10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to

Commission file number 1-14236

FelCor Lodging Trust Incorporated

(Exact name of registrant as specified in its charter)

Maryland	75-2541756
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
545 E. John Carpenter Frwy., Suite 1300, Irving, Texas	75062
(Address of principal executive offices)	(Zip Code)

(972) 444-4900
(Registrant’s telephone number, including area code)

     Securities registered pursuant to Section 12(b) of the Act:

	Name of each exchange
Title of each class	on which registered
Common Stock	New York Stock Exchange, Inc.
$1.95 Series A Cumulative Convertible Preferred Stock	New York Stock Exchange, Inc.
Depositary Shares representing 8% Series C Cumulative
Redeemable Preferred Stock	New York Stock Exchange, Inc.

     Securities registered pursuant to Section 12(g) of the Act:

None
(Title of class)

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. R Yes £ No

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. £ Yes R No

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. R Yes £ No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. £

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

     Large accelerated filer £ Accelerated filer R Non-accelerated filer £

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) £ Yes R No

     The aggregate market value of the common stock of the registrant held by non-affiliates of the registrant, computed by reference to the price at which registrants common stock was last sold at the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $695 million.

     As of March 1, 2006, the registrant had issued and outstanding 60,474,499 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

     The Registrant’s definitive Proxy Statement pertaining to the 2006 Annual Meeting of Stockholders (the “Proxy Statement”), filed or to be filed not later than 120 days after the end of the fiscal year pursuant to Regulation 14A, is incorporated herein by reference into Part III.

FELCOR LODGING TRUST INCORPORATED

INDEX

	Form 10-K
	Report
Item No.	Page
PART I
1. Business		2
1A. Risk Factors		10
1B. Unresolved Staff Comments		19
2. Properties		19
3. Legal Proceedings		30
4. Submission of Matters to a Vote of Security Holders		30
PART II
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Purchases of Equity Securities		31
6. Selected Financial Data		33
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
7A. Quantitative and Qualitative Disclosures About Market Risk		55
8. Financial Statements and Supplementary Data		56
9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		56
9A. Controls and Procedures		56
9B. Other Information		57
PART III
10. Directors and Executive Officers of the Registrant		58
11. Executive Compensation		58
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		58
13. Certain Relationships and Related Transactions		58
14. Principal Accountant Fees and Services		58
PART IV
15. Exhibits and Financial Statement Schedules		59
Fifth Supplemental Indenture
Third Supplemental Indenture
First Supplemental Indenture
Omnibus Agreement
First Amendment to Term Credit Agreement
Second Amendment to Term Credit Agreement
Credit Agreement
First Amendment to Credit Agreement
Second Amendment to Credit Agreement
Subsidiary Guaranty
Purchase and Sale Agreement
List of Subsidiaries
Consent of PricewaterhouseCoopers LLP
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

     This Annual Report on Form 10-K contains registered trademarks owned or licensed by companies other than us, including but not limited to Candlewood Suites®, Conrad®, Crowne Plaza®, Disneyland®, Doubletree®, Doubletree Guest Suites®, Embassy Suites Hotels®, Four Points® by Sheraton, Hampton Inn®, Harvey Suites®, Hilton®, Hilton Garden Inn®, Hilton Suites®, Holiday Inn®, Holiday Inn & Suites®, Holiday Inn Express®, Holiday Inn Express & Suites®, Holiday Inn Select®, Homewood Suites® by Hilton, InterContinental®, Priority Club®, Sheraton®, Sheraton Suites®, St. Regis®, Staybridge Suites®, The Luxury Collection®, W®, Walt Disney World®, Worlds of Fun® and Westin®.

PART I

Item 1. Business

     FelCor Lodging Trust Incorporated, or FelCor, is a Maryland corporation and one of the nation’s largest public lodging real estate investment trusts, or REITs, based on total assets and number of hotels owned. We are the sole general partner of, and the owner of a greater than 95% partnership interest in, FelCor Lodging Limited Partnership, or FelCor LP, through which we held ownership interests in 130 hotels with approximately 37,000 rooms and suites at December 31, 2005. When used in this Annual Report on Form 10-K, “we” and “our” refer to FelCor and its consolidated subsidiaries, unless otherwise indicated.

     At December 31, 2005, we owned a 100% interest in 101 hotels, a 90% or greater interest in entities owing seven hotels, a 75% interest in an entity owning one hotel, a 60% interest in an entity owning two hotels and a 50% interest in entities owning 19 hotels. As the result of our ownership interests in the operating lessees of 125 of these hotels, we reflect their operating revenues and expenses in our consolidated statements of operations. The operating revenues and expenses of the remaining five hotels were reported on the equity method, four hotels were operated by 50% owned lessees and one hotel, in which we had a 50% ownership interest, was operated without a lease.

     Our hotels included in continuing operations at December 31, 2005 were located in the United States (28 states) and Canada, with concentrations in Texas (25 hotels), California (19 hotels), Florida (15 hotels) and Georgia (12 hotels). We own the largest number of Embassy Suites Hotels and independently owned Doubletree-branded hotels. At December 31, 2005, we owned interests in 35 hotels that we had identified as non-strategic assets to be sold.

     Our business is conducted in one reportable segment, which is hospitality. During 2005, we derived 98% of our revenues from hotels located within the United States and the balance from our Canadian hotels.

     We seek to increase operating cash flow through aggressive asset management and the competitive positioning of our hotels, to maintain a sound and flexible capital structure, and to reposition our portfolio through the sale of non-strategic hotels, investment in capital expenditures at our existing hotels that we expect to provide a high return on investment and investment in newer, higher quality hotels in major urban and resort markets with greater growth potential. The hotels in which we may invest are expected to be affiliated with, or to benefit from affiliation with, one of the premium brands available to us.

     At December 31, 2005, we had an aggregate of 62,972,039 shares and units outstanding, consisting of 60,209,499 shares of FelCor common stock and 2,762,540 units of limited partnership interest of FelCor LP not owned by FelCor.

     Additional information relating to our hotels and our business, including the charters of our Corporate Governance and Nominating Committee, Compensation Committee and Audit Committee; our corporate governance guidelines; and our code of business conduct and ethics can be found on our website at www.felcor.com. Information relating to our hotels and our business can also be found in the Notes to Consolidated Financial Statements located elsewhere in this Annual Report on Form 10-K. Our annual, quarterly and current reports, and amendments to these reports, filed with the Securities and Exchange Commission, or SEC, under the Securities Exchange Act of 1934, or Exchange Act, are made available on our website, free of charge, under the “SEC Filings” tab on our “Investor Relations” page, as soon as practicable following their filing. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

     We submitted the certification of the Chief Executive Officer of FelCor required by Section 303A. 12(a) of the New York Stock Exchange, or NYSE, Listed Company Manual, relating to FelCor’s compliance with the NYSE’s corporate governance listing standards, to the NYSE on July 8, 2005 with no qualifications. We included the certifications of the Chief Executive Officer and Chief Financial Officer of FelCor required by Section 302 of the Sarbanes-Oxley Act of 2002 and related rules, relating to the quality of FelCor’s public disclosure, in this Annual Report on Form 10-K as Exhibits 31.1 and 31.2.

2

Developments During 2005

     We completed 2005 with a 10.8% increase in our hotel revenue per available room, or RevPAR, compared to 2004. This was the second year of RevPAR increases following an unprecedented consecutive three year decline in RevPAR that we had experienced prior to 2004. The fundamentals of the lodging industry appear to be strong, as evidenced by the national trend of increased RevPAR and increases in average daily room rates, or ADR, which represent a major portion of the increase in RevPAR. The increase in ADR also resulted in a 116 basis point increase in our Hotel Earnings Before Interest, Taxes, Depreciation and Amortization margin, or Hotel EBITDA margin, at our hotels in continuing operations. Hotel EBITDA margin is a commonly used non-GAAP measure described in more detail and reconciled to GAAP measures in the “Non-GAAP Financial Measures” section of Management’s Discussion and Analysis of Financial Condition in Item 7 of this Annual Report on Form 10-K.

     During 2005, we reduced our debt outstanding by $92 million with the proceeds of asset sales, extinguishment of debt by the transfer of hotels to their non-recourse mortgage holder and the use of cash on hand. Through the issuance of $169 million of new 8% Series C redeemable preferred stock, we also retired all $169 million of our 9% Series B redeemable preferred stock.

     Of the 26 hotels previously identified for sale at December 31, 2004, we sold 11 during 2005 for gross sale proceeds of $79 million and surrendered eight limited service hotels, owned by a consolidated joint venture, to their non-recourse mortgage holder for extinguishment of $49 million in debt.

     In 2005, we re-established and paid a fourth quarter common dividend of $0.15 per share. We also paid preferred dividends of $1.95 per share on our Series A preferred stock, a pro rata $1.125 per depositary share on our Series B preferred stock for the period prior to retirement and a pro rata initial year preferred dividend of $1.6333 per depositary share on our Series C preferred stock.

     In 2005, we started construction on our 184 unit Royale Palms condominium development in Myrtle Beach, South Carolina, which is expected to be completed in the summer of 2007. This project is over 90% pre-sold.

Recent Developments

Amendment to IHG Management Agreements

     On January 24, 2006, we announced that we had executed an agreement modifying our management agreements covering our hotels managed by InterContinental Hotels Group, or IHG. This agreement will enable us to complete our repositioning program and create “New FelCor.”

     The amendment to our IHG management agreements eliminates any potential liquidated damages and reinvestment requirement with respect to IHG-managed hotels previously sold, 30 additional IHG-managed hotels to be sold and one Crowne Plaza hotel to be converted to another brand. The management agreements on the remaining 17 IHG-managed hotels have been extended to 2025 and include a new management performance standard and restructured incentive fees.

     In connection with this agreement, we have identified 11 Crowne Plaza hotels, 12 Holiday Inn-branded hotels, one Staybridge Suites hotel and an independent branded hotel as non-strategic assets for sale. These 25 hotels are in addition to five IHG-managed hotels previously identified as non-strategic. These non-strategic hotels include all of our Holiday Inn hotels that are located in secondary and tertiary markets, as well as 10 hotels in Texas. Hospitality Properties Trust, or HPT, purchased five of the non-strategic Crowne Plaza hotels, a Holiday Inn-branded hotel and the Staybridge Suites hotel in January 2006 for $160 million.

     The 17 IHG-managed Holiday Inn-branded hotels that we are retaining are located in desirable markets that are primarily in urban locations in the Northeast, the East Coast and California. We have committed to special capital expenditure plans that total approximately $50 million at 11 of these hotels designed to maximize the value of these hotels.

     The completion of the agreement with IHG enables us to sell our non-strategic hotels, use the proceeds to reduce debt and invest in high return-on-investment capital projects at our remaining core hotels. New FelCor will become a lower-leveraged company with a stronger and renovated portfolio. Our repositioned portfolio will provide us a solid platform for future growth in today’s strong RevPAR environment.

3

New FelCor

     New FelCor, following the disposition of our remaining non-strategic hotels, will own 90 consolidated hotels, with 81% of its Hotel EBITDA derived from hotels in the upper upscale segment, that are located primarily in Top 25 and resort markets.

• The average Hotel EBITDA per room for our 90 core hotels is more than 2.5 times higher than our non-strategic hotels for the year ended December 31, 2005.

• Hotel EBITDA growth for the year ended December 31, 2005, for our 90 core hotels was 15%, as compared to only 1% for our non-strategic hotels.

• Hotel EBITDA margins for the year ended December 31, 2005, were 28% for our 90 core hotels compared to only 17% for our non-strategic hotels.

• High return capital projects should provide a boost to our future Hotel EBITDA growth.

Repositioning

     At December 31, 2005, we had 35 non-strategic hotels for sale. These hotels are located primarily in secondary and tertiary markets, and include hotels in Texas and Atlanta, Georgia, where we had an excess concentration of hotels. Our repositioning strategy includes:

• The sale of seven hotels previously identified as non-strategic, including five IHG-managed hotels, one of which was sold in January 2005.

• The sale of 25 additional IHG-managed hotels, including the seven hotels sold to HPT in January 2006.

• The sale of three additional hotels not managed by IHG.

• Total proceeds from hotel sales are expected to be between $485 and $535 million, which is in addition to $15 million in proceeds from the sale of three hotels in December 2005, representing an EBITDA multiple of between 12 and 13 times 2005 Hotel EBITDA.

• The Crowne Plaza in San Francisco at Union Square will be converted to another brand by the end of 2006.

In connection with this repositioning, we recorded an impairment charge of $263 million in the fourth quarter of 2005 primarily associated with the amendment of the IHG agreements and our decision to sell additional non-strategic hotels.

Although the 35 non-strategic hotels represent 29% of our rooms at December 31, 2005, they only represent 14% of our Hotel EBITDA for 2005. The hotels to be sold have significantly lower RevPAR and Hotel EBITDA margins than our 90 core hotels. Following the sale of the 35 non-strategic hotels, New FelCor will have significantly lower exposure to markets with low barriers to entry, such as Atlanta, Dallas, Houston and Omaha, and will be more geographically diverse with no market contributing more than 6% of EBITDA. The sale hotels will be marketed through exclusive broker arrangements that are listed on our web site at www.felcor.com.

FelCor’s Consolidated Portfolio Summary at December 31, 2005

	Consolidated FelCor			Non-Strategic Hotels			New FelCor(a)
Hotel count		125			35			90
Room count		36,132			10,595			25,537
Brands (hotel count):
Embassy Suites Hotels		54			1			53
Doubletree		9			2			7
Hilton		2			0			2
Sheraton/Westin		11			1			10
Holiday Inn		33			16			17
Crowne Plaza		12			11			0
Other		4			4			1
Total		125			35			90
(a) Assumes the conversion of the Crowne Plaza in San Francisco at Union Square to another brand
Operating Statistics (year ended December 31, 2005):
RevPAR	$	74		$	51		$	84
Hotel EBITDA (in millions)	$	305		$	42		$	263
Hotel EBITDA per room	$	8,452		$	3,992		$	10,302
Hotel EBITDA margin		25.2	%		16.6	%		27.6	%

4

Use of Proceeds/Capitalization

     Total proceeds from the 35 non-strategic hotels identified for sale are expected to be between $485 and $535 million. The asset sales are expected to occur in 2006 and 2007 and the proceeds will be used primarily to invest in capital improvement projects at many of our core hotels and to pay down approximately $385 million of debt. This is in addition to proceeds of $15 million from the sale of three hotels in December 2005, used to pay down debt.

     We plan to use approximately $100 to $150 million of the sales proceeds to fund capital improvement projects to be completed over the next 18 months. These projects are in addition to maintenance capital expenditures of approximately 5% of annual hotel revenues. These capital projects consist of adding meeting space and completing major renovations to hotels where we expect that additional rate and occupancy can be captured.

     Additionally in January 2006, we re-established an unsecured $125 million line of credit, that will allow us to use our excess cash to fund additional high-return capital projects.

FelCor’s IHG-Branded Portfolio

     The 17 core Holiday Inn-branded hotels being retained by us, including six Holiday Inn Select-branded hotels, are comprised of high quality hotels located on desirable real estate. We are also retaining our unconsolidated interest in the Chateau LeMoyne hotel located in New Orleans that is managed by IHG. These hotels have higher average Hotel EBITDA margins than the average of our current upper upscale, full service hotels. In addition, for the year ended December 31, 2005, these hotels earned almost twice the Hotel EBITDA per room generated by the non-strategic hotels to be sold.

FelCor’s IHG-Branded Portfolio Summary^(a)

	Core Holiday			Non-Strategic
	Inn Hotels			Hotels
Hotel count		17			30
Rooms count		6,300			9,084
Operating Statistics (year ended December 31, 2005):
RevPAR	$	73.05		$	50.39
Hotel EBITDA per room	$	8,129		$	4,083
Hotel EBITDA margin		24.2	%		17.1	%

(a) Excludes the Crowne Plaza in San Francisco at Union Square that is to be converted to another brand.

     The 17 core Holiday Inn-branded hotels are as follows:

Boston, MA — Beacon Hill, Holiday Inn Select
Charleston, SC — Mills House, Holiday Inn
Cocoa Beach, FL – Oceanfront, Holiday Inn
Houston, TX — Medical Center, Holiday Inn
Nashville, TN – Opryland, Holiday Inn Select
New Orleans, LA — French Quarter, Holiday Inn
Orlando, FL – Airport, Holiday Inn Select
Orlando, FL — International Drive, Holiday Inn
Philadelphia, PA — Historic District, Holiday Inn
Pittsburgh, PA — University Center, Holiday Inn Select
San Diego, CA — On the Bay, Holiday Inn
San Francisco, CA — Fisherman’s Wharf, Holiday Inn
Santa Barbara, CA — Holiday Inn
Santa Monica Beach, CA — At the Pier, Holiday Inn
San Antonio, TX – Airport, Holiday Inn Select
Toronto, Ontario, Canada – Airport, Holiday Inn Select
Toronto, Ontario, Canada – Yorkdale, Holiday Inn

5

Management Changes

     In February 2006, we announced the appointment of Thomas J. Corcoran, Jr. as Chairman of the Board, Richard A. Smith as President and Chief Executive Officer and Andrew J. Welch as Executive Vice President and Chief Financial Officer. At the same time, we announced that Donald J. McNamara resigned his position as Chairman of the Board, but will remain on our Board of Directors, and that Michael D. Rose resigned from our Board of Directors. Mr. Rose’s position on the Board of Directors will be filled by Mr. Smith. In March 2006, we announced the appointment of Troy A. Pentecost as Executive Vice President and Director of Asset Management, replacing Jack Eslick. Mr. Corcoran co-founded FelCor in 1991 with Hervey Feldman and has served as President and Chief Executive Officer since our formation. Mr. Smith joined FelCor in 2004 as Executive Vice President and Chief Financial Officer. Mr. Welch was most recently Senior Vice President and Treasurer for FelCor. Mr. Pentecost was formerly with Remington Hotel Corporation.

The Industry

     The industry experienced strong growth in 2005 as indicated by an 8.4% increase in RevPAR, continuing the momentum generated in 2004, according to Smith Travel Research, or STR, a leading provider of industry data. This increase stemmed from both additional room demand and a significant improvement in ADR. In 2005, the industry sold 3.3% more room nights than in 2004. Combined with only a slight increase (0.4%) of available room nights, the U.S. occupancy rate grew to 63.1%, the highest level since 2000. At $90.84, ADR surpassed the $90 hurdle for the first time in industry history.

     Supply growth in lodging product, a significant lead indicator of the performance of existing lodging real estate, continues to stay benign. Since 2003, the average annual supply growth has been 0.8% compared to the long-term average of 2.1% from 1989 to 2005.

     A number of industry sources predict that 2006 will see a continuation of the growth over the last two years. Macroeconomic Advisers forecasts Real Gross Domestic Product, or GDP adjusted for inflation, growth to be 3.8% in 2006 and 3.5% in 2007. This indication of the ongoing strength of the U.S. economy, both strong leisure and business travel demand and the limited new supply growth, causes us to look optimistically into the near future. STR predicts that 2006 occupancy levels – fueled by a 3.1% increase in demand and only a 1.2% increase in supply – will surpass 2000 levels and reach 64.3%. At the same time, ADR is expected to grow by 6.0% resulting in a RevPAR increase of 8.0%. PricewaterhouseCoopers, or PwC, another leading source of lodging data, predicts that the U.S. RevPAR will increase by 7.3% and 6.2% in 2006 and 2007 respectively. PwC also predicts that the lodging industry profits (measured in income before income taxes) will increase by 20.9% and surpass 2000 levels. However, these predicted growth rates are not uniform across the country and assume that no major external event such an act of terrorism or natural disaster affect the U.S. economy and the travel and lodging industries.

     STR classifies hotel chains into six distinct categories: Luxury, Upper Upscale, Upscale, Midscale with Food & Beverage, Midscale without Food & Beverage, and Economy. We own properties in the Upper Upscale (including Doubletree Guest Suites, Doubletree, Embassy Suites Hotels, Sheraton and Westin hotels), Upscale (Crowne Plaza), and Midscale With Food & Beverage (Holiday Inn) categories, from which we derived approximately 99% of our EBITDA in 2005. More than 58% of our EBITDA in 2005 was derived from upper upscale all-suite hotels.

     STR also categorizes hotels based upon their relative market positions, as measured by ADR, as Luxury, Upscale, Midprice, Economy and Budget. The following table contains information with respect to average occupancy (determined by dividing occupied rooms by available rooms), ADR and RevPAR for our hotels, as well as all Upscale U.S. hotels, all Midprice U.S. hotels and all U.S. hotels, as reported by STR, for the periods indicated.

6

	Year Ended December 31,
	2005			2004			2003			2002			2001
Number of FelCor Hotels		125			142			159			183			183
Occupancy:
FelCor hotels (1)		69.3	%		65.5	%		62.4	%		62.1	%		63.9	%
All Upscale U.S. hotels (2)		64.7			63.0			60.8			60.8			60.8
All Midprice U.S. hotels (3)		61.2			59.4			57.2			56.8			57.8
All U.S. hotels		63.1			61.3			59.2			59.0			59.7
ADR:
FelCor hotels (1)	$	107.18		$	99.07		$	94.92		$	96.84		$	102.18
All Upscale U.S. hotels (2)		99.39			94.05			90.55			90.47			91.87
All Midprice U.S. hotels (3)		73.26			69.81			67.54			67.96			69.76
All U.S. hotels		90.84			86.20			82.92			82.83			84.10
RevPAR:
FelCor hotels (1)	$	74.29		$	64.91		$	59.19		$	60.16		$	65.34
All Upscale U.S. hotels (2)		64.35			59.26			55.06			55.02			55.87
All Midprice U.S. hotels (3)		44.82			41.47			38.60			38.58			40.30
All U.S. hotels		57.34			52.88			49.07			48.87			50.24

(1)	Information is historical and includes discontinued operations.
(2)	This category includes hotels in the “upscale price level,” defined as hotels with ADRs in the 70th to 85th percentiles in their respective markets.
(3)	This category includes hotels in the “midprice level,” defined as hotels with ADRs in the 40th to 70th percentiles in their respective markets.

Business Strategy

     We have identified three long-term strategic objectives: growth in our earnings; improvement in our return on invested capital; and a reduction in our overall financial leverage. In order to achieve these strategic objectives, our business strategy is to: dispose of non-strategic hotels; improve the competitive positioning of our core hotels through aggressive asset management and the judicious application of capital with the expectation of obtaining a high return on investment; and pay down debt through a combination of operational cash flow, the sale of non-strategic hotels and, if appropriate, other capital transactions. We continue to examine our portfolio to address market supply and concentration of risk issues. Additionally, we are considering external growth, through the acquisition of hotels, which does three things: increase long-term shareholder value, improve the quality of our portfolio and improve both our market distribution and future EBITDA growth.

  Sale of Non-Strategic Hotels

     Under the management agreements entered into with IHG in 2001 and amended in 2004, we were obligated to reinvest the net proceeds from the sale of IHG-managed hotels in other IHG-managed hotels or pay substantial liquidated damages to IHG. This potential exposure to liquidated damages made it impractical to sell IHG-managed hotels. In January 2006, we executed an agreement modifying our management agreements covering our hotels managed by IHG. This agreement eliminates any potential liquidated damages or reinvestment requirement with respect to hotels previously sold, IHG-managed hotels now identified for sale and one Crowne Plaza hotel to be converted to another brand. We can now seek to sell hotels that we have deemed non-strategic, which include our Crowne Plaza hotels, all of our Holiday Inn hotels in secondary and tertiary markets and hotels in markets where we have an excess concentration of hotels such as Texas and Atlanta, Georgia.

     We began negotiating the amendment to our IHG management agreements in 2005. In October 2005, our Audit Committee conditionally approved an impairment charge on certain hotels, if and only if a definitive agreement with IHG was reached. We provided an update on the negotiations with IHG to our Executive Committee of the Board of Directors in December 2005, and at that time concluded that if a definitive agreement could be finalized, a material impairment charge would be necessary. We finalized the definitive agreement

7

with IHG in January 2006. As a result of the agreement, we determined that it was more likely than not that certain hotels would be sold significantly before the end of their previously estimated useful life, triggering an impairment charge of $263 million, which was recorded as of December 31, 2005 with respect to 25 IHG-managed hotels, three hotels not managed by IHG and two IHG-managed hotels that we had previously designated as non-strategic.

     At December 31, 2005, we had 35 hotels designated as non-strategic, substantially all of which we intend to sell in 2006 and 2007. Eight of these hotels were sold in January 2006.

  Refined Investment Strategy

     The completion of the agreement with IHG enables us to sell our non-strategic hotels and use the proceeds to reduce debt and invest in high return-on investment capital projects at our remaining core hotels. We currently plan on spending between $175 million and $200 million on hotel capital improvements in 2006. As we focus on improving our core portfolio through renovations and repositionings, our portfolio will be positioned to have above average growth. Any future acquisition efforts will be focused on higher quality hotels in markets with significant barriers to entry, such as central business districts and resort locations. Hotel brand and market segment will be secondary concerns when we are considering investment opportunities.

  Improving the Competitive Positioning of Our Hotels

     We seek to improve the competitive position of our hotels through aggressive asset management and the maintenance of strong relationships with our brand-owner managers. While REIT requirements prohibit us from directly managing our hotels, we work closely with our brand-owner managers to actively monitor and review hotel operations. We strongly urge our managers to implement best practices in expense management at our hotels, and we strive to influence brand strategy on marketing and revenue enhancement programs. Consistent with our commitment to position our hotels to best take advantage of the current recovery in the lodging industry, we have continued making both revenue enhancing and maintenance capital improvements at our hotels. During 2005, we spent $127 million on capital expenditures, including capital improvements made by our unconsolidated joint ventures, representing approximately 10% of total revenue. Additionally, in 2005, our repair and maintenance expense represented 6.9% of our hotel room revenue from continuing operations. We expect our 2006 capital expenditures will be between $175 and $200 million. We plan to use a portion of the proceeds from the sale of non-strategic hotels to fund capital projects such as adding meeting space or completing major renovations to hotels where we expect that additional rate and occupancy can be captured. Additionally, we have re-established an unsecured line of credit that will allow us to use excess cash to fund additional high-return capital projects.

  Paydown of Debt

     We are committed to pay down our debt, while maintaining short-term liquidity. In 2005, we reduced our consolidated debt by $92 million. We plan to use approximately $400 million of sale proceeds from non-strategic hotels to pay down debt. In January 2006, we used proceeds from the sale of eight hotels, cash on hand and a draw of $45 million under our line of credit to pay off our $225 million term loan.

     At December 31, 2005, we had cash balances of $95 million. Our cash balances included approximately $31 million held under our hotel management agreements to meet our hotel minimum working capital requirements. We have no significant nonextendable debt maturities until 2007, when approximately $134 million in debt matures in excess of normal recurring principal payments. We will continue to seek opportunities to reduce our debt and our cost of capital on an economically sound basis.

Strategic Relationships

     We benefit from our brand-owner and manager alliances with Hilton Hotels Corporation (Embassy Suites Hotels, Hilton and Doubletree), InterContinental Hotels Group PLC (Crowne Plaza and Holiday Inn) and Starwood Hotels & Resorts Worldwide, Inc. (Sheraton and Westin). These relationships enable us to work effectively with our managers to maximize Hotel EBITDA margins and operating cash flow from our hotels .

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• Hilton Hotels Corporation (www.hiltonworldwide.com) is recognized internationally as a preeminent hospitality company. Hilton develops, owns, manages or franchises approximately 2,300 hotels, resorts and vacation ownership properties. Its portfolio includes many of the world’s best known and most highly regarded hotel brands, including Hilton, Hilton Garden Inn, Doubletree, Embassy Suites Hotels, Conrad, Hampton Inn and Homewood Suites by Hilton, among others. Subsidiaries of Hilton managed 63 of our hotels at December 31, 2005. Hilton is a 50% partner in joint ventures with us in the ownership of 12 hotels and the management of residential condominiums, and is the holder of a 10% equity interest in certain of our consolidated subsidiaries owning six hotels.

• InterContinental Hotels Group PLC (www.ichotelsgroup.com) of the United Kingdom is the world’s most global hotel company and the largest by number of rooms. IHG owns, manages, leases or franchises, through various subsidiaries, more than 3,600 hotels and 539,000 guest rooms in nearly 100 countries and territories around the world. IHG owns a portfolio of well recognized and respected hotel brands including InterContinental Hotels & Resorts, Crowne Plaza Hotels & Resorts, Holiday Inn, Holiday Inn Express, Holiday Inn Select, Staybridge Suites, Candlewood Suites, and also manages the world’s largest hotel loyalty program, Priority Club Rewards, with more than 27 million members worldwide. Building on more than 50 years of innovation, IHG has contributed to a wide-range of industry “firsts.” Among these innovations, IHG was the first hotel company to recognize and reward customer loyalty through a customer frequency program, Priority Club Rewards, and the first hotel company to receive reservations via the Internet. At December 31, 2005, subsidiaries of IHG managed 48 of our hotels and owned approximately 17% of our outstanding common stock. In February 2006, IHG sold substantially all of its holdings of our common stock.

• Starwood Hotels & Resorts Worldwide, Inc. (www.starwoodhotels.com) is one of the leading hotel and leisure companies in the world with approximately 850 properties with 258,000 rooms in 95 countries. With internationally renowned brands, Starwood is a fully integrated owner, operator and franchisor of hotels and resorts including: St. Regis, The Luxury Collection, Sheraton, Westin, Four Points by Sheraton and W brands. Subsidiaries of Starwood managed 11 of our hotels at December 31, 2005. Starwood is a 40% joint venture partner with us in the ownership of two hotels and a 50% joint venture partner with us in the ownership of one hotel.

Competition

     The hotel industry is highly competitive. Each of our hotels is located in a developed area that includes other hotel properties and competes for guests primarily with other full service and limited service hotels in its immediate vicinity and secondarily with other hotel properties in its geographic market. We believe that location, brand recognition, the quality of the hotel, the services provided, and price are the principal competitive factors affecting our hotels.

Environmental Matters

     We customarily obtain a Phase I environmental survey from an independent environmental consultant before acquiring a hotel. The principal purpose of a Phase I survey is to identify indications of potential environmental contamination for which a property owner may have liability and, secondarily, to assess, to a limited extent, the potential for environmental regulatory compliance liabilities. The Phase I surveys of our hotels were designed to meet the requirements of the then current industry standards governing Phase I surveys, and consistent with those requirements, none of the surveys involved testing of groundwater, soil or air. Accordingly, they do not represent evaluations of conditions at the studied sites that would be revealed only through such testing. In addition, their assessment of environmental regulatory compliance issues was general in scope and was not a detailed determination of the hotel’s complete environmental compliance status. Similarly, the surveys did not involve comprehensive analysis of potential offsite liability. The Phase I survey reports did not reveal any environmental liability that we believe would have a material adverse effect on our business, assets or results of operations, nor are we aware of any such liability. Nevertheless, it is possible that these reports do not reveal or accurately assess all environmental liabilities and that there are material environmental liabilities of which we are unaware.

     We believe that our hotels are in compliance, in all material respects, with all federal, state, local and foreign laws and regulations regarding hazardous substances and other environmental matters, the violation of which could have a material adverse effect on us. We have not been notified by any governmental authority or

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private party of any noncompliance, liability or claim relating to hazardous or toxic substances or other environmental matters in connection with any of our current or former properties that we believe would have a material adverse effect on our business, assets or results of operations. However, obligations for compliance with environmental laws that arise or are discovered in the future may adversely affect our financial condition.

Tax Status

     We elected to be taxed as a REIT under the federal income tax laws, commencing with our initial taxable year ended December 31, 1994. As a REIT, we generally are not subject to federal income taxation at the corporate level on taxable income that is distributed to our stockholders. We may, however, be subject to certain state and local taxes on our income and property. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its annual taxable income. In connection with our election to be taxed as a REIT, our charter imposes restrictions on the ownership and transfer of shares of our common stock. FelCor LP expects to make distributions on its units sufficient to enable us to meet our distribution obligations as a REIT. As a result of the passage of the REIT Modernization Act, in 2001 we acquired or terminated all of our hotel leases and contributed them to taxable REIT subsidiaries, or TRSs. These TRSs are subject to both federal and state income taxes. At December 31, 2005, our TRSs had a federal income tax loss carry forward of $419 million.

Employees

     Thomas J. Corcoran, Jr., our Chairman of the Board of Directors, entered into a new employment agreement with us in February 2006 that continues in effect until February 1, 2011. Mr. Richard A. Smith, our President and Chief Executive Officer, entered into an employment agreement with us in February 2006 that continues into effect until February 1, 2008. Both Mr. Corcoran’s and Mr. Smith’s agreements automatically renew for successive one-year terms unless terminated by either party. All of our executive officers, including Messers. Corcoran and Smith, have change in control contracts that renew annually. We had 76 full-time employees at December 31, 2005.

     All persons employed in the day-to-day operation of our hotels are employees of the management companies engaged by us and are not our employees.

Item 1A. Risk Factors

     Certain statements and analyses contained in this Annual Report on Form 10-K, in our 2006 Annual Report to Shareholders, or that may in the future be made by, or be attributable to, us, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate” or “continue” or the negative thereof or other variations thereon or comparable terminology. All of such forward-looking statements are based upon present expectations and assumptions that may or may not actually occur. The following factors constitute cautionary statements identifying important factors, including material risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements or in our historical results. Each of the following factors, among others, could adversely affect our ability to meet the current expectations of management.

Future terrorist activities and United States military involvement in the Middle East and elsewhere may result in reducing business and leisure travel, which would reduce our revenues.

     The terrorist attacks of September 11, 2001, caused a significant disruption in travel-related businesses in the United States. Consistent with the rest of the lodging industry, we experienced substantial declines in occupancy and ADR, due to a decline in both business and leisure travel in 2001 and the continued decline in business travel in 2002 and 2003. While the lodging industry experienced the beginnings of a recovery in 2004 and strong growth in 2005, another act of terrorism in the United States, protracted or expanded United States military involvement in the War on Terrorism, heightened “Threat Levels,” contractions in the airline industry, or increased security precautions making air travel more difficult could result in decreases in travel and our revenues. The factors described above, as well as other political or economic events, may adversely affect the lodging industry, including us, as a result of reduced public travel.

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Our financial leverage is high.

     At December 31, 2005, our consolidated debt of $1.7 billion represented 52% of our total market capitalization. The decline in our revenues and cash flow from operations during 2001, 2002 and 2003, have resulted in a reduction of our public debt ratings and may limit our access to additional debt capital. Our senior unsecured public notes currently are rated B1 by Moody’s Investors Service, and B by Standard & Poor’s, which are considered below investment grade. Historically, we have incurred debt for acquisitions and to fund our renovation, redevelopment and rebranding programs. Limitations upon our access to debt financing could adversely affect our ability to fund these activities and programs in the future.

     We had increases in RevPAR in 2004 and 2005, but if RevPAR worsens, it could result in a continuation, or worsening, of our net losses and reduce our ability to pay dividends and service our debt.

     Our financial leverage could have important consequences. For example, it could:

• limit our ability to obtain additional financing for working capital, renovation, redevelopment and rebranding plans, acquisitions, debt service requirements and other purposes;

• require us to agree to additional restrictions and limitations on our business operations and capital structure to obtain additional financing;

• increase our vulnerability to adverse economic and industry conditions, as well as to fluctuations in interest rates;

• require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for capital expenditures, future business opportunities, the payment of dividends or other purposes;

• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and

• place us at a competitive disadvantage, compared to our competitors that have less debt.

     We may be able to incur substantial debt in the future, which could increase the risk described above. The covenants under our $125 million line of credit would have allowed us to incur an additional $627 million of debt at December 31, 2005. Based upon our calculation of the limitations under our senior notes, described below, assuming additional debt was borrowed at a 7% annual interest rate and invested in assets generating annual Hotel EBITDA equal to 7% of their cost, at December 31, 2005, we could have incurred approximately $1.2 billion of additional indebtedness, all of which could have been secured indebtedness.

We have restrictive debt covenants that could adversely affect our ability to finance our operations or engage in other business activities.

     The indentures governing our outstanding senior unsecured notes and agreements governing our line of credit contain various restrictive covenants and incurrence tests, including, among others, provisions that can restrict our ability to:

• incur any additional indebtedness if, after giving effect thereto, our consolidated indebtedness would exceed 60% of our adjusted total assets or our interest coverage ratio, as defined in the indentures, would be less than 2.0 to 1;

• incur any additional secured indebtedness or subsidiary debt if, after giving effect thereto, our consolidated secured indebtedness and subsidiary debt exceeds 40% of our adjusted total assets;

• make common and preferred distributions;

• make investments;

• engage in transactions with affiliates;

• incur liens;

• merge or consolidate with another person;

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• dispose of all or substantially all of our assets; and

• permit limitations on the ability of our subsidiaries to make payments to us.

     These restrictions may adversely affect our ability to finance our operations or engage in other business activities that may be in our best interest.

     Under the terms of the indentures governing one of our outstanding senior notes, we are prohibited from repurchasing any of our capital stock, whether common or preferred, subject to certain exceptions, so long as our debt-to-EBITDA ratio, as defined in the indenture, exceeds 4.85 to 1. Although our current debt-to-EBITDA ratio is below that threshold, a decline in our EBITDA, or an increase in our debt could raise our ratio above the 4.85 to 1 threshold. Accordingly, we may be prohibited from purchasing any of our capital stock, except as permitted under limited exceptions, such as from the proceeds of a substantially concurrent issuance of other capital stock.

     If actual operating results were to be significantly below our current expectations, as reflected in our public guidance, or if interest rates increase significantly more than we expect, we may be unable to continue to satisfy the incurrence test under the indentures governing our senior unsecured notes. In such an event, we may be prohibited from incurring additional indebtedness, except to repay or refinance maturing debt with debt of similar priority in the capital structure, and may be prohibited from, among other things, paying distributions on our preferred or common stock, except to the extent necessary to satisfy the REIT qualification requirement that we distribute currently at least 90% of our taxable income.

     In January 2006, we established a new $125 million unsecured line of credit. This line of credit has certain restrictive covenants, such as a leverage ratio, fixed charge coverage ratio, an unencumbered leverage ratio and a maximum payout ratio.

     The breach of any of these covenants and limitations under our line of credit could result in acceleration of amounts outstanding under our line of credit. Our failure to timely satisfy any judgment or recourse indebtedness, if in the amount of $10 million or more, could result in the acceleration of most of our unsecured recourse indebtedness. We may not be able to refinance or repay our debt in full under those circumstances.

Future or existing relationships may result in certain of our directors and officers having interests that conflict with ours.

     Adverse tax consequences to affiliates upon a sale of certain hotels. Thomas J. Corcoran, Jr., our Chairman of the Board of Directors, and Robert A. Mathewson, a director, may incur additional tax liability if we sell our investments in six hotels that we acquired in July 1994 from partnerships in which they were investors. Consequently, our interests could differ from Messrs. Corcoran’s and Mathewson’s interests in the event that we consider a sale of any of these hotels. Decisions regarding a sale of any of these six hotels must be made by a majority of our independent directors.

     Conflicts of interest. A director who has a conflict of interest with respect to an issue presented to our board will have no legal obligation to abstain from voting upon that issue. We do not have provisions in our bylaws or charter that require an interested director to abstain from voting upon an issue, and we do not expect to add provisions in our charter and bylaws to this effect. Although each director has a duty of loyalty to us, there is a risk that, should an interested director vote upon an issue in which he or one of his affiliates has an interest, his vote may reflect a bias that could be contrary to our best interests. In addition, even if an interested director abstains from voting, the director’s participation in the meeting and discussion of an issue in which he has, or companies with which he is associated have, an interest could influence the votes of other directors regarding the issue.

We are subject to the risks inherent in the hospitality industry.

     The economic slowdown that ran from 2001 through 2003 had a significant adverse effect on our RevPAR performance and results of operations. If the current economic recovery does not continue, the effects on our financial condition could be material. We experienced declines in RevPAR, beginning in March 2001 through 2003. A sharp reduction in business travel was the primary cause of the RevPAR decline. The decreased occupancies led to declines in room rates, as hotels competed more aggressively for guests. Both of

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these factors had a significant adverse effect on our RevPAR, Hotel EBITDA margins and results of operations. Primarily as a result of the concentration of our hotels in certain markets, the RevPAR performance of our hotels differ from the national average. The following table reflects the RevPAR changes experienced by our hotels, as a group on a same-store basis, compared to all U.S. hotels, as a group, for the past three calendar years.

	Change in RevPAR
	Year Ended December 31,
	2005	2004	2003
All FelCor hotels	+10.8%	+5.0%	–3.9%
All U.S. hotels	+8.4%	+7.8%	+0.4%

     If the current economic recovery stalls, or if the lodging industry fails to benefit from the recovery for a protracted period of time, or if the markets in which we have significant concentrations should fail to participate in the continued recovery in the industry, our results of operations and financial condition could deteriorate.

     Investing in hotel assets involves special risks. We have invested in hotel-related assets, and our hotels are subject to all of the risks common to the hotel industry. These risks could adversely affect hotel occupancy and the rates that can be charged for hotel rooms, and generally include:

• competition from other hotels;

• construction of more hotel rooms in a particular area than needed to meet demand;

• the current high cost of, and any further increases in, fuel costs and other travel expenses, inconveniences and other events that reduce business and leisure travel;

• adverse effects of declines in general and local economic activity;

• fluctuations in our revenue caused by the seasonal nature of the hotel industry;

• an outbreak of a pandemic disease affecting the travel industry;

• a downturn in the hotel industry; and

• risks generally associated with the ownership of hotels and real estate, as discussed below.

     We could face increased competition. Each of our hotels competes with other hotels in its geographic area. A number of additional hotel rooms have been, or may be, built in a number of the geographic areas in which our hotels are located, which could adversely affect both occupancy and rates in the markets in which our hotels are located. A significant increase in the supply of Midprice, Upscale and Upper Upscale hotel rooms and suites, if demand fails to increase at least proportionately, could have a severe adverse effect on our business, financial condition and results of operations.

     We face reduced coverages and increased costs of insurance. Our property insurance has a $100,000 all risk deductible, a deductible of 3% of insured value for named windstorm coverage and a deductible of 5% of insured value for California earthquake coverage. Should uninsured or not fully insured losses be substantial, they could have a material adverse impact on our operating results, cash flows and financial condition. Additional catastrophic losses, such as the losses caused by hurricanes Katrina, Rita and Wilma in 2005, could make the cost of insuring against these types of losses prohibitively expensive or difficult to find. In an effort to keep our cost of insurance within reasonable limits, we have only purchased terrorism insurance for those hotels that are secured by mortgage debt, as required by our lenders. Our terrorism insurance policies have both per occurrence and aggregate limits of $50 million with regard to 65 hotels. We have established a self-insured retention of $250,000 per occurrence for general liability insurance with regard to 71 of our hotels. The remainder of our hotels participate in general liability programs sponsored by our managers, with no deductible.

     We have geographic concentrations that may create risks from regional or local economic, seismic or weather conditions. At December 31, 2005, approximately 58% of our hotel rooms were located in, and 53% of our 2005 Hotel EBITDA was generated from, four states: California, Florida, Georgia and Texas. Additionally, at December 31, 2005, we had concentrations in four major metropolitan areas, Atlanta, the Los Angeles area, Dallas and Orlando, which together represented approximately 24% of our Hotel EBITDA for the year ended December 31, 2005. Therefore, adverse economic, seismic or weather conditions in these states or metropolitan areas will have a greater adverse effect on us than on the industry as a whole.

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     We had 35 hotels at December 31, 2005, substantially all of which we intend to sell in 2006 and 2007. We may be unable to sell these hotels at acceptable prices, or at all, within the proposed time frame. If we are unable to sell these hotels at anticipated prices, we may realize additional losses upon sale. Even if we are successful in selling these hotels as contemplated, if we fail to reinvest the net proceeds in a manner that will generate returns equal to, or better than, the hotels sold, our results of operations will be adversely affected.

     We are subject to possible adverse effects of franchise and license agreement requirements. Substantially all of our hotels are operated under existing franchise or license agreements with nationally recognized hotel brands. Each agreement requires that the licensed hotel be maintained and operated in accordance with specific standards and restrictions in order to maintain uniformity within the franchisor system. Compliance with these standards, and changes in these standards, could require us to incur significant expenses or capital expenditures, which could adversely affect our results of operations and ability to pay dividends to our stockholders and service on our indebtedness.

     If a franchise or license agreement terminates due to our failure to make required improvements, we may be liable to the brand manager or franchisor for a termination payment. These termination payments vary by agreement and hotel, but are generally measured by a multiple of between two and 8.2 times the annual fees received by the franchisor or brand manager. The loss of a substantial number of brand licenses could have a material adverse effect on our business because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the brand manager or franchisor. Our franchise agreements also expire or terminate, subject to certain specified renewal rights, at various times. As a condition of the renewal or extension of the franchise agreements, the brand owner may require the payment of substantial fees and may require substantial capital improvements to be made to the hotels for which we would be responsible. During the next five years, the franchise or license agreements applicable in respect of 15 of our hotels are scheduled to expire in accordance with their terms.

     We are subject to the risks of brand concentration. We are subject to the potential risks associated with the concentration of our hotels under a limited number of brands. A negative public image or other adverse event that becomes associated with the brand could adversely affect hotels operated under that brand.

     The following table reflects the percentage of Hotel EBITDA from our consolidated portfolio of 125 hotels included in continuing operations as of December 31, 2005, generated by hotels operated under each of the indicated brands during the year ended December 31, 2005:

			% of 2005
			Hotel
	Hotels		EBITDA
Embassy Suites Hotels		54		51	%
Holiday Inn-branded hotels		33		22
Sheraton-branded hotels		10		11
Doubletree-branded hotels		9		6
Crowne Plaza hotels		12		6
Other		7		4

     Should any of these brands suffer a significant decline in popularity with the traveling public, it could adversely affect our revenues and profitability.

     We are subject to the risks of hotel operations. Through our ownership of the lessees of our hotels, we are subject to the risk of fluctuating hotel operating expenses at our hotels, including, but not limited to:

• wage and benefit costs;

• repair and maintenance expenses;

• gas and electricity costs;

• insurance costs, including health, general liability and workers compensation; and

• other operating expenses.

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     In addition, we are subject to the risks of a decline in Hotel EBITDA margins, which occurs when hotel operating expenses increase disproportionately to revenues. These operating expenses and Hotel EBITDA margins are within the control of our brand-owner managers, over which we have limited control, resulting in an increased risk of volatility in our results of operations.

     The lodging business is seasonal in nature. Generally, hotel revenues for our hotel portfolio are greater in the second and third calendar quarters than in the first and fourth calendar quarters, although this may not be true for hotels in major tourist destinations. Revenues for hotels in tourist areas generally are substantially greater during tourist season than other times of the year. Seasonal variations in revenue at our hotels can be expected to cause quarterly fluctuations in our revenues. Quarterly earnings also may be adversely affected by events beyond our control, such as extreme weather conditions, economic factors and other considerations affecting travel.

     We lack control over the management and operations of our hotels. We are dependent on the ability of independent third party managers to operate and manage our hotels. In order to maintain our REIT status, we cannot operate our hotels or any subsequently acquired hotels. As a result, we are unable to directly implement strategic business decisions for the operation and marketing of our hotels, such as decisions with respect to the setting of room rates, the salary and benefits provided to hotel employees, the conduct of food and beverage operations and similar matters.

Our ability to grow or sustain our business may be limited by our ability to attract debt or equity financing, and we may have difficulty accessing capital on attractive terms.

     We may not be able to fund future growth and operations solely from cash provided from operating activities because of our obligation to distribute at least 90% of our taxable income each year to maintain our status as a REIT and any future decline in cash flow. Consequently, we may be forced to rely upon the proceeds of hotel sales or the availability of debt or equity capital to fund hotel acquisitions and necessary capital improvements, and we may be dependent upon our ability to attract debt financing from public or institutional lenders. The capital markets have been, and in the future may be, adversely affected by various events beyond our control, such as the United States’ military involvement in the Middle East and elsewhere, the terrorist attacks on September 11, 2001, the ongoing War on Terrorism by the United States and the bankruptcy of major companies. Similar events, such as an escalation in the War on Terrorism, new terrorist attacks, or additional bankruptcies in the future, as well as other events beyond our control, could adversely affect the availability and cost of capital for our business. We cannot assure you that we will be successful in attracting sufficient debt or equity financing to fund future growth and operations, or to pay or refinance existing debt, at an acceptable cost, or at all.

We own, and may acquire, interests in hotel joint ventures with third parties that expose us to some risk of additional liabilities or capital requirements.

     We own, through our subsidiaries, interests in several real estate joint ventures with third parties. Joint ventures that are not consolidated into our financial statements owned a total of 19 hotels, in which we had an aggregate investment of $109 million, at December 31, 2005. The operations of 14 of these hotels are included in our consolidated results of operations due to our majority ownership of the lessees of these hotels. None of our directors or officers hold any interest in any of these ventures. Our joint venture partners are affiliates of Hilton with respect to 12 hotels, affiliates of Starwood with respect to one hotel, and private entities or individuals with respect to six hotels. The ventures and hotels were subject to non-recourse mortgage loans aggregating $204 million at December 31, 2005.

     The personal liability of our subsidiaries under existing non-recourse loans secured by the hotels of our joint ventures is generally limited to the guaranty of the borrowing ventures’ personal obligations to pay for the lender’s losses caused by misconduct, fraud or misappropriation of funds by the ventures and other typical exceptions from the non-recourse covenants in the mortgages, such as those relating to environmental liability. We may invest in other ventures in the future that own hotels and have recourse or non-recourse debt financing. If a venture defaults under its mortgage loan, the lender may accelerate the loan and demand payment in full before taking action to foreclose on the hotel. As a partner or member in any of these ventures, our subsidiary may be exposed to liability for claims asserted against the venture, and the venture may not have sufficient assets or insurance to discharge the liability.

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     Our subsidiaries may not legally be able to control decisions being made regarding these ventures and their hotels. In addition, the hotels in a venture may perform at levels below expectations, resulting in the potential for insolvency of the venture unless the partners or members provide additional funds. In some ventures, the partners or members may elect to make additional capital contributions. We may be faced with the choice of losing our investment in a venture or investing additional capital in it with no guaranty of receiving a return on that investment.

As a REIT, we are subject to specific tax laws and regulations, the violation of which could subject us to significant tax liabilities.

     The federal income tax laws governing REITs are complex. We have operated, and intend to continue to operate, in a manner that is intended to enable us to qualify as a REIT under the federal income tax laws. The REIT qualification requirements are extremely complicated, and interpretations of the federal income tax laws governing qualification as a REIT are limited. Accordingly, we cannot be certain that we have been, or will continue to be, successful in operating so as to qualify as a REIT. At any time, new laws, interpretations or court decisions may change the federal tax laws relating to, or the federal income tax consequences of, qualification as a REIT.

     Failure to make required distributions would subject us to tax. Each year, a REIT must pay out to its stockholders at least 90% of its taxable income, other than any net capital gain. To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible tax if the actual amount we pay out to our stockholders in a calendar year is less than the minimum amount specified under federal tax laws. FelCor’s only source of funds to make such distributions comes from distributions from FelCor LP. Accordingly, we may be required to borrow money or sell assets to enable us to pay out enough of our taxable income to satisfy the distribution requirements and to avoid corporate income tax and the 4% tax in a particular year.

     Failure to qualify as a REIT would subject FelCor to federal income tax. If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax at regular corporate rates on our taxable income for any such taxable year for which the statute of limitations remains open. We might need to borrow money or sell hotels in order to obtain the funds necessary to pay any such tax. If we cease to be a REIT, we no longer would be required to distribute most of our taxable income to our stockholders. Unless our failure to qualify as a REIT was excused under federal income tax laws, we could not re-elect REIT status until the fifth calendar year following the year in which we failed to qualify.

     A sale of assets acquired from Bristol Hotel Company, or Bristol, within ten years after the merger may result in us incurring corporate income tax. If we sell any asset acquired from Bristol within ten years after our 1998 merger with Bristol, and we recognize a taxable gain on the sale, we will be taxed at the highest corporate rate on an amount equal to the lesser of^:

• the amount of gain recognized at the time of the sale; or

• the amount of gain that we would have recognized if we had sold the asset at the time of the Bristol merger for its then fair market value.

     The sales of Bristol hotels that have been made to date have not resulted in any material amount of tax liability to us. If we are successful in selling the hotels that we have designated as sale hotels, the majority of which are Bristol hotels, we could incur corporate income tax with respect to the related built-in gain.

Departure of key personnel would deprive us of the institutional knowledge, expertise and leadership they provide.

     Our management includes the Chairman of the Board, currently Mr. Corcoran, the President and Chief Executive Officer, currently Mr. Smith, and four Executive Vice Presidents. The persons in these positions generally possess institutional knowledge about our organization and the hospitality or real estate industries, have significant expertise in their fields, and possess leadership skills that are important to our operations. The loss of any of our senior executive officers or Chairman of the Board could adversely affect our ability to execute our business strategy.

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We are subject to the risks of real estate ownership, which could increase our costs of operations.

     General Risks. Our investments in hotels are subject to the numerous risks generally associated with owning real estate, including among others:

• adverse changes in general or local economic or real estate market conditions;

• changes in zoning laws;

• increases in supply or competition;

• changes in traffic patterns and neighborhood characteristics;

• increases in assessed valuation and real estate tax rates;

• increases in the cost of property insurance;

• recent and future increases in the cost of wood, steel, concrete and other building materials, which increase the cost of renovations, expansions and new construction;

• costly governmental regulations and fiscal policies;

• the potential for uninsured or underinsured property losses;

• the potential that we are unable to meet all requirements under the Americans with Disabilities Act;

• the impact of environmental laws and regulations; and

• other circumstances beyond our control.

Moreover, real estate investments are relatively illiquid, and we may not be able to adjust our portfolio in a timely manner to respond to changes in economic and other conditions.

     Compliance with environmental laws may adversely affect our financial condition. Owners of real estate are subject to numerous federal, state, local and foreign environmental laws and regulations. Under these laws and regulations, a current or former owner of real estate may be liable for the costs of remediating hazardous substances found on its property, whether or not it was responsible for their presence. In addition, if an owner of real property arranges for the disposal of hazardous substances at another site, it may also be liable for the costs of remediating the disposal site, even if it did not own or operate the disposal site. Such liability may be imposed without regard to fault or the legality of a party’s conduct and may, in certain circumstances, be joint and several. A property owner may also be liable to third parties for personal injuries or property damage sustained as a result of its release of hazardous or toxic substances, including asbestos-containing materials, into the environment. Environmental laws and regulations may require us to incur substantial expenses and limit the use of our properties. We could have substantial liability for a failure to comply with applicable environmental laws and regulations, which may be enforced by the government or, in certain instances, by private parties. The existence of hazardous substances on a property can also adversely affect the value of, and the owner’s ability to use, sell or borrow against, the property.

     We cannot provide assurances that future or amended laws or regulations, or more stringent interpretations or enforcement of existing environmental requirements, will not impose any material environmental liability, or that the environmental condition or liability relating to the hotels will not be affected by new information or changed circumstances, by the condition of properties in the vicinity of such hotels, such as the presence of leaking underground storage tanks, or by the actions of unrelated third parties.

     Compliance with the Americans with Disabilities Act may adversely affect our financial condition. Under the Americans with Disabilities Act of 1990, all public accommodations, including hotels, are required to meet certain federal requirements for access and use by disabled persons. Various state and local jurisdictions have also adopted requirements relating to the accessibility of buildings to disabled persons. We believe that our hotels substantially comply with the requirements of the Americans with Disabilities Act and other applicable laws. However, a determination that the hotels are not in compliance with these laws could result in liability for both governmental fines and payments to private parties. If we were required to make unanticipated major

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modifications to our hotels to comply with the requirements of the Americans with Disabilities Act and other similar laws, it could adversely affect our ability to make distributions to our stockholders and to pay our obligations.

Our charter contains limitations on ownership and transfer of shares of our stock that could adversely affect attempted transfers of our capital stock.

     To maintain our status as a REIT, no more than 50% in value of our outstanding stock may be owned, actually or constructively, under the applicable tax rules, by five or fewer persons during the last half of any taxable year. Our charter prohibits, subject to some exceptions, any person from owning more than 9.9%, as determined in accordance with the Internal Revenue Code and the Exchange Act, of the number of outstanding shares of any class of our stock. Our charter also prohibits any transfer of our stock that would result in a violation of the 9.9% ownership limit, reduce the number of stockholders below 100 or otherwise result in our failure to qualify as a REIT. Any attempted transfer of shares in violation of the charter prohibitions will be void, and the intended transferee will not acquire any right in those shares. We have the right to take any lawful action that we believe is necessary or advisable to ensure compliance with these ownership and transfer restrictions and to preserve our status as a REIT, including refusing to recognize any transfer of stock in violation of our charter.

Some provisions in our charter and bylaws and Maryland law make a takeover of us more difficult.

     Ownership Limit. The ownership and transfer restrictions of our charter may have the effect of discouraging or preventing a third party from attempting to gain control of us without the approval of our board of directors. Accordingly, it is less likely that a change in control, even if beneficial to stockholders, could be effected without the approval of our board.

     Staggered Board. Our board of directors is divided into three classes. Directors in each class are elected for terms of three years. As a result, the ability of stockholders to effect a change in control of us through the election of new directors is limited by the inability of stockholders to elect a majority of our board at any particular meeting.

     Authority to Issue Additional Shares. Under our charter, our board of directors may issue up to an aggregate of 20 million shares of preferred stock without stockholder action. The preferred stock may be issued, in one or more series, with the preferences and other terms designated by our board that may delay or prevent a change in control of us, even if the change is in the best interests of stockholders. As of December 31, 2005, we had outstanding 12,880,475 shares of our Series A preferred stock and 67,980 shares, represented by 6,798,000 depositary shares, of our Series C preferred stock.

     Maryland Takeover Statutes. As a Maryland corporation, we are subject to various provisions under the Maryland General Corporation Law, including the Maryland Business Combination Act, that may have the effect of delaying or preventing a transaction or a change in control that might involve a premium price for the stock or otherwise be in the best interests of stockholders. Under the Maryland business combination statute, some “business combinations,” including some issuances of equity securities, between a Maryland corporation and an “interested stockholder,” which is any person who beneficially owns 10% or more of the voting power of the corporation’s shares, or an affiliate of that stockholder, are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Any of these business combinations must be approved by a stockholder vote meeting two separate super majority requirements, unless, among other conditions, the corporation’s common stockholders receive a minimum price, as defined in the statute, for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its common shares. Our charter currently provides that the Maryland Control Share Acquisition Act will not apply to any of our existing or future stock. That statute may deny voting rights to shares involved in an acquisition of one-tenth or more of the voting stock of a Maryland corporation. To the extent these or other laws are applicable to us, they may have the effect of delaying or preventing a change in control of us even though beneficial to our stockholders.

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Item 1B. Unresolved Staff Comments

     Not applicable.

Item 2. Properties ..

     We own a diversified portfolio of nationally branded, upscale and full-service hotels managed principally by the brand owners, which are Hilton, IHG, and Starwood. We are competitively positioned, with a strong management team, brand manager alliances, diversified upscale and full-service hotels, and value creation expertise.

     We consider our hotels, generally, to be high quality lodging properties with respect to desirability of location, size, facilities, physical condition, quality and variety of services offered in the markets in which they are located. Our hotels are designed to appeal to a broad range of hotel customers, including frequent business travelers, groups and conventions, as well as leisure travelers. The hotels generally feature comfortable, modern guest rooms, meeting and convention facilities and full-service restaurant and catering facilities. Our hotels included in continuing operations, are located in 28 states and Canada, and are situated primarily in major markets near airport, suburban or downtown areas. The following tables illustrate the distribution of our 125 consolidated hotels included in continuing operations at December 31, 2005.

								% of 2005 Hotel
Top Markets	Hotels		Rooms		% of Total Rooms			EBITDA(a)
Atlanta		10		3,059		8	%		9	%
Los Angeles Area		6		1,435		4			6
Dallas		12		3,585		10			5
Orlando		6		2,219		6			4
Boca Raton/Ft. Lauderdale		4		1,118		3			4
San Francisco Bay Area		8		2,690		7			4
Minneapolis		4		955		3			4
New Orleans		2		746		2			3
Phoenix		3		798		2			3
Philadelphia		3		1,174		3			3
Chicago		4		1,239		3			3
Washington, D.C.		1		437		1			3
San Diego		1		600		2			3
San Antonio		4		1,188		3			3
Northern New Jersey		3		757		2			3
Houston		4		1,403		4			3
Top Four States
California		19		5,536		15			17
Texas		25		7,343		20			13
Florida		15		4,937		14			13
Georgia		12		3,413		9			10
Location
Suburban		55		13,860		38			39
Urban		30		9,799		27			26
Airport		26		8,181		23			22
Resort		13		4,044		11			13
Highway		1		248		1			0
Segment
Upscale all-suite		66		16,332		45			58
Full service		34		11,519		32			22
Upscale		23		7,843		22			19
Limited service		2		438		1			1
Core Hotels		90		25,537		71			87
Non-Strategic Hotels		35		10,595		29			13

(a) A detailed description and computation of Hotel EBITDA is contained in the “Non-GAAP Financial Measures” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Annual Report on Form 10-K.

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     Our hotels have an average of approximately 290 rooms, with six hotels having 500 or more rooms. Although obsolescence arising from age and condition of facilities can adversely affect our hotels, we have spent approximately $500 million, in the aggregate, during the past six years to upgrade, renovate and/or redevelop our hotels to enhance or maintain their competitive position. We are committed to maintaining the high standards of our hotels. In 2005, we spent $112 million on consolidated hotel capital expenditures and spent 6.9% of our consolidated room revenue from continuing operations on maintenance and repair expense.

Hotel Brands

     A key part of our business strategy is to have our hotels managed by one of our brand-owner manager alliances. Our hotels are operated under some of the nation’s most recognized and respected hotel brands. We maintain relationships with our brand owners, who also manage substantially all of our hotels. We are the owner of the largest number of Embassy Suites Hotels and independently owned Doubletree-branded hotels. The following table illustrates the distribution of our hotels among these premier brands at December 31, 2005.

Brand Distribution

					% of			% of 2005
Brand	Hotels		Rooms		Total Rooms			Hotel EBITDA
Embassy Suites Hotels		54		13,653		38	%		51	%
Holiday Inn-branded		33		11,356		31			22
Sheraton-branded		10		3,269		9			11
Doubletree-branded		9		2,019		6			6
Crowne Plaza(a)		12		4,025		11			6
Other		7		1,810		5			4

(a) Five of these hotels were sold subsequent to December 31, 2005, six have been identified for sale and one is scheduled for conversion to another brand.

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     Hotel Operating Statistics

     The following tables set forth average historical occupied rooms, or Occupancy, ADR and RevPAR for the years ended December 31, 2005 and 2004, and the percentage changes therein between the periods presented for our consolidated hotels included in continuing operations:

Operating Statistics by Brand^(a)

	Occupancy (%)
	Year Ended December 31,
	2005		2004		% Variance
Embassy Suites Hotels		73.2		69.9		4.7
Holiday Inn-branded hotels		68.2		65.7		3.7
Sheraton-branded hotels		64.3		63.0		2.0
Doubletree-branded hotels		68.3		65.7		4.1
Crowne Plaza hotels		67.9		63.4		7.0
Other hotels		60.3		57.9		4.0
Total hotels		69.3		66.4		4.4

	ADR ($)
	Year Ended December 31,
	2005		2004		% Variance
Embassy Suites Hotels		122.84		117.48		4.6
Holiday Inn-branded hotels		89.07		83.25		7.0
Sheraton-branded hotels		109.88		98.38		11.7
Doubletree-branded hotels		111.78		105.39		6.1
Crowne Plaza hotels		100.03		93.83		6.6
Other hotels		97.94		91.79		6.7
Total hotels		107.18		100.94		6.2

			RevPAR ($)
	Year Ended December 31,
	2005		2004		% Variance
Embassy Suites Hotels		89.91		82.11		9.5
Holiday Inn-branded hotels		60.76		54.74		11.0
Sheraton-branded hotels		70.68		62.01		14.0
Doubletree-branded hotels		76.40		69.20		10.4
Crowne Plaza hotels		67.90		59.53		14.1
Other hotels		59.03		53.18		11.0
Total hotels		74.29		67.03		10.8

^(a) Hotels have been excluded in both the current and prior year for those months directly impacted by hurricanes.

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Operating Statistics for Our Top Markets^(a)

	Occupancy (%)
	Year Ended December 31,
	2005		2004		% Variance
Atlanta		72.8		68.5		6.3
Dallas		53.4		49.9		7.2
Los Angeles Area		74.0		71.5		3.5
Orlando		73.0		76.1		(4.1	)
Boca Raton/Ft. Lauderdale		77.1		78.6		(2.0	)
Minneapolis		70.7		68.0		4.1
Philadelphia		71.6		68.0		5.4
San Diego		81.6		80.9		0.8
Phoenix		72.4		69.7		4.0
San Antonio		75.5		70.0		7.9
Northern New Jersey		70.3		66.9		5.0
Chicago		73.0		69.7		4.6
San Francisco Bay Area		71.2		65.3		9.1
Houston		72.4		67.5		7.2
Washington, D.C.		74.3		73.3		1.4

	ADR ($)
	Year Ended December 31,
	2005		2004		% Variance
Atlanta		92.51		86.93		6.4
Dallas		95.31		90.98		4.8
Los Angeles Area		118.05		110.30		7.0
Orlando		85.06		77.32		10.0
Boca Raton/Ft. Lauderdale		129.89		113.85		14.1
Minneapolis		128.32		125.48		2.3
Philadelphia		118.52		105.99		11.8
San Diego		128.47		120.16		6.9
Phoenix		121.78		113.38		7.4
San Antonio		87.82		84.01		4.5
Northern New Jersey		138.67		135.32		2.5
Chicago		116.18		106.44		9.1
San Francisco Bay Area		115.72		112.44		2.9
Houston		74.31		68.87		7.9
Washington, D.C.		145.47		125.57		15.8

	RevPAR ($)
	Year Ended December 31,
	2005		2004		% Variance
Atlanta		67.33		59.50		13.2
Dallas		50.93		45.36		12.3
Los Angeles Area		87.32		78.84		10.8
Orlando		62.10		58.85		5.5
Boca Raton/Ft. Lauderdale		100.13		89.52		11.8
Minneapolis		90.77		85.30		6.4
Philadelphia		84.90		72.07		17.8
San Diego		104.86		97.26		7.8
Phoenix		88.21		78.97		11.7
San Antonio		66.29		58.79		12.8
Northern New Jersey		97.47		90.58		7.6
Chicago		84.75		74.22		14.2
San Francisco Bay Area		82.40		73.39		12.3
Houston		53.81		46.52		15.7
Washington, D.C.		108.09		91.99		17.5

^(a) Hotels have been excluded in both the current and prior year for those months directly impacted by hurricanes.

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  Embassy Suites Hotels

     Embassy Suites Hotels are upscale, full-service, all-suite hotels that cater to both business travelers and leisure guests. Part of the Hilton family of hotels, each Embassy Suites Hotel features convenient, value-added guest services and amenities including:

• spacious two-room suites featuring a separate living area, private bedroom and a mini-kitchen;

• two remote-controlled televisions, two telephones with voice mail and data ports, iron and ironing board, refrigerator, microwave oven, wet bar, and coffee maker in every suite;

• complimentary, full cooked-to-order breakfast every morning;

• complimentary beverages at two-hour managers’ receptions each evening, subject to local laws and regulations, in an atrium environment; and

• business centers equipped with fax and copy machines. Doubletree and Doubletree Guest Suites Hotels

     Doubletree hotels and Doubletree Guest Suites are, respectively, the full-service and all-suite hotel brands that provide all the conveniences travelers might expect, in a warm and welcoming environment. Part of the Hilton family, these brands offer comfortable accommodations, meeting facilities, exceptional dining options, health and fitness facilities, state-of-the art technology, and other amenities and services to both business and leisure travelers. These brands primarily serve major metropolitan areas and leisure destinations.

  Holiday Inn Branded Hotels

     The Holiday Inn brand is one of the most widely recognized lodging brands in the world, with nearly 1,500 properties worldwide. The brand offers today’s travelers dependability, friendly service and modern, attractive facilities at an excellent value. Holiday Inn hotels offer guests dependable services and amenities for both business and leisure travelers. Guests enjoy amenities such as restaurants and room service, relaxing lounges, swimming pools and fitness centers. Properties also feature guest rooms equipped with coffee makers, hair dryers and irons. Holiday Inn hotels also offer 24-hour business services and meeting facilities.

     The Holiday Inn Select hotels provide business travelers with special services and amenities to make their stay as comfortable and productive as possible. All Holiday Inn Select hotels feature meeting facilities equipped with video conferencing capabilities, on-site meeting specialists, 24-business services and professional support, and outstanding guest rooms equipped for business. Holiday Inn Select hotels are located throughout North and South America near business centers and airports.

  Crowne Plaza Hotels

     Crowne Plaza hotels is the ideal hotel choice for small- to mid-sized business meetings and offers personalized service and one point of contact for hassle-free, successful meetings as “The Place To Meet.” Crowne Plaza hotels provide comfortably appointed guest rooms, upscale dining, quality fitness facilities, concierge services and full-service meeting rooms. With more than 230 hotels and 64,000 guest rooms in over 40 countries, Crowne Plaza hotels are located in major urban centers, gateway cities and resort destinations worldwide.

  Sheraton and Sheraton Suites

     With more than 400 hotels and resorts in over 70 countries, Sheraton Hotels & Resorts is the largest of the Starwood Hotels & Resorts Worldwide, Inc. brands. Located in the world’s most sought-after cities and resort destinations, Sheraton hotels serve the needs of both business and leisure travelers with unique programs and unusual amenities designed to make travel as hassle-free and enjoyable as possible.

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     At all Sheraton Hotels & Resorts, travelers will find full-service dining facilities and room service, on-site fitness centers with a swimming pool, on-site business services, laundry/valet services and meeting facilities for groups of all sizes. Guestrooms worldwide include generous work desks, televisions with cable/satellite channels and a complimentary newspaper delivered to the door daily.

  Other Hotels

     As of December 31, 2005, seven of our hotels were operated under brands other than described above, as follows:

• Hampton Inn (2 hotels);

• Harvey Suites (1 hotel);

• Hilton Hotel (1 hotel);

• Hilton Suites (1 hotel);

• Staybridge Suites (1 hotel); and

• Westin (1 hotel).

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Hotel Portfolio

     The following table sets forth certain descriptive information regarding the 130 hotels in which we owned an interest at December 31, 2005:

	State	Rooms		% Owned(a)			Brand
Consolidated Continuing Operations Core Hotels
Birmingham(b)	AL		242				Embassy Suites Hotel
Phoenix — Biltmore(b)	AZ		232				Embassy Suites Hotel
Phoenix Crescent Hotel(b)	AZ		342				Sheraton
Phoenix Tempe(b)	AZ		224				Embassy Suites Hotel
Dana Point — Doheny Beach	CA		195				Doubletree Guest Suites
Los Angeles — Anaheim (Located near Disneyland Park)(b)	CA		222				Embassy Suites Hotel
Los Angeles — Covina/I-10(b)	CA		202		50	%	Embassy Suites Hotel
Los Angeles — El Segundo — International Airport — South	CA		349		97	%	Embassy Suites Hotel
Milpitas — Silicon Valley(b)	CA		266				Embassy Suites Hotel
Napa Valley(b)	CA		205				Embassy Suites Hotel
Oxnard — Mandalay Beach Resort & Conference Center	CA		248				Embassy Suites Hotel
Palm Desert — Palm Desert Resort	CA		198				Embassy Suites Hotel
San Diego — On the Bay	CA		600				Holiday Inn
San Francisco — Burlingame Airport	CA		340				Embassy Suites Hotel
San Francisco — South San Francisco Airport(b)	CA		312				Embassy Suites Hotel
San Francisco — Fisherman’s Wharf	CA		585				Holiday Inn
San Francisco — Union Square	CA		403				Crowne Plaza
San Rafael — Marin County/Conference Center(b)	CA		235		50	%	Embassy Suites Hotel
Santa Barbara — Goleta	CA		160				Holiday Inn
Santa Monica — Beach at the Pier	CA		132				Holiday Inn
Wilmington(b)	DE		244		90	%	Doubletree
Boca Raton(b)	FL		263				Embassy Suites Hotel
Cocoa Beach — Oceanfront	FL		500				Holiday Inn
Deerfield Beach — Boca Raton/Deerfield Beach Resort(b)	FL		244				Embassy Suites Hotel
Ft. Lauderdale — 17th Street(b)	FL		358				Embassy Suites Hotel
Ft. Lauderdale — Cypress Creek(b)	FL		253				Sheraton Suites
Jacksonville — Baymeadows(b)	FL		277				Embassy Suites Hotel
Miami — International Airport(b)	FL		316				Embassy Suites Hotel
Orlando — International Airport(b)	FL		288				Holiday Inn Select
Orlando — International Drive — Resort	FL		651				Holiday Inn
Orlando — International Drive South/Convention Center(b)	FL		244				Embassy Suites Hotel
Orlando— (North)	FL		277				Embassy Suites Hotel
Orlando — Walt Disney World Resort	FL		229				Doubletree Guest Suites
Tampa— On Tampa Bay(b)	FL		203				Doubletree Guest Suites
Atlanta — Airport(b)	GA		232				Embassy Suites Hotel
Atlanta — Buckhead(b)	GA		317				Embassy Suites Hotel
Atlanta — Galleria(b)	GA		278				Sheraton Suites
Atlanta — Gateway — Atlanta Airport	GA		395				Sheraton
Atlanta — Perimeter Center(b)	GA		241		50	%	Embassy Suites Hotel
Brunswick	GA		130				Embassy Suites Hotel

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	State	Rooms		% Owned(a)			Brand
Chicago — Lombard/Oak Brook(b)	IL		262		50	%	Embassy Suites Hotel
Chicago — Northshore/Deerfield (Northbrook) (b)	IL		237				Embassy Suites Hotel
Chicago O’Hare Airport(b)	IL		297				Sheraton Suites
Indianapolis — North(b)	IN		221		75	%	Embassy Suites Hotel
Kansas City — Overland Park(b)	KS		199		50	%	Embassy Suites Hotel
Lexington(b)	KY		155				Sheraton Suites
Lexington — Lexington Green(b)	KY		174				Hilton Suites
Baton Rouge(b)	LA		223				Embassy Suites Hotel
New Orleans(b)	LA		372				Embassy Suites Hotel
New Orleans — French Quarter	LA		374				Holiday Inn
Boston — Government Center	MA		303				Holiday Inn Select
Boston — Marlborough(b)	MA		229				Embassy Suites Hotel
Baltimore — BWI Airport(b)	MD		251		90	%	Embassy Suites Hotel
Troy — North (Auburn Hills) (b)	MI		251		90	%	Embassy Suites Hotel
Bloomington(b)	MN		219				Embassy Suites Hotel
Minneapolis — Airport(b)	MN		310				Embassy Suites Hotel
St. Paul — Downtown(b)	MN		210				Embassy Suites Hotel
Kansas City — Plaza(b)	MO		266		50	%	Embassy Suites Hotel
Charlotte(b)	NC		274		50	%	Embassy Suites Hotel
Charlotte SouthPark	NC		208				Doubletree Guest Suites
Raleigh(b)	NC		203				Doubletree Guest Suites
Raleigh — Crabtree(b)	NC		225		50	%	Embassy Suites Hotel
Parsippany(b)	NJ		274		50	%	Embassy Suites Hotel
Piscataway — Somerset(b)	NJ		222				Embassy Suites Hotel
Secaucus — Meadowlands(b)	NJ		261		50	%	Embassy Suites Hotel
Tulsa — I-44	OK		244				Embassy Suites Hotel
Philadelphia — Historic District	PA		364				Holiday Inn
Philadelphia — Society Hill(b)	PA		365				Sheraton
Pittsburgh — At University Center (Oakland)(b)	PA		251				Holiday Inn Select
Charleston — Mills House (Historic Downtown)(b)	SC		214				Holiday Inn
Myrtle Beach — At Kingston Plantation	SC		255				Embassy Suites Hotel
Myrtle Beach Resort	SC		385				Hilton
Nashville — Airport/Opryland Area	TN		296				Embassy Suites Hotel
Nashville — Opryland/Airport (Briley Parkway)	TN		382				Holiday Inn Select
Austin(b)	TX		189		90	%	Doubletree Guest Suites
Austin — North(b)	TX		260		50	%	Embassy Suites Hotel
Corpus Christi(b)	TX		150				Embassy Suites Hotel
Dallas — DFW International Airport-South(b)	TX		305				Embassy Suites Hotel
Dallas — Love Field(b)	TX		248				Embassy Suites Hotel
Dallas — Market Center	TX		244				Embassy Suites Hotel
Dallas — Park Central	TX		536		60	%	Westin
Dallas — Park Central Area	TX		279				Embassy Suites Hotel
Houston — Medical Center	TX		284				Holiday Inn & Suites
San Antonio — International Airport(b)	TX		261		50	%	Embassy Suites Hotel
San Antonio — International Airport(b)	TX		397				Holiday Inn Select
San Antonio — N.W. I-10(b)	TX		216		50	%	Embassy Suites Hotel
Burlington Hotel & Conference Center(b)	VT		309				Sheraton
Vienna — At Tysons Corner(b)	VA		437		50	%	Sheraton

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	State	Rooms		% Owned(a)			Brand
Canada
Toronto — Airport	Ontario		445				Holiday Inn Select
Toronto — Yorkdale	Ontario		370				Holiday Inn
Non-Strategic Hotels
Montgomery — East I-85	AL		210				Holiday Inn
Irvine — Orange County Airport (Newport Beach)(c)	CA		335				Crowne Plaza
Milpitas — San Jose-North (Milpitas — Silicon Valley)(c)	CA		305				Crowne Plaza
Pleasanton (San Ramon Area)	CA		244				Crowne Plaza
Denver — Aurora(b)	CO		248		90	%	Doubletree
Stamford	CT		380				Holiday Inn Select
Miami — International Airport (LeJeune Center)	FL		304				Crowne Plaza
Orlando— Nikki Bird (Maingate — Walt Disney World Area)	FL		530				Holiday Inn
Atlanta — Airport(c)	GA		378				Crowne Plaza
Atlanta — Airport-North	GA		493				Holiday Inn
Atlanta — Perimeter — Dunwoody	GA		250				Holiday Inn Select
Atlanta — Powers Ferry(c)	GA		296				Crowne Plaza
Atlanta — South (I-75 & U.S. 41)	GA		180				Holiday Inn
Columbus — North (I-185 at Peachtree Mall)	GA		224				Holiday Inn
Chicago — The Allerton	IL		443				Crowne Plaza
Minneapolis — Downtown	MN		216				Embassy Suites Hotel
Kansas City — NE I-435 North (At Worlds of Fun)	MO		165				Holiday Inn
Omaha — Central(c)	NE		129				Hampton Inn
Omaha — Central (I-80)	NE		383				Holiday Inn
Omaha — Old Mill	NE		223				Crowne Plaza
Philadelphia — Center City	PA		445				Crowne Plaza
Knoxville — Central At Papermill Road	TN		240				Holiday Inn
Amarillo — I-40	TX		248				Holiday Inn
Austin — Town Lake (Downtown Area)	TX		320				Holiday Inn
Dallas(c)	TX		295				Crowne Plaza Suites
Dallas — At Campbell Centre	TX		300		90	%	Doubletree
Dallas — DFW International Airport-North	TX		164				Harvey Suites
Dallas — Market Center	TX		354				Crowne Plaza
Dallas — Park Central	TX		438		60	%	Sheraton
Dallas — Park Central(c)	TX		114				Staybridge Suites
Dallas — West End/Convention Center	TX		309				Hampton Inn
Houston — Greenway Plaza Area	TX		355				Holiday Inn Select
Houston — I-10 West & Hwy. 6 (Park 10 Area)(c)	TX		349				Holiday Inn Select
Houston — Intercontinental Airport	TX		415				Holiday Inn
San Antonio — Downtown (Market Square)	TX		314				Holiday Inn
Unconsolidated Operations
Hays(b)	KS		114		50	%	Hampton Inn
Hays(b)	KS		191		50	%	Holiday Inn
Salina(b)	KS		192		50	%	Holiday Inn
Salina — I-70(b)	KS		93		50	%	Holiday Inn Express & Suites
New Orleans — Chateau LeMoyne (In French Quarter/Historic Area)(b)	LA		171		50	%	Holiday Inn

(a)	We own 100% of the real estate interests unless otherwise noted.
(b)	This hotel is encumbered by mortgage debt or capital lease obligation.
(c)	This hotel was sold in January 2006.

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Management Agreements

     The management agreements governing the operation of 68 of our hotels that are (i) managed by IHG or Starwood under brands owned by them, or (ii) managed by Hilton under the Doubletree or Hilton brands, contain the right and license to operate the hotels under the specified brands. No separate franchise agreements or payment of separate franchise fees are required for the operation of these hotels.

     Management Fees and Performance Standards. Under the management agreements with IHG for 45 of our hotels operated under Holiday Inn and Crowne Plaza names, the TRS lessees generally pay IHG a basic management fee for each hotel equal to 2% of total revenue of the hotel plus 5% of the room revenue of the hotel (which is the equivalent of a franchise fee) for each fiscal month during the initial term and any renewal term. The minimum basic management fees owed under the other management agreements are generally as follows:

• Embassy Suites Hotels (54 hotels) — 2% of the hotel’s total revenue per month;

• Sheraton — Westin (11 hotels) — 2% of the hotel’s total revenue per month; and

• Doubletree (9 hotels) — between 2% and 3% of the hotel’s total revenue per month.

     The IHG management agreements, as amended in January 2006, with regard to the 17 core IHG-managed hotels require the TRS lessees to pay an incentive management fee on a hotel by hotel basis measured as a percentage of hotel net operating income, as defined in the agreements. These incentive management fees for each hotel are subordinate to an 8.5% return on our investment basis in the hotel and limited to 2.5% of the hotel’s revenues. For the remainder of the IHG-managed hotels, the TRS lessees are required to pay an incentive management fee based on the performance of these hotels, considered in the aggregate. The incentive management fee is computed as a percentage of hotel profits in excess of specified returns to us, based on our investment basis in the managed hotels.

     The management agreements with the other managers generally provide for an incentive management fee based on a percentage of the TRS lessee’s net income before overhead up to an additional 2% of revenues, on a hotel by hotel basis, or, an incentive management fee measured as a percentage of cash flow, subordinate to a 12% return on our investment basis in the hotel, subject to the same 2% of revenues maximum. The management fees we paid with respect to hotels in continuing operations during each of the past three years are as follows (in thousands):

	Management Fees Paid During
	Year Ended December 31,
Brand	2005		2004		2003
Holiday Inn	$	18,799	$	16,931	$	16,086
Crowne Plaza		7,571		6,695		6,366
Embassy Suites		10,199		9,617		9,815
Sheraton — Westin		4,877		4,721		4,243
Doubletree		1,933		1,770		1,707
Other		77		738		940
Total	$	43,456	$	40,472	$	39,157

     Term and Termination. The management agreements with IHG terminate in 2007 for 31 hotels and 2025 for 17 hotels. The management agreements with the other managers generally have initial terms of between 5 and 20 years, and the agreements are generally renewable beyond the initial term for a period or periods of between 5 and 10 years only upon the mutual written agreement of the parties. The management agreements covering our hotels expire, subject to any renewal rights, as follows:

	Number of Management Agreements Expiring in
Brand	2006		2007		2008		2009		2010		Thereafter
Embassy Suites		19		9		4		11		9		2
Sheraton — Westin		0		0		1		0		0		10
Doubletree		0		3		2		0		0		4
Holiday Inn		0		16		0		0		0		17
Crowne Plaza		0		12		0		0		0		0
Other	1		3		0		0		0		2
Total	20		43		7		11		9		35

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     The management agreements are generally terminable upon the occurrence of standard events of default or if the hotel subject to the agreement fails to meet certain financial expectations. Upon termination by either party for any reason, the TRSs generally will pay all amounts due and owing under the management agreement through the effective date of termination. If an agreement is terminated as a result of a default by us, we may also be liable for damages suffered by the manager. Under the IHG management agreements, if we sell certain core hotels, we may be required to pay IHG a monthly replacement management fee equal to the existing fee structure for up to one year and liquidated damages or reinvest the sale proceeds into another hotel to be branded under an IHG brand. In addition, if a TRS breaches the agreement, resulting in a default and its termination, or otherwise causes or suffers a termination for any reason other than an event of default by IHG, the TRS may be liable for liquidated damages under the terms of the management agreement.

     Assignment. Generally, neither party to the management agreements has the right to sell, assign or transfer the agreements to an unaffiliated third party without the prior written consent of the other party to the agreement, which consent shall not be unreasonably withheld. A change in control of either party will generally require the other’s consent, which may not be unreasonably withheld.

Franchise Agreements

     Other than our 68 hotels, whose license to use a brand name are contained in the management agreement governing their operations, each of our remaining hotels operates under a separate franchise or license agreement. Of our 57 hotels that are operated under a separate franchise or license agreement, 54 are operated under the Embassy Suites Hotels brand.

     The Embassy Suites Hotels franchise license agreements to which we are a party grant us the right to the use of the Embassy Suites Hotels name, system and marks with respect to specified hotels and establish various management, operational, record-keeping, accounting, reporting and marketing standards and procedures with which the licensed hotel must comply. In addition, the franchisor establishes requirements for the quality and condition of the hotel and its furnishings, furniture and equipment, and we are obligated to expend such funds as may be required to maintain the hotel in compliance with those requirements.

     Typically, our Embassy Suites Hotels franchise license agreements provide for payment to the franchisor of a license fee or royalty of 4% of suite revenues. In addition, we pay approximately 3.5% of suite revenues as marketing and reservation system contributions for the systemwide benefit of Embassy Suites Hotels. The license fees we paid with respect to hotels in continuing operations, during each of the past three years are as follows (in thousands):

	License Fees Paid During
	Year Ended December 31,
Brand	2005		2004		2003
Embassy Suites Hotels	$	17,400	$	16,340	$	15,658
Other		492		493		529
Total	$	17,892	$	16,833	$	16,187

     Our typical Embassy Suites Hotels franchise license agreement provides for a term of 20 years, but we have a right to terminate the license for any particular hotel on the 10th or 15th anniversary of the agreement upon payment by us of an amount equal to the fees paid to the franchisor with respect to that hotel during the two preceding years. The agreements provide us with no renewal or extension rights. The agreements are not assignable by us and a change in control of the franchisee will constitute a default on our part. In the event we breach one of these agreements, in addition to losing the right to use the Embassy Suites Hotels name for the operation of the applicable hotel, we may be liable, under certain circumstances, for liquidated damages equal to the fees paid to the franchisor with respect to that hotel during the three preceding years. Franchise license agreements covering 13 of our Embassy Suites Hotels expire within the next five years. Franchise license agreements covering our hotels expire as follows:

	Number of Franchise Agreements Expiring in
Brand	2006		2007		2008		2009		2010		Thereafter
Embassy Suites Hotels		0		7		1		4		1		41
Other(1)	2		0		0		0		0		1
Total	2		7		1		4		1		42

⁽¹⁾ Included in “Other” are the following brands: Hampton Inn (2 hotels); and Hilton Suites (1 hotel).

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Item 3. Legal Proceedings

     At December 31, 2005, there was no litigation pending or known to be threatened against us or affecting any of our hotels, other than claims arising in the ordinary course of business or which are not considered to be material. Furthermore, most of these ordinary course of business claims are substantially covered by insurance. We do not believe that any claims known to us, individually or in the aggregate, will have a material adverse effect on us.

Item 4. Submission of Matters to a Vote of Security Holders

     Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Purchases of Equity Securities

Market Information

     Our common stock is traded on the New York Stock Exchange under the symbol “FCH.” The following table sets forth for the indicated periods the high and low sale prices for our common stock, as traded on that exchange.

	High		Low
2005
First quarter	$	14.99	$	12.20
Second quarter		14.75		11.78
Third quarter		16.40		14.20
Fourth quarter		17.59		13.27
2004
First quarter	$	12.60	$	9.92
Second quarter		12.30		9.50
Third quarter		12.35		10.50
Fourth quarter		14.97		10.92

Stockholder Information

     At March 1, 2006, we had approximately 320 holders of record of our common stock and approximately 50 holders of record of our Series A preferred stock (which is convertible into common stock). It is estimated that there were approximately 8,500 beneficial owners, in the aggregate, of our common stock and Series A preferred stock at that date.

     IN ORDER TO COMPLY WITH CERTAIN REQUIREMENTS RELATED TO OUR QUALIFICATION AS A REIT, OUR CHARTER LIMITS, SUBJECT TO CERTAIN EXCEPTIONS, THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE OWNED BY ANY SINGLE PERSON OR AFFILIATED GROUP TO 9.9% OF THE OUTSTANDING COMMON STOCK.

Distribution Information

     In the fourth quarter of 2005, we resumed paying a common dividend, with a $0.15 per share dividend paid on December 1, 2005. We did not declare any dividends on FelCor’s common stock in 2004. We have continued to pay the full accrued dividends on our outstanding preferred stock.

     Our current 2006 operating plan contemplates the continued payment of common and preferred stock dividends, assuming that our announced expectations of 2006 operating performance are met. This operating plan, and our policy regarding dividends, may change, depending upon our actual results of operations, our continued ability to meet the incurrence test under our outstanding senior notes, our success in selling non-strategic hotels and other factors. We currently expect our board of directors to consider the amount, if any, to be distributed on a quarterly basis in preferred and common dividends, based upon the actual operating results of that quarter, economic conditions and other operating trends. Accordingly, future distributions, if any, paid by us will be at the discretion of our board of directors and will depend on our actual cash flow, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as our board of directors deems relevant.

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     In order to maintain our qualification as a REIT, we must make annual distributions to our stockholders of at least 90% of our taxable income (which does not include net capital gains). For the year ended December 31, 2005, our common distribution represented approximately 81% return of capital. For the year ended December 31 2004, distributions to preferred stockholders satisfied our annual distribution requirements. Under certain circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet REIT distribution requirements. In that event, we presently would expect to borrow funds, or to sell assets for cash, to the extent necessary to obtain cash sufficient to make the distributions required to retain our qualification as a REIT for federal income tax purposes.

Issuances of Unregistered Securities

     All issuances of unregistered securities have been previously reported.

Equity Compensation Plan Information

     The following table sets forth as of December 31, 2005, information concerning our equity compensation plans, including the number of shares issuable and available for issuances under our plans, options, warrants and rights; weighted average exercise price of outstanding options, warrants and rights; and the number of securities remaining available for future issuance.

Equity Compensation Plan Information

	Number of shares to be
	issued upon		Weighted average
	exercise of		exercise price of		Number of shares
	outstanding options,		outstanding options,		remaining available
Plan category	warrants and rights		warrants and rights		for future issuance
Equity compensation plans approved by security holders:
Stock Options		1,465,257	$	23.41
Unvested Restricted Stock		753,468
Total		2,218,725				990,138

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Item 6. Selected Financial Data

     The following tables set forth selected financial data for us for the years ended December 31, 2005, 2004, 2003, 2002, and 2001 that has been derived from our audited financial statements and the notes thereto. This data should be read in conjunction with Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the consolidated financial statements and notes thereto, appearing elsewhere in this Annual Report on Form 10-K.

SELECTED FINANCIAL DATA
(in thousands, except per share data)

	Year Ended December 31,
	2005			2004			2003			2002(1)			2001
Statement of Operations Data:(2)
Total revenues	$	1,212,179		$	1,115,874		$	1,048,364		$	1,094,002		$	1,026,616
Net loss from continuing operations(3)		(262,906	)		(81,534	)		(148,326	)		(35,051	)		(50,800	)
Diluted earnings per share:
Net loss from continuing operations applicable to common stockholders	$	(5.20	)	$	(1.98	)	$	(2.99	)	$	(1.33	)	$	(1.43	)
Other Data:
Cash distributions declared per common share(4)	$	0.15		$	—		$	—		$	0.60		$	1.70
Funds From Operations (5)		(191,139	)		(30,608	)		(207,462	)		(60,018	)		105,492
EBITDA(5)		12,475			184,950			(532	)		150,024			353,435
Cash flows provided by operating activities		111,482			33,281			52,914			106,037			144,766
Balance Sheet Data (at end of period):
Total assets	$	2,919,093		$	3,317,658		$	3,590,893		$	3,780,363		$	4,079,485
Total debt, net of discount		1,675,280			1,767,122			2,037,355			1,877,134			1,938,408

(1)	Includes hotel revenue and expenses with respect to 88 hotels that were leased to IHG prior to July 1, 2001. Prior to acquisition of these leases, our revenues with respect to these 88 hotels were comprised mainly of percentage lease revenues. Accordingly, revenues, expenses and operating results for the year ended December 31, 2002, are not directly comparable to the same period in 2001.
(2)	All years prior to 2005 have been adjusted to reflect those hotels disposed of in 2005 or prior as discontinued operations.
(3)	Included in net loss from continuing operations are the following amounts (in thousands):

	Years Ended December 31,
	2005			2004			2003			2002			2001
Impairment loss	$	(263,091	)	$	(3,494	)	$	(74,160	)	$	(3,902	)	$	(3,022	)
Minority interest share of impairment loss		8,976			—			1,770			—			—
Charge-off of deferred debt costs		(2,659	)		(6,960	)		(2,834	)		(3,222	)		(1,270	)
Loss on early extinguishment of debt		(11,921	)		(44,216	)		—			—			—
Abandoned projects		265			—			—			(1,663	)		(837	)
Asset disposition costs		—			—			—			—			(36,604	)
Merger termination costs		—			—			—			—			(19,919	)
Merger related financing costs		—			—			—			—			(5,486	)
Gain (loss) on swap termination		—			1,005			—			—			(7,049	)
Gain on sale of assets		733			1,167			284			5,861			2,935

(4)

Commencing with the fourth quarter 2005, we reinstituted a common dividend. We had declared a quarterly common dividend on our common stock from our inception through 2002, but as a result of the uncertain geopolitical environment and soft business climate, together with the decline in margins resulting from continued declines in our portfolio’s average daily rate, our board of directors suspended the payment of dividends on our common stock in 2003 and 2004. We have, however, continued to pay the full accrued dividends on our outstanding preferred stock.

(5)

A more detailed description and computation of FFO and EBITDA is contained in the “Non-GAAP Financial Measures” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7.

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Consistent with SEC guidance, FFO has not been adjusted for the following amounts included in net loss (in thousands):

	Year Ended December 31,
	2005			2004			2003			2002			2001
Impairment loss, continuing operations	$	(263,091	)	$	(3,494	)	$	(74,160	)	$	(3,902	)	$	(3,022	)
Impairment loss, discontinued operations		(3,660	)		(34,795	)		(171,349	)		(153,603	)		(3,978	)
Minority interest share of impairment loss		8,976			—			1,770			—			—
Charge-off of deferred debt costs		(2,659	)		(6,960	)		(2,834	)		(3,222	)		(1,270	)
Gain (loss) on early extinguishment of debt		(8,641	)		(44,216	)		1,611			—			—
Gain (loss) on swap termination		—			1,005			—			—			(7,049	)
Asset disposition costs		(1,300	)		(4,900	)		—			—			—
Abandoned projects		(265	)		—			—			(1,663	)		(837	)
Lease acquisition costs		—			—			—			—			(36,604	)
Merger termination costs		—			—			—			—			(19,919	)
Merger related financing costs		—			—			—			—			(5,486	)
Issuance costs of redeemed preferred stock		(6,522	)		—			—			—			—

Consistent with SEC guidance, EBITDA has not been adjusted for the following amounts included in net loss (in thousands):

	Years Ended December 31,
	2005			2004			2003			2002			2001
Impairment loss, continuing operations	$	(263,091	)	$	(3,494	)	$	(74,160	)	$	(3,902	)	$	(3,022	)
Impairment loss, discontinued operations		(3,660	)		(34,795	)		(171,349	)		(153,603	)		(3,978	)
Minority interest share of impairment loss		8,976			—			1,770			—			—
Charge-off of deferred debt costs		(2,659	)		(6,960	)		(2,834	)		(3,222	)		(1,270	)
Gain (loss) on early extinguishment of debt		(8,641	)		(44,216	)		1,611			—			—
Gain (loss) on swap termination		—			1,005			—			—			(7,049	)
Asset disposition costs		(1,300	)		(4,900	)		—			—			—
Abandoned projects		(265	)		—			—			(1,663	)		(837	)
Gain on sale of depreciable assets		12,124			19,422			2,668			5,861			—

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

     We completed 2005 with a 10.8% increase in our hotel revenue per available room, or RevPAR, compared to 2004. This was the second year of RevPAR increases following an unprecedented consecutive three year decline in RevPAR that we had experienced prior to 2004. The fundamentals of the lodging industry appear to be strong, as evidenced by the national trend of increased RevPAR and increases in average daily room rates, or ADR, which represent a major portion of the increase in RevPAR. The increase in ADR also resulted in a 116 basis point increase in Hotel earnings before interest, taxes, depreciation and amortization, or EBITDA, margin at our hotels.

     During 2005, we reduced our debt outstanding by $92 million with the proceeds of asset sales, extinguishment of debt through the transfer of hotels to their non-recourse mortgage holder and the use of cash on hand. Through the issuance of $169 million of new 8% Series C redeemable preferred stock, we also retired all $169 million of our 9% Series B redeemable preferred stock.

     Of the 26 hotels previously identified for sale at December 31, 2004, we sold 11 during 2005 for gross sale proceeds of $79 million and surrendered eight limited service hotels, owned by a consolidated joint venture, to their non-recourse mortgage holder for extinguishment of $49 million in debt.

     Under the management agreements entered into with InterContinental Hotels Group, or IHG, in 2001 and amended in 2004, we were obligated to reinvest the net proceeds from the sale of IHG-managed hotels in other IHG-managed hotels or pay substantial liquidated damages to IHG. This potential exposure to liquidated damages made it impractical to sell IHG-managed hotels. In January 2006, we executed an agreement modifying our management agreements covering our hotels managed by IHG. This agreement eliminated any potential liquidated damages and reinvestment requirement with respect to hotels previously sold, IHG-managed hotels now identified for sale and one Crowne Plaza hotel to be converted to another brand. We are now able to sell hotels that we have determined to be non-strategic, which include all of our Holiday Inn hotels in secondary and tertiary markets and hotels in markets where we have an excess concentration of hotels, such as Texas and Atlanta, Georgia. As a result of our decision to seek to sell certain hotels, we determined that it was more likely than not that they would be sold significantly before the end of their previously estimated useful life, triggering an impairment charge of $263 million, which was recorded as of December 31, 2005 with respect to 25 IHG-managed hotels, three hotels not managed by IHG and two IHG-managed hotels that we had previously designated as non-strategic. At December 31, 2005, we had 35 hotels designated as non-strategic, substantially all of which we intend to sell in 2006 and 2007. Eight of these hotels were sold in January 2006.

Financial Comparison (in thousands, except RevPAR, Hotel EBITDA margin and percentage change)

	Years Ended December 31,
							% Change						% Change
	2005			2004			2005-2004			2003			2004-2003
RevPAR	$	74.29		$	67.03			10.8	%	$	63.81			5.0	%
Hotel EBITDA(1)		305,380			268,079			13.9	%		248,725			7.8	%
Hotel EBITDA margin(1)		25.2	%		24.1	%		4.6	%		23.7	%		1.7	%
Net loss from continuing operations(2)		(262,906	)		(81,534	)		222.4	%		(148,326	)		(45.0	)%
Funds From Operations (“FFO”)(1) (3)		(191,139	)		(30,608	)		524.5	%		(207,462	)		(85.2	)%
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)(1) (4)		12,475			184,950			(93.3	)%		(532	)		(348.7	)%

(1) Included in the Financial Comparison are non-GAAP financial measures, including Hotel EBITDA, Hotel EBITDA margin, FFO and EBITDA. Further discussion and a detailed reconciliation of these non-GAAP financial measures to our financial statements are found elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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(2) Included in net loss from continuing operations are the following amounts (in thousands):

	Years Ended December 31,
	2005			2004			2003
Impairment loss	$	(263,091	)	$	(3,494	)	$	(74,160	)
Minority interest share of impairment loss		8,976			—			1,770
Loss on early extinguishment of debt		(11,921	)		(44,216	)		—
Charge-off of deferred debt costs		(2,659	)		(6,960	)		(2,834	)
Abandoned projects		265			—			—
Gain on swap termination		—			1,005			—
Gain on sale of assets		733			1,167			284

(3) Consistent with SEC guidance on non-GAAP financial measures, FFO has not been adjusted for the following amounts included in net loss (in thousands, except per share amounts).

	2005						2004						2003
				Per Share						Per Share						Per Share
	Dollars			Amount			Dollars			Amount			Dollars			Amount
Impairment loss, continuing operations	$	(263,091	)	$	(4.23	)	$	(3,494	)	$	(0.06	)	$	(74,160	)	$	(1.20	)
Impairment loss, discontinued operations		(3,660	)		(0.06	)		(34,795	)		(0.56	)		(171,349	)		(2.77	)
Minority interest share of impairment loss		8,976			0.14			—			—			1,770			0.03
Charge-off of deferred debt costs		(2,659	)		(0.04	)		(6,960	)		(0.10	)		(2,834	)		(0.05	)
Gain (loss) on early extinguishment of debt		(8,641	)		(0.14	)		(44,216	)		(0.71	)		1,611			0.03
Asset disposition costs		(1,300	)		(0.02	)		(4,900	)		(0.08	)		—			—
Abandoned projects		(265	)		—			—			—			—			—
Gain on swap termination		—			—			1,005			0.02			—			—

(4) Consistent with SEC guidance on non-GAAP financial measures, EBITDA has not been adjusted for the following amounts included in net loss (in thousands).

	Years Ended December 31,
	2005			2004			2003
Impairment loss, continuing operations	$	(263,091	)	$	(3,494	)	$	(74,160	)
Impairment loss, discontinued operations		(3,660	)		(34,795	)		(171,349	)
Minority interest share of impairment loss		8,976			—			1,770
Charge off of deferred debt costs		(2,659	)		(6,960	)		(2,834	)
Gain (loss) on early extinguishment of debt		(8,641	)		(44,216	)		1,611
Gain on swap termination		—			1,005			—
Asset disposition costs		(1,300	)		(4,900	)		—
Abandoned projects		(265	)		—			—
Gain on sale of assets		12,124			19,422			2,668

RevPAR and Hotel Operating Margin

     In 2005, we had our second consecutive year-over-year increase in RevPAR. For the year, our RevPAR increased 10.8% from $67.03 to $74.27. The increase in RevPAR consisted of a 4.4% increase in occupancy to 69.3% and a 6.2% increase in ADR. We attribute the increase in RevPAR largely to a nationwide lodging industry recovery and improvements from some major capital projects completed in 2004 and 2005. In 2005, a significant portion of the improvement in RevPAR came from an increase in ADR. We expect this trend of increasing RevPAR to continue in 2006 and further believe that improvements in ADR will continue to be a significant portion of the growth in RevPAR. This is significant to the lodging industry, because increases in room rate generally result in increases in Hotel EBITDA margins. We have seen a firming of Hotel EBITDA margin at our hotels, which improved from 24.1% in 2004 to 25.2% in 2005, and we expect to see further improvements in 2006 as ADR continues to be a significant factor in RevPAR improvement. We are focused on working with our brand managers to control the expense creep that generally occurs during the early years of a lodging industry recovery, to continue to improve our Hotel EBITDA margins.

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Sale of Non-Strategic Hotels

     Under the management agreements entered into with IHG in 2001 and amended in 2004, we were obligated to reinvest the net proceeds from the sale of IHG-managed hotels in other IHG-managed hotels or pay substantial liquidated damages to IHG. This potential exposure to liquidated damages made it impractical to sell IHG-managed hotels. In January 2006, we executed an agreement modifying our management agreements covering our hotels managed by IHG. This agreement eliminates any potential liquidated damages or reinvestment requirement with respect to hotels previously sold, IHG-managed hotels now identified for sale and one Crowne Plaza hotel to be converted to another brand. We can now seek to sell hotels that we have deemed non-strategic, which include all of our Holiday Inn hotels in secondary and tertiary markets and hotels in markets where we have an excess concentration of hotels, such as Texas and Atlanta, Georgia.

     We began negotiating the amendment to our IHG management agreements in 2005. In October 2005, our Audit Committee conditionally approved an impairment charge on certain hotels, if and only if a definitive agreement with IHG was reached. We provided an update on the negotiations with IHG to our Executive Committee of the Board of Directors in December 2005, and at that time concluded that if a definitive agreement could be finalized, a material impairment charge would be necessary. We finalized the definitive agreement with IHG in January 2006, which enables us to sell certain IHG-managed hotels without liquidated damages or reinvestment requirements and removed the liquidated damage and reinvestment requirement for hotels already sold. As a result of the agreement, we determined that it was more likely than not that certain hotels would be sold significantly before the end of their previously estimated useful life, triggering an impairment charge of $263 million, which was recorded as of December 31, 2005 with respect to 25 IHG-managed hotels, three hotels not managed by IHG and two IHG-managed hotels that we had previously designated as non-strategic.

     In connection with this agreement with IHG, seven hotels were sold to Hospitality Properties Trust, or HPT, in January 2006, for $160 million. These hotels, which will continue to be managed by IHG, consisted of five Crowne Plaza hotels, one Holiday Inn hotel and one Staybridge Suites hotel. Six of these hotels are located in markets where we had an excess concentration of hotels.

     When testing for recoverability we generally use historical and projected cash flows over the expected hold period. When determining fair value for purposes of determining impairment we use a combination of historical and projected cash flows and other available market information, such as recent sales prices for similar assets in specific markets. The estimated cash flows used to test for recoverability are undiscounted while the cash flows used for determining fair values are discounted using a reasonable capitalization rate, or as earlier noted based on the local market conditions using recent sales of similar assets.

     At December 31, 2005, we had 35 hotels designated as non-strategic, substantially all of which we intend to sell in 2006 and 2007. Eight of these hotels were sold in January 2006. These hotels are located primarily in secondary and tertiary markets, and include hotels in Texas and Atlanta, Georgia, where we had an excess concentration of hotels. Our repositioning strategy includes:

• The sale of seven hotels previously identified as non-strategic, including five IHG-managed hotels, one of which was sold in January 2006.

• The sale of 25 additional IHG-managed hotels, including the seven hotels sold to HPT in January 2006.

• The sale of three additional hotels not managed by IHG.

• Total proceeds from hotel sales are expected to be between $485 and $535 million representing an EBITDA multiple of between 12 and 13 times 2005 Hotel EBITDA.

• The Crowne Plaza in San Francisco at Union Square will be converted to another brand by the end of 2006.

     Although the 35 non-strategic hotels represent 29% of our rooms at December 31, 2005, they only represent 14% of our Hotel EBITDA. The hotels to be sold have significantly lower RevPAR and Hotel EBITDA margins than our 90 core hotels. Following the sale of the 35 non-strategic hotels, we will have significantly lower exposure to markets with low barriers to entry, such as Atlanta, Dallas, Houston and Omaha, and will be more geographically diverse with no market contributing more than 6% of EBITDA.

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     Refined Investment Strategy

          The completion of the agreement with IHG enables us to sell our non-strategic hotels and use the proceeds to reduce debt and invest in high return-on investment capital projects at our remaining core hotels. We currently plan on spending between $175 million and $200 million on hotel capital improvements in 2006. As we focus on improving our core portfolio through renovations and repositionings, we believe our portfolio will be positioned to have above average growth. Any future acquisition efforts will be focused on higher quality hotels in markets with significant barriers to entry, such as central business districts and resort locations. Hotel brand and market segment will be secondary concerns when we are considering investment opportunities.

Results of Operations

Comparison of the Years Ended December 31, 2005 and 2004

          For the year ended December 31, 2005, we recorded a loss applicable to common stockholders of $298 million, compared to a loss of $135 million in 2004. We had a loss from continuing operations of $263 million compared to a prior year loss of $82 million. Contributing to 2005 loss from continuing operations were impairment charges of $263 million, $15 million related to the early retirement of debt and $6 million in losses from hurricanes.

          Total revenue from continuing operations increased $96 million, or 8.7%, compared to the prior year. The increase in revenue is principally attributed to a 10.8% increase in RevPAR compared to 2004. The increase in RevPAR came from increases in both ADR and occupancy and represents increases in all of our top markets. The lodging industry nationwide continues to experience increased demand, but there have been only limited increases in room supply leading to strong improvements in RevPAR in most markets.

          In 2005, 57% of our increased RevPAR was attributed to increases in ADR. Increased ADR typically improves Hotel EBITDA margin because the hotels are receiving more revenue for each guest. For 2005, our Hotel EBITDA margin improved 116 basis points over 2004.

          Total operating expenses increased by $75 million but decreased as a percentage of total revenue from 91.4% to 90.3%. Hotel departmental expenses, which consist of rooms expense, food and beverage expense, and other operating departments, increased $19 million compared to 2004, but decreased as a percentage of total revenue from 35.9% to 34.6%. These costs are directly related to the number of hotel guests and should improve as a percentage of total revenue as rates increase.

          Other property operating costs, which consist of general and administrative costs, marketing costs, repairs and maintenance, utilities expense, and other costs, increased $29 million compared to 2004, and increased as a percentage of total revenue from 29.0% to 29.1%. The slight increase as a percentage of total revenue was entirely related to increased utility expenses, and other costs remained constant or decreased as a percent of total revenue.

          Management and franchise fees increased $4 million compared to 2004 and remained essentially the same as a percentage of total revenue.

          Taxes, insurance and lease expense increased $13 million and increased as a percentage of total revenue from 9.8% to 10.1%. The increase as a percentage of total revenue was from property tax expense, percentage lease expense and general liability insurance. Property tax expenses increased in 2005 largely because of credits for prior year tax appeals that were recorded in 2004. Percentage lease expense is computed as a percentage of hotel revenues in excess of a base rent. Therefore, as revenues increase, percentage rent expense increases at a faster rate. General liability insurance reflects the nationwide trend of increases in rates.

          Corporate expenses increased by $2 million compared to 2004 and remained essentially flat as a percentage of total revenue.

          Depreciation expense increased by $7 million compared to 2004. The increase in depreciation expense reflects the large capital expenditures spent in 2004 and 2005.

38

     Net interest expense decreased by $15 million in 2005 compared to 2004. The principal reason for the reduction in interest expense is attributed to reduction in average debt outstanding during 2005. Our average outstanding debt decreased by $178 million in 2005 compared to 2004. During 2004 we retired $775 million of senior notes and issued $524 million of senior notes and mortgage debt. In 2005, we further reduced our outstanding debt by $92 million.

     In 2005, we recorded impairment charges, under the provisions of SFAS 144, of $266.8 million, $263.1 million of which was included in continuing operations at December 31, 2005 and the remainder was included in discontinued operations. The 2005 charges primarily related to our decision to designate as non-strategic and sell an additional 28 hotels, in connection with the negotiation of the amendment to our IHG management agreements. We also recorded impairment charges with respect to 11 hotels previously designated as non-strategic principally because of revised estimates of fair value.

     In 2005, we incurred hurricane losses of $6 million compared to hurricane losses of $2 million incurred in 2004. The hurricane losses for both years represent our insurance deductibles and our best estimates of direct expenses related to these losses. In addition, associated with the 2005 hurricane losses, we anticipate approximately $5 million of business interruption proceeds to be collected and recorded to income in 2006.

     During 2005, we incurred expenses of $15 million related to the early retirement of debt compared to $50 million in 2004. The early extinguishment of debt charges in 2005 related principally to secured debt that was retired on hotels that we have designated as non-strategic. The 2004 early retirement related principally to the early retirement of senior notes paying 10% interest.

     Equity in income from unconsolidated entities was $10 million in 2005 compared to $17 million in 2004. Included in 2004 was an $11 million gain related to the sale of a residential condominium development in Myrtle Beach, South Carolina. Net income from unconsolidated ventures owning hotels increased in 2005 principally related to improvements in RevPAR.

     Minority interest increased by $19 million in 2005 compared to 2004, principally resulting from FelCor LP’s minority interest in the impairment loss in 2005.

     Discontinued operations provided net income of $11 million in 2005 compared to a loss of $19 million in 2004. Included in the 2004 loss in discontinued operations is a $35 million impairment loss. Included in discontinued operations are the results of operations of the 19 hotels disposed in 2005.

     Preferred dividends increased by $4 million in 2005 compared to 2004. The principal reasons for this increase are attributed to the issuance of $160 million of Series A preferred stock in 2004 and the first full year of dividends in 2005.

     In accordance with the Emerging Issues Task Force Topic D-42, “The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock,” we have subtracted $7 million of the issuance costs of our redeemed Series B preferred stock from net income to determine net loss applicable to common stockholders for the calculation of net loss per share.

Comparison of the Years Ended December 31, 2004 and 2003

     For the year ended December 31, 2004, we recorded a loss applicable to common stockholders of $135 million, compared to a loss in 2003 of $337 million. During 2004, our hotel operating revenue from continuing operations increased by $66 million, reflecting the 5% increase in RevPAR for the year. This RevPAR improvement came on the heels of an unprecedented three year decline in our RevPAR, which has resulted in hotel revenues remaining well below historical levels. Also contributing to the current year loss were: $50 million of net costs associated with the early retirement of $775 million in senior notes; $38 million of impairment charges on our hotels; a $5 million charge associated with the early termination of a hotel lease; $2 million of hurricane losses sustained in the third quarter at 13 of our hotels; and a gain of $12 million from the development and sale of the 251-unit Margate condominium tower at the Kingston Plantation in Myrtle Beach, South Carolina.

39

     Our revenues from continuing operations for 2004 were $1.1 billion, which reflected a 6% increase, over 2003. The increase in revenues principally resulted from the 5% increase in hotel RevPAR. Our hotel portfolio occupancy increased by 3.1% over the prior year and its ADR increased by 1.7%. We attribute the increase in RevPAR to the general firming of the U.S. economy resulting in increased business travel, from which we derive a significant portion of out hotel business. Business travelers generally pay a higher room rate than other types of hotel guests and, as business travel increases, we are able to accept smaller amounts of lower room rate business.

     Also contributing to the increase in revenues for 2004 was the acquisition in March 2004 of the Holiday Inn in Santa Monica, California, which contributed $5.4 million of our consolidated revenues in 2004.

     The Hotel EBITDA margin of our hotels included in continuing operations at December 31, 2004, was 24.1% compared to 23.7% in 2003. The slight increase in Hotel EBITDA margin is attributed primarily to decreases in property tax and insurance expenses, which were largely offset by increased labor related costs. Property tax expense decreased in 2004, compared to 2003, largely from reductions in assessed values and resolution of prior years’ property tax appeals. The reduction in insurance expense, compared to the prior year, reflects the softening in the property insurance markets and reductions in general liability losses.

     Our interest expense included in continuing operations decreased by 10%, to $148 million, as compared to 2003. The reduction in interest expense is related to a $270 million reduction in outstanding debt and a reduction in our weighted average interest rate by 23 basis points, compared to 2003. The change in debt outstanding and the reduction in average interest rate resulted principally from the following capital transactions:

• We completed the early retirement of $775 million in senior notes:

o $600 million of senior notes maturing in 2008 that bore interest at 10%; and

o $175 million of senior notes maturing in October 2004;

• We issued $290 million of floating rate senior notes;

• We issued $234 million in mortgage debt; and

• We issued $160 million of convertible preferred stock.

     In 2004, we recorded impairment charges, under the provisions of SFAS 144, of $38 million, $4 million of which is included in continuing operations and the remainder is included in discontinued operations. The 2004 charges related to 17 hotels. With respect to one hotel, we entered into an option in the third quarter 2004 that would permit the option holder to purchase the hotel for substantially less than its carrying value. The remaining hotels either had revised estimates of fair value or reduced estimated holding periods.

     During 2004, we completed the early retirement of $775 million of senior notes. Associated with this early retirement, we recorded a charge-off of deferred financing costs of $7 million, a loss on early retirement of debt (representing the premium paid at retirement) of $44 million, and we had a gain of $1 million related to the termination of an interest rate swap on a portion of these notes.

     Equity in income from unconsolidated entities increased $15 million compared to 2003. The principal component of this increase was our portion of the gain on the development and sale of the Margate condominium tower at the Kingston Plantation in Myrtle Beach, South Carolina, by an unconsolidated entity in which we owned a 50% interest.

     Included in the loss from discontinued operations are the results of operations of the 19 hotels disposed in 2005 and the 18 hotels disposed in 2004.

Non-GAAP Financial Measures

     We refer in this annual report on Form 10-K to certain “non-GAAP financial measures.” These measures, including FFO, EBITDA, Hotel EBITDA and Hotel EBITDA margin, are measures of our financial performance that are not calculated and presented in accordance with generally accepted accounting principles, or GAAP. The following tables reconcile each of these non-GAAP measures to the most comparable GAAP financial measure. Immediately following the reconciliations, we include a discussion of why we believe these measures are useful supplemental measures of our performance and of the limitations upon such measures.

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     The following tables detail our computation of FFO (in thousands, except for per share data):

Reconciliation of Net Loss to FFO
(in thousands, except per share data)

	Year Ended December 31,
	2005								2004								2003
						Per Share								Per Share								Per Share
	Dollars			Shares		Amount			Dollars			Shares		Amount			Dollars			Shares		Amount
Net loss	$	(251,615	)						$	(100,127	)						$	(310,144	)
Issuance costs of redeemed preferred stock		(6,522	)
Preferred dividends		(39,408	)							(35,130	)							(26,908	)
Net loss applicable to common stockholders		(297,545	)		59,436	$	(5.01	)		(135,257	)		59,045	$	(2.29	)		(337,052	)		58,657	$	(5.75	)
Depreciation from continuing operations		119,323					2.01			111,836					1.89			116,710					1.99
Depreciation from unconsolidated entities and discontinued operations		12,884					0.22			18,916					0.32			33,325					0.57
Gain on sale of assets		(12,124	)				(0.20	)		(19,422	)				(0.33	)		(2,668	)				(0.05	)
Minority interest in FelCor LP		(13,677	)		2,778		(0.09	)		(6,681	)		2,939	$	(0.08	)		(17,777	)		3,188		(0.11	)
FFO	$	(191,139	)		62,214	$	(3.07	)	$	(30,608	)		61,984	$	(0.49	)	$	(207,462	)		61,845	$	(3.35	)

	Year Ended December 31,
	2002								2001
						Per Share								Per Share
	Dollars			Shares		Amount			Dollars			Shares		Amount
Net loss	$	(178,581	)						$	(39,276	)
Preferred dividends		(26,292	)							(24,600	)
Net loss applicable to common stockholders		(204,873	)		54,173	$	(3.78	)		(63,876	)		52,622	$	(1.21	)
Depreciation from continuing operations		123,758					2.28			131,232					2.49
Depreciation from unconsolidated entities and discontinued operations		40,675					0.75			37,342					0.71
Gain on sale of assets		(5,861	)				(0.11	)		—					—
Preferred dividends		—					—			11,662			4,636		2.52
Stock options and unvested restricted shares		—					—			—			404		—
Minority interest in FelCor LP		(13,717	)		7,564		(0.11	)		(10,868	)		9,013		(2.93	)
FFO	$	(60,018	)		61,737	$	(0.97	)	$	105,492			66,675	$	1.58

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     Consistent with SEC guidance on non-GAAP financial measures, FFO has not been adjusted for the following amounts included in net income (loss) (in thousands, except for per share amounts):

	Year Ended December 31,
	2005						2004						2003						2002						2001
				Per						Per						Per						Per						Per
				Share						Share						Share						Share						Share
	Dollars			Amount			Dollars			Amount			Dollars			Amount			Dollars			Amount			Dollars			Amount
Impairment loss, continuing operations	$	(263,091	)	$	(4.23	)	$	(3,494	)	$	(0.06	)	$	(74,160	)	$	(1.20	)	$	(3,902	)	$	(0.06	)	$	(3,022	)	$	(0.05	)
Impairment loss, discontinued operations		(3,660	)		(0.06	)		(34,795	)		(0.56	)		(171,349	)		(2.77	)		(153,603	)		(2.49	)		(3,978	)		(0.06	)
Minority interest share of impairment loss		8,976			0.14			—			—			1,770			0.03			—			—			—			—
Charge-off of deferred debt costs		(2,659	)		(0.04	)		(6,960	)		(0.10	)		(2,834	)		(0.05	)		(3,222	)		(0.05	)		(1,270	)		(0.02	)
Gain (loss) on early extinguishment of debt		(8,641	)		(0.14	)		(44,216	)		(0.71	)		1,611			0.03			—			—			—			—
Gain from swap termination		—			—			1,005			0.02			—			—			—			—			(7,049	)		(0.11	)
Abandoned projects		(265	)		—			—			—			—			—			(1,663	)		(0.03	)		(837	)		(0.01	)
Asset disposition costs		(1,300	)		(0.02	)		(4,900	)		(0.08	)		—			—			—			—			(36,604	)		(0.55	)
Merger termination costs		—			—			—			—			—			—			—			—			(19,919	)		(0.30	)
Merger related financing costs		—			—			—			—			—			—			—			—			(5,486	)		(0.08	)
Issuance costs of redeemed preferred stock		(6,522	)		(0.10	)		—			—			—			—			—			—			—			—

     The following table details our computation of EBITDA (in thousands):

Reconciliation of Net Loss to EBITDA
(in thousands)

	Year Ended December 31,
	2005			2004			2003			2002			2001
Net loss	$	(251,615	)	$	(100,127	)	$	(310,144	)	$	(178,581	)	$	(39,276	)
Depreciation from continuing operations		119,323			111,836			116,710			123,758			131,232
Depreciation from unconsolidated entities and discontinued operations		12,884			18,916			33,325			40,675			37,342
Merger termination costs		—			—			—			—			19,919
Merger financing costs		—			—			—			—			5,486
Lease acquisition costs		—			—			—			—			36,604
Interest expense		135,054			148,430			165,064			164,368			159,221
Interest expense from unconsolidated entities and discontinued operations		7,602			9,631			10,080			11,433			11,682
Amortization expense		2,904			2,945			2,210			2,088			2,093
Minority interest in FelCor LP		(13,677	)		(6,681	)		(17,777	)		(13,717	)		(10,868	)
EBITDA	$	12,475		$	184,950		$	(532	)	$	150,024		$	353,435

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     Consistent with SEC guidance on non-GAAP financial measures, EBITDA has not been adjusted for the following amounts included in net loss (in thousands):

	Year Ended December 31,
	2005			2004			2003			2002			2001
Impairment loss, continuing operations	$	(263,091	)	$	(3,494	)	$	(74,160	)	$	(3,902	)	$	(3,022	)
Impairment loss, discontinued operations		(3,660	)		(34,795	)		(171,349	)		(153,603	)		(3,978	)
Minority interest share of impairment loss		8,976			—			1,770			—			—
Charge-off of deferred debt costs		(2,659	)		(6,960	)		(2,834	)		(3,222	)		(1,270	)
Gain (loss) on early extinguishment of debt		(8,641	)		(44,216	)		1,611			—			—
Gain (loss) from swap termination		—			1,005			—			—			(7,049	)
Asset disposition costs		(1,300	)		(4,900	)		—			—			—
Abandoned projects		(265	)		—			—			(1,663	)		(837	)
Gain on sale of assets		12,124			19,422			2,668			5,861			—

Hotel EBITDA and Hotel EBITDA Margin
(dollars in thousands)

	Year Ended December 31,
	2005			2004			2003
Continuing Operations
Total revenue	$	1,212,179		$	1,115,874		$	1,048,364
Retail space rental and other revenue		(2,049	)		(2,721	)		(1,022	)
Hotel revenue		1,210,130			1,113,153			1,047,342
Hotel operating expenses		(904,750	)		(845,074	)		(798,617	)
Hotel EBITDA	$	305,380		$	268,079		$	248,725
Hotel EBITDA margin(1)		25.2	%		24.1	%		23.7	%

⁽¹⁾ Hotel EBITDA as a percentage of hotel revenue.

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Hotel Operating Expense Composition
(dollars in thousands)

	Year Ended December 31,
	2005			2004			2003
Continuing Operations
Hotel departmental expenses:
Room	$	253,563		$	238,807		$	219,399
Food and beverage		135,558			132,561			123,736
Other operating departments		30,356			29,028			24,311
Other property related costs:
Administrative and general		115,394			106,780			99,876
Marketing and advertising		103,807			96,465			90,881
Repairs and maintenance		67,359			62,494			59,384
Energy		66,510			57,848			53,470
Taxes, insurance and lease expense		70,855			63,786			72,215
Total other property related costs		843,402			787,769			743,272
Management and franchise fees		61,348			57,305			55,345
Hotel operating expenses	$	904,750		$	845,074		$	798,617
Reconciliation of total operating expense to hotel operating expense:
Total operating expenses	$	1,094,694		$	1,019,469		$	970,174
Unconsolidated taxes, insurance and lease expense		5,673			5,737			6,846
Consolidated hotel lease expense		(57,004	)		(51,261	)		(47,460	)
Abandoned projects		(265	)		—			—
Corporate expenses		(19,025	)		(17,035	)		(14,233	)
Depreciation		(119,323	)		(111,836	)		(116,710	)
Hotel operating expenses	$	904,750		$	845,074		$	798,617

Reconciliation of Net Loss to Hotel EBITDA
(in thousands)

	Year Ended December 31,
	Actual			Actual			Actual
	2005			2004			2003
Net loss	$	(251,615	)	$	(100,127	)	$	(310,144	)
Discontinued operations		(11,291	)		18,593			161,818
Equity in income from unconsolidated entities		(10,169	)		(17,121	)		(2,370	)
Minority interests		(23,813	)		(5,229	)		(10,632	)
Consolidated hotel lease expense		57,004			51,261			47,460
Unconsolidated taxes, insurance and lease expense		(5,673	)		(5,737	)		(6,846	)
Interest expense, net		130,954			145,666			162,808
Impairment loss		263,091			3,494			74,160
Hurricane loss		6,481			2,125			—
Loss on early extinguishment of debt		11,921			44,216			—
Charge-off of deferred financing costs		2,659			6,960			2,834
Gain on swap termination		—			(1,005	)		—
Corporate expenses		19,025			17,035			14,233
Depreciation		119,323			111,836			116,710
Retail space rental and other revenue		(2,049	)		(2,721	)		(1,022	)
Abandoned projects		265			—			—
Gain on sale of assets		(733	)		(1,167	)		(284	)
Hotel EBITDA	$	305,380		$	268,079		$	248,725

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Reconciliation of Ratio of Operating Income to Total Revenues to Hotel EBITDA Margin

	Year Ended December 31,
	Actual			Actual			Actual
	2005			2004			2003
Ratio of operating income to total revenues		9.7	%		8.6	%		7.5	%
Retail space rental and other revenue		(0.2	)		(0.2	)		(0.1	)
Unconsolidated taxes, insurance and lease expense		(0.4	)		(0.5	)		(0.7	)
Consolidated lease expense		4.7			4.6			4.5
Corporate expenses		1.6			1.5			1.4
Depreciation		9.8			10.1			11.1
Hotel EBITDA margin		25.2	%		24.1	%		23.7	%

     Substantially all of our non-current assets consist of real estate. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminish predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under GAAP, to be helpful in evaluating a real estate company’s operations. These supplemental measures, including FFO, EBITDA, Hotel EBITDA and Hotel EBITDA margin, are not measures of operating performance under GAAP. However, we consider these non-GAAP measures to be supplemental measures of a REIT’s performance and should be considered along with, but not as an alternative to, net income as a measure of our operating performance.

FFO and EBITDA

     The White Paper on Funds From Operations approved by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We compute FFO in accordance with standards established by NAREIT. This may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than we do.

     EBITDA is a commonly used measure of performance in many industries. We define EBITDA as net income or loss (computed in accordance with GAAP) plus interest expenses, income taxes, depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDA on the same basis.

Hotel EBITDA and Hotel EBITDA Margin

     Hotel EBITDA and Hotel EBITDA margin are commonly used measures of performance in the hotel industry and give investors a more complete understanding of the operating results over which our individual hotels and operating managers have direct control. We believe that Hotel EBITDA and Hotel EBITDA margin is useful to investors by providing greater transparency with respect to two significant measures used by us in our financial and operational decision-making. Additionally, using these measures facilitates comparisons with other hotel REITs and hotel owners. We present Hotel EBITDA and Hotel EBITDA margin by eliminating corporate-level expenses, depreciation and expenses related to our capital structure. We eliminate corporate-level costs and expenses because we believe property-level results provide investors with supplemental information into the ongoing operational performance of our hotels and the effectiveness of management in running our business on a property-level basis. We eliminate depreciation and amortization because, even though depreciation and amortization are property-level expenses, we do not believe that these non-cash expenses, which are based on historical cost accounting for real estate assets, and implicitly assume that the value of real estate assets diminishes predictably over time, accurately reflect an adjustment in the value of our

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assets. To enhance the comparability of our hotel-level operating results with other hotel REITs and hotel owners, we are now disclosing Hotel EBITDA and Hotel EBITDA margin rather than the hotel operating profit and hotel operating margin previously disclosed. The purpose of the change is to remove any distortion created by unconsolidated entities and to reflect hotel-level operations as if they were fully consolidated. To reflect this, we eliminate consolidated percentage rent paid to unconsolidated entities, which is effectively eliminated by minority interest expense and equity in income from unconsolidated subsidiaries, and include the cost of unconsolidated taxes, insurance and lease expense, to reflect the entire operating costs applicable to our hotels.

Use and Limitations of Non-GAAP Measures

     Our management and Board of Directors use FFO, EBITDA, Hotel EBITDA and Hotel EBITDA margin to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. We use Hotel EBITDA and Hotel EBITDA margin in evaluating hotel-level performance and the operating efficiency of our hotel managers.

     The use of these non-GAAP financial measures has certain limitations. FFO, EBITDA, Hotel EBITDA and Hotel EBITDA margin, as presented by us, may not be comparable to FFO, EBITDA, Hotel EBITDA and Hotel EBITDA margin as calculated by other real estate companies. These measures do not reflect certain expenses that we incurred and will incur, such as depreciation, interest and capital expenditures. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.

     These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. Neither should FFO, FFO per share or EBITDA be considered as measures of our liquidity or indicative of funds available for our cash needs, including our ability to make cash distributions or service our debt. FFO per share does not measure, and should not be used as a measure of, amounts that accrue directly to the benefit of stockholders. FFO, EBITDA, Hotel EBITDA and Hotel EBITDA margin reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.

Liquidity and Capital Resources

     Our principal source of cash to meet our cash requirements, including distributions to stockholders and repayments of indebtedness, is from the results of operations of our hotels. For the year ended December 31, 2005, net cash flow provided by operating activities, consisting primarily of hotel operations, was $111 million. At December 31, 2005, we had cash on hand of $95 million. Included in cash on hand was $31 million held under our hotel management agreements to meet our hotel minimum working capital requirements.

     We currently expect that our cash flow provided by operating activities for 2006 will be approximately $160 million to $167 million. These cash flow forecasts assume a RevPAR increase of 7% to 9%, and Hotel EBITDA margin increases of at least 100 basis points. Our current operating plan contemplates that we will make preferred dividend payments of $39 million, capital expenditures of approximately $175 to $200 million, $15 million in normal recurring principal payments, and that we will defer a debt maturity of $117 million (which we currently anticipate extending in accordance with its terms), leaving a cash flow shortfall of approximately $62 million to $94 million. We expect the cash necessary to fund this cash flow shortfall and distributions, if any, on our common stock, will come from our cash balances or the proceeds from the sale of hotels. We anticipate that our board of directors will determine the amount of preferred and common dividends, if any, for each quarterly period, based upon the actual operating results of that quarter, economic conditions, other operating trends, our financial condition and capital requirements, as well as the minimum REIT distribution requirements.

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     During 2005, our hotels in New Orleans and surrounding markets, such as Atlanta, Georgia; Baton Rouge, Louisiana; Houston, San Antonio, and Dallas, Texas, benefited from the increase in demand for hotel rooms, resulting from the displacement of New Orleans residents, and from the influx of relief and construction workers. We believe that the increased demand in most of these markets will continue into 2006, but we are unable to predict how long.

     We expect cash flow from operations to be sufficient to cover the payment of a dividend on our common stock, our full preferred stock dividends as well as the funding of maintenance capital expenditures of five percent of annual hotel revenues for the foreseeable future.

     Events, including the threat of additional terrorist attacks, U.S. military involvement in the Middle East and the bankruptcy of several major corporations, had an adverse impact on the capital markets in prior years. Similar events, such as new terrorist attacks or additional bankruptcies, could further adversely affect the availability and cost of capital for our business. In addition, any slowdown of the overall economy and of the lodging industry could adversely affect our operating cash flow and the availability and cost of capital for our business.

     As a consequence of the recent economic recovery, its impact on the travel and lodging industries, and our lower secured debt levels, Standard & Poor’s raised their ratings on our senior unsecured debt in 2006, from B- to B. Should Standard & Poor’s or Moody’s increase their ratings on our senior unsecured debt to BB- or Ba3, respectively, our interest rates on $300 million of our senior unsecured debt will drop by 50 basis points, reducing our interest expense by $1.5 million annually.

     We are subject to the risks of fluctuating hotel operating margins at our hotels, including but not limited to increases in wage and benefit costs, repair and maintenance expenses, utilities, insurance, and other operating expenses that can fluctuate disproportionately to revenues. These operating expenses are difficult to predict and control, resulting in an increased risk of volatility in our results of operations. The recent economic slowdown that began in 2001, led to a sharp drop in occupancy and ADR resulting in declines in RevPAR and in the erosion in our Hotel EBITDA margins through 2003. Our Hotel EBITDA margins from continuing operations increased to 25.2% in 2005. However, if our hotel RevPAR and/or operating margins worsen, they could have a material adverse effect on our operations, earnings and cash flow.

     In the fourth quarter of 2005, we retired $258 million of secured debt related to 25 hotels and entered into a $225 million unsecured term loan. In connection with the early retirement of $258 million of secured debt, we recorded $15 million expense in the fourth quarter of 2005. The $225 million term loan was subsequently retired in January 2006 with proceeds from hotel sales, cash on hand and $45 million drawn on our $125 million line of credit established in January 2006. Associated with the early retirement of the $225 million term loan in January 2006, we will record $1 million write-off of loan costs in the first quarter of 2006.

     Our line of credit established in January 2006, has certain restrictive covenants, including a leverage ratio, fixed charge coverage ratio, unencumbered leverage ratio and a maximum payout ratio. In addition to financial covenants, our line of credit includes certain other affirmative and negative covenants, including restrictions on our ability to create or acquire wholly-owned subsidiaries; restrictions on the operation/ownership of our hotels; limitations on our ability to lease property or guarantee leases of other persons; limitations on our ability to make restricted payments (such as distributions on common and preferred stock, share repurchases and certain investments); limitations on our ability to merge or consolidate with other persons, to issue stock of our subsidiaries and to sell all or substantially all of our assets; restrictions on our ability to make investments in condominium developments; limitations on our ability to change the nature of our business and limitations on our ability to modify certain instruments, to create liens, to enter into transactions with affiliates and limitations on our ability to enter into joint ventures. At the date of this filing, we were in compliance with all of these covenants.

     If operating results fall significantly below our current expectations, as outlined in our current guidance, we may not be able to satisfy the financial covenant requirements in our current line of credit and we may be unable to borrow under it.

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     During 2005, we issued 6.8 million depositary shares representing our 8% Series C Preferred Stock, with gross proceeds of $169 million. The proceeds were used to redeem all of the shares outstanding of our 9% Series B Preferred Stock. As a result of this redemption, we recorded a reduction in net income applicable to common stockholders of $7 million for the original issuance cost of the Series B preferred stock which was redeemed.

     In 2005, eight limited service hotels owned by a consolidated joint venture were surrendered to their non-recourse mortgage holders in exchange for extinguishment of approximately $49 million of debt.

     In 2005, we started construction on the 184 unit Royale Palms condominium development in Myrtle Beach, South Carolina. This project is more than 90% pre-sold and is expected to be completed in the summer of 2007. In conjunction with this development, we entered into a $70 million recourse construction loan facility. At December 31, 2005, we had spent $13 million on this project and had drawn $9 million on the construction loan. The interest on this construction facility is currently based on LIBOR plus 225 basis points and may be reduced to LIBOR plus 200 basis points when the project is 55% complete upon satisfaction of certain other requirements.

     At December 31, 2005, we had aggregate mortgage indebtedness of $738 million that was secured by 46 of our consolidated hotels with an aggregate book value of $1.2 billion and our Royale Palms condominium development. Substantially all of this debt is recourse solely to the specific assets securing the debt, except in the case of fraud, misapplication of funds and other customary recourse provisions. Loans secured by 10 hotels provide for lock-box arrangements.

     With respect to loans secured by 10 hotels, the owner is permitted to retain 115% of budgeted hotel operating expenses before the remaining revenues would become subject to a similar lock-box arrangement if a specified debt service coverage ratio was not met. The mortgage loans secured by eight of these 10 hotels also provide that, so long as the debt service coverage ratios remain below a second, even lower minimum level, the lender may retain any excess cash (after deduction for the 115% of budgeted operating expenses, debt service, tax, insurance and other reserve requirements) and, if the debt service coverage ratio remains below this lower minimum level for 12 consecutive months, apply any accumulated excess cash to the prepayment of the principal amount of the debt. If the debt service coverage ratio exceeds the lower minimum level for three consecutive months, any then accumulated excess cash will be returned to the owner. Eight of these 10 hotels, which accounted for 6% of our total revenues in 2005, are currently below the applicable debt service coverage ratio and are subject to the lock-box provisions. None of the hotels are currently below the second, even lower minimum debt service coverage ratio that would permit the lender to retain excess cash after deduction for the 115% of budgeted operating expenses, debt service, tax, insurance and other reserve requirements.

     Most of our mortgage debt is non-recourse to us and contains provisions allowing for the substitution of collateral upon satisfaction of certain conditions. Most of our mortgage debt is prepayable, subject to various prepayment penalties, yield maintenance or defeasance obligations.

     The breach of any of the covenants and limitations under our line of credit could result in the acceleration of amounts outstanding. Our failure to satisfy any accelerated indebtedness, if in the amount of $10 million or more, could result in the acceleration of most of our other unsecured recourse indebtedness. We may not be able to refinance or repay our debt in full under those circumstances

     Our other borrowings contain affirmative and negative covenants that are generally equal to or less restrictive than our line of credit.

     Our publicly-traded senior unsecured notes require that we satisfy total leverage, secured leverage and interest coverage tests in order to: incur additional indebtedness except to refinance maturing debt with replacement debt, as defined under our indentures; pay dividends in excess of the minimum dividend required to meet the REIT qualification test; repurchase capital stock; or merge. As of the date of this filing, we have satisfied all such tests. Under the terms of certain of our indentures, we are prohibited from repurchasing any of our capital stock, whether common or preferred, subject to certain exceptions, so long as our debt-to-EBITDA ratio, as defined in the indentures, exceeds 4.85 to 1. Debt, as defined in the indentures, approximates our consolidated debt. EBITDA is defined in the indentures as consolidated GAAP net income, adjusted for

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minority interest in FelCor LP, actual cash distributions by unconsolidated entities, gains or losses from asset sales, dividends on preferred stock and extraordinary gains and losses (as defined at the date of the indentures), plus interest expense, income taxes, depreciation expense, amortization expense and other non-cash items. Although our current debt-to-EDITDA ratio is below 4.85 to 1, a decline in our EBITDA, as a result of asset sales or adverse economic developments, or an increase in our debt, could make us subject to this limitation.

     If actual operating results fall significantly below our current expectations, as reflected in our current public guidance, or if interest rates increase substantially above expected levels, we may be unable to continue to satisfy the incurrence test under the indentures governing our senior unsecured notes. In such an event, we may be prohibited from, among other things, incurring any additional indebtedness, except under certain specific exceptions, or paying dividends on our preferred or common stock, except to the extent necessary to satisfy the REIT qualification requirement that we distribute currently at least 90% of our taxable income.

     We currently anticipate that we will meet our financial covenant and incurrence tests under the RevPAR guidance provided by us at our fourth quarter earnings conference call on February 7, 2006. For the first quarter of 2006, we currently anticipate that our portfolio RevPAR will be 10% to 12% above the comparable period of the prior year. The RevPAR increase in 2006, compared to the same periods in 2005, was approximately 18% for January 2006 and 13% for February 2006. We currently anticipate that full year 2006 hotel portfolio RevPAR will increase approximately 7% to 9%. For 2006, we expect to make capital expenditures of approximately $175 to $200 million. We estimate that our income for 2006 will be in the range of $23 to $30 million. FFO for the year 2006 is anticipated to be within the range of $113 to $120 million, and EBITDA is expected to be within the range of $282 to $289 million. No asset sales, except for the eight hotels sold in January, or capital transactions are assumed in the preparation of our guidance.

Reconciliation of Estimated Net Income to Estimated FFO and EBITDA
(in millions, except per share and unit data)

	Full Year 2006 Guidance
	Low Guidance						High Guidance
				Per Share						Per Share
	Dollars			Amount(a)			Dollars			Amount (a)
Net income(b)	$	23					$	30
Preferred dividends		(39	)					(39	)
Net loss applicable to common stockholders(b)		(16	)	$	(0.27	)		(9	)	$	(0.15	)
Depreciation		130						130
Minority interest in FelCor LP		(1	)					(1	)
FFO	$	113		$	1.79		$	120		$	1.90
Net income(b)	$	23					$	30
Depreciation		130						130
Minority interest in FelCor LP		(1	)					(1	)
Interest expense		126						126
Amortization expense		4						4
EBITDA	$	282					$	289

(a)	Weighted average shares are 59.7 million. Adding minority interest and unvested restricted stock of 3.4 million shares to weighted average shares, provides the weighted average shares and units of 63.1 million used to compute FFO per share.
(b)	Excludes gains or losses from asset sales and debt extinguishment.

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     The following table details our debt outstanding at December 31, 2005 and 2004 (in thousands):

								Balance Outstanding
	Encumbered		Interest Rate at			Maturity		December 31,
	Hotels		December 31, 2005			Date		2005		2004
Promissory note	none			6.31	(a)	June 2016		$	650	$	650
Senior unsecured term notes	none			7.63		Oct. 2007			123,358		122,426
Senior unsecured term notes	none			9.00		June 2011			298,660		298,409
Term loan(b)	none			5.81		Oct. 2006			225,000		—
Senior unsecured term notes	none			8.48	(c)	June 2011			290,000		290,000
Total unsecured debt(d)				7.89					937,668		711,485
Mortgage debt	9 hotels			6.52		July 2009-2014			104,282		192,363
Mortgage debt	8 hotels			6.63	(e)	May 2006			117,913		144,669
Mortgage debt		—		—			—		—		127,316
Mortgage debt	7 hotels			7.32		April 2009			127,455		130,458
Mortgage debt	4 hotels			7.55		June 2009			41,912		67,959
Mortgage debt	8 hotels			8.70		May 2010			172,604		175,504
Mortgage debt	7 hotels			8.73		May 2010			133,374		135,690
Mortgage debt	1 hotel			6.77	(a)	August 2008			15,500		15,500
Mortgage debt		—		—			—		—		10,521
Mortgage debt	1 hotel			7.91		Dec. 2007			10,457		—
Mortgage debt		—		—			—		—		49,476
Other	1 hotel			9.17		August 2011			5,204		6,181
Construction loan		—		6.47		Oct. 2007			8,911		—
Total secured debt(d)	46 hotels			7.69					737,612		1,055,637
Total(d)				7.80	%			$	1,675,280	$	1,767,122

(a)	Variable interest rate based on LIBOR. The six month LIBOR was 4.58% at December 31, 2005.
(b)	This term note was repaid in January 2006.
(c)	Variable interest rate based on LIBOR. $100 million of these notes were matched with interest rate swap agreements that effectively converted the variable interest rate to a fixed rate.
(d)	Interest rates are calculated based on the weighted average outstanding debt at December 31, 2005.
(e)	Variable interest rate based on LIBOR. This debt may be extended at our option for up to two, one-year periods.

     At December 31, 2004, we had three interest rate swaps with an aggregate notional amount of $100 million, maturing in December 2007. The interest rate received on these interest rate swaps is 4.25% plus LIBOR and the interest rate paid is 7.80%.

     During 2005, we spent an aggregate of $112 million on capital expenditures at our consolidated hotels and $15million at our unconsolidated hotels.

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Contractual Obligations

     We have obligations and commitments to make certain future payments under debt agreements and various contracts. The following schedule details these obligations at December 31, 2005 (in thousands):

			Less Than		1 – 3		4 – 5		After
	Total		1 Year		Years		Years		5 Years
Debt (a)	$	2,182,431	$	468,202	$	390,626	$	609,507	$	714,096
Operating leases		173,636		34,996		25,538		21,000		92,102
Purchase obligations		130,299		130,299		—		—		—
IHG special capital plans(b)		50,568		—		50,568		—		—
Total contractual obligations	$	2,536,934	$	633,497	$	466,732	$	630,507	$	806,198

(a)	Our long-term debt consists of both secured and unsecured debt and includes both principal and interest. Interest expense for variable rate debt was calculated using the interest rate at December 31, 2005.
(b)	As a part of the amendment to the IHG management agreements, we have agreed to spend, by June 30, 2007, approximately $51 million with regard to special capital plans on 11 hotels. We are to agree upon special capital plans to be completed by July 2008 with regard to four hotels and January 2011 with regard to two hotels.

Off-Balance Sheet Arrangements

     At December 31, 2005, we had unconsolidated 50% investments in ventures that own an aggregate of 19 hotels (referred to as hotel joint ventures), and we had unconsolidated 50% investments in ventures that operate four of those 19 hotels (referred to as operating joint ventures). We own 100% of the lessees operating two hotels owned by the hotel joint ventures, 51% of the lessees operating 12 hotels owned by the hotel joint ventures and one hotel joint venture is operated without a lease. We also owned a 50% interest in entities that provide condominium management services and develop condominiums in Myrtle Beach, South Carolina. None of our directors, officers or employees owns any interest in any of these joint ventures or entities. The hotel joint ventures had $204 million of non-recourse mortgage debt relating to the 19 hotels. This debt is not reflected as a liability on our consolidated balance sheet.

     Our liability with regard to non-recourse debt and the liability of our subsidiaries that are members or partners in joint ventures are generally limited to the guarantee of the borrowing entity’s obligations to pay for the lender’s losses caused by misconduct, fraud or misappropriation of funds by the venture and other typical exceptions from the non-recourse provisions in the mortgages, such as for environmental liabilities.

     We have recorded equity in income (loss) of unconsolidated entities of $10 million; $17 million, including a gain of $11 million related to the development and sale of condominiums; and $2 million for the years ended December 31, 2005, 2004 and 2003, respectively, and received distributions of $8 million (of which $1 million was provided from operations) $23 million (of which $12 million was provided by operations) and $9 million for the years 2005, 2004 and 2003, respectively. The principal source of income for our hotel joint ventures is percentage lease revenue from the operating lessees. We own 51% of the operating lessees for 12 of the hotel joint ventures and 100% of the operating lessee for one of the hotel joint ventures. The 100% owned operating lessee incurred aggregate net losses, which were included in our consolidated statements of operations, of $2 million during the past three years.

     Capital expenditures on the hotels owned by our hotel joint ventures are generally paid from their capital reserve account, which is funded from the income from operations of these ventures. However, if a venture has insufficient cash flow to meet operating expenses or make necessary capital improvements, the venture may make a capital call upon the venture members or partners to fund such necessary improvements. It is possible that, in the event of a capital call, the other joint venture member or partner may be unwilling or unable to make the necessary capital contributions. Under such circumstances, we may elect to make the other party’s contribution as a loan to the venture or as an additional capital contribution by us. Under certain circumstances, a capital contribution by us may increase our equity investment to greater than 50% and may require that we consolidate the venture, including all of its assets and liabilities, into our consolidated financial statements.

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     With respect to those ventures that are partnerships, any of our subsidiaries that serve as a general partner will be liable for all of the recourse obligations of the venture, to the extent that the venture does not have sufficient assets or insurance to satisfy the obligations. In addition, the hotels owned by these ventures could perform below expectations and result in the insolvency of the ventures and the acceleration of their debts, unless the members or partners provide additional capital. In some ventures, the members or partners may be required to make additional capital contributions or have their interest in the venture be reduced or offset for the benefit of any party making the required investment on their behalf. We may be faced with the choice of losing our investment in a venture or investing additional capital under circumstances that do not assure a return on that investment.

Inflation

     Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. Competitive pressures may, however, require us to reduce room rates in the near term and may limit our ability to raise room rates in the future. We are also subject to the risk that inflation will cause increases in hotel operating expenses disproportionately to revenues.

Seasonality

     The lodging business is seasonal in nature. Generally, hotel revenues are greater in the second and third calendar quarters than in the first and fourth calendar quarters, although this may not be true for hotels in major tourist destinations. Revenues for hotels in tourist areas generally are substantially greater during tourist season than other times of the year. Seasonal variations in revenue at our hotels can be expected to cause quarterly fluctuations in our revenues. Quarterly earnings also may be adversely affected by events beyond our control, such as extreme weather conditions, economic factors and other considerations affecting travel. To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenues, we may utilize cash on hand or borrowings to satisfy our obligations or make distributions to our equity holders.

Critical Accounting Policies and Estimates

     Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

     On an on-going basis, we evaluate our estimates, including those related to bad debts, the carrying value of investments in hotels, litigation, and other contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

     We believe the following critical accounting policies affect the most significant judgments and estimates used in the preparation of our consolidated financial statements.

• We are required by GAAP to record an impairment charge when we believe that an investment in one or more of our hotels has been impaired, such that future undiscounted cash flows would not recover the book basis, or net book value, of the investment. We test for impairment when certain events occur, including one or more of the following: projected cash flows are significantly less than recent historical cash flows; significant changes in legal factors or actions by a regulator that could affect the value of our hotels; events that could cause changes or uncertainty in travel patterns; and a current expectation that, more likely than not, a hotel will be sold or otherwise disposed of significantly before the end of its previously estimated useful

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life. In 2005 we identified 28 hotels, in 2004 we identified two hotels, in 2003 we identified 18 hotels and in 2002 we identified 33 hotels, that we expect to sell. The shorter probable holding periods related to our decision to sell these hotels was the primary factor that led to impairment charges on these hotels. As we sell these hotels, we may recognize additional losses or gains on sale. In the evaluation of impairment of our hotel assets, and in establishing the impairment charge, we made many assumptions and estimates on a hotel by hotel basis, which included the following:

o Annual cash flow growth rates for revenues and expenses;

o Holding periods;

o Expected remaining useful lives of assets;

o Estimates in fair values taking into consideration future cash flows, capitalization rates, discount rates and comparable selling prices; and

o Future capital expenditures.

	Changes in these estimates, future adverse changes in market conditions or poor operating results of underlying hotels could result in losses or an inability to recover the carrying value of the hotels that may not be reflected in the hotel’s current carrying value, thereby requiring additional impairment charges in the future.
•	We make estimates with respect to contingent liabilities for losses covered by insurance in accordance with Financial Accounting Standard 5, Accounting for Contingencies. We record liabilities for self insured losses under our insurance programs when it becomes probable that an asset has been impaired or a liability has been incurred at the date of our financial statements and the amount of the loss can be reasonably estimated. In 2002, we initially became self-insured for the first $250,000, per occurrence, of our general liability claims with regard to 68 of our hotels. At December 31, 2005, we had 71 of our hotels participating in this program. We review the adequacy of our reserves for our self-insured claims on a regular basis. Our reserves are intended to cover the estimated ultimate uninsured liability for losses with respect to reported and unreported claims incurred as of the end of each accounting period. These reserves represent estimates at a given accounting date, generally utilizing projections based on claims, historical settlement of claims and estimates of future costs to settle claims. Estimates are also required since there may be reporting lags between the occurrence of the insured event and the time it is actually reported. Because establishment of insurance reserves is an inherently uncertain process involving estimates, currently established reserves may not be sufficient. If our insurance reserves of $6 million, at December 31, 2005, for general liability losses are insufficient, we will record an additional expense in future periods. Property and catastrophic losses are event-driven losses and, as such, until a loss occurs and the amount of loss can be reasonably estimated, no liability is recorded. We had recorded no contingent liabilities with regard to property or catastrophic losses at December 31, 2005.
•	SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” as amended by SFAS 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities,” establishes accounting and reporting standards for derivative instruments. In accordance with these pronouncements, all of our interest rate swap agreements outstanding at December 31, 2005, were designated as cash flow hedges because they are hedging our exposure to the changes in interest payments on our floating rate debt. These instruments are adjusted to our estimate of their fair market value through accumulated other comprehensive income within stockholders’ equity. We estimate the fair value of our interest rate swaps and fixed rate debt through the use of a third party valuation. We may use other methods and assumptions to validate the fair market value. At December 31, 2005, our estimate of the fair market value of the interest rate swaps was approximately $2 million and represents the amount that we estimate we would currently receive upon termination of these instruments, based on current market rates and reasonable assumptions about relevant future market conditions.
•	Our Taxable REIT Subsidiaries, or TRSs, have cumulative potential future tax deductions totaling $419 million. The net deferred income tax asset associated with these potential future tax deductions was $173 million. We have recorded a valuation allowance of $133 million

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deferred tax asset related to our TRSs, because of the uncertainty of realizing the benefit of the deferred tax asset. SFAS 109, “Accounting for Income Taxes,” establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. In accordance with SFAS 109, we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. In the event we were to determine that we would be able to realize all or a portion of our deferred tax assets in the future, an adjustment to the deferred tax asset would increase operating income in the period such determination was made.

Recent Accounting Announcements

     In December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS No. 123(R), “Share-Based Payment”, which is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation”. SFAS No. 123(R) supersedes Accounting Principals Board, or APB, Opinion No. 25, “Accounting for Stock

     Issued to Employees” and amends SFAS No. 95, “Statement of Cash Flows”. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The new standard will be effective in the first annual reporting period beginning after June 15, 2005. We expect to adopt this standard under the modified prospective application. We do not expect adoption of this standard to have a material effect on us.

     In March 2005, the FASB issued Interpretation No. 47, or FIN 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143.” FIN 47 refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. An entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The fair value of a liability for the conditional asset retirement obligation should be recognized when incurred, generally upon acquisition, construction, or development and through the normal operation of the asset. This interpretation is effective no later than the end of fiscal years ending after December 31, 2005. Adoption did not have a material effect on our consolidated financial statements.

Disclosure Regarding Forward Looking Statements

     This Annual Report on Form 10-K and the documents incorporated by reference in this Annual Report on Form 10-K include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “anticipates,” “may,” “will,” “should,” “seeks”, or other variations of these terms (including their use in the negative), or by discussions of strategies, plans or intentions. A number of factors could cause actual results to differ materially from those anticipated by these forward-looking statements. Among these factors are:

• general economic and lodging industry conditions, including the anticipated continuation of the current recovery in the economy, the realization of anticipated job growth, the impact of the United States’ military involvement in the Middle East and elsewhere, future acts of terrorism, the threat or outbreak of a pandemic disease affecting the travel industry, the impact on the travel industry of high fuel costs and increased security precautions, and the impact that the bankruptcy of additional major air carriers may have on our revenues and receivables;

• our overall debt levels and our ability to obtain new financing and service debt;

• our inability to retain earnings;

• our liquidity and capital expenditures;

• our growth strategy and acquisition activities;

• our inability to sell the hotels being marketed for sale at anticipated prices; and

• competitive conditions in the lodging industry.

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     Certain of these risks and uncertainties are described in greater detail under “Risk Factors” in Item 1A above, or in our other filings with the Securities and Exchange Commission.

     In addition, these forward-looking statements are necessarily dependent upon assumptions and estimates that may prove to be incorrect. Accordingly, while we believe that the plans, intentions and expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these plans, intentions or expectations will be achieved. The forward-looking statements included in this report, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, are expressly qualified in their entirety by the risk factors and cautionary statements discussed in our filings under the Securities Act of 1933 and the Securities Exchange Act of 1934. We undertake no obligation to update any forward-looking statements to reflect future events or circumstances.

     The prospective financial information, related to hotel sale proceeds and guidance, included in this Form 10-K has been prepared by, and is the responsibility of, our management. PricewaterhouseCoopers LLP has neither examined nor compiled the accompanying prospective financial information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report included in this Form 10-K relates to our historical financial information. It does not extend to the prospective financial information and should not be read to do so.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     At December 31, 2005, approximately 70% of our consolidated debt had fixed interest rates. In some cases, market rates of interest are below the rates we are obligated to pay on our fixed-rate debt.

     The following tables provide information about our financial instruments that are sensitive to changes in interest rates, including interest rate swaps and debt obligations. For debt obligations, the tables present scheduled maturities and weighted average interest rates, by maturity dates. For interest rate swaps, the tables present the notional amount and weighted average interest rate, by contractual maturity date. The fair value of our fixed rate debt indicates the estimated principal amount of debt having the same debt service requirements that could have been borrowed at the date presented, at then current market interest rates. The fair value of our fixed to variable interest rate swaps indicates the estimated amount that would have been received or paid by us had the swaps been terminated at the date presented.

Expected Maturity Date
at December 31, 2005
(dollars in thousands)

																						Fair
	2006			2007			2008			2009			2010			Thereafter			Total			Value
Liabilities
Fixed rate:
Debt	$	13,726		$	149,737		$	15,695		$	176,560		$	281,843		$	382,727		$	1,020,288		$	987,451
Average interest rate		7.95	%		7.68	%		7.96	%		7.37	%		8.70	%		8.47	%		8.21	%
Floating rate:
Debt		342,913			—			24,411			—			—			190,650			557,974			557,974
Average interest rate(a)		6.09	%		—			6.66	%		—			—			8.82	%		7.05	%
Interest rate swaps (floating to fixed)(b)
Notional amount		—			—			—			—			—			100,000			100,000			102,222
Pay rate		—			—			—			—			—			7.80	%		7.80	%
Receive rate		—			—			—			—			—			—			—
Total debt	$	356,639		$	149,737		$	40,106		$	176,560		$	281,843		$	673,377		$	1,678,262
Average interest rate		6.16	%		7.68	%		7.17	%		7.37	%		8.70	%		8.47	%		7.80	%
Net discount																				(2,982	)
Total debt																			$	1,675,280

(a)	The average floating rate of interest represents the implied forward rates in the yield curve at December 31, 2005.
(b)	The interest rate swaps in effect during 2005 increased our interest expense by a net $0.3 million during 2005. The interest rate swaps in effect at December 31, 2005, mature in 2007 but are matched with debt maturing in 2011.

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Expected Maturity Date
at December 31, 2004
(dollars in thousands)

																						Fair
	2005			2006			2007			2008			2009			Thereafter			Total			Value
Liabilities
Fixed rate:
Debt	$	26,927		$	18,025		$	261,783		$	16,977		$	202,231		$	708,478		$	1,234,421		$	1,235,442
Average interest rate		7.54	%		7.78	%		7.46	%		7.93	%		7.40	%		8.50	%		8.06	%
Floating rate:
Debt		5,392			143,018			2,015			17,618			78,537			190,650			437,230			437,230
Average interest rate(a)		4.50	%		4.62	%		4.20	%		4.77	%		4.24	%		6.86	%		5.53	%
Interest rate swaps (floating to fixed)(b)
Notional amount		—			—			—			—			—			100,000			100,000			100,067
Pay rate		—			—			—			—			—			7.80	%
Receive rate		—			—			—			—			—			6.87	%
Total debt	$	32,319		$	161,043		$	263,798		$	34,595		$	280,768		$	999,128			1,771,651
Average interest rate		7.04	%		4.98	%		7.44	%		6.32	%		6.51	%		8.53	%		7.41	%
Net discount																				(4,529	)
Total debt																			$	1,767,122

(a)	The average floating rate of interest represents the implied forward rates in the yield curve at December 31, 2004.
(b)	The interest rate swaps in effect during 2004 decreased our interest expense by a net $4 million during 2004. The interest rate swaps in effect at December 31, 2004, mature in 2007 but are matched with debt maturing in 2011.

     Swap contracts, such as described above, contain a credit risk, in that the counterparties may be unable to fulfill the terms of the agreement. We minimize that risk by evaluating the creditworthiness of our counterparties, who are limited to major banks and financial institutions, and we do not anticipate nonperformance by the counterparties. The Standard & Poor’s credit ratings for each of the financial institutions that are counterparties to the interest rate swap agreements are AA-.

Item 8. Financial Statements and Supplementary Data

     Furnished herewith beginning at page F-1 are consolidated financial statements of the registrant and its subsidiaries meeting the requirements of Regulation S-X.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

     None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

     Under the supervision and with the participation of FelCor’s management, including its chief executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and principal financial officer concluded, as of the Evaluation Date, that our disclosure controls and procedures were effective, such that the information relating to us required to be disclosed in our reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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Changes in Internal Control over Financial Reporting.

     There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934) during the fourth quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting.

     Our management is responsible for establishing and maintaining adequate internal control over financial reporting. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

     Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2005. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment, we have concluded that, as of December 31, 2005, our internal control over financial reporting is effective, based on those criteria.

     Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm as stated in their report, which appears on page F-2 of this Annual Report on Form 10-K.

Item 9B. Other Information

     Not applicable.

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PART III. — OTHER INFORMATION

Item 10. Directors and Executive Officers of the Registrant

     The information called for by this Item is contained in our definitive Proxy Statement for our 2006 Annual Meeting of Stockholders, and is incorporated herein by reference.

Item 11. Executive Compensation

     The information called for by this Item is contained in our definitive Proxy Statement for our 2006 Annual Meeting of Stockholders, and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

     The information called for by this Item is contained in our definitive Proxy Statement for our 2006 Annual Meeting of Stockholders, or in Item 5 of this Annual Report on Form 10-K for the year ended December 31, 2005, and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

     The information called for by this Item is contained in our definitive Proxy Statement for our 2006 Annual Meeting of Stockholders, and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

     The information called for by this Item is contained in our definitive Proxy Statement for our 2006 Annual Meeting of Stockholders, and is incorporated herein by reference.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

     (a) The following is a list of documents filed as a part of this report:

     (1) Financial Statements.

     Included herein at pages F-1 through F-34.

     (2) Financial Statement Schedules.

     The following financial statement schedule is included herein at pages F-35 through F-39.

     Schedule III — Real Estate and Accumulated Depreciation for FelCor Lodging Trust Incorporated

     All other schedules for which provision is made in Regulation S-X are either not required to be included herein under the related instructions, are inapplicable or the related information is included in the footnotes to the applicable financial statement and, therefore, have been omitted.

     (b) Exhibits.

     The following exhibits are provided pursuant to the provisions of Item 601 of Regulation S-K:

Exhibit
Number	Description of Exhibit
4.1	Articles of Amendment and Restatement dated June 22, 1995, amending and restating the Charter of FelCor Lodging Trust Incorporated (“FelCor”), as amended or supplemented by Articles of Merger dated June 23, 1995, Articles Supplementary dated April 30, 1996, Articles of Amendment dated August 8, 1996, Articles of Amendment dated June 16, 1997, Articles of Amendment dated October 30, 1997, Articles Supplementary filed May 6, 1998, Articles of Merger and Articles of Amendment dated July 27, 1998, Certificate of Correction dated March 11, 1999, Certificate of Correction to the Articles of Merger between FelCor and Bristol Hotel Company, dated August 30, 1999, Articles Supplementary, dated April 1, 2002, Certificate of Correction, dated March 29, 2004, to Articles Supplementary filed May 2, 1996, Articles Supplementary filed April 2, 2004, Articles Supplementary filed August 20, 2004, Articles Supplementary filed April 6, 2005, and Articles Supplementary filed August 29, 2005 (filed as Exhibit 4.1 to FelCor’s Registration Statement on Form S-3 (Registration No. 333-128862) and incorporated herein by reference).
4.2	Bylaws of FelCor, as amended (filed as Exhibit 4.2 to FelCor’s Registration Statement on Form S-3 (Registration File No. 333-128862) and incorporated herein by reference).
4.3	Form of Share Certificate for Common Stock (filed as Exhibit 4.1 to FelCor’s Form 10-Q for the quarter ended June 30, 1996, and incorporated herein by reference).
4.4	Form of Share Certificate for $1.95 Series A Cumulative Convertible Preferred Stock (filed as Exhibit 4.4 to FelCor’s Form 8-K, dated May 1, 1996, and incorporated herein by reference).
4.5	Form of Share Certificate for 8% Series C Cumulative Redeemable Preferred Stock (filed as Exhibit 4.10.1 to FelCor’s Form 8-K, dated April 6, 2005, and filed on April 11, 2005, and incorporated herein by reference).

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Exhibit
Number	Description of Exhibit
4.6	Deposit Agreement, dated April 7, 2005, between FelCor and SunTrust Bank, as preferred share depositary (filed as Exhibit 4.11.1 to FelCor’s Current Report on Form 8-K filed April 11, 2005, and incorporated herein by reference).
4.6.1	Supplement and Amendment to Deposit Agreement, dated August 30, 2005, between the Company and SunTrust Bank, as depositary(filed as Exhibit 4.11.2 to FelCor’s Current Report on Form 8-K filed April 11, 2005, and incorporated herein by reference).
4.7	Form of Depositary Receipt evidencing the Depositary Shares, which represent the 8% Series C Cumulative Redeemable Preferred Stock (filed as Exhibit 4.12.1 to FelCor’s Form 8-K, dated April 6, 2005, and filed on April 11, 2005, and incorporated herein by reference).
4.8	Indenture, dated as of October 1, 1997, by and among FelCor Lodging Limited Partnership, formerly FelCor Suites Limited Partnership (“FelCor LP”), FelCor, the Subsidiary Guarantors named therein and SunTrust Bank, Atlanta, Georgia, as Trustee (filed as Exhibit 4.1 to the Registration Statement on Form S-4 (Registration File No. 333-39595) of FelCor LP and the other co-registrants named therein and incorporated herein by reference).
4.8.1	First Amendment to Indenture, dated as of February 5, 1998, by and among FelCor, FelCor LP, the Subsidiary Guarantors named therein and SunTrust Bank, Atlanta, Georgia, as Trustee (filed as Exhibit 4.2 to the Registration Statement on Form S-4 (Registration File No. 333-39595) of FelCor LP and the other co-registrants named therein and incorporated herein by reference).
4.8.2	Second Amendment to Indenture and First Supplemental Indenture, dated as of December 30, 1998, by and among FelCor, FelCor LP, the Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.7.2 to the 1998 10-K and incorporated herein by reference).
4.8.3	Third Amendment to Indenture, dated as of March 30, 1999, by and among FelCor, FelCor LP, the Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.7.3 to FelCor’s Form 10-Q for the quarter ended March 31, 1999 (the “March 1999 10-Q”) and incorporated herein by reference).
4.8.4	Second Supplemental Indenture, dated as of August 1, 2000, by and among FelCor LP, FelCor, the Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.2.4 to the Registration Statement on Form S-4 (Registration File No. 333-47506) of FelCor LP and the other co-registrants named therein and incorporated herein by reference).
4.8.5	Third Supplemental Indenture, dated as of July 26, 2001, by and among FelCor LP, FelCor, the Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.2.5 to the Registration Statement on Form S-4 (Registration File No. 333-63092) of FelCor LP and the other co-registrants named therein and incorporated herein by reference).
4.8.6	Fourth Supplemental Indenture, dated October 1, 2002, by and among FelCor LP, FelCor, the Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.7.6 to FelCor’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (the “2002 Form 10-K”) and incorporated herein by reference).
4.8.7*	Fifth Supplemental Indenture, dated as of January 25, 2006, by and among FelCor LP, FelCor, the Subsidiary Guarantors named therein, the New Subsidiary Guarantor named therein and SunTrust Bank, as trustee.
4.9	Indenture, dated as of June 4, 2001, by and among FelCor LP, FelCor, the Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.9 to FelCor’s Form 8-K dated as of June 4, 2001, and filed June 14, 2001, and incorporated herein by reference).

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Exhibit
Number	Description of Exhibit
4.9.1	First Supplemental Indenture, dated as of July 26, 2001, by and among FelCor LP, FelCor, the Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.4.1 to the Registration Statement on Form S-4 (Registration File No. 333-63092) of FelCor LP and the other co-registrants named therein and incorporated herein by reference).
4.9.2	Second Supplemental Indenture, dated October 1, 2002, by and among FelCor LP, FelCor, the Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.9.2 to the 2002 Form 10-K and incorporated herein by reference).
4.9.3*	Third Supplemental Indenture, dated as of January 25, 2006, by and among FelCor LP, FelCor, the Subsidiary Guarantors named therein, the New Subsidiary Guarantors named therein and SunTrust Bank, as trustee.
4.10	Indenture, dated as of May 26, 2004, by and among FelCor LP, FelCor, the Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.5 to the Registration Statement on Form S-4 (Registration File No. 333-117598) of FelCor LP and the other co-registrants named therein and incorporated herein by reference).
4.10.1*	First Supplemental Indenture, dated as of January 25, 2006, FelCor, FelCor LP, the Subsidiary Guarantors named therein, the New Subsidiary Guarantors named therein and SunTrust Bank, as trustee.
10.1	Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated as of December 31, 2001 (filed as Exhibit 10.1 to FelCor’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (the “2001 Form 10-K”), and incorporated herein by reference.)
10.1.1	First Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated April 1, 2002 (filed as Exhibit 10.1.1 to FelCor’s Form 8-K dated April 1, 2002, and filed on April 4, 2002, and incorporated herein by reference).
10.1.2	Second Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated August 31, 2002 (filed as Exhibit 10.1.2 to the 2002 Form 10-K and incorporated herein by reference).
10.1.3	Third Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated October 1, 2002 (filed as Exhibit 10.1.3 to the 2002 Form 10-K and incorporated herein by reference).
10.1.4	Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated as of July 1, 2003 (filed as Exhibit 10.1.4 to FelCor’s Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).
10.1.5	Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated as of April 2, 2004 (filed as Exhibit 10.1.5 to FelCor’s Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).
10.1.6	Sixth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated as of August 23, 2004 (filed as Exhibit 10.1.6 to FelCor’s Form 8-K dated as of, and filed on, August 26, 2004, and incorporated herein by reference).
10.1.7	Seventh Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated as of April 7, 2005, which contains Addendum No. 4 to the Second Amended and Restated Agreement of Limited Partnership of FelCor Lodging Limited Partnership (filed as Exhibit 10.1.8 to FelCor’s Form 8-K, dated April 6, 2006, and filed on April 11, 2005, and incorporated herein by reference).

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Exhibit
Number	Description of Exhibit
10.1.8	Eighth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated as of August 30, 2005 (filed as Exhibit 10.1.9 to FelCor’s Form 8-K, dated August 29, 2005, and filed September 2, 2005, and incorporated herein by reference).
10.2	Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of InterContinental Hotels, as manager, with respect to FelCor’s InterContinental Hotels branded hotels (included as an exhibit to the Leasehold Acquisition Agreement, which was filed as Exhibit 10.28 to FelCor’s Form 10-Q for the quarter ended March 31, 2001, and incorporated herein by reference).
10.2.1	Master Amendment to Management Agreements, dated September 17, 2003, by and among FelCor, FelCor LP, FelCor TRS I, L.L.C., FelCor TRS Holdings, L.P., BHR Operations, L.L.C., BHR Lodging Tenant Company, BHR Salt Lake Tenant Company, L.L.C., BHR Hotels Finance, Inc., BHR Dallas Tenant Company, L.P. and BHR Plano Tenant Company, L.P. (filed as Exhibit 10.4.1 to FelCor’s Form 10-Q for the quarter ended September 30, 2003, and incorporated herein by reference).
10.2.2*	Omnibus Agreement between FelCor and all its various subsidiaries, controlled entities and affiliates, and Six Continents Hotels, Inc. and all its various subsidiaries, controlled entities and affiliates, with respect to FelCor’s InterContinental Hotels branded hotels.
10.3.1	Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of Hilton Hotels Corporation, as manager, with respect to FelCor’s Embassy Suites Hotels branded hotels, including the form of Embassy Suites Hotels License Agreement attached as an exhibit thereto, effective prior to July 28, 2004 (filed as Exhibit 10.5 to the 2001 Form 10-K and incorporated herein by reference).
10.3.2	Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of Hilton Hotels Corporation, as manager, with respect to FelCor’s Embassy Suites Hotels branded hotels, including the form of Embassy Suites Hotels License Agreement attached as an exhibit thereto, effective July 28, 2004 (filed as Exhibit 10.3.2 to FelCor’s Form 10-K for the fiscal year ended December 31, 2004 (the “2004 Form 10-K” and incorporated herein by reference).
10.4	Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of Hilton Hotels Corporation, as manager, with respect to FelCor’s Doubletree and Doubletree Guest Suites branded hotels (filed as Exhibit 10.6 to the 2001 Form 10-K and incorporated herein by reference).
10.5	Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of Starwood Hotels & Resorts, Inc., as manager, with respect to FelCor’s Sheraton and Westin branded hotels (filed as Exhibit 10.7 to the 2001 Form 10-K and incorporated herein by reference).
10.6	Executive Employment Agreement, dated effective as of February 1, 2006, between FelCor and Thomas J. Corcoran, Jr. (filed as Exhibit 10.36 to FelCor’s Form 8-K, dated February 7, 2006, and filed on February 13, 2006 and incorporated herein by reference).
10.7	Executive Employment Agreement, dated effective as of February 1, 2006, between FelCor and Richard A. Smith (filed as Exhibit 10.37 to FelCor’s Form 8-K, dated February 7, 2006, and filed on February 13, 2006 and incorporated herein by reference).
10.8	Form of Severance Agreement for executive officers and certain key employees of FelCor (filed as Exhibit 10.13 to the 1998 10-K and incorporated herein by reference).
10.9	Restricted Stock and Stock Option Plan of FelCor (filed as Exhibit 10.9 to the 1994 10-K/A and incorporated herein by reference).

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Exhibit
Number	Description of Exhibit
10.10	Savings and Investment Plan of FelCor (filed as Exhibit 10.10 to the 2001 Form 10-K and incorporated herein by reference).
10.11	1995 Restricted Stock and Stock Option Plan of FelCor (filed as Exhibit 10.9.2 to FelCor’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995, and incorporated herein by reference).
10.12	Non-Qualified Deferred Compensation Plan, as amended and restated July 1999 (filed as Exhibit 10.9 to the September 1999 10-Q and incorporated herein by reference).
10.13	1998 Restricted Stock and Stock Option Plan (filed as Exhibit 4.2 to FelCor’s Registration Statement on Form S-8 (Registration File No. 333-66041) and incorporated herein by reference).
10.14	2001 Restricted Stock and Stock Option Plan of FelCor (filed as Exhibit 10.14 to the 2002 Form 10-K and incorporated herein by reference).
10.15	Second Amended and Restated 1995 Equity Incentive Plan (filed as Exhibit 99.1 to FelCor’s Post-Effective Amendment on Form S-3 to Form S-4 Registration Statement (Registration File No. 333-50509) and incorporated herein by reference).
10.16	Amended and Restated Stock Option Plan for Non-Employee Directors (filed as Exhibit 99.2 to FelCor’s Post-Effective Amendment on Form S-3 to Form S-4 Registration Statement (Registration File No. 333-50509) and incorporated herein by reference).
10.17	Form of Nonstatutory Stock Option Contract under Restricted Stock and Stock Option Plans of FelCor (filed as Exhibit 10.16 to the 2004 Form 10-K and incorporated herein by reference).
10.18	Form of Employee Stock Grant Contract under Restricted Stock and Stock Option Plans of FelCor (filed as Exhibit 10.17 to the 2004 Form 10-K and incorporated herein by reference).
10.19	FelCor Lodging Trust Incorporated 2005 Restricted Stock and Stock Option Plan (filed as Exhibit 4.4 to FelCor’s Registration Statement on Form S-8 (Registration File No. 333-126228) and incorporated herein by reference).
10.20	Form of Employee Stock Grant Contract under Restricted Stock and Stock Option Plans of FelCor applicable to 2005 Grants (filed as Exhibit 10.33 to FelCor’s Form 8-K dated April 26, 2005, and filed on May 2, 2005, and incorporated herein by reference).
10.21	Summary of Annual Compensation Program for Directors of FelCor (filed as Exhibit 10.18 to the 2004 Form 10-K and incorporated herein by reference).
10.22	Summary of 2006 Performance Criteria for Annual Incentive Bonus Award Program (filed as Exhibit 10.38 to FelCor’s Form 8-K, dated February 17, 2006, and filed on February 22, 2006 and incorporated herein by reference).
10.23.1	Form of Mortgage, Security Agreement and Fixture Filing by and between FelCor/CSS Holdings, L.P., as Mortgagor, and The Prudential Insurance Company of America, as Mortgagee (filed as Exhibit 10.23 to the March 1999 10-Q and incorporated herein by reference).
10.23.2	Promissory Note, dated April 1, 1999, in the original principal amount of $100,000,000, made by FelCor/CSS Holdings, Ltd., payable to the order of The Prudential Insurance Company of America (filed as Exhibit 10.23.1 to FelCor’s Form 10-Q for the quarter ended June 30, 1999 (the “June 1999 10-Q”) and incorporated herein by reference).

63

Exhibit
Number	Description of Exhibit
10.24.1	Form of Deed of Trust, Security Agreement and Fixture Filing, each dated as of May 12, 1999, from FelCor/MM Holdings, L.P., as Borrower, in favor of Fidelity National Title Insurance Company, as Trustee, and Massachusetts Mutual Life Insurance Company, as Beneficiary, each covering a separate hotel and securing one of the separate Promissory Notes described in Exhibit 10.21.2, also executed by FelCor/CSS Holdings, L.P. with respect to the Embassy Suites Hotel-Anaheim and Embassy Suites Hotel-Deerfield Beach, and by FelCor LP with respect to the Embassy Suites Hotel-Palm Desert (filed as Exhibit 10.24.2 to the June 1999 10-Q and incorporated herein by reference).
10.24.2	Form of six separate Promissory Notes, each dated May 12, 1999, made by FelCor/MM Holdings, L.P. payable to the order of Massachusetts Mutual Life Insurance Company in the respective original principal amounts of $12,500,000 (Embassy Suites Hotel-Dallas Market Center), $14,000,000 (Embassy Suites Hotel-Dallas Love Field), $12,450,000 (Embassy Suites Hotel-Tempe), $11,550,000 (Embassy Suites Hotel-Anaheim), $8,900,000 (Embassy Suites Hotel-Palm Desert), $15,600,000 (Embassy Suites Hotel-Deerfield Beach) (filed as Exhibit 10.24.1 to the June 1999 10-Q and incorporated herein by reference).
10.25.1	Form Deed of Trust and Security Agreement and Fixture Filing with Assignment of Leases and Rents, each dated as of April 20, 2000, from FelCor/MM S-7 Holdings, L.P., as Mortgagor, in favor of Massachusetts Mutual Life Insurance Company and Teachers Insurance and Annuity Association of America, as Mortgagee, each covering a separate hotel and securing one of the separate Promissory Notes described in Exhibit 10.22.3 (filed as Exhibit 10.24 to FelCor’s Form 10-Q for the quarter ended June 30, 2000 (the “June 2000 10-Q”) and incorporated herein by reference).
10.25.2	Form of Accommodation Cross-Collateralization Mortgage and Security Agreement, each dated as of April 20, 2000, executed by FelCor/MM S-7 Holdings, L.P., in favor of Massachusetts Mutual Life Insurance Company and Teachers Insurance and Annuity Association of America (filed as Exhibit 10.24.1 to the June 2000 10-Q and incorporated herein by reference).
10.25.3	Form of fourteen separate Promissory Notes, each dated April 20, 2000, each made by FelCor/MM S-7 Holdings, L.P., each separately payable to the order of Massachusetts Mutual Life Insurance Company and Teachers Insurance and Annuity Association of America, respectively, in the respective original principal amounts of $13,500,000 (Phoenix (Crescent), Arizona), $13,500,000 (Phoenix (Crescent), Arizona), $6,500,000 (Cypress Creek/Ft. Lauderdale, Florida), $6,500,000 (Cypress Creek/Ft. Lauderdale, Florida), $9,000,000 (Atlanta Galleria, Georgia), $9,000,000 (Atlanta Galleria, Georgia), $12,500,000 (Chicago O’Hare Airport, Illinois), $12,500,000 (Chicago O’Hare Airport, Illinois), $3,500,000 (Lexington, Kentucky), $3,500,000 (Lexington, Kentucky), $17,000,000 (Philadelphia Society Hill, Philadelphia), $17,000,000 (Philadelphia Society Hill, Philadelphia), $10,500,000 (South Burlington, Vermont) and $10,500,000 (South Burlington, Vermont) (filed as Exhibit 10.24.2 to the June 2000 10-Q and incorporated herein by reference).
10.26.1	Form Deed of Trust and Security Agreement, each dated as of May 2, 2000, from each of FelCor/CMB Buckhead Hotel, L.L.C., FelCor/CMB Marlborough Hotel, L.L.C., FelCor/CMB Deerfield Hotel, L.L.C., FelCor/CMB Corpus Holdings, L.P., FelCor/CMB Orsouth Holdings, L.P., FelCor/CMB New Orleans Hotel, L.L.C., FelCor/CMB Piscataway Hotel, L.L.C., and FelCor/CMB SSF Holdings, L.P., each as Borrower, in favor of The Chase Manhattan Bank, as Beneficiary, each covering a separate hotel and securing one of the separate Promissory Notes described in Exhibit 10.23.2 (filed as Exhibit 10.25 to the June 2000 10-Q and incorporated herein by reference).
10.26.2	Form of eight separate Promissory Notes, each dated May 2, 2000, made by FelCor/CMB Buckhead Hotel, L.L.C., FelCor/CMB Marlborough Hotel, L.L.C., FelCor/CMB Deerfield Hotel, L.L.C., FelCor/CMB Corpus Holdings, L.P., FelCor/CMB Orsouth Holdings, L.P., FelCor/CMB New Orleans Hotel, L.L.C., FelCor/CMB Piscataway Hotel, L.L.C. and

64

Exhibit
Number	Description of Exhibit
	FelCor/CMB SSF Holdings, L.P., each separately payable to the order of The Chase Manhattan Bank in the respective original principal amounts of $38,250,000 (Atlanta Buckhead, Georgia), $20,500,000 (Boston Marlborough, Massachusetts), $16,575,000 (Chicago Deerfield, Illinois), $5,338,000 (Corpus Christi, Texas), $25,583,000 (Orlando South, Florida), $32,650,000 (New Orleans, Louisiana), $20,728,000 (Piscataway, New Jersey) and $26,268,000 (South San Francisco, California) (filed as Exhibit 10.25.1 to the June 2000 10-Q and incorporated herein by reference).
10.27.1	Loan Agreement, dated April 24, 2003, by and between FelCor/JPM Hotels, L.L.C., as borrower, and JPMorgan Chase Bank, as lender, relating to a $115 million loan from lender to borrower (the “Mortgage Loan”) (filed as Exhibit 10.28 to FelCor’s Form 10-Q for the quarter ended March 31, 2003 (the “March 2003 10-Q”) and incorporated herein by reference).
10.27.2	Form of Mortgage, Deed of Trust and Security Agreement, each dated April 24, 2003, from FelCor/JPM Hotels, L.L.C., as borrower, and DJONT/JPM Leasing, L.L.C., as lessee, (and, in the case of the Mortgages with respect to the properties located in the State of Florida, FelCor LP) in favor of JPMorgan Chase Bank, as lender, each covering a separate hotel and securing the Mortgage Loan (filed as Exhibit 10.28.1 to the March 2003 10-Q and incorporated herein by reference).
10.27.3	Promissory Note, dated April 24, 2003, made by FelCor/JPM Hotels, L.L.C. payable to the order of JPMorgan Chase Bank in the original principal amount of $115 million (filed as Exhibit 10.28.2 to the March 2003 10-Q and incorporated herein by reference).
10.28.1	Mezzanine Loan Agreement, dated April 24, 2003, by and between FelCor/JPM Holdings, L.L.C., as borrower, and JPMorgan Chase Bank, as lender, relating to a $10 million senior mezzanine loan from lender to borrower (the “Senior Mezzanine Loan”) (filed as Exhibit 10.29 to the March 2003 10-Q and incorporated herein by reference).
10.28.2	Pledge and Security Agreement, dated April 24, 2003, from FelCor/JPM Holdings, L.L.C., as pledgor, in favor of JPMorgan Chase Bank, as lender, securing the Senior Mezzanine Loan (filed as Exhibit 10.29.1 to the March 2003 10-Q and incorporated herein by reference).
10.28.3	Promissory Note, dated April 24, 2003, made by FelCor/JPM Holdings, L.L.C. payable to the order of JPMorgan Chase Bank in the original principal amount of $10 million (filed as Exhibit 10.29.2 to the March 2003 10-Q and incorporated herein by reference).
10.29.1	Junior Mezzanine Loan Agreement, dated April 24, 2003, by and between DJONT/JPM Tenant Co., L.L.C., as borrower, and JPMorgan Chase Bank, as lender, relating to a $25 million junior mezzanine loan from lender to borrower (the “Junior Mezzanine Loan”) (filed as Exhibit 10.30 to the March 2003 10-Q and incorporated herein by reference).
10.29.2	Pledge and Security Agreement, dated April 24, 2003, from DJONT/JPM Tenant Co., L.L.C., as pledgor, in favor of JPMorgan Chase Bank, as lender, securing the Junior Mezzanine Loan (filed as Exhibit 10.30.1 to the March 2003 10-Q and incorporated herein by reference).
10.29.3	Promissory Note, dated April 24, 2003, made by DJONT/JPM Tenant Co., L.L.C. payable to the order of JPMorgan Chase Bank in the original principal amount of $25 million (filed as Exhibit 10.30.2 to the March 2003 10-Q and incorporated herein by reference).
10.29.4	Security Agreement, dated April 24, 2003, from DJONT/JPM Tenant Co., L.L.C. in favor of JPMorgan Chase Bank, securing the Junior Mezzanine Loan (filed as Exhibit 10.30.3 to the March 2003 10-Q and incorporated herein by reference).
10.30	Termination Agreement, dated July 28, 2004, by and among FCH/DT BWI Hotel, L.L.C., FCH/DT BWI Holdings, L.P., FelCor Hotel Asset Company, L.L.C., FelCor/JPM Atlanta CP

65

Exhibit
Number	Description of Exhibit
	Hotel, L.L.C., FelCor/JPM Atlanta ES Hotel, L.L.C., FelCor/JPM Austin HI Holdings, L.P., FelCor/JPM Austin Holdings, L.P., FelCor/JPM Boca Raton Hotel, L.L.C., FelCor/JPM BWI Hotel, L.L.C., FelCor/JPM Denver Hotel, L.L.C., FelCor/JPM LBV Hotel, L.L.C., FelCor/JPM Mandalay Hotel, L.L.C., FelCor/JPM Nashville Hotel, L.L.C., FelCor/JPM Orlando Hotel, L.L.C., FelCor/JPM Orlando I-Drive Hotel, L.L.C., FelCor/JPM Phoenix Hotel, L.L.C., FelCor/JPM Troy Hotel, L.L.C., FelCor/JPM Wilmington Hotel, L.L.C., BHR Operations, L.L.C., DJONT Leasing, L.L.C., DJONT Operations, L.L.C., DJONT/JPM Atlanta CP Leasing, L.L.C., DJONT/JPM Atlanta ES Leasing, L.L.C., DJONT/JPM Austin HI Leasing, L.P., DJONT/JPM Austin Leasing, L.P., DJONT/JPM Boca Raton Leasing, L.L.C., DJONT/JPM BWI Leasing, L.L.C., DJONT/JPM Denver Leasing, L.L.C., DJONT/JPM LBV Leasing, L.L.C., DJONT/JPM Mandalay Leasing, L.L.C., DJONT/JPM Orlando I-Drive Leasing, L.L.C., DJONT/JPM Orlando Leasing, L.L.C., DJONT/JPM Phoenix Leasing, L.L.C., DJONT/JPM Troy Leasing, L.L.C., DJONT/JPM Wilmington Leasing, L.L.C., FCH/DT Leasing, L.L.C., FCH/DT Leasing II, L.L.C., FelCor TRS Holdings, L.P., FelCor LP and JPMorgan Chase Bank (filed as Exhibit 10.31.6 to FelCor’s Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference).
10.31.1	Form of Loan Agreement, each dated either May 26, 2004, June 10, 2004 or July 19, 2004, between JPMorgan Chase Bank, as lender, and each of FelCor/JPM Boca Raton Hotel, L.L.C., FelCor/JPM Phoenix Hotel, L.L.C., FelCor/JPM Wilmington Hotel, L.L.C., FelCor/JPM Atlanta ES Hotel, L.L.C., FelCor/JPM Austin Holdings, L.P., FelCor/JPM Orlando Hotel, L.L.C., FelCor/JPM Denver Hotel, L.L.C., FelCor/JPM Troy Hotel, L.L.C. and FelCor/JPM BWI Hotel, L.L.C. and FCH/DT BWI Hotel, L.L.C., as borrowers, and acknowledged and agreed by FelCor LP (filed as Exhibit 10.34 to FelCor’s Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference).
10.31.2	Form of Mortgage, Renewal Mortgage, Deed of Trust, Deed to Secure Debt, Indemnity Deed of Trust and Assignment of Leases and Rents, Security Agreement and Fixture Filing, each dated either May 26, 2004, June 10, 2004 or July 19, 2004, from FelCor/JPM Wilmington Hotel, L.L.C., DJONT/JPM Wilmington Leasing, L.L.C., FelCor/JPM Phoenix Hotel, L.L.C., DJONT/JPM Phoenix Leasing, L.L.C., FelCor/JPM Boca Raton Hotel, L.L.C., DJONT/JPM Boca Raton Leasing, L.L.C., FelCor/JPM Atlanta ES Hotel, L.L.C., DJONT/JPM Atlanta ES Leasing, L.L.C., FelCor/JPM Austin Holdings, L.P., DJONT/JPM Austin Leasing, L.P., FelCor/JPM Orlando Hotel, L.L.C., DJONT/JPM Orlando Leasing, L.L.C., FelCor/JPM Denver Hotel, L.L.C., DJONT/JPM Denver Leasing, L.L.C., FelCor/JPM Troy Hotel, L.L.C., DJONT/JPM Troy Leasing, L.L.C., FCH/DT BWI Holdings, L.P., FCH/DT BWI Hotel, L.L.C. and DJONT/JPM BWI Leasing, L.L.C., to, and for the benefit of, JPMorgan Chase Bank, as mortgagee or beneficiary (filed as Exhibit 10.34.1 to FelCor’s Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference).
10.31.3	Form of nine separate Promissory Notes, each dated either May 26, 2004, June 10, 2004 or July 19, 2004, made by FelCor/JPM Wilmington Hotel, L.L.C., FelCor/JPM Phoenix Hotel, L.L.C., FelCor/JPM Boca Raton Hotel, L.L.C., FelCor/JPM Atlanta ES Hotel, L.L.C., FelCor/JPM Austin Holdings, L.P., FelCor/JPM Orlando Hotel, L.L.C., FelCor/JPM Denver Hotel, L.L.C., FelCor/JPM Troy Hotel, L.L.C. and FelCor/JPM BWI Hotel, L.L.C., each separately payable to the order of JPMorgan Chase Bank in the respective original principal amounts of $11,000,000 (Wilmington, Delaware), $21,368,000 (Phoenix, Arizona), $5,500,000 (Boca Raton, Florida), $13,500,000 (Atlanta, Georgia), $9,616,000 (Austin, Texas), $9,798,000 (Orlando, Florida), $5,000,000 (Aurora, Colorado), $6,900,000 (Troy, Michigan) and $24,120,000 (Linthicum, Maryland) (filed as Exhibit 10.34.2 to FelCor’s Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference).
10.31.4	Form of Guaranty of Recourse Obligations of Borrower, each dated either May 26, 2004, June 10, 2004 or July 19, 2004, made by FelCor LP in favor of JPMorgan Chase Bank (filed as Exhibit 10.34.3 to FelCor’s Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference).

66

Exhibit
Number	Description of Exhibit
10.32.1	Construction Loan Agreement, dated April 27, 2005, among Grande Palms, L.L.C. and Bank of America, N.A., as Administrative Agent, and the other financial institutions party thereto, and Bank of America Securities, as Lead Arranger, for a maximum principal loan amount of $69.8 million (filed as Exhibit 10.34.1 of FelCor’s Form 10-Q for the quarter ended June 30, 2005, and incorporated herein by reference).
10.32.2	Guaranty Agreement, dated April 27, 2005, by FelCor Lodging Limited Partnership in favor of Bank of America, N.A. on behalf of the lenders(filed as Exhibit 10.34.2 of FelCor’s Form 10-Q for the quarter ended June 30, 2005, and incorporated herein by reference).
10.32.3	Form of Promissory Note, each dated April 27, 2005, made by Grande Palms, L.L.C., each separately payable to the order of Bank of America, N.A. ($25 million), Bank of Montreal ($20 million) and The Bank of Nova Scotia ($24.8 million)(filed as Exhibit 10.34.3 of FelCor’s Form 10-Q for the quarter ended June 30, 2005, and incorporated herein by reference).
10.32.4	Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated April 27, 2005, made by Grande Palms, L.L.C. for the benefit of Bank of America, N.A., as Administrative Agent under the Construction Loan Agreement referenced in Exhibit 10.34.1 (filed as Exhibit 10.34.4 of FelCor’s Form 10-Q for the quarter ended June 30, 2005, and incorporated herein by reference).
10.33	Term Credit Agreement, dated as of October 18, 2005, among FelCor TRS Borrower 1, L.P., as Initial Borrower; FelCor TRS Guarantor, L.P., FelCor LP and the other guarantors named therein as Guarantors; Citigroup North America, Inc., as Initial Lender, as Administrative Agent, and as Collateral Agent, and Citigroup Global Markets, Inc., as Sole Lead Arranger and Sole Book Running Manager, for a maximum principal loan amount of $175 million (filed as Exhibit 10.35 to FelCor’s Form 10-Q for the quarter ended September 30, 2005, and incorporated herein by reference).
10.33.1*	First Amendment to Term Credit Agreement, dated as of December 9, 2005, among FelCor TRS Borrower 1, L.P. and FelCor TRS Borrower 2, L.P., as borrowers; FelCor TRS Guarantor, L.P., FelCor LP, FelCor Lodging Company, L.L.C., FelCor Philadelphia Center, L.L.C., FelCor Marshall Motels, L.L.C. and Center City Hotel Associates, as guarantors; Citicorp North America, Inc., as the initial Lender, the administrative agent for the lenders and the collateral agent for the secured parties; and Citigroup Global Markets Inc., as sole lead arranger and sole book running manager.
10.33.2*	Second Amendment to Term Credit Agreement, dated as of January 9, 2006, among FelCor TRS Borrower 1, L.P. and FelCor TRS Borrower 2, L.P., as borrowers and certain other borrowers named therein; FelCor TRS Guarantor, L.P., FelCor LP, FelCor Lodging Company, L.L.C., FelCor Philadelphia Center, L.L.C., FelCor Marshall Motels, L.L.C. and Center City Hotel Associates, as guarantors; Citicorp North America, Inc., as the initial Lender, the administrative agent for the lenders and the collateral agent for the secured parties; and Citigroup Global Markets Inc., as sole lead arranger and sole book running manager.
10.34.1*	Credit Agreement, dated as of December 12, 2005, by and among FelCor, FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and J.P. Morgan Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint lead arrangers for an initial aggregate amount of $125,000,000.
10.34.1.1*	First Amendment to Credit Agreement, dated as of January 12, 2006, by and among FelCor, FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and J.P. Morgan Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint lead arrangers.

67

Exhibit
Number	Description of Exhibit
10.34.1.2*	Second Amendment to Credit Agreement, dated as of January 25, 2006, by and among FelCor, FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and J.P. Morgan Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint lead arrangers.
10.34.2*	Subsidiary Guaranty, dated as of January 27, 2006, made by FelCor/CSS Holdings, L.P., FelCor Hotel Asset Company, L.L.C., FelCor Pennsylvania Company, L.L.C., FelCor Lodging Holding Company, L.L.C., FHAC Texas Holdings, L.P., FelCor Canada Co., FelCor Omaha Hotel Company, L.L.C., FelCor TRS Holdings, L.P., Myrtle Beach Hotels, L.L.C., FelCor TRS Borrower I, L.P., FelCor TRS Guarantor, L.P., Center City Hotel Associates, FelCor Lodging Company, L.L.C., FelCor TRS Borrower 3, L.P. and FelCor TRS Borrower 4, L.L.C.
10.35*	Purchase and Sale Agreement, dated effective as of January 20, 2006, by and between FelCor and Hospitality Properties Trust.
14.1	FelCor Code of Business Conduct and Ethics (filed as Exhibit 14.1 to the 2004 Form 10-K and incorporated herein by reference).
21.1*	List of Subsidiaries of FelCor.
23.1*	Consent of PricewaterhouseCoopers LLP.
31.1*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002).
32.1*	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2*	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

* Indicates that the document is filed herewith.

68

SIGNATURES

     Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FELCOR LODGING TRUST INCORPORATED
By:	/s/ Lawrence D. Robinson
	Lawrence D. Robinson
	Executive Vice President

Date: March 15, 2006

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date	Signature
March 15, 2006	/s/ Thomas J. Corcoran, Jr.
	Thomas J. Corcoran, Jr.
	Chairman of the Board and Director
March 15, 2006	/s/ Richard A. Smith
	Richard A. Smith
	President and Director (Chief Executive Officer)
March 15, 2006	/s/ Andrew J. Welch
	Andrew J. Welch
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)
March 15, 2006	/s/ Lester C. Johnson
	Lester C. Johnson
	Senior Vice President and Controller
	(Principal Accounting Officer)
March 8, 2006	/s/ Melinda J. Bush
	Melinda J. Bush, Director
March 13, 2006	/s/ Richard S. Ellwood
	Richard S. Ellwood, Director
March 8, 2006	/s/ Richard O. Jacobson
	Richard O. Jacobson, Director
March 9, 2006	/s/ David C. Kloeppel
	David C. Kloeppel, Director
March 13, 2006	/s/ Charles A. Ledsinger, Jr.
	Charles A. Ledsinger, Jr., Director
March 9, 2006	/s/ Robert H. Lutz, Jr.
	Robert H. Lutz, Jr., Director
March 13, 2006	/s/ Robert A. Mathewson
	Robert A. Mathewson, Director
March 8, 2006	/s/ Donald J. McNamara
	Donald J. McNamara, Director

69

FELCOR LODGING TRUST INCORPORATED

INDEX TO FINANCIAL STATEMENTS

PART I — FINANCIAL INFORMATION

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets — December 31, 2005 and 2004	F-4
Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003	F-5
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2005, 2004 and 2003	F-6
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2005, 2004 and 2003	F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003	F-8
Notes to Consolidated Financial Statements	F-9
Schedule III — Real Estate and Accumulated Depreciation as of December 31, 2005	F-35

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of FelCor Lodging Trust Incorporated:

We have completed integrated audits of FelCor Lodging Trust Incorporated’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005, and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of FelCor Lodging Trust Incorporated and its subsidiaries, or the Company, at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing in Item 9A, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

F-2

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP
Dallas, Texas
March 14, 2006

F-3

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED BALANCE SHEETS

December 31, 2005 and 2004

(in thousands)

	2005			2004
ASSETS
Investment in hotels, net of accumulated depreciation of $1,019,123 in 2005 and $948,631 in 2004	$	2,587,379		$	2,955,766
Investment in unconsolidated entities		109,262			110,843
Hotels held for sale		—			255
Cash and cash equivalents		94,564			119,310
Restricted cash		18,298			34,736
Accounts receivable, net of allowance for doubtful accounts of $2,203 in 2005 and $905 in 2004		54,815			51,845
Deferred expenses, net of accumulated amortization of $12,150 in 2005 and $14,935 in 2004		12,423			18,804
Condominium development project		13,051			1,613
Other assets		29,301			24,486
Total assets	$	2,919,093		$	3,317,658
LIABILITIES AND STOCKHOLDERS’ EQUITY
Debt, net of discount of $2,982 in 2005 and $4,529 in 2004	$	1,675,280		$	1,767,122
Distributions payable		8,596			8,867
Accrued expenses and other liabilities		138,017			124,922
Total liabilities		1,821,893			1,900,911
Commitments and contingencies
Minority interest in FelCor LP, 2,763 and 2,788 units issued and outstanding at December 31, 2005 and 2004, respectively		25,393			39,659
Minority interest in other partnerships		40,014			46,765
Stockholders’ equity:
Preferred stock, $.01 par value, 20,000 shares authorized:
Series A Cumulative Convertible Preferred Stock, 12,880 shares, liquidation value of $322,011 issued and outstanding at December 31, 2005 and December 31, 2004		309,362			309,362
Series B Cumulative Redeemable Preferred Stock, 68 shares, liquidation value of $169,395 issued and outstanding at December 31, 2004		—			169,395
Series C Cumulative Redeemable Preferred Stock, 68 shares, liquidation value of $169,950 issued and outstanding at December 31, 2005		169,412			—
Common stock, $.01 par value, 200,000 shares authorized and 69,440 and 69,436 shares issued, including shares in treasury, at December 31, 2005 and 2004, respectively		694			694
Additional paid-in capital		2,081,869			2,085,189
Accumulated other comprehensive income		19,602			15,780
Accumulated deficit		(1,372,720	)		(1,066,143	)
Less: Common stock in treasury, at cost, of 9,231 and 9,619 shares at December 31, 2005 and 2004, respectively		(176,426	)		(183,954	)
Total stockholders’ equity		1,031,793			1,330,323
Total liabilities and stockholders’ equity	$	2,919,093		$	3,317,658

The accompanying notes are an integral part of these consolidated financial statements.

F-4

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31, 2005, 2004 and 2003

(in thousands, except per share data)

	2005			2004			2003
Revenues:
Hotel operating revenue	$	1,210,130		$	1,113,153		$	1,047,342
Retail space rental and other revenue		2,049			2,721			1,022
Total revenues		1,212,179			1,115,874			1,048,364
Expenses:
Hotel departmental expenses		419,477			400,396			367,446
Other property operating costs		353,070			323,587			303,611
Management and franchise fees		61,348			57,305			55,345
Taxes, insurance and lease expense		122,186			109,310			112,829
Abandoned projects		265			—			—
Corporate expenses		19,025			17,035			14,233
Depreciation		119,323			111,836			116,710
Total operating expenses		1,094,694			1,019,469			970,174
Operating income		117,485			96,405			78,190
Interest expense, net		(130,954	)		(145,666	)		(162,808	)
Impairment loss		(263,091	)		(3,494	)		(74,160	)
Hurricane loss		(6,481	)		(2,125	)		—
Charge-off of deferred financing costs		(2,659	)		(6,960	)		(2,834	)
Loss on early extinguishment of debt		(11,921	)		(44,216	)		—
Gain on swap termination		—			1,005			—
Loss before equity in income of unconsolidated entities, minority interests and gain on sale of assets		(297,621	)		(105,051	)		(161,612	)
Equity in income from unconsolidated entities		10,169			17,121			2,370
Gain on sale of assets		733			1,167			284
Minority interests		23,813			5,229			10,632
Loss from continuing operations		(262,906	)		(81,534	)		(148,326	)
Discontinued operations		11,291			(18,593	)		(161,818	)
Net loss		(251,615	)		(100,127	)		(310,144	)
Preferred dividends		(39,408	)		(35,130	)		(26,908	)
Issuance costs of redeemed preferred stock		(6,522	)		—			—
Net loss applicable to common stockholders	$	(297,545	)	$	(135,257	)	$	(337,052	)
Loss per common share data:
Basic and diluted:
Net loss from continuing operations	$	(5.20	)	$	(1.98	)	$	(2.99	)
Net loss	$	(5.01	)	$	(2.29	)	$	(5.75	)
Weighted average common shares outstanding		59,436			59,045			58,657
Cash dividends declared on common stock	$	0.15			—			—

The accompanying notes are an integral part of these consolidated financial statements.

F-5

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the years ended December 31, 2005, 2004 and 2003

(in thousands)

	2005			2004			2003
Net loss	$	(251,615	)	$	(100,127	)	$	(310,144	)
Unrealized holding gains from interest rate swaps		2,074			147			—
Foreign currency translation adjustment		1,748			6,155			9,577
Comprehensive loss	$	(247,793	)	$	(93,825	)	$	(300,567	)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the years ended December 31, 2005, 2004, and 2003
(in thousands)

	Preferred Stock						Common Stock
																Accumulated
	Number						Number						Additional			Other									Total
	of						of						Paid-in			Comprehensive			Accumulated			Treasury			Stockholders’
	Shares			Amount			Shares			Amount			Capital			Income (Loss)			Deficit			Stock			Equity
Balance at December 31, 2002		6,048		$	318,907			75,136		$	751		$	2,204,530		$	(99	)	$	(593,834	)	$	(313,438	)	$	1,616,817
Foreign exchange translation		—			—			—			—			—			9,577			—			—			9,577
Issuance of stock awards		—			—			6			—			(1,873	)		—			—			1,873			—
Amortization of stock awards		—			—			—			—			2,210			—			—			—			2,210
Common stock exchange for treasury stock		—			—			(5,713	)		(57	)		(109,295	)		—			—			109,352			—
Conversion of operating partnership units into common shares		—			—			—			—			(2,495	)		—			—			4,936			2,441
Allocation from minority units		—			—			—			—			2,279			—			—			—			2,279
Dividends declared:
$1.95 per Series A preferred share		—			—			—			—			—			—			(11,662	)		—			(11,662	)
$2.25 per Series B depositary preferred share		—			—			—			—			—			—			(15,246	)		—			(15,246	)
Net loss		—			—			—			—			—			—			(310,144	)		—			(310,144	)
Balance at December 31, 2003		6,048			318,907			69,429			694			2,095,356			9,478			(930,886	)		(197,277	)		1,296,272
Foreign exchange translation		—			—			—			—			—			6,155			—			—			6,155
Issuance of Series A preferred stock		6,900			159,850			—			—			(3,850	)		—			—			—			156,000
Issuance of stock awards		—			—			7			—			(9,067	)		—			—			9,092			25
Amortization of stock awards		—			—			—			—			3,179			—			—			—			3,179
Unrealized gain on hedging transaction		—			—			—			—			—			147			—			—			147
Conversion of operating partnership units into common shares		—			—			—			—			(1,999	)		—			—			4,692			2,693
Allocation from minority units		—			—			—			—			1,109			—			—			—			1,109
Forfeitures of stock awards		—			—			—			—			461			—			—			(461	)		—
Dividends declared:
$1.95 per Series A preferred share		—			—			—			—			—			—			(19,884	)		—			(19,884	)
$2.25 per Series B depositary preferred share		—			—			—			—			—			—			(15,246	)		—			(15,246	)
Net loss		—			—			—			—			—			—			(100,127	)		—			(100,127	)
Balance at December 31, 2004		12,948			478,757			69,436			694			2,085,189			15,780			(1,066,143	)		(183,954	)		1,330,323
Foreign exchange translation		—			—			—			—			—			1,748			—			—			1,748
Issuance of Series C preferred stock		68			169,412			—			—			(5,492	)		—			—			—			163,920
Retirement of Series B preferred stock		(68	)		(169,395	)		—			—			6,522			—			(6,522	)					(169,395	)
Issuance of stock awards		—			—			4			—			(7,285	)		—			—			7,022			(263	)
Amortization of stock awards		—			—			—			—			3,265			—			—			—			3,265
Unrealized gain on hedging transaction		—			—			—			—			—			2,074			—			—			2,074
Conversion of operating partnership units into common shares		—			—			—			—			(118	)		—			—			506			388
Allocation from minority units		—			—			—			—			(212	)		—			—			—			(212	)
Dividends declared:		—
$0.15 per common share					—			—			—			—			—			(9,032	)		—			(9,032	)
$1.95 per Series A preferred share		—			—			—			—			—			—			(25,117	)		—			(25,117	)
$1.125 per Series B depositary preferred share		—			—			—			—			—			—			(5,432	)		—			(5,432	)
$1.63 per Series C depositary preferred share		—			—			—			—			—			—			(8,859	)		—			(8,859	)
Net loss		—			—			—			—			—			—			(251,615	)		—			(251,615	)
Balance at December 31, 2005		12,948		$	478,774			69,440		$	694		$	2,081,869		$	19,602		$	(1,372,720	)	$	(176,426	)	$	1,031,793

The accompanying notes are an integral part of these consolidated financial statements.

F-7

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2005, 2004, and 2003
(in thousands)

	2005			2004			2003
Cash flows from operating activities:
Net loss	$	(251,615	)	$	(100,127	)	$	(310,144	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		122,535			122,653			140,225
Gain on sale of assets		(12,522	)		(20,589	)		(2,660	)
Amortization of deferred financing fees		3,399			4,161			4,996
Accretion (amortization) of debt		1,167			510			590
Allowance for doubtful accounts		1,298			199			309
Amortization of unearned officers’ and directors’ compensation		2,904			2,945			2,210
Equity in income from unconsolidated entities		(10,169	)		(17,121	)		(2,370	)
Distributions of income from unconsolidated entities		1,062			11,932			2,212
Charge-off of deferred financing costs		2,659			6,960			2,834
Loss (gain) on early extinguishment of debt		8,641			44,216			(1,611	)
Impairment loss on investment in hotels and hotels held for sale		266,751			38,289			245,509
Minority interests		(23,295	)		(7,375	)		(20,588	)
Changes in assets and liabilities:
Accounts receivable		(7,476	)		(2,412	)		2,597
Restricted cash operations		(6,941	)		(23,467	)		2,826
Other assets		(4,887	)		(424	)		(7,043	)
Accrued expenses and other liabilities		17,971			(27,069	)		(6,978	)
Net cash flow provided by operating activities		111,482			33,281			52,914
Cash flows provided by (used in) investing activities:
Acquisition of hotels		—			(27,759	)		—
Improvements and additions to hotels		(111,664	)		(95,599	)		(64,045	)
Additions to condominium project		(11,546	)		—			—
Acquisition of joint venture		(1,197	)		—			—
Cash from consolidation of venture		3,204			—			2,705
Proceeds from asset dispositions		73,502			152,686			104,131
Proceeds received from property damage insurance		3,131			—			—
Decrease (increase) in restricted cash-investing		10,804			8,155			(689	)
Cash distributions from unconsolidated entities		6,578			10,899			6,636
Capital contributions to unconsolidated entities		(1,350	)		—			—
Net cash flow provided by (used in) investing activities		(28,538	)		48,382			48,738
Cash flows provided by (used in) financing activities:
Proceeds from borrowings		233,911			523,802			321,119
Net proceeds from sale of preferred stock		164,147			158,990			—
Redemption of preferred stock		(169,395	)		—			—
Repayment of borrowings		(292,990	)		(838,891	)		(198,426	)
Payment of debt issue costs		(659	)		(5,517	)		(6,656	)
Decrease in restricted cash financing		4,401			—			—
Distributions paid to other partnerships’ minority interests		—			(4,000	)		—
Contribution from minority interest holders		2,200			3,247			—
Distributions paid to FelCor LP limited partners		(414	)		—			(492	)
Distributions paid to preferred stockholders		(39,905	)		(34,757	)		(26,908	)
Distributions paid to common stockholders		(9,032	)		—			(8,796	)
Net cash flow provided by (used in) financing activities		(107,736	)		(197,126	)		79,841
Effect of exchange rate changes on cash		46			2,888			229
Net change in cash and cash equivalents		(24,746	)		(112,575	)		181,722
Cash and cash equivalents at beginning of periods		119,310			231,885			50,163
Cash and cash equivalents at end of periods	$	94,564		$	119,310		$	231,885
Supplemental cash flow information — Interest paid	$	132,091		$	162,324		$	160,407

The accompanying notes are an integral part of these consolidated financial statements.

F-8

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

     In 1994, FelCor Lodging Trust Incorporated, or FelCor, went public as a real estate investment trust, or REIT, with six hotels and a market capitalization of $120 million. We are now one of the nation’s largest lodging REITs based on total assets and number of hotels owned, holding ownership interests in 130 hotels at December 31, 2005. We are the owner of the largest number of Embassy Suites Hotels^® and independently owned Doubletree^®-branded hotels in North America. Our portfolio also includes 66 upscale all-suite hotels.

     FelCor is the sole general partner of, and the owner of an approximately 95% limited partnership interest in, FelCor Lodging Limited Partnership, or FelCor LP. All of our operations are conducted solely through FelCor LP, or its subsidiaries.

     At December 31, 2005, we had ownership interests in 130 hotels. We owned a 100% real estate interest in 101 hotels, a 90% or greater interest in entities owning seven hotels, a 75% interest in an entity owning one hotel, a 60% interest in an entity owning two hotels, and 50% interests in unconsolidated entities that own 19 hotels. We consolidated the operating revenues and expenses with regard to 125 of these hotels as a result of our ownership interests in the operating lessees of these hotels. At December 31, 2005, we owned 100% of the operating lessees with regard to 113 hotels and 51% of the operating lessees with regard to 12 hotels. The operating revenues and expenses of the remaining five hotels were unconsolidated, four hotels were operated by 50% owned lessees and one hotel, in which we had a 50% ownership interest, was operated without a lease.

     At December 31, 2005, we had 60,209,499 shares of FelCor common stock and 2,762,540 units of FelCor LP limited partnership interest outstanding.

     The following table reflects the distribution, by brand, of the 125 hotels included in our consolidated hotel continuing operations at December 31, 2005:

Brand	Hotels		Rooms
Embassy Suites Hotels		54		13,653
Doubletree and Doubletree Guest Suites®		9		2,019
Holiday Inn® — branded		33		11,356
Crowne Plaza® and Crowne Plaza Suites®		12		4,025
Sheraton® and Sheraton Suites®		10		3,269
Other brands		7		1,810
Total hotels		125

     The hotels shown in the above table are located in the United States (28 states) and Canada (two hotels), with concentrations in Texas (25 hotels), California (19 hotels), Florida (15 hotels) and Georgia (12 hotels). Approximately 55% of our hotel room revenues were generated from hotels in these four states during 2005.

     At December 31, 2005, of the 125 consolidated hotels included in continuing operations, (i) subsidiaries of Hilton Hotels corporation, or Hilton, managed 63, (ii) subsidiaries of InterContinental Hotels Group, or IHG, managed 48, (iii) subsidiaries of Starwood Hotels & Resorts Worldwide Inc., or Starwood, managed 11, and (iv) independent management companies managed three.

     Certain reclassifications have been made to prior period financial information to conform to the current period’s presentation with no effect to previously reported net loss or stockholders’ equity.

F-9

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies

     Principles of Consolidation — Our accompanying consolidated financial statements include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation. Investments in unconsolidated entities (consisting entirely of 50 percent owned ventures) are accounted for by the equity method.

     Use of Estimates — The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

     Investment in Hotels — Our hotels are stated at cost and are depreciated using the straight-line method over estimated useful lives of 40 years for buildings, 15 to 20 years for improvements and three to seven years for furniture, fixtures, and equipment.

     We periodically review the carrying value of each of our hotels to determine if circumstances exist indicating an impairment in the carrying value of the investment in the hotel or that depreciation periods should be modified. If facts or circumstances support the possibility of impairment, we prepare a projection of the undiscounted future cash flows over the shorter of the hotel’s estimated useful life or the expected hold period, without interest charges, of the specific hotel and determine if the investment in such hotel is recoverable based on the undiscounted future cash flows. If impairment is indicated, we make an adjustment to reduce carrying value of the hotel to its then fair value. We use recent operating results and current market information to arrive at our estimates of fair value.

     Maintenance and repairs are expensed and major renewals and improvements are capitalized. Upon the sale or disposition of a fixed asset, the asset and related accumulated depreciation are removed from our accounts and the related gain or loss is included in operations.

     Acquisition of Hotels — Our hotel acquisitions consist almost exclusively of land, building, furniture, fixtures and equipment, and inventory. We allocate the purchase price among these asset classes based upon their respective values determined in accordance with Statement of Financial Accounting Standards, or SFAS, 141, “Business Combinations.” When we acquire properties, we acquire them for use. The only intangible assets typically acquired consist of miscellaneous operating agreements all of which are of short duration and at market rates. We do not generally acquire any significant in-place leases or other intangible assets (e.g., management agreements, franchise agreements or trademarks) when we acquire hotels. In conjunction with the acquisition of a hotel, we typically enter into new franchise and management agreements with the selected brand owner and manager.

     Investment in Unconsolidated Entities — We own a 50% interest in various real estate ventures in which the partners or members jointly make all material decisions concerning the business affairs and operations. Additionally, we also own a preferred equity interest in one of these real estate ventures. Because we do not control these entities, we carry our investment in unconsolidated entities at cost, plus our equity in net earnings or losses, less distributions received since the date of acquisition and any adjustment for impairment. Our equity in net earnings or losses is adjusted for the straight-line depreciation, over the lower of 40 years or the remaining life of the venture, of the difference between our cost and our proportionate share of the underlying net assets at the date of acquisition. We periodically review our investment in unconsolidated entities for other than temporary declines in market value. Any decline that is not expected to be recovered in the next 12 months is considered other than temporary and an impairment is recorded as a reduction in the carrying value of the investment. Estimated fair values are based on our projections of cash flows and market capitalization rates.

F-10

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies — (continued)

     Hotels Held for Sale — We consider each individual hotel to be an identifiable component of our business. In accordance with SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” we do not consider hotels as “held for sale” until it is probable that the sale will be completed within one year. Once a hotel is “held for sale” the operations related to the hotel are included in discontinued operations. We consider a hotel as “held for sale” once we have executed a contract for sale, allowed the buyer to complete their due diligence review, and received a substantial non-refundable deposit. Until a buyer has completed its due diligence review of the asset, necessary approvals have been received and substantive conditions to the buyer’s obligation to perform have been satisfied, we do not consider a sale to be probable.

     We do not depreciate hotel assets so long as they are classified as “held for sale.” Upon designation of a hotel as being “held for sale,” and quarterly thereafter, we review the carrying value of the hotel and, as appropriate, adjust its carrying value to the lesser of depreciated cost or fair value, less cost to sell, in accordance with SFAS 144. Any such adjustment in the carrying value of a hotel classified as “held for sale” is reflected in discontinued operations. We include in discontinued operations the operating results of those hotels that are classified as “held for sale” or that have been sold.

     Cash and Cash Equivalents — All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents.

     We place cash deposits at major banks. Our bank account balances may exceed the Federal Depository Insurance Limits of $100,000; however, management believes the credit risk related to these deposits is minimal.

     Restricted Cash —Restricted cash includes reserves for capital expenditures, real estate taxes, and insurance, as well as cash collateral deposits for mortgage debt agreement provisions.

     Deferred Expenses — Deferred expenses, consisting primarily of loan costs, are recorded at cost. Amortization is computed using a method that approximates the interest method over the maturity of the related debt.

     Other Assets — Other assets consist primarily of hotel operating inventories, prepaid expenses and deposits.

     Revenue Recognition — Approximately 99.8% to 99.9% of our revenue is comprised of hotel operating revenues, such as room revenue, food and beverage revenue, and revenue from other hotel operating departments (such as telephone, parking and business centers). These revenues are recorded net of any sales or occupancy taxes collected from our guests. All rebates or discounts are recorded, when allowed, as a reduction in revenue, and there are no material contingent obligations with respect to rebates or discounts offered by us. All revenues are recorded on an accrual basis, as earned. Appropriate allowances are made for doubtful accounts and are recorded as a bad debt expense. The remaining 0.1% to 0.2% of our revenue is from retail space rental revenue and other sources.

     We do not have any time-share arrangements and do not sponsor any frequent guest programs for which we would have any contingent liability. We participate in frequent guest programs sponsored by the brand owners of our hotels and we expense the charges associated with those programs (typically consisting of a percentage of the total guest charges incurred by a participating guest), as incurred. When a guest redeems accumulated frequent guest points at one of our hotels, the hotel bills the sponsor for the services provided in redemption of such points and records revenue in the amount of the charges billed to the sponsor. Associated with the frequent guest programs, we have no loss contingencies or ongoing obligation beyond what is paid to the brand owner at the time of the guest’s stay.

F-11

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies — (continued)

     Foreign Currency Translation — Results of operations for our Canadian hotels are maintained in Canadian dollars and translated using the average exchange rates during the period. Assets and liabilities are translated to U.S. dollars using the exchange rate in effect at the balance sheet date. Resulting translation adjustments are reflected in accumulated other comprehensive income.

     Capitalized Cost — We capitalize interest and certain other costs, such as property taxes, land leases, and property insurance relating to hotels undergoing major renovations and redevelopments. Such costs capitalized in 2005, 2004, and 2003, were $5.8 million, $3.6 million and $2.0 million, respectively.

     Net Income (Loss) Per Common Share — We compute basic earnings per share by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding. We compute diluted earnings per share by dividing net income (loss) available to common stockholders by the weighted average number of common shares and equivalents outstanding. Common stock equivalents represent shares issuable upon exercise of stock options and unvested officers’ restricted stock grants.

     For all years presented, our Series A Cumulative Preferred Stock, or Series A preferred stock, if converted to common shares, would be antidilutive; accordingly we do not assume conversion of the Series A preferred stock in the computation of diluted earnings per share. For all years presented, stock options granted are not included in the computation of diluted earnings per share because the average market price of the common stock during each respective year was less than the exercise price of the options.

     Stock Compensation ¾ We apply Accounting Principles Board, or APB, Opinion 25 and related interpretations in accounting for our stock based compensation plans for stock based compensation issued prior to January 1, 2003. In 1995, SFAS 123, “Accounting for Stock-Based Compensation,” was issued, which, if fully adopted by us, would have changed the methods we apply in recognizing the cost of the plans. As permitted under the transition provisions of SFAS 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” we began recognizing compensation expense in accordance with SFAS 123 under the prospective method for all new awards issued after December 31, 2002. Had the compensation cost for our stock-based compensation plans been determined in accordance with SFAS 123 prior to January 1, 2003, our net income or loss and net income or loss per common share for the periods presented would approximate the pro forma amounts below (in thousands, except per share data):

	2005			2004			2003
Loss from continuing operations, as reported	$	(262,906	)	$	(81,534	)	$	(148,326	)
Add stock based compensation included in the net loss, as reported		2,904			2,945			2,210
Less stock based compensation expense that would have been included in the determination of net loss if the fair value method had been applied to all awards		(2,914	)		(3,001	)		(2,355	)
Loss from continuing operations, pro forma	$	(262,916	)	$	(81,590	)	$	(148,471	)
Basic and diluted net loss from continuing operations per common share:
As reported	$	(5.20	)	$	(1.98	)	$	(2.99	)
Pro forma	$	(5.20	)	$	(1.98	)	$	(2.99	)

     The effects of applying SFAS 123 in this pro forma disclosure are not indicative of future amounts.

F-12

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies ¾ (continued)

     Derivatives ¾ We record derivatives in accordance with SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities.” SFAS 133, as amended, establishes accounting and reporting standards for derivative instruments. Specifically, SFAS 133 requires an entity to recognize all derivatives as either assets or liabilities on the balance sheet and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either stockholders’ equity or net income, depending on whether the derivative instrument qualifies as a hedge for accounting purposes and the nature of the hedging activity.

     Segment Information ¾ SFAS 131, “Disclosures about Segments of an Enterprise and Related Information,” requires the disclosure of selected information about operating segments. Based on the guidance provided in the standard, we have determined that our business is conducted in one operating segment.

     Distributions and Dividends — We and FelCor LP resumed paying a common dividend with the fourth quarter 2005 payment of $0.15 per share. Additionally, we have paid regular quarterly dividends on our preferred stock in accordance with our preferred stock dividend requirements. In 2003, we announced that, as the result of declines in our portfolio’s average daily rate, which was attributed to the uncertain geopolitical environment and soft business climate, along with the risk of further margin deterioration, we suspended payment of regular common dividends. Our ability to make distributions is dependent on our receipt of quarterly distributions from FelCor LP, and FelCor LP’s ability to make distributions is dependent upon the results of operations of our hotels.

     Minority Interests — Minority interests in FelCor LP and other consolidated subsidiaries represent the proportionate share of the equity in FelCor LP and other consolidated subsidiaries not owned by us. We allocate income and loss to minority interest based on the weighted average percentage ownership throughout the year.

     Income Taxes — We have elected to be treated as a REIT under Sections 856 to 860 of the Internal Revenue Code. We generally lease our hotels to wholly-owned taxable REIT subsidiaries, or TRSs, that are subject to federal and state income taxes. Through these lessees we record room revenue, food and beverage revenue and other revenue related to the operations of our hotels. We account for income taxes in accordance with the provisions of SFAS 109. Under SFAS 109, we account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

3. Investment in Hotels

     Investment in hotels at December 31, 2005 and 2004 consisted of the following (in thousands):

	2005			2004
Building and improvements.	$	2,710,465		$	3,031,237
Furniture, fixtures and equipment		567,330			519,358
Land		294,074			316,364
Construction in progress		34,633			37,438
		3,606,502			3,904,397
Accumulated depreciation		(1,019,123	)		(948,631	)
	$	2,587,379		$	2,955,766

     In 2004, we acquired the 132 room Santa Monica Hotel in California for $27.8 million. We entered into a 14-year management agreement with IHG for the hotel. We utilized cash on hand to acquire this hotel.

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FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Investment in Hotels — (continued)

     Discussions of hotel dispositions are included in our Discontinued Operations footnote.

     We invested $112 million and $96 million in additions and improvements to our consolidated hotels during the years ended December 31, 2005 and 2004, respectively.

4. Impairment Charge

     Our hotels are comprised of operations and cash flows that can clearly be distinguished, operationally and for financial reporting purposes, from the remainder of our operations. Accordingly, we consider our hotels to be components as defined by SFAS 144 for purposes of determining impairment charges and reporting discontinued operations.

     When testing for recoverability we generally use historical and projected cash flows over the expected hold period. When determining fair value for purposes of determining impairment we use a combination of historical and projected cash flows and other available market information, such as recent sales prices for similar assets in specific markets. The estimated cash flows used to test for recoverability are undiscounted while the cash flows used for determining fair values are discounted using a reasonable capitalization rate, or as earlier noted based on the local market conditions using recent sales of similar assets.

     In 2005, we recorded impairment charges, under the provisions of SFAS 144, of $266.8 million ($263.1 million of which is included in continuing operations and the remainder is included in discontinued operations). The 2005 charges primarily related to our decision to designate as non-strategic and sell an additional 28 hotels, in connection with the negotiation of the amendment to our IHG management agreements. Under the management agreements entered into with IHG in 2001 and amended in 2004, we were obligated to reinvest the net proceeds from the sale of IHG-managed hotels in other IHG-managed hotels or pay substantial liquidated damages to IHG. This potential exposure to liquidated damages made it impractical to sell IHG-managed hotels. In January 2006, we executed an agreement modifying our management agreements covering our hotels managed by IHG. This agreement eliminates any potential liquidated damages or reinvestment requirement with respect to hotels previously sold, IHG-managed hotels now identified for sale and one Crowne Plaza hotel to be converted to another brand. We also recorded impairment charges with respect to 11 hotels previously designated as non-strategic principally because of revised estimates of fair value resulting from changes in the market and sales offers. In January 2006, we sold eight non-strategic hotels for gross proceeds of approximately $160 million.

     In 2004, we recorded impairment charges, under the provisions of SFAS 144, of $38.3 million ($3.5 million of which is included in continuing operations and the remainder is included in discontinued operations). The 2004 charges are related to 17 hotels. With respect to one hotel, we entered into an option in the third quarter 2004 that would permit the option holder to purchase the hotel for substantially less than its carrying value. The remaining hotels either had revised estimates of fair value or reduced estimated holding periods.

     In 2003, we recorded impairment charges, under the provisions of SFAS 144, of $245.5 million ($74.2 million of which is included in continuing operations and the remainder is included in discontinued operations). The 2003 charges were primarily related to our decision to sell 11 IHG-managed hotels, following an amendment to the management agreements on these hotels, and our decision to sell an additional seven hotels. We tested certain of our previously impaired non-strategic hotels for recoverability during the fourth quarter of 2003 as the result of one or more of the following circumstances: continued operating losses; further declines in revenue, in excess of that in our core portfolio; further reductions in the estimated hold periods; and revised estimates of fair value. As a result, we recorded additional impairment charges on certain of the non-strategic hotels identified for sale in 2002.

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FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Impairment Charge — (continued)

     The non-strategic hotels held for investment, which are included in our continuing operations, were tested for impairment as required by SFAS 144 using the undiscounted cash flows for the shorter of the estimated remaining holding periods or the useful life of the hotels. Those hotels that failed the impairment test described in SFAS 144 were written down to their then current estimated fair value, before any selling expenses. These hotels continue to be depreciated over their remaining useful lives.

     We may be subject to additional impairment charges in the event that operating results of individual hotels are materially different from our forecasts, the economy and lodging industry weaken, or if we shorten our contemplated holding period for certain of our hotels.

5. Discontinued Operations

     The results of operations of the19 hotels disposed of in 2005, 18 hotels disposed of in 2004 and 16 hotels disposed of in 2003, are presented in discontinued operations for the periods presented.

     Results of operations for the 53 hotels included in discontinued operations are as follows:

	Year Ended December 31,
	2005			2004			2003
Hotel operating revenue	$	45,970		$	145,007		$	209,684
Operating expenses		(44,599	)		(146,430	)		(211,091	)
Asset disposition costs		(1,300	)		(4,900	)		—
Operating income (loss)		1,371			(1,423	)		(1,407	)
Direct interest costs, net		(918	)		(3,943	)		(3,003	)
Impairment		(3,660	)		(34,795	)		(171,349	)
Gain on the early extinguishment of debt		3,280			—			1,611
Gain on disposition		11,736			19,422			2,376
Minority interest		(518	)		2,146			9,954
Income (loss) from discontinued operations	$	11,291		$	(18,593	)	$	(161,818	)

     In 2005, we sold 11 hotels for gross proceeds of $79.2 million. Additionally, in 2005 we relinquished title to the non-recourse mortgage holder of eight limited service hotels, owned by a consolidated joint venture, in exchange for the extinguishment of $49.2 million of debt. Associated with these eight hotels we recorded $1.3 million of asset disposition costs and $3.3 million gain on early extinguishment of debt.

     In 2004, we sold 17 hotels for gross proceeds of $157.0 million. We also transferred our interest in a hotel that we leased to the lessor in 2004. In conjunction with the termination of this lease we paid the lessor $5 million, which was recorded as asset disposition costs.

     In 2003, we sold 14 hotels for gross proceeds of $123.1 million. We also relinquished title to the non-recourse mortgage holder of two low-rise hotels in exchange for the extinguishment of $9.7 million of debt. Associated with these two hotels we recorded $0.3 million gain on early extinguishment of debt.

F-15

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Investment in Unconsolidated Entities

     We owned 50% interests in joint venture entities that owned 19 hotels at December 31, 2005 and 20 hotels at December 31, 2004. We also owned a 50% interest in entities that own real estate in Myrtle Beach, South Carolina, provide condominium management services, and lease four hotels. We account for our investments in these unconsolidated entities under the equity method. We do not have any majority-owned subsidiaries that are not consolidated in our financial statements. We make adjustments to our equity in income from unconsolidated entities related to the difference between our basis in investment in unconsolidated entities compared to the historical basis of the assets recorded by the joint ventures.

     Summarized combined financial information for 100% of these unconsolidated entities is as follows (in thousands):

	December 31,
	2005		2004
Balance sheet information:
Investment in hotels, net of accumulated depreciation	$	259,645	$	282,028
Total assets	$	287,375	$	313,104
Debt	$	203,880	$	218,292
Total liabilities	$	203,484	$	237,597
Equity	$	83,891	$	75,507

     Debt of our unconsolidated entities at December 31, 2005, consisted of $203.9 million of non-recourse mortgage debt.

     Summarized combined statement of operations information for 100% of our unconsolidated entities is as follows (in thousands):

	2005			2004			2003
Total revenues	$	75,396		$	67,902		$	75,456
Net income	$	21,801		$	33,746	(a)	$	9,438
Net income attributable to FelCor	$	11,348		$	18,483		$	4,459
Preferred return		516			516			514
Depreciation of cost in excess of book value		(1,695	)		(1,878	)		(2,603	)
Equity in income from unconsolidated entities	$	10,169		$	17,121		$	2,370

(a) Includes $17.5 million from the gain on the sale of residential condominium development in Myrtle Beach, South Carolina, which was realized in 2004. Our share of the gain was $8.8 million. We also recorded additional gains of $1.9 million in our equity in income from unconsolidated entities to reflect the differences between our historical basis in the assets sold and the basis recorded by the condominium joint venture.

     A summary of the components of our investment in unconsolidated entities as of December 31, 2005 and 2004 are as follows (in thousands):

	2005			2004
Hotel investments	$	43,117		$	38,497
Cost in excess of book value of hotel investments		63,098			68,924
Land and condominium investments		4,270			4,124
Hotel lessee investments		(1,223	)		(702	)
	$	109,262		$	110,843

F-16

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Investment in Unconsolidated Entities — (continued)

     A summary of the components of our equity in income of unconsolidated entities for the years ended December 31, 2005, 2004, and 2003, are as follows (in thousands):

	2005			2004			2003
Hotel investments	$	10,691		$	17,673		$	2,981
Hotel lessee operations		(522	)		(552	)		(611	)
	$	10,169		$	17,121		$	2,370

     In 2005, we acquired, for $1.2 million, an additional 25% interest in a joint venture owning a single hotel, bringing our interest in this previously unconsolidated venture to 75%. This venture has been included in our consolidated financial statements at December 31, 2005 from the date of acquisition of the remaining interest.

7. Debt

     Debt at December 31, 2005 and 2004 consisted of the following (in thousands):

								Balance Outstanding
	Encumbered		Interest Rate at			Maturity		December 31,
	Hotels		December 31, 2005			Date		2005		2004
Promissory note	none			6.31	(a)	June 2016		$	650	$	650
Senior unsecured term notes	none			7.63		Oct. 2007			123,358		122,426
Senior unsecured term notes	none			9.00		June 2011			298,660		298,409
Term loan(b)	none			5.81		Oct. 2006			225,000		—
Senior unsecured term notes	none			8.48	(c)	June 2011			290,000		290,000
Total unsecured debt(d)				7.89					937,668		711,485
Mortgage debt	9 hotels			6.52		July 2009-2014			104,282		192,363
Mortgage debt	8 hotels			6.63	(e)	May 2006			117,913		144,669
Mortgage debt		—		—			—		—		127,316
Mortgage debt	7 hotels			7.32		April 2009			127,455		130,458
Mortgage debt	4 hotels			7.55		June 2009			41,912		67,959
Mortgage debt	8 hotels			8.70		May 2010			172,604		175,504
Mortgage debt	7 hotels			8.73		May 2010			133,374		135,690
Mortgage debt	1 hotel			6.77	(a)	August 2008			15,500		15,500
Mortgage debt		—		—			—		—		10,521
Mortgage debt	1 hotel			7.91		Dec. 2007			10,457		—
Mortgage debt		—		—			—		—		49,476
Other	1 hotel			9.17		August 2011			5,204		6,181
Construction loan		—		6.47		Oct. 2007			8,911		—
Total secured debt(d)	46 hotels			7.69					737,612		1,055,637
Total(d)				7.80	%			$	1,675,280	$	1,767,122

(a)	Variable interest rate based on LIBOR. The six month LIBOR was 4.58% at December 31, 2005.
(b)	This term loan was repaid in January 2006.
(c)	Variable interest rate based on LIBOR. $100 million of these notes were matched with interest rate swap agreements that effectively converted the variable interest rate to a fixed rate.
(d)	Interest rates are calculated based on the weighted average outstanding debt at December 31, 2005.
(e)	Variable interest rate based on LIBOR. This debt may be extended at our option for up to two, one-year periods.

F-17

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7 . Debt ¾ (continued)

     We reported interest expense net of interest income of $4.1 million, $2.8 million and $2.3 million for the years ended December 31, 2005, 2004 and 2003, respectively. We capitalized interest of $1.9 million, $1.5 million and $0.6 million, for the years ended December 31, 2005, 2004 and 2003, respectively.

     In the fourth quarter of 2005, we retired $258 million of secured debt related to 25 hotels and entered into a $225 million unsecured term loan. In connection with the early retirement of $258 million of secured debt we recorded $15 million expense in the fourth quarter of 2005. The $225 million term loan was subsequently retired in January 2006 with proceeds from hotel sales, cash on hand and $45 million drawn on our $125 million line of credit, which was established in January 2006. This line of credit has certain restrictive financial covenants, including a leverage ratio, fixed charge coverage ratio, unencumbered leverage ratio and a maximum payout ratio. Associated with the early retirement of the $225 million term loan in January 2006, we will record $0.7 million write-off of loan costs in the first quarter of 2006.

     On June 9, 2004, we redeemed all $175 million in principal amount of our outstanding 7.375% Senior Notes due 2004. The redemption price was $1,018 per $1,000 of the principal amount, plus accrued interest. With the retirement of this debt, we recorded a loss on redemption of $3.2 million and wrote off $0.3 million of debt issue costs. We also recorded a $1 million gain on the unwinding of the interest rate swaps tied to this debt.

     During 2004, we purchased all $600 million of our 9.5% Senior Notes due 2008 (which bore interest at 10% as a result of the 2003 downgrade of the credit ratings on our senior notes) through tender offers, redemptions and by purchases in the open market, at an average price of $1,063.55 per $1,000 in principal amount. With the retirement of this debt, we recorded a loss on early extinguishment of debt of $41 million of which $38.2 million related to the premium paid in excess of par and $2.8 million related to the charge off of unamortized discount. We also wrote off debt issue costs of $6.5 million.

     In 2004, we also elected to terminate our line of credit and wrote off debt issue costs of $0.2 million. We charged off $2.8 million and $3.2 million of unamortized deferred costs as a result of a reduction of the line of credit commitments in 2003 and 2002, respectively.

     In June 2003, we entered into a new secured delayed draw facility with JPMorgan Chase Bank for up to $200 million. In 2004, we borrowed $194 million under this facility (collateralized by 15 hotels). The amount drawn under the facility was converted into: (i) $107 million of nine separate fixed rate CMBS loans secured by nine hotels with a weighted average interest rate of 6.5% and with maturity dates ranging from 2009 to 2014, and (ii) $87 million under a cross-collateralized floating rate CMBS loan secured by six hotels with an interest rate of LIBOR plus 2.11% and with a maturity date of 2009, including extension options which are subject to our satisfaction of certain conditions. On July 28, 2004, we cancelled the unused balance of this $200 million facility.

     In December 2004, we closed on $40 million second mortgage financing with regard to seven of our hotels. The second mortgage loan has a fixed interest rate of 6.82% and contains the same terms and conditions as the first mortgage, including the maturity date of March 2009.

     At December 31, 2005, we had aggregate mortgage indebtedness of $738 million that was secured by 46 of our consolidated hotels with an aggregate book value of $1.2 billion and our Royale Palms condominium development. Substantially all of this debt is recourse solely to the specific assets securing the debt, except in the case of fraud, misapplication of funds and other customary recourse provisions. Loans secured by 10 hotels provide for lock-box arrangements.

     With respect to loans secured by 10 hotels, the owner is permitted to retain 115% of budgeted hotel operating expenses before the remaining revenues would become subject to a similar lock-box arrangement if a specified debt service coverage ratio was not met. The mortgage loans secured by eight of these 10 hotels also

F-18

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Debt ¾ (continued)

     provide that, so long as the debt service coverage ratios remain below a second, even lower minimum level, the lender may retain any excess cash (after deduction for the 115% of budgeted operating expenses, debt service, tax, insurance and other reserve requirements) and, if the debt service coverage ratio remains below this lower minimum level for 12 consecutive months, apply any accumulated excess cash to the prepayment of the principal amount of the debt. If the debt service coverage ratio exceeds the lower minimum level for three consecutive months, any then accumulated excess cash will be returned to the owner. Eight of these 10 hotels, which accounted for 6% of our total revenues in 2005, are currently below the applicable debt service coverage ratio and are subject to the lock-box provisions. None of the hotels are currently below the second, even lower minimum debt service coverage ratio that would permit the lender to retain excess cash after deduction for the 115% of budgeted operating expenses, debt service, tax, insurance and other reserve requirements.

     Our publicly-traded senior unsecured notes require that we satisfy total leverage, secured leverage and an interest coverage tests in order to: incur additional indebtedness except to refinance maturing debt with replacement debt, as defined under our indentures; pay dividends in excess of the minimum dividend required to meet the REIT qualification test; repurchase capital stock; or merge. As of the date of this filing, we have satisfied all such tests. Under the terms of certain of our indentures, we are prohibited from repurchasing any of our capital stock, whether common or preferred, subject to certain exceptions, so long as our debt-to-EBITDA ratio, as defined in the indentures, exceeds 4.85 to 1. Debt, as defined in the indentures, approximates our consolidated debt. EBITDA is defined in the indentures as consolidated GAAP net income, adjusted for minority interest in FelCor LP, actual cash distributions by unconsolidated entities, gains or losses from asset sales, dividends on preferred stock and extraordinary gains and losses (as defined at the date of the indentures), plus interest expense, income taxes, depreciation expense, amortization expense and other non-cash items. Although our current debt-to-EDITDA ratio is below 4.85 to 1, a decline in our EBITDA, as a result of asset sales or adverse economic developments, or an increase in our debt, could make us subject to this limitation.

     If actual operating results fall significantly below our current expectations, as reflected in our current public guidance, or if interest rates increase substantially above expected levels, we may be unable to continue to satisfy the incurrence test under the indentures governing our senior unsecured notes. In such an event, we may be prohibited from, among other things, incurring any additional indebtedness, except under certain specific exceptions, or paying dividends on our preferred or common stock, except to the extent necessary to satisfy the REIT qualification requirement that we distribute currently at least 90% of our taxable income.

     Future scheduled principal payments on debt obligations at December 31, 2005, are as follows (in thousands):

Year
2006(a)	$	356,639
2007		149,737
2008		40,106
2009		176,560
2010		281,843
2011 and thereafter		673,377
		1,678,262
Discount accretion over term		(2,982	)
	$	1,675,280

(a) Includes a $225 million term note that was repaid in January 2006 and a $118 million non-recourse mortgage loan maturing in 2006, that may be extended at our option for up to two, one-year periods, subject to certain contingencies.

F-19

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Derivatives

     On the date we enter into a derivative contract, we designate the derivative as a hedge to the exposure to changes in the fair value of a recognized asset or liability or a firm commitment (referred to as a fair value hedge), or the exposure to variable cash flows of a forecasted transaction (referred to as a cash flow hedge). For a fair value hedge, the gain or loss is recognized in earnings in the period of change, together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. The effect of that accounting is to reflect in earnings the extent to which the hedge is not effective in achieving offsetting changes in fair value. For a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of other comprehensive income (outside earnings) and subsequently reclassified into earnings when the forecasted transaction affects earnings. The ineffective portion of the gain or loss is reported in earnings immediately. At December 31, 2005, all of our outstanding hedges were cash flow hedges.

     We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy, relating to our various hedge transactions. This process includes linking all derivatives to specific assets and liabilities on the balance sheet or specific firm commitments. We also formally assess (both at the hedge’s inception and on an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the cash flows or fair values of hedged items and whether those derivatives may be expected to remain highly effective in future periods. When we determine that a derivative is not (or has ceased to be) highly effective as a hedge, we will discontinue hedge accounting, prospectively.

     In the normal course of business, we are exposed to the effect of interest rate changes. We limit these risks by following established risk management policies and procedures including the use of derivatives. It is our objective to use interest rate hedges to manage our fixed and floating interest rate position and not to engage in speculation on interest rates. We manage interest rate risk based on the varying circumstances of anticipated borrowings, and existing floating and fixed rate debt. We will generally seek to pursue interest rate risk mitigation strategies that will result in the least amount of reported earnings volatility under generally accepted accounting principles, while still meeting strategic economic objectives and maintaining adequate liquidity and flexibility. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract.

     In June 2004, we unwound six interest rate swap agreements, designated as fair value hedges, with an aggregate notional amount of $175 million that were matched with the $175 million in senior unsecured notes due 2004 that we redeemed. A $1 million gain was recorded, offsetting the loss on the redemption of the debt. Also during June 2004, five additional swaps with an aggregate amount of $125 million that were matched to the $125 million senior unsecured notes due 2007 were unwound at a cost of $2.3 million. The $2.3 million was applied to the principal balance of these notes and will be amortized to interest expense over the remaining life of the debt. During July 2004, four interest rate swap agreements with a notional value of $100 million, that were matched to mortgage debt maturing in November 2007, were unwound at a cost of $1.3 million. The $1.3 million was applied to the principal balance of this debt and will be amortized to interest expense over the remaining life of this debt.

     To determine the fair values of our derivative instruments, we use a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized.

F-20

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Derivatives — (continued)

     At December 31, 2005, we had three interest rate swaps with aggregate notional amount of $100 million, maturing in December 2007. These interest rate swaps are designated as cash flow hedges, and are marked to market through other comprehensive income. The estimated unrealized net gain on these interest rate swap agreements was approximately $2.2 million at December 31, 2005, and represents the amount we would receive if the agreements were terminated, based on current market rates. These amounts subsequently are reclassified into interest expense as a yield adjustment in the same period in which the related interest on the floating-rate debt obligations affects earnings. During the year ended December 31, 2006, approximately $1.2 million of gains in accumulated other comprehensive income related to the interest rate swap are expected to be reclassified as a reduction in interest expense as a yield adjustment of the hedged debt obligation. The interest rate received on these interest rate swaps is 4.25% plus LIBOR and the interest rate paid is 7.80%. These swaps have been 100% effective through December 31, 2005.

     The amounts paid or received by us under the terms of the interest rate swap agreements are accrued as interest rates change, and we recognize them as an adjustment to interest expense, which will have a corresponding effect on our future cash flows. The interest rate swaps increased interest expense by $0.3 million during the year ended December 31, 2005 and decreased interest expense by $4.1 million and $7.2 million during the years ended December 31, 2004 and 2003, respectively. Our interest rate swaps have monthly to semi-annual settlement dates. Agreements such as these contain a credit risk in that the counterparties may be unable to fulfill the terms of the agreement. We minimize that risk by evaluating the creditworthiness of our counterparties, who are limited to major banks and financial institutions, and we do not anticipate nonperformance by the counterparties. The Standard & Poor’s credit ratings for each of the financial institutions that are counterparties to our interest rate swap agreements are AA to AA-.

     To fulfill requirements under the $150 million secured loan facility executed in April 2003, we purchased 6% interest rate caps with a notional amount of $141.1 million. We concurrently sold interest rate caps with identical terms. In July 2004, we purchased 6.5% interest rate caps on LIBOR with a notional amount of $84.6 million to fulfill requirements under an $87 million cross-collateralized floating rate CMBS loan and concurrently sold interest rate caps with identical terms. These interest rate cap agreements have not been designated as hedges. The fair value of both the purchased and sold interest rate caps were equal at December 31, 2005, resulting in no net earnings impact.

9. Fair Value of Financial Instruments

     SFAS 107 requires disclosures about the fair value of all financial instruments, whether or not recognized for financial statement purposes. Disclosures about fair value of financial instruments are based on pertinent information available to management as of December 31, 2005. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

     Our estimates of the fair value of (i) accounts receivable, accounts payable and accrued expenses approximate carrying value due to the relatively short maturity of these instruments; (ii) debt is based upon effective borrowing rates for issuance of debt with similar terms and remaining maturities; and (iii) our interest rate swaps and the hedged debt are recorded at estimates of fair value, which are based on the amount that we estimate we would currently receive upon termination of these instruments at current market rates and with reasonable assumptions about relevant future market conditions. The estimated fair value of our debt is $1.6 billion at December 31, 2005.

F-21

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Income Taxes

     We have elected to be taxed as a REIT under the Internal Revenue Code. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our taxable income to our stockholders. We currently intend to adhere to these requirements and maintain our REIT status. As a REIT, we generally will not be subject to corporate level federal income taxes on net income we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property and to federal income and excise taxes on our undistributed taxable income. In addition, taxable income from non-REIT activities managed through TRSs is subject to federal, state and local taxes.

     We generally lease our hotels to wholly-owned TRSs that are subject to federal and state income taxes. In 2005 and 2004, we also contributed certain hotel assets to our wholly-owned TRSs. We account for income taxes in accordance with the provisions of SFAS 109, “Accounting for Income Taxes.” Under SFAS 109, we account for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Reconciliation between TRS’s GAAP net loss and taxable loss:

     The following table reconciles the TRS GAAP net loss to taxable loss for the years ended December 31, 2005, 2004, and 2003 (in thousands):

	2005			2004			2003
GAAP net loss	$	(251,615	)	$	(100,127	)	$	(310,144	)
GAAP net loss (income) from REIT operations		(37,237	)		35,168			171,463
GAAP net loss of taxable subsidiaries		(288,852	)		(64,959	)		(138,681	)
Impairment loss not deductible for tax		231,605			8,509			39,303
Tax loss in excess of book gains on sale of hotels		(39,842	)		(51,576	)		(31,423	)
Depreciation and amortization(a)		(1,910	)		(4,948	)		(1,625	)
Employee benefits not deductible for tax		1,708			1,040			2,381
Other book/tax differences		4,779			(3,216	)		(2,997	)
Tax loss of taxable subsidiaries	$	(92,512	)	$	(115,150	)	$	(133,042	)

(a) The changes in book/tax differences in depreciation and amortization principally resulting from book and tax basis differences, differences in depreciable lives and accelerated depreciation methods.

F-22

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Income Taxes — (continued)

Summary of TRS’s net deferred tax asset:

     At December 31, 2005 and 2004, our TRS had a deferred tax asset, prior to any valuation allowance, primarily comprised of the following (in thousands):

	2005			2004
Accumulated net operating losses of our TRS	$	162,827		$	127,672
Tax property basis in excess of book		—			10,524
Accrued employee benefits not deductible for tax		9,695			9,046
Bad debt allowance not deductible for tax		837			344
Gross deferred tax assets		173,359			147,586
Valuation allowance		(133,138	)		(147,586	)
Deferred tax asset after valuation allowance		40,221			—
Gross deferred tax liability — book property basis in excess of tax		(40,221	)		—
Net deferred tax asset	$	—		$	—

     We have provided a valuation allowance against our deferred tax asset as of December 31, 2005 and 2004, that results in a net deferred tax asset of zero as of December 31, 2005 and 2004 due to the uncertainty of realization (because of ongoing operating losses). Accordingly, no provision or benefit for income taxes is reflected in the accompanying Consolidated Statements of Operations. As of December 31, 2005, the TRS has net operating loss carryforwards for federal income tax purposes of $428.5 million which are available to offset future taxable income, if any, through 2025.

Reconciliation between REIT GAAP net loss and taxable income loss:

     The following table reconciles REIT GAAP net income (loss) to taxable income (loss) for the years ended December 31, 2005, 2004 and 2003 (in thousands):

	2005			2004			2003
GAAP net income (loss) from REIT operations	$	37,237		$	(35,168	)	$	(171,463	)
Book/tax differences, net:
Depreciation and amortization(a)		4,797			2,386			14,236
Minority interests		(24,204	)		(2,724	)		(19,241	)
Tax loss in excess of book gains on sale of hotels		(21,547	)		(10,893	)		(2,736	)
Impairment loss not deductible for tax		35,146			29,779			206,206
Other		4,045			1,314			(184	)
Taxable income (loss) subject to distribution requirement(b)	$	35,474		$	(15,306	)	$	26,818

(a)	Book/tax differences in depreciation and amortization principally result from differences in depreciable lives and accelerated depreciation methods.
(b)	The dividend distribution requirement is 90%.

     If we sell any asset acquired from Bristol Hotel Company, or Bristol, within 10 years after our merger with Bristol in 1998, and we recognize a taxable gain on the sale, we will be taxed at the highest corporate rate on an amount equal to the lesser of the amount of gain that we recognize at the time of the sale, or the amount of gain that we would have recognized if we had sold the asset at the time of the Bristol merger for its then fair market value. The sales of Bristol hotels that have been made to date have not resulted in any material amount of tax liability. If we are successful in selling the hotels that we have designated as non-strategic, the majority of which are Bristol hotels, we could incur corporate income tax with respect to the related built in gain, the amount of which cannot yet be determined. At the current time, we believe that we will be able to avoid any substantial built in gain tax on these sales through offsetting built in losses, like kind exchanges and other tax planning strategies.

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FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Income Taxes — (continued)

Characterization of distributions:

     For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof. For the years ended December 31, 2005, 2004 and 2003, distributions paid per share were characterized as follows:

	2005				2004				2003
	Amount		%		Amount		%		Amount		%
Common Stock
Ordinary income	$	0.028		18.76	$	—		—	$	—		—
Return of capital		0.122		81.24		—		—		—		—
	$	0.150		100.00	$	—		—	$	—		—
Preferred Stock — Series A
Ordinary income	$	1.95		100.00	$	0.0425		2.18	$	1.95		100.00
Return of capital		—		—		1.9075		97.82		—		—
	$	1.95		100.00	$	1.9500		100.00	$	1.95		100.00
Preferred Stock — Series B
Ordinary income	$	1.125		100.00	$	0.0491		2.18	$	2.25		100.00
Return of capital		—		—		2.2009		97.82		—		—
	$	1.125		100.00	$	2.2500		100.00	$	2.25		100.00
Preferred Stock — Series C
Ordinary income	$	1.633		100.00	$	—		—	$	—		—
Return of capital		—		—		—		—		—		—
	$	1.633		100.00	$	—		—	$	—		—

11. Capital Stock

     As of December 31, 2005, we had $600 million of common stock, preferred stock, debt securities, and/or common stock warrants available for offerings under a shelf registration statement previously declared effective.

Preferred Stock

     Our board of directors is authorized to provide for the issuance of up to 20 million shares of preferred stock in one or more series, to establish the number of shares in each series, to fix the designation, powers, preferences and rights of each such series, and the qualifications, limitations or restrictions thereof.

     In 1996, we issued 6.1 million shares of our Series A preferred stock at $25 per share. In April 2004, we completed the sale of 4.6 million shares of our $1.95 Series A Cumulative Convertible Preferred Stock. The shares were sold at a price of $23.79 per share, which included accrued dividends of $0.51 per share through April 5, 2004, resulting in net proceeds of $104 million. In August 2004, we completed the sale of an additional 2.3 million shares of our $1.95 Series A Cumulative Convertible Preferred Stock. The shares were sold at a price of $23.22 per share, which included accrued dividends of $0.28 per share through August 22, 2004, resulting in net proceeds of $52 million.

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FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Capital Stock — (continued)

     The Series A preferred stock bears an annual cumulative dividend payable in arrears equal to the greater of $1.95 per share or the cash distributions declared or paid for the corresponding period on the number of shares of common stock into which the Series A preferred stock is then convertible. Each share of the Series A preferred stock is convertible at the stockholder’s option to 0.7752 shares of common stock, subject to certain adjustments. During 2000, holders of 69,400 shares of Series A preferred stock converted their shares to 53,798 common shares, which were issued from treasury shares.

     In 1998, we issued 5.75 million depositary shares, representing 57,500 shares of our 9% Series B preferred stock at $25 per depositary share. In 2002, we issued 1,025,800 depositary shares, representing 10,258 shares of our Series B preferred stock at $24.37 per depositary share to yield 9.4%. In 2005, we redeemed all of the outstanding Series B preferred stock. The redemption of the Series B preferred shares resulted in a reduction in income available to common shareholders of $6.5 million and representing the original issuance cost of the Series B preferred shares redeemed.

     On April 8, 2005, we completed the issuance of 5.4 million depositary shares, and an additional 1.4 million depositary shares on August 30, 2005, each representing 1/100 of a share of our 8% Series C Cumulative Redeemable Preferred Stock, with gross proceeds of $135 million and $34.4 million, respectively. The gross proceeds were used to redeem all of our 9% Series B preferred stock. We may call the Series C preferred stock and the corresponding depositary shares at $25 per depositary share. These shares have no stated maturity, sinking fund or mandatory redemption, and are not convertible into any of our other securities. The Series C preferred stock has a liquidation preference of $2,500 per share (equivalent to $25 per depositary share) and is entitled to annual cumulative dividends at the rate of 8% of the liquidation preference (equivalent to $2.25 annually per depositary share).

     Accrued dividends payable of $8.6 million at December 31, 2005, were paid in January 2006.

FelCor LP Units

     We are the sole general partner of FelCor LP and are obligated to contribute the net proceeds from any issuance of our equity securities to FelCor LP in exchange for units of partnership interest, or Units, corresponding in number and terms to the equity securities issued by us. Units of limited partner interest may also be issued by FelCor LP to third parties in exchange for cash or property, and Units so issued to third parties are redeemable at the option of the holders thereof for a like number of shares of our common stock or, at our option, for the cash equivalent thereof. During 2005, 25,595 Units were exchanged for a like number of common shares issued from treasury stock. During 2004, 245,398 Units were exchanged for a like number of our common shares issued from treasury stock. During 2003, 256,118 Units were exchanged for a like number of common shares issued from treasury stock.

12. Hotel Operating Revenue, Departmental Expenses, and Other Property Operating Costs

     Hotel operating revenue from continuing operations was comprised of the following (in thousands):

	Year Ended December 31,
	2005		2004		2003
Room revenue	$	975,128	$	886,478	$	835,278
Food and beverage revenue		174,537		168,391		156,974
Other operating departments		60,465		58,284		55,090
Total hotel operating revenues	$	1,210,130	$	1,113,153	$	1,047,342

F-25

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Hotel Operating Revenue, Departmental Expenses and Other Property Operating Costs — (continued)

     Approximately 99.8% to 99.9% of our revenue in 2005, 2004 and 2003 was comprised of hotel operating revenues, which includes room revenue, food and beverage revenue, and revenue from other operating departments (such as telephone, parking and business centers). These revenues are recorded net of any sales or occupancy taxes collected from our guests. All rebates or discounts are recorded, when allowed, as a reduction in revenue, and there are no material contingent obligations with respect to rebates or discounts offered by us. All revenues are recorded on an accrual basis, as earned. Appropriate allowances are made for doubtful accounts and are recorded as a bad debt expense. The remaining percentage of our revenue was from retail space rental revenue and other sources in 2005, 2004 and 2003. During 2004, we recorded $1 million of other revenue that we received in development fees from the successful completion of a condominium project.

     We do not have any time-share arrangements and do not sponsor any guest frequency programs for which we would have any contingent liability. We participate in guest frequency programs sponsored by the brand owners of our hotels, and we expense the charges associated with those programs (typically consisting of a percentage of the total guest charges incurred by a participating guest), as incurred. When a guest redeems accumulated guest frequency points at one of our hotels, the hotel bills the sponsor for the services provided in redemption of such points and records revenue in the amount of the charges billed to the sponsor. Associated with the guest frequency programs, we have no loss contingencies or ongoing obligation beyond what is paid to the brand owner at the time of the guest’s stay.

     Hotel departmental expenses from continuing operations were comprised of the following (in thousands):

	Year Ended December 31,
	2005		2004		2003
Room	$	253,563	$	238,807	$	219,399
Food and beverage		135,558		132,561		123,736
Other operating departments		30,356		29,028		24,311
Total hotel departmental expenses	$	419,477	$	400,396	$	367,446

     Other property operating costs from continuing operations were comprised of the following (in thousands):

	Year Ended December 31,
	2005		2004		2003
Hotel general and administrative expense	$	115,394	$	104,780	$	99,876
Marketing		103,807		96,465		90,881
Repair and maintenance		67,359		64,494		59,384
Utilities		66,510		57,848		53,470
Total other property operating costs	$	353,070	$	323,587	$	303,611

     Included in hotel departmental expenses and other property operating costs were hotel compensation and benefit expenses of $383.6 million, $364.3 million and $341.6 million for the year ended December 31, 2005, 2004 and 2003, respectively.

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FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Taxes, Insurance and Lease Expense

     Taxes, insurance and lease expense from continuing operations was comprised of the following (in thousands):

	Year Ended December 31,
	2005		2004		2003
Operating lease expense (a)	$	65,659	$	59,508	$	55,637
Real estate and other taxes		42,507		37,810		42,091
Property, general liability insurance and other		14,020		11,992		15,101
Total taxes, insurance and lease expense	$	122,186	$	109,310	$	112,829

(a) Includes hotel lease expense of $57.0 million, $51.4 million and $47.2 million, respectively, associated with 14 hotels in 2005 and 15 hotels in 2004 and 2003 owned by unconsolidated entities and leased to our consolidated lessees. Included in lease expense is $31.0 million, $23.6 million and $19.5 million in percentage rent for the year ended December 31, 2005, 2004 and 2003, respectively.

14. Land Leases and Hotel Rent

     We lease land occupied by certain hotels from third parties under various operating leases that expire through 2073. Certain land leases contain contingent rent features based on gross revenue at the respective hotels. In addition, we recognize rent expense for 14 hotels that are owned by unconsolidated entities and are leased to our consolidated lessees. These leases expire through 2015 and require the payment of base rents and contingent rent based on revenues at the respective hotels. Future minimum lease payments under our land lease obligations and hotel leases at December 31, 2005, were as follows (in thousands):

Year
2006	$	34,996
2007		14,612
2008		10,926
2009		10,919
2010		10,081
2011 and thereafter		92,102
	$	173,636

F-27

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. Earnings Per Share

     The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2005, 2004 and 2003 (in thousands, except per share data):

	2005			2004			2003
Numerator:
Loss from continuing operations	$	(262,906	)	$	(81,534	)	$	(148,326	)
Less: Preferred dividends		(39,408	)		(35,130	)		(26,908	)
Issuance costs of redeemed preferred stock		(6,522	)		—			—
Loss from continuing operations and applicable to common stockholders		(308,836	)		(116,664	)		(175,234	)
Discontinued operations		11,291			(18,593	)		(161,818	)
Net loss applicable to common stockholders	$	(297,545	)	$	(135,257	)	$	(337,052	)
Denominator:
Denominator for basic loss per share — weighted average shares		59,436			59,045			58,657
Denominator for diluted loss per share — adjusted weighted average shares and assumed conversions		59,436			59,045			58,657
Loss per share data:
Basic:
Loss from continuing operations	$	(5.20	)	$	(1.98	)	$	(2.99	)
Discontinued operations	$	0.19		$	(0.31	)	$	(2.76	)
Net loss	$	(5.01	)	$	(2.29	)	$	(5.75	)
Diluted:
Loss from continuing operations	$	(5.20	)	$	(1.98	)	$	(2.99	)
Discontinued operations	$	0.19		$	(0.31	)	$	(2.76	)
Net loss	$	(5.01	)	$	(2.29	)	$	(5.75	)

     Securities that could potentially dilute basic earnings per share in the future that were not included in computation of diluted earnings per share, because they would have been antidilutive for the periods presented, are as follows (unaudited, in thousands):

	2005		2004		2003
Restricted shares granted but not vested		648		395		303
Series A convertible preferred shares		9,985		9,985		4,636

     Series A preferred dividends that would be excluded from net income (loss) applicable to common stockholders, if the Series A preferred shares were dilutive, were $25.1 million in 2005, $19.9 million in 2004 and $11.7 million for 2003.

16. Commitments, Contingencies and Related Party Transactions

     We shared the executive offices and certain employees with FelCor, Inc. (controlled by Thomas J. Corcoran, Jr., Chairman of the Board of Directors), and it paid its share of the costs thereof, including an allocated portion of the rent, compensation of certain personnel, office supplies, telephones, and depreciation of office furniture, fixtures, and equipment. Any such allocation of shared expenses must be approved by a majority of our independent directors. FelCor, Inc. had a 10% ownership interest in one hotel and limited other investments. FelCor, Inc. paid $50,000 for shared office costs in both 2005 and 2004 and $46,000 in 2003.

F-28

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16. Commitments, Contingencies and Related Party Transactions — (continued)

     In an effort to keep our cost of insurance within reasonable limits, we have only purchased terrorism insurance for those hotels that are secured by mortgage debt, as required by our lenders. Our terrorism insurance has per occurrence and aggregate limits of $50 million. We have established a self-insured retention of $250,000 per occurrence for general liability insurance with regard to 71 of our hotels; the remainder of our hotels participate in general liability programs of our managers, with no deductible. Because of our general liability deductible for the 71 hotels, we maintain reserves to cover the estimated ultimate uninsured liability for losses with respect to reported and unreported claims incurred as of the end of each accounting period. At December 31, 2005 and 2004, our reserve for this self-insured portion of general liability claims was $5.6 million and $3.9 million, respectively. Our property program has a $100,000 all risk deductible, a deductible of 3% of insured value for named windstorm and a deductible of 5% of insured value for California quake. Should uninsured or not fully insured losses be substantial, they could have a material adverse impact on our operating results and cash flows.

     There is no litigation pending or known to be threatened against us or affecting any of our hotels, other than claims arising in the ordinary course of business or which are not considered to be material. Furthermore, most of these claims are substantially covered by insurance. We do not believe that any claims known to us, individually or in the aggregate, will have a material adverse effect on us.

     Our hotels are operated under various management agreements that call for base management fees, which range from 2% to 7% of hotel room revenue and generally have an incentive provision related to the hotel’s profitability. In addition, the management agreements generally require us to invest approximately 3% to 5% of revenues in capital maintenance. The management agreements have terms from 5 to 20 years and generally have renewal options.

     With the exception of 69 hotels whose rights to use a brand name are contained in the management agreement governing their operations, and our one hotel that does not operate under a nationally recognized brand name, each of our hotels operates under a franchise or license agreement. Typically, our franchise or license agreements provide for a royalty fee of 4% of room revenues to be paid to the franchisor.

     In the event we breach one of our Embassy Suites Hotels franchise license agreements, in addition to losing the right to use the Embassy Suites Hotels name for the operation of the applicable hotel, we may be liable, under certain circumstances, for liquidated damages equal to the fees paid to the franchisor with respect to that hotel during the three preceding years.

     As a part of the amendment to the IHG management agreements, we have agreed to spend, by June 30, 2007, approximately $50.6 million with regard to special capital plans on 11 hotels. We are to agree upon special capital plans to be completed by July 2008 with regard to four hotels and January 2011 with regard to two hotels.

F-29

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. Supplemental Cash Flow Disclosure

     At December 31, 2005, $8.6 million of aggregate preferred stock dividends had been declared for payment in January 2006. At December 31, 2004, and 2003, $10.1 million and $6 million, respectively, of aggregate preferred stock dividends had been declared for payment in the following January.

     We allocated $0.1 million and $2.0 million of minority interest to additional paid in capital due to the exchange of 25,595 units and 245,398 units for common stock in 2005 and 2004, respectively.

     Depreciation expense is comprised of the following (in thousands):

	For the years ending December 31,
	2005		2004		2003
Depreciation from continuing operations	$	119,323	$	111,836	$	116,710
Depreciation from discontinued operations		3,212		10,817		23,515
Total depreciation expense	$	122,535	$	122,653	$	140,225

     For the year ended December 31, 2005, repayment of borrowings of $293.0 million consisted of early retirement of secured debt of $262.0 million and $31.0 million of normal recurring principal payments.

     For the year ended December 31, 2004, repayment of borrowings of $838.9 million consisted of $775.0 million in early retirement of senior notes, $18.9 million of normal recurring principal payments, $41.3 million of premium paid in excess of par on the retirement of the senior notes and $3.7 million to retire interest rate swaps. For the year ended December 31, 2003, the repayment of borrowings consisted entirely of debt repayment and normal recurring principal payments.

18. Stock Based Compensation Plans

     We sponsor four restricted stock and stock option plans, or the FelCor Plans. In addition, upon completion of the merger with Bristol in 1998, we assumed two stock option plans previously sponsored by Bristol, or the Bristol Plans. We were initially obligated to issue up to 1,237,309 shares of our common stock pursuant to the Bristol Plans. No additional options may be awarded under the Bristol Plans. The FelCor Plans and the Bristol Plans are referred to collectively as the Plans.

     We are authorized to issue 4,700,000 shares of common stock under the FelCor Plans pursuant to awards granted in the form of incentive stock options, non-qualified stock options, and restricted stock. All options have 10-year contractual terms and vest either over five equal annual installments (20% per year), beginning in the year following the date of grant or 100% at the end of a four-year vesting term. Under the FelCor Plans, there were 990,138 shares available for grant at December 31, 2005.

     There were options covering 75,385 shares outstanding under the Bristol Plans at December 31, 2005. These options are fully vested.

F-30

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. Stock Based Compensation Plans — (continued)

Stock Options

     A summary of the status of our non-qualified stock options under the Plans as of December 31, 2005, 2004 and 2003, and the changes during these years are presented in the following tables:

	2005					2004					2003
				Weighted					Weighted					Weighted
	No. Shares of			Average		No. Shares of			Average		No. Shares of			Average
	Underlying			Exercise		Underlying			Exercise		Underlying			Exercise
	Options			Prices		Options			Prices		Options			Prices
Outstanding at beginning of the year		1,478,760		$	24.72		1,911,544		$	22.72		1,990,830		$	22.70
Forfeited		(13,503	)	$	22.30		(432,784	)	$	15.91		(79,286	)	$	22.15
Outstanding at end of year		1,465,257		$	23.41		1,478,760		$	24.72		1,911,544		$	22.72
Exercisable at end of year		1,455,257		$	23.46		1,333,760		$	24.24		1,664,594		$	23.70

	Options Outstanding						Options Exercisable
	Number		Wgtd. Avg.				Number
Range of	Outstanding		Remaining		Wgtd Avg.		Exercisable		Wgtd. Avg.
Exercise Prices	at 12/31/05		Life		Exercise Price		at 12/31/05		Exercise Price
$15.62 to $22.56		1,094,535		3.39	$	21.03		1,084,535	$	21.08
$24.18 to $36.12		305,722		0.70	$	29.10		305,722	$	29.10
$36.63		65,000		1.47	$	36.63		65,000	$	36.63
$15.62 to $36.63		1,465,257		2.74	$	23.41		1,455,257	$	23.46

     The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for 2001 and 2000 when options were granted: dividend yield of 12.44% to 11.28%; risk free interest rates are different for each grant and range from 4.33% to 6.58%; the expected lives of options were six years; and volatility of 21.04% for 2001 grants and 18.22% for 2000 grants. The weighted average fair value of options granted during 2001, was $0.85 per share. We have issued no stock options since 2001.

Restricted Stock

     A summary of the status of our restricted stock grants as of December 31, 2005, 2004, and 2003, and the changes during these years are presented below:

F-31

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. Stock Based Compensation Plans — (continued)

	2005				2004					2003
			Weighted					Weighted				Weighted
			Average					Average				Average
			Fair Market					Fair Market				Fair Market
			Value					Value				Value
	No. Shares		at Grant		No. Shares			at Grant		No. Shares		at Grant
Outstanding at beginning of the year		1,187,606	$	17.54		731,431		$	22.03		633,681	$	23.73
Granted(a):
With immediate vesting(b)		22,300	$	13.73		26,500		$	10.00		27,400	$	10.98
With 4-year pro rata vesting		319,300	$	12.52		295,040		$	10.00		—		—
Vesting within 12 months of grant		—		—		50,000		$	12.47		—		—
With 5-year pro rata vesting		20,000	$	13.85		110,000		$	12.25		70,350	$	10.98
Forfeited		—		—		(25,365	)	$	18.19		—		—
Outstanding at end of year		1,549,206	$	13.35		1,187,606		$	17.54		731,431	$	22.03
Vested at end of year		795,738	$	18.49		558,151		$	20.52		431,550	$	21.49

(a)	All shares granted are issued out of treasury except for 5,200, 6,300 and 6,900 of the restricted shares issued to directors during the years ended December 31, 2005, 2004 and 2003, respectively.
(b)	Shares awarded to directors.

19. Employee Benefits

     We offer a 401(k) plan, health insurance benefits and a deferred compensation plan to our employees. Our matching contribution to our 401(k) plan was $0.7 million for 2005 and $0.6 million for 2004 and 2003. The cost of health insurance benefits were $0.7 million during 2005 and $0.6 million each of the years ended December 31, 2004 and 2003. The deferred compensation plan we offer is available only to directors and qualifying senior officers. We make no matching or other contributions to the deferred compensation plan, other than the payment of its operating and administrative expenses.

     The employees at our hotels are employees of the respective management companies. Under the management agreements, we reimburse the management companies for the compensation and benefits related to the employees who work at our hotels. We are not, however, the sponsors of their employee benefit plans and have no obligation to fund these plans.

20. Segment Information

     SFAS 131, “Disclosures about Segments of an Enterprise and Related Information,” requires the disclosure of selected information about operating segments. Based on the guidance provided in the standard, we have determined that our business is conducted in one operating segment because of the similar economic characteristics of our hotels.

     The following table sets forth revenues for continuing operations, and investment in hotel assets represented by, the following geographical areas as of and for the years ended December 31, 2005, 2004 and 2003 (in thousands):

	Revenue						Investment in Hotel Assets
	2005		2004		2003		2005		2004		2003
California	$	216,039	$	196,071	$	189,737	$	715,815	$	727,375	$	677,381
Texas		188,288		171,669		163,349		534,299		674,590		766,134
Florida		152,062		137,917		126,424		535,009		524,856		515,640
Georgia		106,345		96,111		89,700		294,976		356,925		359,004
Other states		522,668		489,326		457,869		1,461,117		1,559,156		1,615,529
Canada		26,777		24,780		21,285		65,286		61,495		56,276
Total	$	1,212,179	$	1,115,874	$	1,048,364	$	3,606,502	$	3,904,397	$	3,989,964

F-32

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21. Recently Issued Statements of Financial Accounting Standards

     In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment”, which is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation”. SFAS No. 123(R) supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees” and amends SFAS No. 95, “Statement of Cash Flows”. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The new standard will be effective for the Company in the first annual reporting period beginning after June 15, 2005. We expect to adopt this standard under the modified prospective application. Adoption is not expected to have a material effect on the Company.

     In March 2005, the FASB issued Interpretation No. 47 (“FIN 47”), “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143.” FIN 47 refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. An entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The fair value of a liability for the conditional asset retirement obligation should be recognized when incurred, generally upon acquisition, construction, or development and through the normal operation of the asset. This interpretation is effective no later than the end of fiscal years ending after December 31, 2005. Adoption did not have a material effect on the Company’s consolidated financial statements.

22. Quarterly Operating Results (unaudited)

     Our unaudited consolidated quarterly operating data for the years ended December 31, 2005 and 2004, follows (in thousands, except per share data). In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of quarterly results have been reflected in the data. It is also management’s opinion, however, that quarterly operating data for hotel enterprises are not indicative of results to be achieved in succeeding quarters or years. In order to obtain a more accurate indication of performance, there should be a review of operating results, changes in stockholders’ equity and cash flows for a period of several years.

F-33

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22. Quarterly Operating Results (unaudited) — (continued)

	First			Second			Third			Fourth
2005	Quarter			Quarter			Quarter			Quarter
Total revenues	$	284,434		$	317,999		$	309,885		$	299,861
Net income (loss) from continuing operations	$	(5,755	)	$	10,358		$	(889	)	$	(266,620	)
Discontinued operations	$	(2,259	)	$	(7	)	$	12,147		$	1,410
Net income (loss) (a)	$	(8,014	)	$	10,351		$	11,258		$	(265,210	)
Net loss applicable to common stockholders	$	(18,105	)	$	(4,656	)	$	105		$	(274,889	)
Comprehensive loss	$	(6,631	)	$	8,722		$	15,169		$	(265,053	)
Diluted per common share data:
Net loss from continuing operations	$	(0.27	)	$	(0.08	)	$	(0.20	)	$	(4.65	)
Discontinued operations	$	(0.03	)	$	—		$	0.20		$	0.02
Net loss	$	(0.30	)	$	(0.08	)	$	—		$	(4.62	)
Weighted average common shares outstanding		59,416			59,404			59,442			59,453

	First			Second			Third			Fourth
2004	Quarter			Quarter			Quarter			Quarter
Total revenues	$	270,465		$	292,555		$	284,889		$	267,965
Net income (loss) from continuing operations	$	(17,088	)	$	(32,167	)	$	(9,182	)	$	(23,097	)
Discontinued operations	$	(3,611	)	$	494		$	(27,803	)	$	12,327
Net loss (b)	$	(20,699	)	$	(31,673	)	$	(36,985	)	$	(10,770	)
Net loss applicable to common stockholders	$	(27,425	)	$	(40,643	)	$	(46,328	)	$	(20,861	)
Comprehensive loss	$	(21,160	)	$	(32,182	)	$	(32,496	)	$	(7,987	)
Diluted per common share data:
Net loss from continuing operations	$	(0.41	)	$	(0.70	)	$	(0.31	)	$	(0.56	)
Discontinued operations	$	(0.06	)	$	0.01		$	(0.47	)	$	0.21
Net loss	$	(0.47	)	$	(0.69	)	$	(0.78	)	$	(0.35	)
Weighted average common shares outstanding		58,937			58,950			59,075			59,192

(a)	The fourth quarter net loss in 2005 includes an impairment charge of $263 million.
(b)	The third and fourth quarter’s net loss in 2004 include impairment charges of $33.0 million and $5.3 million, respectively. The second, third and fourth quarter’s net loss in 2004 also includes loss from earlier retirement of debt of $31.2 million, $12.9 million and $5.8 million, respectively.

     In accordance with SFAS 144, amounts previously reported in continuing operations have been reclassified to discontinued operations upon sale of hotels or the designation of hotels as “held for sale” in subsequent periods.

F-34

FELCOR LODGING TRUST INCORPORATED

Schedule III — Real Estate and Accumulated Depreciation

as of December 31, 2005

(in thousands)

							Cost Capitalized					Gross Amounts at Which
			Initial Cost				Subsequent to Acquisition					Carried at Close of Period						Accumulated						Life Upon
					Buildings					Buildings				Buildings				Depreciation						Which
					and					and				and				Buildings &		Year		Date		Depreciation
Location	Encumbrances		Land		Improvements		Land			Improvements		Land		Improvements		Total		Improvements		Opened		Acquired		is Computed
Birmingham, AL (1)	$	16,059	$	2,843	$	29,286	$	0		$	1,091	$	2,843	$	30,377	$	33,220	$	7,656		1987		1/3/1996	15 - 40 Yrs
Montgomery East I-85, AL (2)		0		830		7,222		9			2,801		839		10,023		10,862		1,954		1964		7/28/1998	15 - 40 Yrs
Phoenix — Biltmore, AZ (1)		20,864		0		38,998		4,695			1,572		4,695		40,570		45,265		10,215		1985		1/3/1996	15 - 40 Yrs
Phoenix Crescent Hotel, AZ (3)		24,835		3,608		29,583		0			1,403		3,608		30,986		34,594		6,463		1986		6/30/1997	15 - 40 Yrs
Phoenix Tempe, AZ (1)		9,736		3,951		34,371		0			1,048		3,951		35,419		39,370		6,757		1986		5/4/1998	15 - 40 Yrs
Dana Point — Doheny Beach, CA (4)		0		1,787		15,545		0			1,410		1,787		16,955		18,742		3,694		1992		2/21/1997	15 - 40 Yrs
Irvine — Orange County Airport (Newport Beach), CA (5)		0		4,953		43,109		0			2,118		4,953		45,227		50,180		8,533		1986		7/28/1998	15 - 40 Yrs
Los Angeles — Anaheim (Located near Disneyland Park ®), CA (1)		9,032		2,548		14,832		0			1,273		2,548		16,105		18,653		4,173		1987		1/3/1996	15 - 40 Yrs
Los Angeles International Airport — South, CA (1)		0		2,660		17,997		0			1,246		2,660		19,243		21,903		5,588		1985		3/27/1996	15 - 40 Yrs
Milpitas — Silicon Valley, CA (1)		27,658		4,021		23,677		0			1,942		4,021		25,619		29,640		6,500		1987		1/3/1996	15 - 40 Yrs
Milpitas — San Jose North (Milpitas — Silicon Valley), CA (5)		0		4,127		35,917		0			6,040		4,127		41,957		46,084		8,157		1987		7/28/1998	15 - 40 Yrs
Napa Valley, CA (1)		14,530		3,287		14,205		0			1,280		3,287		15,485		18,772		3,851		1985		5/8/1996	15 - 40 Yrs
Oxnard — Mandalay Beach Resort & Conference Center, CA (1)		0		2,930		22,125		1			2,684		2,931		24,809		27,740		5,959		1986		5/8/1996	15 - 40 Yrs
Palm Desert — Palm Desert Resort, CA (1)		0		2,368		20,598		4			2,031		2,372		22,629		25,001		4,358		1984		5/4/1998	15 - 40 Yrs
Pleasanton (San Ramon Area), CA (5)		0		3,152		27,428		0			278		3,152		27,706		30,858		5,138		1986		7/28/1998	15 - 40 Yrs
San Diego — On the Bay, CA (2)		0		0		68,229		0			4,409		0		72,638		72,638		14,518		1965		7/28/1998	15 - 40 Yrs
San Francisco — Airport — Burlingame, CA (1)		0		0		39,929		0			719		0		40,648		40,648		10,286		1986		11/6/1995	15 - 40 Yrs
San Francisco — Airport — South San Francisco, CA (1)		24,390		3,418		31,737		0			1,984		3,418		33,721		37,139		8,354		1988		1/3/1996	15 - 40 Yrs
San Francisco — Fisherman’s Wharf, CA (2)		0		0		61,883		0			1,642		0		63,525		63,525		16,358		1970		7/28/1998	15 - 40 Yrs
San Francisco — Union Square, CA (5)		0		8,466		73,684		(453	)		3,754		8,013		77,438		85,451		14,372		1970		7/28/1998	15 - 40 Yrs
Santa Barbara, CA (2)		0		1,683		14,647		0			739		1,683		15,386		17,069		2,762		1969		7/28/1998	15-40 Yrs
Santa Monica, CA (2)		0		10,200		16,580		0			214		10,200		16,794		26,994		766		1967		3/11/2004	15-40 Yrs
Toronto — Airport, Canada (7)		0		0		21,041		0			10,906		0		31,947		31,947		6,843		1970		7/28/1998	15 - 40 Yrs
Toronto — Yorkdale, Canada (2)		0		1,566		13,633		477			9,835		2,043		23,468		25,511		5,439		1970		7/28/1998	15 - 40 Yrs
Denver, CO (6)		4,882		2,432		21,158		0			922		2,432		22,080		24,512		4,175		1989		3/15/1998	15 - 40 Yrs
Stamford, CT (7)		0		0		37,154		0			4,029		0		41,183		41,183		7,438		1984		7/28/1998	15 - 40 Yrs
Wilmington, DE (6)		10,740		1,379		12,487		0			9,940		1,379		22,427		23,806		4,213		1972		3/20/1998	15 - 40 Yrs
Boca Raton, FL (1)		5,370		1,868		16,253		0			343		1,868		16,596		18,464		4,269		1989		2/28/1996	15 - 40 Yrs
Cocoa Beach — Oceanfront, FL (2)		0		2,285		19,892		0			13,020		2,285		32,912		35,197		7,159		1960		7/28/1998	15 - 40 Yrs
Deerfield Beach, FL (1)		12,196		4,523		29,443		68			1,463		4,591		30,906		35,497		7,830		1987		1/3/1996	15 - 40 Yrs

F-35

FELCOR LODGING TRUST INCORPORATED
Schedule III — Real Estate and Accumulated Depreciation — (continued)
as of December 31, 2005
(in thousands)

							Cost Capitalized					Gross Amounts at Which
			Initial Cost				Subsequent to Acquisition					Carried at Close of Period						Accumulated						Life Upon
					Buildings					Buildings				Buildings				Depreciation						Which
					and					and				and				Buildings &		Year		Date		Depreciation
Location	Encumbrances		Land		Improvements		Land			Improvements		Land		Improvements		Total		Improvements		Opened		Acquired		is Computed
Ft. Lauderdale — 17th Street, FL (1)		21,285		5,329		47,850		(163	)		2,430		5,166		50,280		55,446		12,767		1986		1/3/1996	15 - 40 Yrs
Ft. Lauderdale (Cypress Creek), FL (8)		11,958		3,009		26,177		0			1,666		3,009		27,843		30,852		5,264		1986		5/4/1998	15 - 40 Yrs
Jacksonville — Baymeadows, FL (1)		13,859		1,130		9,608		0			6,467		1,130		16,075		17,205		3,949		1986		7/28/1994	15 - 40 Yrs
Miami International Airport, FL (1)		17,206		4,135		24,950		0			1,385		4,135		26,335		30,470		6,699		1983		7/28/1998	15 - 40 Yrs
Miami International Airport (LeJeune Center), FL (5)		0		0		26,007		0			1,355		0		27,362		27,362		5,066		1987		1/3/1996	15 - 40 Yrs
Orlando — International Airport, FL (7)		9,567		2,549		22,188		0			1,903		2,549		24,091		26,640		4,688		1984		7/28/1998	15 - 40 Yrs
Orlando — International Drive — Resort, FL (2)		0		5,108		44,460		0			9,442		5,108		53,902		59,010		10,641		1972		7/28/1998	15 - 40 Yrs
Orlando International Drive/Convention Center, FL (1)		23,754		1,632		13,870		0			1,349		1,632		15,219		16,851		4,318		1985		7/28/1994	15 - 40 Yrs
Orlando — Nikki Bird (Maingate — Disney World Area®, FL (2)		0		0		31,457		0			6,656		0		38,113		38,113		6,379		1974		7/28/1998	15 - 40 Yrs
Orlando (North), FL (1)		0		1,673		14,218		6			7,012		1,679		21,230		22,909		5,599		1985		7/28/1994	15 - 40 Yrs
Orlando- Walt Disney World Resort®, FL (4)		0		0		28,092		0			186		0		28,278		28,278		5,569		1987		7/28/1997	15 - 40 Yrs
Tampa — On Tampa Bay, FL (4)		13,522		2,142		18,639		1			2,010		2,143		20,649		22,792		4,348		1986		7/28/1997	15 - 40 Yrs
Atlanta — Airport, GA (5)		0		0		40,734		0			322		0		41,056		41,056		9,127		1975		7/28/1998	15 - 40 Yrs
Atlanta — Airport, GA (1)		13,181		0		22,342		2,568			1,546		2,568		23,888		26,456		4,446		1989		5/4/1998	15 - 40 Yrs
Atlanta — Airport — North, GA (2)		0		0		34,353		0			538		0		34,891		34,891		7,533		1967		7/28/1998	15 - 40 Yrs
Atlanta — Buckhead, GA (1)		35,516		7,303		38,996		(300	)		1,857		7,003		40,853		47,856		9,178		1988		10/17/1996	15 - 40 Yrs
Atlanta — Galleria, GA (8)		16,557		5,052		28,507		0			1,071		5,052		29,578		34,630		6,278		1990		6/30/1997	15 - 40 Yrs
Atlanta — Gateway-Atlanta Airport, GA (3)		0		5,113		22,857		1			258		5,114		23,115		28,229		4,911		1986		6/30/1997	15 - 40 Yrs
Atlanta — Perimeter — Dunwoody, GA (7)		0		0		20,449		0			468		0		20,917		20,917		3,878		1985		7/28/1998	15 - 40 Yrs
Atlanta — Powers Ferry, GA (5)		0		3,391		29,517		0			770		3,391		30,287		33,678		5,635		1981		7/28/1998	15 - 40 Yrs
Atlanta — South (I-75 & US 41), GA (2)		0		859		7,475		0			251		859		7,726		8,585		1,420		1973		7/28/1998	15 - 40 Yrs
Brunswick, GA (1)		0		705		6,067		0			324		705		6,391		7,096		1,606		1988		7/19/1995	15 - 40 Yrs
Columbus — North I-185 at Peachtree Mall, GA (2)		0		0		6,978		0			2,058		0		9,036		9,036		2,015		1969		7/28/1998	15 - 40 Yrs
Chicago — The Allerton, IL (5)		0		3,298		28,723		15,589			28,337		18,887		57,060		75,947		13,004		1923		7/28/1998	15 - 40 Yrs
Chicago — Northshore/Deerfield (Northbrook), IL (1)		15,390		2,305		20,054		0			821		2,305		20,875		23,180		4,886		1987		6/20/1996	15 - 40 Yrs
Chicago O’Hare Airport, IL (3)		22,996		8,178		37,043		0			1,993		8,178		39,036		47,214		8,116		1994		6/30/1997	15 - 40 Yrs
Indianapolis North, IN (1)		0		0		0		5,125			13,929		5,125		13,929		19,054		7,079		1986		8/1/1996	15 - 40 Yrs
Lexington, KY (8)		6,439		0		21,644		2,488			943		2,488		22,587		25,075		4,232		1989		5/4/1998	15 - 40 Yrs
Lexington — Lexington Green, KY (10)		15,586		1,955		13,604		0			257		1,955		13,861		15,816		3,402		1987		1/10/1996	15 - 40 Yrs
Baton Rouge, LA (1)		10,324		2,350		19,092		1			1,163		2,351		20,255		22,606		5,172		1985		1/3/1996	15 - 40 Yrs
New Orleans, LA (1)		30,316		3,647		31,993		0			7,394		3,647		39,387		43,034		11,116		1984		12/1/1994	15 - 40 Yrs
New Orleans — French Quarter, LA (2)		0		0		50,732		0			8,432		0		59,164		59,164		10,462		1969		7/28/1998	15 - 40 Yrs

F-36

FELCOR LODGING TRUST INCORPORATED
Schedule III — Real Estate and Accumulated Depreciation — (continued)
as of December 31, 2005
(in thousands)

							Cost Capitalized						Gross Amounts at Which
			Initial Cost				Subsequent to Acquisition						Carried at Close of Period						Accumulated						Life Upon
					Buildings					Buildings					Buildings				Depreciation						Which
					and					and					and				Buildings &		Year		Date		Depreciation
Location	Encumbrances		Land		Improvements		Land			Improvements			Land		Improvements		Total		Improvements		Opened		Acquired		is Computed
Boston — Government Center, MA (7)		0		0		45,192		0			5,974			0		51,166		51,166		10,990		1968		7/28/1998	15 - 40 Yrs
Boston — Marlborough, MA (1)		19,035		948		8,143		761			13,345			1,709		21,488		23,197		4,861		1988		6/30/1995	15 - 40 Yrs
Baltimore — BWI Airport, MD (1)		23,551		2,568		22,433		(2	)		1,488			2,566		23,921		26,487		5,298		1987		3/20/1997	15 - 40 Yrs
Troy, MI (1)		6,737		2,968		25,905		0			1,668			2,968		27,573		30,541		6,081		1987		3/20/1997	15 - 40 Yrs
Minneapolis — Airport, MN (1)		20,393		5,417		36,508		24			686			5,441		37,194		42,635		9,483		1986		11/6/1995	15 - 40 Yrs
Minneapolis — Bloomington, MN (1)		10,720		2,038		17,731		0			662			2,038		18,393		20,431		4,066		1980		2/1/1997	15 - 40 Yrs
Minneapolis -Downtown, MN (1)		0		818		16,820		0			1,134			818		17,954		18,772		4,201		1984		11/15/1995	15 - 40 Yrs
St Paul- Downtown, MN (1)		5,196		1,156		17,315		0			391			1,156		17,706		18,862		4,658		1983		11/15/1995	15 - 40 Yrs
Kansas City NE I-435 North (At Worlds of Fun), MO (2)		0		967		8,415		0			257			967		8,672		9,639		2,047		1975		7/28/1998	15 - 40 Yrs
Charlotte SouthPark, NC (4)		0		1,458		12,681		1			2,221			1,459		14,902		16,361		1,372		N/A		7/12/2002	15 - 40 Yrs
Raleigh, NC (4)		13,522		2,124		18,476		0			1,304			2,124		19,780		21,904		4,077		1987		7/28/1997	15 - 40 Yrs
Omaha — Central, NE (9)		0		514		4,477		0			948			514		5,425		5,939		1,075		1965		7/28/1998	15 - 40 Yrs
Omaha — Central (I-80), NE (2)		0		1,782		15,513		0			3,788			1,782		19,301		21,083		3,394		1991		7/28/1998	15 - 40 Yrs
Omaha — Old Mill, NE (5)		0		971		8,449		0			5,162			971		13,611		14,582		3,297		1974		7/28/1998	15 - 40 Yrs
Piscataway-Somerset, NJ (1)		19,246		1,755		17,563		0			1,280			1,755		18,843		20,598		4,568		1988		1/10/1996	15 - 40 Yrs
Tulsa — I-44, OK (1)		0		525		7,344		0			799			525		8,143		8,668		3,200		1985		7/28/1994	15 - 40 Yrs
Philadelphia -Center City, PA (5)		0		5,759		50,127		(452	)		(3,030	)		5,307		47,097		52,404		8,856		1970		7/28/1998	15 - 40 Yrs
Philadelphia —Historic District, PA (2)		0		3,164		27,535		0			6,580			3,164		34,115		37,279		7,148		1972		7/28/1998	15 - 40 Yrs
Philadelphia Society Hill, PA (3)		31,274		4,542		45,121		0			2,099			4,542		47,220		51,762		9,783		1986		10/1/1997	15 - 40 Yrs
Pittsburgh at University Center (Oakland), PA (7)		15,500		0		25,031		0			1,843			0		26,874		26,874		5,239		1988		11/1/1998	15 - 40 Yrs
Charleston -Mills House (Historic Downtown), SC (2)		20,183		3,251		28,295		0			488			3,251		28,783		32,034		5,308		1982		7/28/1998	15 - 40 Yrs
Myrtle Beach — At Kingston Plantation, SC (1)		0		2,940		24,988		0			2,374			2,940		27,362		30,302		6,492		1987		12/5/1996	15 - 40 Yrs
Myrtle Beach Resort (15)		0		12,000		17,689		6			6,155			12,006		23,844		35,850		4,567		1974		7/23/2002	15 - 40 Yrs
Knoxville — Central At Papermill Road, TN (2)		0		0		11,518		0			1,716			0		13,234		13,234		2,491		1966		7/28/1998	15 - 40 Yrs
Nashville- Airport/Opryland Area, TN (1)		0		1,118		9,506		0			686			1,118		10,192		11,310		3,479		1985		7/28/1994	15 - 40 Yrs
Nashville — Opryland/Airport (Briley Parkway), TN (7)		0		0		27,734		0			2,340			0		30,074		30,074		6,428		1981		7/28/1998	15 - 40 Yrs
Amarillo — I-40, TX (2)		0		0		5,754		0			3,031			0		8,785		8,785		1,797		1970		7/28/1998	15 - 40 Yrs
Austin, TX (4)		9,389		2,508		21,908		0			2,202			2,508		24,110		26,618		5,224		1987		3/20/1997	15 - 40 Yrs
Austin -Town Lake (Downtown Area), TX (2)		0		0		21,433		0			966			0		22,399		22,399		4,163		1967		7/28/1998	15 - 40 Yrs
Corpus Christi, TX (1)		4,956		1,113		9,618		51			2,411			1,164		12,029		13,193		2,891		1984		7/19/1995	15 - 40 Yrs

F-37

FELCOR LODGING TRUST INCORPORATED
Schedule III — Real Estate and Accumulated Depreciation — (continued)
as of December 31, 2005
(in thousands)

							Cost Capitalized					Gross Amounts at Which
			Initial Cost				Subsequent to Acquisition					Carried at Close of Period						Accumulated						Life Upon
					Buildings					Buildings		Depreciation		Buildings				Depreciation						Which
					and					and				and				Buildings &		Year		Date		Depreciation
Location	Encumbrances		Land		Improvements		Land			Improvements		Land		Improvements		Total		Improvements		Opened		Acquired		is Computed
Dallas, TX (5)		0		0		30,346		5,603			439		5,603		30,785		36,388		5,681		1981		7/28/1998	15 - 40 Yrs
Dallas — At Campbell Center, TX (6)		0		3,208		27,907		0			1,822		3,208		29,729		32,937		4,691		1982		5/29/1998	15 - 40 Yrs
Dallas — DFW International Airport North TX (14)		0		1,537		13,379		0			451		1,537		13,830		15,367		2,531		1989		7/28/1998	15 - 40 Yrs
Dallas — DFW International Airport South, TX (1)		14,936		0		35,156		4,041			756		4,041		35,912		39,953		6,808		1985		7/28/1998	15 - 40 Yrs
Dallas — Love Field, TX (1)		10,947		1,934		16,674		0			901		1,934		17,575		19,509		4,566		1986		3/29/1995	15 - 40 Yrs
Dallas — Market Center, TX (5)		0		4,056		35,302		0			1,299		4,056		36,601		40,657		6,636		1983		7/28/1998	15 - 40 Yrs
Dallas — Market Center, TX (1)		0		2,560		23,751		0			695		2,560		24,446		27,006		5,175		1980		6/30/1997	15 - 40 Yrs
Dallas — Park Central, TX (3)		0		1,720		28,550		(264	)		818		1,456		29,368		30,824		4,517		1972		11/1/1998	15 - 40 Yrs
Dallas — Park Central, TX (12)		0		0		8,053		1,619			272		1,619		8,325		9,944		3,010		1997		7/28/1998	15 - 40 Yrs
Dallas — Park Central, TX (13)		0		4,513		43,125		762			5,098		5,275		48,223		53,498		9,149		1983		6/30/1997	15 - 40 Yrs
Dallas — Park Central Area, TX (1)		0		1,497		12,722		(19	)		1,112		1,478		13,834		15,312		4,062		1985		7/28/1994	15 - 40 Yrs
Dallas — West End/Convention Center, TX (9)		0		1,953		16,989		0			1,953		1,953		18,942		20,895		3,408		1969		7/28/1998	15 - 40 Yrs
Houston — Greenway Plaza Area, TX (7)		0		3,398		29,578		0			613		3,398		30,191		33,589		5,627		1984		7/28/1998	15 - 40 Yrs
Houston — I-10 West & Hwy. 6 (Park 10 Area), TX (7)		0		3,037		26,431		(53	)		1,376		2,984		27,807		30,791		4,574		1969		7/28/1998	15 - 40 Yrs
Houston — Intercontinental Airport, TX (2)		0		3,868		33,664		0			947		3,868		34,611		38,479		6,418		1971		7/28/1998	15 - 40 Yrs
Houston — Medical Center, TX (11)		0		0		22,027		0			2,437		0		24,464		24,464		4,338		1984		7/28/1998	15 - 40 Yrs
San Antonio — Downtown (Market Square), TX (2)		0		0		22,129		1			1,045		1		23,174		23,175		4,341		1968		7/28/1998	15 - 40 Yrs
San Antonio — International Airport, TX (7)		15,585		3,351		29,168		(193	)		2,513		3,158		31,681		34,839		6,174		1981		7/28/1998	15 - 40 Yrs
Burlington Hotel & Conference Center, VT (3)		19,316		3,136		27,283		(2	)		768		3,134		28,051		31,185		5,683		1967		12/4/1997	15 - 40 Yrs
	$	718,234	$	253,920	$	2,732,775	$	42,001		$	303,012	$	295,921	$	3,035,787	$	3,331,708	$	646,484

(1)	Embassy Suites
(2)	Holiday Inn
(3)	Sheraton
(4)	Doubletree Guest Suites
(5)	Crowne Plaza
(6)	Doubletree
(7)	Holiday Inn Select
(8)	Sheraton Suites
(9)	Hampton Inn
(10)	Hilton Suites
(11)	Holiday Inn Hotel & Suites
(12)	Staybridge Suites
(13)	Westin
(14)	Harvey Suites
(15)	Hilton

F-38

FELCOR LODGING TRUST INCORPORATED
Schedule III — Real Estate and Accumulated Depreciation — (continued)
as of December 31, 2005
(in thousands)

	Year Ended December 31,
	2005			2004
Reconciliation of Land and Buildings and Improvements
Balance at beginning of period	$	3,513,950		$	3,776,887
Additions during period:
Acquisitions		18,949			26,780
Improvements		21,735			18,902
Deductions during period:
Sale of properties		(140,071	)		(300,529	)
Hotels held for sale		—			(8,090	)
Foreclosures		(82,855	)		—
Balance at end of period before impairment charges		3,331,708			3,513,950
Cumulative impairment charges on real estate assets owned at end of period		(327,169	)		(166,349	)
Balance at end of period	$	3,004,539		$	3,347,601
Reconciliation of Accumulated Depreciation
Balance at beginning of period	$	590,065		$	545,355
Additions during period:
Depreciation for the period		79,231			87,561
Deductions during period:
Sale of properties		(22,812	)		(42,851	)
Balance at end of period	$	646,484		$	590,065

F-39

EX-4.8.7

Exhibit 4.8.7

FIFTH SUPPLEMENTAL INDENTURE

     This Fifth Supplemental Indenture (this “Agreement”) is entered into as of January 25, 2006, by and among (i) FelCor Lodging Limited Partnership, a Delaware limited partnership (“FelCor LP”), (ii) FelCor Lodging Trust Incorporated, a Maryland corporation (“FelCor”), (iii) each of the entities listed on Schedule 1 attached hereto (collectively, the “New Subsidiary Guarantors”), and (iv) SunTrust Bank, as Trustee (“Trustee”).

     WHEREAS, FelCor LP, as Issuer, FelCor and certain of its subsidiaries names therein, as Guarantors, and Trustee, as Trustee, entered into that certain Indenture dated as of October 1, 1997, as amended and supplemented to date (the “Indenture”);

     WHEREAS, each of the subsidiary guarantors listed on Schedule 2 attached hereto (the “Former Guarantors”), were guarantors of the Line of Credit (as defined in the Indenture) and, pursuant to Section 4.07 of the Indenture, executed and delivered Subsidiary Guarantees under and as defined in the Indenture;

     WHEREAS, the Line of Credit was fully paid, discharged and terminated in March, 2004, and, pursuant to Section 4.07 of the Indenture, each of the Former Guarantors was automatically released and discharged from its Subsidiary Guarantee upon the release and discharge of the Guarantee (as defined in the Indenture) which resulted in the creation of such Subsidiary Guarantee; and

     WHEREAS, on or about the date hereof, FelCor LP and FelCor are entering into a new Line of Credit which will be guaranteed by the New Subsidiary Guarantors and, pursuant to Section 4.07 of the Indenture, the New Subsidiary Guarantors are required to execute and deliver a supplemental indenture to the Indenture providing for a Subsidiary Guarantee by such New Subsidiary Guarantor.

     NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

     1. Each of the New Subsidiary Guarantors hereby executes this Agreement as a supplemental indenture to the Indenture for the purpose of providing a guarantee of the Notes, as that term is defined in the Indenture, and of certain of FelCor LP’s obligations under the Indenture as set forth therein and agrees to assume and be subject to all of the terms, conditions, waivers and covenants applicable to a Subsidiary Guarantor under the Indenture, including without limitation, those set forth in Article XI thereof. Upon its execution hereof, each of the New Subsidiary Guarantors hereby acknowledges that it shall be a Subsidiary Guarantor for all purposes as defined and as set forth in the Indenture, effective as of the date hereof. Further, each New Subsidiary Guarantor hereby waives and shall not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights

against FelCor LP, FelCor or any other Restricted Subsidiary as a result of any payment by such New Subsidiary Guarantor under its Subsidiary Guarantee.

     2. The parties hereto hereby confirm and acknowledge the prior release and discharge of each of the Former Guarantors from any and all guaranty obligations arising under the Indenture.

     3. The parties hereto hereby confirm and acknowledge that the Indenture shall continue in full force and effect according to its original terms, except as expressly supplemented hereby.

     4. This Agreement may be executed in any number of counterparts, but all such counterparts shall together constitute but one and the same agreement. In making proof of this Agreement, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto.

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

FELCOR LODGING LIMITED PARTNERSHIP,
a Delaware limited partnership
By:	FelCor Lodging Trust Incorporated, a Maryland corporation, its general partner

By:	/s/ Lawrence D. Robinson
Name:	Lawrence D. Robinson
Title:	Executive Vice President

FELCOR LODGING TRUST INCORPORATED,
a Maryland corporation
By:	/s/ Lawrence D. Robinson
Name:	Lawrence D. Robinson
Title:	Executive Vice President
FELCOR/CSS HOLDINGS, L.P., a Delaware limited partnership
By:	FelCor CSS Hotels, L.L.C., a Delaware limited liability company, its general partner
FELCOR HOTEL ASSET COMPANY, L.L.C., a Delaware limited liability company
FELCOR PENNSYLVANIA COMPANY, L.L.C., a Delaware limited liability company
FELCOR LODGING HOLDING COMPANY, L.L.C., a Delaware limited liability company

-2-

FHAC TEXAS HOLDINGS, L.P., a Texas limited partnership
By:	FelCor Hotel Asset Company, L.L.C., a Delaware limited liability company, its general partner
FELCOR CANADA CO., a Nova Scotia unlimited liability company
FELCOR OMAHA HOTEL COMPANY, L.L.C., a Delaware limited liability company
FELCOR TRS HOLDINGS, L.P., a Delaware limited partnership
By:	FelCor TRS I, L.L.C., a Delaware limited liability company, its general partner
MYRTLE BEACH HOTELS, L.L.C., a Delaware limited liability company
FELCOR TRS BORROWER 1, L.P., a Delaware limited partnership
By:	FelCor TRS Borrower GP 1, L.L.C., a Delaware limited liability company, its general partner
FELCOR TRS GUARANTOR, L.P., a Delaware limited partnership
By:	FelCor TRS Guarantor GP, L.L.C., a Delaware limited liability company, its general partner
CENTER CITY HOTEL ASSOCIATES, a Pennsylvania limited partnership
By:	FelCor Philadelphia Center, L.L.C., a Delaware limited liability company its general partner
FELCOR LODGING COMPANY, L.L.C., a Delaware limited liability company
FELCOR TRS BORROWER 3, L.P., a Delaware limited partnership
By:	FelCor TRS Borrower GP 3, L.L.C., a Delaware limited liability company, its general partner
FELCOR TRS BORROWER 4, L.L.C., a Delaware limited liability company

By:	/s/ Lawrence D. Robinson
Name:	Lawrence D. Robinson
Title:	Executive Vice President

-3-

SUNTRUST BANK, as Trustee
By:	/s/ George Hogan
Name:	George Hogan
Title:	Vice President

-4-

SCHEDULE 1

NEW SUBSIDIARY GUARANTORS

1.	FelCor/CSS Holdings, L.P., a Delaware limited partnership
2.	FelCor Hotel Asset Company, L.L.C., a Delaware limited liability company
3.	FelCor Pennsylvania Company, L.L.C., a Delaware limited liability company
4.	FelCor Lodging Holding Company, L.L.C., a Delaware limited liability company
5.	FHAC Texas Holdings, L.P., a Texas limited partnership
6.	FelCor Canada Co., a Nova Scotia unlimited liability company
7.	FelCor Omaha Hotel Company, L.L.C., a Delaware limited liability company
8.	FelCor TRS Holdings, L.P., a Delaware limited partnership
9.	Myrtle Beach Hotels, L.L.C., a Delaware limited liability company
10.	FelCor TRS Borrower 1, L.P., a Delaware limited partnership
11.	FelCor TRS Guarantor, L.P., a Delaware limited partnership
12.	Center City Hotel Associates, a Pennsylvania limited partnership
13.	FelCor Lodging Company, L.L.C., a Delaware limited liability company
14.	FelCor TRS Borrower 3, L.P., a Delaware limited partnership
15.	FelCor TRS Borrower 4, L.L.C., a Delaware limited liability company

-5-

SCHEDULE 2

FORMER GUARANTORS

1.	FelCor/CSS Hotels, L.L.C., a Delaware limited liability company
2.	FelCor/LAX Hotels, L.L.C., a Delaware limited liability company
3.	FelCor/CSS Holdings, L.P., a Delaware limited partnership
4.	FelCor/St. Paul Holdings, L.P., a Delaware limited partnership
5.	FelCor/LAX Holdings, L.P., a Delaware limited partnership
6.	FelCor Eight Hotels, L.L.C., a Delaware limited liability company
7.	FelCor Hotel Asset Company, L.L.C., a Delaware limited liability company
8.	FelCor Nevada Holdings, L.L.C., a Nevada limited liability company
9.	FHAC Nevada Holdings, L.L.C., a Nevada limited liability company
10.	FHAC Texas Holdings, L.P., a Texas limited partnership
11.	FelCor Omaha Hotel Company, L.L.C., a Delaware limited liability company
12.	FelCor Country Villa Hotel, L.L.C., a Delaware limited liability company
13.	FelCor Moline Hotel, L.L.C., a Delaware limited liability company
14.	FelCor Canada Co., a Nova Scotia unlimited liability company
15.	FelCor TRS Holdings, L.P., a Delaware limited partnership
16.	Kingston Plantation Development Corp., a Delaware corporation
17.	FelCor Holdings Trust, a Massachusetts business trust

-6-

EX-4.9.3

Exhibit 4.9.3

THIRD SUPPLEMENTAL INDENTURE

     This Third Supplemental Indenture (this “Agreement”) is entered into as of January 25, 2006, by and among (i) FelCor Lodging Limited Partnership, a Delaware limited partnership (“FelCor LP”), (ii) FelCor Lodging Trust Incorporated, a Maryland corporation (“FelCor”), (iii) each of the entities listed on Schedule 1 attached hereto (collectively, the “New Subsidiary Guarantors”), and (iv) SunTrust Bank, as Trustee (“Trustee”).

     WHEREAS, FelCor LP, as Issuer, FelCor and certain of its subsidiaries names therein, as Guarantors, and Trustee, as Trustee, entered into that certain Indenture dated as of June 4, 2001, as amended and supplemented to date (the “Indenture”);

     WHEREAS, each of the subsidiary guarantors listed on Schedule 2 attached hereto (the “Former Guarantors”), were guarantors of the Line of Credit (as defined in the Indenture) and, pursuant to Section 4.07 of the Indenture, executed and delivered Subsidiary Guarantees under and as defined in the Indenture;

     WHEREAS, the Line of Credit was fully paid, discharged and terminated in March, 2004, and, pursuant to Section 4.07 of the Indenture, each of the Former Guarantors was automatically released and discharged from its Subsidiary Guarantee upon the release and discharge of the Guarantee (as defined in the Indenture) which resulted in the creation of such Subsidiary Guarantee; and

     WHEREAS, on or about the date hereof, FelCor LP and FelCor are entering into a new Line of Credit which will be guaranteed by the New Subsidiary Guarantors and, pursuant to Section 4.07 of the Indenture, the New Subsidiary Guarantors are required to execute and deliver a supplemental indenture to the Indenture providing for a Subsidiary Guarantee by such New Subsidiary Guarantor.

     NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

     1. Each of the New Subsidiary Guarantors hereby executes this Agreement as a supplemental indenture to the Indenture for the purpose of providing a guarantee of the Notes, as that term is defined in the Indenture, and of certain of FelCor LP’s obligations under the Indenture as set forth therein and agrees to assume and be subject to all of the terms, conditions, waivers and covenants applicable to a Subsidiary Guarantor under the Indenture, including without limitation, those set forth in Article XI thereof. Upon its execution hereof, each of the New Subsidiary Guarantors hereby acknowledges that it shall be a Subsidiary Guarantor for all purposes as defined and as set forth in the Indenture, effective as of the date hereof. Further, each New Subsidiary Guarantor hereby waives and shall not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights

against FelCor LP, FelCor or any other Restricted Subsidiary as a result of any payment by such New Subsidiary Guarantor under its Subsidiary Guarantee.

     2. The parties hereto hereby confirm and acknowledge the prior release and discharge of each of the Former Guarantors from any and all guaranty obligations arising under the Indenture.

     3. The parties hereto hereby confirm and acknowledge that the Indenture shall continue in full force and effect according to its original terms, except as expressly supplemented hereby.

     4. This Agreement may be executed in any number of counterparts, but all such counterparts shall together constitute but one and the same agreement. In making proof of this Agreement, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto.

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

FELCOR LODGING LIMITED PARTNERSHIP, a Delaware limited partnership
By:	FelCor Lodging Trust Incorporated, a Maryland corporation, its general partner

By:	/s/ Lawrence D. Robinson
Name:	Lawrence D. Robinson
Title:	Executive Vice President

FELCOR LODGING TRUST INCORPORATED, a Maryland corporation
By:	/s/ Lawrence D. Robinson
Name:	Lawrence D. Robinson
Title:	Executive Vice President
FELCOR/CSS HOLDINGS, L.P., a Delaware limited partnership
By:	FelCor CSS Hotels, L.L.C., a Delaware limited liability company, its general partner
FELCOR HOTEL ASSET COMPANY, L.L.C., a Delaware limited liability company
FELCOR PENNSYLVANIA COMPANY, L.L.C., a Delaware limited liability company
FELCOR LODGING HOLDING COMPANY, L.L.C., a Delaware limited liability company

-2-

FHAC TEXAS HOLDINGS, L.P., a Texas limited partnership
By:	FelCor Hotel Asset Company, L.L.C., a Delaware limited liability company, its general partner
FELCOR CANADA CO., a Nova Scotia unlimited liability company
FELCOR OMAHA HOTEL COMPANY, L.L.C., a Delaware limited liability company
FELCOR TRS HOLDINGS, L.P., a Delaware limited partnership
By:	FelCor TRS I, L.L.C., a Delaware limited liability company, its general partner
MYRTLE BEACH HOTELS, L.L.C., a Delaware limited liability company
FELCOR TRS BORROWER 1, L.P., a Delaware limited partnership
By:	FelCor TRS Borrower GP 1, L.L.C., a Delaware limited liability company, its general partner
FELCOR TRS GUARANTOR, L.P., a Delaware limited partnership
By:	FelCor TRS Guarantor GP, L.L.C., a Delaware limited liability company, its general partner
CENTER CITY HOTEL ASSOCIATES, a Pennsylvania limited partnership
By:	FelCor Philadelphia Center, L.L.C., a Delaware limited liability company its general partner
FELCOR LODGING COMPANY, L.L.C., a Delaware limited liability company
FELCOR TRS BORROWER 3, L.P., a Delaware limited partnership
By:	FelCor TRS Borrower GP 3, L.L.C., a Delaware limited liability company, its general partner
FELCOR TRS BORROWER 4, L.L.C., a Delaware limited liability company
By:	/s/ Lawrence D. Robinson
Name:	Lawrence D. Robinson
Title:	Executive Vice President

-3-

SUNTRUST BANK, as Trustee
By:	/s/ George Hogan
Name:	George Hogan
Title:	Vice President

-4-

SCHEDULE 1

NEW SUBSIDIARY GUARANTORS

1.	FelCor/CSS Holdings, L.P., a Delaware limited partnership
2.	FelCor Hotel Asset Company, L.L.C., a Delaware limited liability company
3.	FelCor Pennsylvania Company, L.L.C., a Delaware limited liability company
4.	FelCor Lodging Holding Company, L.L.C., a Delaware limited liability company
5.	FHAC Texas Holdings, L.P., a Texas limited partnership
6.	FelCor Canada Co., a Nova Scotia unlimited liability company
7.	FelCor Omaha Hotel Company, L.L.C., a Delaware limited liability company
8.	FelCor TRS Holdings, L.P., a Delaware limited partnership
9.	Myrtle Beach Hotels, L.L.C., a Delaware limited liability company
10.	FelCor TRS Borrower 1, L.P., a Delaware limited partnership
11.	FelCor TRS Guarantor, L.P., a Delaware limited partnership
12.	Center City Hotel Associates, a Pennsylvania limited partnership
13.	FelCor Lodging Company, L.L.C., a Delaware limited liability company
14.	FelCor TRS Borrower 3, L.P., a Delaware limited partnership
15.	FelCor TRS Borrower 4, L.L.C., a Delaware limited liability company

-5-

SCHEDULE 2

FORMER GUARANTORS

1.	FelCor/CSS Hotels, L.L.C., a Delaware limited liability company
2.	FelCor/LAX Hotels, L.L.C., a Delaware limited liability company
3.	FelCor/CSS Holdings, L.P., a Delaware limited partnership
4.	FelCor/St. Paul Holdings, L.P., a Delaware limited partnership
5.	FelCor/LAX Holdings, L.P., a Delaware limited partnership
6.	FelCor Eight Hotels, L.L.C., a Delaware limited liability company
7.	FelCor Hotel Asset Company, L.L.C., a Delaware limited liability company
8.	FelCor Nevada Holdings, L.L.C., a Nevada limited liability company
9.	FHAC Nevada Holdings, L.L.C., a Nevada limited liability company
10.	FHAC Texas Holdings, L.P., a Texas limited partnership
11.	FelCor Omaha Hotel Company, L.L.C., a Delaware limited liability company
12.	FelCor Country Villa Hotel, L.L.C., a Delaware limited liability company
13.	FelCor Moline Hotel, L.L.C., a Delaware limited liability company
14.	FelCor Canada Co., a Nova Scotia unlimited liability company
15.	FelCor TRS Holdings, L.P., a Delaware limited partnership
16.	Kingston Plantation Development Corp., a Delaware corporation
17.	FelCor Holdings Trust, a Massachusetts business trust

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EX-4.10.1

Exhibit 4.10.1

FIRST SUPPLEMENTAL INDENTURE

     This First Supplemental Indenture (this “Agreement”) is entered into as of January 25, 2006, by and among (i) FelCor Lodging Limited Partnership, a Delaware limited partnership (“FelCor LP”), (ii) FelCor Lodging Trust Incorporated, a Maryland corporation (“FelCor”), (iii) each of the entities listed on Schedule 1 attached hereto (collectively, the “New Subsidiary Guarantors”), and (iv) SunTrust Bank, as Trustee (“Trustee”).

     WHEREAS, FelCor LP, as Issuer, FelCor and certain of its subsidiaries names therein, as Guarantors, and Trustee, as Trustee, entered into that certain Indenture dated as of May 26, 2004 (the “Indenture”);

     WHEREAS, each of the subsidiary guarantors listed on Schedule 2 attached hereto (the “Former Guarantors”), executed and delivered Subsidiary Guarantees under and as defined in the Indenture on the basis and with the belief that they were guarantors of other Guaranteed Indebtedness (as defined in the Indenture) and, pursuant to Section 4.07 of the Indenture;

     WHEREAS, all other Guaranteed Indebtedness of the Former Guarantors, if any, was fully paid, discharged and terminated and, pursuant to Section 11.07 of the Indenture, each of the Former Guarantors was automatically released and discharged from its Subsidiary Guarantee upon the unconditional and complete release of such Former Guarantor from its Guarantee (as defined in the Indenture) of all Guaranteed Indebtedness; and

     WHEREAS, on or about the date hereof, FelCor LP and FelCor are entering into a new Line of Credit which will be guaranteed by the New Subsidiary Guarantors and, pursuant to Section 4.07 of the Indenture, the New Subsidiary Guarantors are required to execute and deliver a supplemental indenture to the Indenture providing for a Subsidiary Guarantee by such New Subsidiary Guarantor.

     NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

     1. Each of the New Subsidiary Guarantors hereby executes this Agreement as a supplemental indenture to the Indenture for the purpose of providing a guarantee of the Notes, as that term is defined in the Indenture, and of certain of FelCor LP’s obligations under the Indenture as set forth therein and agrees to assume and be subject to all of the terms, conditions, waivers and covenants applicable to a Subsidiary Guarantor under the Indenture, including without limitation, those set forth in Article XI thereof. Upon its execution hereof, each of the New Subsidiary Guarantors hereby acknowledges that it shall be a Subsidiary Guarantor for all purposes as defined and as set forth in the Indenture, effective as of the date hereof. Further, each New Subsidiary Guarantor hereby waives and shall not in any manner whatsoever claim or take the benefit or

advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against FelCor LP, FelCor or any other Restricted Subsidiary as a result of any payment by such New Subsidiary Guarantor under its Subsidiary Guarantee.

     2. The parties hereto hereby confirm and acknowledge the prior release and discharge of each of the Former Guarantors from any and all guaranty obligations arising under the Indenture.

     3. The parties hereto hereby confirm and acknowledge that the Indenture shall continue in full force and effect according to its original terms, except as expressly supplemented hereby.

     4. This Agreement may be executed in any number of counterparts, but all such counterparts shall together constitute but one and the same agreement. In making proof of this Agreement, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto.

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

FELCOR LODGING LIMITED PARTNERSHIP, a Delaware limited partnership
By:	FelCor Lodging Trust Incorporated, a Maryland corporation, its general partner

By:	/s/ Lawrence D. Robinson
Name:	Lawrence D. Robinson
Title:	Executive Vice President

FELCOR LODGING TRUST INCORPORATED, a Maryland corporation
By:	/s/ Lawrence D. Robinson
Name:	Lawrence D. Robinson
Title:	Executive Vice President
FELCOR/CSS HOLDINGS, L.P., a Delaware limited partnership
By:	FelCor CSS Hotels, L.L.C., a Delaware limited liability company, its general partner
FELCOR HOTEL ASSET COMPANY, L.L.C., a Delaware limited liability company
FELCOR PENNSYLVANIA COMPANY, L.L.C., a Delaware limited liability company

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FELCOR LODGING HOLDING COMPANY, L.L.C., a Delaware limited liability company
FHAC TEXAS HOLDINGS, L.P., a Texas limited partnership
By:	FelCor Hotel Asset Company, L.L.C., a Delaware limited liability company, its general partner
FELCOR CANADA CO., a Nova Scotia unlimited liability company
FELCOR OMAHA HOTEL COMPANY, L.L.C., a Delaware limited liability company
FELCOR TRS HOLDINGS, L.P., a Delaware limited partnership
By:	FelCor TRS I, L.L.C., a Delaware limited liability company, its general partner
MYRTLE BEACH HOTELS, L.L.C., a Delaware limited liability company
FELCOR TRS BORROWER 1, L.P., a Delaware limited partnership
By:	FelCor TRS Borrower GP 1, L.L.C., a Delaware limited liability company, its general partner
FELCOR TRS GUARANTOR, L.P., a Delaware limited partnership
By:	FelCor TRS Guarantor GP, L.L.C., a Delaware limited liability company, its general partner
CENTER CITY HOTEL ASSOCIATES, a Pennsylvania limited partnership
By:	FelCor Philadelphia Center, L.L.C., a Delaware limited liability company its general partner
FELCOR LODGING COMPANY, L.L.C., a Delaware limited liability company
FELCOR TRS BORROWER 3, L.P., a Delaware limited partnership
By:	FelCor TRS Borrower GP 3, L.L.C., a Delaware limited liability company, its general partner
FELCOR TRS BORROWER 4, L.L.C., a Delaware limited liability company

By:	/s/ Lawrence D. Robinson
Name:	Lawrence D. Robinson
Title:	Executive Vice President

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SUNTRUST BANK, as Trustee
By:	/s/ George Hogan
Name:	George Hogan
Title:	Vice President

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SCHEDULE 1

NEW SUBSIDIARY GUARANTORS

1.	FelCor/CSS Holdings, L.P., a Delaware limited partnership
2.	FelCor Hotel Asset Company, L.L.C., a Delaware limited liability company
3.	FelCor Pennsylvania Company, L.L.C., a Delaware limited liability company
4.	FelCor Lodging Holding Company, L.L.C., a Delaware limited liability company
5.	FHAC Texas Holdings, L.P., a Texas limited partnership
6.	FelCor Canada Co., a Nova Scotia unlimited liability company
7.	FelCor Omaha Hotel Company, L.L.C., a Delaware limited liability company
8.	FelCor TRS Holdings, L.P., a Delaware limited partnership
9.	Myrtle Beach Hotels, L.L.C., a Delaware limited liability company
10.	FelCor TRS Borrower 1, L.P., a Delaware limited partnership
11.	FelCor TRS Guarantor, L.P., a Delaware limited partnership
12.	Center City Hotel Associates, a Pennsylvania limited partnership
13.	FelCor Lodging Company, L.L.C., a Delaware limited liability company
14.	FelCor TRS Borrower 3, L.P., a Delaware limited partnership
15.	FelCor TRS Borrower 4, L.L.C., a Delaware limited liability company

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SCHEDULE 2

FORMER GUARANTORS

1.	FelCor/CSS Hotels, L.L.C., a Delaware limited liability company
2.	FelCor/LAX Hotels, L.L.C., a Delaware limited liability company
3.	FelCor/CSS Holdings, L.P., a Delaware limited partnership
4.	FelCor/St. Paul Holdings, L.P., a Delaware limited partnership
5.	FelCor/LAX Holdings, L.P., a Delaware limited partnership
6.	FelCor Eight Hotels, L.L.C., a Delaware limited liability company
7.	FelCor Hotel Asset Company, L.L.C., a Delaware limited liability company
8.	FelCor Nevada Holdings, L.L.C., a Nevada limited liability company
9.	FHAC Nevada Holdings, L.L.C., a Nevada limited liability company
10.	FHAC Texas Holdings, L.P., a Texas limited partnership
11.	FelCor Omaha Hotel Company, L.L.C., a Delaware limited liability company
12.	FelCor Country Villa Hotel, L.L.C., a Delaware limited liability company
13.	FelCor Moline Hotel, L.L.C., a Delaware limited liability company
14.	FelCor Canada Co., a Nova Scotia unlimited liability company
15.	FelCor TRS Holdings, L.P., a Delaware limited partnership
16.	Kingston Plantation Development Corp., a Delaware corporation
17.	FelCor Holdings Trust, a Massachusetts business trust

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EX-10.2.2

Exhibit 10.2.2

OMNIBUS AGREEMENT

This Omnibus Agreement (“OBA”) is effective as of the date set forth herein, by and between Six Continents Hotels, Inc. and all its various subsidiaries, controlled entities and affiliates (collectively, “IHG”) and FelCor Lodging Trust Incorporated and all its various subsidiaries, controlled entities and affiliates (“FCH”).

WHEREAS, IHG and FCH, or subsidiaries or affiliates of each, are parties to certain management agreements (“Management Agreements”) with respect to the 48 hotels (“Hotels”) listed below; and

WHEREAS, IHG and FCH, or subsidiaries or affiliates of each, were parties to certain Management Agreements with respect to the hotels listed on Exhibit 1; and

WHEREAS, disputed claims have arisen between the parties which has resulted in both parties intending to cause or allow the termination, alteration, or modification of the Management Agreements with respect to certain groups of Hotels;

NOW THEREFORE, for good and valuable consideration, the parties agree as follows.

1. Effective Date.

The Effective Date of this OBA is the date on which the Purchase and Sale Agreement(s) (“P&S Agreement(s)”) set forth in Section 2 have been executed by FCH and IHG or IHG’s third party designee.

2. Sale and purchase of Hotels.

As of the Effective Date, Hospitality Properties Trust or subsidiaries or affiliates (“HPT”) has contracted for the purchase of the following Hotels pursuant to the P&S Agreement attached hereto as Exhibit 2 (“Group 1 Hotels”):

Atlanta Powers Ferry Crowne Plaza
Miami Airport Crowne Plaza
San Jose Crowne Plaza
Dallas Park Central Crowne Plaza Suites
Dallas Staybridge Suites
Houston I-10 West Holiday Inn Select
Irvine Crowne Plaza
Atlanta Airport Crowne Plaza

If the transaction contemplated in the above referenced P&S Agreement shall fail to close on the purchase of any Hotel listed above due to FCH’s failure to deliver marketable title (including estoppels and assignments with respect to major leases), zoning issues affecting the Miami - Airport Crowne Plaza, condemnation proceedings having a material impact on the value of such Hotel(s) with respect to which the condemnation and/or the impact of the condemnation is discovered after the date of execution of any P&S Agreement, or a failure by FCH to satisfactorily address physical items with respect to such Hotel(s) contained in covenants to the P&S Agreement, then in addition to any other rights or remedies of the parties to the P&S Agreement which may be contained in such Agreements, the Management Agreement for such hotel shall

1

be modified as indicated in the attached Exhibit 3 for a “Group 4” hotel. If closing on the purchase of any such Hotel does not occur for any other reason, then in addition to any other rights or remedies of the parties to the P&S Agreement contained in such Agreements, the Management Agreement for each such hotel shall be modified as indicated in the attached Exhibit 3 for a “Group 2” hotel. In the event that the PSA contemplated for the Group 1 Hotels does not include Crowne Plaza – Miami Airport, and that HPT does not thereafter execute a P&S Agreement for the separate purchase of such hotel, then this OBA shall remain effective in all other particulars, but IHG and FCH shall modify the terms of this OBA to make IHG whole with respect to such failure by HPT to purchase such hotel.

In addition, HPT has contracted, or intends to contract, for the purchase of the Philadelphia – Center City Crowne Plaza hotel, pursuant to a separate P&S agreement which will, upon execution, be attached hereto as Exhibit 2-A. If HPT executes such a P&S agreement and the transaction contemplated in such P&S Agreement shall fail to close due to FCH’s failure to deliver marketable title (including estoppels and assignments with respect to major leases), condemnation proceedings having a material impact on the value of such Hotel(s) with respect to which the condemnation and/or the impact of the condemnation is discovered after the date of execution of any P&S Agreement, or a failure by FCH to satisfactorily address physical items with respect to such Hotel(s) contained in covenants to the P&S Agreement, then in addition to any other rights or remedies of the parties to the P&S Agreement which may be contained in such Agreements, the Management Agreement for such hotel shall be modified as indicated in the attached Exhibit 3 for a “Group 4” hotel. If such a P&S agreement is executed by HPT and closing on the purchase of the Philadelphia Hotel does not occur within sixty (60) days of the Effective Date hereof for any other reason, or if no P&S agreement is executed by HPT with respect to the Philadelphia hotel within thirty (60) days of the Effective Date hereof, the Management Agreement for each such hotel shall be modified as indicated in the attached Exhibit 3 for a “Group 2” hotel; provided, however, that IHG shall have the exclusive right for sixty (60) days thereafter to market said hotel to a third party on FCH’s behalf for a sales price of $47,000,000 less property condition or other agreed upon credits in an attempt to retain the brand and management. In the event IHG is not successful in so marketing the Philadelphia Center City Crowne Plaza Hotel, it may be sold by FCH, only after openly and widely marketing the same through a nationally recognized broker. FCH shall take no action to prevent IHG’s designee from bidding, or IHG from approaching other bidders with an offer to retain management.

Upon closing on the sale of the Group 1 Hotels, no Replacement Management Fees or Termination Liquidated Damages shall be due, owing or payable by FCH to IHG with respect to such Hotels.

3. Release of Replacement Management Fee and Termination Liquidated Damages for Certain Sold Hotels.

The hotels listed on Exhibit 1 (“Sold Hotels”) have previously been sold, and their respective management agreements terminated, by FCH since the exhaustion of the “Special Damages Credit” applicable to hotels sold pursuant to the Master Amendment to Management Agreement dated September 17, 2003. The parties agree that no Termination Liquidated Damages for such Sold Hotels would be due, owing or payable until February 1, 2006 or thereafter. Effective upon execution of this OBA, no

2

Replacement Management Fees or Termination Liquidated Damages shall be due, owing or payable by FCH to IHG as to any and all Sold Hotels, except that any Replacement Management Fees heretofore paid by FCH with respect to Sold Hotels shall be retained by IHG. In the event the P&S Agreements are not executed by FCH and HPT, then any Replacement Management Fees and Termination Liquidated Damages held in abeyance shall be due and payable from and after January 1, 2006.

4. Release of Replacement Management Fee and Termination Liquidated Damages for Certain Additional Hotels.

The following hotels (“Group 2 Hotels”) shall have their respective Management Agreements modified as indicated on the portions of Exhibit 3 applicable to Group 2 Hotels.

Group 2 Hotels
Amarillo I-40 Holiday Inn
Columbus Airport North Holiday Inn
Omaha Central I-80 Holiday Inn
Orlando Nikki Bird Holiday Inn
Tampa Busch Holiday Inn
Atlanta Airport North Holiday Inn
Dallas DFW North Harvey Suites
Montgomery East I-85 Holiday Inn
Dallas Market Center Crowne Plaza
Pleasanton Crowne Plaza
Stamford Holiday Inn Select

Group 3 Hotel

The Chicago — Allerton Crowne Plaza Hotel shall be considered a Group 2 hotel but the parties shall by separate agreement agree that IHG may, for a period of forty-five (45) days from January 30, 2006, exclusively market such hotel to a third party of IHG’s choosing for a sales price of $65,000,000, plus remaining committed but unspent 2005 capital expenditures, less uncommitted and unspent 2005 capital expenditures, less PCA credits agreed upon as of the Effective Date between IHG and FCH in the amount of $275,649. After the expiration of such exclusive marketing right, the hotel may be sold by FCH only after openly and widely marketing the same through a nationally recognized broker. FCH shall take no action to prevent IHG’s designee from bidding, or IHG from approaching other bidders with an offer to retain brand and management.

5. Hotels That May be Sold by FCH Encumbered by Flag

The following hotels (“Group 4 Hotels”) shall have their respective Management Agreements modified as indicated on the portions of Exhibit 3 applicable to Group 4 Hotels.

Atlanta Jonesboro Holiday Inn
Knoxville West Holiday Inn
Houston Greenway Holiday Inn Select
Kansas City Northeast Holiday Inn

3

Atlanta Perimeter Holiday Inn Select
Omaha Old Mill Crowne Plaza
Houston Airport Holiday Inn
San Antonio Downtown Holiday Inn
Austin Town Lake Holiday Inn

6. San Francisco Union Square

The Management Agreement for the San Francisco Union Square hotel shall be modified as indicated in Exhibit 3.

7. Hotels to be Retained by FCH

The following hotels (“Group 5 Hotels”) shall have their respective Management Agreements modified as indicated on the portions of Exhibit 3 applicable to Group 5 Hotels:

Boston Government Center Holiday Inn Select
Charleston Mills House Holiday Inn
Cocoa Beach Oceanfront Holiday Inn
Nashville Opryland Holiday Inn Select
Houston Medical Center Holiday Inn
Orlando Airport Holiday Inn Select
Orlando International Drive Holiday Inn
New Orleans French Quarter Holiday Inn
Philadelphia Independence Holiday Inn
Pittsburgh University Center Holiday Inn Select
San Antonio Airport Holiday Inn Select
San Diego On the Bay Holiday Inn
Santa Barbara Holiday Inn
Santa Monica Holiday Inn
San Francisco Fisherman’s Wharf Holiday Inn
Toronto Airport Holiday Inn Select
Toronto Yorkdale Holiday Inn

8. Communications,

FCH and IHG agree that they will jointly discuss communications and not make any individual statements about one another or IHG’s designee in connection with the transactions contemplated in this OBA to the public, including, but not limited to, press releases, the media, the investment community, and government regulatory agencies without the prior written consent of the other party; provided, however, that each party may make any public disclosures as its counsel may deem to be necessary under applicable laws, rules and regulations, but shall consult with one another regarding such public disclosure unless the timing required for disclosure precludes the ability to obtain the other party’s consent.

FCH and IHG further agree that they will not issue, directly or indirectly, any communication, written or otherwise, that damages, criticizes or otherwise reflects adversely or encourages adverse action against the other.

4

      9. Additional Provisions.

Defined terms used (and not otherwise defined) herein shall have the meanings given to such terms in the Management Agreement.

      10. Mutual Release.

For each of the Group 1 and Group 2 Hotels, and the Sold Hotels, IHG hereby acquits and releases FCH and its directors, officers, employees, subsidiaries or affiliates, from all claims, demands, causes of action, payments or penalties constituting “Replacement Management Fees” or “Termination Liquidated Damages” pursuant to Sections 15.04 or 15.05 of the Management Agreement that could potentially become due and payable after the effective date of this Agreement, or may have become due and payable; provided, however, that nothing in this Section 8 shall operate to release FCH from claims for which IHG is entitled to indemnification under Section 12 of the Management Agreements. ,

Effective upon the sale of the Group 3 Hotel, Group 4 Hotels, and sale or re-branding of the Crowne Plaza Union Square Hotel as contemplated in this Agreement, IHG hereby acquits and releases FCH and its directors, officers, employees, subsidiaries or affiliates, from all claims, demands, causes of action, payments or penalties constituting “Replacement Management Fees” or “Termination Liquidated Damages” pursuant to Sections 15.04 or 15.05 of the Management Agreement that may become due and payable after the effective date of this Agreement; provided, however, that nothing in this Section 8 shall operate to release FCH from claims for which IHG is entitled to indemnification under Section 12 of the Management Agreements.,

For each of the Group 1, 2, 3, 4 and 5 Hotels, Sold Hotels and Crowne Plaza Union Square Hotel, FelCor hereby acquits and releases IHG and its directors, officers, employees, subsidiaries or affiliates, from all claims, demands, causes of action, payments or penalties relating to or arising from IHG’s leasing or management of the Hotels, the performance or market effectiveness of IHG’s brands used to market the Hotels, or claims that the Hotels failed to achieve maximum profits with respect to the Hotels, up through the date of this OBA; provided, however, that nothing in this Section 8 shall operate to release IHG from claims for which FCH is entitled to indemnification under Sections 10 or 12 of the Management Agreements, or from claims relating to IHG’s management of any Hotel unknown to and not reasonably discoverable by FelCor as of the Effective Date of this OBA.

SIGNATURE PAGE FOLLOWS

5

Executed this 20th day of January, 2006.

SIX CONTINENTS HOTELS, INC.

By:	/s/ Robert Chety
Name:	Robert Chety
Its:	Vice President

FELCOR LODGING TRUST, INCORPORATED

By: /s/ Thomas J. Corcoran Jr.

Name: Thomas J. Corcoran Jr.
Chief Executive Officer

6

EXHIBIT 1 TO OBA
Sold Hotels

(intentionally omitted)

7

EXHIBIT 2 TO OBA
P&S AGREEMENT
(intentionally omitted)

8

EXHIBIT 2-A TO OBA
PHILADELPHIA — CENTER CITY CROWNE P&S AGREEMENT
(intentionally omitted)

9

EXHIBIT 3 TO OBA
FORM OF MANAGEMENT AGREEMENT AMENDMENTS

10

AMENDMENT TO MANAGEMENT AGREEMENT

This Amendment to Management Agreement (“Amendment”) is effective as of the 1st day of January, 2006, by and between InterContinental Hotels Group Resources, Inc., as successor by merger to Bristol Management, L.P., and BHMC Canada Inc,, hereinafter “Manager,” and                     , hereinafter “Leasehold Owner.”

RECITALS

Leasehold Owner and Manager are parties to a certain Management Agreement and Standard Provisions to Management Agreement (collectively “Management Agreement”) dated as of July 1, 2001, as subsequently amended by a Master Amendment to Management Agreement dated as of September 17, 2003, for the management and operation of the                      hotel (“Hotel”) located at                     .

                     (“Superior Owner”) leases the Hotel to Leasehold Owner pursuant to a certain Operating Lease dated July 27, 1998 [as assigned]. For convenience, Leasehold Owner and Superior Owner shall be collectively referred to herein as “Owner.”

Leasehold Owner and Manager, with the consent of Superior Owner, desire to further amend the Management Agreement as provided below.

AGREEMENTS

Now, therefore, in exchange for valuable consideration, the receipt and sufficiency of which is acknowledged by the parties, Leasehold Owner and Manager agree as follows:

[Group 2, and Group 1 hotels that become Group 2 hotels].

The Initial Term Expiration Date shall be amended to read “December 31, 2007”. Leasehold Owner may extend such termination date only for events of force majeure (to be determined at Leasehold Owner or Superior Owner’s expense) significantly affecting the Hotel or the hotel capital markets generally which demonstrably thwart Leasehold Owner or Superior Owner’s efforts to sell the Hotel; provided, however, that no such extension shall be given or any such extension of the termination date shall be subject to cancellation by Manager upon 30 days’ notice to Leasehold Owner, notwithstanding the continuation or impact of the event of force majeure, if, by December 31, 2007 or thereafter for all [Group 2] hotels except Nikki Bird, Montgomery and Omaha Central, and if by December 31, 2006 or thereafter for Nikki Bird, Montgomery and Omaha Central, with respect to the Brand’s quality-grading system, the question or average score of questions related to the physical condition of the Hotel is lower than the overall service score of the Hotel based on a twelve (12) month moving average and Leasehold Owner does not within 30 days after receipt of notice of such failure commit to, promptly undertake and diligently pursue completion of a capital plan designed to address such failure.

Page 1 of 27

Manager may, in its sole discretion, terminate the Management Agreement for any Hotel effective December 31, 2007, as extended if applicable, and the provisions of Section 15.03 shall apply. No Hotel shall be extended beyond 180 days unless (a) Manager and Leasehold Owner agree to such extension notwithstanding any force majeure or market conditions and (b) the Hotel becomes subject to the same terms and conditions as [Group 5]; provided, however, that the provisions of 15.04 (b-g), inclusive, and 15.05 of the Management Agreement shall be, and are hereby, deleted and of no further force or effect. If either Leasehold Owner or Superior Owner has not given an extension notice by November 30, 2007 and has not demonstrated by December 31, 2007 that an event of force majeure significantly affected the Hotel or the hotel capital markets generally which thwarted Leasehold Owner or Superior Owner’s efforts to sell the Hotel, the Management Agreement shall terminate effective December 31, 2007 and the post termination provisions in the Management Agreement shall apply. In the event of a sale, foreclosure or deed in lieu thereof, or other alienation of the interests of Superior Owner in and to the Hotel resulting in a termination of the Management Agreement with respect to the Hotel, Leasehold Owner shall have no obligation with respect to payment to Manager of Replacement Management Fees, Termination Liquidated Damages, or any other measure of damages by virtue of such termination, but shall not be released from claims for which Manager is entitled to indemnification under the Management Agreement, or from amounts due and owing under the Management Agreement through the effective date of such termination as provided in sections 15.02(c) and 15.03(c).

The parties recognize and acknowledge that it is the intention of Leasehold Owner and Superior Owner to market and sell the Hotel without regard to retention of brand affiliation. Accordingly, effective with the signing of this agreement, Manager or its Affiliate may manage, license, franchise or grant the use of the Marks to any hotel which Leasehold Owner and Superior Owner might otherwise consider to be competitive with, or likely to adversely impact the performance of, the Hotel, and Leasehold Owner and Superior Owner explicitly waive any right to notification of or objection to the licensing, franchising or management of any such hotel.

[Crowne Plaza Chicago — Allerton only]

Provided Superior Owner openly and widely markets the Hotel through a nationally recognized broker and takes no action to prevent Manger, its affiliates or a designee of its affiliates from bidding, or Manager from approaching other bidders with an offer to retain management, in the event of a sale of the Hotel resulting from or occurring after such marketing effort, the provisions of Sections 15.02(e), 15.04 (b-g), inclusive, and 15.05 of the Management Agreement shall be deleted and of no further force or effect. In the event of such sale, resulting in a termination of the Management Agreement with respect to the Hotel, Leasehold Owner shall have no obligation with respect to payment to Manager of Replacement Management Fees, Termination Liquidated Damages, or any other measure of damages by virtue of such termination, but shall not be released from claims for which Manager is entitled to indemnification under the Management Agreement or from amounts due and owing under the Management Agreement through the effective date of such termination as provided in sections 15.02(c) and 15.03(c).

The parties recognize and acknowledge IHG was granted a right, by separate agreement, to market the Crowne Plaza — Allerton (the “IHG Option”) for a period of time. Leasehold Owner and Superior Owner will not take any action to market and sell the Hotel prior to the expiration of the IHG Option, and that subsequent to the expiration

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of the IHG Option, it is the intention of Leasehold Owner and Superior Owner to market and sell the Hotel without regard to retention of brand affiliation. Accordingly, Manager or its Affiliate may manage, license, franchise or grant the use of the Marks to any hotel which Leasehold Owner and Superior Owner might otherwise consider to be competitive with, or likely to adversely impact the performance of, the Hotel and Leasehold Owner and Superior Owner explicitly waive any right to notification of or objection to the licensing, franchising or management of any such hotel.

With respect to the sale or conversion of the Hotel and termination of this Management Agreement, there may be obligations to terminated employees after the transition date, in respect of payments in lieu of salary required under various governmental acts and regulations, severance payments, accrued benefit and vacation payments, or unfunded ERISA liabilities in various funds controlled by unions under collective bargaining agreements to which FelCor, IHG or the Hotel may be parties. FelCor and IHG shall use their best efforts to minimize the amount of such claims by (a) encouraging purchaser and/or new manager to assume such agreements and contracts, and to re-hire affected employees; (b) attempting to negotiate redeployment of any equipment, service or concession agreements or employees to another hotel managed by Manager or its affiliates; (c) providing proper notices under the Federal and Illinois “WARN” acts and similar statutes or ordinances; and (d) negotiating for reduction or release of such claims, fees or penalties. However, to the extent such claims, fees, obligations, liabilities or penalties cannot be so avoided or reduced, they shall be considered the responsibility of Leasehold Owner under the Management Agreement and Leasehold Owner shall indemnify and hold Manager and IHG harmless from such claims, fees, obligations, liabilities or penalties. Payment for or adjustment of such items shall be part of the “final accounting” pursuant to Section 15.03 of the Management Agreement.

Should Leasehold Owner or Superior Owner fail to notify Manager of its intent to terminate this Management Agreement by December 31, 2007, this Management Agreement shall be amended to contain all of the terms and conditions of the management agreements applicable to the hotels listed in Exhibit A-1, including agreement upon and completion of a Special Capital Plan as described in Section 5.07(k) thereof within two years after December 31, 2007, except that in the event of a sale of the Hotel after December 31, 2007, resulting in a termination of the Management Agreement with respect to the Hotel, Leasehold Owner shall have no obligation with respect to payment to Manager of Replacement Management Fees, Termination Liquidated Damages, or any other measure of damages by virtue of such termination, but shall not be released from claims for which Manager is entitled to indemnification under the Management Agreement or from amounts due and owing under the Management Agreement through the effective date of such termination as provided in sections 15.02(c) and 15.03(c). In the event this Agreement is amended on or after December 31, 2007, to incorporate the provisions of the agreements listed in Exhibit A-1 as provided above, and prior to agreement upon and completion of a Special Capital Plan, this Agreement shall be further subject to termination by manager upon 30 days’ notice to Leasehold Owner if with respect to the Brand’s quality grading system, the question or average score of questions related to the physical condition of the Hotel is lower than the overall service score of the Hotel based on a twelve (12) month moving average and Leasehold Owner does not within 30 days after receipt of notice of such failure commit to, promptly undertake and diligently pursue completion of a capital plan designed to address such failure.

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Notwithstanding the foregoing, Manager may, in its sole discretion, upon ninety (90) days notice, terminate the Hotel effective December 31, 2007 or effective on a date prior to the commencement of a Special Capital Plan, whichever is later. In the event of such a termination by Manager that is not due to an Event of Default by Leasehold Owner, Leasehold Owner shall have no obligation with respect to payment to Manager of Replacement Management Fees, Termination Liquidated Damages, or any other measure of damages by virtue of such termination, other than claims for which Manager is entitled to indemnification under the Management Agreement and for amounts due and owing under the Management Agreement through the effective date of such termination as provided in sections 15.02(c) and 15.03(c).

[Union Square only]

Leasehold Owner shall have the right, from and after the date hereof, to negotiate with the owners of any hotel brand not affiliated with Manager, for a franchise or other licensing and/or management arrangement with respect to the Hotel. Leasehold Owner shall have the right to convert such hotel to any such other brand, or operate the same without a brand, provided that Leasehold Owner elects to terminate the Management Agreement on or prior to December 31, 2007. In the event of such brand conversion, or in the event of a sale of the Hotel by Superior Owner at any time during the Term of the Management Agreement, Leasehold Owner may terminate the Management Agreement upon at least ninety (90) days notice and upon termination the provisions of Sections 15.02(e), 15.04 (a-g), inclusive, and 15.05 of the Management Agreement shall be deleted and of no further force or effect, and Leasehold Owner shall have no obligation with respect to payment to Manager of Replacement Management Fees, Termination Liquidated Damages, or any other measure of damages by virtue of such termination, but shall not be released from claims for which Manager is entitled to indemnification under the Management Agreement or from amounts due and owing under the Management Agreement through the effective date of such termination as provided in sections 15.02(c) and 15.03(c).

With respect to the sale or conversion of the Hotel and termination of this Management Agreement, there may be obligations to terminated employees after the transition date, in respect of payments in lieu of salary required under various governmental acts and regulations, severance payments, accrued benefit and vacation payments, or unfunded ERISA liabilities in various funds controlled by unions under collective bargaining agreements to which FelCor, IHG or the Hotel may be parties. FelCor and IHG shall use their best efforts to minimize the amount of such claims by (a) encouraging purchaser and/or new manager to assume such agreements and contracts, and to re-hire affected employees; (b) attempting to negotiate redeployment of any equipment, service or concession agreements or employees to another hotel managed by Manager or its affiliates; (c) providing proper notices under the Federal and California “WARN” acts and similar statutes or ordinances; and (d) negotiating for reduction or release of such claims, fees or penalties. However, to the extent such claims, fees, obligations, liabilities or penalties cannot be so avoided or reduced, they shall be considered the responsibility of Leasehold Owner under the Management Agreement and Leasehold Owner shall indemnify and hold Manager and IHG harmless from such claims, fees, obligations, liabilities or penalties. Payment for or adjustment of such items shall be part of the “final accounting” pursuant to Section 15.03 of the Management Agreement

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Superior Owner and Leasehold Owner agree not to sell the hotel to an unrelated third party unless Superior Owner openly and widely markets the Hotel through a nationally recognized broker and takes no action to prevent any party, including Manager or its Affiliates from making an offer to purchase the Hotel.

The parties recognize and acknowledge that it is the intention of Leasehold Owner and Superior Owner to market and sell the Hotel without regard to retention of brand affiliation. Accordingly, Manager or its Affiliate may manage, license, franchise or grant the use of the Marks to any hotel which Leasehold Owner and Superior Owner might otherwise consider to be competitive with, or likely to adversely impact the performance of, the Hotel and Leasehold Owner and Superior Owner explicitly waive any right to notification of or objection to the licensing, franchising or management of any such hotel.

If Leasehold Owner does not notify Manager of its termination of this Management Agreement at least ninety (90) days prior to December 31, 2007, this Management Agreement shall be amended to contain all of the terms and conditions of the management agreements applicable to the hotels listed in Exhibit A-1, including Sections 15.02 (e), 15.04 and 15.05 and including agreement upon and completion of a Special Capital Plan as described in Section 5.07 (k) hereof within two years after December 31, 2007, except that in the event of a sale of the Hotel after December 31, 2007, resulting in a termination of the Management Agreement with respect to the Hotel upon ninety (90) days notice, Leasehold Owner shall have no obligation with respect to payment to Manager of Replacement Management Fees, Termination Liquidated Damages, or any other measure of damages by virtue of such termination, but shall not be released from claims for which Manager is entitled to indemnification under the Management Agreement or from amounts due and owing under the Management Agreement through the effective date of such termination as provided in sections 15.02(c) and 15.03(c).

Notwithstanding the foregoing, Manager may, in its sole discretion, upon ninety (90) days notice, terminate the Hotel effective December 31, 2007 or effective on a date prior to the commencement of a Special Capital Plan, whichever is later. In the event of such a termination by Manager that is not due to an Event of Default by Leasehold Owner, Leasehold Owner shall have no obligation with respect to payment to Manager of Replacement Management Fees, Termination Liquidated Damages, or any other measure of damages by virtue of such termination, other than claims for which Manager is entitled to indemnification under the Management Agreement and for amounts due and owing under the Management Agreement through the effective date of such termination as provided in sections 15.02(c) and 15.03(c)

[Group 4, and Group 1 hotels that become Group 4 hotels]
Manager or its affiliates shall provide Leasehold Owner with a Product Improvement Plan (“PIP”) for the Hotel, which Manager and its Affiliates would accept in conjunction with an application for a franchise or license agreement for the hotel from a third-party purchaser thereof and consistent with Manager’s PIP standards and practices applicable to franchise applications generally, no later than December 30, 2005, (“PIP Deadline”). Leasehold Owner shall make its employees, agents and representatives freely available to Manager and its Affiliates in order to meet the PIP Deadline. Leasehold Owner may market the Hotel for sale to third parties subject to the requirement that any buyer must make application to Manager or its appropriate Affiliate for a franchise or license agreement for the continuing operation of the Hotel under the Brand, subject to the

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standard fees, terms and conditions of Manager and its Affiliates for a grant of such license or franchise (“Standard IHG Brand License”). In the event a prospective buyer of the Hotel makes such application and a franchise or license agreement is granted to such buyer by Manager or its affiliates and such buyer closes on the purchase of the Hotel and executes the Standard IHG Brand License, or in the event the Hotel is purchased by Manager, an Affiliate of Manager or the designee of either and Manager retains management the provisions of Sections 15.02(e), 15.04 (b-g), inclusive, and 15.05 of the Management Agreement shall be deleted and of no further force or effect upon Buyer’s closing of the purchase of the Hotel. In the event of a sale under which the purchaser executes a Standard IHG Brand License or a sale to Manager under the terms described herein, resulting in a termination of the Management Agreement with respect to the Hotel, Leasehold Owner shall have no obligation with respect to payment to Manager of Replacement Management Fees, Termination Liquidated Damages, or any other measure of damages by virtue of such termination, other than amounts due and owing under the Management Agreement through the effective date of such termination as provided in sections 15.02(c) and 15.03(c).

If Leasehold Owner does not notify Manager of its termination of this Management Agreement at least sixty (60) days prior to December 31, 2007, this Management Agreement shall be amended to contain all of the terms and conditions of the management agreements applicable to the hotels listed in Exhibit A-1, including agreement upon and completion of a Special Capital Plan as described in Section 5.07 (k) hereof within two years after December 31, 2007, except that in the event of a sale of the Hotel after December 31, 2007, resulting in a termination of the Management Agreement with respect to the Hotel, if the purchaser of the Hotel executes a Standard IHG Brand License, or in the event the Hotel is purchased by Manager, an Affiliate of Manager or the designee of either and Manager retains management, Leasehold Owner shall have no obligation with respect to payment to Manager of Replacement Management Fees, Termination Liquidated Damages, or any other measure of damages by virtue of such termination, other than claims for which Manager is entitled to indemnification under the Management Agreement and for amounts due and owing under the Management Agreement through the effective date of such termination as provided in sections 15.02(c) and 15.03(c). In the event this Agreement is amended on or after December 31, 2007, to incorporate the provisions of the agreements listed in Exhibit A-1 as provided above, and prior to agreement upon and completion of a Special Capital Plan, this Agreement shall be further subject to termination by Manager upon 30 days’ notice to Leasehold Owner if the Hotel is failing to meet the then current Brand quality standards and the product portion of such Brand quality standards is below the applicable quality threshold, and Leasehold Owner does not within 30 days after receipt of notice of such failure commit to and comply with a capital plan designed to address such failure.

(Groups 1-4]

Exhibits H [Incentive Management Fee] and I [Replacement Management Fees] to the Management Agreement are hereby deleted unless and until the hotel becomes subject to the terms of the Management Agreement applicable to the hotels listed on Exhibit A-1.

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[Group 5 only]

The Initial Term Expiration Date shall be, and is hereby, amended to read “July 1, 2025.” [Fisherman’s Wharf: The Initial Term Expiration Date shall be, and is hereby, amended to read “the date of lease expiration plus, with respect to the “Columbus building” only, any hotel or ground lease extensions Leasehold Owner or Superior Owner may negotiate in its sole and absolute discretion, provided that no such lease extension shall extend the term of this Agreement beyond July 1, 2025

There shall be added to Section 4 new Section 4.07 as follows:

Section 4.07: Notwithstanding the provisions of Sections 4.04(v), 4.05 and 4.06 above, Manager may condition its consent to a sale or lease by Leasehold Owner or Superior Owner of restaurant or parking facilities, upon (i) Manager’s receipt of a payment or payments, or adjustment of Basic Management Fee provisions, reasonably calculated to replace Basic Management Fees foregone by Manager as a consequence of any such transaction, and; (ii) adjustment of the ROI Failure and Incentive Management Fee calculations so that Manager shall not be adversely affected. In the event Leasehold Owner or Superior Owner desire to convert a portion of a Hotel to a residential, retail or commercial use, including condominiums, time shares, fractional ownership or other form of use, but specifically excluding any hotel use (“Alternate Use”), Leasehold Owner and Manager shall negotiate in good faith to agree upon the terms of such proposed Alternate Use with the objective of minimizing disruption to hotel operations and appropriately adjusting the Manager’s fee structure to mitigate the effect of such Alternate Use. If at any time the parties cannot agree upon the amount or calculation of such payment or payments, or upon the economic effect of any Alternate Use, either party may demand determination of such issue by arbitration in the manner set forth for budget disputes in Section 6.02(d)

The provisions of Section 5.07(b) through 5.07 (g) of the Management Agreement shall be deleted, and the following inserted in their place and stead:

(b) Leasehold Owner shall expend such amounts for Capital Replacements as shall be required in the normal and ordinary course of operation of the Hotel in accordance with the Brand Standards. Design and installation of Capital Replacements shall be carried out under Leasehold Owner’s supervision, unless Leasehold Owner requests Manager in writing to supervise such Capital Replacements, and the costs of design, construction management, technical services fees to Manager, its affiliates or third parties, and similar project-specific services shall be Leasehold Owner’s responsibility. After the Capital Replacements Budget, reflecting the level of expenditures set forth below, is agreed upon as provided in Section 6.02(a) and made a part of the applicable Annual Business Plan, Leasehold Owner shall be responsible for any further pricing, scheduling or other capital planning necessary to proceed with any project, absent a separate written agreement with Manager to do so. All Special Capital Plans (as defined below) and capital replacements that include design specifications must meet Brand Standards. Prior to purchase and implementation, leasehold owner shall submit design specifications, including plans, specifications and color boards to Manager or its Affiliates for approval.

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Leasehold Owner and Manager agree that expenditures on Capital Replacements shall be, unless otherwise agreed by Leasehold Owner and Manager in the Capital Replacements Budgets or in a writing separately executed, including any Special Capital Plan or Redevelopment Plan as described in subsection (k) below, (i) at least 5% of the Adjusted Gross Revenues((after deducting from Adjusted Gross Revenues any sale or lease proceeds received by Leasehold Owner pursuant to Section 4.04 hereof) of the Hotel until Leasehold Owner’s commencement of the [Special Capital[ [Redevelopment] Plan described in Section 5.07(k) below; (ii) at least 3% of the Adjusted Gross Revenues ((after deducting from Adjusted Gross Revenues any sale or lease proceeds received by Leasehold Owner pursuant to Section 4.04 hereof) of the Hotel during each of the two Fiscal Years following Leasehold Owner’s completion of the [Special Capital[ [Redevelopment] Plan described in Section 5.07(k) below; and (ii) at least 5% of the Adjusted Gross Revenues (after deducting from Adjusted Gross Revenues any sale or lease proceeds received by Leasehold Owner pursuant to Section 4.04 hereof) of the Hotel for all subsequent Fiscal Years (“Minimum Capital Replacements Expenditure”). Commencing with the effective date of this Amendment, Leasehold Owner shall additionally expend up to 2.5% of the Adjusted Gross Revenues ((after deducting from Adjusted Gross Revenues any sale or lease proceeds received by Leasehold Owner pursuant to Section 4.04 hereof) of the Hotel for each full Fiscal Year prior to completion of the Special Capital [Redevelopment] Plan described in Section 5.07(k) below for maintenance, repair or other necessary expenditures for items not included in the Special Capital or Redevelopment Plans; To the extent Leasehold Owner requests Manager, in writing, to supervise any particular Capital Replacements project, Manager and Leasehold Owner will seek to negotiate a technical services agreement that, if and when ultimately executed, shall govern the provision of services related to that project. Notwithstanding the foregoing, if the amounts expended by Leasehold Owner and its Affiliates (plus any amounts authorized to be spent directly by Manager and its Affiliates) on Capital Replacements for the Hotel, at the end of any Fiscal Year, are less than the amounts required to be expended pursuant to this Section 5.07(b) through the end of such Fiscal Year, and Leasehold Owner fails to expend the amount of such shortfall within ninety (90) days following the end of such Fiscal Year, then in such event Manager shall have the right to perform or complete all uncompleted Capital Replacements projects approved for completion prior to the end of such Fiscal Year at Leasehold Owner’s expense, at a cost not to exceed 110% of the amount provided therefor within the applicable Capital Replacements Budget, and shall be entitled to payment or reimbursement therefor from the Capital Reserve Account or funds provided by Leasehold Owner as contemplated by this Section 5.07.

          (c) Leasehold Owner shall establish an interest bearing bank account in its name with an institution of Manager’s choice, with agreement by Leasehold Owner, to be designated as the FCH/BHR Capital Reserve Account (the “Capital Reserve Account”). Funds deposited in this account may be commingled with funds deposited for other hotels listed on Exhibit A-1. Promptly after the end of each Fiscal Month, Manager shall deposit into the Capital Reserve Account an amount equal to the Minimum Capital Replacements Expenditures for such Fiscal Month from the Gross Revenues of the Hotel in accordance with Section 8.01 hereof. Funds deposited in the Capital Reserve Account in respect of the Hotel may be combined with funds deposited in respect of the other hotels listed on Exhibit A-1 hereto. Designees of both Leasehold Owner and Manager shall be authorized to draw upon the Capital Reserve Account solely for the purposes and under the circumstances provided for herein. In addition, so long as

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Leasehold Owner, Guarantor, FelCor or any successor thereof maintains an Approved Facility, Manager shall not deposit any funds to the Capital Reserve Account that would increase its balance to more than $500,000.00 collectively for all Hotels.

          (d) Manager shall compute, as a book reserve, for each Fiscal Month beginning with the Fiscal Month commencing immediately after the Effective Date, and continuing for each and every month during the Initial Term and any Renewal Term(s) the amount equal to the Minimum Capital Replacements Expenditure, less capital expenditures actually made on the Hotel during that period (such net amount being the “Cumulative Capital Reserve Balance”.)

          (e)The Leasehold Owner may draw on the Capital Reserve Account for the payment of all costs of Capital Replacements that have been made by Leasehold Owner to the Hotel, provided that Leasehold Owner shall have no right to make any such draw at any time that the balance of the Capital Reserve Account is equal to or less than $500,000.00 collectively for all Hotels. The Manager may draw on the Capital Reserve Account, or if the Capital Reserve Account is inadequate, the Manager may make demand upon Leasehold Owner, upon five (5) days written notice, for the payment either directly from Leasehold Owner or from the Approved Facility of all costs of Capital Replacements that have been made by Manager to Hotel pursuant to the then current Capital Replacements Budget.

          (f)From time to time, but not less frequently than weekly, Leasehold Owner shall make deposits to the Capital Reserve Account in amounts necessary to restore its balance to not less than $500,000.00 collectively for all Hotels or such greater amount as may be necessary (after taking into account anticipated contributions) to pay for budgeted Capital Replacements as they come due; provided, however, that in no event shall Leasehold Owner be required to make any deposits to such Capital Reserve Account which would cause the balance therein to exceed the then Cumulative Capital Reserve Balance.

          (g) In the event that either (i) Leasehold Owner or one of its Affiliates fails or refuses to maintain an Approved Facility or Leasehold Owner fails or refuses to make required timely deposits to the Capital Reserve Account in amounts necessary to restore its balance to $500,000.00 collectively for all Hotels or to pay for budgeted Capital Replacements as they come due, or (ii) without the consent of Manager, the amounts expended or committed by Leasehold Owner and its Affiliates (plus any amounts authorized to be spent directly by Manager and its Affiliates) on Capital Replacements for the Hotel are less than required by Section 5.07(a) above, and Leasehold Owner fails to expend the amount of such shortfall within ninety (90) days following the end of the Fiscal Year in which such expenditures were not made or committed, then upon either of such events, Manager may commence payment of any cash otherwise distributable to Leasehold Owner from the Sweep Account to the Capital Reserve Account, and in addition may make written demand that Leasehold Owner make deposits within five (5) days into the Capital Reserve Account, until the balance in that account is not less than the Cumulative Capital Reserve Balance. In the event Leasehold Owner fails to fully fund such Cumulative Capital Reserve Balance within such five (5) day period, Manager shall be entitled to retain Net Operating Income of the Hotel and pay such amounts into the Capital Reserve Account until such account is credited with the full amount of the Cumulative Capital Reserve Balance as of the date of such failure by Leasehold Owner.

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There shall be added to Section 5.07 a new subsection (k) as follows:

[HI Select Boston; HI Select Toronto Airport; HI Toronto Yorkdale; HI Philadelphia; HI Select Pittsburgh; HI Select Nashville — Briley Parkway; HI Select Orlando Airport; HI Houston Medical Center; HI French Quarter; HI Select San Antonio Airport; and Mills House]:

(k) Notwithstanding the provisions of Sections 5.07(a) and 6.02 hereof, Manager and Leasehold Owner have agreed upon a comprehensive capital plan (“Special Capital Plan”), a copy of which is attached hereto as Exhibit A-2. Except for subsequent amendment in any subsequent writing, Capital Replacements Budget or Annual Business Plan, the Special Capital Plan shall be completed by Leasehold Owner no later than June 30, 2007, even if the cost thereof exceeds the expenditure levels set forth in Section 5.07(a), in default of which completion Manager shall have all of the rights and remedies available under the Management Agreement (as amended), including but not limited to securing completion of the Special Capital Plan as are set forth in Sections 5.07 (a) and (d) hereof and/or default and termination of the Management Agreement under Article 15, including the damages provisions therein. Leasehold Owner’s performance of the Special Capital Plan shall not excuse Leasehold Owner’s obligation to expend such capital, including “emergency capital,” as shall be required in the normal and ordinary course of operation of the Hotel in accordance with life safety issues and the Brand Standards.

[HI Santa Monica; HI Santa Barbara; HI San Francisco Fisherman’s Wharf; HI San Diego]:

(k) Notwithstanding the provisions of Sections 5.07(a) and 6.02 hereof, Manager and Leasehold Owner shall agree upon a comprehensive capital plan (“Special Capital Plan”), a copy of which shall be attached hereto as Exhibit A-2, no later than April 1, 2006. Except for subsequent amendment in any subsequent writing, Capital Replacements Budget or Annual Business Plan, identified items within the Special Capital Plan shall be completed by the time frame set forth in the Special Capital Plan, and the remainder of such Special Capital Plans shall be completed by Leasehold Owner no later than June 30, 2008, even if the cost thereof exceeds the expenditure levels set forth in Section 5.07(a), in default of which completion Manager shall have all of the rights and remedies available under the Management Agreement (as amended), including but not limited to securing completion of the Special Capital Plan as are set forth in Sections 5.07 (a) and (d) hereof and/or default and termination of the Management Agreement under Article 15, including the damages provisions therein. Leasehold Owner’s performance of the Special Capital Plan shall not excuse Leasehold Owner’s obligation to expend such capital, including “emergency capital,” as shall be required in the normal and ordinary course of operation of the Hotel in accordance with life safety issues and the Brand Standards.

[I-Drive, Cocoa Beach]:
(k) Notwithstanding the provisions of Sections 5.07(a) and 6.02 hereof, Manager and Leasehold Owner shall agree upon a comprehensive redevelopment capital plan (“Redevelopment Plan”) no later than December 31, 2006, which

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Redevelopment Plan may contemplate the physical redevelopment of the Hotel and/or the conversion of the Hotel to another brand owned by Manager or an Affiliate of Manager. Such Redevelopment Plan shall meet the standards of the applicable brand and be consistent in scope with current practices with respect to hotels managed by Manager under such brand. Except for subsequent amendment in any subsequent writing, Capital Replacements Budget or Annual Business Plan, the Redevelopment Plan shall be completed by Leasehold Owner no later than December 31, 2010, even if the cost thereof exceeds the expenditure levels set forth in Section 5.07(a). Except for subsequent amendment in any subsequent writing, failure to sign a reasonable Redevelopment Plan by December 31, 2006 or complete such plan by December 31, 2010, shall be a default of which execution and/or completion Manager shall have all of the rights and remedies available under the Management Agreement, including but not limited to securing completion of such Redevelopment Plan as are set forth in Sections 5.07 (a) and (d) hereof, and/or default and termination of the Management Agreement under Article 15, including the damages provisions therein When agreed upon by the parties, the Redevelopment Plan shall be appended hereto as Exhibit A-2. Leasehold Owner’s performance of the Redevelopment Plan shall not excuse Leasehold Owner’s obligation to expend such amounts, including “emergency capital,” as shall be required in the normal and ordinary course of operation of the Hotel in accordance with life safety issues and the Brand Standards.

Upon completion of the Redevelopment Plan, to the extent the number of hotel rooms has been significantly reduced, adjustment to the ROI Failure and Incentive Management Fee calculations shall be made so that Manager shall not be adversely affected.

The provisions of Section 7.01(b) of the Management Agreement are hereby deleted, and the following inserted in their place and stead:

(b) In addition to the Basic Management Fee, Manager shall be entitled to receive an Incentive Management Fee based upon the combined “Incentive Profit” of the Hotel.

(i) The Incentive Profit shall be computed as follows:

(ii) (A) the Adjusted Net Operating Income of the Hotel for the applicable period, minus

      (B) the product of 8.5% (the “ROI Percentage”) multiplied by Leasehold Owner’s Investment Basis in the Hotel for the

Fiscal Year for which the computation is being made

(ii) If there is any positive “Incentive Profit”, as so computed, for the Hotel, then Manager shall be paid an “Incentive

Management Fee” equal to the lesser of the following: (1) the product of 25% (the “Incentive Management Fee Percentage”) times the Incentive Profit, or (2) two and one-half percent (2.5%) of the Adjusted Gross Revenues of the Hotel.

(iii) If a Fiscal Year consists of less than twelve (12) calendar months or if during any Fiscal Year, this agreement is

terminated, then for the purpose of calculating the Incentive Management Fee for such Fiscal Year, the Adjusted Net Operating Income shall be included only for the period during which this

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Agreement was in effect and (b) the Leasehold Owner’s Investment Basis in the Hotel shall be adjusted multiplied by a fraction, the numerator of which is the number of days during the Fiscal Year that this Agreement was in effect and the denominator of which is 365.

          (iv) The Incentive Management Fee will be paid from the Sweep Account, subject to Section 8.01 hereof, thirty (30) days following the end of each calendar quarter, on a year-to-date basis, with a year end reconciliation of the Incentive Management Fee for such Fiscal Year being made no later than forty-five (45) days following the end of such Fiscal Year. Within thirty (30) days after the end of each calendar quarter Leasehold Owner shall provide a calculation of the Investment Basis for all managed hotels applicable to such quarter, certified as true and accurate by a financial officer of Leasehold Owner. Several examples of the Incentive Management Fee calculations are attached hereto as Exhibit “A-3” Leasehold Owner’s capitalization policies shall comply with Generally Accepted Accounting Principles (“GAAP”). At Manager’s election, and at its own cost (and not an Operating Cost) an audit of the books and records relevant to the determination of the Investment Basis and the consistency of such determination with GAAP may be performed annually by a nationally recognized, independent certified public accounting firm appointed by Manager. Leasehold Owner shall cooperate in good faith with Manager to facilitate such audit. Any adjustments to the Investment Basis for a Fiscal Year shall entitle Manager to a credit or debit, as applicable, to the Incentive Management Fees in such Fiscal Year and/or proportionate adjustment of the Performance Test, if applicable, in such Fiscal Year. If the aggregate errors identified by such audit result in a net change of the total Investment Basis by an amount equal or greater than three percent, then Leasehold Owner, as an Ownership Cost, shall reimburse Manager for one-half of the cost of such audit; provided, however, should Leasehold Owner disagree with the conclusions of the certified public accounting firm appointed by Manager, it may at its own cost have an independent audit a nationally recognized, independent certified public accounting firm appointed by Leasehold Owner audit such books and records. If Leasehold Owner conducts such audit, and the two firms disagree, the matter may be submitted to arbitration as provided in section 6.02, and the party whose position is upheld shall pay all audit and arbitration costs.”

There shall be added to the Management Agreement a new Section 7.06, as follows:

          7.06. Performance Standards; Termination; Cure.

          So long as Leasehold Owner is not in default of its obligations under this Agreement, commencing with the first full Fiscal Year after the Fiscal Year in which Leasehold Owner completes implementation of the Special Capital Plan or, for I-Drive and Cocoa Beach, the second full Fiscal Year after the Redevelopment Plan, as defined in Section 5.07(k) above, within ninety (90) days of the end of the prior Fiscal Year, Leasehold Owner shall be entitled to terminate this Agreement (“Performance Termination”) upon sixty days written notice (“Performance Termination Notice”) if the Adjusted Net Operating Income of the Hotel is less than a fixed 7.5% (the “Performance Hurdle Percentage”) of Leasehold Owner’s Investment Basis for each of any two consecutive Fiscal Years (“Determination Period”). Such condition shall be referred to herein as an “ROI Failure,” and shall entitle Leasehold Owner to declare a Performance Termination unless:

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(i) within thirty (30) days of receipt of the Performance Termination Notice or final decision of a Lodging Arbiter or arbitration as described below, whichever is later, Manager shall have made payments to Leasehold Owner to the extent necessary to make Adjusted Net Operating Income for the second of such two consecutive Fiscal Years equal to the applicable Performance Hurdle Percentage of Leasehold Owner’s Investment Basis; or

(ii) the Hotel’s Net Operating Income for the second Fiscal Year during the Determination Period, is greater than or equal to ninety-five percent (95%) of budgeted Net Operating Income as determined pursuant to the Yearly Budget (the “Budget Test”).; or

(iii) If, and only to the extent, the hotel has suffered a significant event of Force Majeure excusing Manager’s performance as more fully described below.

          Solely for purposes of calculating the existence of an ROI Failure under this Section 7.06 (and not for purposes of determining Basic Management Fees or Incentive Management Fees in any Fiscal Year), any business interruption award, income or proceeds, and unreimbursed expenses or expenses attributable to the proving and collection thereof, shall be excluded from Net Operating Income or Adjusted Net Operating Income.

          Solely for purposes of calculating the existence of an ROI Failure under this Section 7.06 (and not for purposes of determining Basic Management Fees or Incentive Management Fees in any Fiscal Year), real estate taxes and property insurance premiums shall be included in Adjusted Net Operating Income, but shall be capped at no more than costs in Fiscal Year 2005 increased by no more than the cumulative change in the Consumer Price Index.

          If, in Manager’s judgment, significant conditions of Force Majeure which reduced Adjusted Net Operating Income by more than twenty five hundredths of a percent (0.25%) caused the ROI Failure, then Manager may, irrespective of the financial results of the Determination Period, assert that no ROI Failure exists; provided, however, that upon request of Leasehold Owner, Manager shall substantiate at its expense through appropriate documentation the impact of the Force Majeure conditions. If Leasehold Owner disputes whether the ROI Failure then the matter will be submitted to an independent third party consultant selected by the parties, which shall be a national firm of recognized standing for consulting in the lodging and hospitality industry )“Lodging Arbiter”) for resolution. The Lodging Arbiter shall determine only whether (i) Force Majeure conditions pertain to the Determination Period and, if so, (ii) absent such Force Majeure condition, the ROI Failure would not exist. The Lodging Arbiter shall make such determination within thirty (30) business days after its appointment and such determination shall be conclusive and binding upon Leasehold Owner and Manager. For purposes of this Section, in addition to the matters identified as Force Majeure in Article 21, Force Majeure shall include material damage to or destruction of all or part of the Hotel, partial or temporary taking by power of eminent domain, voluntary construction, reconstruction, redecorating or refurbishing of all or a significant portion of the Hotel, or the closing or unavailability of all or any significant portion of the Hotel. If the Lodging Arbiter determines that Force Majeure occurred in any Fiscal Year within a Determination Period, and absent such Force

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Majeure condition the Performance Deficit would not exist, then such Fiscal Year shall not be included in any Determination Period.

          If the parties agree that conditions of Force Majeure contributed to a ROI Failure or the Lodging Arbiter so determines, and Leasehold Owner disputes the financial impact of such Force Majeure to the ROI Failure, then the matter will be submitted to a mutually agreeable, independent, certified, nationally recognized public accounting firm for conclusive resolution.

          If, with respect to Force Majeure,the parties cannot agree upon the selection of such a Lodging Arbiter or public accounting firm, or if the parties dispute the Performance Termination for reasons other than Force Majeure, the matter may be resolved by arbitration in the manner set forth for budget disputes in Section 6.02(d). The prevailing party will be entitled to be reimbursed the costs associated with the resolution of such issues.

          If Manager fails, within thirty (30) days of receipt of such Performance Termination Notice (subject to the submission of any Force Majeure dispute to the Lodging Arbiter) (“Cure Period “), to deposit the Cure Amount into the Sweep Account, so long as Leasehold Owner is not in default of its obligations under this Agreement then this Agreement shall terminate at 11:59 PM on the last day of Manager’s Cure Period. In the event of such termination, the provisions of Sections 15.04 and 15.05 of the Management Agreement shall be inapplicable to such termination, and Leasehold Owner shall have no obligation with respect to payment to Manager of Replacement Management Fees, Termination Liquidated Damages, or any other measure of damages by virtue of such termination, other than claims for which Manager is entitled to indemnification under the Management Agreement and for amounts due and owing under the Management Agreement through the effective date of such termination as provided in sections 15.02(c) and 15.03(c)

          If Manager pays a Cure Amount for any Fiscal Year, if Manager meets the Budget Test for any Fiscal Year, or if there is an ROI Failure excused by conditions of Force Majeure for any Fiscal Year, with respect to future Determination Periods, the Hotel shall be deemed to have met the Performance Test for only such Fiscal Year.

The title of Section 15.04 shall be amended to read: Replacement Fee to Manager Upon Termination of a Hotel other than a Performance Termination or Event of Default by Manager

Section 15.04(b) is hereby amended to read:

“A “Replacement Investment” shall mean the amount invested by Leasehold Owner or one of its Affiliates in (i) the acquisition of any hotel that, at the time of acquisition, was not operated under a Brand owned by Manager or one of its Affiliates and that Manager has approved as being appropriate for operation under a Brand owned by Manager or one of its Affiliates, (which approval shall be in Manager’s sole discretion as an Affiliate of the Brand owner, and may be conditioned upon the prior or future completion of certain specified improvements to comply with the applicable Brand Standards, the cost of which improvements

Page 14 of 27

shall be part of the amount invested for acquisition of the Hotel for purposes of this subsection (b)), and that Leasehold Owner has made or offers to make subject to a new Agreement in favor of Manager on substantially the same terms as this Agreement (and for a term equal to the remaining term of this Agreement), and (ii) a significant expansion by Leasehold Owner, Superior Owner or an affiliate of either, of a hotel operated by Manager, which expansion will materially increase Gross Revenues, in the reasonable opinion of Manager, and which is otherwise approved by Manager, which approval shall not be unreasonably withheld or delayed. The amount of Leasehold Owner’s “Replacement Investment Balance” shall be equal to the aggregate of its Replacement Investments and those of its Affiliates, from and after the Effective Date of this Amendment, plus the Net Proceeds received by Leasehold Owner with respect to any terminated Hotel as to which Leasehold Owner has paid Liquidated Damages as provided in Section 15.05 hereof, reduced by the Net Proceeds theretofore derived by Leasehold Owner and/or its Affiliates from the sale of any Managed Hotels. With respect to any other termination of a Hotel other than a Performance Termination or Event of Default by Manager, and which does not generate Net Proceeds from a sale, the Replacement Investment Balance shall be reduced by the Investment Basis then applicable to such terminated hotel.

The first clause of Section 15.04(c) shall be amended to read as follows: “If, upon the termination of this Agreement for a reason other than a Performance Termination or Event of Default by Manager, there is a Replacement Investment Balance equal to or greater than zero...”.

The first clause of Section 15.04 (d) shall be amended to read as follows: “If, upon the termination of this Agreement for a reason other than a Performance Termination or Event of Default by Manager, there is not a positive Replacement Investment Balance,....”

The words “sold Managed Hotel” in the first sentence of Section 15.04(e) shall be replaced with the word “terminated hotel operated by Manager for Leasehold Owner, Superior Owner or an Affiliate of either,”

The words “or termination” shall follow the word “sale” in Section 15.04(f)

[For purposes of unpooling the Incentive Management Fees], There shall be deleted from Section 15.04(d) the following language:

”, which shall be equal to the Incentive Management Fee earned by Manager for all of the Managed Hotels during such previous Fiscal Year multiplied by a fraction, the numerator of which shall be the Hotel’s Adjusted Net Operating Income for such previous Fiscal Year, and the denominator of which shall be the Adjusted Net Operating Income of all Managed Hotels for the same period; provided, however, if the Hotel is sold during the first twelve (12) months of the Initial Term, the monthly Replacement Management Fee for the Hotel shall be equal to one-twelfth (1/12^th ) of the sum of the Basic Management Fee, and the Incentive Management Fee allocable to the Hotel for the first twelve (12) months

Page 15 of 27

of the Initial Term, as forecast in the Annual Plan for the Hotel for such twelve (12) month period.”

There shall be added to Section 15.05(a)(i) the following: “,provided, however, that after January 1, 2015, the Incentive Management Fee shall be disregarded in the calculation of Liquidated Damages, and only the Basic Management Fee shall be considered in such calculation.” The chart immediately following current Subsection 15.05(a)(iii) shall be amended to read:

YEAR	2005	2006	2007	2008	2009	2010	2011	2012	2013
MULTIPLE	8.7X	8.2X	7.8X	7.2X	6.6X	6.0X	5.4X	4.7X	4.0X
YEAR	2014	2015 to 8/1/2021			8/2/2021-8/1/2023			8/2/2023-2025
MULTIPLE	3.2X	3.0X			2.0X			1.0X

Section 15.05(b) of the Management Agreement is hereby deleted in its entirety, and in its place and stead is inserted the following new Section 15.05(b):

15.05(b). Franchise Fee Credit. The parties agree that, with respect to Replacement Management Fees and Termination Liquidated Damages due and payable to Manager by virtue of termination of this Management Agreement pursuant to Sections 15.04 and 15.05(a), above, in the event a purchaser of the Hotel executes a franchise or license agreement for the Hotel (“Buyer’s Franchise”) with Manager or an Affiliate for a term of at least three (3) years, the Replacement Management Fees and Termination Liquidated Damages shall be reduced by a “Franchise Fee Credit”. The Franchise Fee Credit shall be calculated as follows: Gross Rooms Revenues of the Hotel for the most recent twelve (12) months prior to termination, multiplied times each of the applicable royalty rates for each of the first three (3) years in the Buyer’s Franchise, net of any royalty reduction or “advertising assistance” granted to the licensee in the Buyer’s Franchise or in any side agreement exclusive of any allowance or assistance provided from any advertising or marketing fund to which franchisees contribute, that may be maintained by Manager or any of its Affiliates. In the event the Buyer’s Franchise is terminated for any reason other than a breach by the IHG Entity within thirty-six (36) months of it being in effect as to the Hotel, the parties shall increase the Replacement Management Fees and Terminated Liquidated Damages by a number equal to the Franchise Fee Credit multiplied by a fraction, the numerator of which is thirty-six (36) minus the number of months Buyer’s Franchise was in effect, and the denominator of which is thirty-six (36).

Section 19.02 shall be amended to read in its entirety:

          Assignment by Leasehold Owner. Leasehold Owner shall have the right to assign this Agreement in its entirety to a purchaser of the Hotel upon reasonable determination by Manager, including, but not limited to, credit worthiness of such purchaser, (such determination by Manager and written consent not to be unreasonably withheld or delayed), in which event Leasehold Owner and Guarantor shall be released form any liability hereunder except as otherwise set forth herein. Additionally, Leasehold

Page 16 of 27

Owner shall have the right to assign this Agreement to any parent, subsidiary or Affiliate of Leasehold Owner or to the holder of any Authorized Mortgage, provided no such assignment shall release Leasehold Owner or Guarantor. Leasehold Owner shall not otherwise assign (or permit the assignment of) any of Leasehold Owner’s interest in this Agreement or in any manner, either directly or indirectly, partition (or seek the partition of), sell, assign or transfer any of its rights or interests in the Hotel or permit a change in a fifty percent (50%) or more equity or profit sharing interest in Leasehold Owner or its immediate parent without the prior written consent (which consent shall not be unreasonably withheld) of Manager, and no such assignment shall release Leasehold Owner or Guarantor of its obligations unless and only to the extent waived by Manager in writing at the time of or after the assignment. . If at any time after the Effective Date hereof, without the prior written consent of Manager, Leasehold Owner shall effect or suffer to exist any assignment in violation of this Section 19.02, Manager may, within thirty (30) days following its receipt of notice of such assignment, elect to terminate this Agreement (which termination shall be effective ninety (90) days after Manager’s having served Leasehold Owner with timely written notice of its election to terminate), and upon such termination Leasehold Owner shall provide a Replacement Investment or pay to Manager the Replacement Management Fee and/or Liquidated Damages as contemplated by Article 15 hereof. In the event any assignment of Leasehold Owner’s interest in the Hotel occurs pursuant to the foregoing causes or otherwise, Leasehold Owner shall pay to Manager any and all costs or expenses, including without limitation attorney’s fees, incurred by Manager, related to such assignment and the transition of Management to the successor owner. Such fees and costs shall include payment to Manager of the hourly rate for Manager’s internal personnel (both onsite and otherwise) to transition management to the new Owner.

There shall be added to the end of Section 15.05(a) the following sentence: Termination Liquidated Damages shall be an Ownership Cost.

The provisions of Article 21 shall be deleted, and the following provisions inserted in their place and stead:

21.01. Operation of Hotel. If at any time during the Initial Term and any Renewal Term(s) it becomes necessary in Manager’s reasonable opinion to cease or alter operation of the Hotel in order to protect the health, safety and welfare of the guests and/or employees of the Hotel, or the Hotel itself, for reasons of force majeure beyond the control of Manager such as, but not limited to, acts of war, insurrection, civil strife and commotion, labor unrest or acts of God, terrorist acts or significant, localized threats of terrorist acts, outbreaks of disease, hurricanes or severe storms, or similar events that significantly adversely impact operation of the Hotel, then in such event Manager may close and cease or alter operation of all or part of the Hotel, reopening and commencing or resuming operation when Manager deems that such may be done without jeopardy to the Hotel, its guests and employees.

21.02. Extension of Time. It is further understood and agreed that with respect to any obligation, other than the payment of money, to be performed by a party during the Term of this Agreement, such party shall in no event be liable for failure so to do when prevented by any force majeure cause such as strike, lockout, breakdown, accident, order or regulation of or by any governmental

Page 17 of 27

authority, failure of supply or inability, by the exercise of reasonable diligence, to obtain supplies, parts or employees necessary to perform such obligation, or war or other emergency. The time within which such obligation shall be performed shall be extended for a period of time equivalent to the delay from such cause.

The parties agree that the Investment Basis for the Hotel as defined in Section 23 of the Management Agreement, as of the effective date of this Amendment shall be as set forth in Exhibit A-4, the same to be revised as of December 31, 2006 first effective for Fiscal Year 2007 to include capital expenditures by Leasehold Owner or Superior Owner in Fiscal Year 2006 and in that portion of Fiscal Year 2005 following October 28, 2005, and thereafter annually as provided by this Management Agreement.

The definition of “Approved Facility” in Section 23 shall be amended to refer to “a borrowing capacity of not less than $25 million” until completion of the Special Capital Plans and Redevelopment Plans set forth herein, after which it shall be reduced to $10 million.

The definition of “Investment Basis” in Section 23 shall be amended to read:

Investment Basis — As of the date of this Amendment, the amount shown on Exhibit A-4 attached hereto and made a part hereof. The Investment Basis for any Fiscal Year shall be the Investment Basis in the Hotel at the end of the immediately preceding Fiscal Year. Except as provided below, with respect to calculations applicable to Fiscal Years 2006 and 2007, in determining Investment Basis at the end of any Fiscal Year for each Hotel, the Investment Basis at the beginning of the prior Fiscal Year shall be increased annually by a percentage equal to the percentage increase in the Consumer Price Index during the immediately preceding calendar year, then shall be increased by all expenditures placed in service (and ensuring no amount is double counted) by Leasehold Owner during such Fiscal Year at such Hotel and included in depreciable fixed assets by Leasehold Owner or Superior Owner for financial reporting purposes, and shall be decreased by an imputed five percent (5%) of the prior Fiscal Year’s Adjusted Gross Revenue provided, however, that the cumulative compounded increase in the Investment Basis resulting from such Consumer Price Index increase shall not exceed 45% at any time during the Initial Term hereof.

No such adjustment to Investment Basis shall occur at the end of 2005 for calculations applicable to Fiscal Year 2006. For purposes of calculating the Performance Test (if applicable) and the Incentive Management Fee for Fiscal Year 2007, the calculation at the end of 2006 will be as follows: Start with the Investment Basis as set forth on Exhibit A-4. Apply the Consumer Price Index increase as set forth above for the period between October 28, 2005 and December 31, 2005. Add to this number the pro-rated portion of the full Fiscal Year 2005 capital expenditures by Leasehold Owner or Superior Owner for the period between October 28, 2005 and December 31, 2005 and then subtract five percent (5%) of Adjusted Gross Revenue for the full Fiscal Year 2005 prorated for the same period. Apply the Consumer Price Index increase as set forth above for the period between January 1, 2006 and December 31, 2006. Then add to this number the Fiscal Year 2006 capital expenditures by Leasehold Owner or Superior Owner and then subtract five percent (5%) of Adjusted Gross

Page 18 of 27

Revenue for the same Fiscal Year 2006. An example of calculation of the Investment Basis is attached as Exhibit A-5.

If a force majeure event excusing an ROI Failure pursuant to Section 7.06 is established by either agreement of the parties or through the arbitration procedures in this Agreement for any Fiscal Year, the annual increase in the Consumer Price Index for the applicable Fiscal Year for purposes of calculating the Investment Basis of the Hotel shall be deemed to be zero.

There shall be deleted from the definition of “Gross Revenues” in Section 23 the phrase “Net Proceeds received by Leasehold Owner in connection with the sale of any property pursuant to Section 4.04 hereof.”

The definition of Net Proceeds in Section 23 shall be amended to read:

     Net Proceeds: with respect to the sale of any Managed Hotel or other property, the purchase price paid less usual and customary closing costs, but excluding any fee or commission payable to Leasehold Owner or an Affiliate of Leasehold Owner. With respect to a foreclosure or transfer by virtue of a deed in lieu of foreclosure, the unpaid principal and interest on the relevant loan at the time of such foreclosure or deed in lieu of foreclosure, before giving any effect to the reduction of the loan by the amount of any deposits, escrow balances or other impounds held by lender or otherwise securing the loan.
(b)

[All groups]

Section 2.3 of the Management Agreement shall be, and is hereby, deleted. References to “Term” and “Initial Term” in the Management Agreement shall be read to mean the same thing, and any references to “Renewal Term” or “Renewal Terms” shall be disregarded.

The Master Amendment to Management Agreement dated September 17, 2003 is deemed null and void in its entirety.

The parties further agree as of the date hereof, the Replacement Investment Balance is hereby reset to zero, and that termination of any management agreement with respect to the hotels listed on Exhibit A-6 shall not affect the Replacement Investment Balance for such hotels if the management agreement(s) so terminated provide for deletion of Sections 15.02(e), 15.04 (b-g), inclusive, and 15.05 of their respective management agreements under the circumstances of such termination.

Except as specifically amended or modified by this Amendment, the provisions of the Management Agreement shall remain in full force and effect. Terms not defined in this Amendment shall have the meaning ascribed to them in the Management Agreement. Each party represents that it has full power and authority to execute this Agreement and to be bound by and perform the terms hereof. On request each party shall furnish the other evidence of such authority. Superior Owner joins in the execution of this Amendment solely to evidence its consent thereto.

Executed as of the date first above written.

Page 19 of 27

LEASEHOLD OWNER

(NAME)

By:

Its:

InterContinental Hotels Group Resources, Inc.

By:

Its:

BHMC CANADA, Inc.

By:

Its:

Consent to execution by Leasehold Owner:

SUPERIOR OWNER

By:

Its:

Page 20 of 27

EXHIBIT A-1

Atlanta Powers Ferry Crowne Plaza
Miami Airport Crowne Plaza
San Jose Crowne Plaza
Dallas Park Central Crowne Plaza Suites
Dallas Staybridge Suites
Philadelphia — Center City Crowne Plaza
Houston I-10 West Holiday Inn Select
Irvine Crowne Plaza
Atlanta Airport Crowne Plaza

Page 21 of 27

EXHIBIT A-2

SPECIAL CAPITAL PLAN
(To be inserted for each hotel)

Page 22 of 27

EXHIBIT A-3
INCENTIVE MANAGEMENT FEE CALCULATION EXAMPLES

EXAMPLE 1
Calculation at end of FY 2005 for application in FY 2006 only.
Initial Investment Basis (from Exhibit A-4): $20,000,000
No adjustments for CPI, Capital Expenditures or CapEx.
Net Investment Basis = $20,000,000

EXAMPLE 2: INSUFFICIENT ADJUSTED GROSS REVENUES
Adjusted Gross Revenues: $3,000,000
Adjusted Net Operating Income: $1,000,000
Investment Basis: $20,000,000
ROI Percentage (Investment Basis X .085): $1,700,000
Subtract ROI Percentage from Adjusted Net Operating Income = negative result
If above number is positive, multiply by 25.0%: number is not positive
Incentive fee is lesser of this calculation ( 0 ) or 2.5% of Adjusted Gross Revenues ($75,000)
Incentive Fee = $0

EXAMPLE 3: SUFFICIENT ADJUSTED GROSS REVENUES
Adjusted Gross Revenues: $3,000,000
Adjusted Net Operating Income: $1,800,000
Investment Basis: $20,000,000
ROI Percentage (Investment Basis X .085): $1,700,000
Subtract ROI Percentage from Adjusted Net Operating Income = $100,000
If above number is positive, multiply by 25.0%: $25,000
Incentive fee is lesser of this calculation ($25,000) or 2.5% of Adjusted Gross Revenues ($75,000)
Incentive Fee = $25,000

EXAMPLE 4: IMPOSITION OF 2.5% CAP
Adjusted Gross Revenues: $3,000,000
Adjusted Net Operating Income: $2,500,000
Investment Basis: $20,000,000
ROI Percentage (Investment Basis X .085): $1,700,000
Subtract ROI Percentage from Adjusted Net Operating Income = $800,000
If above number is positive, multiply by 25.0%: $200,000
Incentive fee is lesser of this calculation ($200,000) or 2.5% of Adjusted Gross Revenues ($75,000)
Incentive Fee = $75,000

Page 23 of 27

EXHIBIT A-4

INVESTMENT BASIS FOR HOTEL
(To be inserted by hotel from agreed-upon spreadsheet attached hereto)

Page 24 of 27

EXHIBIT A-5
Investment Basis Calculation Examples

Example 1 - Calculation at end of FY 2006 for application in FY 2007 calculations
Initial Investment Basis (from Exhibit A-4): $20,000,000
CPI Increase 10/28/05 — 12/31/05: 0.5%
Calculate: $20,000,000 X 0.5% = $100,000
Capital Expenditures 10/28/05 — 12/31/05: $100,000
Adjusted Gross Revenue 1-/28/05 — 12/31/05: $1,250,00
5% of above number: $62,500
Calculate: CapEx for period less 5% of AGR for period = $37,500
Add CPI increase and Net Capex to Initial Investment Basis: $20,000,000 + $100,000 + $37,500 =
$20,137,500
Notional Ending FY 2005 Investment Basis = $20,137,500 (used only for calculation of FY 2006
Investment Basis)
CPI Increase 1/1/06 — 12/31/06: 3.0%
Calculate: $20,137,500 X 3.0% = $604,125
Capital Expenditures FY 2006: $100,000
Adjusted Gross Revenue FY 2006: $3,000,000
5% of above number: $150,000
Calculate: CapEx for FY 2006 less 5% of AGR for FY 2006 = ($50,000)
Add CPI increase and Net Capex to Notional Ending FY 2005 Investment Basis: $20,137,500 + $604,125
+ ($50,000) = $20,691,625
New Investment Basis = $20,691,625

Example 2 — Calculation in subsequent years when capex is less than 5% of AGR:
Investment Basis at beginning of Preceding Fiscal Year: $20,691,625 (from Example 1)
CPI Increase FY just ended: 3%
Calculate: $20,691,625 X 3% = $620,749
Capital Expenditures FY just ended: $100,000
Adjusted Gross Revenue FY just ended: $3,000,000
5% of above number: $150,000
Calculate: CapEx for FY just ended less 5% of AGR for FY just ended = ($50,000)
Add CPI increase and Net Capex to Preceding Fiscal Year Beginning Investment Basis: $20,691,625 +
$620,749 + ($50,000) = $21,262,374
New Investment Basis = $21,262,374

Example 3 — Calculation in subsequent years when capex exceeds 5% of AGR:
Investment Basis at beginning of Preceding Fiscal Year: $20,691,625 (from Example 1)
CPI Increase FY just ended: 3%

Page 25 of 27

Calculate: $20,691,625 X 3% = $620,749
Capital Expenditures FY just ended: $100,000
Adjusted Gross Revenue FY just ended: $1,000,000
5% of above number: $50,000
Calculate: CapEx for FY just ended less 5% of AGR for FY just ended = $50,000
Add CPI increase and Net Capex to Preceding Fiscal Year Beginning Investment Basis: $20,691,625 +
$620,749 + $50,000 = $21,362,374

New Investment Basis = $21,362,374

Page 26 of 27

EXHIBIT A-6

Amarillo I-40 Holiday Inn
Columbus Airport North Holiday Inn
Omaha Central I-80 Holiday Inn
Omaha Central Hampton Inn
Orlando Nikki Bird Holiday Inn
Tampa Busch Holiday Inn
Atlanta Airport North Holiday Inn
Dallas DFW North Harvey Suites
Montgomery East I-85 Holiday Inn
Dallas Market Center Crowne Plaza
Pleasanton Crowne Plaza
Stamford Holiday Inn Select
Philadelphia Center City Crowne Plaza Hotel
Atlanta Jonesboro Holiday Inn
Knoxville West Holiday Inn
Houston Greenway Holiday Inn Select
Kansas City Northeast Holiday Inn
Atlanta Perimeter Holiday Inn Select
Omaha Old Mill Crowne Plaza
Houston Airport Holiday Inn
San Antonio Downtown Holiday Inn
Austin Town Lake Holiday Inn
San Francisco Union Square Crowne Plaza

Page 27 of 27

EX-10.33.1

Exhibit 10.33.1

EXECUTION COPY

FIRST LETTER AMENDMENT

Dated as of December 9, 2005

Citicorp North America, Inc.,
as Administrative Agent
Two Penns Way, Suite 110
New Castle, Delaware 19720

          Re:       FelCor TRS Term Credit Facility

Ladies and Gentlemen:

          Reference is made to that certain Term Credit Agreement dated as of October 18, 2005 (the “Credit Agreement”) among FelCor TRS Borrower 1, L.P. (together with any Additional Borrowers that have become party to the Credit Agreement prior to the date hereof, collectively, the “Borrowers”), as borrowers; FelCor TRS Guarantor, L.P., FelCor Lodging Limited Partnership, as guarantors (together with any Additional Guarantors that have become parties to the Credit Agreement prior to the date hereof, collectively, the “Guarantors”); Citicorp North America, Inc. (“CNAI”), as the initial Lender, the administrative agent (in such capacity, the “Administrative Agent”) for the Lenders and the collateral agent for the Secured Parties; and Citigroup Global Markets Inc., as sole lead arranger and sole book running manager. Capitalized terms not otherwise defined herein shall have their respective meanings set forth in the Credit Agreement.

          It is hereby agreed by you and us as follows:

          1. Amendments to Credit Agreement. The Credit Agreement is, effective as of the date of this First Letter Amendment (this “Amendment”), hereby amended as follows:

     (a) The cover page of the Credit Agreement is hereby amended by deleting the figure “$175,000,000” on the first line thereof and substituting therefor the figure “$225,000,000”.

     (b) The definition of “Maximum Facility Amount” set forth in Section 1.01 of the Credit Agreement is hereby amended by deleting the figure “$175,000,000” set forth therein and substituting therefor the figure “$225,000,000”.

     (c) Section 2.03 of the Credit Agreement is hereby amended by deleting the chart set forth therein and substituting therefor the following chart:

Date	Amount
May 18, 2006	$	324,678
June 18, 2006	$	326,302
July 18, 2006	$	327,933
August 18, 2006	$	329,573
September 18, 2006	$	331,221
October 18, 2006	$	332,877

     (d) The Borrower Parties shall cause each of the New Guarantors (defined below) to execute and deliver a Guaranty Supplement to the Administrative Agent not later than December 30, 2005 (the “Delivery Date”). Any Default or Event of Default that otherwise would have

resulted under the Credit Agreement (including pursuant to Section 5.01(j)(i) thereof) by reason of the failure of the Borrower Parties to cause such Guaranty Supplements to be so executed and delivered prior to the Delivery Date is hereby waived by the Lenders and the Administrative Agent. For purposes of this Amendment, the following Subsidiaries of FLLP (or their respective successors in interest, whether by merger, consolidation or otherwise, to the extent the same shall remain Subsidiaries of the Borrower Parties as of the Delivery Date) shall comprise “New Guarantors”: (i) FelCor/JPM Orlando I-Drive Hotel, L.L.C., (ii) FelCor/JPM Atlanta CP Hotel, L.L.C., (iii) FelCor/JPM Austin HI Holdings, L.P., (iv) FelCor/JPM Austin HI Hotel, L.L.C., (v) FelCor/JPM Mandalay Hotel, L.L.C., (vi) FelCor/JPM LBV Hotel, L.L.C., and (vii) FelCor/JPM Brunswick Hotel, L.L.C.

     (e) Schedule I to the Credit Agreement is hereby amended and replaced in its entirety with Annex A attached hereto.

     (f) Schedule II to the Credit Agreement is hereby supplemented by adding thereto the assets identified on Annex B attached hereto, which assets are intended to be transferred to a Borrower or a wholly-owned Subsidiary thereof in compliance with the Qualifying Asset Conditions prior to the Collateral Delivery Date. Each Loan Party hereby represents and warrants that such Schedule II, as amended by such Annex B, contains an accurate and complete list of all Mortgage Assets as of the date hereof.

     (g) Schedule 4.01(q) to the Credit Agreement is hereby supplemented by adding thereto the information set forth in Annex C attached hereto. Each Loan Party hereby represents and warrants that such Schedule 4.01(q), as amended by such Annex C, is accurate and complete as of the date hereof.

          2. Representations and Warranties. Each Loan Party hereby represents and warrants that the representations and warranties of such Loan Party contained in each of the Loan Documents (as amended or supplemented to date, including pursuant to this Amendment) are true and correct on and as of the date first above written, before and after giving effect to this Amendment, as though made on and as of such date. Each Loan Party further represents and warrants that the factual matters described herein are true and correct as of the date hereof.

          3. Effectiveness of Amendment. This Amendment shall become effective as of the date first above written when, and only when, the Administrative Agent shall have received (a) counterparts of this Amendment executed by the Borrowers, the Administrative Agent and the Required Lenders (or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment), (b) an original counterpart of the Consent attached hereto executed by each Guarantor, (c) certified copies of authorizing resolutions and all documents evidencing other necessary corporate action of each Borrower approving this Amendment and the matters contemplated hereby and of each Guarantor approving the Consent and the matters contemplated hereby and thereby, (d) an incumbency certificate executed by a Secretary or Assistant Secretary of each Borrower and each Guarantor certifying to the names and true signatures of the officers of such parties authorized to sign this Amendment and the Consent, (e) an opinion of counsel to the Loan Parties in form and substance satisfactory to the Administrative Agent, and (f) replacement Notes reflecting the amended Maximum Facility Amount.

          4. Costs and Expenses. The Borrowers agree to pay on demand all reasonable out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Amendment and any instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of

2

counsel for the Administrative Agent) in accordance with the terms of Section 9.04 of the Credit Agreement.

          5. Certain Definitions. Following the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

          6. Ratification. The Credit Agreement (as amended by this Amendment) and each of the other Loan Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not, except to the extent expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under the Credit Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Credit Agreement or any of the other Loan Documents.

          7. Execution Instructions. If you agree to the terms and provisions hereof, please evidence such agreement by executing and returning a counterpart of this Amendment to Malcolm K. Montgomery of Shearman & Sterling LLP by facsimile (646.848.7587), with four duplicate originals by overnight courier.

          8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

[Balance of page intentionally left blank]

3

     This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

Very truly yours,
FELCOR TRS BORROWER 1, L.P.
By:	FelCor TRS Borrower GP 1, L.L.C.,
	its General Partner

By:	/s/ Andrew J. Welch
	Name:  Andrew J. Welch
	Title:  Senior Vice President

FELCOR TRS BORROWER 2, L.P.
By:	FelCor TRS Borrower GP 2, L.L.C.,
	its General Partner

By:	/s/ Andrew J. Welch
	Name:  Andrew J. Welch
	Title:  Senior Vice President

S-1

Agreed as of the date first above written:

CITICORP NORTH AMERICA, INC.,
as Administrative Agent and Collateral Agent and as a Lender

By	/s/ David Bouton
	Name:  David Bouton
	Title:   Vice President

S-2

CONSENT

Dated as of December 9, 2005

          Each of the undersigned, as Guarantor under the Guaranty set forth in Article VII of the Term Credit Agreement dated as of October 18, 2005 (the “Credit Agreement”) referred to in the First Letter Amendment to which this Consent is attached, hereby consents to such First Letter Amendment and hereby confirms and agrees that notwithstanding the effectiveness of such First Letter Amendment, the Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of such First Letter Amendment, each reference in the Guaranty to the “Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean and be a reference to the Credit Agreement, as amended and modified by such First Letter Amendment.

FELCOR TRS GUARANTOR, L.P.,
a Delaware limited partnership
By:	FelCor TRS Guarantor GP, L.L.C.,
	its General Partner
	By:	/s/ Andrew J. Welch
		Name:  Andrew J. Welch
		Title:   Senior Vice President
FELCOR LODGING LIMITED PARTNERSHIP,
a Delaware limited partnership
By:	FelCor Lodging Trust Incorporated,
	its General Partner
	By:	/s/ Andrew J. Welch
		Name:  Andrew J. Welch
		Title: Senior Vice President
FELCOR LODGING COMPANY, L.L.C.,
a Delaware limited liability company
By:	/s/ Andrew J. Welch
	Name:	Andrew J. Welch
	Title:	Senior Vice President

[Signatures continued on next page.]

C-1

FELCOR PHILADELPHIA CENTER, L.L.C.
By:	/s/ Andrew J. Welch
	Name:	Andrew J. Welch
	Title:	Senior Vice President
FELCOR MARSHALL MOTELS, L.L.C.
By:	/s/ Andrew J. Welch
	Name:	Andrew J. Welch
	Title:	Senior Vice President
CENTER CITY HOTEL ASSOCIATES
By:	FelCor Philadelphia Center, L.L.C.,
	its General Partner
	By:		/s/ Andrew J. Welch
			Name: Andrew J. Welch
			Title: Senior Vice President

C-2

ANNEX A TO FIRST
LETTER AMENDMENT

SCHEDULE 1
TERM COMMITMENTS AND APPLICABLE LENDING OFFICES

Name of
Initial Lender	Term Commitment		Domestic Lending Office	Eurodollar Lending Office
Citicorp North	$	225,000,000	Two Penns Way, Suite 110	Two Penns Way, Suite 110
America, Inc.			New Castle, DE 19720	New Castle, DE 19720
			Attn: Annemarie E. Pavco	Attn: Annemarie E. Pavco
			Global Loans	Global Loans
			Tel.: (302) 894-6010	Tel.: (302) 894-6010
			Fax: (212) 994-0849	Fax: (212) 994-0849
Total	$	225,000,000

Annex A-1

ANNEX B TO FIRST
LETTER AMENDMENT

SUPPLEMENT TO SCHEDULE II
MORTGAGE ASSETS

19. Orlando I-Drive Holiday Inn located at 8978 International Drive, Orlando, Florida 32819.

20. Walt Disney World Village — Doubletree located at 2305 Hotel Plaza Boulevard, Lake Buena Vista, Florida 32830.

21. Mandalay Beach — Embassy Suites located at 2101 Mandalay Beach Road, Oxnard, California 93035.

22. Brunswick — Embassy Suites located at 500 Mall Boulevard, Brunswick, Georgia 31525.

Annex B-1

ANNEX C TO FIRST
LETTER AMENDMENT

SUPPLEMENT TO SCHEDULE 4.01(Q)
REAL PROPERTY

[Intentionally omitted.]

EX-10.33.2

Exhibit 10.33.2

SECOND LETTER AMENDMENT

Dated as of January 9, 2006

Citicorp North America, Inc.,
as Administrative Agent
Two Penns Way, Suite 110
New Castle, Delaware 19720

          Re:           FelCor TRS Term Credit Facility

Ladies and Gentlemen:

          Reference is made to that certain Term Credit Agreement dated as of October 18, 2005, as amended by a certain First Letter Amendment dated as of December 9, 2005 (collectively, the “Credit Agreement”) among FelCor TRS Borrower 1, L.P. (together with any Additional Borrowers that have become party to the Credit Agreement prior to the date hereof, collectively, the “Borrowers”), as borrowers; FelCor TRS Guarantor, L.P., FelCor Lodging Limited Partnership, as guarantors (together with any Additional Guarantors that have become parties to the Credit Agreement prior to the date hereof, collectively, the “Guarantors”); Citicorp North America, Inc. (“CNAI”), as the initial Lender, the administrative agent (in such capacity, the “Administrative Agent”) for the Lenders and the collateral agent for the Secured Parties; and Citigroup Global Markets Inc., as sole lead arranger and sole book running manager. Capitalized terms not otherwise defined herein shall have their respective meanings set forth in the Credit Agreement.

          It is hereby agreed by you and us as follows:

          1. Amendment to Credit Agreement. The definition of “Collateral Delivery Date” set forth in Section 1.01 of the Credit Agreement is, effective as of the date of this Second Letter Amendment (this “Amendment”), hereby amended by deleting the date “January 10, 2006” set forth therein and substituting therefor the date “February 10, 2006”.

          2. Representations and Warranties. Each Loan Party hereby represents and warrants that the representations and warranties of such Loan Party contained in each of the Loan Documents (as amended or supplemented to date, including pursuant to this Amendment) are true and correct on and as of the date first above written, before and after giving effect to this Amendment, as though made on and as of such date.

          3. Effectiveness of Amendment. This Amendment shall become effective as of the date first above written when, and only when, the Administrative Agent shall have received (a) counterparts of this Amendment executed by the Borrowers, the Administrative Agent and the Required Lenders (or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment), and (b) an original counterpart of the Consent attached hereto executed by each Guarantor.

          4. Costs and Expenses. The Borrowers agree to pay on demand all reasonable out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Amendment (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section 9.04 of the Credit Agreement.

          5. Certain Definitions. Following the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

          6. Ratification. The Credit Agreement (as amended by this Amendment) and each of the other Loan Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not, except to the extent expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under the Credit Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Credit Agreement or any of the other Loan Documents.

          7. Execution Instructions. If you agree to the terms and provisions hereof, please evidence such agreement by executing and returning a counterpart of this Amendment to Malcolm K. Montgomery of Shearman & Sterling LLP by facsimile (646.848.7587), with four duplicate originals by overnight courier.

          8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

[Balance of page intentionally left blank]

2

          This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

Very truly yours,
FELCOR TRS BORROWER 1, L.P.
By:	FelCor TRS Borrower GP 1, L.L.C.,
	its General Partner
	By:	/s/ Andrew J. Welch
		Name:  Andrew J. Welch
		Title:    Senior Vice President

FELCOR TRS BORROWER 2, L.P.
By:	FelCor TRS Borrower GP 2, L.L.C.,
	its General Partner
	By:	/s/ Andrew J. Welch
		Name:  Andrew J. Welch
		Title:    Senior Vice President

FELCOR TRS BORROWER 3, L.P.
By:	FelCor TRS Borrower GP 3, L.L.C.,
	its General Partner
	By:	/s/ Andrew J. Welch
		Name:  Andrew J. Welch
		Title:    Senior Vice President

FELCOR TRS BORROWER 4, L.L.C.
By:	/s/ Andrew J. Welch
	Name:  Andrew J. Welch
	Title:    Senior Vice President

S-1

Agreed as of the date first above written:

CITICORP NORTH AMERICA, INC.,
as Administrative Agent and Collateral Agent and as a Lender

By	/s/ David Bouton
	Name:  David Bouton
	Title:    Vice President

S-2

CONSENT

Dated as of January 9, 2006

          Each of the undersigned, as Guarantor under the Guaranty set forth in Article VII of the Term Credit Agreement dated as of October 18, 2005, as amended by the First Letter Amendment dated as of December 9, 2005 (collectively, the “Credit Agreement”) referred to in the Second Letter Amendment to which this Consent is attached, hereby consents to such Second Letter Amendment and hereby confirms and agrees that notwithstanding the effectiveness of such Second Letter Amendment, the Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of such Second Letter Amendment, each reference in the Guaranty to the “Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean and be a reference to the Credit Agreement, as amended and modified by such Second Letter Amendment.

FELCOR TRS GUARANTOR, L.P.,
a Delaware limited partnership
By:	FelCor TRS Guarantor GP, L.L.C.,
	its General Partner
	By:	/s/ Andrew J. Welch
		Name: Andrew J. Welch
		Title: Senior Vice President
FELCOR LODGING LIMITED PARTNERSHIP,
a Delaware limited partnership
By:	FelCor Lodging Trust Incorporated,
	its General Partner
	By:	/s/ Andrew J. Welch
		Name: Andrew J. Welch
		Title: Senior Vice President

FELCOR LODGING COMPANY, L.L.C.,
a Delaware limited liability company
By:	/s/ Andrew J. Welch
	Name: Andrew J. Welch
	Title: Senior Vice President

[Signatures continued on next page.]

C-1

FELCOR PHILADELPHIA CENTER, L.L.C.
By:	/s/ Andrew J. Welch
	Name:  Andrew J. Welch
	Title:    Senior Vice President
FELCOR MARSHALL MOTELS, L.L.C.
By:	/s/ Andrew J. Welch
	Name:  Andrew J. Welch
	Title:    Senior Vice President

CENTER CITY HOTEL ASSOCIATES
By:	FelCor Philadelphia Center, L.L.C.,
	its General Partner
	By:	/s/ Andrew J. Welch
		Name:  Andrew J. Welch
		Title:    Senior Vice President

FELCOR/JPM ATLANTA CP HOTEL, L.L.C.
By:	/s/ Andrew J. Welch
	Name:  Andrew J. Welch
	Title:    Senior Vice President

C-2

EX-10.34.1

Exhibit 10.34.1

Execution Version

CREDIT AGREEMENT

dated as of

December 12, 2005

among

FELCOR LODGING TRUST INCORPORATED
and
FELCOR LODGING LIMITED PARTNERSHIP

The Lenders Party Hereto

and

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

J.P. MORGAN SECURITIES INC.
and
CITIGROUP GLOBAL MARKETS INC.

as Joint Bookrunners and Joint Lead Arrangers

TABLE OF CONTENTS

			Page
ARTICLE I DEFINITIONS				1
	SECTION 1.1.	Defined Terms		1
	SECTION 1.2.	Classification of Loans and Borrowings		14
	SECTION 1.3.	Terms Generally		14
	SECTION 1.4.	Accounting Terms; GAAP		14
	SECTION 1.5.	Joint Venture Investments		14
ARTICLE II THE CREDITS				15
	SECTION 2.1.	Commitments		15
	SECTION 2.2.	Loans and Borrowings		15
	SECTION 2.3.	Requests for Revolving Borrowings		16
	SECTION 2.4.	[RESERVED]		16
	SECTION 2.5.	Swingline Loans		16
	SECTION 2.6.	Letters of Credit		17
	SECTION 2.7.	Funding of Borrowings		21
	SECTION 2.8.	Interest Elections		21
	SECTION 2.9.	Termination and Reduction of Commitments		22
	SECTION 2.10.	Repayment of Loans; Evidence of Debt		23
	SECTION 2.11.	Prepayment of Loans		24
	SECTION 2.12.	Fees		25
	SECTION 2.13.	Interest		26
	SECTION 2.14.	Alternate Rate of Interest		26
	SECTION 2.15.	Increased Costs		27
	SECTION 2.16.	Break Funding Payments		28
	SECTION 2.17.	Taxes		28
	SECTION 2.18.	Payments Generally; Pro Rata Treatment; Sharing of Set-offs		29
	SECTION 2.19.	Mitigation Obligations; Replacement of Lenders		30
	SECTION 2.20.	Joint and Several Liability of the Borrowers		31
ARTICLE III REPRESENTATIONS AND WARRANTIES				33

i

TABLE OF CONTENTS

(continued)

			Page
	SECTION 3.1.	Organization; Powers		33
	SECTION 3.2.	Authorization; Enforceability		33
	SECTION 3.3.	Governmental Approvals; No Conflicts		33
	SECTION 3.4.	Financial Condition; No Material Adverse Change		33
	SECTION 3.5.	Properties		34
	SECTION 3.6.	Litigation and Environmental Matters		34
	SECTION 3.7.	Compliance with Laws and Agreements		34
	SECTION 3.8.	Investment and Holding Company Status		35
	SECTION 3.9.	Taxes		35
	SECTION 3.10.	ERISA		35
	SECTION 3.11.	Disclosure		35
	SECTION 3.12.	Indebtedness		35
	SECTION 3.13.	Ownership; Organization Structure; Subsidiaries		36
	SECTION 3.14.	Solvency		36
	SECTION 3.15.	Location of Assets; Unencumbered Assets		36
	SECTION 3.16.	No Burdensome Restrictions		36
	SECTION 3.17.	Insurance		36
	SECTION 3.18.	Use of Proceeds; Margin Stock		36
	SECTION 3.19.	Foreign Asset Control Regulations		36
ARTICLE IV CONDITIONS				37
	SECTION 4.1.	Effective Date		37
	SECTION 4.2.	Each Credit Event		38
ARTICLE V AFFIRMATIVE COVENANTS				38
	SECTION 5.1.	Financial Statements; Ratings Change and Other Information		39
	SECTION 5.2.	Notices of Material Events		40
	SECTION 5.3.	Existence; Conduct of Business		40
	SECTION 5.4.	Payment of Obligations		40
	SECTION 5.5.	Maintenance of Properties; Insurance		40
	SECTION 5.6.	Books and Records; Inspection Rights		41

ii

TABLE OF CONTENTS

(continued)

			Page
	SECTION 5.7.	Compliance with Laws		41
	SECTION 5.8.	Use of Proceeds and Letters of Credit		41
	SECTION 5.9.	Notices of Asset Sales or Dispositions		41
	SECTION 5.10.	Further Assurances		41
	SECTION 5.11.	Distributions in the Ordinary Course		41
	SECTION 5.12.	ERISA Compliance		42
	SECTION 5.13.	Additional Subsidiary Guarantors; Release of Subsidiary Guarantors		42
ARTICLE VI NEGATIVE COVENANTS				42
	SECTION 6.1.	Financial Covenants and Other Covenants		42
	SECTION 6.2.	Liens		43
	SECTION 6.3.	Fundamental Changes; Governing Documents		44
	SECTION 6.4.	Indebtedness		45
	SECTION 6.5.	Transactions with Affiliates		45
	SECTION 6.6.	Asset Sales and Disposition of Assets		45
	SECTION 6.7.	Negative Pledge; Restrictive Agreements		45
	SECTION 6.8.	Restricted Investments; Acquisitions		45
	SECTION 6.9.	Fiscal Year		45
	SECTION 6.10.	Margin Regulations; Securities Laws		45
	SECTION 6.11.	ERISA		46
	SECTION 6.12.	Optional Prepayments and Modifications of Certain Debt Instruments		46
ARTICLE VII EVENTS OF DEFAULT				46
ARTICLE VIII THE ADMINISTRATIVE AGENT				48
ARTICLE IX MISCELLANEOUS				50
	SECTION 9.1.	Notices		50
	SECTION 9.2.	Waivers; Amendments		51
	SECTION 9.3.	Expenses; Indemnity; Damage Waiver		51
	SECTION 9.4.	Successors and Assigns		52
	SECTION 9.5.	Survival		55

iii

TABLE OF CONTENTS

(continued)

		Page
SECTION 9.6.	Counterparts; Integration; Effectiveness		55
SECTION 9.7.	Severability		56
SECTION 9.8.	Right of Setoff		56
SECTION 9.9.	Governing Law; Jurisdiction; Consent to Service of Process		56
SECTION 9.10.	WAIVER OF JURY TRIAL		56
SECTION 9.11.	Headings		57
SECTION 9.12.	Confidentiality		57
SECTION 9.13.	USA PATRIOT Act		57
SECTION 9.14.	Interest Rate Limitation		57

iv

SCHEDULES:

Schedule SG	—	Subsidiary Guarantors
Schedule 2.1	—	Commitments
Schedule 2.6	—	Existing Letters of Credit
Schedule 3.6	—	Disclosed Matters
Schedule 3.12	—	Existing Indebtedness
Schedule 3.13	—	Organizational Structure
Schedule 3.15	—	Properties and Unencumbered Assets

EXHIBITS:

Exhibit A — Form of Assignment and Assumption
Exhibit B — Form of Borrowing Request
Exhibit C — Form of Note
Exhibit D — Form of Interest Election Request
Exhibit E — Form of Subsidiary Guaranty
Exhibit F — Form of Officer’s Certificate

     CREDIT AGREEMENT (this “Agreement”) dated as of December 12, 2005, among FelCor Lodging Trust Incorporated, a Maryland corporation (“FelCor Trust”) and FelCor Lodging Limited Partnership, a Delaware limited partnership (“FelCor Partnership,” and together with FelCor Trust, individually a “Borrower” and collectively, the “Borrowers”), the LENDERS party hereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

     The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     SECTION 1.1. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

     “ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

     “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

     “Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder.

     “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

     “Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

     “Agreement” has the meaning assigned to such term in the recitals.

     “Alternate Base Rate” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus ¹/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

     “Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.

     “Applicable Rate” means, for any day, with respect to any ABR Loan or Eurodollar Revolving Loan, as the case may be, the applicable rate per annum set forth below under the caption “ABR Spread” or “Eurodollar Spread”, as the case may be, based upon the Leverage Ratio:

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	ABR		Eurodollar
Leverage Ratio:	Spread		Spread
Category 1
>6.25 to 1.0		1.25%		2.25%
Category 2
>5.50 to 1.0 and <6.25 to 1.0		1.00%		2.00%
Category 3
<5.50 to 1.0		0.75%		1.75%

The Administrative Agent shall determine and adjust the Applicable Rate as of the date (each a “Calculation Date”) that is five Business Days after the date on which the Borrowers provide the officer’s certificate in accordance with the provisions of SECTION 5.1(c); provided that if the Borrowers fail to provide the officer’s certificate required by SECTION 5.1(c) on or before the date required by SECTION 5.1(c), the Applicable Rate from such date shall be based on Category 1 until such time that an appropriate officer’s certificate is provided whereupon the Applicable Rate shall be determined by the then current Leverage Ratio. Each Applicable Rate so determined shall be effective and applied during the period beginning on one Calculation Date and ending on the date immediately preceding the next Calculation Date.

     “Approved Fund” has the meaning assigned to such term in SECTION 9.4.

     “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by SECTION 9.4), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

     “Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.

     “Board” means the Board of Governors of the Federal Reserve System of the United States of America.

     “Borrower” and “Borrowers” have the meanings assigned to such terms in the recitals.

     “Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect or (b) a Swingline Loan.

     “Borrowing Request” means a request by the Borrowers for a Revolving Borrowing in accordance with SECTION 2.3 in the form of Exhibit B.

     “Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that,

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when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

     “Calculation Date” has the meaning assigned to such term in the definition of “Applicable Rate”.

     “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

     “Cash Equivalents” means:

     (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

     (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

     (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

     (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

     (e) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

     “Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of FelCor Trust; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the FelCor Trust by Persons who were neither (i) nominated by the board of directors of the FelCor Trust nor (ii) appointed by directors so nominated; or (c) the acquisition of direct or indirect Control of FelCor Trust by any Person or group.

     “Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of SECTION 2.15(b), by any lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request, guideline or directive (whether

-4-

or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

     “Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans.

     “Closing Date” means December 12, 2005.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     “Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) increased or reduced from time to time pursuant to SECTION 2.9 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to SECTION 9.4. The initial amount of each Lender’s Commitment is set forth on Schedule 2.1, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders’ Commitments is $125,000,000.

     “Condominium Development” means the development of residential condominium units for the purpose of resale.

     “Consolidated Net Income” shall mean, for any period, the net income (or loss) of the Borrowers and their Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP consistently applied.

     “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

     “Credit Event” has the meaning assigned to such term in Section 4.2

     “Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

     “Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.6.

     “dollars” or “$” refers to lawful money of the United States of America.

     “Effective Date” means the date on which the conditions specified in SECTION 4.1 are satisfied (or waived in accordance with SECTION 9.2).

     “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

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     “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrowers or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

     “Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

     “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrowers, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by a Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by a Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by a Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by a Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

     “Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

     “Event of Default” has the meaning assigned to such term in Article VII.

     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrowers hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which a Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrowers under SECTION 2.19(b)), any withholding tax

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that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with SECTION 2.17(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrowers with respect to such withholding tax pursuant to SECTION 2.17(a).

     “Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

     “FelCor Partnership” has the meaning assigned to such term in the recitals.

     “FelCor Trust” has the meaning assigned to such term in the recitals.

     “Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of a Borrower.

     “Fixed Charges” means, with respect to any period, the sum of (a) Interest Charges for such period and (b) the aggregate of all dividends and distributions payable (whether paid or accrued) during such period on the preferred equity interests (if any) of the Borrowers and their Subsidiaries (excluding any preferred equity interests in any lessee entity issued to a manager of one or more of Borrowers’ or their Subsidiaries’ hotels or an Affiliate thereof in the nature of an incentive management fee so long as the dividends and distributions payable on such preferred equity interests have been subtracted in determining Total EBITDA.

     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which a Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

     “GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.

     “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

     “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary

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obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

     “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

     “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) all obligations of such Person under so-called forward equity purchase contracts to the extent such obligations are not payable solely in equity interests, (l) all uncollateralized obligations of such Person in respect of any Swap Agreements, and (m) all obligations of such Person in respect of any so-called “synthetic lease” (i.e., a lease of property which is treated as an operating lease under GAAP and as a loan for U.S. income tax purposes). The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

     “Indemnified Taxes” means Taxes other than Excluded Taxes.

     “Interest Charges” means, with respect to any period, the sum (without duplication) of the following (in each case, eliminating all offsetting debits and credits between a Borrower and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Borrowers and their Subsidiaries in accordance with GAAP): (a) all interest in respect of Indebtedness of the Borrowers and their Subsidiaries (including imputed interest on Capital Lease Obligations) deducted in determining Consolidated Net Income for such period, and (b) all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period.

     “Interest Election Request” means a request by the Borrowers to convert or continue a Revolving Borrowing in accordance with SECTION 2.8 and in the form of Exhibit D.

     “Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first

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day of such Interest Period and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

     “Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is seven (7) or fourteen (14) days (in each case, to the extent available from all Lenders), or one, two, three or six months thereafter, as the Borrowers may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period and (iii) no Interest Period shall extend beyond the Maturity Date. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

     “Investments” means all investments, in cash or by delivery of property made, directly or indirectly (i) in any Person, whether by acquisition of shares of capital stock, Indebtedness or other obligations or securities or by loan, advance, guaranty, capital contribution or otherwise, or (ii) in any assets or property.

     “Issuing Bank” means JPMorgan Chase Bank, N.A., in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in SECTION 2.6(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

     “Joint Venture” means a partnership, limited liability company, corporation, joint venture or trust (other than a Subsidiary) in which a Borrower or its Subsidiaries own less than 100% of the Equity Interests.

     “LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.

     “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrowers at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

     “Lenders” means the Persons listed on Schedule 2.1 and any other Person that shall have become a party hereto pursuant to SECTION 2.9(d) or an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender.

     “Letter of Credit” means any letter of credit issued or deemed to be issued pursuant to this Agreement.

     “Leverage Ratio” has the meaning assigned to such term in SECTION 6.1(a).

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     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Telerate Page 3750 (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

     “Loan Documents” means this Agreement, the Subsidiary Guaranties, any Notes issued hereunder, any Borrowing Request, any Interest Election Request and all other related agreements and documents, executed, issued or delivered hereunder or thereunder or pursuant hereto or thereto.

     “Loans” means the loans made by the Lenders to the Borrowers pursuant to this Agreement.

     “Margin Stock” means “margin stock” or “margin security” as such terms are defined in Regulations U and X.

     “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Borrowers and the Subsidiaries taken as a whole, (b) the ability of the Borrowers or the Subsidiary Guarantors to perform any of their obligations under this Agreement or any other Loan Document or (c) the rights of or benefits available to the Lenders under this Agreement or any other Loan Document.

     “Material Indebtedness” means Recourse Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the Borrowers and their Subsidiaries in an aggregate principal amount exceeding $10,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of a Borrower or any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

     “Maturity Date” means January 2, 2009, or if such date is extended pursuant to SECTION 2.10, January 2, 2010.

     “Moody’s” means Moody’s Investors Service, Inc.

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     “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

     “Non-Recourse Indebtedness” means any Indebtedness: (a) under the terms of which the payee’s remedies upon the occurrence of an event of default are limited to specific, identified assets of the payor which secure such Indebtedness and (b) for the repayment of which neither a Borrower nor any Subsidiary (other than a special purpose Subsidiary which owns such assets) has any personal liability beyond the loss of such specified assets, except for liability for fraud, material misrepresentation or misuse or misapplication of insurance proceeds, condemnation awards, existence of hazardous wastes or other customary exceptions to non-recourse provisions for the financing of real estate.

     “Note” or “Notes” means any promissory notes of the Borrowers in favor of a Lender evidencing the Revolving Loans, and any promissory notes issued to the Swingline Lender evidencing Swingline Loans, as such promissory note may be amended, modified, supplemented, extended, renewed or replaced from time to time and in the form of Exhibit C, individually or collectively, as appropriate.

     “Obligations” means, without duplication, all of the obligations, liabilities and indebtedness of the Borrowers to the Lenders and the Administrative Agent, whenever arising, under this Agreement, any Notes issued hereunder, or any of the other Loan Documents to which a Borrower is a party, including without limitation the outstanding principal amount of the Loans, interest and fees.

     “Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.

     “Participant” has the meaning set forth in SECTION 9.4.

     “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

     “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

     “Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which a Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

     “Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

     “Recourse Indebtedness” means any Indebtedness other than Non-Recourse Indebtedness.

     “Register” has the meaning set forth in SECTION 9.4.

     “Regulations T, U, and X” means Regulations T, U and X, respectively, of the Board (or any successor body) as from time to time in effect and any successor to all or a portion thereof.

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     “REIT” means a domestic trust or corporation that qualifies as a real estate investment trust under the provisions of Sections 856, et seq., of the Code.

     “Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

     “Required Lenders” means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing at least 50.1% of the sum of the total Revolving Credit Exposures and unused Commitments at such time; provided that, in the event any of the Lenders shall have failed to fund its share of any Borrowing requested by the Borrowers which such Lender is obligated to fund under the terms of this Agreement and any such failure has not been cured as provided in SECTION 2.7(b), then for so long as such failure continues, “Required Lenders” means Lenders (excluding all Lenders whose failure to fund their respective shares of such Borrowing have not been so cured) having Revolving Credit Exposures and unused Commitments representing at least 50.1% of the sum of the total Revolving Credit Exposures and unused Commitments of such Lenders at such time.

     “Restricted Investments” means all Investments except the following:

     (a) Investments in property to be used in the ordinary course of business of the Borrowers and their Subsidiaries;

     (b) Investments in current assets arising in the ordinary course of business of the Borrowers and their Subsidiaries;

     (c) Investments directly in real property in the ordinary course of business of the Borrowers and their Subsidiaries;

     (d) Investments in entities owning real properties provided that income from such Investments shall be either (i) qualified dividends under the “75% gross income test” under Section 856(c)(3) of the Code or (ii) “rents from real property” under applicable provisions of the Code;

     (e) Investments in one or more Subsidiaries or any Person that concurrently with such Investment becomes a Subsidiary, provided that each such Subsidiary is a either a “qualified REIT subsidiary” within the meaning of section 856(i) of the Code or any successor provision, a partnership or a disregarded entity under Treasury Regulation 301.7701-3, or a “taxable REIT subsidiary” within the meaning of section 856(i) of the Code or any successor provision;

     (f) Investments in cash and Cash Equivalents;

     (g) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit extended in the ordinary course of business; provided that the aggregate amount of such receivables that do not relate directly to hotel operations shall not exceed $3,000,000 at any time; and

     (h) Investments received in the ordinary course of business in satisfaction or partial satisfaction of delinquent amounts owed by financially troubled account debtors.

     “Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in a Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on

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account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in a Borrower or Subsidiary or any option, warrant or other right to acquire any such Equity Interests in a Borrower or Subsidiary.

     “Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure and Swingline Exposure at such time.

     “Revolving Loan” means a Loan made pursuant to SECTION 2.3.

     “S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill Companies, Inc.

     “Secured Indebtedness” means Indebtedness of a Borrower or any Subsidiary secured by a Lien.

     “Senior Unsecured Notes” means the senior unsecured notes of the Borrowers with maturity dates of October, 2007 and June, 2011, in each case issued pursuant to the applicable Senior Unsecured Notes Indenture.

     “Senior Unsecured Notes Indentures” means the following Indentures entered into by the Borrowers and certain of the Subsidiary Guarantors: (a) Indenture dated as of October 1, 1997 with respect to the 7-5/8% Senior Notes due 2007, (b) Indenture dated as of June 4, 2001 with respect to the 8-1/2% Senior Notes due 2011, and (c) Indenture dated as of May 26, 2004 with respect to the Senior Floating Rate Notes due 2011, in each case as amended and supplemented to the date hereof.

     “Solvent” means, with respect to any Person as of a particular date, that on such date (a) such Person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (b) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature in their ordinary course, (c) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s assets would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to engage, (d) the fair value of the assets of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, and (e) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject, with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable

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regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

     “subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

     “Subsidiary” means any subsidiary of the Borrowers.

     “Subsidiary Guarantor” means the Subsidiaries listed on Schedule SG and any other Person which becomes a party to the Subsidiary Guaranty in accordance with SECTION 5.13.

     “Subsidiary Guaranty” means the guaranty delivered for the benefit of the Administrative Agent and the Lenders in substantially the form attached hereto as Exhibit E.

     “Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrowers or the Subsidiaries shall be a Swap Agreement.

     “Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time.

     “Swingline Lender” means JPMorgan Chase Bank, N.A., in its capacity as lender of Swingline Loans hereunder.

     “Swingline Loan” means a Loan made pursuant to SECTION 2.5.

     “Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

     “Total Assets” means, as of any date of determination, the total book value of all assets of the Borrowers and their Subsidiaries determined on a consolidated basis in accordance with GAAP.

     “Total EBITDA” shall mean, for any period, Consolidated Net Income for such period plus, to the extent deducted in determining Consolidated Net Income during such period (without duplication), (i) income tax expense for such period, (ii) Interest Charges for such period, (iii) depreciation of real estate owned and amortization expense for such period, and (iv) amortization of intangibles for such period, after eliminating therefrom all extraordinary nonrecurring items of income or expense, including non-cash impairment charges, non-cash write-offs of deferred financing costs incurred

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prior to the date hereof, and costs, premiums and penalties arising by contract in connection with the prepayment of Indebtedness .

     “Total Net Debt” means, as of any date of determination, the total amount of all Indebtedness of the Borrowers and their Subsidiaries minus unrestricted cash and Cash Equivalents in excess of $25,000,000 on the balance sheet of the Borrowers, all as determined on a consolidated basis in accordance with GAAP.

     “Total Unencumbered Assets” means, as of any date of determination, the total book value of all Unencumbered Assets of the Borrowers and their Subsidiaries determined on a consolidated basis in accordance with GAAP.

     “Transactions” means the execution, delivery and performance by the Borrowers and the Subsidiary Guarantors of this Agreement and the other Loan Documents, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

     “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

     “Unencumbered Assets” means all income-producing real property assets in the United States and Canada which are (1) improved with a building for which a certificate of occupancy has been issued (where available) or which is otherwise being lawfully occupied for its intended uses, (2) either (A) 100% owned in fee (or leasehold under a ground lease that has a remaining term of at least thirty (30) years (except that up to five of the ground-leases for existing Unencumbered Assets may have a remaining term of at least twenty (20) years) and that has customary provisions to permit non-recourse leasehold mortgage financing under customary prudent lending requirements (an “Eligible Ground Lease”)) by a Borrower or a wholly-owned Subsidiary, or (B) at least 51% owned in fee (or leasehold under an Eligible Ground Lease), directly or indirectly (including through a Joint Venture), by the Borrowers and their Subsidiaries, so long as a Borrower substantially controls the sale and financing of such property, (3) free of (and if owned by a Subsidiary or a Joint Venture, the Equity Interests of such Subsidiary or Joint Venture are free of) all Liens and negative pledges (other than those permitted by clauses (a) through (e) of SECTION 6.2), and (4) not subject to any Environmental Liability or other event or occurrence which would have a Material Adverse Effect.

     “Unencumbered Leverage Ratio” has the meaning assigned to such term in SECTION 6.1(c).

     “Unsecured Indebtedness” means at any time the aggregate unpaid principal amount of all Indebtedness of the Borrowers and their Subsidiaries, other than (i) Indebtedness of a Subsidiary owing to a Borrower or to a wholly-owned Subsidiary and (ii) Secured Indebtedness.

     “Unused Fee” has the meaning assigned to such term in SECTION 2.12(a).

     “Unused Fee Rate” means 0.50% per annum; provided that during any period beginning on one Calculation Date and ending on the date immediately preceding the next Calculation Date that (a) the Unencumbered Leverage Ratio is less than 5.0 to 1 and (b) no Default or Event of Default has occurred and is continuing, the Unused Fee Rate shall be 0.375%.

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     “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

     SECTION 1.2. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

     SECTION 1.3. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

     SECTION 1.4. Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrowers notify the Administrative Agent that the Borrowers request an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrowers that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

     SECTION 1.5. Joint Venture Investments. For purposes of calculating the financial covenants in SECTION 6.1 (including the definitions used therein), (a) Total EBITDA shall be calculated, to the extent applicable, to include the pro-rata share (as determined by their respective percentage interests in the profits and losses of such Joint Venture) of results attributable to the Borrowers and their Subsidiaries from Joint Ventures and (b) Total Net Debt and Unsecured Indebtedness shall be calculated as follows: (i) if the Indebtedness of a Joint Venture is recourse to a Borrower or one of its Subsidiaries (other than Indebtedness which is recourse only to a special purpose Subsidiary which owns the assets securing such Indebtedness), then Total Net Debt and Unsecured Indebtedness shall include the amount of such Indebtedness that is recourse to such Person, without duplication, and (ii) if the Indebtedness of such Joint Venture is not recourse to a Borrower or one of its Subsidiaries, then Total Net Debt and Unsecured Indebtedness shall include such Person’s pro-rata share of such Indebtedness as determined by its percentage interest in the profits and losses of such Joint Venture. For purposes of this SECTION 1.5, Indebtedness of a Joint Venture that is recourse to a Borrower or one of its Subsidiaries solely as a result of such Person’s being a partner or member in such Joint Venture shall be treated as not.

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recourse to such Person as long as the only assets owned by such Person are its equity interest in such Joint Venture and any contributed capital held to fund such equity interest.

ARTICLE II

THE CREDITS

     SECTION 2.1. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrowers in dollars from time to time and to acquire participations in Swingline Loan and Letters of Credit during the Availability Period in an aggregate principal amount that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the total Revolving Credit Exposures exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.

     SECTION 2.2. Loans and Borrowings. (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments. Each Swingline Loan shall be made in accordance with the procedures set forth in SECTION 2.5. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

     (b) Subject to SECTION 2.14, each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrowers may request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrowers to repay such Loan in accordance with the terms of this Agreement.

     (c) At the commencement of each Interest Period for any Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $2,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by SECTION 2.6(e). Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $500,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of ten (10) Eurodollar Revolving Borrowings outstanding.

     (d) Notwithstanding any other provision of this Agreement, the Borrowers shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

     SECTION 2.3. Requests for Revolving Borrowings. To request a Revolving Borrowing, the Borrowers shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 p.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 p.m., New York City time, one Business Day before the date of the proposed Borrowing; provided that any such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by SECTION 2.6(e) may be given not later than 10:00 a.m., New York City time, on the

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date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request signed by the Borrowers. Each such Borrowing Request, whether telephonic and/or written, shall specify the following information in compliance with SECTION 2.2:

     (i) the aggregate amount of the requested Borrowing;

     (ii) the date of such Borrowing, which shall be a Business Day;

     (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

     (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

     (v) the location and number of a Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of SECTION 2.7.

If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the Borrowers shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this SECTION 2.3, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing. Each such Borrowing Request shall be accompanied by the officer’s certificate required by SECTION 6.1(e).

     SECTION 2.4. [RESERVED]

     SECTION 2.5. Swingline Loans. (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrowers from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $10,000,000 or (ii) the total Revolving Credit Exposures exceeding the total Commitments; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Swingline Loans.

     (b) To request a Swingline Loan, the Borrowers shall notify the Administrative Agent of such request by telephone (confirmed by telecopy in the form of Exhibit B), not later than 12:00 noon, New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the Borrowers. The Swingline Lender shall make each Swingline Loan available to the Borrowers by means of a credit to the general deposit account of the Borrowers with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in SECTION 2.6(e), by remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.

     (c) The Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., New York City time, on any Business Day require the Lenders to acquire

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participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in SECTION 2.7 with respect to Loans made by such Lender (and SECTION 2.7 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders. The Administrative Agent shall notify the Borrowers of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrowers (or other party on behalf of the Borrowers) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Borrowers for any reason. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrowers of any default in the payment thereof.

     SECTION 2.6. Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, the Borrowers may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrowers to, or entered into by the Borrowers with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. On the Effective Date, the letters of credit previously issued by JPMorgan Chase Bank, N.A. and listed on Schedule 2.6 shall be deemed to be Letters of Credit issued under this Agreement.

     (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrowers shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (at least five (5) Business Days in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. Each such notice shall be accompanied by the officer’s certificate required by SECTIONS 4.2(f) and 6.1(e). The Administrative Agent shall promptly advise each Lender of each such notice. If requested by the Issuing Bank, the Borrowers also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A

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Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrowers shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $10,000,000 and (ii) the total Revolving Credit Exposures shall not exceed the total Commitments.

     (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is ten (10) Business Days prior to the Maturity Date; provided, that any Letter of Credit with a one-year term may provide for the automatic renewal thereof for additional one-year periods, so long as such automatic renewal does not extend the expiration date of any such Letters of Credit beyond the date that is ten (10) Business Days prior to the Maturity Date.

     (d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrowers on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrowers for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

     (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrowers shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if the Borrowers shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrowers prior to such time on such date, then not later than 12:00 noon, New York City time, on (i) the Business Day that the Borrowers receive such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrowers receive such notice, if such notice is not received prior to such time on the day of receipt; provided that the Borrowers may, subject to the conditions to borrowing set forth herein, request in accordance with SECTION 2.3 or SECTION 2.5 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the Borrowers’ obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the Borrowers fail to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrowers in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrowers, in the same manner as provided in SECTION 2.7 with respect to Loans made by such Lender (and SECTION 2.7 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative

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Agent of any payment from the Borrowers pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrowers of their obligation to reimburse such LC Disbursement.

     (f) Obligations Absolute. Each Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, a Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrowers to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrowers to the extent permitted by applicable law) suffered by the Borrowers that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

     (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrowers by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrowers of their obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement nor shall the Issuing Bank have any liability whatsoever to the Borrowers or the Lenders for any failure to give such notice.

     (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrowers shall reimburse such LC Disbursement in full on the date such LC Disbursement is

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made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrowers reimburse such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrowers fail to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then SECTION 2.13(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

     (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrowers, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrowers shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to SECTION 2.12(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

     (j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrowers receive notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing at least 50.1% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrowers shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to a Borrower described in clause (h) or (i) of Article VII. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrowers under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrowers’ risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrowers for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure representing at least 50.1% of the total LC Exposure), be applied to satisfy other obligations of the Borrowers under this Agreement. If the Borrowers are required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrowers within three Business Days after all Events of Default have been cured or waived or after all of the Obligations have been paid in full in cash and the Commitments and all Letters of Credit have been terminated.

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     SECTION 2.7. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in SECTION 2.5. The Administrative Agent will make such Loans available to the Borrowers by promptly crediting the amounts so received, in like funds, to an account of a Borrower maintained with the Administrative Agent in New York City and designated by the Borrowers in the applicable Borrowing Request; provided that ABR Revolving Loans or Swingline Loans made to finance the reimbursement of an LC Disbursement as provided in SECTION 2.6(e) shall be remitted by the Administrative Agent to the Issuing Bank.

     (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrowers a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrowers severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrowers to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrowers, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

     SECTION 2.8. Interest Elections. (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Revolving Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrowers may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrowers may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

     (b) To make an election pursuant to this Section, the Borrowers shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under SECTION 2.3 if the Borrowers were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in the form of Exhibit D and signed by the Borrowers.

     (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with SECTION 2.2:

     (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be

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specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

     (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

     (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

     (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrowers shall be deemed to have selected an Interest Period of one month’s duration.

     (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

     (e) If the Borrowers fail to deliver a timely Interest Election Request with respect to a Eurodollar Revolving Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrowers, then, so long as an Event of Default is continuing (i) no outstanding Revolving Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

     SECTION 2.9. Termination and Reduction of Commitments. (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.

     (b) The Borrowers may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000, (ii) the Borrowers shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with SECTION 2.11, the total Revolving Credit Exposures would exceed the total Commitments and (iii) unless the Commitments are reduced to zero, no reduction shall be made which would reduce the Commitments to an amount less than $75,000,000.

     (c) The Borrowers shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrowers pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrowers may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrowers (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

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     (d) Unless a Default or an Event of Default has occurred and is continuing, the Borrowers, by written notice to the Administrative Agent, may request on up to four (4) occasions that the Commitments be increased by an amount not less than $25,000,000 per request and not more than $125,000,000 in the aggregate (such that the total Commitments after all such increases shall never exceed $250,000,000); provided that for any such request the Borrowers and/or the Administrative Agent shall use commercially reasonable efforts to locate additional lenders (which qualify as assignees under SECTION 9.4) reasonably acceptable to the Borrowers and the Administrative Agent or existing Lenders willing to hold commitments for the requested increase. In the event that lenders commit to any such increase, (i) the Commitments of those lenders committing to such increase shall be increased, (ii) the Applicable Percentage of each of the Lenders shall be adjusted according to the increased or new Commitments (or, in the case of a new lender not previously party hereto, added to Schedule 2.1) and the Borrowers shall make such borrowings and repayments as shall be necessary to effect a reallocation of the Revolving Loans, (iii) new or replacement notes shall be issued, and (iv) other changes shall be made by way of supplement, amendment or restatement of any Loan Document as may be necessary or desirable to reflect the aggregate amount, if any, by which Lenders have agreed to increase their respective Commitments or any other lenders (which qualify as eligible assignees under SECTION 9.4) have agreed to make new commitments pursuant to this SECTION 2.9(d), in each case notwithstanding anything in SECTION 9.2(b) to the contrary, without the consent of any Lender other than those Lenders increasing their Commitments. The fees payable by the Borrowers upon any such increase in the Commitments shall be agreed upon by the Administrative Agent and the Borrowers at the time of such increase. Notwithstanding the foregoing, nothing in this SECTION 2.9(d) shall constitute or be deemed to constitute an agreement by any Lender to increase its Commitment hereunder.

Notwithstanding the foregoing, an increase in the aggregate amount of the Commitments shall be effective only if (i) no Default or Event of Default shall have occurred and be continuing on the date such increase is requested and the date such increase is to become effective; (ii) each of the representations and warranties made by the Borrowers in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date such increase is requested and the date such increase is to become effective with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); (iii) the Administrative Agent shall have received (x) such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the authorization of such increase and (y) a favorable written opinion (addressed to the Administrative Agent and the Lenders) of counsel for the Borrowers (which may be an opinion of in-house counsel), after giving effect to such increase; and (iv) the Borrowers shall be in compliance with ARTICLE VI.

     SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) The Borrowers hereby jointly and severally and unconditionally promise to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swingline Loan is made; provided that on each date that a Revolving Borrowing is made, the Borrowers shall repay all Swingline Loans then outstanding.

     (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrowers to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

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     (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

     (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Loans in accordance with the terms of this Agreement.

     (e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrowers shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and the form of Exhibit C. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to SECTION 9.4) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

     (f) So long as no Default or Event of Default has occurred and is continuing, the Borrowers may elect at least thirty (30) days but no more than one hundred and twenty (120) days prior to the Maturity Date, to extend the Maturity Date for one year as provided in this SECTION 2.10(f) by providing written notice of such election to the Administrative Agent (which shall promptly notify each of the Lenders). If on the initial Maturity Date (i) no Default or Event of Default exists and is continuing, (ii) the representations and warranties of the Borrowers set forth in this Agreement are true and correct in all material respects on and as of such date (or, if such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date), (iii) the Borrowers pay to the Administrative Agent, for the pro rata benefit of the Lenders based on their Applicable Percentages, an extension fee equal to 0.25% of the then total Commitments, and (iv) the Borrowers have given written notice to the Administrative Agent of such election to extend the Maturity Date within the time frame set forth in this SECTION 2.10(f), the Maturity Date shall be extended to January 2, 2010.

     SECTION 2.11. Prepayment of Loans. (a) The Borrowers shall have the right at any time and from time to time at its option to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section. The Borrowers shall be required to prepay the Loan to the extent required by SECTION 5.9.

     (b) The Borrowers shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon, New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by SECTION 2.9, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with SECTION 2.9. Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving

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Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in SECTION 2.2. Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by SECTION 2.13.

     SECTION 2.12. Fees. (a) The Borrowers jointly and severally agree to pay to the Administrative Agent for the account of each Lender an unused fee (the “Unused Fee”), which shall accrue at the Unused Fee Rate on the average daily unused amount of the Commitment of such Lender during the period from and including the Closing Date to but excluding the date on which such Commitment terminates. Accrued Unused Fees shall be payable quarterly in arrears on the fifteenth (15^th) day of January, April, July and October of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof. All Unused Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

     (b) The Borrowers jointly and severally agree to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable to Eurodollar Revolving Loans on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within ten (10) days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

     (c) The Borrowers jointly and severally agree to pay to each Lender for its own account an upfront fee equal to 0.375% of its Commitment on the Effective Date, payable on the Effective Date.

     (d) The Borrowers jointly and severally agree to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrowers and the Administrative Agent.

     (e) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of facility fees and participation fees, to the Lenders. Fees paid shall not be refundable under any circumstances.

     SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.

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     (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

     (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrowers hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

     (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon the Maturity Date or other termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Revolving Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

     (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

     SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

     (a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

     (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrowers and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrowers and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted.

     SECTION 2.15. Increased Costs. (a) If any Change in Law shall:

     (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit

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extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or

     (ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrowers will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

     (b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.

     (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

     (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrowers shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

     SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under SECTION 2.11(b) and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrowers pursuant to SECTION 2.19, then, in any such event, the Borrowers

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shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

     SECTION 2.17. Taxes. (a) Any and all payments by or on account of any obligation of the Borrowers hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrowers shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrowers shall make such deductions and (iii) the Borrowers shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

     (b) In addition, the Borrowers shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

     (c) The Borrowers shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrowers hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrowers by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

     (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Borrower to a Governmental Authority, the Borrowers shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

     (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which a Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrowers (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrowers as will permit such payments to be made without withholding or at a reduced rate.

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     (f) If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts pursuant to this SECTION 2.17, it shall pay over such refund to the Borrowers (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrowers under this SECTION 2.17 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrowers, upon the request of the Administrative Agent or such Lender, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This Section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrowers or any other Person.

     SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a) The Borrowers shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under SECTION 2.15, SECTION 2.16, SECTION 2.17, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York or as otherwise directed in writing by the Administrative Agent, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to SECTION 2.15, SECTION 2.16, SECTION 2.17 and SECTION 9.3 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.

     (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

     (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is

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recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrowers pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrowers or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrowers rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrowers in the amount of such participation.

     (d) Unless the Administrative Agent shall have received notice from the Borrowers prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrowers have not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

     (e) If any Lender shall fail to make any payment required to be made by it pursuant to SECTION 2.5(c), SECTION 2.6(d), SECTION 2.6(e), SECTION 2.7(b) or SECTION 2.18(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

     SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under SECTION 2.15, or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to SECTION 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to SECTION 2.15 or SECTION 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrowers hereby jointly and severally agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

     (b) If any Lender requests compensation under SECTION 2.15, or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to SECTION 2.17, or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in SECTION 9.4), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrowers shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and

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participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under SECTION 2.15 or payments required to be made pursuant to SECTION 2.17, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

     SECTION 2.20. Joint and Several Liability of the Borrowers.

     (a) Each of the Borrowers is accepting joint and several liability hereunder in consideration of the financial accommodation to be provided by the Lenders under this Agreement, for the mutual benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings of each of the Borrowers to accept joint and several liability for the obligations of each of them.

     (b) Each of the Borrowers jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrower with respect to the payment and performance of all of the Obligations arising under this Agreement and the other Loan Documents, it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each of the Borrowers without preferences or distinction among them.

     (c) If and to the extent that either of the Borrowers shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event, the other Borrower will make such payment with respect to, or perform, such Obligation.

     (d) The obligations of each Borrower under the provisions of this SECTION 2.20 constitute full recourse obligations of such Borrower, enforceable against it to the full extent of its properties and assets.

     (e) Except as otherwise expressly provided herein, to the extent permitted by law, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of occurrence of any Default or Event of Default (except to the extent notice is expressly required to be given pursuant to the terms of this Agreement), or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by the Administrative Agent or the Lenders under or in respect of any of the obligations hereunder, any requirement of diligence and, generally, all demands, notices and other formalities of every kind in connection with this Agreement. Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by the Administrative Agent or the Lenders at any time or times in respect of any default by either Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by the Administrative Agent or the Lenders in respect of any of the obligations hereunder, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of such obligations or the addition, substitution or release, in whole or in part, of either Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or any failure to act on the part of the Administrative Agent or the Lenders, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder which might, but for the provisions of

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this SECTION 2.20, afford grounds for terminating, discharging or relieving such Borrower, in whole or in part, from any of its obligations under this SECTION 2.20, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the obligations of such Borrower under this SECTION 2.20 shall not be discharged except by performance and then only to the extent of such performance. The obligations of each Borrower under this SECTION 2.20 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to either Borrower or a Lender. The joint and several liability of the Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of either Borrower or any of the Lenders.

     (f) The provisions of this SECTION 2.20 are made for the benefit of the Lenders and their successors and assigns, and may be enforced by them from time to time against either of the Borrowers as often as occasion therefor may arise and without requirement on the part of the Lenders first to marshal any of its claims or to exercise any of its rights against the other Borrower or to exhaust any remedies available to it against the other Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this SECTION 2.20 shall remain in effect until all the Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations is rescinded or must otherwise be restored or returned by the Lenders upon the insolvency, bankruptcy or reorganization of either of the Borrowers, or otherwise, the provisions of this SECTION 2.20 will forthwith be reinstated and in effect as though such payment had not been made.

     (g) Notwithstanding any provision to the contrary contained herein or in any of the other Loan Documents, to the extent the obligations of either Borrower shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of such Borrower hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code).

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     Each Borrower represents and warrants to the Lenders, as of Effective Date and the date of each Credit Event hereunder that:

     SECTION 3.1. Organization; Powers. (a) Each of the Borrowers and its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

     (b) FelCor Trust qualified as a real estate investment trust under the provisions of subchapter M of the Code for its fiscal years ended December 31, 1994 through December 31, 2004. No tax return has been examined and reported on by the Internal Revenue Service. FelCor Trust has not incurred any liability for excise taxes pursuant to Section 4981 of the Code. Each Subsidiary of FelCor Trust is either a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code, a partnership or a disregarded entity under Treasury Regulation Section 301.7701-3, or a taxable REIT subsidiary within the meaning of Section 856(i) of the Code.

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     SECTION 3.2. Authorization; Enforceability. The Transactions are within each Borrower’s and each Subsidiary Guarantor’s corporate, partnership, limited liability company or trust powers and have been duly authorized by all necessary corporate, partnership, limited liability company or trust and, if required, stockholder or other equity holder action. Each of this Agreement and the other Loan Documents has been duly executed and delivered by each Borrower and each Subsidiary Guarantor party thereto and constitutes a legal, valid and binding obligation of each Borrower and each Subsidiary Guarantor, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

     SECTION 3.3. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation (including Regulations T, U or X) or the charter, by-laws or other organizational documents of the Borrowers or any of its Subsidiaries or any order, writ, judgment, injunction, decree or permit of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrowers or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Borrowers or any of their Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrowers or any of their Subsidiaries.

     SECTION 3.4. Financial Condition; No Material Adverse Change. (a) The Borrowers have heretofore furnished to the Lenders its consolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended December 31, 2004, reported on by PricewaterhouseCoopers LLP independent public accountants, and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended September 30, 2005, certified by its chief financial officer. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrowers and their consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.

     (b) Since December 31, 2004, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Borrowers and their Subsidiaries, taken as a whole.

     SECTION 3.5. Properties. (a) Each of the Borrowers and their Subsidiaries has good and marketable title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes, and none of such properties is subject to any Lien prohibited by this Agreement.

     (b) Each of the Borrowers and their Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrowers and their Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

     (c) Each of the Borrowers and their Subsidiaries has obtained, and holds in full force and effect, all franchises, licenses, permits, certificates, authorizations, qualifications, accreditations, easements, rights of way and other rights, consents and approvals which are necessary for the operation of

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its respective businesses as presently conducted, except where the failure to obtain or maintain the same would not have or would not reasonably be expected to have a Material Adverse Effect.

     SECTION 3.6. Litigation and Environmental Matters. (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of a Borrower, threatened against or affecting a Borrower or any of their Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve this Agreement, the other Loan Documents or the Transactions.

     (b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither a Borrower nor any of their Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

     (c) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

     SECTION 3.7. Compliance with Laws and Agreements. Each of the Borrowers and their Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. Neither the Borrowers nor any of their Subsidiaries is in default in any respect under any contract, lease, loan agreement, indenture, mortgage, security agreement or other agreement or obligation to which it is a party or by which any of its properties is bound which default would have or would be reasonably expected to have a Material Adverse Effect.

     SECTION 3.8. Investment and Holding Company Status. Neither a Borrower nor any of their Subsidiaries is (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.

     SECTION 3.9. Taxes. Each of the Borrowers and their Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

     SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $1,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on

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the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $1,000,000 the fair market value of the assets of all such underfunded Plans.

     SECTION 3.11. Disclosure. The Borrowers have disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information (including the financial projections) furnished by or on behalf of the Borrowers to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrowers represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

     SECTION 3.12. Indebtedness. (a) As of the date hereof and except as set forth on Schedule 3.12, the Borrowers and their Subsidiaries have no outstanding Indebtedness (other than inter-company indebtedness). As of the date hereof, all Indebtedness on Schedule 3.12 is permitted by this Agreement. Neither a Borrower nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of such Borrower or such Subsidiary, and no event or condition exists with respect to any Indebtedness of a Borrower or any Subsidiary, that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

     (b) Except as disclosed in Schedule 3.12, neither a Borrower nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by SECTION 6.2.

     SECTION 3.13. Ownership; Organization Structure; Subsidiaries. As of the date hereof, (a) Schedule 3.13 is a complete and accurate (i) list of the Borrowers and their Subsidiaries, showing the correct name of each Subsidiary, its jurisdiction of organization and the percentage of shares of each class of its Equity Interests outstanding owned by the Borrowers and each other Subsidiary, and (ii) list of the Borrowers’ Affiliates, other than the Subsidiaries, (b) except as set forth on Schedule 3.13, the Borrowers do not have any Subsidiaries or own any interest, directly or indirectly, in any joint venture and (c) no Person (including any Affiliates of such Person) owns, beneficially or of record, directly or indirectly, Equity Interests of a Borrower representing 30% or more in the aggregate of the outstanding Equity Interests of such Borrower. The outstanding Equity Interests of the Borrowers and all of the Subsidiaries are validly issued, fully paid and non-assessable and are owned by such entity free and clear of all Liens, except for Liens permitted by clauses (a) through (e) of SECTION 6.2 with respect to Equity Interests in Subsidiaries.

     SECTION 3.14. Solvency. Each Borrower is and, after consummation of the transactions contemplated by this Agreement, will be Solvent.

     SECTION 3.15. Location of Assets; Unencumbered Assets. As of the Effective Date, set forth on Schedule 3.15 is (a) a list of all properties of the Borrowers and their Subsidiaries (with the city and state where located) and the ownership interests of the Borrowers in such property and (b) a list of all Unencumbered Assets and the owner or ground-lessee of each such Unencumbered Asset. All such

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Unencumbered Assets satisfy the requirements for an Unencumbered Asset, set forth in the definition thereof. Schedule 3.15 shall be updated as of the end of each fiscal quarter as set forth in SECTION 5.1(c); provided that the owner or ground-lessee of an Unencumbered Asset need only be listed on such updated Schedule 3.15 if it is a new Unencumbered Asset.

     SECTION 3.16. No Burdensome Restrictions. Neither a Borrower nor any Subsidiary is a party to any agreement or instrument or subject to any other obligation or any charter or corporate restriction or any provision of any applicable law, rule or regulation (i) which, individually or in the aggregate, would have or would be reasonably expected to have a Material Adverse Effect or (ii) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Borrowers or any Subsidiaries that own outstanding shares of capital stock or similar equity interests in such Subsidiary.

     SECTION 3.17. Insurance. The insurance policies and programs in effect as of the Effective Date and thereafter with respect to the properties, assets and business of the Borrowers and the Subsidiaries are in compliance with SECTION 5.5.

     SECTION 3.18. Use of Proceeds; Margin Stock. The Borrowers will use the proceeds of the Loans (including any Letters of Credit) for acquisitions and other general working capital purposes of the Borrowers and their Subsidiaries. No part of the proceeds of any Loan or the issuance of any Letter of Credit will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.

     SECTION 3.19. Foreign Asset Control Regulations. Neither making of the Loans to the Borrowers, the issuance of any Letters of Credit, nor the Borrowers’ use of the proceeds of the Loans will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, including without limitation Executive Order 13224 66 Fed. Reg. 49079 (September 25, 2001) (Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit or Support Terrorism), or the Act.

ARTICLE IV

CONDITIONS

     SECTION 4.1. Effective Date. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with SECTION 9.2):

     (a) The Administrative Agent (or its counsel) shall have received from each party to this Agreement and each other Loan Document either (i) a counterpart of this Agreement or such Loan Document signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy or electronic transmission of a signed signature page of this Agreement or such Loan Document) that such party has signed a counterpart of this Agreement or such Loan Document.

     (b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Jenkens & Gilchrist, a Professional Corporation, and of Miles & Stockbridge, P.C., United States counsel for the Borrowers and the Subsidiary Guarantors, and of Canadian counsel for the Canadian Subsidiary Guarantor, covering such matters relating to the Borrowers, the Subsidiary Guarantors, this Agreement,

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the other Loan Documents or the Transactions as the Required Lenders shall reasonably request. The Borrowers hereby request such counsel to deliver such opinion.

     (c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrowers and the Subsidiary Guarantors, the authorization of the Transactions and any other legal matters relating to the Borrowers, the Subsidiary Guarantors, this Agreement, the other Loan Documents or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel.

     (d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of a Borrower, confirming compliance with the conditions set forth in paragraphs (a) and (b) of SECTION 4.2.

     (e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrowers hereunder.

     (f) The Administrative Agent shall have received an officer’s certificate duly executed by the President, Vice President or a Financial Officer of a Borrower certifying as to pro forma compliance with the financial covenants in SECTION 6.1 as of the Effective Date (taking into account any Borrowings to be made on such date).

     (g) The Administrative Agent shall have received satisfactory financial statements of the type described in SECTION 5.1(a) for the 2003 and 2004 fiscal years of the Borrowers and satisfactory financial statements of the type described in SECTION 5.1(b) for the quarter ended September 30, 2005.

     (h) The Administrative Agent shall have received satisfactory evidence of the repayment in full and termination of the Borrower’s Term Credit Agreement dated as of October 18, 2005 among the FelCor Partnership and certain of its Subsidiaries, Citicorp North America, Inc., as administrative agent and certain other parties.

The Administrative Agent shall notify the Borrowers and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to SECTION 9.2) at or prior to 3:00 p.m., New York City time, on January 15, 2006 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

     SECTION 4.2. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit (each, a “Credit Event”), is subject to the satisfaction of the following conditions:

     (a) After giving effect to such Credit Event, the representations and warranties of the Borrowers set forth in this Agreement shall be true and correct on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable (or if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

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     (b) At the time of and immediately after giving effect to such Credit Event, no Default shall have occurred and be continuing or would occur as a result of such Credit Event.

     (c) No change in the business, assets, management, operations, financial condition or prospects of the Borrowers and their Subsidiaries or any of their respective properties shall have occurred since December 31, 2004 which change will have or could have a Material Adverse Effect.

     (d) The Administrative Agent shall have received a Borrowing Request or a request for issuance, amendment, renewal or extension of a Letter of Credit, as applicable.

     (e) No law, regulation or order of any Governmental Authority shall prohibit enjoin or restrain any Lender from such Credit Event, as reasonably determined by such Lender.

     (f) The Administrative Agent shall have received an officer’s certificate duly executed by the President, Vice President or a Financial Officer of a Borrower certifying as to pro forma compliance with the financial covenants required by SECTION 6.1(e) as of the Effective Date (taking into account the requested Credit Event).

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrowers on the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section.

ARTICLE V

AFFIRMATIVE COVENANTS

     Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, each Borrower covenants and agrees with the Lenders that:

     SECTION 5.1. Financial Statements; Ratings Change and Other Information. The Borrowers will furnish to the Administrative Agent and each Lender:

     (a) within 90 days after the end of each fiscal year of the Borrowers, their audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by PricewaterhouseCoopers LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrowers and their consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

     (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrowers, their consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrowers and their consolidated Subsidiaries on a consolidated basis in accordance

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with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

     (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of a Borrower in the form of Exhibit F hereto (i) certifying that such Financial Officer has reviewed the terms of the Loan Documents, and has made, or caused to be made, under his or her supervision, a review in reasonable detail of the consolidated financial condition of the Borrowers and the Subsidiaries during the period covered by such reports, (ii) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed calculations demonstrating compliance with SECTION 6.1 and SECTION 6.8, (iv) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in SECTION 3.4 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate and (v) containing updates of Schedule 3.15;

     (d) to the extent not publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrowers or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by a Borrower to its shareholders generally, as the case may be;

     (e) promptly following any request therefor, all such financial information regarding the Borrowers and the Subsidiaries and specifically regarding the properties and assets of the Borrowers and the Subsidiaries, as the Administrative Agent or Lenders shall reasonably request, including, but not limited to, partnership, limited liability company and joint venture agreements, property cash flow projections, property budgets, actual and budgeted capital expenditures, operating statements (current year and immediately preceding year, if applicable), operating performance statistics and mortgage information; and

     (f) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of a Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.

     SECTION 5.2. Notices of Material Events. The Borrowers will furnish to the Administrative Agent and each Lender prompt written notice of the following:

     (a) the occurrence of any Default;

     (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting a Borrower or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;

     (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrowers and their Subsidiaries in an aggregate amount exceeding $5,000,000; and

     (d) any other development (including the occurrence of an Environmental Liability) that results in, or could reasonably be expected to result in, a Material Adverse Effect.

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Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of a Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

     SECTION 5.3. Existence; Conduct of Business. Each Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under SECTION 6.2(a) or any such action with respect to any Subsidiary (other than a Subsidiary Guarantor) that could not reasonably be expected to result in a Material Adverse Effect. Without limiting the generality of the foregoing, FelCor Trust will do all things necessary to maintain its status as a REIT and its listing on the New York Stock Exchange.

     SECTION 5.4. Payment of Obligations. Each Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) such Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

     SECTION 5.5. Maintenance of Properties; Insurance. Each Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition in the ordinary course of its business, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.

     SECTION 5.6. Books and Records; Inspection Rights. Each Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Each Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

     SECTION 5.7. Compliance with Laws. Each Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, including Environmental Laws, and with all contractual obligations, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

     SECTION 5.8. Use of Proceeds and Letters of Credit. The proceeds of the Loans and the Letters of Credit will be used only for the financing of the working capital needs (including acquisitions) of the Borrowers and their Subsidiaries and for general corporate purposes (including payment, prepayment and refinancing of Indebtedness to the extent otherwise permitted by this Agreement). No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.

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     SECTION 5.9. Notices of Asset Sales or Dispositions . The Borrowers shall deliver to the Administrative Agent and the Lenders written notice not less than five (5) Business Days prior to a sale, transfer, granting of a Lien to secure Indebtedness on, or other disposition of an Unencumbered Asset, in a single transaction or series of related transactions, for consideration in excess of $15,000,000. In addition, simultaneously with delivery of any such notice, the Borrowers shall deliver to the Administrative Agent a certificate of a Financial Officer certifying that the Borrowers are in compliance with this Agreement and the other Loan Documents both on a historical basis and on a pro forma basis, exclusive of the property sold, transferred or encumbered with a Lien (or will be after making the required prepayments described in the next paragraph).

     To the extent such proposed transaction would result in a failure to comply with the covenants set forth herein, the Borrowers shall apply the proceeds of such transaction (together with such additional amounts as may be required), to prepay the Obligations in an amount, as determined by the Administrative Agent, equal to that which would be required to reduce the Obligations so that Borrowers will be in compliance with the covenants set forth herein upon the consummation of the contemplated transaction.

     SECTION 5.10. Further Assurances. Each Borrower will cooperate with, and will cause each Subsidiary to cooperate with, the Administrative Agent and the Lenders and execute such further instruments and documents as the Lenders or the Administrative Agent shall reasonably request to carry out to their reasonable satisfaction the Transactions contemplated by this Agreement and the other Loan Documents.

     SECTION 5.11. Distributions in the Ordinary Course. In the ordinary course of business each Borrower causes all of the Subsidiaries to make transfers of net cash and cash equivalents upstream to the Borrowers (other than amounts held by Subsidiaries as tenant deposits and for reserves, capital expenditures, leasing commissions, tenant improvements and other working capital purposes), and each Borrower shall continue to follow such ordinary course of business. The Borrowers shall not make net transfers of cash and cash equivalents downstream to the Subsidiaries except in the ordinary course of business consistent with past practice.

     SECTION 5.12. ERISA Compliance. Each Borrower shall, and shall cause each of its Subsidiaries and ERISA Affiliates to, establish, maintain and operate all Plans to comply in all material respects with the provisions of ERISA, the Code, all other applicable laws, and the regulations and interpretations thereunder and the respective requirements of the governing documents for such Plans.

     SECTION 5.13. Additional Subsidiary Guarantors; Release of Subsidiary Guarantors.

     (a) If, after the Closing Date, a Subsidiary of the Borrowers that is not a Subsidiary Guarantor (i) acquires any real property asset that then or thereafter qualifies under the definition of Unencumbered Asset and such real property asset is directly or indirectly wholly-owned or ground leased by a Borrower or (ii) provides a Guarantee of the Senior Unsecured Notes or any other Indebtedness of the Borrowers, the Borrowers shall cause such Person to execute and deliver a Subsidiary Guaranty to the Administrative Agent and the Lenders in substantially the form of Exhibit E hereto; provided that a Subsidiary that owns or ground-leases an Unencumbered Asset shall not be required to execute and deliver a Subsidiary Guaranty so long as the aggregate book value of all Unencumbered Properties owned or ground leased by Subsidiaries that are not Subsidiary Guarantors does not exceed 2% of Total Unencumbered Assets. Such Subsidiary Guaranty shall evidence consideration and equivalent value.

     (b) The Borrowers each acknowledge that, subject to the indefeasible payment and performance in full of the Obligations, the rights of contribution among each of them and the Subsidiary

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Guarantors are in accordance with applicable laws and in accordance with each such Person’s benefits under the Loans and this Agreement. The Borrowers further acknowledge that, subject to the indefeasible payment and performance in full of the Obligations, the rights of subrogation of the Subsidiary Guarantors as against the Borrowers are in accordance with applicable laws.

     (c) Other than during the continuance of a Default or Event of Default, at the request of the Borrowers following the delivery of the certificate of an Authorized Officer in accordance with SECTION 5.9 hereof, the Subsidiary Guaranty of any Subsidiary Guarantor shall be released by the Administrative Agent if and when (i) all of the real property assets owned or ground-leased by such Subsidiary Guarantor shall cease (not thereby creating a Default or Event of Default) to be an Unencumbered Asset which is wholly-owned by the Borrowers or any of their Subsidiaries and (ii) any and all Guarantees of the Senior Unsecured Notes and other Indebtedness of the Borrowers provided by such Subsidiary Guarantor have been terminated or are being terminated concurrently with such release.

ARTICLE VI

NEGATIVE COVENANTS

     Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, each Borrower covenants and agrees with the Lenders that:

     SECTION 6.1. Financial Covenants and Other Covenants.

     (a) Leverage Ratio. As of the last day of any fiscal quarter of the Borrowers, the Borrowers will not permit the ratio of Total Net Debt to Total EBITDA for the period of four (4) consecutive fiscal quarters ending on such date (the “Leverage Ratio”) to exceed: (a) 7.0 to 1.0 from the Closing Date through June 30, 2007 and (b) 5.75 to 1.0 thereafter.

     (b) Fixed Charge Coverage. The Borrowers will not permit the ratio of (i) Total EBITDA for any period of four (4) consecutive fiscal quarters of the Borrowers to (ii) Fixed Charges for such period to be less than: (a) 1.35 to 1.0 from the Closing Date through June 30, 2007 and (b) 1.5 to 1.0 thereafter.

     (c) Total Unsecured Indebtedness. As of the last day of any fiscal quarter of the Borrowers, the Borrowers will not permit the ratio of Unsecured Indebtedness to Total EBITDA for Unencumbered Assets for the period of four (4) consecutive fiscal quarters ending on such date (the “Unencumbered Leverage Ratio”) to exceed: (a) 7.25 to 1.0 from the Closing Date through June 30, 2007 and (b) 6.25 to 1.0 thereafter; provided that for purposes of calculating the Unencumbered Leverage Ratio, the aggregate amount of Total EBITDA for Unencumbered Assets attributable to Unencumbered Assets that are not 100% owned by the Borrowers or a Subsidiary Guarantor that is 100% owned by a Borrower shall be limited to 10% of Total EBITDA for Unencumbered Assets unless the Person which owns such Unencumbered Asset provides a Subsidiary Guaranty.

     (d) Maximum Dividend Payout Ratio. The Borrowers shall not make any Restricted Payments after the occurrence and during the continuance of an Event of Default, unless such Restricted Payments are necessary for FelCor Trust to maintain its status as a REIT, and then only in the minimum amount necessary to maintain such status as a REIT.

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     (e) Pro Forma Calculations. The Borrowers shall comply with the financial ratios set forth in SECTION 6.1(a), SECTION 6.1(b) and SECTION 6.1(c) as of the date of each Borrowing. The Borrowers shall recalculate such financial ratios by adding the amount equal to the Indebtedness associated with such Borrowing to the Indebtedness reflected on the most recently available financial statements, and adding thereto any Indebtedness incurred since the date of such financial statement (less any Indebtedness repaid, retired, or forgiven during such period) and adding thereto the proforma EBITDA of such assets acquired with such Indebtedness to Total EBITDA (less the EBITDA of any assets sold during such period). The Borrowers shall deliver an officer’s certificate, signed by the Financial Officer of a Borrower, certifying that the pro forma calculations as of the date of such Borrowing demonstrate the Borrowers’ compliance with the covenants and financial ratios set forth in SECTION 6.1(a), SECTION 6.1(b) and SECTION 6.1(c).

     (f) Covenant Calculations. For purposes of the calculations to be made pursuant to SECTION 6.1 (a) through (c) (and the definitions used therein), (1) the relevant financial statements and terms will exclude the effects of consolidation of investments in non-wholly owned subsidiaries under Interpretation No. 46 of the Financial Accounting Standards Board and (2) SECTION 1.5 shall apply to investments in Joint Ventures.

     SECTION 6.2. Liens. The Borrowers will not, and will not permit any Subsidiary to, directly or indirectly, create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any property (including, without limitation, any document or instrument in respect of goods or accounts receivable) or asset now owned or hereafter acquired by it, or assign, convey or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

     (a) Liens for taxes, assessments or other governmental charges that are not yet due and payable or are being contested in compliance with SECTION 5.4;

     (b) any attachment or judgment Lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay;

     (c) Liens incidental to the conduct of business or the ownership of properties and assets (including landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s and other similar Liens for sums not yet due and payable) and Liens to secure the performance of bids, tenders, leases, or trade contracts, or to secure statutory obligations (including obligations under workers compensation, unemployment insurance and other social security legislation), surety or appeal bonds or other Liens incurred in the ordinary course of business and not in connection with the borrowing of money; provided that such Liens do not, in the aggregate, materially detract from the value of all property of the Borrowers and the Subsidiaries taken as a whole;

     (d) leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances, in each case incidental to the ownership of property or assets or the ordinary conduct of the business of the Borrowers or any of their Subsidiaries, provided that such Liens do not, in the aggregate, materially detract from the value of all property of the Borrowers and their Subsidiaries taken as a whole;

     (e) Liens securing Indebtedness of a Subsidiary to a Borrower or to a wholly-owned Subsidiary of a Borrower; or

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     (f) Liens on assets securing Secured Indebtedness, so long as (i) the incurrence of such Secured Indebtedness is not prohibited by Article VI and (ii) if such Lien is on an Unencumbered Property, the Borrowers comply with SECTION 5.9 and no Default or Event of Default exists or would exist after giving effect thereto.

     SECTION 6.3. Fundamental Changes; Governing Documents. (a) The Borrowers will not, and will not permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or any substantial part of its assets, or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Person may merge into a Borrower in a transaction in which such Borrower is the surviving Person, (ii) any Person may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to a Borrower or to another Subsidiary, (iv) any Subsidiary may sell, transfer or lease all or substantially all of its assets and a Borrower may sell or transfer all or substantially all of the Equity Interests of any Subsidiary in compliance with SECTION 6.6 and (v) any Subsidiary may liquidate or dissolve if the Borrowers determine in good faith that such liquidation or dissolution is in the best interests of the Borrowers and is not materially disadvantageous to the Lenders.

     (b) The Borrowers will not, and will not permit any of their Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by the Borrowers and their Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto.

     (c) The Borrowers will not and will not permit their or their Subsidiaries’ certificate of formation, limited liability company agreement, certificate of limited partnership, partnership agreement, articles of incorporation, by-laws, or other charter documents, as the case may be, to be modified, amended or supplemented in any respect whatsoever, without, in each case, the express prior written consent or approval of the Required Lenders, if such changes would materially adversely affect the rights of the Administrative Agent or the Lenders hereunder or under any of the other Loan Documents.

     SECTION 6.4. Indebtedness. Neither a Borrower nor any of its Subsidiaries shall directly or indirectly create, incur, assume or otherwise become directly or indirectly liable with respect to any Indebtedness if (i) a Default or an Event of Default has occurred and is continuing, or (ii) such incurrence would cause a Default or Event of Default hereunder; provided that the Borrowers may incur Indebtedness during the continuance of a Default or an Event of Default only if such Indebtedness is applied to the repayment in full of the Obligations and the Commitments are terminated.

     SECTION 6.5. Transactions with Affiliates. The Borrowers will not, and will not permit any of their Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any material property or assets from, or otherwise engage in any other material transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrowers or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among a Borrower and its Subsidiaries in which such Borrower owns at least 90% of the equity interests and which do not involve any other Affiliate and (c) any Restricted Payments permitted by SECTION 6.1(d).

     SECTION 6.6. Asset Sales and Disposition of Assets. The Borrowers will not, and will not permit any Subsidiary to, sell, transfer or otherwise dispose of any asset unless (a) the Borrowers

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comply with SECTION 5.9, to the extent applicable, and (b) no Default or Event of Default exists or would exist after giving effect thereto.

     SECTION 6.7. Negative Pledge; Restrictive Agreements. From and after the Effective Date, the Borrowers shall not enter into or permit to exist, and will not permit any Subsidiary to enter into or permit to exist, any agreement or arrangement (i) containing any provision prohibiting or restricting the creation or assumption of any Lien upon its properties (other than (a) mechanics liens or judgment liens more than 30 days past due, and (b) with respect to prohibitions on liens set forth in a mortgage on a particular property), revenues or assets, whether now owned or hereafter acquired, or (ii) prohibiting or restricting the ability of such Person to amend or modify this Agreement or any other Loan Document, or (iii) prohibiting or restricting the ability of any Subsidiary to make or pay dividends or distributions to the Borrowers (other than restrictions on dividends and distributions by a particular Subsidiary set forth in an agreement for Secured Indebtedness entered into by such Subsidiary).

     SECTION 6.8. Restricted Investments; Acquisitions. The Borrowers will not, and will not permit any Subsidiary to, (i) make any Restricted Investment if, after giving effect thereto, the aggregate amount of Restricted Investments held by the Borrowers and their Subsidiaries would exceed 25% of Total Assets or (ii) make any Investments in Condominium Developments, if after giving effect thereto, the aggregate amount of Investments in Condominium Developments held by the Borrowers and their Subsidiaries would exceed 10% of Total Assets. For purposes of this Section, an Investment shall be valued at the greater of (i) cost and (ii) the value at which such Investment is to be shown on the books of the Borrowers and their Subsidiaries in accordance with GAAP. In addition, the Borrowers will not, and will not permit their Subsidiaries to, make any acquisition of assets if a Default or an Event of Default has occurred and is continuing, or would occur after giving effect thereto.

     SECTION 6.9. Fiscal Year. The Borrowers shall not, and shall not permit any Subsidiary to, change its Fiscal Year for accounting or tax purposes from a period consisting of the 12-month period ending on December 31 of each calendar year.

     SECTION 6.10. Margin Regulations; Securities Laws. Neither a Borrower nor any of the Subsidiaries shall use all or any portion of the proceeds of any credit extended under this Agreement to purchase or carry Margin Stock.

     SECTION 6.11. ERISA. The Borrowers shall not and shall not permit any Subsidiary or other ERISA Affiliate of the Borrowers to:

     (a) engage in any prohibited transaction described in Sections 406 of ERISA or 4975 of the Internal Revenue Code for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the Department of Labor, except to the extent engaging in such transaction would not have a Material Adverse Effect;

     (b) permit to exist any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of the Code), with respect to any Plan, whether or not waived;

     (c) terminate any Plan which could reasonably result in any liability of a Borrower or any ERISA Affiliate under Title IV of ERISA exceeding $5,000,000;

     (d) fail to make any contribution or payment to any Multiemployer Plan which a Borrower or any ERISA Affiliate may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto, except to the extent such failure would not have a Material Adverse Effect;

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     (e) fail to pay any required installment or any other payment required under Section 412 of the Code on or before the due date for such installment or other payment;

     (f) amend a Plan resulting in an increase in current liability for the plan year such that a Borrower or any ERISA Affiliate is required to provide security to such Plan under Section 401(a)(29) of the Code; or

     (g) take or omit to take any action that would cause the assets of a Borrower or its Subsidiaries to constitute “plan assets” within the meaning of 29 C.F.R. Section 2510.3-101 of one or more “employee benefit plans” as defined in Section 3(3) of ERISA, subject to Title I of ERISA or Section 4975 of the Code.

ARTICLE VII

EVENTS OF DEFAULT

     If any of the following events (“Events of Default”) shall occur:

     (a) the Borrowers shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

     (b) the Borrowers shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article VII) payable under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three (3) days;

     (c) any representation or warranty made or deemed made by or on behalf of a Borrower or any Subsidiary in or in connection with this Agreement or any other Loan Documents or any amendment or modification hereof or thereof or waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any amendment or modification hereof or waiver hereunder, shall prove to have been incorrect in any material respect when made or deemed made;

     (d) a Borrower or any Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in SECTION 5.2, SECTION 5.3 (with respect to a Borrower’s existence) or SECTION 5.8 or in ARTICLE VI;

     (e) a Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article VII), and such failure shall continue unremedied for a period of thirty (30) days after the earlier of a Borrower’s becoming aware of such default or notice thereof from the Administrative Agent to the Borrowers (which notice will be given at the request of any Lender);

     (f) a Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable;

     (g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or

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their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to Secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness or to the voluntary prepayment of Indebtedness that is permitted by this Agreement;

     (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of a Borrower or any Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for a Borrower or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

     (i) a Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for a Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

     (j) a Borrower or any Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

     (k) one or more judgments for the payment of money (other than in respect of Non-Recourse Indebtedness) in an aggregate amount in excess of $10,000,000 shall be rendered against a Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of a Borrower or any Subsidiary to enforce any such judgment; provided that any such judgment shall not give rise to an Event of Default under this Section VII(k) if and for so long as the amount of such judgment is fully covered by a valid and binding insurance policy in favor of such Borrower or Subsidiary and the insurer under such policy has been notified of, and has not disputed the claim made for, such judgment;

     (l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect;

     (m) FelCor Trust shall cease to own directly or indirectly at least 80% of the aggregate Equity Interests in FelCor Partnership, or

     (n) a Change in Control shall occur;

then, and in every such event (other than an event with respect to a Borrower described in clause (h) or (i) of this Article VII), and at any time thereafter during the continuance of such event, the Administrative Agent shall, at the request of the Required Lenders, by notice to the Borrowers, take any or all of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, (ii) declare the Loans then outstanding to be due and payable

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in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers, and (iii) enforce any rights and exercise any remedies available under any Loan Document or otherwise; and in case of any event with respect to a Borrower described in clause (h) or (i) of this Article VII, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

     Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.

     The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with a Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

     The Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in SECTION 9.2), and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrowers or any of their Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in SECTION 9.2) or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by a Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

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     The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

     The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

     Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrowers. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrowers, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and SECTION 9.3 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

     Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder.

ARTICLE IX

MISCELLANEOUS

     SECTION 9.1. Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

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     (i) if to a Borrower, to it at 545 E. John Carpenter Freeway, Suite 1300, Irving, Texas 75062, Attention of the Treasurer, with a copy to the General Counsel, (Telecopy No. (972) 444-4949);

     (ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 1111 Fannin Street, 10^th Floor, Houston, Texas 77002, (Telecopy No. (713) 750-2892), with a copy to JPMorgan Chase Bank, N.A., 277 Park Avenue, New York, New York 10172, Attention of Donald Shokrian (Telecopy No. (646) 534-0574);

     (iii) if to the Issuing Bank, to JPMorgan Chase Bank, N.A., 270 Park Avenue, 15^th Floor, New York, New York 10017, Attention of Daniella Cassagnol (Telecopy No. (212) 270-3513);

     (iv) if to the Swingline Lender to JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 1111 Fannin Street, 10^th Floor, Houston, Texas 77002, (Telecopy No. (713) 750-2892); and

     (v) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

     (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrowers may, in their discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

     (c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

     SECTION 9.2. Waivers; Amendments. (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrowers therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.

     (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required Lenders or by the Borrowers and the Administrative Agent with the consent of the Required

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Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, or permit the expiration date of any Letter of Credit to be after the Maturity Date, without the written consent of each Lender affected thereby other than as expressly permitted in SECTION 2.10(f) with respect to the one-year extension of the Maturity Date, (iv) change SECTION 2.18(b) or SECTION 2.18(c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender, or (vi) release a Borrower of its obligations hereunder or release any Subsidiary Guaranty (if provided), without the consent of each Lender, provided that the Administrative Agent may confirm release of a Subsidiary Guaranty in accordance with SECTION 5.13; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Issuing Bank or the Swingline Lender hereunder without the prior written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be. Notwithstanding the foregoing, the total Commitments may be increased as provided in SECTION 2.9(d) with only the consent of the Administrative Agent and those Lenders which are increasing their respective Commitments.

     SECTION 9.3. Expenses; Indemnity; Damage Waiver. (a) The Borrowers shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

     (b) The Borrowers shall indemnify the Administrative Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrowers or any of their Subsidiaries, or any Environmental Liability related in any way to the Borrowers or any of its

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Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

     (c) To the extent that the Borrowers fail to pay any amount required to be paid by it to the Administrative Agent, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Issuing Bank or the Swingline Lender in its capacity as such.

     (d) To the extent permitted by applicable law, the Borrowers shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

     (e) All amounts due under this Section shall be payable promptly after written demand therefor.

     SECTION 9.4. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) a Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by a Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

     (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:

          (A) the Borrowers, provided that no consent of the Borrowers shall be required for an assignment to a Lender or an Affiliate of a Lender, or, if an Event of Default has occurred and is continuing, any other assignee; and

          (B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment to an Affiliate of a Lender so long as the Lender gives the Administrative Agent prior written notice of such transfer; and

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          (C) the Issuing Bank, provided that no consent of the Issuing Bank shall be required for an assignment to an Affiliate of a Lender so long as the Lender gives the Administrative Agent prior written notice of such transfer.

      (i) Assignments shall be subject to the following additional conditions:

          (A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrowers and the Administrative Agent otherwise consent, provided that no such consent of the Borrowers shall be required if an Event of Default under clause (a), (b), (h) or (i) of Article VII has occurred and is continuing;

          (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;

          (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 (except that such fee shall not be payable for an assignment by a Lender to its Affiliate); and

          (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

      (ii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of SECTION 2.15, SECTION 2.16, SECTION 2.17 and SECTION 9.3). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this SECTION 9.4 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

      (iii) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrowers, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for

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all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrowers, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

      (iv) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c) (i) Any Lender may, without the consent of the Borrowers, the Administrative Agent, the Issuing Bank or the Swingline Lender, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrowers, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to SECTION 9.2(b) that affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of SECTION 2.15, SECTION 2.16, and SECTION 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of SECTION 9.8 as though it were a Lender, provided such Participant agrees to be subject to SECTION 2.18(c) as though it were a Lender.

      (ii) A Participant shall not be entitled to receive any greater payment under SECTION 2.15 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers’ prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of SECTION 2.17 unless the Borrowers are notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with SECTION 2.17(e) as though it were a Lender.

     (d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a

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security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

     SECTION 9.5. Survival. All covenants, agreements, representations and warranties made by the Borrowers herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of SECTIONS 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

     SECTION 9.6. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in SECTION 4.1, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

     SECTION 9.7. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

     SECTION 9.8. Right of Setoff. Subject to SECTION 2.18, if an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrowers against any of and all the obligations of the Borrowers now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

     SECTION 9.9. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

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     (b) Each Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against a Borrower or its properties in the courts of any jurisdiction.

     (c) Each Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

     (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in SECTION 9.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

     SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

     SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this

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Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to a Borrower and its obligations, (g) with the consent of the Borrowers or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrowers. For the purposes of this Section, “Information” means all information received from the Borrowers relating to the Borrowers or their business, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrowers; provided that, in the case of information received from the Borrowers after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

     SECTION 9.13. USA PATRIOT Act. Each Lender hereby notifies the Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow such Lender to identity the Borrowers in accordance with the Act.

     SECTION 9.14. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

FELCOR LODGING TRUST INCORPORATED
By:	/s/ Andrew J. Welch
	Name: Andrew J. Welch
	Title:   Senior Vice President

Address:	545 E John Carpenter Freeway, Suite 1300
	Irving, Texas 75062
Taxpayer Identification Number: 75-2541756

FELCOR LODGING LIMITED PARTNERSHIP
By:	FelCor Lodging Trust Incorporated,
	its General Partner
	By	/s/ Andrew J. Welch
		Name: Andrew J. Welch
		Title:   Senior Vice President

Address:	545 E John Carpenter Freeway, Suite 1300
	Irving, Texas 75062
Taxpayer Identification Number: 75-2544994

JPMORGAN CHASE BANK, N.A., individually and as
Swingline Lender, Issuing Bank and Administrative Agent,
By:	/s/ Donald S. Shokrian
	Name: Donald S. Shokrian
	Title:  Managing Director

CITICORP NORTH AMERICA, INC.
By:	/s/ David Bouton
	Name: David Bouton
	Title:  Vice President

MERRILL LYNCH CAPITAL CORPORATION
By:	/s/ John C. Rowland
	Name: John C. Rowland
	Title:  Vice President

BANK OF AMERICA, N.A.
By:	/s/ Lesa J. Butler
	Name: Lesa J. Butler
	Title:  Senior Vice President

DEUTSCHE BANK TRUST COMPANY AMERICAS
By:	/s/ Linda Wang
	Linda Wang
	Vice President
By:	/s/ James Rolison
	James Rolison
	Director

MORGAN STANLEY SENIOR FUNDING, INC.
By:	/s/ Daniel Twenge
	Name: Daniel Twenge
	Title:  Vice President

EX-10.34.1.1

Exhibit 10.34.1.1

AMENDMENT NO. 1 TO CREDIT AGREEMENT

     This AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment No. 1”) is made as of January 12, 2006 among (a) FelCor Lodging Trust Incorporated and FelCor Lodging Limited Partnership (collectively, the “Borrowers”), (b) the Lenders party hereto, and (c) JPMorgan Chase Bank, N.A. (“JPMCB”) as Administrative Agent (in such capacity, the “Administrative Agent”) for the Lenders.

     WHEREAS, the Borrowers, the Lenders and the Administrative Agent are parties to a Credit Agreement, dated as of December 12, 2005 (the “Credit Agreement”), pursuant to which the Lenders have agreed to make loans to the Borrowers on the terms and conditions set forth therein; and

     WHEREAS, the Borrowers have requested that the Lenders amend certain provisions of the Credit Agreement, and the Lenders party hereto are willing to so amend certain provisions of the Credit Agreement on the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and fully intending to be legally bound by this Amendment No. 1, the parties hereto agree as follows:

     1. Definitions. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Credit Agreement.

     2. Amendments to Credit Agreement. As of the Effective Date (as defined in Section 4 hereof) the Credit Agreement is amended by deleting the date “January 15, 2006” set forth in the last paragraph of Section 4.1 and substituting the date “February 15, 2006” in place thereof:

     3. Provisions Of General Application.

     3.1. No Other Changes. Except as otherwise expressly provided or contemplated by this Amendment No. 1, all of the terms, conditions and provisions of the Credit Agreement remain unaltered and in full force and effect. The Credit Agreement and this Amendment No. 1 shall be read and construed as one agreement.

     3.2. Governing Law. THIS AMENDMENT NO. 1 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

     3.3. Assignment. This Amendment No. 1 shall be binding upon and inure to the benefit of each of the parties hereto and their respective permitted successors and assigns.

     3.4. Counterparts. This Amendment No. 1 may be executed in any number of counterparts, but all such counterparts shall together constitute but one and the same agreement. In making proof of this Amendment No. 1, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto.

     4. Effectiveness of this Amendment No. 1. This Amendment No. 1 shall become effective on (the “Effective Date”) the date of execution and delivery to the Administrative Agent by each of the Lenders, the Borrowers, and the Administrative Agent of this Amendment No. 1.

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     IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Amendment No. 1 as of the date first set forth above.

BORROWERS:	FELCOR LODGING TRUST INCORPORATED
	By:	/s/ Andrew J. Welch
		Name:	Andrew J. Welch
		Title:  Senior Vice President

FELCOR LODGING LIMITED PARTNERSHIP
By:	FelCor Lodging Trust Incorporated,
	its General Partner

By:	/s/ Andrew J. Welch
	Name: Andrew J. Welch
	Title:  Senior Vice President

LENDERS:	JPMORGAN CHASE BANK, N.A.,
	individually and as Swingline Lender, Issuing
	Bank and Administrative Agent,

By:	/s/ Donald Shokrian
	Name:	Donald Shokrian
	Title:	Managing Director

CITICORP NORTH AMERICA, INC.
By:	/s/ David Bouton
	Name:	David Bouton
	Title:	Vice President

MERRILL LYNCH CAPITAL CORPORATION
By:	/s/ John C. Rowland
	Name:	John C. Rowland
	Title:	Vice President
BANK OF AMERICA, N.A.
By:	/s/ Lesa J. Butler
	Name:	Lesa J. Butler
	Title:	Senior Vice President
DEUTSCHE BANK TRUST COMPANY AMERICAS
By:	/s/ Linda Wang
	Name:	Linda Wang
	Title:	Vice President
By:	/s/ Brenda Casey
	Name:	Brenda Casey
	Title:	Vice President

MORGAN STANLEY SENIOR FUNDING, INC.
By:	/s/ Eugene F. Martin
	Name:	Eugene F. Martin
	Title:	Vice President

EX-10.34.1.2

Exhibit 10.34.1.2

AMENDMENT NO. 2 TO CREDIT AGREEMENT

     This AMENDMENT NO. 2 TO CREDIT AGREEMENT (this “Amendment No. 2”) is made as of January 25, 2006 among (a) FelCor Lodging Trust Incorporated and FelCor Lodging Limited Partnership (collectively, the “Borrowers”), (b) the Lenders party hereto, and (c) JPMorgan Chase Bank, N.A. (“JPMCB”) as Administrative Agent (in such capacity, the “Administrative Agent”) for the Lenders.

     WHEREAS, the Borrowers, the Lenders and the Administrative Agent are parties to a Credit Agreement, dated as of December 12, 2005, as amended by Amendment No. 1 dated as of January 12, 2006 (the “Credit Agreement”), pursuant to which the Lenders have agreed to make loans to the Borrowers on the terms and conditions set forth therein; and

     WHEREAS, the Borrowers have requested that the Lenders amend certain provisions of the Credit Agreement, and the Lenders party hereto are willing to so amend certain provisions of the Credit Agreement on the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and fully intending to be legally bound by this Amendment No. 2, the parties hereto agree as follows:

     1. Definitions. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Credit Agreement.

     2. Amendments to Credit Agreement. As of the Effective Date (as defined in Section 4 hereof) the Credit Agreement is amended as follows:

     (a) Section 4.1(h) of the Credit Agreement is amended by restating such section in its entirety to read as follows:

     ”(h) The Administrative Agent shall have received satisfactory evidence that the Borrower’s Term Credit Agreement dated as of October 18, 2005 among the FelCor Partnership and certain of its Subsidiaries, Citicorp North America, Inc., as administrative agent and certain other parties shall be repaid in full and terminated with the proceeds of the initial Loans hereunder.”

     (b) Section 5.13(a) of the Credit Agreement is amended by restating the proviso in the first sentence of such section in its entirety as follows:

     ”; provided that a wholly-owned Subsidiary that owns or ground-leases an Unencumbered Asset shall not be required to execute and deliver a Subsidiary Guaranty so long as the aggregate book value of all Unencumbered Assets owned or ground leased by wholly-owned Subsidiaries that are not Subsidiary Guarantors does not exceed 2% of Total Unencumbered Assets.”

     3. Provisions Of General Application.

     3.1. No Other Changes. Except as otherwise expressly provided or contemplated by this Amendment No. 2, all of the terms, conditions and provisions of the Credit Agreement remain unaltered and in full force and effect. The Credit Agreement and this Amendment No. 2 shall be read and construed as one agreement.

     3.2. Governing Law. THIS AMENDMENT NO. 2 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

     3.3. Assignment. This Amendment No. 2 shall be binding upon and inure to the benefit of each of the parties hereto and their respective permitted successors and assigns.

     3.4. Counterparts. This Amendment No. 2 may be executed in any number of counterparts, but all such counterparts shall together constitute but one and the same agreement. In making proof of this Amendment No. 2, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto.

     4. Effectiveness of this Amendment No. 2. This Amendment No. 2 shall become effective on (the “Effective Date”) the date of execution and delivery to the Administrative Agent by each of the Required Lenders, the Borrowers, and the Administrative Agent of this Amendment No. 2.

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     IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Amendment No. 2 as of the date first set forth above.

BORROWERS:	FELCOR LODGING TRUST INCORPORATED
	By:	/s/ Joel M. Eastman
		Name:	Joel M. Eastman
		Title:	Vice President

FELCOR LODGING LIMITED PARTNERSHIP
By:	FelCor Lodging Trust Incorporated,
	its General Partner

By:	/s/ Joel M. Eastman
	Name:	Joel M. Eastman
	Title:	Vice President

LENDERS:	JPMORGAN CHASE BANK, N.A.,
	individually and as Swingline Lender, Issuing
	Bank and Administrative Agent,

By:	/s/ Donald Shokrian
	Name:	Donald Shokrian
	Title:	Managing Director
CITICORP NORTH AMERICA, INC.
By:	/s/ Jeanne M. Craig
	Name:	Jeanne M. Craig
	Title:	Vice President
MERRILL LYNCH CAPITAL CORPORATION
By:	/s/ John C. Rowland
	Name:	John C. Rowland
	Title:	Vice President
BANK OF AMERICA, N.A.
By:	/s/ Lesa J. Butler
	Name:	Lesa J. Butler
	Title:	Senior Vice President
DEUTSCHE BANK TRUST COMPANY AMERICAS
By:	/s/ Steven P. Lapham
	Name:	Steven P. Lapham
	Title:	Managing Director
By:	/s/ Brenda Casey
	Name:	Brenda Casey
	Title:	Vice President

MORGAN STANLEY SENIOR FUNDING, INC.
By:	/s/ Daniel Twenge
	Name:	Daniel Twenge
	Title:	Vice President

EX-10.34.2

Exhibit 10.34.2

SUBSIDIARY GUARANTY

     Subsidiary Guaranty, dated as of January 27, 2006 by and among the undersigned and such other Persons which may become party hereto from time to time by executing a joinder (in the form of Appendix 1 hereto) (each a “Subsidiary Guarantor” and collectively the “Subsidiary Guarantors”), in favor of each of the Lenders (as defined herein) and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”) for itself and for the other financial institutions (collectively, the “Lenders”) which are or may become parties to the Credit Agreement dated as of December 12, 2005, among FelCor Lodging Trust Incorporated and FelCor Lodging Limited Partnership (the “Borrowers”), the Administrative Agent, and the Lenders (as amended or modified, the “Credit Agreement”). Capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement.

     WHEREAS, the Borrowers, the Administrative Agent, the Lenders and the other parties thereto have entered into the Credit Agreement;

     WHEREAS, the Borrowers and each Subsidiary Guarantor are members of a group of related entities, the success of each of which is dependent in part on the success of the other members of such group;

     WHEREAS, each Subsidiary Guarantor expects to receive substantial direct and indirect benefits from the Revolving Loans made by each Lender to the Borrowers pursuant to the Credit Agreement (which benefits are hereby acknowledged);

     WHEREAS, the Borrowers have covenanted and agreed with the Lenders, that pursuant to Section 5.13 of the Credit Agreement, the undersigned Subsidiary Guarantors shall execute and deliver this Subsidiary Guaranty; and

     WHEREAS, each Subsidiary Guarantor wishes to guaranty the Borrowers’ obligations to the Lenders and the Administrative Agent under and in respect of the Credit Agreement as herein provided.

     NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

     1. Guaranty of Payment and Performance of Obligations. In consideration of the Lenders’ extending credit, or otherwise, in their discretion, giving time, financial or banking facilities or accommodations to the Borrowers, each Subsidiary Guarantor hereby jointly and severally, absolutely, irrevocably and unconditionally guarantees to the Administrative Agent and each Lender that the Borrowers will duly and punctually pay or perform, at the place specified therefor, or if no place is specified, at the Administrative Agent’s head office, (i) all indebtedness, obligations and liabilities of the Borrowers to any of the Lenders and the Administrative Agent, individually or

collectively, under the Credit Agreement or any of the other Loan Documents or in respect of any of the Loans or the Notes or other instruments at any time evidencing any obligations thereunder, whether existing on the date of the Credit Agreement or arising or incurred thereafter, direct or indirect, secured or unsecured, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, arising by contract, operation of law or otherwise, including all such which would become due but for the operation of the automatic stay pursuant to §362(a) of the Federal Bankruptcy Code and the operation of §§502(b) and 506(b) of the Federal Bankruptcy Code; and (ii) without limitation of the foregoing, all reasonable fees, costs and expenses incurred by the Administrative Agent or the Lenders in attempting to collect or enforce any of the foregoing, accrued in each case to the date of payment thereof (collectively the “Obligations” and individually an “Obligation”). This Subsidiary Guaranty is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance by the Borrowers of the Obligations and not of their collectibility only and is in no way conditioned upon any requirement that any Lender or the Administrative Agent first attempt to collect any of the Obligations from the Borrowers or resort to any security or other means of obtaining payment of any of the Obligations which any Lender or the Administrative Agent now has or may acquire after the date hereof or upon any other contingency whatsoever. Upon any Event of Default which is continuing by the Borrowers in the full and punctual payment and performance of the Obligations, the liabilities and obligations of each Subsidiary Guarantor hereunder shall, at the option of the Administrative Agent, become forthwith due and payable to the Administrative Agent and to the Lender or Lenders owed the same without demand or notice of any nature, all of which are expressly waived by each Subsidiary Guarantor, except for notices required to be given to the Borrowers under the Loan Documents. Payments by the Subsidiary Guarantors hereunder may be required by any Lender or the Administrative Agent on any number of occasions.

     2. Subsidiary Guarantor’s Further Agreements to Pay. Each Subsidiary Guarantor further jointly and severally agrees, as the principal obligor and not as a guarantor only, to pay to each Lender and the Administrative Agent forthwith upon demand, in funds immediately available to such Lender or the Administrative Agent, all costs and expenses (including court costs and legal fees and expenses) incurred or expended by the Administrative Agent or such Lender in connection with this Subsidiary Guaranty and the enforcement hereof, together with interest on amounts recoverable under this Subsidiary Guaranty from the time after such amounts become due at the default rate of interest set forth in the Credit Agreement; provided that if such interest exceeds the maximum amount permitted to be paid under applicable law, then such interest shall be reduced to such maximum permitted amount.

     3. Payments. Each Subsidiary Guarantor jointly and severally covenants and agrees that the Obligations will be paid strictly in accordance with their respective terms regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Administrative Agent or any Lender with respect thereto. Without limiting the generality of the foregoing, each Subsidiary Guarantor’s obligations hereunder with respect to any Obligation shall not be discharged

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by a payment in a currency other than the currency in which the Obligation is denominated (the “Obligation Currency”) or at a place other than the place specified for the payment of the Obligation, whether pursuant to a judgment or otherwise, to the extent that the amount so paid on conversion to the Obligation Currency and transferred to New York, New York, U.S.A., under normal banking procedures does not yield the amount of Obligation Currency due thereunder.

     4. Taxes. All payments hereunder shall be made without any counterclaim or set-off, free and clear of, and without reduction for any Indemnified Taxes or Other Taxes, which are now or may hereafter be imposed, levied or assessed by any Governmental Authority on payments hereunder, all of which will be for the account of and paid by the Subsidiary Guarantors. If for any reason, any such reduction is made or any Taxes are paid by the Administrative Agent or any Lender (except for taxes on income or profits of such Administrative Agent or Lender), each Subsidiary Guarantor jointly and severally agrees to pay to the Administrative Agent or such Lender such additional amounts as may be necessary to ensure that the Administrative Agent or such Lender receives the same net amount which it would have received had no such reduction been made or Taxes paid.

     5. Consent to Jurisdiction. Each Subsidiary Guarantor agrees that any suit for the enforcement of this Subsidiary Guaranty or any of the other Loan Documents may be brought in the courts of the State of New York sitting in New York, New York or any federal court sitting in New York, New York and consents to the non-exclusive jurisdiction of such courts and the service of process in any such suit being made upon such Subsidiary Guarantor by mail at the address specified herein. Except to the extent such waiver is expressly prohibited by law, each Subsidiary Guarantor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient court.

     6. Liability of each Subsidiary Guarantor. The Administrative Agent and each Lender have and shall have the absolute right to enforce the liability of each Subsidiary Guarantor hereunder without resort to any other right or remedy including any right or remedy under any other guaranty or against any other Subsidiary Guarantor, and the release or discharge of any Subsidiary Guarantor or other guarantor of any Obligations shall not affect the continuing liability of each Subsidiary Guarantor hereunder that has not been released or discharged.

     It is the intention and agreement of each Subsidiary Guarantor, the Administrative Agent and the Lenders that the obligations of each Subsidiary Guarantor under this Subsidiary Guaranty shall be joint and several and valid and enforceable against each Subsidiary Guarantor to the maximum extent permitted by applicable law. Accordingly, if any provision of this Subsidiary Guaranty creating any obligation of any Subsidiary Guarantor in favor of the Administrative Agent and the Lenders shall be declared to be invalid or unenforceable in any respect or to any extent, it is the stated intention and agreement of the Subsidiary Guarantors, the Administrative Agent and the Lenders that any balance of the obligation created by such provision and all other obligations of each

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of the other Subsidiary Guarantors to the Administrative Agent and the Lenders created by other provisions of this Subsidiary Guaranty shall remain valid and enforceable. Likewise, if by final order a court of competent jurisdiction shall declare any sums which the Administrative Agent or the Lenders may be otherwise entitled to collect from any Subsidiary Guarantor under this Subsidiary Guaranty to be in excess of those permitted under any law (including any federal or state fraudulent conveyance or like statute or rule of law) applicable to such Subsidiary Guarantor’s obligations under this Subsidiary Guaranty, it is the stated intention and agreement of the Subsidiary Guarantors, the Administrative Agent and the Lenders that all sums not in excess of those permitted under such applicable law shall remain fully collectible by the Administrative Agent and the Lenders from each of the other Subsidiary Guarantors, jointly and severally.

     7. Representations and Warranties; Covenants. (a) Each Subsidiary Guarantor hereby makes and confirms the representations and warranties made on its behalf by the Borrowers pursuant to §3 of the Credit Agreement, as if such representations and warranties were set forth herein. Each Subsidiary Guarantor hereby agrees to perform the covenants set forth in §§5 and 6 of the Credit Agreement (to the extent such covenants expressly apply to such Subsidiary Guarantor) as if such covenants were set forth herein. Each Subsidiary Guarantor acknowledges that it is, on a collective basis with the Borrowers and all other Subsidiary Guarantors, bound by the financial covenants and other covenants set forth in §6.1 of the Credit Agreement. Each Subsidiary Guarantor hereby confirms that it shall be bound by all acts or omissions of the Borrowers pursuant to the Credit Agreement.

          (b) Each Subsidiary Guarantor is a limited liability company, limited partnership, corporation, or other legal entity, as applicable, duly formed or organized, validly existing and in good standing under the laws of the state of its formation or organization; each Subsidiary Guarantor has all requisite limited liability company, limited partnership, corporate or other legal entity power, as applicable, to own its respective properties and conduct its respective business as now conducted and as presently contemplated; and such Subsidiary Guarantor is in good standing as a foreign entity and is duly authorized to do business in the jurisdictions where the properties and Unencumbered Assets owned or ground-leased by it are located and in each other jurisdiction where such qualification is necessary except where a failure to be so qualified in such other jurisdiction would not have a Material Adverse Effect. The execution, delivery and performance of this Subsidiary Guaranty and the transactions contemplated hereby (i) are within the authority of such Subsidiary Guarantor, (ii) have been duly authorized by all necessary proceedings on the part of such Subsidiary Guarantor and any member, manager, or other controlling Person thereof, (iii) do not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which such Subsidiary Guarantor is subject or any judgment, order, writ, injunction, license or permit applicable to such Subsidiary Guarantor, (iv) do not conflict with any provision of the Certificate of Organization or Formation, the limited liability company agreement, articles of incorporation, bylaws, or other authority documents of such Subsidiary Guarantor or the authority documents of any controlling Person thereof, and (v) do not contravene any provisions of, or constitute a default, Default or Event of

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Default or a failure to comply with any term, condition or provision of, any other agreement, instrument, judgment, order, decree, permit, license or undertaking binding upon or applicable to such Subsidiary Guarantor or any of such Subsidiary Guarantor’s properties (except for any such failure to comply under any such other agreement, instrument, judgment, order, decree, permit, license, or undertaking as would not have a Material Adverse Effect) or result in the creation of any mortgage, pledge, security interest, lien, encumbrance or charge upon any of the properties or assets of such Subsidiary Guarantor.

          (c) The Guaranty has been duly executed and delivered and constitutes the legal, valid and binding obligations of each Subsidiary Guarantor, subject only to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and to the fact that the availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

          (d) The execution, delivery and performance by each Subsidiary Guarantor of this Subsidiary Guaranty and the transactions contemplated hereby do not require (i) the approval or consent of any governmental agency or authority other than those already obtained, or (ii) filing with any governmental agency or authority, other than filings which will be made with the SEC when and as required by law.

     8. Effectiveness. The obligations of each Subsidiary Guarantor under this Subsidiary Guaranty shall continue in full force and effect and shall remain in operation until all of the Obligations shall have been paid in full or otherwise fully satisfied, and continue to be effective or be reinstated, as the case may be, if at any time payment or other satisfaction of any of the Obligations is rescinded or must otherwise be restored or returned upon the bankruptcy, insolvency, or reorganization of a Borrower, or otherwise, as though such payment had not been made or other satisfaction occurred. No invalidity, irregularity or unenforceability of the Obligations by reason of applicable bankruptcy laws or any other similar law, or by reason of any law or order of any government or agency thereof purporting to reduce, amend or otherwise affect the Obligations, shall impair, affect, be a defense to or claim against the obligations of any Subsidiary Guarantor under this Subsidiary Guaranty.

     9. Freedom of Lender to Deal with Borrowers and Other Parties. The Administrative Agent and each Lender shall be at liberty, without giving notice to or obtaining the assent of any Subsidiary Guarantor and without relieving any Subsidiary Guarantor of any liability hereunder, to deal with the Borrowers and with each other party who now is or after the date hereof becomes liable in any manner for any of the Obligations, in such manner as the Administrative Agent or such Lender in its sole discretion deems fit, and to this end each Subsidiary Guarantor gives to the Administrative Agent and each Lender full authority in its sole discretion to do any or all of the following things: (a) extend credit, make loans and afford other financial accommodations to the Borrowers at such times, in such amounts and on such terms as

5

the Administrative Agent or such Lender may approve, (b) vary the terms and grant extensions of any present or future indebtedness or obligation of the Borrowers or of any other party to the Administrative Agent or such Lender, (c) grant time, waivers and other indulgences in respect thereto, (d) vary, exchange, release or discharge, wholly or partially, or delay in or abstain from perfecting and enforcing any security or guaranty or other means of obtaining payment of any of the Obligations which the Administrative Agent or any Lender now has or may acquire after the date hereof, (e) accept partial payments from the Borrowers or any such other party, (f) release or discharge, wholly or partially, any endorser or guarantor, and (g) compromise or make any settlement or other arrangement with the Borrowers or any such other party.

     10. Unenforceability of Obligations Against Borrowers; Invalidity of Security or Other Guaranties. If for any reason a Borrower has no legal existence or is under no legal obligation to discharge any of the Obligations undertaken or purported to be undertaken by it or on its behalf, or if any of the moneys included in the Obligations have become irrecoverable from a Borrower by operation of law or for any other reason, this Subsidiary Guaranty shall nevertheless be binding on each Subsidiary Guarantor to the same extent as if such Subsidiary Guarantor at all times had been the principal debtor on all such Obligations. This Subsidiary Guaranty shall be in addition to any other guaranty or other security for the Obligations, and it shall not be prejudiced or rendered unenforceable by the invalidity of any such other guaranty or security.

     11. Waivers by Subsidiary Guarantor. Each Subsidiary Guarantor waives notice of acceptance hereof, notice of any action taken or omitted by the Administrative Agent or any Lender in reliance hereon, and any requirement that the Administrative Agent or any Lender be diligent or prompt in making demands hereunder, giving notice of any default by the Borrowers or asserting any other rights of the Administrative Agent or any Lender hereunder. Each Subsidiary Guarantor also irrevocably waives, to the fullest extent permitted by law, all defenses in the nature of suretyship that at any time may be available in respect of such Subsidiary Guarantor’s obligations hereunder by virtue of any statute of limitations, valuation, stay, moratorium law or other similar law now or hereafter in effect.

     12. Restriction on Subrogation and Contribution Rights. Notwithstanding any other provision to the contrary contained herein or provided by applicable law, unless and until all of the Obligations have been indefeasibly paid in full in cash and satisfied in full, each Subsidiary Guarantor hereby irrevocably defers and agrees not to enforce any and all rights it may have at any time (whether arising directly or indirectly, by operation of law or by contract) to assert any claim against the Borrowers on account of payments made under this Subsidiary Guaranty, including, without limitation, any and all rights of or claim for subrogation, contribution, reimbursement, exoneration and indemnity, and further waives any benefit of and any right to participate in any collateral which may be held by the Administrative Agent or any Lender or any affiliate of the Administrative Agent or any Lender. In addition, each Subsidiary Guarantor will not claim any set-off or counterclaim against the Borrowers in respect of any liability it may have to the

6

Borrowers unless and until all of the Obligations have been indefeasibly paid in full in cash and satisfied in full.

     Subject to the foregoing and the indefeasible performance and payment in full of the Obligations, each Subsidiary Guarantor acknowledges that all other Subsidiary Guarantors shall have contribution rights against such Subsidiary Guarantor in accordance with applicable law and in accordance with each such Person’s benefits received under the Credit Agreement and the Loans.

     13. Demands. Any demand on or notice made or required to be given pursuant to this Subsidiary Guaranty shall be in writing and shall be delivered in hand, mailed by United States registered or certified first class mail, postage prepaid, return receipt requested, sent by overnight courier, or sent by telegraph, telecopy, telefax or telex and confirmed by delivery via courier or postal service, addressed as follows:

(a) if to the Subsidiary Guarantors, at

c/o FelCor Lodging Trust Incorporated
545 E. John Carpenter Freeway, Suite 1300
Irving, TX 75062
Attention: General Counsel

or at such other address for notice as the Subsidiary Guarantors shall last have
furnished in writing to the Administrative Agent;

(b) if to the Administrative Agent, at

JP Morgan Chase Bank, N.A.
Loan and Agency Services Group
1111 Fannin Street
10^th Floor
Houston, TX 77002,

with a copy to,

JP Morgan Chase Bank, N.A.
277 Park Avenue
New York, New York 10172
Attention: Donald Shokrian

or at such other address for notice as the Administrative Agent shall last have
furnished in writing to the Subsidiary Guarantors; and

(c) if to any Lender, at such Lender’s address as set forth in its Administrative
Questionnaire.

7

     Any such notice or demand shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand, overnight courier or facsimile to the party to which it is directed, at the time of the receipt thereof by such party or the confirmed transmission of such facsimile or (ii) if sent by registered or certified first-class mail, postage prepaid, return receipt requested, on the fifth Business Day following the mailing thereof.

     14. Amendments, Waivers, Etc. No provision of this Subsidiary Guaranty can be changed, waived, discharged or terminated except by an instrument in writing signed by the Administrative Agent and the Subsidiary Guarantors expressly referring to the provision of this Subsidiary Guaranty to which such instrument relates; and no such waiver shall extend to, affect or impair any right with respect to any Obligation which is not expressly dealt with therein. No course of dealing or delay or omission on the part of the Administrative Agent or the Lenders or any of them in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto.

     15. Further Assurances. Each Subsidiary Guarantor at its sole cost and expense agrees to do all such things and execute, acknowledge and deliver all such documents and instruments as the Administrative Agent from time to time may reasonably request in order to give full effect to this Subsidiary Guaranty and to perfect and preserve the rights and powers of the Administrative Agent and the Lenders hereunder.

     16. Miscellaneous Provisions. This Subsidiary Guaranty is intended to take effect as a sealed instrument to be governed by and construed in accordance with the laws of the State of New York and shall inure to the benefit of the Administrative Agent, each Lender and its respective successors in title and assigns permitted under the Credit Agreement, and shall be binding on each Subsidiary Guarantor and each Subsidiary Guarantor’s successors in title, assigns and legal representatives. The rights and remedies herein provided are cumulative and not exclusive of any remedies provided by law or any other agreement. The invalidity or unenforceability of any one or more sections of this Subsidiary Guaranty shall not affect the validity or enforceability of its remaining provisions. Captions are for ease of reference only and shall not affect the meaning of the relevant provisions. The meanings of all defined terms used in this Subsidiary Guaranty shall be equally applicable to the singular and plural forms of the terms defined.

     17. WAIVER OF JURY TRIAL. EXCEPT TO THE EXTENT SUCH WAIVER IS EXPRESSLY PROHIBITED BY LAW, EACH SUBSIDIARY GUARANTOR HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY JURISDICTION AND IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS SUBSIDIARY GUARANTY, THE OBLIGATIONS, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT HERETO OR THERETO OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING, AMONG THE SUBSIDIARY GUARANTORS, THE BORROWERS, THE ADMINISTRATIVE AGENT AND/OR THE LENDERS. THIS WAIVER OF JURY TRIAL SHALL BE EFFECTIVE FOR EACH AND EVERY

8

DOCUMENT EXECUTED BY THE SUBSIDIARY GUARANTORS, THE ADMINISTRATIVE AGENT OR THE LENDERS AND DELIVERED TO THE ADMINISTRATIVE AGENT OR THE LENDERS, AS THE CASE MAY BE, WHETHER OR NOT SUCH DOCUMENTS SHALL CONTAIN SUCH A WAIVER OF JURY TRIAL. EACH SUBSIDIARY GUARANTOR CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.

[Remainder of Page Intentionally Left Blank]

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     IN WITNESS WHEREOF, each Subsidiary Guarantor has executed and delivered this Subsidiary Guaranty as of the date first above written.

FELCOR/CSS HOLDINGS, L.P., a Delaware limited
partnership

By: FelCor CSS Hotels, L.L.C., a Delaware limited
       liability company, its general partner

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR HOTEL ASSET COMPANY, L.L.C., a Delaware limited
liability company

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR PENNSYLVANIA COMPANY, L.L.C., a Delaware
limited liability company

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR LODGING HOLDING COMPANY, L.L.C., a Delaware
limited liability company

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FHAC TEXAS HOLDINGS, L.P., a Texas limited partnership

By: FelCor Hotel Asset Company, L.L.C., a Delaware
       limited liability company, its general partner

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR CANADA CO., a Nova Scotia unlimited liability
company

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR OMAHA HOTEL COMPANY, L.L.C., a Delaware limited
liability company

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR TRS HOLDINGS, L.P., a Delaware limited
partnership

By: FelCor TRS I, L.L.C., a Delaware limited liability
       company, its general partner

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

MYRTLE BEACH HOTELS, L.L.C., a Delaware limited
liability company

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR TRS BORROWER 1, L.P., a Delaware limited
partnership

By: FelCor TRS Borrower GP 1, L.L.C., a Delaware
       limited liability company, its general partner

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR TRS GUARANTOR, L.P., a Delaware limited
partnership

By: FelCor TRS Guarantor GP, L.L.C., a Delaware
       limited liability company, its general partner

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

CENTER CITY HOTEL ASSOCIATES, a Pennsylvania limited
partnership

By: FelCor Philadelphia Center, L.L.C., a Delaware
       limited liability company its general partner

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR LODGING COMPANY, L.L.C., a Delaware limited
liability company

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR TRS BORROWER 3, L.P., a Delaware limited
partnership

By: FelCor TRS Borrower GP 3, L.L.C., a Delaware
       limited liability company, its general partner

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

FELCOR TRS BORROWER 4, L.L.C., a Delaware limited
liability company

By:	/s/ Joel M. Eastman
Name:	Joel M. Eastman
Title:	Vice President

Appendix 1

FORM OF JOINDER AGREEMENT
(SUBSIDIARY GUARANTY)
Dated as of ______ __, 20___

JPMorgan Chase Bank, N.A.,
   as Administrative Agent
277 Park Avenue
New York, New York 10172
Attention: Donald Shokrian (Fax: 646-534-0574)

Ladies and Gentlemen:

          Reference is hereby made to (a) the Credit Agreement, dated as of December 12, 2005 (as amended and in effect from time to time, the “Credit Agreement”), by and among FELCOR LODGING TRUST INCORPORATED and FELCOR LODGING LIMITED PARTNERSHIP (the “Borrowers”), the Lenders party thereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent for itself and the Lenders (the “Administrative Agent”), (b) the Subsidiary Guaranty dated as of January 23, 2006 (the “Subsidiary Guaranty”) from certain subsidiaries of the Borrowers to the Lenders and the Administrative Agent. Terms not otherwise defined herein which are defined in the Credit Agreement shall have the respective meanings given thereto in the Credit Agreement.

     1. Joinder to Subsidiary Guaranty.

          The Undersigned,                     , a                     , (the “Undersigned”) hereby joins the Subsidiary Guaranty as a Subsidiary Guarantor and agrees to comply with and be bound by all of the terms, conditions and covenants of the Subsidiary Guaranty. Without limiting the generality of the preceding sentence, the Undersigned agrees that it shall be jointly and severally liable, together with the other Subsidiary Guarantors thereunder, for the guaranty of the payment and performance of all obligations of the Borrowers under the Credit Agreement as further set forth therein.

          From and after the Effective Date hereof (as hereinafter defined), all references in the Loan Documents to the “Subsidiary Guarantors” shall for all purposes be deemed to include the Undersigned.

     2. New Subsidiary Guarantor’s Representations and Warranties.

          The Undersigned represents and warrants to the Administrative Agent and the Lenders that:

a.	it is capable of complying with and is in compliance with all of the provisions of the Subsidiary Guaranty, the Credit Agreement and the other Loan Documents applicable to it;
b.	each of the representations and warranties set forth in §3 of the Credit Agreement made on its behalf by the Borrowers, except as set forth on Schedule 2(b) attached hereto and each of the representations and warranties set forth in §7 of the Subsidiary Guaranty is true and correct in all material respects with respect to the Undersigned as of the date hereof (except to the extent that such representations and warranties relate expressly to an earlier date);
c.	Schedule 2(c) attached hereto sets forth a true and accurate description of the Subsidiary Guarantors and the revised Schedule 3.15 attached hereto sets forth a true and accurate list of the properties and Unencumbered Assets.
d.	upon the execution of this Joinder Agreement, the Undersigned will be jointly and severally liable, together with the other Subsidiary Guarantors, for the payment and performance of all obligations of the Borrowers under the Credit Agreement as set forth in the Subsidiary Guaranty.

     3. Delivery of Documents.

     The Undersigned hereby agrees that it shall comply with the requirements of §5.13 of the Credit Agreement and shall deliver the items referenced therein to the Administrative Agent concurrently with this Joinder Agreement (the date on which all such documents shall have been delivered to the Administrative Agent being hereinafter referred to as the “Effective Date”), each of which shall be in form and substance reasonably satisfactory to the Administrative Agent.

[Remainder of Page Intentionally Left Blank]

     This Joinder Agreement shall be governed by and construed in accordance with the laws of the State of New York.

Very truly yours,

By:

Name:

Title:

Accepted and Agreed:

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

By:

Name:

Title:

EX-10.35

Exhibit 10.35

PURCHASE AND SALE AGREEMENT

by and among

FELCOR LODGING TRUST INCORPORATED AND CERTAIN OF ITS AFFILIATES,
as Sellers,

and

HOSPITALITY PROPERTIES TRUST,
as Purchaser

January 20, 2006

PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE AGREEMENT is made as of January 20, 2006, by and among (i) FELCOR LODGING TRUST INCORPORATED, a Maryland real estate investment trust (“FCH”), (ii) the entities listed as “sellers” on the signature pages of this Agreement (each, individually, a “Seller” and collectively, the “Sellers”), and (iii) HOSPITALITY PROPERTIES TRUST, a Maryland real estate investment trust (the “Purchaser”).

WITNESSETH:

     WHEREAS, the Sellers are the owners or ground lessees of the seven (7) Properties (all capitalized terms used and not otherwise defined herein having the meanings ascribed to such terms in Section 1); and

     WHEREAS, the Purchaser desires to purchase the Properties, as more fully set forth below; and

     WHEREAS, the Sellers are willing to sell all of the Properties to the Purchaser, subject to and upon the terms and conditions hereinafter set forth; and

     WHEREAS, FCH owns, directly or indirectly, all of the Sellers and the transactions contemplated by this Agreement are of direct and material benefit to FCH;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the FCH Parties and the Purchaser hereby agree as follows:

SECTION 1. DEFINITIONS

     Capitalized terms used in this Agreement shall have the meanings set forth below or in the Section of this Agreement referred to below:

     1.1 “Agreement” shall mean this Purchase and Sale Agreement, together with Schedules A-H attached hereto, as it and they may be amended from time to time as herein provided.

     1.2 “Allocable Purchase Price” shall mean, with respect to each Property, the amount set forth in Schedule A opposite the name of such Property, it being understood and agreed that

the aggregate amount of the Allocable Purchase Prices of the Properties shall be One Hundred Sixty Million Two Hundred Thousand ($160,200,000), subject to adjustment pursuant to Section 2, in which event, the Allocable Purchase Price shall be adjusted proportionately.

     1.3 “Assets” shall mean, with respect to any Hotel, collectively, all of the Real Property, the Ground Leases, the FAS, the FF&E, the Contracts, the Documents, the Improvements, the Intangible Property, the Inventories, the Expendables and the Tenant Leases owned by any of the Sellers in connection with or relating to such Hotel.

     1.4 “Booking” means a booking, contract or other reservation for the future use of guest rooms, banquet facilities, meeting rooms or other Hotel facilities and off-site catering for which a Booking Deposit has been received on behalf of Seller, or for which a written proposal has been made by or on behalf of Seller and accepted by the recipient of such proposal or for which a written proposal has been received and accepted by or on behalf of Seller (regardless of whether a Booking Deposit has been received) for any period after the Proration Time.

     1.5 “Booking Deposit” means all room reservation deposits, public function, banquet, food and beverage deposits and other deposits or fees for Bookings.

     1.6 “Brand” shall mean, with respect to each Hotel, the brand under which such Hotel is operated as indicated on Schedule A, together with the Brand Standards applicable thereto, and all of the attributes and features customarily associated with such brand of hotels in North America from time to time.

     1.7 “Brand Standards” shall mean, with respect to any Hotel, the standards of operation, as amended from time to time, in effect at substantially all hotels which are operated under the Brand name of such Hotel, which standards shall include, but not be limited to, standards of operation from time to time required of owners of similar hotels or as may be specified in manuals and other guidelines in effect with respect to such Brand.

     1.8 “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which banking institutions

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in The Commonwealth of Massachusetts or the State of New York are authorized by law or executive action to close.

     1.9 “Capital Replacements” shall mean, collectively, the replacements and renewals to the FF&E and the repairs, replacements, corrections, maintenance, alterations, improvements, renovations, installations, replacements, renewals and additions to be performed by either the Seller or the Purchaser in accordance with the terms of this Agreement.

     1.10 “Closing” shall have the meaning given such term in Section 2.2.

     1.11 “Closing Date” shall have the meaning given such term in Section 2.2.

     1.12 “Code” shall mean the Internal Revenue Code of 1986, as amended.

     1.13 “Contracts” shall mean, with respect to any Property, all hotel licensing agreements and other service contracts, equipment leases, booking agreements and other arrangements or agreements to which any of the Sellers is a party affecting the ownership, repair, maintenance, management, leasing or operation of such Property, to the extent the Sellers’ interest therein is assignable or transferable.

     1.14 “Deposit” shall have the meaning given such term in Section 2.3.

     1.15 “Documents” shall mean, with respect to any Property, all books, records and files relating to the leasing, maintenance, management or operation of such Property.

     1.16 “Entity” shall mean any corporation, general or limited partnership, limited liability company or partnership, stock company or association, joint venture, association, company, trust, bank, trust company, land trust, business trust, cooperative, any government or agency, authority or political subdivision thereof or any other entity.

     1.17 “Escrow Agent” shall mean Fidelity National Title Insurance Company or such other person as shall be reasonably acceptable to the Purchaser and the Sellers.

     1.18 “Expendables” means blankets, linens, tableware, china, glassware, uniforms and other goods of an expendable nature owned or leased by Sellers (or Hotel Operator as agent for Seller) in connection with the ownership or operation of the

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Hotels; provided, however, the term Expendables does not include FF&E or Inventory.

     1.19 “FAS” shall mean all items included within “Property and Equipment” under the Uniform System of Accounts, including, but not limited to, Expendables, whether used in connection with public space or guest rooms.

     1.20 “FCH” shall have the meaning given such term in the first paragraph of this Agreement.

     1.21 “FCH Capital Replacements” shall have the meaning given such term in Section 2.3 of this Agreement.

     1.22 “FCH Parties” shall mean, collectively, FCH and the Sellers.

     1.23 “FF&E” shall mean, with respect to any Property, all appliances, machinery, devices, fixtures, appurtenances, equipment, furniture, furnishings and articles of tangible personal property of every kind and nature whatsoever located in or at, or used in connection with, the ownership, operation or maintenance of such Property.

     1.24 “Ground Leases” shall mean, collectively, (i) a Lease, dated June 24, 1980, as amended and assigned, with respect to the Miami Airport Crowne Plaza, Miami, Florida, and (ii) a Lease, dated January 8, 1965, as amended and assigned, with respect to the Atlanta Airport Crowne Plaza, Atlanta, Georgia.

     1.25 “Ground Lease Property” shall mean a Property subject to a Ground Lease, and the applicable Seller’s entire right, title and interest therein.

     1.26 “Hotel” shall mean each hotel located at the properties identified on Schedule A, the legal descriptions of which are set forth on Schedules C-1 through C-7.

     1.27 “Hotel Operator” shall mean InterContinental Hotels Group, PLC or its affiliates, Sellers’ hotel operator.

     1.28 “HPT Capital Replacements” shall have the meaning given such term is Section 2.3 of this Agreement.

     1.29 “IHG” shall mean InterContinental Hotels Group, PLC, a United Kingdom corporation.

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     1.30 “IHG Management Agreement” shall mean a management agreement, dated as of the Closing Date, between the Purchaser, or its affiliates, as owner, and IHG, or its affiliates, as manager, with respect to, inter alia, the Properties.

     1.31 “IHG Parent Guaranty” shall mean a guaranty agreement executed by IHG, for the benefit of the Purchaser, inter alia, pursuant to which the payment or performance of IHG’s and its affiliates’ obligations under the IHG Management Agreement, or any portion thereof, are guaranteed, together with all modifications, amendments and supplements thereto.

     1.32 “IHG Security Deposit Agreement” shall mean a security deposit agreement, dated as of the Closing Date, between the Purchaser, or its affiliates, and IHG, or its affiliates.

     1.33 “Improvements” shall mean, with respect to any Property, all buildings, fixtures, walls, fences, landscaping and other structures and improvements situated on, affixed or appurtenant to the Real Property with respect to such Property.

     1.34 “Inspection Period” shall mean the period expiring on the Closing Date.

     1.35 “Intangible Property” shall mean, with respect to any Property, all transferable or assignable Licenses and Permits, development rights and approvals, certificates, licenses, warranties and guarantees, the Contracts, telephone exchange numbers identified with such Property held by any of the Sellers and all other transferable intangible property, miscellaneous rights, benefits and privileges of any kind or character with respect to such Property.

     1.36 “Inventories” shall mean, with respect to each Hotel, all consumable products used in connection with the operation of each Hotel.

     1.37 “Legal Requirements” shall mean, with respect to any Property, all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees, injunctions and requirements affecting such Property, the Hotel located thereon, or the maintenance, construction, alteration, management or operation thereof, whether now or hereafter enacted or in existence.

     1.38 “Licenses and Permits” means all certificates of occupancy and all zoning, subdivision, building, safety and health approvals and all other licenses, permits and

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entitlements issued by governmental authorities and owned by Seller in connection with and relating solely to the operation, ownership or subdivision of the Hotels, including those identified on Schedule D.

     1.39 “Permitted Encumbrances” shall mean, with respect to any Property, (a) liens for taxes, assessments and governmental charges with respect to such Property not yet due and payable or due and payable but not yet delinquent; and (b) such other nonmonetary encumbrances with respect to such Property which are not objected to by the Purchaser in accordance with Section 3.2.

     1.40 “Person” shall mean an individual, partnership, joint venture, corporation, limited liability company, real estate investment trust, any other form of business organization, and any government or governmental authority.

     1.41 “Properties” shall mean, collectively, all of the Assets relating to the properties identified on Schedule A, the legal descriptions of which are set forth in Schedules C-1 through C-7.

     1.42 “Proration Time” shall mean, with respect to each Hotel, 11:59 p.m. local time on the day immediately preceding the Closing Date, provided, however, with respect to food and beverage services at bars, restaurants or lounges at each Hotel, the Proration Time means 3:00 a.m. local time on the Closing Date.

     1.43 “Purchase Price” shall mean the sum of the Allocable Purchase Prices, but in no event more than One Hundred Sixty Million Two Hundred Thousand ($160,200,000), subject to adjustment pursuant to Section 2 and Section 9.

     1.44 “Purchaser” shall have the meaning given such term in the first paragraph of this Agreement.

     1.45 “Real Property” shall mean, with respect to any Property, the real property described in the applicable Schedule C-1 through C-7, together with all easements, rights of way, privileges, licenses and appurtenances which the Sellers may own with respect thereto.

     1.46 “Rent Roll” shall mean Schedule E to this Agreement.

     1.47 “Sellers” shall have the meaning given such term in the first paragraph of this Agreement.

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     1.48 “Subsidiary” shall mean with respect to any Person, any Entity (a) in which such Person owns directly, or indirectly through one or more Subsidiaries, twenty percent (20%) or more of the voting or beneficial interest or (b) which such Person otherwise has the right or power to control (whether by contract, through ownership of securities or otherwise).

     1.49 “Surveys” shall have the meaning given such term in Section 3.2.

     1.50 “Tenant Deposits” shall mean all deposits identified on the Rent Roll and held by Sellers under the Tenant Leases.

     1.51 “Tenant Leases” shall mean, with respect to any Property, all leases, rental agreements or other agreements (other than agreements for letting of rooms or other facilities to hotel guests), including all amendments or modifications thereto), which entitle any person to have rights with respect to the use or occupancy of any portion of such Property.

     1.52 “Title Commitments” shall have the meaning given such term in Section 3.2.

     1.53 “Title Company” shall mean Fidelity National Title Insurance Company, or such other title insurance company as shall have been selected by the Purchaser and approved by the Sellers, which approval shall not be unreasonably withheld, delayed or conditioned.

     1.54 “True-up” shall have the meaning given such term in Section 9.

     1.55 “Uniform System of Accounts” shall mean A Uniform System of Accounts for Hotels, Ninth Revised Edition, 1996, as published by the Hotel Association of New York City, as the same may be further revised from time to time.

     1.56 "Unopened” means, with reference to Inventory and Expendables, all items that remain in unopened crates or cases or which otherwise are stored in new or sealed condition awaiting use in any storage location and not in guest rooms or immediately in service at public bars or restaurants.

SECTION 2. PURCHASE AND SALE; CLOSING

     2.1 Purchase and Sale. In consideration of the mutual covenants herein contained, the Purchaser hereby agrees to

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purchase from the Sellers, and the FCH Parties hereby agree to sell or cause the Sellers to sell, all of the FCH Parties’ right, title and interest in and to the Properties for the Purchase Price, subject to and in accordance with the terms and conditions of this Agreement.

     2.2 Closing. The purchase and sale of the Properties shall be consummated at a closing (the “Closing”) to be held at the offices of Sullivan & Worcester LLP, One Post Office Square, Boston, Massachusetts, or at such other location as the Sellers and the Purchaser may agree, at 10:00 a.m., local time, on a date (the “Closing Date”) which is the later to occur of (a) the expiration of the Inspection Period, and (b) the date as of which all conditions precedent to the Closing herein set forth (other than those to be satisfied at the Closing) have either been satisfied or waived by the party in whose favor such conditions run. In the event that the Closing shall not have occurred on or before January 20, 2006, either party may terminate this Agreement, provided such party is not in default hereunder, in which event the Deposit shall be paid to the Purchaser unless the Purchaser is in default hereunder.

     2.3 Purchase Price. The Purchase Price shall be paid as follows:

     (i) Upon execution of this Agreement, the Purchaser shall deposit with the Escrow Agent the sum of Five Million Dollars ($5,000,000) (such amount, together with all interest earned thereon, the “Deposit”); and

     (ii) The sum of the Purchase Price less the Deposit, subject to adjustment as provided in this Section 2.3 and in Article 9, shall be paid by the Purchaser to or at the direction of the Sellers at the Closing.

     (b) The Purchase Price shall be payable in immediately available federal funds by wire transfer to an account or accounts to be designated by the Sellers.

     (c) The Sellers and the Purchaser had contemplated that the Seller would complete certain Capital Replacements prior to the Closing, as more particularly described in Schedule B. The Sellers and the Purchaser acknowledge and agree that (i) the Sellers have not, and shall not be obligated to, complete such additional Capital Replacements, and (ii) the Purchase Price shall be reduced by the aggregate amount of One Million Four Hundred Eight Thousand One Hundred Twenty Dollars ($1,408,120).

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     (d) The Sellers and the Purchaser contemplate that certain Capital Replacements as further described in Schedule B are to be completed by the Sellers on or after the Closing Date (the “FCH Capital Replacements”). The Seller shall perform, or cause to be performed, the FCH Capital Replacements described in Schedule B hereto, in accordance with the plans and specifications, and permits, licenses, contracts and approvals relating thereto, and otherwise in accordance the terms of this Section 2.3. All such FCH Capital Replacements shall be performed in a good and workmanlike manner, consistent with industry standards for like hotels in like locales and in accordance with all applicable Legal Requirements and the Brand Standards. The Sellers and the Purchaser acknowledge and agree that (i) the Sellers shall complete such FCH Capital Replacements on or before June 30, 2006, (ii) the amount of Nine Hundred Twenty Seven Thousand Three Hundred Eight Dollars ($927,308) shall be deposited into escrow with the Escrow Agent to be disbursed to the Sellers on a periodic basis as such FCH Capital Replacements are completed, as evidenced by the certificate of IHG, and (iii) in the event that the FCH Capital Replacements shall not have been so completed by June 30, 2006, amounts remaining on deposit with the Escrow Agent shall be disbursed to Purchaser. The Sellers and Purchaser contemplate that certain Capital Replacements as further described in Schedule B in the amount of Three Hundred Eighty Four Thousand Nine Hundred Eighty Six Dollars ($384,986) are to be completed by the Purchaser on or after the Closing Date (the “HPT Capital Replacements”), and the Purchaser shall receive a credit against the Purchase Price in such amount at Closing.

     (e) The Sellers and the Purchaser acknowledge and agree that the Properties contain certain physical conditions that are not satisfactory to the Purchaser, and due to such physical conditions, the Purchaser shall receive a credit against the Purchase Price in the amount of Two Million Fifty One Thousand Two Hundred Three Dollars ($2,051,203) at Closing.

     2.4 Duties of Escrow Agent.

     (a) The Escrow Agent shall hold the Deposit in an interest-bearing federally insured account and shall pay the Deposit to the party entitled thereto in accordance with the terms of this Agreement.

     (b) The acceptance by the Escrow Agent of its duties as such under this Agreement is subject to the following terms and conditions, which all parties to this Agreement hereby agree

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shall govern and control with respect to the rights, duties, liabilities and immunities of the Escrow Agent:

          (i) The Escrow Agent acts hereunder as a depositary only, and is not responsible or liable in any manner whatever for the sufficiency of any amounts deposited with it.

          (ii) The Escrow Agent shall not be liable for acting upon any notice, request, waiver, consent, receipt or other instrument or document which the Escrow Agent in good faith believes to be genuine and what it purports to be.

          (iii) The Escrow Agent shall not be liable for any error in judgment, or for any act done or step taken or omitted by it in good faith, or for any mistake of fact or law, or for anything which it may do or refrain from doing in connection herewith, except its own bad faith, gross negligence or willful misconduct.

          (iv) The Escrow Agent may consult with, and obtain advice from, legal counsel in the event of any dispute or question as to the construction of any of the provisions hereof or its duties hereunder, and it shall incur no liability and shall be fully protected in acting in good faith in accordance with the opinion and advice of such counsel.

          (v) In the performance of its duties hereunder, the Escrow Agent shall be entitled to rely upon any document, instrument or signature believed by it to be genuine and signed by either of the other parties hereto or their successors.

          (vi) The Escrow Agent may assume that any person purporting to give any notice of instructions in accordance with the provisions hereof has been duly authorized to do so.

          (vii) The Sellers and the Purchaser each hereby release the Escrow Agent from any act done or omitted to be done by the Escrow Agent in good faith in the performance of its duties hereunder.

     (c) The Sellers and the Purchaser may remove the Escrow Agent at any time upon not less than five (5) days notice to the Escrow Agent; in such case, the Sellers, by notice to the Purchaser, shall appoint a successor Escrow Agent, reasonably satisfactory to the Purchaser, which shall accept such appointment and agree in writing to be bound by the terms of this Agreement. In the event no successor Escrow Agent is appointed and acting hereunder within five (5) days after resignation by the Escrow Agent or there is a dispute among the

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parties with respect to payment of the Deposit, the Escrow Agent may deliver the Deposit into a court of competent jurisdiction. Upon delivery of the Deposit to a successor agent or court of competent jurisdiction, the Escrow Agent shall be released and discharged from all further obligations hereunder.

     (d) The Escrow Agent agrees to serve without compensation for its services; provided, however, that the Purchaser and the Sellers hereby agree to reimburse, or to advance to, the Escrow Agent all reasonable expenses of the Escrow Agent incurred in the performance of its duties hereunder.

SECTION 3. DILIGENCE, ETC.

     3.1 Diligence Inspections. From and after the date of this Agreement, the Sellers shall permit the Purchaser and its representatives to inspect the Properties and the Improvements (including, without limitation, guest rooms, meeting rooms, food and beverage outlets and related back of the house areas, all roofs, electric, mechanical and structural elements, and HVAC systems therein), to perform due diligence, soil analysis and environmental investigations, to examine the books of account and records of the FCH Parties with respect to the Properties, including, without limitation, all Contracts and other agreements affecting the Properties, and make copies thereof, at such reasonable times as the Purchaser or its representatives may request. To the extent that, in connection with such investigations, the Purchaser damages or disturbs the Properties, or any portion thereof, the Purchaser shall, to the extent practicable, return the same to substantially the same condition which existed immediately prior to such damage or disturbance. The Purchaser shall indemnify, defend and hold harmless the Sellers from and against any and all expense, loss or damage which the Sellers may incur as a result of any act or omission of the Purchaser or its representatives, agents or contractors in the conduct of its inspections, other than any expense, loss or damage to the extent arising from any negligent act or omission of the Sellers during any such inspection. Such restoration obligations and indemnification agreement shall survive the termination of this Agreement.

     3.2 Title and Survey Matters.

     (a) Promptly upon execution of this Agreement, the Purchaser shall order from the Title Company and direct the Title Company promptly to deliver to the Purchaser a preliminary title commitment, having an effective date after the date of this Agreement, for an ALTA extended owner’s policy of title

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insurance with respect to each of the Properties, together with complete and legible copies of all instruments and documents referred to as exceptions to title (collectively, the “Title Commitment”).

     (b) Promptly upon execution of this Agreement, the Purchaser shall arrange for the preparation of an ALTA survey with respect to each of the Properties (the “Survey”), by a licensed surveyor in the jurisdiction in which each such Property is located, which (i) contains an accurate legal description of such Property, (ii) shows the exact location, dimension and description (including applicable recording information) of all utilities, easements, encroachments and other physical matters affecting such Property, the number of striped parking spaces located thereon and all applicable building set-back lines, (iii) states whether such Property is located within a 100-year flood plain and (iv) includes a certification in the form attached hereto as Schedule F.

     (c) Within ten (10) Business Days after receipt of both the Title Commitment and the Survey with respect to a Property, the Purchaser shall give the Sellers notice of any title exceptions or survey matters (other than Permitted Exceptions) as to which the Purchaser objects. If, for any reason, the Sellers are unable or unwilling to take such actions as may be required to cause such exceptions to be removed from such Title Commitment or to remedy such matters, the Sellers shall give the Purchaser notice thereof; it being understood and agreed that the failure of the Sellers to give such notice within five (5) Business Days after the Purchaser’s notice of objection shall be deemed an election by the Sellers not to cause such removal and remedy. If the Sellers shall be unable or unwilling (or shall be deemed unable or unwilling) to remove any title defects or remedy any survey matters to which the Purchaser has objected, the Purchaser may elect (i) to terminate this Agreement and receive a refund of the Deposit, or (ii) to consummate the transactions contemplated hereby, notwithstanding such defect, without any abatement or reduction in the Purchase Price on account thereof. The Purchaser shall make any such election by notice to the Sellers given on or prior to the fifth (5^th) Business Day (but in any event prior to the Closing Date) after the Sellers’ notice of its inability or unwillingness to cure any such title defect or remedy any such survey matter. Failure of the Purchaser to give such notice shall be deemed an election by the Purchaser to waive such obligations and consummate the transactions contemplated hereby in accordance with clause (ii) above.

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     3.3 Other Diligence Materials. Throughout the Inspection Period and through and until the Closing, the Sellers shall provide the Purchaser and its representatives with copies of all leases, title reports, as-built plans, surveys, environmental assessment reports, building evaluations, financial data, audited property statements for the past three (3) years and other investigations and materials pertaining to the Properties as are in the possession or control of the FCH Parties.

     3.4 Termination of Agreement. If the results of the inspections performed by or on behalf of the Purchaser pursuant to Section 3.1 or Section 3.3 shall be unsatisfactory to the Purchaser in any respect or if Purchaser otherwise determines not to proceed to Closing, the Purchaser shall have the right to terminate this Agreement at any time prior to the expiration of the Inspection Period by the giving of written notice thereof to the Sellers, in which event, the Deposit shall be refunded to the Purchaser. In the event that the Purchaser shall fail so to terminate this Agreement, the Purchaser shall have no further right to terminate this Agreement pursuant to this Section 3.4.

SECTION 4. CONDITIONS TO PURCHASER’S OBLIGATION TO CLOSE

     The obligation of the Purchaser to acquire each of the Properties on the Closing Date shall be subject to the satisfaction of the following conditions precedent on and as of such Closing Date:

     4.1 Closing Documents. The FCH Parties shall have delivered to the Purchaser:

     (a) A good and sufficient limited or special warranty deed with covenants against grantor’s acts, or its local equivalent, in proper statutory form for recording, duly executed and acknowledged by the applicable Seller(s), conveying good and marketable title to each of the Properties, free from all liens and encumbrances other than the Permitted Encumbrances;

     (b) An assignment of each of the Ground Leases, in proper statutory form for recording, duly executed and acknowledged by the applicable Seller(s), conveying good and marketable leasehold title to each of the Ground Lease Properties, free from all liens and encumbrances other than the Permitted Encumbrances;

     (c) One or more bill(s) of sale and assignment agreement(s), in form and substance reasonably satisfactory to the Sellers and the Purchaser, duly executed and acknowledged by the applicable Seller(s), with respect to all of the Sellers’

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right, title and interest in, to and under the FAS, the FF&E, the Contracts, the Documents, the Intangible Property, the Inventories and the Tenant Leases with respect to each of the Properties and the Sellers’ rights under all builder’s warranties with respect to each of the Properties;

     (d) To the extent the same are in the FCH Parties’ possession or control, original, fully executed copies of all material documents and agreements, leases, including, without limitation, the Ground Leases, plans and specifications and contracts, licenses and permits pertaining to the Properties;

     (e) An affidavit as of the Closing Date, in respect of Section 1445 of the Internal Revenue Code of 1986, as amended, sufficient to provide one exemption under subdivision (b) thereof for each of the FCH Parties;

     (f) A Sellers’ closing certificate in the form attached hereto as Schedule G;

     (g) Copies of any and all certificates, and related correspondence and materials, provided by, for or to, any of the FCH Parties, IHG or any of their respective affiliates, in connection within the FCH Parties’ determination of the actual knowledge of the general manager of each Hotel and the actual knowledge of Jack Eslick and Mike DeNicola pursuant to Section 6 hereof;

     (h) With respect to each Ground Lease Property, a consent and estoppel certificate, in form and substance satisfactory to the Purchaser, dated within thirty (30) days prior to the Closing Date, duly executed by the ground lessor under the Ground Lease with respect to such Ground Lease Property in the form reasonably acceptable to Purchaser;

     (i) Estoppel certificates, dated within thirty (30) days prior to the Closing Date, with respect to the Tenant Leases, in form and substance satisfactory to the Purchaser, duly executed by each of the tenants of each of the Properties to the extent received by the applicable Seller.

     (j) Certified copies of all charter documents, applicable corporate resolutions and certificates of incumbency with respect to the applicable FCH Parties; and

     (k) Such other conveyance documents, certificates, deeds, affidavits and other instruments as the Purchaser or the Title Company may reasonably require to effectuate the transactions contemplated by this Agreement, including, without limitation,

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parties in possession and mechanics’ lien affidavits and gap indemnities.

     4.2 Management of Hotels. The Purchaser, IHG and its affiliates (i) shall have entered into the IHG Management Agreement and the IHG Security Deposit Agreement, and received the IHG Parent Guaranty, in each case on terms satisfactory to the Purchaser, in its sole discretion, engaging IHG and its affiliates to manage the Hotels, (ii) such agreements shall be in full force and effect, and (iii) all conditions precedent to the effectiveness of such agreements shall have been satisfied.

     4.3 Condition of Properties.

     (a) No default or event which with the giving of notice and/or lapse of time could constitute a material default shall have occurred and be continuing under any material agreement benefiting or affecting any of the Properties in any respect;

     (b) Except for the action described in Schedule H hereto with respect to the Houston I-10 Hotel, no action shall be pending or threatened for the condemnation or taking by power of eminent domain of all or any material portion of any of the Properties;

     (c) All material licenses, permits and other authorizations necessary for the current use, occupancy and operation of each of the Properties shall be in full force and effect; and

     (d) All representations and warranties of each the FCH Parties herein shall be true, correct and complete in all material respects on and as of the Closing Date and each of the FCH Parties shall have performed all covenants and obligations required to be performed by the FCH Parties on or before the Closing Date.

     4.4 Title Policies and Surveys. (a) The Title Company shall be prepared, subject only to payment of the applicable premium and endorsement fees and delivery of all conveyance documents in recordable form, to issue title insurance policies to the Purchaser with respect to each of the Properties, in form and substance satisfactory to the Purchaser in accordance with Section 3.2., together with such affirmative coverages as the Purchaser may reasonably require.

     (b) The Purchaser shall have received an as-built survey with respect to each of the Properties, such survey to be consistent with the requirements of Section 3.2.

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SECTION 5. CONDITIONS TO FCH PARTIES’ OBLIGATION TO CLOSE

     The obligation of the FCH Parties to convey the Properties on the Closing Date to the Purchaser is subject to the satisfaction of the following conditions precedent on and as of the Closing Date:

     5.1 Purchase Price. The Purchaser shall have delivered to the FCH Parties the Purchase Price as provided in Section 2.3.

     5.2 Closing Documents. The Purchaser shall have delivered to the Sellers:

     (a) Duly executed and acknowledged counterparts of the documents described in Section 4.1, where applicable; and

     (b) Certified copies of all charter documents, applicable resolutions and certificates of incumbency with respect to the Purchaser.

SECTION 6. REPRESENTATIONS AND WARRANTIES OF FCH PARTIES

     To induce the Purchaser to enter into this Agreement, each FCH Party, with respect to all Properties, and each Seller, with respect to its Property, represent and warrant to the Purchaser as follows:

     6.1 Status and Authority of the FCH Parties. Each of the FCH Parties is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its state of incorporation or formation, and has all requisite power and authority under the laws of such state and its respective charter documents to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. It has duly qualified to transact business in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where failure to do so could not reasonably be expected to have a material adverse effect.

     6.2 Action of the FCH Parties. Each of the FCH Parties has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and upon the execution and delivery of any document to be delivered by it on or prior to the Closing Date, such document shall constitute its valid and binding obligation and agreement, enforceable against such FCH Party in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency,

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reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

     6.3 No Violations of Agreements. Neither the execution, delivery or performance of this Agreement, nor compliance with the terms and provisions hereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the Properties pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which it is bound.

     6.4 Litigation. None of the FCH Parties has received any written notice of and, to its knowledge, no action or proceeding is pending or threatened and no investigation looking toward such an action or proceeding has begun, which (a) questions the validity of this Agreement or any action taken or to be taken pursuant hereto, (b) will result in any material adverse change in the business, operation, affairs or condition of any of the Properties, (c) will result in or subject any of the Properties to a material liability, or (d) except for the action described in Schedule H hereto with respect to the Houston I-10 Hotel, involves condemnation or eminent domain proceedings against any material part of any of the Properties.

     6.5 Tenant Leases, Etc. Other than the Tenant Leases listed in the Rent Roll, the Sellers have not entered into any contract or agreement with respect to the occupancy of the Properties, or any portion thereof, which will be binding on the Purchaser after the Closing. The copies of the Tenant Leases heretofore delivered by the Sellers to the Purchaser are true, correct and complete copies thereof; the Tenant Leases have not been amended except as evidenced by amendments similarly delivered and constitute the entire agreement between the Sellers and the tenants thereunder. Except as otherwise set forth in the Rent Roll: (i) to knowledge of the FCH Parties’, each of the Tenant Leases is in full force and effect on the terms set forth therein, there are no defaults or circumstances which with the giving of notice, the passage of time or both would constitute a default thereunder and each tenant is legally required to pay all sums and perform all material obligations set forth therein without concessions, abatements, offsets, defenses or other basis for relief or adjustment; (ii) no tenant has asserted in writing or, to the knowledge of the FCH Parties’, has any defense to, offsets or claims against, rent payable by it or the performance of its other obligations under its Tenant Lease; (iii) the Sellers have no outstanding

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obligations to provide any tenant with an allowance to perform, or to perform at its own expense, any tenant improvements; (iv) no tenant is in arrears in the payment of any sums or in the performance of any material obligation required of it under its Tenant Lease beyond any applicable grace period, and no Tenant has prepaid any rent or other charges (except as disclosed in the Rent Roll); (v) no tenant has filed a petition in bankruptcy or for the approval of a plan of reorganization or management under the Federal Bankruptcy Code or under any other similar state law, or made an admission in writing as to the relief therein provided, or otherwise become the subject of any proceeding under any federal or state bankruptcy or insolvency law, or has admitted in writing its inability to pay its debts as they become due or made an assignment for the benefit of creditors, or has petitioned for the appointment of or has had appointed a receiver, trustee or custodian for any of its property; (vi) no tenant has requested in writing a modification of its Tenant Lease, or a release of its obligations under its Tenant Lease in any material respect or has given written notice terminating its Tenant Lease, or has been released of its obligations thereunder in any material respect prior to the normal expiration of the term thereof; (vii) except as set forth in the Tenant Leases, no guarantor has been released or discharged, voluntarily or involuntarily, or by operation of law, from any obligation under or in connection with any Tenant Lease or any transaction related thereto; (viii) all security deposits paid by tenants, are as set forth in the Rent Roll; (ix) all brokerage commissions due with respect to each of the Tenant Leases has been paid, except as otherwise set forth on the Rent Roll; and (x) the other information set forth in the Rent Roll is true, correct and complete in all material respects.

     6.6 Ground Leases. The copies of the Ground Leases heretofore delivered by the Sellers to the Purchaser are true, correct and complete copies thereof; the Ground Leases have not been amended except as evidenced by amendments similarly delivered and constitute the entire agreement between the ground lessors and the Sellers thereunder. Each of the Ground Leases is in full force and effect on the terms set forth therein, there are no defaults or circumstances which with the giving of notice, the passage of time or both would constitute a default thereunder.

     6.7 Agreements, Etc. Other than the Tenant Leases and the Ground Leases, there are no contracts or agreements affecting any of the Properties which will be binding on the Purchaser or any of the Properties subsequent to the Closing Date other than

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contracts and agreements which the Purchaser has agreed in writing to assume prior to the expiration of the Inspection Period or which IHG is party to and which are required for the effective management of the hotels or which are terminable upon thirty (30) days notice without payment of premium or penalty.

     6.8 Compliance With Law. To the FCH Parties’ knowledge, none of the FCH Parties has received written notice that (i) any of the Properties or the current use and operation thereof violate any material federal, state, municipal and other governmental statutes, ordinances, by-laws, rules, regulations or any other legal requirements, including, without limitation, those relating to construction, occupancy, zoning, adequacy of parking, environmental protection, occupational health and safety and fire safety applicable thereto; and (ii) there is not currently in effect any material license, permit or other authorization necessary for the current use, occupancy and operation of any of the Properties. Except for the action described in Schedule H hereto with respect to the Houston I-10 Hotel, none of the FCH Parties has received written notice of any threatened request, application, proceeding, plan, study or effort which would (i) materially adversely affect the present use or zoning of any of the Properties, (ii) jeopardize the status of any material license, permit or other authorization necessary for the current use, occupancy or operation of any of the Properties, or (iii) modify or realign any adjacent street or highway in a material and adverse way.

     6.9 Taxes. To the FCH Parties’ knowledge, (i) other than the amounts disclosed by tax bills and the Title Commitments, no taxes or special assessments of any kind (special, bond or otherwise) are or have been levied with respect to any of the Properties, or any portion thereof, which are outstanding or unpaid, other than amounts not yet due and payable or, if due and payable, not yet delinquent, and (ii) all tax returns for privilege, gross receipts, excise, sales and use, personal property and franchise taxes have been prepared and duly filed, and all taxes, if any, shown on such returns or otherwise determined to be due, together with any interest or penalties thereon, have been paid by the FCH Parties.

     6.10 Not A Foreign Person. None of the FCH Parties is a “foreign person” within the meaning of Section 1445 of the United States Internal Revenue Code of 1986, as amended, and the treasury regulations promulgated thereunder.

     6.11 Hazardous Substances. Except as described in any environmental report delivered to the Purchaser prior to the

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expiration of the Inspection Period to the FCH Parties’ knowledge, none of the FCH Parties has received written notice that any of the FCH Parties nor any tenant or other occupant or user of any of the Properties, or any portion thereof, has stored or disposed of (or engaged in the business of storing or disposing of) or has released or caused the release of any hazardous waste, contaminants, oil, radioactive or other material on any of the Properties, or any portion thereof, the removal of which is required or the maintenance of which is prohibited or penalized by any applicable Federal, state or local statutes, laws, ordinances, rules or regulations, and, to each FCH Party’s knowledge, none of the FCH Parties has received written notice that any of the Properties is contaminated with any such hazardous waste, contaminants, oil, radioactive or other materials, except any such materials maintained in accordance with applicable law.

     6.12 Insurance. None of the FCH Parties has received any written notice from any insurance carrier of defects or inadequacies in any of the Properties which, if uncorrected, would result in a termination of insurance coverage or a material increase in the premiums charged therefor.

     6.13 Ownership of Sellers. FCH is the sole record and beneficial owner, directly or indirectly, of all of the issued and outstanding equity interests in the Sellers and the transactions contemplated by this Agreement are of direct material benefit to FCH.

     6.14 Utilities, Etc. To the FCH Parties’ knowledge, except as may be set forth in any of the due diligence materials submitted by the FCH Parties’ to Purchaser or identified by Purchaser as a result of its due diligence inspections and other investigations pursuant to Section 3.1 hereof, (i) all utilities and services necessary for the use and operation of each of the Properties (including, without limitation, road access, gas, water, electricity and telephone) are available thereto and are of sufficient capacity to meet adequately all needs and requirements necessary for the current use and operation of each of the Properties, and (ii) no fact, condition or proceeding exists which would result in the termination or material impairment of the furnishing of such utilities to any of the Properties.

     6.15 Condition of Properties. To the FCH Parties’ knowledge, except as may be set forth in any of the due diligence materials submitted by the FCH Parties’ to Purchaser or identified by Purchaser as a result of its due diligence

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inspections and other investigations pursuant to Section 3.1 hereof, none of the FCH Parties has received any written notice of any material defects in the Properties.

     6.16 Employment Contracts; Labor Matters. None of the Sellers now has or has ever had any employees.

     6.17 Intellectual Property. To the FCH Parties’ knowledge, no Seller is infringing or alleged to be infringing upon the rights of any third party with respect to any of the trademarks and service marks (whether or not registered) and trademark and service mark registrations and applications, patent and patent applications, copyright and copyright applications, trade dress, trade and product names (collectively, the “Intellectual Property”) owned or licensed by any of the Sellers, and no Seller is infringing or alleged to be infringing upon the rights of any third party with respect to any of Intellectual Property, and no Seller knows of any basis for the assertion against any Seller of a claim for such infringement.

     The representations and warranties made in this Agreement by the FCH Parties are made as of the date hereof and shall be deemed remade by the FCH Parties as of the Closing Date with the same force and effect as if made on, and as of, such date. All representations and warranties made in this Agreement by the FCH Parties shall survive the Closing for a period of one (1) year thereafter, and upon expiration shall be of no further force and effect, except to the extent that with respect to any particular alleged breach, the Purchaser gives the FCH Parties written notice prior to the expiration of said one (1) year period of such alleged breach.

     Notwithstanding anything to the contrary contained in this Section 6, none of the FCH Parties shall have any liability to the Purchaser for the breach of any representation or warranty made in this Agreement unless the loss resulting from the FCH Parties’ breach of its representations and warranties exceeds, in the aggregate, One Million Dollars ($1,000,000), in which event the FCH Parties shall be liable for each dollar of damages resulting from the breach or breaches of its representations and warranties, but in no event shall the FCH Parties’ total liability for any such breach or breaches exceed, in the aggregate, Twenty Million Dollars ($20,000,000).

     “FCH Parties’ knowledge” shall mean only the actual knowledge of the general manager of each Hotel, Jack Eslick or Mike DeNicola, in each case, after the FCH Parties’ having made

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specific inquiries of each such general manager, Jack Eslick and Mike DeNicola.

     Except as otherwise expressly provided in this Agreement or any documents to be delivered to the Purchaser at the Closing, the FCH Parties disclaim the making of any representations or warranties, express or implied, regarding the Properties or matters affecting the Properties, whether made by the FCH Parties, on the FCH Parties’ behalf or otherwise, including, without limitation, the physical condition of the Properties, title to or the boundaries of the Real Property, pest control matters, soil conditions, the presence, existence or absence of hazardous wastes, toxic substances or other environmental matters, compliance with building, health, safety, land use and zoning laws, regulations and orders, structural and other engineering characteristics, traffic patterns, market data, economic conditions or projections, and any other information pertaining to the Properties or the market and physical environments in which they are located. The Purchaser acknowledges (i) that the Purchaser has entered into this Agreement with the intention of making and relying upon its own investigation or that of third parties with respect to the physical, environmental, economic and legal condition of each Property and (ii) that the Purchaser is not relying upon any statements, representations or warranties of any kind, other than those specifically set forth in this Agreement or in any document to be delivered to the Purchaser at any Closing, made by the FCH Parties or anyone acting on the FCH Parties’ behalf. The Purchaser further acknowledges that it has not received from or on behalf of the FCH Parties any accounting, tax, legal, architectural, engineering, property management or other advice with respect to this transaction and is relying solely upon the advice of third party accounting, tax, legal, architectural, engineering, property management and other advisors. Subject to the provisions of this Agreement, the Purchaser shall purchase the Properties in their “as is” condition on the Closing Date.

SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER

     To induce the FCH Parties to enter in this Agreement, the Purchaser represents and warrants to the FCH Parties as follows:

     7.1 Status and Authority of the Purchaser. The Purchaser is a Maryland real estate investment trust duly organized, validly existing and in trust good standing under the laws of the State of Maryland, and has all requisite power and authority under the laws of such state and under its charter documents to enter into and perform its obligations under this Agreement and

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to consummate the transactions contemplated hereby. The Purchaser has duly qualified and is in good standing as a trust or unincorporated business association in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where the failure to do so could not reasonably be expected to have a material adverse effect.

     7.2 Action of the Purchaser. The Purchaser has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and upon the execution and delivery of any document to be delivered by the Purchaser on or prior to the Closing Date such document shall constitute the valid and binding obligation and agreement of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

     7.3 No Violations of Agreements. Neither the execution, delivery or performance of this Agreement by the Purchaser, nor compliance with the terms and provisions hereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Purchaser pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which the Purchaser is bound.

     7.4 Litigation. No investigation, action or proceeding is pending and, to the Purchaser’s knowledge, no action or proceeding is threatened and no investigation looking toward such an action or proceeding has begun, which questions the validity of this Agreement or any action taken or to be taken pursuant hereto.

     The representations and warranties made in this Agreement by the Purchaser shall be continuing and shall be deemed remade by the Purchaser as of the Closing Date with the same force and effect as if made on, and as of, such date. The Purchaser’s liability with respect to all representations and warranties made in this Agreement by the Purchaser shall survive the Closing for a period of one (1) year thereafter, and upon expiration shall be of no further force or effect, except to the extent that with respect to any particular alleged breach, the FCH Parties give the Purchaser written notice prior to the expiration of said one (1) year period of such alleged breach.

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SECTION 8. COVENANTS OF THE FCH PARTIES

     Each of the FCH Parties hereby covenants with the Purchaser between the date of this Agreement and the Closing Date as follows:

     8.1 Compliance with Laws, Etc. To comply or to cause compliance in all material respects with (i) all applicable laws, regulations and other requirements from time to time of every governmental body having jurisdiction of the Properties or the use or occupancy of the Improvements located on the Real Property and (ii) all terms, covenants and conditions of all instruments of record and other agreements affecting the Properties.

     8.2 Approval of Agreements. Except as otherwise authorized by this Agreement or in the ordinary course of business, not to enter into, modify, amend or terminate any other agreement with respect to any Property which would encumber or be binding upon such Property from and after the Closing Date without in each instance obtaining the prior written consent of the Purchaser.

     8.3 Ground Lease Estoppels. The FCH Parties shall request, and use reasonable efforts to obtain, from the ground lessors under the Ground Leases, the consent and estoppel certificates described in Section 4.1(g).

     8.4 Tenant Estoppels. The FCH Parties shall request, and use reasonable efforts to obtain, from the tenants under the Tenant Leases the estoppel certificates described in Section 4.1(h). In the event the Sellers are unable to obtain any such estoppel certificate, the FCH Parties shall provide the Purchaser at Closing with an estoppel certificate in substitution therefor in the form described in Section 4.1(h) executed by the FCH Parties, which estoppel certificate shall expressly indemnify and hold the Purchaser harmless from and against any and all loss, cost, damage and expense that the Purchaser may incur or otherwise suffer as a result of the FCH Parties’ failure to obtain and deliver to the Purchaser such estoppel certificate, or the failure of any statement, representation or warranty contained therein to be true, complete and correct, including, without limitation, reasonable attorneys’ fees and expenses.

     8.5 Change in Brands. The FCH Parties shall not change, and they shall cause their affiliates not to change, the Brand now in effect with respect to any Hotel.

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     8.6 Notice of Material Changes or Untrue Representations. Upon learning of any material change in any condition with respect to any of the Properties or of any event or circumstance which makes any representation or warranty of any of the FCH Parties to the Purchaser under this Agreement untrue or misleading in any material respect, Sellers agree to promptly to notify the Purchaser thereof (the Purchaser agreeing, on learning of any such fact or condition, promptly to notify the FCH Parties thereof).

     8.7 Financial Information. To provide to the Purchaser, promptly upon request, at the FCH Parties’ sole cost and expense, such audited and unaudited financial and other information and certifications of the FCH Parties with respect to the FCH Parties and the Properties as the Purchaser may from time to time reasonably request in order to comply with any applicable securities laws and/or any rules, regulations or requirements of the Securities and Exchange Commission and, if required or requested, to permit the Purchaser to incorporate by reference any information included in filings made by FCH with the Securities and Exchange Commission.

     8.8 Licensing Approval. To the FCH Parties’ knowledge, all liquor licenses currently in effect at the Hotels are in the name of IHG. Each Seller shall use best efforts to assist the Purchaser and/or IHG in obtaining appropriate licenses from the applicable licensing authorities which authorize the Purchaser to operate the Properties and the Hotels in the same manner and with the same number of keys as they are currently being operated. If a license to sell alcoholic beverages at the Hotel is in any Seller’s name and cannot be transferred to IHG by the Closing Date and IHG cannot obtain a new or temporary license by the Closing Date, then to the extent permitted by law Seller shall cooperate reasonably with IHG in maintaining the license on behalf of IHG and keeping open all bars, lounges and liquor facilities of the Hotels between the Closing Date and the time when such license is obtained by IHG by entering into a agreement for the continued operation of and under Seller’s liquor license mutually acceptable to Seller and IHG in their reasonable discretion. The Sellers’ obligations under this Section 8.9 shall survive the Closing.

SECTION 9. APPORTIONMENTS

     9.1 General. Except as otherwise expressly provided in this Agreement, all income and expenses of the Property with respect to the period prior to the Proration Time shall be for the account of Seller and all income and expenses of the

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Properties with respect to the period from and after the Proration Time shall be for the account of Purchaser.

     9.2 Taxes.

     (a) Real and personal property taxes, assessments and special district levies (“Taxes”) shall be prorated for the tax fiscal year in which the Closing Date occurs on the basis of the then most current tax bills available with respect to the Properties; Sellers shall be charged with said proration for the period through the day prior to the Closing Date and Purchaser shall be charged with said proration for the period from and after the Closing Date. If the prorations are not based on the actual tax bills for the tax fiscal year in which the Closing Date occurs, Sellers and Purchaser shall re-prorate such taxes, assessments and levies based upon the actual tax bills within thirty (30) days after such tax bills are received. Such proration shall satisfy the obligation of Sellers to Purchaser with respect to all such taxes, assessments and levies on the Property for the tax fiscal year in which the Closing Date occurs. The Sellers shall be entitled to receive any refunds of any Taxes for any periods prior to Closing, regardless of when received.

     (b) Sellers shall pay (l) all sales, revenue and excise taxes (and any surtax, interest and penalties thereon) (collectively, “Sales Tax”) payable with respect to Sellers’ operation of the Hotels for periods prior to the Closing Date, and (2) any Sales Tax due in connection with the sale to Purchaser of those items of personal property for which Sales Tax is payable.

     (c) Sellers shall pay all room occupancy and use taxes due and payable with respect to the Hotels for the period prior to the Closing Date, and Purchaser shall pay all room occupancy and use taxes (“Room Taxes”) due and payable with respect to the Hotels for the period on and after the Closing. Sellers and Purchaser each shall pay fifty percent (50%) of all Room Taxes due and payable with respect to the Hotels for the night commencing prior to and ending on the day on which the Proration Time occurs.

     9.3 Rents. Rents payable with respect to the Ground Lease Property and due under Tenant Leases shall be prorated as of the Closing on a cash basis and the net amount paid by the Seller to the Purchaser or by the Purchaser to the Seller, as the case may be (collectively, “Rents”).

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     9.4 Hotel Apportionments.

     (a) The Purchaser shall pay to the Sellers, at the Closing, an amount equal to (a) the book value of all Unopened Inventory and Expendables, (b)aggregate petty cash and cash in cash registers, house banks and vending machines, (c) prepaid operating expenses of the Properties and the Hotels, (d) amounts reflected on the guest ledger, (e) postage in meters and prepaid internet access cards and (f) 50% of room occupancy revenues for the night on which the Proration Time occurs, reduced by an amount equal to any Booking Deposits, (collectively, the “Hotel Operating Items”) in each case, as of the Proration Time and based upon a fair and reasonable estimated accounting prepared by the Sellers and IHG and delivered to the Purchaser on the Closing Date.

     (b) All payments for Hotel services (“Hotel Services”), whether in cash or accounts receivable, arising from Hotel services provided beginning on the day preceding the Closing Date (i.e., the night that straddles the Closing) shall be credited to Sellers. All receipts for guest room rentals and Hotel services thereafter shall belong to Purchaser.

     (c) All receipts and expenses from restaurant and bar operations (“Restaurant Receipts”) at the Hotels to the closing hours of facility operations which commenced on the day preceding the Closing Date shall belong to, and be paid by, Sellers. All thereafter accruing receipts and expenses from restaurant and bar operations at the Hotels shall be for Purchaser’s account.

     (d) Seller shall credit Purchaser at Closing for all accrued vacation and sick time (“PTO”), and Purchaser shall assume all liability therefor.

     (d) Seller shall retain all accounts receivable owed to Sellers (or to Hotel Operator as agent of Sellers) as of the Proration Time and arising out of the ownership or operation of the Hotels.

     9.5 True-Up. Within sixty (60) days after the Closing, Purchaser shall prepare and deliver to Sellers an accounting of the Sales Tax, Room Taxes, Rents, Hotel Operating Items, Hotel Services, Restaurant Receipts, and PTO which are prorated between, paid or otherwise credited to the Purchaser and/or Seller Rents as set forth in this Section 9 (collectively, the “Apportioned Items”). If the Sellers disagree with the Purchaser’s accounting of the Apportioned Items, the Sellers

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shall notify the Purchaser within fifteen (15) days after receipt of the Purchaser’s accounting and the Purchaser and the Sellers shall attempt to agree, in good faith, on a final accounting of the Apportioned Items within thirty (30) days, provided if such agreement is not reached within thirty (30) days, upon application by either the Purchaser or the Sellers, a certified public accountant reasonably acceptable to the Purchaser and the Sellers hereto shall make a determination of the amount of any of the Apportioned Items which have not been agreed to. The charges for such accountant shall be borne one-half by the Purchaser and one-half by the Sellers. After agreement of the parties or determination by the accountant, if the aggregate amount of the Apportioned Items is greater than the Sellers’ estimate, Purchaser shall promptly pay Sellers the excess and if less than the Sellers’ estimate, the Sellers shall promptly pay the Purchaser the difference.

     9.6 Closing Costs. The FCH Parties shall pay one-third of the title insurance premiums for the owner’s policies, and the title and survey costs and expenses associated with the transaction contemplated hereby. The FCH Parties shall pay all costs and expenses of the recording and sales and transfer fees and taxes. In addition, the FCH Parties shall pay the cost associated with the transfer of the roof warranties.

     9.7 Survival. The obligations of the parties under this Section 9 shall survive the Closing.

SECTION 10. DAMAGE TO OR CONDEMNATION OF PROPERTIES

     10.1 Casualty. If, prior to the Closing, all or any material portion of the Properties is destroyed or damaged by fire or other casualty, the Sellers shall promptly notify the Purchaser of such fact. In such event, the Purchaser shall have the right to terminate this Agreement by giving notice to the Sellers not later than ten (10) days after the giving of Sellers’ notice (and, if necessary, the Closing Date shall be extended until one day after the expiration of such ten-day period). If the Purchaser elects to terminate this Agreement as aforesaid, the Deposit shall be paid to the Purchaser, whereupon, this Agreement shall terminate and be of no further force and effect and neither party shall have any liability to the other hereunder. If the Purchaser shall not elect to terminate this Agreement as aforesaid, there shall be no abatement of the Purchase Price and the Sellers shall assign to the Purchaser at the Closing the rights of the Sellers to the proceeds, if any, under the Sellers’ insurance policies covering the Properties, or part thereof, with respect to such damage or

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destruction and there shall be credited against the Purchase Price the amount of any deductible, proceeds previously received by the Sellers and any deficiency of proceeds.

     10.2 Condemnation. If, prior to the Closing, all or any material portion of the Properties including, access or parking thereto, is taken by eminent domain (or is the subject of a pending taking which has not yet been consummated), the Sellers shall notify the Purchaser of such fact promptly after obtaining knowledge thereof and the Purchaser shall have the right to terminate this Agreement by giving notice to the Seller not later than ten (10) days after the giving of the Sellers’ notice (and, if necessary, the Closing Date shall be extended until one day after the expiration of such ten-day period). If the Purchaser elects to terminate this Agreement as aforesaid, the Deposit shall be paid to the Purchaser, whereupon, this Agreement shall terminate and be of no further force and effect and neither party shall have any liability to the other hereunder. If the Purchaser shall not elect to terminate this Agreement as aforesaid, the sale of the Properties shall be consummated as herein provided without any adjustment to the Purchase Price (except to the extent of any condemnation award received by any of the Sellers prior to the Closing) and the Sellers shall assign to the Purchaser at the Closing all of the Sellers’ right, title and interest in and to all awards, if any, for the taking, and the Purchaser shall be entitled to receive and keep all awards for the taking of the Properties or portion thereof.

     10.3 Material Portion. As used herein, damage or destruction, or a taking, of a “material portion” of the Properties, shall mean (i) any damage or destruction to any one (1) Hotel which can be repaired or restored to the prior existing condition only at a cost in excess of ten percent (10%) of its Allocable Purchase Price and, in the case of more than one (1) Hotel, twenty percent (20%) of the Purchase Price, or (ii) any taking that impairs the value of any one (1) Hotel in excess of ten percent (10%) of its Allocable Purchase Price and, in the case of more than one (1) Hotel, twenty percent (20%) of the Purchase Price.

     10.4 Survival. The parties’ obligations, if any, under this Section 10 shall survive the Closing.

SECTION 11. DEFAULT

     11.1 Default by the FCH Parties. If any of the FCH Parties shall have made any representation or warranty herein which

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shall be untrue or misleading in any material respect, or if any of the FCH Parties shall fail to perform any of the material covenants and agreements contained herein to be performed by the FCH Parties, the Purchaser may pursue any and all remedies available to it at law or in equity, including, but not limited to, a suit for specific performance or other equitable relief. In no event shall the FCH Parties be liable for, nor shall the Purchaser seek, any consequential, indirect or punitive damages.

     Notwithstanding the foregoing, in the event that, at any time after the Closing Date, any of the FCH Parties shall fail to perform any of the material covenants and agreements contained herein to be performed by the FCH Parties that are intended to survive the Closing hereunder, the FCH Parties shall have the right and opportunity to cure such default, provided the FCH Parties shall perform such cure within thirty (30) days after notice thereof from Purchaser to the FCH Parties (unless such default is susceptible of cure but such cure cannot be accomplished with due diligence within such thirty (30) day period and if, in addition, the FCH Parties commence to cure such default within thirty (30) days after notice thereof from Purchaser and thereafter prosecutes the curing of such default with all due diligence, such period of time (not to exceed an additional seventy-five (75) days in the aggregate) shall be extended to such period of time as may be necessary to cure such default with all due diligence.

     11.2 Default by the Purchaser. If the Purchaser shall have made any representation or warranty herein which shall be untrue or misleading in any material respect, or if the Purchaser shall fail to perform any of the covenants and agreements contained herein to be performed by it, the FCH Parties may, as their sole and exclusive remedy at law and in equity, terminate this Agreement and retain the Deposit, as liquidated damages and not as a penalty.

SECTION 12. MISCELLANEOUS

     (a) Agreement to Indemnify. (i) The FCH Parties shall indemnify and hold harmless the Purchaser from and against any and all obligations, claims, losses, damages, liabilities, and expenses (including, without limitation, reasonable attorneys’ and accountants’ fees and disbursements) arising out of (x) events, contractual obligations, acts or omissions of the FCH Parties that occurred in connection with the ownership or operation of any Property prior to the Closing or (y) any damage to property of others or injury to or death of any person or any claims for any debts or obligations occurring on or about or in

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connection with any Property or any portion thereof at any time or times prior to the Closing, and (ii) the Purchaser shall indemnify and hold harmless the FCH Parties from and against any and all obligations, claims, losses, damages, liabilities and expenses (including, without limitation, reasonable attorneys’ and accountants’ fees and disbursements) arising out of (x) events, contractual obligations, acts or omissions of Purchaser that occur in connection with the ownership or operation of any Property on or after the Closing, or (y) any damage to property of others or injury to or death of any person or any claims for any debts or obligations occurring on or about any Property or any portion thereof at any time or times after the Closing.

     (ii) Whenever either party shall learn through the filing of a claim or the commencement of a proceeding or otherwise of the existence of any liability for which the other party is or may be responsible under this Agreement, the party learning of such liability shall notify the other party promptly and furnish such copies of documents (and make originals thereof available) and such other information as such party may have that may be used or useful in the defense of such claims and shall afford said other party full opportunity to defend the same in the name of such party and shall generally cooperate with said other party in the defense of any such claim.

     (iii) The provisions of this Section 12.1 shall survive the Closing and the termination of this Agreement.

     12.2 Brokerage Commissions. Each of the parties hereto represents to the other parties that it dealt with no broker, finder or like agent in connection with this Agreement or the transactions contemplated hereby. The FCH Parties shall be solely responsible for and shall indemnify and hold harmless the Purchaser and its respective legal representatives, heirs, successors and assigns from and against any loss, liability or expense, including, reasonable attorneys’ fees, arising out of any claim or claims for commissions or other compensation for bringing about this Agreement or the transactions contemplated hereby made by any broker, finder or like agent other than such loss, liability or expense arising from the Purchaser’s breach of its representation made in this Section 12.2. The provisions of this Section 12.2 shall survive the Closing and any termination of this Agreement.

     12.3 Publicity. The parties agree that no party shall, with respect to this Agreement and the transactions contemplated hereby, contact or conduct negotiations with public officials, make any public pronouncements, issue press releases or

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otherwise furnish information regarding this Agreement or the transactions contemplated to any third party without the consent of the other parties, which consent shall not be unreasonably withheld, delayed or conditioned, except as required by law. No such pronouncements or press releases shall identify the Purchaser without the consent of the Purchaser, which may be withheld in Purchaser’s sole discretion. No party, or its employees shall trade in the securities of any parent or affiliate of the Sellers or of the Purchaser until a public announcement of the transactions contemplated by this Agreement has been made. No party shall record this Agreement or any notice thereof.

     12.4 Notices. (a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).

     (a) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

     (b) All such notices shall be addressed,

     If to any of the FCH Parties, to:

FelCor Lodging Trust Incorporated

545 E. John Carpenter Freeway

Suite 1300

Irving, TX 75062

Attn: Mr. Joel M. Eastman

[Telecopier No. 972-444-4949]

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     with a copy to:

FelCor Lodging Trust Incorporated

545 E. John Carpenter Freeway

Suite 1300

Irving, TX 75062

Attn: General Counsel

[Telecopier No. 972-444-4949]

     If to the Purchaser, to:

Hospitality Properties Trust

400 Centre Street

Newton, Massachusetts 02458

Attn: Mr. John G. Murray

[Telecopier No. (617) 969-5730]

     with a copy to:

Sullivan & Worcester LLP

One Post Office Square

Boston, Massachusetts 02109

Attn: Nancy S. Grodberg, Esq.

[Telecopier No. (617) 338-2880]

     (d) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

     12.5 Waivers, Etc. Any waiver of any term or condition of this Agreement, or of the breach of any covenant, representation or warranty contained herein, in any one instance, shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of such term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty, nor shall any failure at any time or times to enforce or require performance of any provision hereof operate as a waiver of or affect in any manner such party’s right at a later time to enforce or require performance of such provision or any other provision hereof. This Agreement may not be amended, nor shall any waiver, change, modification, consent or discharge be effected, except by an instrument in writing executed by or on behalf of the party against whom enforcement of any amendment, waiver, change, modification, consent or discharge is sought.

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     12.6 Assignment; Successors and Assigns. This Agreement and all rights and obligations hereunder shall not be assignable by any party without the written consent of the other parties, except that (x) Purchaser may assign this Agreement to any entity wholly owned, directly or indirectly, by the Purchaser (provided, however, that, in the event this Agreement shall be assigned to any entity wholly owned, directly or indirectly, by the Purchaser, Hospitality Properties Trust shall remain liable for the obligations of the “Purchaser” hereunder). In addition, Purchaser shall have the right to require that the Properties or any part thereof be conveyed directly to its designee. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns. This Agreement is not intended and shall not be construed to create any rights in or to be enforceable in any part by any other persons.

     12.7 Severability. If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.

     12.8 Counterparts, Etc. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.

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     12.9 Governing Law. This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of the State of New York applicable to contracts between residents of New York which are to be performed entirely within New York, regardless of (i) where this Agreement is executed or delivered; or (ii) where any payment or other performance required by this Agreement is made or required to be made; or (iii) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than the State of New York; or (vii) any combination of the foregoing.

     12.10 Waiver of Jury Trial. Except to the extent prohibited by law which cannot be waived, each party hereto waives trial by jury in connection with any action or proceeding of any nature whatsoever arising under, out of or in connection with this Agreement.

     12.11 Performance on Business Days. In the event the date on which performance or payment of any obligation of a party required hereunder is other than a Business Day, the time for payment or performance shall automatically be extended to the first Business Day following such date.

     12.12 Attorneys’ Fees. If any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, the prevailing party therein shall be entitled to receive from the other party the prevailing party’s costs and expenses, including reasonable attorneys’ fees incurred in connection therewith, in preparation therefor and on appeal therefrom, which amounts shall be included in any judgment therein.

     12.13 Section and Other Headings. The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

     12.14 Time of Essence. Time shall be of the essence with respect to the performance of each and every covenant and obligation, and the giving of all notices, under this Agreement.

     12.15 Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING THE PURCHASER, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED WITH

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THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME “HOSPITALITY PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE PURCHASER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE PURCHASER. ALL PERSONS DEALING WITH THE PURCHASER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE PURCHASER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

[SIGNATURES ON FOLLOWING PAGES]

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as a sealed instrument as of the date first above written.

FCH PARTIES:
FELCOR LODGING TRUST INCORPORATED,
a Maryland real estate investment trust
By:	/s/ Joel M. Eastman
	Joel M. Eastman
	Vice President

FELCOR TRS GUARANTOR L.P., a Delaware limited partnership
By:	FelCor TRS Guarantor GP, L.L.C., a
	Delaware limited liability company,
	its General Partner

	By:	/s/ Joel M. Eastman
		Joel M. Eastman
		Vice President
FELCOR LODGING COMPANY, L.L.C.,
a Delaware limited liability company
By:	/s/ Joel M. Eastman
	Joel M. Eastman
	Vice President

FELCOR/JPM ATLANTA CP HOTEL, L.L.C.,
a Delaware limited liability company
By:	/s/ Joel M. Eastman
	Joel M. Eastman
	Vice President

[Signatures Continue on Next Page]

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BHR LODGING TENANT COMPANY, a Delaware company
By:	/s/ Joel M. Eastman
	Joel M. Eastman
	Vice President
BHR OPERATIONS, L.L.C., a Delaware limited liability company
By:	/s/ Joel M. Eastman
	Joel M. Eastman
	Vice President

FELCOR TRS HOLDINGS, L.P., a Delaware limited partnership
By:	FelCor TRS I, L.L.C.,
	a Delaware limited liability company,
	its General Partner
	By:	/s/ Joel M. Eastman
		Joel M. Eastman
		Vice President
BHR TEXAS LEASING, L.P., a Delaware limited partnership
By:	BHR Texas Leasing GP, L.L.C.,
	a Delaware limited liability company,
	its General Partner
	By:	/s/ Joel M. Eastman
		Joel M. Eastman
		Vice President

[Signatures Continue on Next Page]

- ii -

PURCHASER:
HOSPITALITY PROPERTIES TRUST,
a Maryland real estate investment trust
By:	/s/ John G. Murray
	John G. Murray
	President

[Signature Page for FelCor Purchase and Sale Agreement]

- iii -

EX-21.1

EXHIBIT 21.1

LIST OF THE SUBSIDIARIES OF FELCOR LODGING TRUST INCORPORATED
(as of December 31, 2005)

	Name	State and Form of Organization
1.	BHR Canada Tenant Company	Nova Scotia, Canada – Unlimited Liability Company
2.	BHR Lodging Tenant Company	Delaware – Corporation
3.	BHR Operations, L.L.C.	Delaware – Limited Liability Company
4.	BHR Texas Leasing GP, L.L.C.	Delaware – Limited Liability Company
5.	BHR Texas Leasing, L.P.	Delaware – Limited Partnership
6.	Brighton at Kingston Plantation, L.L.C.	Delaware – Limited Liability Company
7.	Center City Hotel Associates	Pennsylvania – Limited Partnership
8.	DJONT Leasing, L.L.C.	Delaware – Limited Liability Company
9.	DJONT Operations, L.L.C.	Delaware – Limited Liability Company
10.	DJONT/CMB Buckhead Leasing, L.L.C.	Delaware – Limited Liability Company
11.	DJONT/CMB Corpus Leasing, L.L.C.	Delaware – Limited Liability Company
12.	DJONT/CMB Deerfield Leasing, L.L.C.	Delaware – Limited Liability Company
13.	DJONT/CMB FCOAM, L.L.C.	Delaware – Limited Liability Company
14.	DJONT/CMB New Orleans Leasing, L.L.C.	Delaware – Limited Liability Company
15.	DJONT/CMB Orsouth Leasing, L.L.C.	Delaware – Limited Liability Company
16.	DJONT/CMB Piscataway Leasing, L.L.C.	Delaware – Limited Liability Company
17.	DJONT/CMB SSF Leasing, L.L.C.	Delaware – Limited Liability Company
18.	DJONT/EPT Leasing, L.L.C.	Delaware – Limited Liability Company
19.	DJONT/EPT Manager, Inc.	Delaware – Corporation
	(f/k/a DJONT/Promus Manager, Inc.)
20.	DJONT/JPM Atlanta ES Leasing, L.L.C.	Delaware – Limited Liability Company
21.	DJONT/JPM Austin Leasing, L.P.	Delaware – Limited Partnership
22.	DJONT/JPM Austin Tenant Co., L.L.C.	Delaware – Limited Liability Company
23.	DJONT/JPM Boca Raton Leasing, L.L.C.	Delaware – Limited Liability Company
24.	DJONT/JPM BWI Leasing, L.L.C.	Delaware – Limited Liability Company

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	Name	State and Form of Organization
25.	DJONT/JPM Denver Leasing, L.L.C.	Delaware – Limited Liability Company
26.	DJONT/JPM Holdings, L.L.C.	Delaware – Limited Liability Company
27.	DJONT/JPM Leasing, L.L.C.	Delaware – Limited Liability Company
28.	DJONT/JPM Orlando Leasing, L.L.C.	Delaware – Limited Liability Company
29.	DJONT/JPM Phoenix Leasing, L.L.C.	Delaware – Limited Liability Company
30.	DJONT/JPM Tenant Co., L.L.C.	Delaware – Limited Liability Company
31.	DJONT/JPM Troy Leasing, L.L.C.	Delaware – Limited Liability Company
32.	DJONT/JPM Wilmington Leasing, L.L.C.	Delaware – Limited Liability Company
33.	E.S. Charlotte Limited Partnership	Minnesota – Limited Partnership
34.	E.S. North, an Indiana Limited Partnership	Indiana – Limited Partnership
35.	EPT Atlanta-Perimeter Center Limited Partnership	Delaware – Limited Partnership
36.	EPT Austin Limited Partnership	Delaware – Limited Partnership
37.	EPT Covina Limited Partnership	Delaware – Limited Partnership
38.	EPT Kansas City Limited Partnership	Delaware – Limited Partnership
39.	EPT Meadowlands Limited Partnership	Delaware – Limited Partnership
40.	EPT Overland Park Limited Partnership	Delaware – Limited Partnership
41.	EPT Raleigh Limited Partnership	Delaware – Limited Partnership
42.	EPT San Antonio Limited Partnership	Delaware – Limited Partnership
43.	FCH/DT BWI Holdings, L.P.	Delaware – Limited Partnership
	(f/k/a B.D. Eastrich BWI No. 1 Limited Partnership)
44.	FCH/DT BWI Hotel, L.L.C.	Delaware – Limited Liability Company
45.	FCH/DT Holdings, L.P.	Delaware – Limited Partnership
46.	FCH/DT Hotels, L.L.C.	Delaware – Limited Liability Company
47.	FCH/DT Leasing, L.L.C.	Delaware – Limited Liability Company
48.	FCH/HHC Hotels, L.L.C.	Delaware – Limited Liability Company
49.	FCH/HHC Leasing, L.L.C.	Delaware – Limited Liability Company
50.	FCH/IHC Hotels, L.P.	Delaware – Limited Partnership

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	Name	State and Form of Organization
51.	FCH/IHC Leasing, L.P.	Delaware – Limited Partnership
52.	FCH/JVEIGHT Leasing, L.L.C.	Delaware – Limited Liability Company
	(f/k/a FCH/Interstate Leasing, L.L.C. and
	FCH/Deerfield Development Co., L.L.C.)
53.	FCH/PSH, L.P.	Pennsylvania – Limited Partnership
	(f/k/a Rouse & Associates-SHS)
54.	FCH/SH Leasing, L.L.C.	Delaware – Limited Liability Company
55.	FCH/SH Leasing II, L.L.C.	Delaware – Limited Liability Company
56.	FelCor Airport Utilities, L.L.C.	Delaware – Limited Liability Company
57.	FelCor Canada Co.	Nova Scotia, Canada – Unlimited Liability Company
58.	FelCor Canada Holding GP, L.L.C.	Delaware – Limited Liability Company
59.	FelCor Canada Holding, L.P.	Delaware – Limited Partnership
60.	FelCor Chat-Lem, L.L.C.	Delaware – Limited Liability Company
61.	FelCor Eight Hotels, L.L.C.	Delaware – Limited Liability Company
62.	FelCor Holdings Trust	Massachusetts – Trust
63.	FelCor Hotel Asset Company, L.L.C.	Delaware – Limited Liability Company
64.	FelCor Hotel Operating Company, L.L.C.	Delaware – Limited Liability Company
65.	FelCor Lodging Company, L.L.C.	Delaware – Limited Liability Company
66.	FelCor Lodging Holding Company, L.L.C.	Delaware – Limited Liability Company
67.	FelCor Lodging Limited Partnership	Delaware – Limited Partnership
	(f/k/a FelCor Suites Limited Partnership)
68.	FelCor Marshall Motels, L.L.C.	Delaware – Limited Liability Company
69.	FelCor Nevada Holdings, L.L.C.	Nevada – Limited Liability Company
70.	FelCor Omaha Hotel Company, L.L.C.	Delaware – Limited Liability Company
71.	FelCor Pennsylvania Company, L.L.C.	Delaware – Limited Liability Company
72.	FelCor Philadelphia Center, L.L.C.	Delaware – Limited Liability Company
73.	FelCor TRS Holdings, L.P.	Delaware – Limited Partnership
74.	FelCor TRS I, L.L.C.	Delaware – Limited Liability Company
75.	FelCor/Charlotte Hotel, L.L.C.	Delaware – Limited Liability Company

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	Name	State and Form of Organization
76.	FelCor/CMB Buckhead Hotel, L.L.C.	Delaware – Limited Liability Company
77.	FelCor/CMB Corpus Holdings, L.P.	Delaware – Limited Partnership
78.	FelCor/CMB Corpus Hotel, L.L.C.	Delaware – Limited Liability Company
79.	FelCor/CMB Deerfield Hotel, L.L.C.	Delaware – Limited Liability Company
80.	FelCor/CMB Marlborough Hotel, L.L.C.	Delaware – Limited Liability Company
81.	FelCor/CMB New Orleans Hotel, L.L.C.	Delaware – Limited Liability Company
82.	FelCor/CMB Orsouth Holdings, L.P.	Delaware – Limited Partnership
83.	FelCor/CMB Orsouth Hotel, L.L.C.	Delaware – Limited Liability Company
84.	FelCor/CMB Piscataway Hotel, L.L.C.	Delaware – Limited Liability Company
85.	FelCor/CMB SSF Holdings, L.P.	Delaware – Limited Partnership
86.	FelCor/CMB SSF Hotel, L.L.C.	Delaware – Limited Liability Company
87.	FelCor/CSS Holdings, L.P.	Delaware – Limited Partnership
88.	FelCor/CSS Hotels, L.L.C.	Delaware – Limited Liability Company
89.	FelCor/Indianapolis Hotel, L.L.C.	Delaware – Limited Liability Company
90.	FelCor/JPM Atlanta CP Hotel, L.L.C.	Delaware – Limited Liability Company
91.	FelCor/JPM Atlanta ES Hotel, L.L.C.	Delaware – Limited Liability Company
92.	FelCor/JPM Austin Holdings, L.P.	Delaware – Limited Partnership
93.	FelCor/JPM Austin Hotel, L.L.C.	Delaware – Limited Liability Company
94.	FelCor/JPM Boca Raton Hotel, L.L.C.	Delaware – Limited Liability Company
95.	FelCor/JPM BWI Hotel, L.L.C.	Delaware – Limited Liability Company
96.	FelCor/JPM Denver Hotel, L.L.C.	Delaware – Limited Liability Company
97.	FelCor/JPM Holdings, L.L.C.	Delaware – Limited Liability Company
98.	FelCor/JPM Hotels, L.L.C.	Delaware – Limited Liability Company
99.	FelCor/JPM Lodging Co., L.L.C.	Delaware – Limited Liability Company
100.	FelCor/JPM Orlando Hotel, L.L.C.	Delaware – Limited Liability Company
101.	FelCor/JPM Phoenix Hotel, L.L.C.	Delaware – Limited Liability Company
102.	FelCor/JPM Troy Hotel, L.L.C.	Delaware – Limited Liability Company

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	Name	State and Form of Organization
103.	FelCor/JPM Wilmington Leasing, L.L.C.	Delaware – Limited Liability Company
104.	FelCor/LAX Holdings, L.P.	Delaware – Limited Partnership
105.	FelCor/LAX Hotels, L.L.C.	Delaware – Limited Liability Company
106.	FelCor/MM Holdings, L.P.	Delaware – Limited Partnership
107.	FelCor/MM Hotels, L.L.C.	Delaware – Limited Liability Company
108.	FelCor/MM S-7 Holdings, L.P.	Delaware – Limited Partnership
109.	FelCor/MM S-7 Hotels, L.L.C.	Delaware – Limited Liability Company
110.	FelCor/New Orleans Annex, L.L.C.	Delaware – Limited Liability Company
111.	FelCor/St. Paul Holdings, L.P.	Delaware – Limited Partnership
112.	FelCor/Tysons Corner Hotel Company, L.L.C.	Delaware – Limited Liability Company
113.	FHAC Nevada Holdings, L.L.C.	Nevada – Limited Liability Company
114.	FHAC Texas Holdings, L.P.	Texas – Limited Partnership
115.	Grande Palms, L.L.C.	Delaware – Limited Liability Company
116.	HI Chat-Lem/Iowa-New Orleans Joint Venture	Louisiana – General Partnership
117.	Kingston Plantation Development Corp.	Delaware – Corporation
118.	Los Angeles International Airport Hotel	Texas – Limited Partnership
	Associates, a Texas Limited Partnership
119.	Margate Towers at Kingston Plantation, L.L.C.	Delaware – Limited Liability Company
120.	MHV Joint Venture	Texas – General Partnership
121.	Myrtle Beach Hotels, L.L.C.	Delaware – Limited Liability Company
122.	Park Central Joint Venture	Texas – General Partnership
123.	Promus/FCH Condominium Company, L.L.C.	Delaware – Limited Liability Company
124.	Promus/FCH Development Company, L.L.C.	Delaware – Limited Liability Company
125.	Promus/FelCor Hotels, L.L.C.	Delaware – Limited Liability Company
126.	Promus/FelCor Lombard Venture	Illinois – General Partnership
127.	Promus/FelCor Manager, Inc.	Delaware – Corporation
128.	Promus/FelCor Parsippany Venture	New Jersey – General Partnership
129.	Promus/FelCor San Antonio Venture	Texas – General Partnership

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	Name	State and Form of Organization
130.	Tysons Corner Hotel Company, L.L.C.	Delaware – Limited Liability Company
131.	FelCor/Iowa-New Orleans Chat-Lem Hotel, L.L.C.	Delaware – Limited Liability Company
132.	FelCor Miami Airport Hotel Company, L.L.C.	Delaware – Limited Liability Company
133.	FelCor TRS Borrower 1, L.P.	Delaware – Limited Partnership
134.	FelCor TRS Borrower GP 1, L.L.C.	Delaware – Limited Liability Company
135.	FelCor TRS Borrower 2, L.P.	Delaware – Limited Partnership
136.	FelCor TRS Borrower GP 2, L.L.C.	Delaware – Limited Liability Company
137.	FelCor TRS Borrower 3, L.P.	Delaware – Limited Partnership
138.	FelCor TRS Borrower GP 3, L.L.C.	Delaware – Limited Liability Company
139.	FelCor TRS Borrower 4, L.L.C.	Delaware – Limited Liability Company
140.	FelCor TRS Guarantor, L.P.	Delaware – Limited Partnership
141.	FelCor TRS Guarantor GP, L.L.C.	Delaware – Limited Liability Company

-6-

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (Nos. 333-04947, 333-25717, 333-46357, 333-51558, 333-62599, 333-122221, 333-125040, and 333-128862) and Form S-8 (File Nos. 333-32579, 333-66041, 333-69869, 333-102662, 333-126228, 333-126230) of FelCor Lodging Trust Incorporated of our report dated March 14, 2006, relating to the financial statements, financial statement schedule, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Dallas, Texas
March 15, 2006

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Richard A. Smith, certify that:

1.	I have reviewed this Annual Report on Form 10-K of FelCor Lodging Trust Incorporated;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 15, 2006

/s/Richard A. Smith  

Richard A. Smith 

Chief Executive Officer 

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Andrew J Welch, certify that:

1.	I have reviewed this Annual Report on Form 10-K of FelCor Lodging Trust Incorporated;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 15, 2006

/s/ Andrew J. Welch  

Andrew J. Welch 

Chief Financial Officer 

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of FelCor Lodging Trust Incorporated (the “Registrant”) on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report), the undersigned hereby certifies, in the capacity as indicated below and pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant.

March 15, 2006	/s/Richard A. Smith
	Richard A. Smith
	Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of FelCor Lodging Trust Incorporated (the “Registrant”) on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report), the undersigned hereby certifies, in the capacity as indicated below and pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant.

March 15, 2006	/s/ Andrew J. Welch
	Andrew J. Welch
	Chief Financial Officer