10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended September 30, 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	Identification No.)
organization)
545 E. John Carpenter Freeway, Suite 1300, Irving, Texas	75062
(Address of principal executive offices)	(Zip Code)

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

     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. þ Yes o No

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). þ Yes o No

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

     The number of shares of Common Stock, par value $.01 per share, of FelCor Lodging Trust Incorporated outstanding on October 31, 2005, was 60,181,399.

INDEX

		Page
	PART I. — FINANCIAL INFORMATION
Item 1.	Financial Statements		3
	Consolidated Balance Sheets September 30, 2005 and December 31, 2004 (unaudited)		3
	Consolidated Statements of Operations — For the Three and Nine Months Ended September 30, 2005 and 2004 (unaudited)		4
	Consolidated Statements of Comprehensive Income (Loss) — For the Three and Nine Months Ended September 30, 2005 and 2004 (unaudited)		5
	Consolidated Statements of Cash Flows — For the Nine Months Ended September 30, 2005 and 2004 (unaudited)		6
	Notes to Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
	General		17
	Financial Comparison		17
	Results of Operations		18
	Non-GAAP Financial Measures		21
	Hotel Portfolio Composition		27
	Hotel Operating Statistics		28
	Liquidity and Capital Resources		30
	Inflation		31
	Seasonality		32
	Disclosure Regarding Forward-Looking Statements		32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		33
Item 4.	Controls and Procedures		34
	PART II. — OTHER INFORMATION
Item 2.	Changes in Securities and Use of Proceeds		35
Item 6.	Exhibits		35
SIGNATURE			36
Term Credit Agreement
Certification of Chief Executive Officer Pursuant to Section 302
Certification of Principal Financial Officer Pursuant to Section 302
Certification of Chief Executive Officer Pursuant to Section 906
Certification of Principal Financial Officer Pursuant to Section 906

2

PART I. — FINANCIAL INFORMATION

Item 1. Financial Statements

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

	September 30,			December 31,
	2005			2004
ASSETS
Investment in hotels, net of accumulated depreciation of $1,008,200 at September 30, 2005 and $948,631 at December 31, 2004	$	2,862,103		$	2,955,766
Investment in unconsolidated entities		107,621			110,843
Hotels held for sale		2,599			255
Cash and cash equivalents		170,923			119,310
Restricted cash		27,170			34,736
Accounts receivable, net of allowance for doubtful accounts of $2,294 at September 30, 2005 and $905 at December 31, 2004		58,945			51,845
Deferred expenses, net of accumulated amortization of $12,049 at September 30, 2005 and $14,935 at December 31, 2004		15,483			18,804
Condominium development project		9,326			1,613
Other assets		23,810			24,486
Total assets	$	3,277,980		$	3,317,658
LIABILITIES AND STOCKHOLDERS’ EQUITY
Debt, net of discount of $3,657 at September 30, 2005 and $4,529 at December 31, 2004	$	1,708,642		$	1,767,122
Distributions payable		8,592			8,867
Accrued expenses and other liabilities		158,987			124,922
Minority interest in FelCor LP, 2,763 and 2,788 units issued and outstanding at September 30, 2005 and December 31, 2004, respectively		38,386			39,659
Minority interest in other partnerships		48,605			46,765
Total liabilities and minority interest		1,963,212			1,987,335
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value, 20,000 shares authorized:
Series A Cumulative Convertible Preferred Stock, 12,880 shares, liquidation value of $322,012, issued and outstanding at September 30, 2005 and December 31, 2004		309,362			309,362
Series B Cumulative Redeemable Preferred Stock, 0 and 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 September 30, 2005		169,412			—
Common stock, $.01 par value, 200,000 shares authorized and 69,441 and 69,436 shares issued, including shares in treasury, at September 30, 2005 and December 31, 2004, respectively		694			694
Additional paid-in capital		2,087,304			2,085,189
Accumulated other comprehensive income		19,445			15,780
Accumulated deficit		(1,088,799	)		(1,066,143	)
Less: Common stock in treasury, at cost, of 9,231 and 9,619 shares at September 30, 2005 and December 31, 2004, respectively		(182,650	)		(183,954	)
Total stockholders’ equity		1,314,768			1,330,323
Total liabilities and stockholders’ equity	$	3,277,980		$	3,317,658

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

3

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended September 30, 2005 and 2004

(unaudited, in thousands, except for per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Revenues:
Hotel operating revenue	$	313,018		$	287,154		$	922,959		$	857,493
Retail space rental and other revenue		1,632			2,166			1,908			2,590
Total revenues		314,650			289,320			924,867			860,083
Expenses:
Hotel departmental expenses		108,405			103,078			317,692			305,105
Other property operating costs		92,758			83,026			267,744			246,430
Management and franchise fees		16,100			15,355			47,087			44,712
Taxes, insurance and lease expense		31,792			28,389			94,359			87,006
Corporate expenses		4,839			3,787			14,108			11,529
Depreciation		30,390			28,533			89,534			83,943
Total operating expenses		284,284			262,168			830,524			778,725
Operating income		30,366			27,152			94,343			81,358
Interest expense, net		(33,173	)		(34,303	)		(98,960	)		(113,090	)
Charge-off of deferred financing costs		—			(1,920	)		—			(6,094	)
Loss on early extinguishment of debt		—			(10,987	)		—			(39,233	)
Impairment loss		(569	)		—			(569	)		—
Hurricane loss		(2,309	)		(2,125	)		(2,309	)		(2,125	)
Gain on swap termination		—			—			—			1,005
Loss before equity in income of unconsolidated entities, minority interests and gain on sales of assets		(5,685	)		(22,183	)		(7,495	)		(78,179	)
Equity in income from unconsolidated entities		3,260			12,019			8,229			15,692
Gain on sale of assets		344			1,094			733			1,094
Minority interests		963			260			1,938			3,285
Income (loss) from continuing operations		(1,118	)		(8,810	)		3,405			(58,108	)
Discontinued operations		12,376			(28,175	)		10,190			(31,249	)
Net income (loss)		11,258			(36,985	)		13,595			(89,357	)
Preferred dividends		(9,829	)		(9,343	)		(29,729	)		(25,039	)
Issuance costs of redeemed preferred stock		(1,324	)		—			(6,522	)		—
Net income (loss) applicable to common stockholders	$	105		$	(46,328	)	$	(22,656	)	$	(114,396	)
Basic and diluted loss per common share data:
Net loss from continuing operations	$	(0.21	)	$	(0.31	)	$	(0.55	)	$	(1.41	)
Net income (loss)	$	0.00		$	(0.78	)	$	(0.38	)	$	(1.94	)
Weighted average common shares outstanding		59,442			59,075			59,398			58,993

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

4

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Three and Nine Months Ended September 30, 2005 and 2004

(unaudited, in thousands)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005		2004			2005		2004
Net income (loss)	$	11,258	$	(36,985	)	$	13,595	$	(89,357	)
Unrealized gain (loss) on swaps		1,020		—			1,767		—
Foreign currency translation adjustment		2,891		4,489			1,897		3,519
Comprehensive income (loss)	$	15,169	$	(32,496	)	$	17,259	$	(85,838	)

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

5

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2005 and 2004

(unaudited, in thousands)

	Nine Months Ended September 30,
	2005			2004
Cash flows from operating activities:
Net income (loss)	$	13,595		$	(89,357	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		91,795			92,242
Loss (gain) on sale of assets		(10,022	)		(3,210	)
Amortization of deferred financing fees		2,522			3,230
Accretion of debt, net of discount		871			200
Amortization of unearned compensation		2,171			1,750
Equity in income from unconsolidated entities		(8,229	)		(15,692	)
Distributions of income from unconsolidated entities		670			11,339
Impairment loss		1,860			33,027
Bad debt reserve		1,389			4
Charge-off of deferred financing costs		—			6,094
Gain (loss) on early extinguishment of debt		(2,538	)		39,233
Minority interests		(1,470	)		(6,028	)
Changes in assets and liabilities:
Accounts receivable		(9,518	)		(12,340	)
Restricted cash — operations		(7,784	)		(19,698	)
Other assets		569			4,912
Accrued expenses and other liabilities		41,295			8,413
Net cash flow provided by operating activities		117,176			54,119
Cash flows (used in) provided by investing activities:
Acquisition of hotel		—			(27,759	)
Acquisition of interest in venture		(1,197	)		—
Cash from consolidation of venture		3,204			—
Improvements and additions to hotels		(76,632	)		(58,597	)
Additions to condominium project		(7,778	)		—
Proceeds from sale of assets		52,354			66,866
Increase in restricted cash — investing		8,454			2,058
Capital contributions to unconsolidated entities		(700	)		—
Distributions of capital from unconsolidated entities		6,021			4,602
Net cash flow used in investing activities		(16,274	)		(12,830	)
Cash flows (used in) provided by financing activities:
Proceeds from borrowings		6,002			483,802
Repayment of borrowings		(25,951	)		(732,458	)
Payment of deferred financing fees		—			(4,283	)
Increase in restricted cash — financing		4,429			—
Contributions from minority interest holders		1,591			2,436
Net proceeds from sale of preferred stock		164,221			156,094
Redemption of preferred stock		(169,395	)		—
Distributions paid to minority interest holders		—			(4,000	)
Distributions paid to preferred stockholders		(30,231	)		(21,676	)
Net cash flow used in financing activities		(49,334	)		(120,085	)
Effect of exchange rate changes on cash		45			1,020
Net change in cash and cash equivalents		51,613			(77,776	)
Cash and cash equivalents at beginning of periods		119,310			231,885
Cash and cash equivalents at end of periods	$	170,923		$	154,109
Supplemental cash flow information —
Interest paid	$	85,626		$	118,427

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

6

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 public lodging REITs, based on total assets and number of hotels owned, holding ownership interests in 134 hotels at September 30, 2005. We are the owner of the largest number of Embassy Suites Hotels^® and Doubletree Guest Suites^® hotels in North America. Our portfolio includes 68 full service, all suite hotels.

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

     At September 30, 2005, we had ownership interests in 134 hotels. We owned a 100% real estate interest in 105 hotels, a 90% or greater interest in entities owning seven hotels, a 60% interest in an entity owning two hotels, a 75% interest in an entity owning one hotel and 50% interests in unconsolidated entities that own 19 hotels. As a result of our ownership interests in the operating lessees of 129 of these hotels, we reflect their operating revenues and expenses in our consolidated statements of operations. The operations of 128 of the 129 consolidated hotels were included in continuing operations at September 30, 2005. The remaining hotel was subject to a firm sale contract at September 30, 2005, and its operations were included in discontinued operations. The operating revenues and expenses of the remaining five hotels are unconsolidated.

     At September 30, 2005, we had an aggregate of 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 128 hotels included in our consolidated continuing operations at September 30, 2005:

Brand	Hotels		Rooms
Embassy Suites Hotels		55		13,922
Doubletree® and Doubletree Guest Suites		10		2,206
Holiday Inn® — branded		34		11,644
Crowne Plaza® and Crowne Plaza Suites®		12		4,025
Sheraton® and Sheraton Suites®		10		3,269
Other brands		7		1,811
Total hotels		128

     The hotels shown in the above table are located in the United States (30 states) and Canada (two hotels), with concentrations in Texas (25 hotels), California (19 hotels), Florida (16 hotels) and Georgia (12 hotels). Approximately 55% of our hotel room revenues in continuing operations were generated from hotels in these four states during the nine months ended September 30, 2005.

     At September 30, 2005, of the 128 consolidated hotels included in continuing operations, (i) subsidiaries of Hilton Hotels Corporation, or Hilton, managed 65, (ii) subsidiaries of InterContinental Hotels Group, or IHG, managed 49 (iii) subsidiaries of Starwood Hotels & Resorts Worldwide, Inc., or Starwood, managed 11, and (iv) other 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 on previously reported net loss or stockholders’ equity.

7

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization ¾ (continued)

     The financial information for the three and nine months ended September 30, 2005 and 2004, is unaudited. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, 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. The accompanying financial statements for the three and nine months ended September 30, 2005 and 2004, include adjustments based on management’s estimates (consisting of normal and recurring accruals), which we consider necessary for a fair presentation of the results for the periods. The financial information should be read in conjunction with the consolidated financial statements for the year ended December 31, 2004, included in our Annual Report on Form 10-K for the year ended December 31, 2004 (“Form 10-K”). Operating results for the three and nine months ended September 30, 2005, are not necessarily indicative of the results that may be expected for the entire year.

2. 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 rates in effect at the balance sheet date. Resulting translation adjustments are reflected in accumulated other comprehensive income included in stockholders’ equity.

3. Investment in Unconsolidated Entities

     We owned 50% interests in joint venture entities that owned 19 hotels at September 30, 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 unaudited combined financial information for 100% of these unconsolidated entities is as follows (in thousands):

	September 30,		December 31,
	2005		2004
Balance sheet information:
Investment in hotels, net of accumulated depreciation	$	259,875	$	282,028
Total assets	$	287,672	$	313,104
Debt	$	205,783	$	218,292
Total liabilities	$	208,825	$	237,597
Equity	$	78,847	$	75,507

     Debt of our unconsolidated entities at September 30, 2005, consisted entirely of non-recourse mortgage debt.

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

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005		2004			2005		2004
Total revenues	$	20,384	$	17,212		$	57,652	$	49,623
Net income	$	6,543	$	20,828	(a)	$	16,962	$	29,610	(a)

(a) Includes $15.9 million from the gain on the sale of residential condominium units development in Myrtle Beach, South Carolina, which was realized in September 2004. Our share of the gain was approximately $7.9 million. We included additional gains of approximately $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 development joint venture.

8

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Investment in Unconsolidated Entities — (continued)

     In May 2005, but effective as of February 28, 2005, we acquired for $1.2 million an additional 25% interest in a joint venture in which we had previously owned a 50% interest. This joint venture owns a single hotel and has been consolidated in our financial statements since the acquisition of our additional interest.

4. Debt

Debt at September 30, 2005 and December 31, 2004, consisted of the following (in thousands):

								Balance Outstanding
	Encumbered		Interest Rate at			Maturity		September 30,		December 31,
	Hotels		September 30, 2005			Date		2005		2004
Promissory note	none			5.92	(a)	June 2016		$	650	$	650
Senior unsecured term notes	none			7.63		October 2007			123,125		122,426
Senior unsecured term notes	none			9.00		June 2011			298,597		298,409
Senior unsecured term notes	none			7.79	(b)	June 2011			290,000		290,000
Total unsecured debt				8.27					712,372		711,485
Mortgage debt	9 hotels			6.52		July 2009 - 2014			104,586		105,951
Mortgage debt	6 hotels			5.74	(c)	August 2007			85,053		86,412
Mortgage debt	10 hotels			6.13	(c)	May 2006			142,008		144,669
Mortgage debt	15 hotels			7.24		Nov. 2007			125,017		127,316
Mortgage debt	7 hotels			7.32		April 2009			128,218		130,458
Mortgage debt	6 hotels			7.55		June 2009			66,768		67,959
Mortgage debt	8 hotels			8.70		May 2010			173,363		175,504
Mortgage debt	7 hotels			8.73		May 2010			133,809		135,690
Mortgage debt	1 hotel			6.77	(a)	August 2008			15,500		15,500
Mortgage debt	1 hotel			7.91		December 2007			10,523		—
Mortgage debt		—		—			—		—		49,476
Mortgage debt		—		—			—		—		10,521
Other	1 hotel			9.17		August 2011			5,423		6,181
Construction loan		—		5.76	(d)	October 2007			6,002		—
Total secured debt(e)	71 hotels			7.36					996,270		1,055,637
Total(e)				7.74	%			$	1,708,642	$	1,767,122

(a)	Variable interest rate based on LIBOR. The six month LIBOR was 3.53% at September 30, 2005.
(b)	The stated interest rate on this debt is six month LIBOR plus 4.25%. We have swapped $100 million of this floating rate debt for a fixed rate of 7.80%. The resulting weighted average rate on these notes was 7.79% at September 30, 2005.
(c)	Variable interest rate based on LIBOR. This debt has two, one-year extension options, subject to certain contingencies.
(d)	This represents a $69.8 million recourse construction loan facility for the development of a 184-unit condominium project in Myrtle Beach, South Carolina. The interest on this facility is currently based on LIBOR plus 225 basis points and is being capitalized as part of the cost of the project. The interest rate may be reduced to LIBOR plus 200 basis points when the project is 55% complete and upon satisfaction of certain other requirements.
(e)	Interest rates are calculated based on the weighted average outstanding debt at September 30, 2005.

     We reported interest expense of $33.2 million and $34.3 million, which is net of interest income of $1.2 million and $0.5 million and capitalized interest of $0.4 million and $0.4 million for the three months ended September 30, 2005 and 2004, respectively. We reported interest expense of $99.0 million and $113.1 million, which is net of interest income of $2.6 million and $1.9 million and capitalized interest of $1.4 million and $0.6 million for the nine months ended September 30, 2005 and 2004, respectively.

9

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Debt ¾ (continued)

     At September 30, 2005, we had aggregate mortgage indebtedness of approximately $1.0 billion that was secured by 71 of our consolidated hotels with an aggregate book value of approximately $1.7 billion. With the exception of the $6.0 million construction loan, 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 carve-out provisions. Loans secured by 33 hotels provide for lock-box arrangements. With respect to loans secured by 15 of these hotels, if the debt service coverage ratios fall below certain levels and certain other conditions are met, the lender is entitled to apply the revenues from the hotels securing the loan to satisfy current requirements for debt service, taxes, insurance and other reserves, and to hold the balance of the revenues, if any, until debt service coverage ratios again reach specified levels.

     With respect to loans secured by the remaining 18 hotels, the owner is permitted to retain 115% of budgeted hotel operating expenses before the remaining revenues would become subject to a lock-box arrangement if a specified debt service coverage ratio was not met. The lender is entitled to apply the remaining revenues to satisfy current requirements for debt service, taxes, insurance and other reserves with any excess cash being returned to the owner. The mortgage loans secured by 16 of these 18 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. Ten of these 18 hotels, which accounted for 6% of our total revenues in 2004, fell below the applicable debt service coverage ratio in 2004 and are currently 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.

5. Derivatives

     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 GAAP 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.

     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.

     At September 30, 2005, we had three interest rate swaps, with an 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 $1.9 million at September 30, 2005, and represents the amount we would receive if the agreements were terminated, based on current market rates. The interest rate received on these interest rate swaps is 4.25% plus LIBOR and the interest rate paid is 7.80%. These swaps were 100% effective through September 30, 2005.

10

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Derivatives — (continued)

     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 $6,100 and by $0.4 million during the three and nine months ended September 30, 2005, 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- or better.

     We had fair value hedges with a notional amount of $400 million that we terminated in 2004. These fair value hedges decreased interest by $4.2 million during the nine months ended September 30, 2004. In June 2004, we unwound six interest rate swap agreements with an aggregate notional amount of $175 million that were matched with the $175 million notes due 2004 that were redeemed. A $1.0 million gain was recorded, offsetting the loss on the redemption of the debt. Also in June 2004, five additional swaps with an aggregate notional 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 cost decreased the book value of these notes and is being amortized to interest expense over the life of the debt. In July 2004, the remaining four interest rate swap agreements, having a notional value of $100 million, were unwound at a cost of $1.3 million. The $1.3 million cost decreased the mortgage debt due November 2007 and is being amortized to interest expense over the life of this debt.

     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 $142.9 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 $86 million, to fulfill requirements under an $86 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 insignificant at September 30, 2005, and resulted in no net earnings impact.

6. Preferred Stock

     We completed the issuance of 5.4 million depositary shares, each depositary share representing 1/100 of a share of our 8% Series C Cumulative Redeemable Preferred Stock, on April 8, 2005, and issued an additional 1.4 million depositary shares on August 30, 2005, with gross proceeds of $135 million and $34.4 million, respectively. The gross proceeds were used to redeem a like number of shares of our 9% Series B Preferred Stock. The redemption of the Series B preferred shares resulted in a reduction in income available to common stockholders representing the original issuance cost of the Series B preferred shares redeemed, of $1.3 million and $6.5 million for the three and nine months ended September 30, 2005, respectively.

11

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
Room revenue	$	256,721	$	232,089	$	748,519	$	688,339
Food and beverage revenue		40,123		39,960		127,993		124,176
Other operating departments		16,174		15,105		46,447		44,978
Total hotel operating revenue	$	313,018	$	287,154	$	922,959	$	857,493

     For the first nine months of both 2005 and 2004, over 99% of our revenue was comprised of hotel operating revenue, which included 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 1% of our revenue was from retail space rental revenue and other sources.

     Hotel departmental expenses from continuing operations were comprised of the following:

	Three Months Ended September 30,
	2005				2004
			% of Total				% of Total
			Hotel				Hotel
	Dollars in		Operating		Dollars in		Operating
	Thousands		Revenue		Thousands		Revenue
Room	$	67,307		21.5	$	63,166		22.0
Food and beverage		32,890		10.5		32,461		11.3
Other operating departments		8,208		2.6		7,451		2.6
Total hotel departmental expenses	$	108,405		34.6	$	103,078		35.9

	Nine Months Ended September 30,
	2005				2004
			% of Total				% of Total
			Hotel				Hotel
	Dollars in		Operating		Dollars in		Operating
	Thousands		Revenue		Thousands		Revenue
Room	$	193,581		21.0	$	183,633		21.4
Food and beverage		100,829		10.9		99,240		11.6
Other operating departments		23,282		2.5		22,232		2.6
Total hotel departmental expenses	$	317,692		34.4	$	305,105		35.6

12

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     Other property operating costs from continuing operations were comprised of the following:

	Three Months Ended September 30,
	2005				2004
			% of Total				% of Total
			Hotel				Hotel
	Dollars in		Operating		Dollars in		Operating
	Thousands		Revenue		Thousands		Revenue
Hotel general and administrative expense	$	31,249		9.9	$	26,810		9.3
Marketing		26,471		8.5		24,234		8.4
Repair and maintenance		17,114		5.5		15,676		5.5
Energy		17,924		5.7		16,306		5.7
Total other property operating costs	$	92,758		29.6	$	83,026		28.9

	Nine Months Ended September 30,
	2005				2004
			% of Total				% of Total
			Hotel				Hotel
	Dollars in		Operating		Dollars in		Operating
	Thousands		Revenue		Thousands		Revenue
Hotel general and administrative expense	$	88,221		9.6	$	80,459		9.4
Marketing		79,584		8.6		74,191		8.7
Repair and maintenance		51,010		5.5		47,461		5.5
Energy		48,929		5.3		44,319		5.1
Total other property operating costs	$	267,744		29.0	$	246,430		28.7

     Included in hotel departmental expenses and other property operating costs are hotel employee compensation and benefit expenses of $98.6 million and $93.8 million for the three months ended September 30, 2005 and 2004, respectively, and $292.3 million and $279.8 million for the nine months ended September 30, 2005 and 2004, respectively.

8. Taxes, Insurance and Lease Expense

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
Operating lease expense (a)	$	17,239	$	15,132	$	49,892	$	45,726
Real estate and other taxes		11,289		9,608		34,266		31,140
Property insurance, general liability insurance and other		3,264		3,649		10,201		10,140
Total taxes, insurance and lease expense	$	31,792	$	28,389	$	94,359	$	87,006

(a) Includes hotel lease expense of $14.7 million and $13.1 million associated with 14 hotels and 15 hotels owned by unconsolidated entities for the three months ended September 30, 2005 and 2004, respectively, and $42.8 million and $39.2 million for the nine months ended September 30, 2005 and 2004, respectively. Included in lease expense are $8.7 million and $6.6 million in percentage rent based on operating results for the three months ended September 30, 2005 and 2004, respectively, and $23.4 million and $18.8 million in percentage rent for the nine months ended September 30, 2005 and 2004, respectively.

13

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Impairment

     Our hotels are comprised of operations and cash flows that can clearly be distinguished, both operationally and for financial reporting purposes. Accordingly, we consider our hotels to be components as defined by Statement of Financial Accounting Standards 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” or SFAS 144, for purposes of determining impairment charges and reporting discontinued operations. We recorded impairment charges under the provisions of the SFAS 144 of $1.3 million during the nine months ended September 30, 2005. We recorded $0.7 million of impairment charges in June 2005, with respect to one of our non-strategic hotels included in continuing operations. In July 2005, we entered into a contract for sale of this hotel and reduced our carrying value to the purchase contract amount. We recorded $0.6 million of impairment charges in September 2005, with respect to one of our non-strategic hotels included in continuing operations. In October 2005, we entered into a contract for sale of this hotel and reduced its carrying value to the purchase contract amount.

     We continue to review and evaluate our hotel portfolio on an ongoing basis and may identify additional non-strategic hotels for sale based upon various factors. If we decide to sell additional hotels, or if our estimates of market value for hotels currently designated as non-strategic decline, we could incur future impairment charges.

10. Discontinued Operations

     Included in discontinued operations are the results of operations, through the date of dispositions, of 15 hotels sold or otherwise disposed of in 2005, one hotel designated as held for sale at September 30, 2005, and 18 hotels disposed of in 2004. Condensed financial information for the hotels included in discontinued operations is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Operating revenue	$	4,881		$	30,212		$	29,655		$	110,501
Operating expenses		3,924			29,421			28,516			110,474
Operating income		957			791			1,139			27
Direct interest costs		—			(1,037	)		(963	)		(3,108	)
Gain on early extinguishment of debt		2,538			—			2,538			—
Impairment loss		—			(33,027	)		(1,291	)		(33,027	)
Gain on sale of assets		9,449			3,058			9,235			2,116
Minority interest		(568	)		2,040			(468	)		2,743
Income (loss) from discontinued operations	$	12,376		$	(28,175	)	$	10,190		$	(31,249	)

     In the first quarter of 2005, we sold the Holiday Inn Salt Lake City, Utah, for $1.2 million.

     In the second quarter of 2005, we sold the Whispering Woods Conference Center in Olive Branch, Mississippi; and the Holiday Inn and Holiday Inn Select hotels in Moline, Illinois, for aggregate gross proceeds of $12.3 million.

     In the third quarter of 2005, we sold the Holiday Inn Jackson North, Mississippi, the Holiday Inn Waco, Texas, and the Embassy Suites St. Louis, Missouri, for aggregate gross proceeds of $44.1 million.

     In the second and third quarter of 2005, we surrendered eight limited service hotels, owned by a consolidated joint venture, to their non-recourse mortgage holder. We recorded a gain of $2.5 million representing the debt extinguished in excess of the book value of these hotels.

     During 2004, we sold 17 hotels for gross proceeds of $157 million. Also in 2004, we terminated a hotel lease and incurred $4.9 million in lease termination charges upon the return of the asset to the lessor.

14

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Earnings (Loss) Per Share

     The following table sets forth the computation of basic and diluted loss per share (in thousands, except per share data):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Numerator:
Income (loss) from continuing operations	$	(1,118	)	$	(8,810	)	$	3,405		$	(58,108	)
Less: Preferred dividends		(9,829	)		(9,343	)		(29,729	)		(25,039	)
Issuance costs of redeemed preferred stock		(1,324	)		—			(6,522	)		—
Loss from continuing operations applicable to common stockholders		(12,271	)		(18,153	)		(32,846	)		(83,147	)
Discontinued operations		12,376			(28,175	)		10,190			(31,249	)
Net loss applicable to common stockholders	$	105		$	(46,328	)	$	(22,656	)	$	(114,396	)
Denominator:
Denominator for basic earnings per share		59,422			59,075			59,398			58,993
Denominator for diluted earnings per share		59,422			59,075			59,398			58,993
Earnings (loss) per share data:
Basic:
Loss from continuing operations	$	(0.21	)	$	(0.31	)	$	(0.55	)	$	(1.41	)
Discontinued operations	$	0.21		$	(0.47	)	$	0.17		$	(0.53	)
Net loss	$	0.00		$	(0.78	)	$	(0.38	)	$	(1.94	)
Diluted:
Loss from continuing operations	$	(0.21	)	$	(0.31	)	$	(0.55	)	$	(1.41	)
Discontinued operations	$	0.21		$	(0.47	)	$	0.17		$	(0.53	)
Net loss	$	0.00		$	(0.78	)	$	(0.38	)	$	(1.94	)

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

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2005	2004		2005		2004
Restricted shares granted but not vested	620		405		543		306
Series A convertible preferred shares	9,985		9,985		9,985		9,985

     Series A preferred dividends that would be excluded from net loss applicable to common stockholders, if these Series A preferred shares were dilutive, were $6.3 million and $5.5 million for the three months ended September 30, 2005 and 2004, respectively, and $18.8 million and $13.6 million for the nine months ended September 30, 2005 and 2004, respectively.

15

FELCOR LODGING TRUST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Stock Based Compensation Plans

     We apply Accounting Principles Board Opinion 25, or APB 25, and related interpretations in accounting for our stock based compensation plans for stock based compensation issued prior to January 1, 2003. In 1995, Statement of Financial Accounting Standards 123, “Accounting for Stock-Based Compensation,” or SFAS 123 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 Statement of Financial Accounting Standards 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” we began recognizing compensation expense in accordance with SFAS 123 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 from continuing operations and net income or loss from continuing operations per common share for the periods presented would approximate the pro forma amounts below (in thousands, except per share data):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Income (loss) from continuing operations, as reported	$	(1,118	)	$	(8,810	)	$	3,405		$	(58,108	)
Add stock based compensation included in the net income or loss, as reported		954			484			2,171			1,615
Less stock based compensation expense that would have been included in the determination of net income or loss if the fair value method had been applied to all awards		(957	)		(638	)		(2,180	)		(1,685	)
Income (loss) from continuing operations, pro forma	$	(1,121	)	$	(8,964	)	$	3,396		$	(58,178	)
Basic and diluted net loss from continuing operations per common share:
As reported	$	(0.21	)	$	(0.31	)	$	(0.55	)	$	(1.41	)
Pro forma	$	(0.21	)	$	(0.31	)	$	(0.55	)	$	(1.41	)

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

13. Subsequent Events

     In October 2005, we refinanced certain mortgage debt in conjunction with the recapitalization of our taxable REIT subsidiaries. As a result of these refinancings, we incurred prepayment penalties and will write-off deferred debt costs aggregating $12.7 million, which will be recorded in the fourth quarter of 2005.

     In October 2005, Hurricane Wilma struck southern Florida and our six hotels in the area were affected to varying degrees. We have not yet been able to determine the full extent of damage to our hotels or estimate our ultimate cost from this hurricane. However, five of the six hotels are at least partially open for business and we expect the sixth hotel to reopen by mid-November 2005. We anticipate recording an expense in fourth quarter to reflect our best estimate of the costs related to this hurricane, which we expect to be less than $5 million, representing our aggregate insurance deductible for the six hotels.

     Our board of directors has declared a fourth quarter common dividend of $0.15 per common share payable on December 1, 2005, to our common stockholders of record on November 15, 2005. Future dividends will be determined by our board of directors, based primarily upon our expected annual cash flow from operations in excess of approximately five percent of total revenues, for maintenance capital.

16

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

     In the third quarter of 2005, revenue per available room, or RevPAR, increased 10.8% for our consolidated hotels in continuing operations and our average daily room rate, or ADR, comprised 55% of the increase in RevPAR. However, included in the third quarter results from operations is the impact of Hurricane Katrina. The net impact aggregates to approximately $2.6 million, including a $2.3 million charge for hurricane losses, representing our current best estimate of uninsured losses; estimates of our lost hotel operating profit of $1.0 million from our two owned hotels and one joint venture hotel in New Orleans, which were temporarily closed following the hurricane; and partially offset by the positive impact of approximately $0.7 million, from hotels in Texas, Louisiana, Alabama and Georgia, which benefited from the hurricane evacuees and relief workers.

     During 2005, through October 31, we have sold seven hotels for gross proceeds of $58 million, surrendered eight hotels in exchange for the extinguishment of $49 million of debt and have one hotel under a firm sale contract for $7 million, which is expected to close in November 2005.

     After disposing of the previously mentioned hotels, we will have 11 hotels remaining that we are currently marketing for sale. We estimate that the gross proceeds from the disposition of these hotels will be approximately $96 million.

     We continue to invest in our core hotels to maintain their competitive position and to take advantage of the current phase of the lodging cycle. During the first nine months of 2005, we spent $86 million on capital improvements and replacements (including our pro rata share of capital for unconsolidated ventures), and anticipate capital expenditures of at least $100 million for the full year.

     We continue to review and evaluate our hotel portfolio on an ongoing basis and may identify additional non-strategic hotels for sale based upon various factors. If we decide to sell additional hotels or if our estimates of market value for the hotels currently designated as non-strategic decline, we could incur future impairment charges.

Financial Comparison (in thousands of dollars, except RevPAR and hotel operating margin)

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
							% Change								% Change
	2005			2004			2004-2005		2005			2004			2004-2005
RevPAR	$	76.43		$	68.98			10.8	$	74.31		$	68.18			9.0
Hotel operating profit(1)		63,963			57,306			11.6		196,077			174,240			12.5
Hotel operating margin(1)		20.4	%		20.0	%		2.0		21.2	%		20.3	%		4.4
Income (loss) from continuing operations(2)	$	(1,118	)	$	(8,810	)		87.3	$	3,405		$	(58,108	)		105.9
Funds From Operations (“FFO”)(1) (3)		23,705			(18,610	)		227.4		65,561			(24,536	)		367.2
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)(1)(4)		81,166			31,447			158.1		221,268			126,202			75.3

(1) Included in the Financial Comparison are non-GAAP financial measures, including FFO, EBITDA, hotel operating profit and hotel operating margin. Further discussions of the use, limitations and importance, and detailed reconciliations to the most comparable GAAP measure, of these non-GAAP financial measures are found elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

17

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

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005			2004		2005			2004
Charge off of deferred debt costs	$	—		$	1,920	$	—		$	6,094
Loss (gain) on early extinguishment of debt		(2,538	)		10,987		(2,538	)		39,233
Hurricane loss		2,309			2,125		2,309			2,125
Gain on swap termination		—			—		—			(1,005	)
Impairment loss		569			—		569			—

(3) In accordance with the guidance provided by the Securities and Exchange Commission, or SEC, on non-GAAP financial measures, FFO has not been adjusted to add back the following items included in net income (loss) (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005			2004		2005			2004
Charge-off of deferred debt costs	$	—		$	1,920	$	—		$	6,094
Loss (gain) on early extinguishment of debt		(2,538	)		10,987		(2,538	)		39,233
Issuance costs of redeemed preferred stock		1,324			—		6,522			—
Gain on swap termination		—			—		—			(1,005	)
Impairment loss		569			33,027		1,860			33,027
Asset disposition costs		—			—		1,300			4,900

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Charge-off of deferred debt costs	$	—		$	1,920		$	—		$	6,094
Loss (gain) on early extinguishment of debt		(2,538	)		10,987			(2,538	)		39,233
Issuance costs of redeemed preferred stock		—			—			—			—
Gain on swap termination		—			—			—			(1,005	)
Impairment loss		569			33,027			1,860			33,027
Gain on sale of depreciable assets		(9,449	)		(3,058	)		(9,624	)		(2,116	)
Asset disposition costs		—			—			1,300			4,900

Results of Operations

Comparison of the Three Months Ended September 30, 2005 and 2004

     For the three months ended September 30, 2005, we recorded net income applicable to common stockholders of $0.1 million, or less than $0.01 per share, compared to a loss of $46.3 million, or $0.78 per share, for the three months ended September 30, 2004.

     Total revenue increased 8.8% to $314.7 million, compared to the prior year quarter. Hotel operating revenues from continuing operations made up more than 99% of the total revenues for both the third quarters of 2005 and 2004. Hotel operating revenues from continuing operations were $313.0 million for the third quarter 2005, an increase of $25.9 million, or 9.0%, compared to the same period in 2004. The increase in revenues was primarily related to a 10.8% increase in our hotel portfolio’s RevPAR, compared to the same period in 2004. The increase in RevPAR was driven by increases in ADR of 5.9% and in occupancy of 4.6%. The increase in ADR amounted to 55% of the improvement in RevPAR, as the trend of improving rates, that began in 2004, continued into the third quarter 2005. Increased ADR typically improves hotel operating margins because the hotels are receiving higher revenues for each guest served. Our hotel operating margins improved 48 basis points to prior year third quarter. The increase in our operating margins for the quarter were adversely affected by $1.6 million of bad debt charge-offs related to the bankruptcy filings of Delta^® Air Lines and Northwest^® Airlines. Also contributing to the sluggish margin growth were the effects of Hurricane Katrina.

18

     Operating expenses for the quarter increased by $22.1 million or 8.4%, compared to the prior year quarter. Operating income for the third quarter of 2005 increased by $3.2 million or 11.8% over the prior year period. The improvement in operating income was driven largely by increased revenue and improvements in operating margins, which resulted principally from increased ADR. The increase in operating expenses came principally from increases in hotel departmental expenses of $5.3 million; other property operating expenses of $9.7 million; taxes, insurance and lease expense of $3.4 million; and depreciation expense of $1.9 million. With the exception of other property related costs, which increased slightly as a percentage of total revenue, all of these expenses remained constant to the prior year as a percent of total revenue or decreased. The increase in hotel departmental expenses resulted largely from increases in occupancy, with the majority of the increase in labor related costs. The increase in other property operating expenses resulted from increased hotel occupancy, with increases in labor costs, utilities, maintenance, marketing expenses and the increased charge-off of $1.6 million related to airline bankruptcies. Management and franchise fees increased as a function of the increase in revenue. Taxes, insurance and lease expenses increased principally due to increased lease expense, which is a function of revenue, and increased property taxes, largely due to reductions recorded in the prior year related to two hotels. Depreciation expense increased as a result of the depreciation related to our 2004 capital expenditures of $96 million.

     Net interest expense included in continuing operations decreased $1.1 million, or 3.3%, compared to the third quarter in 2004. This reduction is principally related to a $110 million reduction in our average outstanding debt, largely resulting from the early retirement of a portion of our senior notes in 2004 and higher interest rates on invested cash, partially offset by higher average interest rates on our debt.

     At September 30, 2005, we had 128 hotels included in our consolidated continuing operations, of which 11 were non-strategic hotels identified for sale. The 11 non-strategic hotels included in continuing operations represented 8.5% of the rooms in our hotel portfolio, but only 3.4% of our calendar year 2004 consolidated hotel operating profit.

     We recorded an impairment charge of $0.6 million in the third quarter of 2005, related to one of our non-strategic hotels included in continuing operations. In October 2005, we accepted a contract for sale of this hotel and reduced its carrying value to the contract purchase amount. In the third quarter of 2005, we recorded $2.3 million in charges, representing our best estimate of uninsured losses from Hurricane Katrina, compared to $2.1 million for hurricane losses recorded in the third quarter of 2004. In the third quarter of 2004, we had $12.9 million of expenses related to the early extinguishment of senior debt.

     Equity in income from unconsolidated entities decreased by 72.9% to $3.2 million in the third quarter of 2005, compared to the same period last year. The decrease is attributed to the $11 million gain recorded in the third quarter 2004 by an unconsolidated entity from the development and sale of the Margate condominium project in Myrtle Beach, South Carolina, partially offset by the increased RevPAR for our unconsolidated hotels and an improvement in their operating margins in 2005.

     Loss from continuing operations was $1.1 million for the third quarter 2005, compared to a loss of $8.8 million in the same period in 2004.

     Discontinued operations for the quarter represent the operating income, direct interest costs, gain on early extinguishment of debt, and gains or losses on sale of 15 hotels disposed of during the first nine months of 2005, one hotel that was designated as held for sale at September 30, 2005, and 18 hotels disposed of in 2004 and impairment losses of $33 million in 2004.

     Net income for the third quarter 2005 was $11.3 million, compared to a net loss in the same period of 2004 of $37.0 million.

     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 $1.3 million of the issuance costs of our Series B preferred stock, which was redeemed in the quarter from net income to determine net loss applicable to common stockholders for the calculation of net loss per share.

19

Comparison of the Nine Months Ended September 30, 2005 and 2004

     For the nine months ended September 30, 2005, we recorded a loss applicable to common stockholders of $22.7 million, or $0.38 per share, compared to a loss of $114.4 million, or $1.94 per share, for the nine months ended September 30, 2004.

     Total revenue increased 7.5% to $924.9 million, compared to the prior year period. Hotel operating revenues from continuing operations made up more than 99% of the total revenues for both the nine months ended September 2005 and 2004 and were $923.0 million for the nine month period ending September 30, 2005, reflecting an increase of $65.5 million, or 7.6%, compared to the same period in 2004. The increase in revenues was primarily related to a 9% increase in our hotel portfolio’s RevPAR, compared to the same period in 2004. The increase in RevPAR was driven by increases in ADR of 5.9% and occupancy of 2.9%. The increase in ADR amounted to 66% of the improvement in RevPAR, as the trend of improving rates, that began in 2004, continued through the third quarter 2005 and contributed to a 92 basis point improvement in hotel operating margins (hotel operating profit as a percentage of hotel revenue).

     Operating expenses for the nine months increased by $51.8 million or 6.7%, compared to the prior year period. Operating income for the nine month period in 2005 increased by $13.0 million, or 16.0%, over the prior year period. The improvement in operating income was driven largely by increased revenue and improvements in operating margins, which resulted principally from increased ADR. The increase in operating expenses came principally from increases in hotel departmental expenses of $12.6 million; other property operating expenses of $21.3 million; taxes, insurance and lease expense of $7.4 million; and depreciation expense of $5.6 million. With the exception of hotel departmental expenses, which decreased as a percentage of total revenue, all of these expenses remained constant to the prior year as a percent of total revenue. The increase in hotel departmental expenses resulted largely from increases in occupancy, with the majority of the increase in labor related costs. The increase in other property operating expenses resulted from increased hotel occupancy, with increases in labor costs, utilities, maintenance, and marketing expenses. Taxes, insurance and lease expense increased principally due to increased lease expense, which is a function of revenue. Depreciation expense increased as a result of the increased depreciation related to our 2004 capital expenditures of $96 million.

     Net interest expense included in continuing operations decreased $14.1 million, or 12.5%, compared to the same period in 2004. This reduction is principally related to a $210 million reduction in our average outstanding debt, largely resulting from the early retirement of a portion of our senior notes in 2004, partially offset by an increase in our average interest rate.

     At September 30, 2005, we had 128 hotels included in our consolidated continuing operations, of which 11 were non-strategic hotels identified for sale. The 11 non-strategic hotels included in continuing operations represented 8.5% of the rooms in our hotel portfolio, but only 3.4% of our calendar year 2004 consolidated hotel operating profit.

     We recorded an impairment charge of $0.6 million in the third quarter of 2005, related to one of our non-strategic hotels included in continuing operations. In October 2005, we accepted a contract for sale of this hotel and reduced its carrying value to the contract purchase amount. In the third quarter 2005, we recorded $2.3 million in charges representing our best estimates of uninsured losses from Hurricane Katrina and $2.1 million for hurricane losses in the third quarter of 2004. In the same nine month period of 2004, we recorded $44.3 million in charges related to the early retirement of a portion of our senior notes and cancellation of our line of credit.

     Equity in income from unconsolidated entities decreased by 47.6% to $8.2 million in the nine month period ended September 30, 2005, compared to the same period last year. The decrease is attributed to the $11 million gain recorded in the third quarter 2004, by an unconsolidated entity related to the development and sale of the Margate condominium project in Myrtle Beach, South Carolina, partially offset by the increased RevPAR for our unconsolidated hotels and an improvement in their operating margins in 2005.

20

     Minority interest declined by $1.3 million, principally because of smaller losses being allocated to FelCor Lodging Limited Partnership as a result of the improved operations in the nine month period, compared to the same period in 2004.

     Income from continuing operations was $3.4 million for the nine month period of 2005, compared to a loss of $58.1 million in the same period in 2004.

     Discontinued operations for the period represent the operating income, direct interest costs, impairment losses and gains or losses on sale of 15 hotels disposed of during the first nine months of 2005, one hotel that was designated as held for sale at September 30, 2005, and 18 hotels disposed of in 2004.

     Net income for the nine months ended September 30, 2005, was $13.6 million, compared to a net loss in the same period of 2004 of $89.4 million.

     Preferred dividends increased by $4.7 million. This results from a full nine months of preferred dividends on the Series A preferred stock issued in April 2004, partially offset by savings from the issuance of 5.4 million depositary shares representing Series C preferred stock and the redemption of a corresponding number of shares of Series B preferred stock during the second quarter 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 $6.5 million of the issuance costs of our Series B preferred stock, which were redeemed in the period, from net income to determine net loss applicable to common stockholders for the calculation of net loss per share.

Non-GAAP Financial Measures

     We refer in this quarterly report on Form 10-Q to certain “non-GAAP financial measures.” These measures, including FFO, EBITDA, hotel operating profit and hotel operating margin, are measures of our financial performance that are not calculated and presented in accordance with generally accepted accounting principles (“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.

     The following tables detail our computation of FFO and EBITDA (in thousands):

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

	Three Months Ended September 30,
	2005								2004
						Per Share								Per Share
	Dollars			Shares		Amount			Dollars			Shares		Amount
Net income (loss)	$	11,258							$	(36,985	)
Preferred dividends		(9,829	)							(9,343	)
Issuance costs of redeemed preferred stock		(1,324	)							—
Net income (loss) applicable to common stockholders		105			59,442	$	—			(46,328	)		59,075	$	(0.78	)
Depreciation from continuing operations		30,390			—		0.51			28,533			—		0.48
Depreciation from unconsolidated entities and discontinued operations		2,654			—		0.04			4,465			—		0.08
Gain on sale of depreciable assets		(9,449	)		—		(0.16	)		(3,058	)		—		(0.05	)
Minority interest in FelCor LP		5			2,773		(0.01	)		(2,222	)		2,903		(0.03	)
Conversion of unvested restricted stock		—			620		—			—			—		—
FFO	$	23,705			62,835	$	0.38		$	(18,610	)		61,978	$	(0.30	)

21

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

	Nine Months Ended September 30,
	2005								2004
						Per Share								Per Share
	Dollars			Shares		Amount			Dollars			Shares		Amount
Net income (loss)	$	13,595							$	(89,357	)
Preferred dividends		(29,729	)							(25,039	)
Issuance costs of redeemed preferred stock		(6,522	)							—
Net loss applicable to common stockholders		(22,656	)		59,398	$	(0.38	)		(114,396	)		58,993	$	(1.94	)
Depreciation from continuing operations		89,534			—		1.51			83,943			—		1.42
Depreciation from unconsolidated entities and discontinued operations		9,362			—		0.16			13,740			—		0.23
Gain on sale of depreciable assets		(9,624	)		—		(0.16	)		(2,116	)		—		(0.04	)
Minority interest in FelCor LP		(1,055	)		2,783		(0.08	)		(5,707	)		2,989		(0.07	)
Conversion of unvested restricted stock		—			543		—			—			—		—
FFO	$	65,561			62,724	$	1.05		$	(24,536	)		61,982	$	(0.40	)

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

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005			2004		2005			2004
Charge-off of deferred financing costs	$	—		$	1,920	$	—		$	6,094
Asset disposition costs		—			—		1,300			4,900
Issuance costs of redeemed preferred stock		1,324			—		6,522			—
Loss (gain) on early extinguishment of debt		(2,538	)		10,987		(2,538	)		39,233
Impairment loss		569			33,027		1,860			33,027
Gain on swap termination		—			—		—			(1,005	)

22

Reconciliation of Net Income (Loss) to EBITDA
(in thousands)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005		2004			2005			2004
Net income (loss)	$	11,258	$	(36,985	)	$	13,595		$	(89,357	)
Depreciation from continuing operations		30,390		28,533			89,534			83,943
Depreciation from unconsolidated entities and discontinued operations		2,654		4,465			9,362			13,740
Minority interest in FelCor Lodging LP		5		(2,222	)		(1,055	)		(5,707	)
Interest expense		34,216		34,230			101,187			113,341
Interest expense from unconsolidated entities and discontinued operations		1,823		2,833			6,474			8,627
Amortization expense		820		593			2,171			1,615
EBITDA	$	81,166	$	31,447		$	221,268		$	126,202

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Charge-off of deferred financing costs	$	—		$	1,920		$	—		$	6,094
Asset disposition costs		—			—			1,300			4,900
Gain on sale of depreciable assets		(9,449	)		(3,058	)		(9,624	)		(2,116	)
Loss (gain) from early extinguishment of debt		(2,538	)		10,987			(2,538	)		39,233
Impairment loss		569			33,027			1,860			33,027
Gain on swap termination		—			—			—			(1,005	)

     The following tables detail our computation of hotel operating profit, hotel operating margin, hotel operating expenses and the reconciliation of hotel operating expenses to total operating expenses with respect to our hotels included in continuing operations at September 30, 2005.

Hotel Operating Profit
(dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Total revenue	$	314,650		$	289,320		$	924,867		$	860,083
Retail space rental and other revenue		(1,632	)		(2,166	)		(1,908	)		(2,590	)
Hotel operating revenue		313,018			287,154			922,959			857,493
Hotel operating expenses		(249,055	)		(229,848	)		(726,882	)		(683,253	)
Hotel operating profit	$	63,963		$	57,306		$	196,077		$	174,240
Hotel operating margin		20.4	%		20.0	%		21.2	%		20.3	%

23

Hotel Operating Expense Composition
(dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Hotel departmental expenses:
Room	$	67,307		$	63,166		$	193,581		$	183,633
Food and beverage		32,890			32,461			100,829			99,240
Other operating departments		8,208			7,451			23,282			22,232
Other property related costs:
Administrative and general		31,249			26,810			88,221			80,459
Marketing and advertising		26,471			24,234			79,584			74,191
Repairs and maintenance		17,114			15,676			51,010			47,461
Energy		17,924			16,306			48,929			44,319
Taxes, insurance and lease expense		31,792			28,389			94,359			87,006
Total other property related costs		124,550			111,415			362,103			333,436
Management and franchise fees		16,100			15,355			47,087			44,712
Hotel operating expenses	$	249,055		$	229,848		$	726,882		$	683,253
Reconciliation of total operating expense to hotel operating expense:
Total operating expenses	$	284,284		$	262,168		$	830,524		$	778,725
Corporate expenses		(4,839	)		(3,787	)		(14,108	)		(11,529	)
Depreciation		(30,390	)		(28,533	)		(89,534	)		(83,943	)
Hotel operating expenses	$	249,055		$	229,848		$	726,882		$	683,253
Supplemental information:
Compensation and benefits expense (included in hotel operating expenses)	$	98,561		$	93,842		$	292,255		$	279,819

24

     The following tables reconcile net income or loss to hotel operating profit and the ratio of operating income to total revenue to hotel operating margin.

Reconciliation of Net Income (Loss) to Hotel Operating Profit
(in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Net income (loss)	$	11,258		$	(36,985	)	$	13,595		$	(89,357	)
Discontinued operations		(12,376	)		28,175			(10,190	)		31,249
Equity in income from unconsolidated entities		(3,260	)		(12,019	)		(8,229	)		(15,692	)
Minority interests		(963	)		(260	)		(1,938	)		(3,285	)
Interest expense, net		33,173			34,303			98,960			113,090
Charge-off of deferred financing costs		—			1,920			—			6,094
Impairment loss		569			—			569			—
Hurricane loss		2,309			2,125			2,309			2,125
Loss on early extinguishment of debt		—			10,987			—			39,233
Gain on swap termination		—			—			—			(1,005	)
Corporate expenses		4,839			3,787			14,108			11,529
Depreciation		30,390			28,533			89,534			83,943
Retail space rental and other revenue		(1,632	)		(2,166	)		(1,908	)		(2,590	)
Gain on sale of assets		(344	)		(1,094	)		(733	)		(1,094	)
Hotel operating profit	$	63,963		$	57,306		$	196,077		$	174,240

Reconciliation of Ratio of Operating Income to Total Revenue to Hotel Operating Margin

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Ratio of operating income to total revenue		9.7	%		9.4	%		10.2	%		9.5	%
Less:
Retail space and rental and other revenue		(0.5	)		(0.7	)		(0.2	)		(0.3	)
Plus:
Corporate expenses		1.5			1.3			1.5			1.3
Depreciation		9.7			10.0			9.7			9.8
Hotel operating margin		20.4	%		20.0	%		21.2	%		20.3	%

     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 operating profit and hotel operating margin, are not measures of operating performance under GAAP. However, we consider these non-GAAP measures to be supplemental measures of a hotel 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 (“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

25

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 Operating Profit and Operating Margin

     Hotel operating profit and operating 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 operating profit and operating 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, these measures facilitate comparisons with other hotel REITs and hotel owners. We present hotel operating profit and hotel operating 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 with respect to the ongoing operating performance of our hotels and the effectiveness of management in running our business on a property-level basis. We eliminate depreciation and amortization, even though they are property-level expenses, because 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 diminish predictably over time, accurately reflect and adjustment in the value of our assets.

Use and Limitations of Non-GAAP Measures

     Our management and Board of Directors use FFO and EBITDA 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 operating profit and hotel operating 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 operating profit and hotel operating margin, as presented by us, may not be comparable to FFO, EBITDA, hotel operating profit and hotel operating 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 operating profit and hotel operating 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 any single financial measure.

26

Hotel Portfolio Composition

     The following tables set forth, as of September 30, 2005, for 125 of our 128 hotels included in our consolidated portfolio of continuing operations, distribution by brand, by our top metropolitan markets, by selected states, by type of location, and by market segment. We have excluded two New Orleans hotels that were closed in September 2005 and our Cocoa Beach, Florida hotel that was closed in September 2004, all as a result of hurricane damage.

					% of			% of 2004 Hotel
Brand	Hotels		Rooms		Total Rooms			Operating Profit
Embassy Suites Hotels		54		13,550		38	%		53	%
Holiday Inn-branded		32		10,770		31			21
Sheraton-branded		10		3,269		9			10
Doubletree-branded		10		2,206		6			6
Crowne Plaza		12		4,025		11			5
Other		7		1,811		5			5

					% of			% of 2004 Hotel
Top Markets	Hotels		Rooms		Total Rooms			Operating Profit
Atlanta		10		3,060		9	%		9	%
Dallas		12		3,586		10			6
Los Angeles Area		6		1,435		4			5
Orlando		6		2,219		6			5
Boca Raton/Ft. Lauderdale		4		1,118		3			5
Minneapolis		4		955		3			4
Philadelphia		3		1,174		3			3
San Diego		1		600		2			3
Phoenix		3		798		2			3
San Antonio		4		1,188		3			3
Northern New Jersey		3		757		2			3
Chicago		4		1,239		3			3
San Francisco Bay Area		8		2,690		8			3
Houston		4		1,403		4			3
Washington, D.C.		1		437		1			3

					% of			% of 2004 Hotel
Top Four States	Hotels		Rooms		Total Rooms			Operating Profit
California		19		5,536		16	%		16	%
Texas		25		7,344		21			14
Florida		15		4,937		14			12
Georgia		12		3,414		10			10

					% of			% of 2004 Hotel
Location	Hotels		Rooms		Total Rooms			Operating Profit
Suburban		57		14,335		40	%		40	%
Urban		29		9,322		26			24
Airport		26		8,182		23			23
Resort		12		3,544		10			13
Interstate		1		248		1			0

					% of			% of 2004 Hotel
Segment	Hotels		Rooms		Total Rooms			Operating Profit
Upscale all-suite		67		16,416		46	%		60	%
Full service		33		10,934		31			21
Upscale		23		7,843		22			17
Limited service		2		438		1			1

27

  Hotel Operating Statistics

     The following tables set forth historical occupancy, ADR and RevPAR at September 30, 2005 and 2004, and the percentage changes therein between the periods presented, for 125 of our 128 hotels included in our consolidated portfolio of continuing operations. We have excluded two New Orleans hotels that were closed in September 2005 and our Cocoa Beach, Florida hotel that was closed in September 2004, all as a result of hurricane damage.

Operating Statistics by Brand

	Occupancy (%)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		%Variance		2005		2004		% Variance
Embassy Suites Hotels		75.1		71.7		4.7		74.1		71.4		3.9
Holiday Inn-branded hotels		71.7		69.9		2.5		68.4		67.5		1.3
Sheraton-branded hotels		67.1		64.2		4.6		65.4		64.8		1.0
Doubletree-branded hotels		71.6		66.3		8.0		69.6		68.3		1.9
Crowne Plaza hotels		71.5		66.6		7.3		68.4		64.5		6.0
Other hotels		65.0		61.0		6.7		61.2		59.5		2.1
Total hotels		72.2		69.0		4.6		70.0		68.1		2.9

	ADR ($)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		% Variance		2005		2004		% Variance
Embassy Suites Hotels		120.79		115.59		4.5		122.02		116.61		4.6
Holiday Inn-branded hotels		88.73		82.23		7.9		86.95		81.84		6.2
Sheraton-branded hotels		106.06		97.70		8.6		108.30		97.36		11.2
Doubletree-branded hotels		105.57		102.75		2.7		109.96		103.90		5.8
Crowne Plaza hotels		100.16		94.02		6.5		98.26		93.22		5.4
Other hotels		103.29		97.79		5.6		99.46		93.61		6.2
Total hotels		105.87		99.94		5.9		106.12		100.18		5.9

	RevPAR ($)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		% Variance		2005		2004		% Variance
Embassy Suites Hotels		90.70		82.93		9.4		90.47		83.22		8.7
Holiday Inn-branded hotels		63.60		57.48		10.7		59.51		55.28		7.6
Sheraton-branded hotels		71.21		62.70		13.6		70.82		63.05		12.3
Doubletree-branded hotels		75.58		68.11		11.0		76.58		70.98		7.9
Crowne Plaza hotels		71.56		62.58		14.4		67.16		60.10		11.8
Other hotels		67.19		59.64		12.7		60.85		56.11		8.4
Total hotels		76.43		68.98		10.8		74.31		68.18		9.0

28

Operating Statistics for Our Top Markets

	Occupancy (%)
	Three Months Ended September 30,							Nine Months Ended September 30,
	2005		2004		% Variance			2005		2004		% Variance
Atlanta		75.5		74.7		1.1			72.4		69.9		3.6
Dallas		53.8		49.0		9.7			52.8		51.6		2.3
Los Angeles Area		80.5		74.0		8.8			75.8		72.9		3.9
Orlando		69.3		78.5		(11.6	)		74.9		77.9		(3.9	)
Boca Raton/Ft. Lauderdale		74.6		75.9		(1.7	)		81.7		79.9		2.1
Minneapolis		79.7		77.8		2.5			73.6		70.0		5.2
Philadelphia		74.7		71.5		4.4			72.3		66.9		8.1
San Diego		88.2		83.8		5.3			84.6		84.5		0.1
Phoenix		64.5		61.9		4.3			73.6		71.6		2.8
San Antonio		80.0		74.5		7.4			77.1		72.2		6.8
Northern New Jersey		69.8		65.5		6.6			70.7		67.2		5.2
Chicago		79.3		73.2		8.4			74.0		70.6		4.7
San Francisco Bay Area		80.6		73.1		10.2			72.0		67.5		6.7
Houston		71.5		62.8		13.8			71.3		69.5		2.6
Washington, D.C.		76.1		76.3		(0.2	)		75.5		75.0		0.6

	ADR ($)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		% Variance		2005		2004		% Variance
Atlanta		90.88		86.06		5.6		91.04		87.00		4.6
Dallas		91.94		91.15		0.9		93.84		90.87		3.3
Los Angeles Area		122.59		115.59		6.0		118.32		111.43		6.2
Orlando		77.63		70.50		10.1		85.75		76.39		12.3
Boca Raton/Ft. Lauderdale		102.24		93.98		8.8		129.19		114.48		12.9
Minneapolis		134.88		129.79		3.9		127.53		124.89		2.1
Philadelphia		114.12		108.22		5.5		114.65		105.57		8.6
San Diego		128.40		119.73		7.2		129.92		119.72		8.5
Phoenix		98.04		90.70		8.1		120.43		111.89		7.6
San Antonio		88.52		82.28		7.6		88.73		84.76		4.7
Northern New Jersey		137.98		133.94		3.0		137.31		135.00		1.7
Chicago		120.22		109.05		10.3		113.81		104.51		8.9
San Francisco Bay Area		120.95		115.70		4.5		115.93		112.89		2.7
Houston		74.38		66.92		11.1		72.39		69.84		3.7
Washington, D.C.		141.80		121.25		16.9		145.80		124.92		16.7

	RevPAR ($)
	Three Months Ended September 30,							Nine Months Ended September 30,
	2005		2004		% Variance			2005		2004		% Variance
Atlanta		68.62		64.30		6.7			65.93		60.85		8.4
Dallas		49.43		44.68		10.6			49.56		46.90		5.7
Los Angeles Area		98.72		85.55		15.4			89.67		81.28		10.3
Orlando		53.83		55.33		(2.7	)		64.19		59.52		7.8
Boca Raton/Ft. Lauderdale		76.32		71.33		7.0			105.50		91.52		15.3
Minneapolis		107.51		100.93		6.5			93.87		87.38		7.4
Philadelphia		85.20		77.40		10.1			82.89		70.57		17.4
San Diego		113.30		100.38		12.9			109.94		101.18		8.7
Phoenix		63.27		56.11		12.8			88.59		80.10		10.6
San Antonio		70.86		61.34		15.5			68.43		61.20		11.8
Northern New Jersey		96.37		87.77		9.8			97.07		90.71		7.0
Chicago		95.39		79.84		19.5			84.18		73.82		14.0
San Francisco Bay Area		97.43		84.54		15.2			83.43		76.15		9.6
Houston		53.18		42.06		26.4			51.60		48.52		6.4
Washington, D.C.		107.89		92.47		16.7			110.02		93.73		17.4

29

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 nine months ended September 30, 2005, net cash flow provided by operating activities, consisting primarily of hotel operations, was $117 million. At September 30, 2005, we had cash and cash equivalents of approximately $171 million. Included in cash and cash equivalents was approximately $37 million utilized to meet our hotel minimum working capital requirements.

     For 2005, our current operating plan contemplates common dividend payments of $9 million, preferred dividend payments of $39 million, capital expenditures of at least $100 million ($86 million has been spent through September 30, 2005), $21 million in normal recurring principal payments and proceeds of approximately $83 million from the sale of non-strategic hotels ($58 million was received through September, 2005).

     We are required to reinvest the proceeds from the further sale of IHG managed hotels in other hotels to be managed by IHG or pay substantial termination fees. As of September 30, 2005, we had an unsatisfied reinvestment obligation of $35 million from the sale of IHG managed hotels. If we do not fulfill this reinvestment obligation within 12 months of the date of sale, we will be required to pay liquidated damages to IHG aggregating $8 million. Additionally, until the earlier of either our satisfaction of the reinvestment requirement, or the payment of liquidated damages, we are required to pay monthly termination fees of $119,000 (based on the hotels we have sold through September 30, 2005), which payments will be offset against any liquidated damages payable with respect to these properties. In addition, seven of the 11 remaining hotels previously identified for sale are managed by IHG and subject to the reinvestment obligation in the event they are sold. We will incur additional reinvestment obligations of approximately $40 million if these hotels are sold at currently estimated prices or, if the proceeds of sale are not so reinvested, we will incur approximately $13 million in additional liquidated damages and termination fees for which we would be liable to IHG. We continue to explore our alternatives to resolve the liquidated damage liability to IHG.

     At September 30, 2005, approximately 25% of our outstanding debt had variable interest rates based on LIBOR. Variable interest rates have recently been increasing and, based on our debt outstanding at September 30, 2005, a one percent change in LIBOR would impact our annual interest expense by $4.3 million.

     In April 2005, we completed the issuance of 5.4 million depositary shares representing our 8% Series C Cumulative Redeemable Preferred Stock, realizing gross proceeds of $135 million and in September 2005 we completed the issuance of an additional 1.4 million depositary shares representing our Series C preferred stock, realizing gross proceeds of $34.4 million. The aggregate gross proceeds of these issuances were used to redeem all of our 9% Series B Cumulative Redeemable Preferred Stock.

     At September 30, 2005, we had aggregate mortgage indebtedness of approximately $1.0 billion that was secured by 71 of our consolidated hotels with an aggregate book value of approximately $1.7 billion. 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 carve-out provisions. Loans secured by 33 hotels provide for lock-box arrangements. With respect to loans secured by 15 of these hotels, if the debt service coverage ratios fall below certain levels and certain other conditions are met, the lender is entitled to apply the revenues from the hotels securing the loan to satisfy current requirements for debt service, taxes, insurance and other reserves, and to hold the balance of the revenues, if any, until debt service coverage ratios again reach specified levels.

     With respect to loans secured by the remaining 18 hotels, the owner is permitted to retain 115% of budgeted hotel operating expenses before the remaining revenues would become subject to a lock-box arrangement if a specified debt service coverage ratio was not met. The lender is entitled to apply the remaining revenues to satisfy current requirements for debt service, taxes, insurance and other reserves, with any excess cash returned to the owner. The mortgage loans secured by 16 of these 18 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

30

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. Ten of these 18 hotels, which accounted for 6% of our total revenues in 2004, fell below the applicable debt service coverage ratio in 2004 and are currently 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, taxes, insurance and other reserve requirements.

     Through September 30, 2005, we made draws of $6.0 million on our $69.8 million recourse construction loan for the development of a 184-unit condominium project in Myrtle Beach, South Carolina. The interest on this facility is based on LIBOR plus 225 basis points and will be capitalized as part of the cost of the project. The interest rate may be reduced to LIBOR plus 200 basis points when the project is 55% complete and upon the satisfaction of certain other requirements. The facility matures in the fourth quarter of 2007 .

     If actual operating results fail to meet our current expectations or if interest rates increase more than currently expected, we might be unable to continue to satisfy the incurrence test under the indentures governing our senior unsecured notes. In such an event, we would be prohibited from, among other things, incurring any additional indebtedness 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. In the event of our failure of this incurrence test we may be unable to distribute the full amount of dividends accruing under our outstanding preferred stock and, accordingly, could be restricted in paying dividends on our common stock. However, based on current operating trends and our current estimates of future performance, we consider the failure of this incurrence test to be unlikely in the foreseeable future.

     The fundamental operating assumptions upon which our previously announced fourth quarter and full year 2005 guidance were based have not changed, but the impact that hurricane Wilma may have on the remainder of the year is not yet known. Accordingly, we are not adjusting our prior guidance until the impact of hurricane Wilma becomes more clear. When that information becomes available, if necessary, we will publish an update to our prior guidance.

     In the third quarter of 2005, we expensed $1.6 million representing our aggregate receivables from Delta^® Air Lines and Northwest^® Airlines, both of which filed for bankruptcy protection in the quarter.

     Our board of directors has declared a fourth quarter common dividend of $0.15 per common share payable on December 1, 2005, to our common stockholders of record on November 15, 2005. Future dividends will be determined by our board of directors, based primarily upon our expected annual cash flow from operations in excess of approximately five percent of total revenues, for maintenance capital.

     FFO and EBITDA are non-GAAP financial measures, as previously discussed under the caption “Non-GAAP Financial Measures” elsewhere in this Quarterly Report on Form 10-Q, and reference is made to that discussion.

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.

31

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.

Disclosure Regarding Forward-Looking Statements

     This Quarterly Report on Form 10-Q and the documents incorporated by reference in this Quarterly Report on Form 10-Q 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.

     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.

32

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk

     At September 30, 2005, approximately 75% of our consolidated debt had fixed interest rates, after considering interest rate swaps. Currently, market rates of interest are below the rates we are obligated to pay on our fixed-rate debt.

     The following table provides information about our financial instruments that are sensitive to changes in interest rates, including interest rate swaps and debt obligations. For debt obligations, the table presents scheduled maturities and weighted average interest rates, by maturity dates. For interest rate swaps, the table presents 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 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 September 30, 2005
(dollars in thousands)

																						Fair
	2005			2006			2007			2008			2009			Thereafter			Total			Value
Liabilities
Fixed rate:
Debt	$	3,539		$	17,284		$	270,833		$	15,757		$	201,008		$	664,665		$	1,173,086		$	1,197,061
Average interest rate		7.82	%		7.80	%		7.48	%		7.96	%		7.40	%		8.57	%		8.09	%
Floating rate:
Debt		1,372			143,018			2,015			23,620			78,538			290,650			539,213			539,213
Average interest rate		6.00	%		6.12	%		5.74	%		6.42	%		5.74	%		7.78	%		6.97	%
Total debt	$	4,911		$	160,302		$	272,848		$	39,377		$	279,546		$	955,315		$	1,712,299
Net discount																				(3,657	)
Total debt																			$	1,708,642
Interest rate swaps
Variable to fixed		—			—		$	100,000			—			—			—		$	100,000		$	1,914,813
Average pay rate		—			—			7.80	%		—			—			—			7.80	%
Average receive rate		—			—			7.79	%		—			—			—			7.79	%

     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 our interest rate swap agreements are AA- or better.

33

Item 4. Controls and Procedures

     (a) Evaluation of disclosure controls and procedures.

     Under the supervision and with the participation of our management, including our 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 disclosures.

     (b) 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 quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

34

PART II. — OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds.

Recent Sales of Unregistered Securities

     During the third quarter 2005, we issued an aggregate of 25,595 shares of our common stock, all of which were issued to a holder of FelCor LP units upon redemption of a like number of units. For the foregoing issuance of shares of common stock by us, we relied upon the exemption from registration provided by Section 4(2) of the Securities Act, since the transaction did not involve a public offering.

Item 6. Exhibits.

     The following exhibits are furnished in accordance with the provisions of Item 601 of Regulation S-K:

Exhibit Number	Description of Exhibit
10.35	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 Lodging Limited Partnership 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.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal 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 Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

35

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: November 8, 2005

FELCOR LODGING TRUST INCORPORATED
By:	/s/ Lester C. Johnson
	Lester C. Johnson
	Senior Vice President and Principal Accounting Officer

36

INDEX

Exhibit Number	Description of Exhibit
10.35	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 Lodging Limited Partnership 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.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal 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 Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

EX-10.35

                                                                   EXHIBIT 10.35

                                                                  EXECUTION COPY

                                  $175,000,000

                              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 LODGING LIMITED PARTNERSHIP
                     AND THE OTHER GUARANTORS NAMED HEREIN,

                                 as Guarantors,

                          CITICORP NORTH AMERICA, INC.,

                               as Initial Lender,

                          CITICORP NORTH AMERICA, INC.,

                as Administrative Agent and as Collateral Agent,

                                       and

                         CITIGROUP GLOBAL MARKETS INC.,

               as Sole Lead Arranger and Sole Book Running Manager



                               TABLE OF CONTENTS



SECTION                                                                                   PAGE
                                                                                       
                                          ARTICLE I
                               DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms......................................................   2
SECTION 1.02. Computation of Time Periods; Other Definitional Provisions.................  24
SECTION 1.03. Accounting Terms...........................................................  25

                                          ARTICLE II
                              AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01. The Term Advances..........................................................  25
SECTION 2.02. Making the Term Advances...................................................  25
SECTION 2.03. Repayment of Term Advances.................................................  26
SECTION 2.04. Mandatory Termination or Reduction of the Term Commitments.................  27
SECTION 2.05. Prepayments................................................................  27
SECTION 2.06. Interest...................................................................  28
SECTION 2.07. Fees.......................................................................  29
SECTION 2.08. Conversion of Term Advances................................................  29
SECTION 2.09. Increased Costs, Etc.......................................................  29
SECTION 2.10. Payments and Computations..................................................  31
SECTION 2.11. Taxes......................................................................  33
SECTION 2.12. Sharing of Payments, Etc...................................................  35
SECTION 2.13. Use of Proceeds............................................................  36
SECTION 2.14. Evidence of Debt...........................................................  36
SECTION 2.15. Extension of Maturity Date.................................................  36

                                         ARTICLE III
                                    CONDITIONS OF LENDING

SECTION 3.01. Conditions Precedent to Initial Borrowing..................................  37
SECTION 3.02. Conditions Precedent to Each Borrowing.....................................  40
SECTION 3.03. Determinations Under Section 3.01..........................................  40

                                          ARTICLE IV
                                REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Loan Parties.........................  41

                                          ARTICLE V
                                COVENANTS OF THE LOAN PARTIES

SECTION 5.01. Affirmative Covenants......................................................  48
SECTION 5.02. Negative Covenants.........................................................  52
SECTION 5.03. Reporting Requirements.....................................................  57
SECTION 5.04. Financial Covenants........................................................  60


                                       i


                                                                                        
                                          ARTICLE VI
                                       EVENTS OF DEFAULT

SECTION 6.01. Events of Default..........................................................  60

                                         ARTICLE VII
                                           GUARANTY

SECTION 7.01. Guaranty; Limitation of Liability..........................................  63
SECTION 7.02. Guaranty Absolute..........................................................  64
SECTION 7.03. Waivers and Acknowledgments................................................  65
SECTION 7.04. Subrogation................................................................  66
SECTION 7.05. Guaranty Supplements and Accession Agreements..............................  67
SECTION 7.06. Indemnification by Guarantors..............................................  67
SECTION 7.07. Subordination..............................................................  67
SECTION 7.08. Continuing Guaranty........................................................  68
SECTION 7.09. Recourse Nature of Guaranty; FLLP Cap Date.................................  68

                                         ARTICLE VIII
                                          THE AGENTS

SECTION 8.01. Authorization and Action; Appointment of Supplemental Collateral Agents....  69
SECTION 8.02. Agents' Reliance, Etc......................................................  70
SECTION 8.03. CNAI and Affiliates........................................................  70
SECTION 8.04. Lender Credit Decision.....................................................  70
SECTION 8.05. Indemnification by Lenders.................................................  70
SECTION 8.06. Successor Agents...........................................................  71

                                         ARTICLE IX
                                        MISCELLANEOUS

SECTION 9.01. Amendments, Etc............................................................  72
SECTION 9.02. Notices, Etc...............................................................  72
SECTION 9.03. No Waiver; Remedies........................................................  73
SECTION 9.04. Costs and Expenses.........................................................  74
SECTION 9.05. Right of Set-off...........................................................  75
SECTION 9.06. Binding Effect.............................................................  75
SECTION 9.07. Assignments and Participations; Replacement Notes..........................  76
SECTION 9.08. Execution in Counterparts..................................................  78
SECTION 9.09. Confidentiality............................................................  78
SECTION 9.10. Release of Collateral......................................................  79
SECTION 9.11. Patriot Act Notification...................................................  79
SECTION 9.12. Jurisdiction, Etc..........................................................  79
SECTION 9.13. Governing Law..............................................................  80
SECTION 9.14. WAIVER OF JURY TRIAL.......................................................  80



                                       ii


SCHEDULES
Schedule I          -  Term Commitments and Applicable Lending Offices
Schedule II         -  Mortgage Assets
Schedule III        -  Unencumbered Assets
Schedule IV         -  Leased TRS Hotels
Schedule V          -  Previously Owned Hotels
Schedule VI         -  TRS Recapitalization Transactions
Schedule 4.01(b)    -  Subsidiaries
Schedule 4.01(f)    -  Material Litigation
Schedule 4.01(n)    -  Existing Debt
Schedule 4.01(o)    -  Surviving Debt
Schedule 4.01(p)    -  Surviving Liens
Schedule 4.01(q)    -  Real Property
       Part I       -  Owned Hotels
       Part II      -  Leased Hotels
       Part III     -  Management Agreements
       Part IV      -  Franchise Agreements
Schedule 4.01(r)    -  Environmental Concerns
Schedule 4.01(w)    -  Plans and Welfare Plans

EXHIBITS

Exhibit A           -  Form of Note
Exhibit B           -  Form of Notice of Borrowing
Exhibit C           -  Form of Accession Agreement
Exhibit D           -  Form of Guaranty Supplement
Exhibit E           -  Form of Assignment and Acceptance
Exhibit F           -  Form of Security Agreement
Exhibit G           -  Form of Mortgage
Exhibit H           -  Form of Assignment of Leases
Exhibit I           -  Form of Closing Opinion of Jenkens & Gilchrist
Exhibit J           -  Form of Opinion of Local Counsel (Real Estate Matters)


                                      iii


                              TERM CREDIT AGREEMENT

            TERM CREDIT AGREEMENT dated as of October 18, 2005 (this
"AGREEMENT") among FELCOR TRS BORROWER 1, L.P., a Delaware limited partnership
(the "INITIAL BORROWER", and together with any Additional Borrowers (as
hereinafter defined) acceding hereto pursuant to Section 3.02 or 5.01(j), the
"BORROWERS"), FELCOR TRS GUARANTOR, L.P., a Delaware limited partnership (the
"TRS GUARANTOR"), FELCOR LODGING LIMITED PARTNERSHIP, Delaware limited
partnership ("FLLP"), the other entities identified herein as guarantors
(together with TRS Guarantor, FLLP, the Borrowers and any Additional Guarantors
acceding hereto pursuant to Section 5.01(j) or 7.05, the "GUARANTORS"), CITICORP
NORTH AMERICA, INC. ("CNAI"), as the initial lender (the "INITIAL LENDER"),
CNAI, as administrative agent (together with any successor administrative agent
appointed pursuant to Article VIII, the "ADMINISTRATIVE AGENT") for the Lenders
(as hereinafter defined), CNAI, as collateral agent (together with any successor
collateral agent appointed pursuant to Article VIII, the "COLLATERAL AGENT", and
together with the Administrative Agent, the "AGENTS") for the Secured Parties
(as hereinafter defined), and CITIGROUP GLOBAL MARKETS INC. ("CGMI"), sole lead
arranger and sole book running manager (the "ARRANGER").

                                   ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

            SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

            "ACCESSION AGREEMENT" means an agreement entered into by a Borrower
      in substantially the form of Exhibit C hereto.

            "ACTUAL DEBT SERVICE" has the meaning specified in the definition of
      "Mortgage Assets Debt Service Coverage Ratio".

            "ADDITIONAL BORROWER" means any direct or indirect wholly-owned
      Subsidiary of FLLP, other than the Initial Borrower, that (a) is
      designated as a Borrower in a Notice of Borrowing, and (b) is or will be
      at by the close of business on the day of the Borrowing requested in such
      Notice of Borrowing, the owner of one or more Mortgage Assets, either
      directly or through a wholly-owned Subsidiary of such Borrower that is a
      Guarantor hereunder.

            "ADDITIONAL GUARANTORS" has the meaning specified in Section 7.05.

            "ADMINISTRATIVE AGENT" has the meaning specified in the recital of
      parties to this Agreement.

            "ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the
      Administrative Agent maintained by the Administrative Agent with Citibank,
      N.A., at its office at Two Penns Way, Suite 110, New Castle, Delaware
      19720, ABA No. 021000089, Account No. 4078-4524, Account Name: Leverage
      Finance, Reference: FelCor, Attention: Global Loans/Agency, or such other
      account as the Administrative Agent shall specify in writing to the
      Lenders.

                                       2


            "AFFILIATE" means, as to any Person, any other Person that, directly
      or indirectly, controls, is controlled by or is under common control with
      such Person or is a director or officer of such Person. For purposes of
      this definition, the term "control" (including the terms "controlling",
      "controlled by" and "under common control with") of a Person means the
      possession, direct or indirect, of the power to vote 20% or more of the
      Voting Interests of such Person or to direct or cause the direction of the
      management and policies of such Person, whether through the ownership of
      Voting Interests, by contract or otherwise.

            "AGENTS" has the meaning specified in the recital of parties to this
      Agreement.

            "AGREEMENT" has the meaning specified in the recital of parties to
      this Agreement.

            "AGREEMENT VALUE" means, for each Hedge Agreement, on any date of
      determination, an amount determined by the Administrative Agent equal to:
      (a) in the case of a Hedge Agreement documented pursuant to the Master
      Agreement (Multicurrency-Cross Border) published by the International Swap
      and Derivatives Association, Inc. (the "MASTER AGREEMENT"), the amount, if
      any, that would be payable by any Loan Party or any of its Subsidiaries to
      its counterparty to such Hedge Agreement, as if (i) such Hedge Agreement
      was being terminated early on such date of determination, (ii) such Loan
      Party or Subsidiary was the sole "Affected Party", and (iii) the
      Administrative Agent was the sole party determining such payment amount
      (with the Administrative Agent making such determination pursuant to the
      provisions of the form of Master Agreement); or (b) in the case of a Hedge
      Agreement traded on an exchange, the mark-to-market value of such Hedge
      Agreement, which will be the unrealized loss on such Hedge Agreement to
      the Loan Party or Subsidiary of a Loan Party to such Hedge Agreement
      determined by the Administrative Agent based on the settlement price of
      such Hedge Agreement on such date of determination; or (c) in all other
      cases, the mark-to-market value of such Hedge Agreement, which will be the
      unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary of
      a Loan Party to such Hedge Agreement determined by the Administrative
      Agent as the amount, if any, by which (i) the present value of the future
      cash flows to be paid by such Loan Party or Subsidiary exceeds (ii) the
      present value of the future cash flows to be received by such Loan Party
      or Subsidiary pursuant to such Hedge Agreement; capitalized terms used and
      not otherwise defined in this definition shall have the respective
      meanings set forth in the above described Master Agreement.

            "APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
      Lender's Domestic Lending Office in the case of a Base Rate Advance and
      such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
      Advance.

            "APPLICABLE MARGIN" means, at any date of determination occurring
      during any of the periods set forth below, the corresponding percentage
      per annum as set forth below:

                                        3




                                                   APPLICABLE MARGIN                APPLICABLE MARGIN
                  PERIOD                      FOR EURODOLLAR RATE ADVANCES       FOR BASE RATE ADVANCES
- ---------------------------------------       ----------------------------       ----------------------
                                                                           
October 18, 2005 through April 17, 2006                  1.50%                            0.50%
April 18, 2006 through October 17, 2006                  1.75%                            0.75%
October 18, 2006 through April 17, 2007                  2.00%                            1.00%
          April 18, 2007 and thereafter                  2.25%                            1.25%


            "APPRAISAL" means an appraisal complying with the requirements of
      the Federal Financial Institutions Reform, Recovery and Enforcement Act of
      1989, as amended from time to time, commissioned by and prepared for the
      account of the Collateral Agent (for the benefit of the Lenders) by a MAI
      appraiser selected by the Collateral Agent in consultation with the
      Borrowers, and otherwise in scope, form and substance satisfactory to the
      Collateral Agent.

            "APPROVED FRANCHISOR" means, with respect to any Hotel Asset, a
      nationally recognized hotel brand franchisor that has entered into a
      written franchise agreement (or, if no separate franchise agreement has
      been entered into with respect to such Hotel Asset, a written management
      agreement) in form and substance reasonably satisfactory to the
      Administrative Agent. The Administrative Agent confirms that as of the
      Closing Date the existing franchisors of the Hotel Assets shown on
      Schedule Part IV of Schedule 4.01(q) hereto are satisfactory to the
      Administrative Agent.

            "APPROVED MANAGER" means, with respect to any Hotel Asset, a
      nationally recognized hotel manager (a) with (or controlled by a Person or
      Persons with) at least ten years of experience in the hotel management
      industry, and (b) that is engaged pursuant to a written management
      agreement in form and substance reasonably satisfactory to the
      Administrative Agent. The Administrative Agent confirms that as of the
      Closing Date the existing hotel managers of the Hotel Assets shown on
      Schedule Part III of Schedule 4.01(q) hereto are satisfactory to the
      Administrative Agent. For purposes of this definition, the term "control"
      (including the term "controlled by") of a Person means the possession,
      direct or indirect, of the power to direct or cause the direction of the
      management and policies of such Person, whether through the ownership of
      Voting Interests, by contract or otherwise.

            "ARRANGER" has the meaning specified in the recital of parties to
      this Agreement.

            "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
      entered into by a Lender and an Eligible Assignee, and accepted by the
      Administrative Agent, in accordance with Section 9.07 and in substantially
      the form of Exhibit D hereto.

            "ASSIGNMENTS OF LEASES" has the meaning specified in Section
      5.01(j)(ii)(B).

            "BANKRUPTCY LAW" means any applicable law governing a proceeding of
      the type referred to in Section 6.01(f) or Title 11, U.S. Code, or any
      similar foreign, federal or state law for the relief of debtors.

            "BASE RATE" means a fluctuating interest rate per annum in effect
      from time to time, which rate per annum shall at all times be equal to the
      higher of (a) the rate of

                                       4


      interest announced publicly by Citibank, N.A. in New York, New York, from
      time to time, as Citibank, N.A.'s base rate and (b) 1/2 of 1% per annum
      above the Federal Funds Rate.

            "BASE RATE ADVANCE" means a Term Advance that bears interest as
      provided in Section 2.06(a)(i).

            "BORROWER EQUITY HOLDER" means each holder of direct Equity
      Interests in any Borrower.

            "BORROWERS" has the meaning specified in the recital of parties to
      this Agreement. Each Borrower shall at all times be a direct or indirect
      wholly-owned Subsidiary of FLLP.

            "BORROWER ACCOUNT" means, with respect to each Borrowing, the
      account specified in the Notice of Borrowing with respect thereto
      maintained by or on behalf of the Borrower named therein.

            "BORROWER PARTIES" means the Loan Parties (other than FLLP).

            "BORROWING" means a borrowing consisting of simultaneous Term
      Advances of the same Type made by the Lenders.

            "BUSINESS DAY" means a day of the year on which banks are not
      required or authorized by law to close in New York City and, if the
      applicable Business Day relates to any Eurodollar Rate Advances, on which
      dealings are carried on in the London interbank market.

            "CAPITALIZED LEASES" means all leases that have been or should be,
      in accordance with GAAP, recorded as capitalized leases.

            "CASH EQUIVALENTS" means any of the following, to the extent owned
      by the applicable Loan Party or any of its Subsidiaries free and clear of
      all Liens (other than Liens created under the Collateral Documents) and
      having a maturity of not greater than 90 days from the date of issuance
      thereof: (a) readily marketable direct obligations of the Government of
      the United States or any agency or instrumentality thereof or obligations
      unconditionally guaranteed by the full faith and credit of the Government
      of the United States, (b) certificates of deposit of or time deposits with
      any commercial bank that is a Lender or a member of the Federal Reserve
      System, issues (or the parent of which issues) commercial paper rated as
      described in clause (c) below, is organized under the laws of the United
      States or any State thereof and has combined capital and surplus of at
      least $1,000,000,000 or (c) commercial paper in an aggregate amount of not
      more than $50,000,000 per issuer outstanding at any time, issued by any
      corporation organized under the laws of any State of the United States and
      rated at least "Prime-1" (or the then equivalent grade) by Moody's or
      "A-1" (or the then equivalent grade) by S&P.

            "CERCLA" means the Comprehensive Environmental Response,
      Compensation and Liability Act of 1980, as amended from time to time.

                                       5


            "CERCLIS" means the Comprehensive Environmental Response,
      Compensation and Liability Information System maintained by the U.S.
      Environmental Protection Agency.

            "CGMI" has the meaning specified in the recital of parties to this
      Agreement.

            "CHANGE OF CONTROL" means the occurrence of any of the following:
      (a) any Person or two or more Persons acting in concert shall have
      acquired and shall continue to have following the date hereof beneficial
      ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
      Commission under the Securities Exchange Act of 1934), directly or
      indirectly, of Voting Interests of the REIT (or other securities
      convertible into such Voting Interests) representing 35% or more of the
      combined voting power of all Voting Interests of the REIT; or (b) there is
      a change in the composition of the REIT's Board of Directors over a period
      of 24 consecutive months (or less) such that a majority of Board members
      (rounded up to the nearest whole number) ceases, by reason of one or more
      proxy contests for the election of Board members, to be comprised of
      individuals who either (i) have been Board members continuously since the
      beginning of such period or (ii) have been elected or nominated for
      election as Board members during such period by at least a majority of the
      Board members described in clause (i) who were still in office at the time
      such election or nomination was approved by the Board; or (c) any Person
      or two or more Persons acting in concert shall have acquired and shall
      continue to have following the date hereof, by contract or otherwise, or
      shall have entered into a contract or arrangement that, upon consummation
      will result in their acquisition of the power to direct, directly or
      indirectly, the management or policies of the REIT; or (d) any Borrower
      Party ceases to be a direct or indirect wholly-owned Subsidiary of FLLP;
      or (e) the REIT ceases to be the direct legal and beneficial owner of all
      general partnership interests in FLLP and the indirect beneficial owner
      (through its Equity Interests in other entities) of limited partnership
      interests comprising more than 50% of the Equity Interests in FLLP; or (f)
      FLLP or any of its Subsidiaries shall create, incur, assume or suffer to
      exist any Lien on the direct or indirect Equity Interests in any Borrower
      Party owned by it other than pursuant to the Collateral Documents.

            "CLOSING DATE" means October 18, 2005 or such other date as may be
      agreed upon by the Borrowers and the Administrative Agent.

            "CNAI" has the meaning specified in the recital of parties to this
      Agreement.

            "COLLATERAL" means all "Collateral" and all "Mortgaged Property"
      referred to in the Collateral Documents and all other property that is or
      is intended to be subject to any Lien in favor of the Collateral Agent for
      the benefit of the Secured Parties.

            "COLLATERAL AGENT" has the meaning specified in the recital of
      parties to this Agreement.

            "COLLATERAL DELIVERY DATE" means January 10, 2006.

            "COLLATERAL DELIVERABLES" means the following items, each in form
      and substance satisfactory to the Administrative Agent (unless otherwise
      specified) in sufficient copies for each Lender:

                                       6


                  (i) Completed requests for information dated as of a current
            date, listing all effective financing statements filed in the
            jurisdictions referred to in Section 5.01(j)(ii)(A) and in such
            other jurisdictions specified by the Administrative Agent that name
            any Borrower Party as debtor, together with copies of such financing
            statements;

                  (ii) Copies of the Assigned Agreements referred to in the
            Security Agreement and all amendments thereto with respect to each
            Mortgage Asset), together with a consent to such assignment, in
            substantially the form of Exhibit C to the Security Agreement or
            otherwise in form and substance satisfactory to the Administrative
            Agent, duly executed by each party to such Assigned Agreements other
            than the Borrower Parties;

                  (iii) A subordination agreement executed and delivered by the
            property manager of each Mortgage Asset;

                  (iv) A franchisor comfort letter executed and delivered by the
            franchisor (if any) of each Mortgage Asset;

                  (v) Evidence that all other action that the Collateral Agent
            may deem necessary or desirable in order to perfect and protect the
            first priority liens and security interests created under the
            Security Agreement has been taken (including, without limitation,
            receipt of duly executed payoff letters, UCC termination statements
            and landlords' and bailees' waiver and consent agreements);

                  (vi) Reports supplementing Schedules III, 4.01(b) and 4.01(q)
            hereto, including descriptions of such changes in the information
            included in such Schedules as may be necessary for such Schedules to
            be accurate and complete, certified as correct and complete by a
            Responsible Officer of the Borrowers;

                  (vii) With respect to each Mortgage Asset, a fully paid
            American Land Title Association Lender's Extended Coverage title
            insurance policy (collectively, the "MORTGAGE POLICIES") in form and
            substance, with endorsements (including a zoning endorsement where
            available) and in an amount (not to exceed in the aggregate for all
            Mortgage Assets the aggregate principal amount of Term Advances then
            outstanding) acceptable to the Collateral Agent, issued, coinsured
            and reinsured by title insurers acceptable to the Collateral Agent,
            insuring each Mortgage to be a valid first and subsisting Lien on
            the property described therein, free and clear of all defects
            (including, but not limited to, mechanics' and materialmen's Liens)
            and encumbrances, excepting only Permitted Encumbrances (as defined
            in the Mortgages), and providing for such other affirmative
            insurance (including endorsements for mechanics' and materialmen's
            Liens where applicable) and such coinsurance and direct access
            reinsurance as the Collateral Agent may deem necessary or desirable,
            and with respect to any such property located in a State in which a
            zoning endorsement is not available, a zoning compliance letter from
            the applicable municipality in a form reasonably acceptable to the
            Collateral Agent;

                  (viii) With respect to each Unencumbered Asset, a current
            record owner and lien search performed by a title insurer acceptable
            to the

                                       7


            Administrative Agent showing TRS Guarantor or a wholly-owned
            Subsidiary thereof as the current record title holder of such
            Unencumbered Asset and showing no Liens of record other than
            Permitted Liens;

                  (ix) With respect to each Hotel Asset, an American Land Title
            Association/American Congress on Surveying and Mapping form survey
            for which all necessary fees have been paid, prepared by a land
            surveyor duly registered and licensed in the State in which the
            property described in such surveys is located and acceptable to the
            Collateral Agent, showing all buildings and other improvements, any
            off-site improvements, the location of any easements, parking
            spaces, rights of way, building set-back lines and other dimensional
            regulations and the absence of encroachments, either by such
            improvements or on to such property, and other defects, other than
            encroachments and other defects acceptable to the Collateral Agent,
            provided that in the case of Mortgage Assets only, each such survey
            shall be (A) dated no more than 30 days before the date of its
            delivery to the Agents, and (B) certified to the Administrative
            Agent, the Collateral Agent and the issuer of the Mortgage Policies
            in a manner satisfactory to the Collateral Agent;

                  (x) With respect to each Mortgage Asset, engineering, soils,
            environmental and other similar reports in form and substance and
            from professional firms acceptable to the Administrative Agent;

                  (xi) Estoppel and consent agreements executed by each of the
            lessors of any leased Mortgage Assets, along with (A) a memorandum
            of lease in recordable form with respect to such leasehold interest,
            executed and acknowledged by the owner of the affected Mortgage
            Asset, as lessor, or (B) evidence that the applicable lease with
            respect to such leasehold interest or memorandum thereof has been
            recorded in all places necessary or desirable, in the Administrative
            Agent's reasonable judgment, to give constructive notice to
            third-party purchasers of such leasehold interest or (3) if such
            leasehold interest was acquired or subleased from the holder of a
            recorded leasehold interest, the applicable assignment or sublease
            document, executed and acknowledged by such holder, in each case in
            form sufficient to give such constructive notice upon recordation;

                  (xii) An Appraisal of each Mortgage Asset;

                  (xiii) Such other consents, agreements, Affiliate lease
            subordination agreements and confirmations of lessors and third
            parties as the Administrative Agent may reasonably deem necessary or
            desirable, and evidence that all other action that the Collateral
            Agent may reasonably deem necessary or desirable, in order to create
            and maintain valid first and subsisting Liens on the property
            described in the Mortgages has been taken;

                  (xiv) Evidence of insurance (which may consist of binders or
            certificates of insurance) naming the Administrative Agent as loss
            payee and additional insured with such responsible and reputable
            insurance companies or associations, and in such amounts and
            covering such risks, as is customary for the hotel industry and
            reasonably satisfactory to the Administrative Agent,

                                       8


            including, without limitation, the insurance required by the terms
            of the Security Agreement and the Mortgages;

                  (xv) An opinion of Jenkens & Gilchrist, counsel for the
            Borrower Parties, with respect to (A) the valid existence, corporate
            power and authority of the Borrower Parties party to the Loan
            Documents, (B) the execution and delivery of the Loan Documents by
            the Borrower Parties and enforceability thereof against the Borrower
            Parties, (C) the perfection of the security interests created by the
            Security Agreement, and (D) such other matters as any Lender through
            the Administrative Agent may reasonably request;

                  (xvi) A favorable opinion of special New York counsel for the
            Borrower Parties reasonably acceptable to the Administrative Agent
            with respect to (A) the enforceability of the Loan documents against
            the Loan Parties, (B) the creation of the security interests created
            pursuant to the Security Agreement, and (C) such other matters as
            any Lender through the Administrative Agent may reasonably request;
            and

                  (xvii) Favorable opinions of local counsel for the Borrower
            Parties in the States in which the Mortgage Assets are located, with
            respect to the enforceability and perfection of the Mortgages,
            substantially in the form of Exhibit J hereto or otherwise in form
            and substance satisfactory to the Administrative Agent.

            "COLLATERAL DOCUMENTS" means the Security Agreement, the Mortgages,
      the Assignments of Leases and any other agreement entered into by a Loan
      Party that creates or purports to create a Lien in favor of the Collateral
      Agent for the benefit of the Secured Parties.

            "COMMUNICATIONS" has the meaning specified in Section 9.02(b).

            "CONFIDENTIAL INFORMATION" means information that any Loan Party
      furnishes to any Agent or any Lender in writing designated as
      confidential, but does not include any such information that is or becomes
      generally available to the public or that is or becomes available to such
      Agent or such Lender from a source other than the Loan Parties or the
      Administrative Agent or any Lender.

            "CONSOLIDATED" refers to the consolidation of accounts in accordance
      with GAAP.

            "CONTINGENT OBLIGATION" means, with respect to any Person, any
      Obligation or arrangement of such Person to guarantee or intended to
      guarantee any Debt, leases, dividends or other payment Obligations
      ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any
      manner, whether directly or indirectly, including, without limitation, (a)
      the direct or indirect guarantee, endorsement (other than for collection
      or deposit in the ordinary course of business), co-making, discounting
      with recourse or sale with recourse by such Person of the Obligation of a
      primary obligor, (b) the Obligation to make take-or-pay or similar
      payments, if required, regardless of nonperformance by any other party or
      parties to an agreement or (c) any Obligation of such Person, whether or
      not contingent, (i) to purchase any such primary obligation or any
      property constituting direct or indirect security therefor, (ii) to
      advance or supply funds (A) for the purchase or

                                       9


      payment of any such primary obligation or (B) to maintain working capital
      or equity capital of the primary obligor or otherwise to maintain the net
      worth or solvency of the primary obligor, (iii) to purchase property,
      assets, securities or services primarily for the purpose of assuring the
      owner of any such primary obligation of the ability of the primary obligor
      to make payment of such primary obligation or (iv) otherwise to assure or
      hold harmless the holder of such primary obligation against loss in
      respect thereof. The amount of any Contingent Obligation shall be deemed
      to be an amount equal to the stated or determinable amount of the primary
      obligation in respect of which such Contingent Obligation is made (or, if
      less, the maximum amount of such primary obligation for which such Person
      may be liable pursuant to the terms of the instrument evidencing such
      Contingent Obligation) or, if not stated or determinable, the maximum
      reasonably anticipated liability in respect thereof (assuming such Person
      is required to perform thereunder), as determined by such Person in good
      faith.

            "CONVERSION", "CONVERT" and "CONVERTED" each refer to a conversion
      of Term Advances of one Type into Term Advances of the other Type pursuant
      to Section 2.08, 2.09 or 2.10.

            "DEBT" of any Person means, without duplication for purposes of
      calculating financial ratios, (a) all Debt for Borrowed Money of such
      Person, (b) all Obligations of such Person for the deferred purchase price
      of property or services other than trade payables incurred in the ordinary
      course of business and not overdue by more than 60 days, (c) all
      Obligations of such Person evidenced by notes, bonds, debentures or other
      similar instruments, (d) all Obligations of such Person created or arising
      under any conditional sale or other title retention agreement with respect
      to property acquired by such Person (even though the rights and remedies
      of the seller or lender under such agreement in the event of default are
      limited to repossession or sale of such property), (e) all Obligations of
      such Person as lessee under Capitalized Leases, (f) all Obligations of
      such Person under acceptance, letter of credit or similar facilities, (g)
      all Obligations of such Person to purchase, redeem, retire, defease or
      otherwise make any payment in respect of any Equity Interests in such
      Person or any other Person (other than Preferred Interests that are issued
      by any Loan Party or Subsidiary thereof and classified as either equity or
      minority interests pursuant to GAAP) or any warrants, rights or options to
      acquire such Equity Interests, (h) all Obligations of such Person in
      respect of Hedge Agreements, valued at the Agreement Value thereof, (i)
      all Contingent Obligations of such Person and (j) all indebtedness and
      other payment Obligations referred to in clauses (a) through (i) above of
      another Person secured by (or for which the holder of such Debt has an
      existing right, contingent or otherwise, to be secured by) any Lien on
      property (including, without limitation, accounts and contract rights)
      owned by such Person, even though such Person has not assumed or become
      liable for the payment of such indebtedness or other payment Obligations.

            "DEBT FOR BORROWED MONEY" of any Person means all items that, in
      accordance with GAAP, would be classified as indebtedness on a
      Consolidated balance sheet of such Person.

            "DEFAULT" means any Event of Default or any event that would
      constitute an Event of Default but for the requirement that notice be
      given or time elapse or both.

            "DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
      office of such Lender specified as its "Domestic Lending Office" opposite
      its name on Schedule I

                                       10


      hereto or in the Assignment and Acceptance pursuant to which it became a
      Lender, as the case may be, or such other office of such Lender as such
      Lender may from time to time specify to the Borrowers and the
      Administrative Agent.

            "DRAW PERIOD" had the meaning specified in Section 2.01.

            "EFFECTIVE DATE" means the first date on which the conditions set
      forth in Article III shall be satisfied.

            "ELIGIBLE ASSIGNEE" means (i) a Lender; (ii) an Affiliate or Fund
      Affiliate of a Lender; (iii) a commercial bank organized under the laws of
      the United States, or any State thereof, respectively, and having total
      assets in excess of $500,000,000; (iv) a savings and loan association or
      savings bank organized under the laws of the United States or any State
      thereof, and having total assets in excess of $500,000,000; (v) a
      commercial bank organized under the laws of any other country that is a
      member of the OECD or has concluded special lending arrangements with the
      International Monetary Fund associated with its General Arrangements to
      Borrow, or a political subdivision of any such country, and having total
      assets in excess of $500,000,000, so long as such bank is acting through a
      branch or agency located in the United States; (vi) the central bank of
      any country that is a member of the OECD; (vii) a finance company,
      insurance company or other financial institution or fund (whether a
      corporation, partnership, trust or other entity) that is engaged in
      making, purchasing or otherwise investing in commercial loans in the
      ordinary course of its business and having total assets in excess of
      $500,000,000; and (viii) any other Person approved by the Administrative
      Agent, and, unless a Default has occurred and is continuing at the time
      any assignment is effected pursuant to Section 9.07, approved by the
      Borrowers, each such approval not to be unreasonably withheld or delayed.

            "ENVIRONMENTAL ACTION" means any action, suit, demand, demand
      letter, claim, notice of non-compliance or violation, notice of liability
      or potential liability, investigation, proceeding, consent order or
      consent agreement relating in any way to any Environmental Law, any
      Environmental Permit or Hazardous Material or arising from alleged injury
      or threat to health, safety or the environment, including, without
      limitation, (a) by any governmental or regulatory authority for
      enforcement, cleanup, removal, response, remedial or other actions or
      damages and (b) by any governmental or regulatory authority or third party
      for damages, contribution, indemnification, cost recovery, compensation or
      injunctive relief.

            "ENVIRONMENTAL LAW" means any Federal, state, local or foreign
      statute, law, ordinance, rule, regulation, code, order, writ, judgment,
      injunction, decree or judicial or agency interpretation, policy or
      guidance relating to pollution or protection of the environment, health,
      safety or natural resources, including, without limitation, those relating
      to the use, handling, transportation, treatment, storage, disposal,
      release or discharge of Hazardous Materials.

            "ENVIRONMENTAL PERMIT" means any permit, approval, identification
      number, license or other authorization required under any Environmental
      Law.

            "EQUITY INTERESTS" means, with respect to any Person, shares of
      capital stock of (or other ownership or profit interests in) such Person,
      warrants, options or other rights for the purchase or other acquisition
      from such Person of shares of capital stock of (or

                                       11


      other ownership or profit interests in) such Person, securities
      convertible into or exchangeable for shares of capital stock of (or other
      ownership or profit interests in) such Person or warrants, rights or
      options for the purchase or other acquisition from such Person of such
      shares (or such other interests), and other ownership or profit interests
      in such Person (including, without limitation, partnership, member or
      trust interests therein), whether voting or nonvoting, and whether or not
      such shares, warrants, options, rights or other interests are authorized
      or otherwise existing on any date of determination.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
      as amended from time to time, and the regulations promulgated and rulings
      issued thereunder.

            "ERISA AFFILIATE" means any Person that for purposes of Title IV of
      ERISA is a member of the controlled group of any Loan Party, or under
      common control with any Loan Party, within the meaning of Section 414 of
      the Internal Revenue Code.

            "ERISA EVENT" means (a)(i) the occurrence of a reportable event,
      within the meaning of Section 4043 of ERISA, with respect to any Plan
      unless the 30-day notice requirement with respect to such event has been
      waived by the PBGC or (ii) the requirements of Section 4043(b) of ERISA
      apply with respect to a contributing sponsor, as defined in Section
      4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9),
      (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably
      expected to occur with respect to such Plan within the following 30 days;
      (b) the application for a minimum funding waiver with respect to a Plan;
      (c) the provision by the administrator of any Plan of a notice of intent
      to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including
      any such notice with respect to a plan amendment referred to in Section
      4041(e) of ERISA); (d) the cessation of operations at a facility of any
      Loan Party or any ERISA Affiliate in the circumstances described in
      Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any
      ERISA Affiliate from a Multiple Employer Plan during a plan year for which
      it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
      (f) the conditions for imposition of a lien under Section 302(f) of ERISA
      shall have been met with respect to any Plan; (g) the adoption of an
      amendment to a Plan requiring the provision of security to such Plan
      pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of
      proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the
      occurrence of any event or condition described in Section 4042 of ERISA
      that constitutes grounds for the termination of, or the appointment of a
      trustee to administer, such Plan.

            "EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D
      of the Board of Governors of the Federal Reserve System, as in effect from
      time to time.

            "EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the
      office of such Lender specified as its "Eurodollar Lending Office"
      opposite its name on Schedule I hereto or in the Assignment and Acceptance
      pursuant to which it became a Lender (or, if no such office is specified,
      its Domestic Lending Office), or such other office of such Lender as such
      Lender may from time to time specify to the Borrowers and the
      Administrative Agent.

            "EURODOLLAR RATE" means, for any Interest Period for all Eurodollar
      Rate Advances comprising part of the same Borrowing, an interest rate per
      annum equal to the rate per annum obtained by dividing (a) the rate per
      annum (rounded upward, if

                                       12


      necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
      any successor page) as the London interbank offered rate for deposits in
      U.S. dollars at 11:00 A.M. (London time) two Business Days before the
      first day of such Interest Period for a period equal to such Interest
      Period or, if for any reason such rate is not available, the rate per
      annum (rounded upward, if necessary, to the nearest 1/100 of 1%) at which
      deposits in U.S. dollars are offered by the principal office of the
      Reference Bank in London, England to prime banks in the London interbank
      market at 11:00 A.M. (London time) two Business Days before the first day
      of such Interest Period in an amount substantially equal to the Reference
      Bank's Eurodollar Rate Advance comprising part of such Borrowing to be
      outstanding during such Interest Period (or, if the Reference Bank shall
      not have such a Eurodollar Rate Advance, $1,000,000) and for a period
      equal to such Interest Period by (b) a percentage equal to 100% minus the
      Eurodollar Rate Reserve Percentage for such Interest Period.

            "EURODOLLAR RATE ADVANCE" means a Term Advance that bears interest
      as provided in Section 2.06(a)(ii).

            "EURODOLLAR RATE RESERVE PERCENTAGE" means, for any Interest Period
      for all Eurodollar Rate Advances comprising part of the same Borrowing,
      the reserve percentage applicable two Business Days before the first day
      of such Interest Period under regulations issued from time to time by the
      Board of Governors of the Federal Reserve System (or any successor) for
      determining the maximum reserve requirement (including, without
      limitation, any emergency, supplemental or other marginal reserve
      requirement) for a member bank of the Federal Reserve System in New York
      City with respect to liabilities or assets consisting of or including
      Eurocurrency Liabilities (or with respect to any other category of
      liabilities that includes deposits by reference to which the interest rate
      on Eurodollar Rate Advances is determined) having a term equal to such
      Interest Period.

            "EVENTS OF DEFAULT" has the meaning specified in Section 6.01.

            "EXISTING DEBT" means, without duplication, (a) all Debt of the
      Borrower Parties and their Subsidiaries, and (b) all Debt secured by the
      Hotel Assets, in each case in the respective principal amounts allocable
      to such Hotel Assets and outstanding immediately before giving effect to
      (i) the TRS Recapitalization Transactions scheduled to occur on or about
      the Closing Date and (ii) the application of the proceeds of the initial
      Borrowing.

            "EXTENSION DATE" has the meaning specified in Section 2.15.

            "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
      rate per annum equal for each day during such period to the weighted
      average of the rates on overnight Federal funds transactions with members
      of the Federal Reserve System arranged by Federal funds brokers, as
      published for such day (or, if such day is not a Business Day, for the
      next preceding 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 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.

            "FEE LETTER" means the fee letter dated as of September 9, 2005
      among the REIT, CNAI and CGMI, as the same may be amended from time to
      time.

                                       13


            "FF&E" means, with respect to any Hotel Asset, any furniture,
      fixtures and equipment, including any beds, lamps, bedding, tables,
      chairs, sofas, curtains, carpeting, smoke detectors, mini bars, paintings,
      decorations, televisions, telephones, radios, desks, dressers, towels,
      bathroom equipment, heating, cooling, lighting, laundry, incinerating,
      loading, swimming pools, landscaping, garage and power equipment,
      machinery, engines, vehicles, fire prevention, refrigerating, ventilating
      and communications apparatus, carts, dollies, elevators, escalators,
      kitchen appliances, restaurant equipment, computers, reservation systems,
      software, cash registers, switchboards, cleaning equipment or any other
      items of furniture, fixtures and equipment typically used in hotel
      properties (including furniture, fixtures and equipment used in guest
      rooms, lobbies, common areas, front desk, back office, bars, restaurants,
      kitchens, laundries, concierge, bellman, recreation, amusement,
      landscaping, parking and other areas of hotels) and any replacements of
      all or any portion of any of the foregoing.

            "FF&E RESERVE" means, with respect to any Mortgage Asset for any
      fiscal period, an amount equal to 4% of the total revenues generated from
      the operation of such Mortgage Asset for such fiscal period.

            "FISCAL YEAR" means a fiscal year of FLLP and its Consolidated
      Subsidiaries ending on December 31 in any calendar year.

            "FLLP" has the meaning specified in the recital of the parties to
      this Agreement.

            "FLLP CAP" has the meaning specified in Section 7.09.

            "FLLP CAP DATE" means the date on which the Loan Parties shall have
      delivered to the Administrative Agent all Collateral Documents and
      Collateral Deliverables and otherwise satisfied in full their respective
      obligations under Sections 5.01(j)(ii) and 5.01(j)(iii).

            "FRANCHISE AGREEMENTS" means (a) the Franchise Agreements set forth
      on Part IV of Schedule 4.01(q) hereto (or, if no separate franchise
      agreement has been entered into with respect to any Hotel Asset, the
      applicable Management Agreement), and (b) any Franchise Agreement in
      respect of a Hotel Asset (or if no separate franchise agreement is entered
      into with respect thereto, the applicable Management Agreement) entered
      into after the Closing Date in compliance with Sections 5.01(n) and
      5.01(o).

            "FUND AFFILIATE" means, with respect to any Lender that is a fund
      that invests in bank loans, any other fund that invests in bank loans and
      is advised or managed by the same investment advisor as such Lender or by
      an Affiliate of such investment advisor.

            "GAAP" has the meaning specified in Section 1.03.

            "GOOD FAITH CONTEST" means the contest of an item as to which: (a)
      such item is contested in good faith, by appropriate proceedings, (b)
      reserves that are adequate are established with respect to such contested
      item in accordance with GAAP and (c) the failure to pay or comply with
      such contested item during the period of such contest is not reasonably
      likely to result in a Material Adverse Effect.

            "GUARANTEED OBLIGATIONS" has the meaning specified in Section 7.01.

                                       14


            "GUARANTY" means the Guaranty by the Guarantors pursuant to Article
      VII, together with any and all Guaranty Supplements and Accession
      Agreements from time to time delivered pursuant to Section 5.01(j)(i) or
      Section 7.05.

            "HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
      by-products or breakdown products, radioactive materials,
      asbestos-containing materials, polychlorinated biphenyls, radon gas and
      mold and (b) any other chemicals, materials or substances designated,
      classified or regulated as hazardous or toxic or as a pollutant or
      contaminant under any Environmental Law.

            "HEDGE AGREEMENTS" means interest rate swap, cap or collar
      agreements, interest rate future or option contracts, currency swap
      agreements, currency future or option contracts and other hedging
      agreements.

            "HEDGE BANK" means any Lender or an Affiliate of a Lender in its
      capacity as a party to a Secured Hedge Agreement.

            "HOTEL ASSETS" means the Mortgage Assets and the Unencumbered
      Assets.

            "INDEMNIFIED COSTS" has the meaning specified in Section 8.05(a).

            "INDEMNIFIED PARTY" has the meaning specified in Section 7.06(a).

            "INITIAL BORROWER" has the meaning specified in the recital of the
      parties to this Agreement.

            "INITIAL LENDER" has the meaning specified in the recital of parties
      to this Agreement.

            "INITIAL MORTGAGE ASSETS" means those Mortgage Assets identified as
      "Initial Mortgage Assets" on Schedule II hereto and with respect to which
      all Liens securing Existing Debt encumbering such Mortgage Assets have
      been satisfied and released in full on the Closing Date.

            "INSUFFICIENCY" means, with respect to any Plan, the amount, if any,
      of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
      ERISA.

            "INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising
      part of the same Borrowing, the period commencing on the date of such
      Eurodollar Rate Advance or the date of the Conversion of any Base Rate
      Advance into such Eurodollar Rate Advance, and ending on the last day of
      the period selected by the applicable Borrower pursuant to the provisions
      below and, thereafter, each subsequent period commencing on the last day
      of the immediately preceding Interest Period and ending on the last day of
      the period selected by such Borrower pursuant to the provisions below. The
      duration of each such Interest Period shall be one, two or three months
      (or, to the extent available from all Lenders, any shorter period), as the
      applicable Borrower may, upon notice received by the Administrative Agent
      not later than 12:00 Noon (New York City time) on the third Business Day
      prior to the first day of such Interest Period, select; provided, however,
      that:

                                       15


                  (i) no Borrower may select any Interest Period with respect to
            any Eurodollar Rate Advance that ends after the Maturity Date;

                  (ii) Interest Periods commencing on the same date for
            Eurodollar Rate Advances comprising part of the same Borrowing shall
            be of the same duration;

                  (iii) whenever the last day of any Interest Period would
            otherwise occur on a day other than a Business Day, the last day of
            such Interest Period shall be extended to occur on the next
            succeeding Business Day; provided, however, that if such extension
            would cause the last day of such Interest Period to occur in the
            next following calendar month, the last day of such Interest Period
            shall occur on the next preceding Business Day; and

                  (iv) whenever the first day of any Interest Period occurs on a
            day of an initial calendar month for which there is no numerically
            corresponding day in the calendar month that succeeds such initial
            calendar month by the number of months equal to the number of months
            in such Interest Period, such Interest Period shall end on the last
            Business Day of such succeeding calendar month.

            "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
      amended from time to time, and the regulations promulgated and rulings
      issued thereunder.

            "INVESTMENT" means (a) any loan or advance to any Person, any
      purchase or other acquisition of any Equity Interests or Debt or the
      assets comprising a division or business unit or a substantial part or all
      of the business of any Person, any capital contribution to any Person or
      any other direct or indirect investment in any Person, including, without
      limitation, any acquisition by way of a merger or consolidation and any
      arrangement pursuant to which the investor incurs Debt of the types
      referred to in clause (i) or (j) of the definition of "Debt" in respect of
      any Person, and (b) the purchase or other acquisition of any real
      property.

            "LEASED TRS HOTELS" means those hotels listed in Part I of Schedule
      IV hereto.

            "LENDERS" means the Initial Lenders, and each Person that shall
      become a Lender hereunder pursuant to Section 9.07 for so long as such
      Initial Lender or Person, as the case may be, shall be a party to this
      Agreement.

            "LIEN" means any lien, security interest or other charge or
      encumbrance of any kind, or any other type of preferential arrangement,
      including, without limitation, the lien or retained security title of a
      conditional vendor and any easement, right of way or other encumbrance on
      title to real property.

            "LOAN DOCUMENTS" means (a) this Agreement, (b) the Notes, (c) the
      Fee Letter, (d) each Accession Agreement, (e) each Guaranty Supplement,
      (f) the Collateral Documents and (g) each Secured Hedge Agreement, in each
      case, as amended.

            "LOAN PARTIES" means the Borrowers and the Guarantors.

            "LOSSES" has the meaning specified in the definition of "Recourse
      Carve-Out Liabilities".

                                       16


            "MANAGEMENT AGREEMENTS" means (a) the Management Agreements set
      forth on Part III of Schedule 4.01(q) hereto, and (b) any Management
      Agreement in respect of a Hotel Asset entered into after the Closing Date
      in compliance with Section 5.01(n).

            "MARGIN STOCK" has the meaning specified in Regulation U.

            "MATERIAL ADVERSE CHANGE" means any material adverse change in the
      business, condition (financial or otherwise), results of operations or
      prospects of (a) FLLP or FLLP and its Subsidiaries, taken as a whole, or
      (b) the Borrower Parties or the Borrower Parties and their Subsidiaries,
      taken as a whole.

            "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
      business, condition (financial or otherwise), operations or prospects of
      (i) FLLP and its Subsidiaries, taken as a whole, or (ii) the Borrower
      Parties and their Subsidiaries, taken as a whole, (b) the rights and
      remedies of any Agent or any Lender under any Loan Document, (c) the
      ability of any Loan Party to perform its Obligations under any Loan
      Document to which it is or is to be a party or (d) the value of the
      Mortgage Assets or the Unencumbered Assets, taken as a whole.

            "MATERIAL CONTRACT" means each contract to which FLLP, any Borrower
      Party or any Subsidiary of any Borrower Party is a party involving
      aggregate consideration payable to or by FLLP, such Borrower Party or such
      Subsidiary in an amount of $5,000,000 or more per annum or otherwise
      material to the business, condition (financial or otherwise), operations,
      performance, properties or prospects of FLLP or the Borrower Parties and
      their Subsidiaries, taken as a whole. Without limitation of the foregoing,
      the Management Agreements shall be deemed to comprise Material Contracts
      hereunder.

            "MATERIAL DEBT" means recourse Debt of any Loan Party or any
      Subsidiary of a Loan Party that is outstanding in a principal amount (or,
      in the case of any Hedge Agreement, an Agreement Value) of $10,000,000 or
      more, either individually or in the aggregate; in each case (a) whether
      the primary obligation of one or more of the Loan Parties or their
      respective Subsidiaries, (b) whether the subject of one or more separate
      debt instruments or agreements, and (c) exclusive of Debt outstanding
      under this Agreement.

            "MATERIAL LITIGATION" has the meaning specified in Section 3.01(f).

            "MATURITY DATE" means the earlier of (a) the first anniversary of
      the Closing Date, subject to the extension thereof pursuant to Section
      2.16 and (b) the date of termination in whole of the Term Commitments
      pursuant to Section 2.04 or 6.01.

            "MAXIMUM FACILITY AMOUNT" means $175,000,000.

            "MOODY'S" means Moody's Investors Service, Inc. and any successor
      thereto.

            "MORTGAGE POLICIES" has the meaning specified in the definition of
      "Collateral Deliverables".

            "MORTGAGE ASSETS" means those assets identified on Schedule II
      hereto, which assets are (a) in the case of the Initial Mortgage Assets,
      owned by the Initial Borrower or a Borrower Party that is a wholly-owned
      Subsidiary of the Initial Borrower by the close

                                       17


      of business on the Closing Date, and (b) in the case of all other Mortgage
      Assets, either (i) owned by a Borrower or a wholly-owned Subsidiary
      thereof on the Closing Date or (ii) 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.

            "MORTGAGE ASSETS DEBT SERVICE COVERAGE RATIO" means, at any date of
      determination, the ratio of (a) the aggregate Net Operating Income for all
      Mortgage Assets to (b) the actual interest expense and scheduled principal
      amortization payments in respect of the Term Advances payable by the
      Borrowers under this Agreement ("ACTUAL DEBT SERVICE") for the consecutive
      four fiscal quarters of the Borrowers most recently ended; provided,
      however, that:

                  (i) at any date of determination occurring on or before March
            31, 2006, the amount described in clause (b) above shall be deemed
            to equal (A) the One Month Eurodollar Rate plus the Applicable
            Margin multiplied by (B) the aggregate principal amount of all Term
            Advances then outstanding; and

                  (ii) at any date of determination occurring after March 31,
            2006 and on or before December 31, 2006, the amount described in
            clause (b) above shall be deemed to equal (A) the Actual Debt
            Service for the immediately preceding fiscal quarter of the
            Borrowers, multiplied by (B) four.

            "MORTGAGES" has the meaning specified in Section 5.01(j)(ii)(B).

            "MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
      Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA
      Affiliate is making or accruing an obligation to make contributions, or
      has within any of the preceding five plan years made or accrued an
      obligation to make contributions.

            "MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
      Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
      Loan Party or any ERISA Affiliate and at least one Person other than the
      Loan Parties and the ERISA Affiliates or (b) was so maintained and in
      respect of which any Loan Party or any ERISA Affiliate could have
      liability under Section 4064 or 4069 of ERISA in the event such plan has
      been or were to be terminated.

            "NEGATIVE PLEDGE" means, with respect to any asset, any provision of
      a document, instrument or agreement (other than a Loan Document) which
      prohibits or purports to prohibit the creation or assumption of any Lien
      on such asset as security for Debt of the Person owning such asset or any
      other Person.

            "NET OPERATING INCOME" means, with respect to any Mortgage Asset,
      (a) the total rental and other revenue from the operation of such Mortgage
      Asset, minus (b) the sum of the FF&E Reserve for such Mortgage Asset plus
      all expenses and other proper charges incurred in connection with the
      operation and maintenance of such Mortgage Asset, including, without
      limitation, management fees, repairs, real estate and chattel taxes and
      bad debt expenses, but before payment or provision for debt service
      charges, income taxes and depreciation, amortization and other non-cash
      expenses, all as determined in accordance with GAAP and in each case for
      the consecutive four fiscal quarters of operations of such Mortgage Asset
      most recently ended.

                                       18


            "NET SALES PROCEEDS" has the meaning specified in Section 5.02(e).

            "NOTE" means a promissory note of any Borrower payable to the order
      of any Lender, in substantially the form of Exhibit A hereto, evidencing
      the aggregate indebtedness of such Borrower to such Lender resulting from
      the Term Advances made by such Lender.

            "NOTICE" has the meaning specified in Section 9.02(c).

            "NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).

            "NPL" means the National Priorities List under CERCLA.

            "OBLIGATION" means, with respect to any Person, any payment,
      performance or other obligation of such Person of any kind, including,
      without limitation, any liability of such Person on any claim, whether or
      not the right of any creditor to payment in respect of such claim is
      reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
      disputed, undisputed, legal, equitable, secured or unsecured, and whether
      or not such claim is discharged, stayed or otherwise affected by any
      proceeding referred to in Section 6.01(f). Without limiting the generality
      of the foregoing, the Obligations of any Loan Party under the Loan
      Documents include (a) the obligation to pay principal, interest, charges,
      expenses, fees, attorneys' fees and disbursements, indemnities and other
      amounts payable by such Loan Party under any Loan Document and (b) the
      obligation of such Loan Party to reimburse any amount in respect of any of
      the foregoing that any Lender, in its sole discretion, may elect to pay or
      advance on behalf of such Loan Party.

            "OECD" means the Organization for Economic Cooperation and
      Development.

            "ONE MONTH EURODOLLAR RATE" means, at any date of determination, an
      interest rate per annum equal to the Eurodollar Rate that would apply to a
      hypothetical Term Advance made two Business Days after such date of
      determination in an amount equal to the aggregate principal amount of all
      Term Advances then outstanding and for a one month Interest Period.

            "OTHER TAXES" has the meaning specified in Section 2.12(b).

            "PATRIOT ACT" has the meaning specified in Section 9.12.

            "PBGC" means the Pension Benefit Guaranty Corporation (or any
      successor).

            "PERMITTED DISTRIBUTION" has the meaning specified in Section
      2.05(b).

            "PERMITTED LIENS" means such of the following as to which no
      enforcement, collection, execution, levy or foreclosure proceeding shall
      have been commenced: (a) Liens for taxes, assessments and governmental
      charges or levies not yet due and payable; (b) Liens imposed by law, such
      as materialmen's, mechanics', carriers', workmen's and repairmen's Liens
      and other similar Liens arising in the ordinary course of business
      securing obligations that (i) are not overdue for a period of more than 30
      days and (ii) individually or together with all other Permitted Liens
      outstanding on any date of determination do not materially adversely
      affect the use of the property to which they relate; (c) pledges or
      deposits to secure obligations under workers' compensation or

                                       19


      unemployment laws or similar legislation or to secure public or statutory
      obligations; (d) easements, zoning restrictions, rights of way and other
      encumbrances on title to real property that do not render title to the
      property encumbered thereby unmarketable or materially adversely affect
      the use or value of such property for its present purposes; (e) Tenancy
      Leases; (f) Permitted Encumbrances as defined in the Mortgages, and (g)
      possessory Liens on cash to the extent arising under any Management
      Agreement or Franchise Agreement.

            "PERMITTED VARIANCES" means certain terms and conditions of the
      Leased TRS Hotels described on Part II of Schedule IV hereto.

            "PERSON" means an individual, partnership, corporation (including a
      business trust), limited liability company, joint stock company, trust,
      unincorporated association, joint venture or other entity, or a government
      or any political subdivision or agency thereof.

            "PLAN" means a Single Employer Plan or a Multiple Employer Plan.

            "PLATFORM" has the meaning specified in Section 9.02(b).

            "POST PETITION INTEREST" has the meaning specified in Section
      7.07(c).

            "PREFERRED INTERESTS" means, with respect to any Person, Equity
      Interests issued by such Person that are entitled to a preference or
      priority over any other Equity Interests issued by such Person upon any
      distribution of such Person's property and assets, whether by dividend or
      upon liquidation.

            "PREVIOUSLY OWNED HOTELS" means those hotel assets listed on
      Schedule V hereto.

            "QUALIFYING ASSET CONDITIONS" means, with respect to any Hotel
      Asset, that such Hotel Asset (a) is located in one of the 48 contiguous
      states of the United States of America or the District of Columbia, (b)
      has been in operation for at least one year; (c) if a Mortgage Asset, is
      100% owned directly by a Borrower or a Guarantor that is a wholly owned
      Subsidiary of a Borrower either in fee simple absolute or subject to a
      Qualifying Ground Lease; (d) if an Unencumbered Asset, is 100% owned
      directly by TRS Guarantor or a Guarantor that is a wholly-owned Subsidiary
      thereof either in fee simple absolute or subject to a Qualifying Ground
      Lease, (d) is fully operating, open to the public, and not under
      significant development or redevelopment; (e) is free of all material
      structural defects or architectural deficiencies, title defects,
      environmental or other material matters (including a casualty event or
      condemnation) that could reasonably be expected to have a material adverse
      effect on the value, use or ability to sell or refinance such Hotel Asset;
      (f) is operated by an Approved Manager or any other property manager
      approved by the Administrative Agent; (g) is subject to a Franchise
      Agreement with an Approved Franchisor or any other franchisor approved by
      the Administrative Agent; (h) is not subject to mezzanine Debt financing;
      (i) is not, and no interest of any Loan Party therein is, subject to any
      Lien (other than Permitted Liens and Liens created by the Collateral
      Documents) or any Negative Pledge; and (j) the Borrower Party that owns
      such Hotel Asset has the right to take the following actions without the
      need to obtain the consent of any Person: (1) to create Liens on such
      Hotel Asset as security for Debt of such Borrower Party, and (2) to sell,
      transfer or otherwise dispose of such Hotel Asset.

                                       20


            "QUALIFYING GROUND LEASE" means a ground lease of real property
      containing the following terms and conditions (subject, however to
      Permitted Variances, which shall be deemed permitted hereunder): (a) a
      remaining term (exclusive of any unexercised extension options) of 30
      years or more from the Closing Date; (b) the right of the lessee to
      mortgage and encumber its interest in the leased property without the
      consent of the lessor; (c) the obligation of the lessor to give the holder
      of any mortgage Lien on such leased real property written notice of any
      defaults on the part of the lessee and agreement of such lessor that such
      lease will not be terminated until such holder has had a reasonable
      opportunity to cure or complete foreclosures, and fails to do so; (d)
      reasonable transferability of the lessee's interest under such lease,
      including the ability to sublease; and (e) such other rights customarily
      required by mortgagees making a loan secured by the interest of the holder
      of a leasehold estate demised pursuant to a ground lease.

            "RECOURSE CARVE-OUT LIABILITIES" means (a) any claims, losses,
      liabilities, demands, judgments, penalties, costs, damages and expenses,
      including any loss of the principal amount of any Term Advances (or any
      portion thereof), directly or indirectly incurred or sustained by any
      Indemnified Party ("LOSSES") in connection with the Term Facility, the
      Loan Documents, the transactions contemplated by the Loan Documents or the
      Hotel Assets, caused by, resulting from or arising out of or in connection
      with any of the following: (i) fraud, willful misconduct, or material
      misrepresentation by any Loan Party, (ii) the misappropriation by any Loan
      Party or any Affiliate thereof of any Net Operating Income or other cash
      proceeds of the Collateral, (iii) the non-payment of real estate taxes in
      respect of any Hotel Asset despite the existence of Net Operating Income
      or other proceeds of the Hotel Assets sufficient therefor (other than real
      estate taxes subject to a Good Faith Contest not required to be paid
      pursuant to Section 5.01(b)), (iv) the commission of waste with regard to
      any Hotel Asset (or any portion thereof) by any Loan Party, (v)
      intentional misconduct of any Loan Party causing the cancellation of any
      insurance coverage, (vi) the Transfer of any Hotel Asset (or any material
      portion thereof) or any other property or asset in violation Section
      5.02(e) or any other provision of the Loan Documents, (vii) the failure of
      any Borrower Party to cause the Net Sales Proceeds of any Transfer of any
      Hotel Asset to be applied to repay Term Advances at the times and to the
      extent required pursuant to Section 2.05(b), (viii) the occurrence of any
      Event of Default described in Section 6.01(f) consisting of a voluntary
      bankruptcy or insolvency proceeding or as to which the applicable Loan
      Party or Borrower Party Subsidiary shall fail to diligently contest such
      bankruptcy or insolvency proceeding in good faith by appropriate
      proceedings, (ix) any non-compliance by any Loan Party or any Subsidiary
      thereof with any Environmental Law or the actual or alleged presence of
      Hazardous Materials on any property of any Loan Party or any of its
      Subsidiaries or any Environmental Action relating in any way to any Loan
      Party or any of its Subsidiaries or any Hotel Asset, (x) from and after
      the Collateral Delivery Date, any Loan Party or Affiliate thereof (A)
      affirmatively seeks, in any case, action, suit or proceeding to suspend,
      reduce, impede, or impair the right of recourse of the Collateral Agent or
      any other Secured Party to the Collateral or any portion thereof, or (B)
      engages in any intentional act or misrepresentation which has the effect
      of suspending, delaying, reducing, impeding, or impairing the right of
      recourse of the Collateral Agent or any other Secured Party to the
      Collateral or any portion thereof, or (xi) the ownership, management or
      operation of the Previously Owned Hotels or any other matter arising out
      of or relating to the Previously Owned Hotels, plus (b) all attorneys'
      fees, court costs, and other legal expenses and all other costs and
      expenses of any kind which any Indemnified Party may at any time pay or
      incur in attempting to collect, compromise or enforce in any respect the
      Guaranty by FLLP of the Recourse Carve-Out Liabilities, whether or not
      suit

                                       21


      is ever filed, and whether or not in connection with any insolvency,
      bankruptcy, reorganization, arrangement or other similar proceeding
      involving any Borrower or Guarantor.

            "REFERENCE BANK" means Citibank, N.A.

            "REGISTER" has the meaning specified in Section 9.07(d).

            "REGULATION U" means Regulation U of the Board of Governors of the
      Federal Reserve System, as in effect from time to time.

            "REIT" means FelCor Lodging Trust Incorporated, a Maryland
      corporation.

            "REPORTING PARTIES" has the meaning specified in Section
      5.03(b)(ii).

            "REQUIRED LENDERS" means, at any time, Lenders owed or holding
      greater than 50% of the aggregate principal amount of the Term Advances
      outstanding at such time.

            "RESPONSIBLE OFFICER" means, with respect to any Loan Party, any
      officer of, or any officer of any general partner or managing member of,
      such Loan Party, which Officer has (a) responsibility for performing the
      underlying function that is the subject of the action required of such
      officer hereunder, or (b) supervisory responsibility for such an officer.

            "S&P" means Standard & Poor's Ratings Group, a division of The
      McGraw-Hill Companies, Inc. and any successor thereto.

            "SALE AND LEASEBACK TRANSACTION" shall mean any arrangement with any
      Person providing for the leasing by a Borrower Party or any of its
      Subsidiaries of any real property that has been sold or transferred or is
      to be sold or transferred by such Borrower Party or such Subsidiary, as
      the case may be, to such Person.

            "SECURED HEDGE AGREEMENT" means any Hedge Agreement permitted under
      Article V that is entered into by and between any Loan Party and any Hedge
      Bank and that is secured by the Collateral Documents.

            "SECURED OBLIGATIONS" means, collectively, the "Secured Obligations"
      as defined in the Security Agreement and the "Obligations" as defined in
      the Mortgages.

            "SECURED PARTIES" means the Agents, the Lenders and the Hedge Banks.

            "SECURITIES ACT" means the Securities Act of 1933, as amended to the
      date hereof and from time to time hereafter, and any successor statute.

            "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
      as amended to the date hereof and from time to time hereafter, and any
      successor statute.

            "SECURITY AGREEMENT" has the meaning specified in Section
      5.01(j)(ii)(A).

            "SINGLE EMPLOYER PLAN" means a single employer plan, as defined in
      Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
      Loan Party or any ERISA Affiliate and no Person other than the Loan
      Parties and the ERISA Affiliates

                                       22


      or (b) was so maintained and in respect of which any Loan Party or any
      ERISA Affiliate could have liability under Section 4069 of ERISA in the
      event such plan has been or were to be terminated.

            "SOLVENT" means, with respect to any Person on a particular date,
      that on such date (a) the fair value of the property of such Person, on a
      going-concern basis, is greater than the total amount of liabilities,
      including, without limitation, contingent liabilities, of such Person, (b)
      the present fair salable value of the assets of such Person, on a
      going-concern basis, 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, (c) such Person does not intend to, and does not
      believe that it will, incur debts or liabilities beyond such Person's
      ability to pay such debts and liabilities as they mature and (d) such
      Person is not engaged in business or a transaction, and is not about to
      engage in business or a transaction, for which such Person's property
      would constitute an unreasonably small capital. The amount of contingent
      liabilities at any time shall be computed as the amount that, in the light
      of all the facts and circumstances existing at such time (including,
      without limitation, after taking into account appropriate discount factors
      for the present value of future contingent liabilities), represents the
      amount that can reasonably be expected to become an actual or matured
      liability.

            "SUBORDINATED OBLIGATIONS" has the meaning specified in Section
      7.07(a).

            "SUBSIDIARY" of any Person means any corporation, partnership, joint
      venture, limited liability company, trust or estate of which (or in which)
      50% or more of (a) the issued and outstanding capital stock having
      ordinary voting power to elect a majority of the Board of Directors of
      such corporation (irrespective of whether at the time capital stock of any
      other class or classes of such corporation shall or might have voting
      power upon the occurrence of any contingency), (b) the interest in the
      capital or profits of such partnership, joint venture or limited liability
      company or (c) the beneficial interest in such trust or estate, in each
      case, is at the time directly or indirectly owned or controlled by such
      Person, by such Person and one or more of its other Subsidiaries or by one
      or more of such Person's other Subsidiaries.

            "SUPPLEMENTAL COLLATERAL AGENT" has the meaning specified in Section
      8.01(b).

            "SURVIVING DEBT" means, without duplication, (a) all Debt of the
      Borrower Parties and their Subsidiaries, and (b) all Debt secured by the
      Hotel Assets in the respective principal amounts allocable to such Hotel
      Assets, in each case to the extent outstanding immediately before and
      after giving effect to (i) the TRS Recapitalization Transactions scheduled
      to occur on or about the Closing Date, and (ii) the application of the
      proceeds of the initial Borrowing on the Closing Date.

            "TAXES" has the meaning specified in Section 2.12(a).

            "TENANCY LEASES" means operating leases, subleases, licenses,
      occupancy agreements and rights-of-use entered into by any Borrower Party
      or any Subsidiary of a Borrower Party in its capacity as a lessor or a
      similar capacity in the ordinary course of business that do not materially
      and adversely affect the use of the real property encumbered thereby for
      its intended purpose (excluding any lease entered into in connection with
      a Sale and Leaseback Transaction).

                                       23


            "TERM ADVANCE" has the meaning specified in Section 2.01.

            "TERM COMMITMENT" means, (a) with respect to any Lender at any time,
      the amount set forth opposite such Lender's name on Schedule I hereto
      under the caption "Term Commitment" or (b) if such Lender has entered into
      one or more Assignment and Acceptances, the amount set forth for such
      Lender in the Register maintained by the Administrative Agent pursuant to
      Section 9.07(d) as such Lender's "Term Commitment", as such amount may be
      reduced at or prior to such time pursuant to Section 2.04.

            "TERM FACILITY" means, at any time, the aggregate amount of the
      Lenders' Term Commitments at such time.

            "TRANSFER" has the meaning specified in Section 5.02(e).

            "TRS GUARANTOR" has the meaning specified in the recital of parties
      to this Agreement.

            "TRS RECAPITALIZATION TRANSACTIONS" means the transactions described
      in Schedule VI hereto.

            "TYPE" refers to the distinction between Term Advances bearing
      interest at the Base Rate and Term Advances bearing interest at the
      Eurodollar Rate.

            "UNENCUMBERED ASSETS" means those assets identified on Schedule III
      hereto, which assets are owned by TRS Guarantor or a wholly-owned
      Subsidiary thereof on the Closing Date, as such Schedule may be
      supplemented from time to time pursuant to the provisions hereof.

            "UNUSED COMMITMENT" means, with respect to any Lender at any date of
      determination, (a) such Lender's Term Commitment at such time minus (b)
      the aggregate principal amount of all Term Advances made by such Lender on
      or prior to such date of determination.

            "VOTING INTERESTS" means shares of capital stock issued by a
      corporation, or equivalent Equity Interests in any other Person, the
      holders of which are ordinarily, in the absence of contingencies, entitled
      to vote for the election of directors (or persons performing similar
      functions) of such Person, even if the right so to vote has been suspended
      by the happening of such a contingency.

            "WELFARE PLAN" means a welfare plan, as defined in Section 3(1) of
      ERISA, that is maintained for employees of any Loan Party or in respect of
      which any Loan Party could have liability under applicable law.

            "WITHDRAWAL LIABILITY" has the meaning specified in Part I of
      Subtitle E of Title IV of ERISA.

            SECTION 1.02. Computation of Time Periods; Other Definitional
Provisions. In this Agreement and the other Loan Documents in the computation of
periods of time from a specified date to a later specified date, the word "FROM"
means "from and including" and the words "TO" and "UNTIL" each mean "to but
excluding". References in the Loan Documents to any agreement or contract "AS
AMENDED" shall mean and be a reference to such agreement or contract

                                       24


as amended, amended and restated, supplemented or otherwise modified from time
to time in accordance with its terms.

            SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(g) ("GAAP").

                                   ARTICLE II
                        AMOUNTS AND TERMS OF THE ADVANCES

            SECTION 2.01. The Term Advances. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make advances (each, a "TERM
ADVANCE") to the Borrowers on any Business Day from the date hereof through
January 9, 2006 (the "DRAW PERIOD") in an amount for each such Term Advance not
to exceed such Lender's Unused Commitment at such time. Each such Borrowing
shall consist of Term Advances of the same Type made simultaneously by the
Lenders ratably according to their Term Commitments. Amounts borrowed under this
Section 2.01 and repaid or prepaid may not be reborrowed. Notwithstanding the
foregoing, no more than four Borrowings shall be permitted hereunder and no
Borrowings shall be permitted after the last day of the Draw Period.

            SECTION 2.02. Making the Term Advances. (a) Each Borrowing shall
be made on notice, given not later than 12:00 Noon (New York City time) on the
third Business Day prior to the date of the proposed Borrowing in the case of a
Borrowing consisting of Eurodollar Rate Advances, or not later than 1:00 P.M.
(New York City time) on the date one Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances,
by the applicable Borrower to the Administrative Agent, which shall give to each
Lender prompt notice thereof by telex or telecopier. Each such notice of a
Borrowing (a "NOTICE OF BORROWING") shall be by telephone, confirmed immediately
in writing, or telex or telecopier or e-mail, in each case in substantially the
form of Exhibit B hereto, specifying therein the requested (i) Borrower in
respect of such Borrowing, (ii) date of such Borrowing, (iii) Type of Term
Advances comprising such Borrowing, (iv) aggregate amount of such Borrowing, (v)
in the case of a Borrowing consisting of Eurodollar Rate Advances, initial
Interest Period for each such Term Advance, and (vi) the account information for
the Borrower Account to which such Borrowing should be credited. Each Lender
shall, before 12:00 Noon (New York City time) on the date of such Borrowing in
the case of a Borrowing consisting of Eurodollar Rate Advances and 1:00 P.M.
(New York City time) on the date of such Borrowing in the case of a Borrowing
consisting of Base Rate Advances, make available for the account of its
Applicable Lending Office to the Administrative Agent at the Administrative
Agent's Account, in same day funds, such Lender's ratable portion of such
Borrowing in accordance with the respective Term Commitments of such Lender and
the other Lenders. After the Administrative Agent's receipt of such funds and
upon fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent will make such funds available to the applicable Borrower
by crediting the applicable Borrower Account.

            (b) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrowers may not select Eurodollar Rate Advances for
the initial Borrowing hereunder or for any Borrowing if the aggregate amount of
such Borrowing is less than $1,000,000 or if the obligation of the Lenders to
make Eurodollar Rate Advances shall then be suspended pursuant to Section
2.06(d)(ii), 2.08 or 2.9 and (ii) there may not be more than 5 separate
Borrowings outstanding at any time.

                                       25


            (c) Each Notice of Borrowing shall be irrevocable and binding on the
Borrowers. In the case of any Borrowing that the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrowers shall
indemnify each Lender against any loss, cost or expense incurred by such Lender
as a result of any failure to fulfill on or before the date specified in such
Notice of Borrowing for such Borrowing the applicable conditions set forth in
Article III, including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.

            (d) Unless the Administrative Agent shall have received notice from
a Lender prior to (x) the date of any Borrowing consisting of Eurodollar Rate
Advances or (y) 12:00 Noon (New York City time) on the date of any Borrowing
consisting of Base Rate Advances that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) of this Section 2.02 and the Administrative Agent may, in
reliance upon such assumption, make available to the applicable Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such ratable portion available to the Administrative Agent, such
Lender and the applicable Borrower severally agree to repay or pay to the
Administrative Agent forthwith on demand such corresponding amount and to pay
interest thereon, for each day from the date such amount is made available to
the applicable Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of any Borrower, the interest rate
applicable at such time under Section 2.06 to Term Advances comprising such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall pay to the Administrative Agent such corresponding amount, such
amount so paid shall constitute such Lender's Term Advance as part of such
Borrowing for all purposes.

            (e) The failure of any Lender to make the Term Advance to be made by
it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Term Advance on the date of such
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Term Advance to be made by such other Lender on the date of
any Borrowing.

            SECTION 2.03. Repayment of Term Advances. The Borrowers shall repay
to the Administrative Agent for the ratable account of the Lenders the aggregate
outstanding principal amount of the Term Advances then outstanding on the
following dates in the amounts indicated (which amounts shall be reduced (a) as
a result of the application of prepayments in accordance with the order or
priority set forth in Section 2.05, and (b) to take into account any reduction
in the Term Commitments pursuant to Section 2.04(b) resulting from the failure
of the aggregate principal amount of Borrowings drawn during the Draw Period to
equal the Maximum Facility Amount, as determined by the Administrative Agent (it
being acknowledged that the payment amounts set forth below are intended to
reflect amortization based on a 25-year schedule applied to the aggregate
principal amount of Borrowings drawn during the Draw Period):



       DATE                                                         AMOUNT
- ------------------                                               ------------
                                                              
   May 18, 2006                                                  $ 252,527.00
  June 18, 2006                                                  $ 253,790.00
  July 18, 2006                                                  $ 255,059.00
 August 18, 2006                                                 $ 256,334.00
September 18, 2006                                               $ 257,616.00
 October 18, 2006                                                $ 258,904.00


                                       26


provided, however, that (i) the final principal installment shall be repaid on
the Maturity Date in an amount equal to the aggregate principal amount of the
Term Advances outstanding on such date, and (ii) if the Maturity Date shall be
extended pursuant to Section 2.15, the foregoing amortization schedule shall be
adjusted by the Administrative Agent to reflect such extension, and (subject to
the provisions of Sections 2.04, 2.05 and 6.01), the aggregate outstanding
principal amount of all Term Advances shall be repaid on the Maturity Date as so
extended.

            SECTION 2.04. Mandatory Termination or Reduction of the Term
Commitments. (a) Upon each repayment or prepayment of the Term Advances, the
Term Facility shall be automatically and permanently reduced, on a pro rata
basis, by an amount equal to the amount by which the aggregate Term Commitments
immediately prior to such reduction exceed the aggregate unpaid principal amount
of the Term Advances outstanding after giving effect to such repayment or
prepayment of the Term Advances. Each such reduction shall be allocated ratably
among the Lenders in accordance with their Term Commitments. Upon any reduction
of the Term Facility to zero, the Term Commitments shall be automatically
terminated.

            (b) On the last day of the Draw Period, following the funding by the
Lenders of any Advances made on such date in accordance with Section 2.02, each
Lender's Term Commitment shall be automatically and permanently reduced by the
amount of such Lender's Unused Commitment.

            SECTION 2.05. Prepayments. (a) Optional. The Borrowers may, upon
same day notice in the case of Base Rate Advances and two Business Days' notice
in the case of Eurodollar Rate Advances, in each case to the Administrative
Agent stating the proposed date and aggregate principal amount of the
prepayment, and if such notice is given the Borrowers shall, prepay the
outstanding aggregate principal amount of the Term Advances comprising part of
the same Borrowing in whole or ratably in part, together with accrued interest
to the date of such prepayment on the aggregate principal amount prepaid;
provided, however, that (i) each partial prepayment shall be in an aggregate
principal amount of $1,000,000 or an integral multiple of $250,000 in excess
thereof or, if less, the amount of the Term Advances outstanding and (ii) if any
prepayment of a Eurodollar Rate Advance is made on a date other than the last
day of an Interest Period for such Term Advance, the Borrowers shall also pay
any amounts owing pursuant to Section 9.04(c). Each such prepayment of Term
Advances shall be applied to the installments thereof in inverse order of
maturity.

            (b) Mandatory. In accordance with Section 5.02(e), the Borrowers
shall, upon the receipt of Net Sales Proceeds from the Transfer of any Hotel
Asset by any Borrower Party or any Subsidiary thereof, prepay a principal amount
of Term Advances equal to the amount of such Net Sales Proceeds; provided,
however that (A) TRS Guarantor and its Subsidiaries may exclude from the
mandatory prepayment required under this Section and distribute to FLLP an
aggregate amount not to exceed $36,000,000 of Net Sales Proceeds resulting from
the sale by TRS Guarantor and its Subsidiaries of Unencumbered Assets (the
"PERMITTED DISTRIBUTION"), and (B) any Net Sales Proceeds remaining after all
Term Advances have been prepaid in full may be retained by the applicable
Borrower Party or Subsidiary thereof. All prepayments under this subsection (b)
shall be made together with accrued interest to the date of such prepayment on
the principal amount prepaid. Each such prepayment of Term Advances shall be
applied to the installments thereof in inverse order of maturity.

                                       27


            SECTION 2.06. Interest. (a) Scheduled Interest. The Borrowers shall
pay interest on the unpaid principal amount of each Term Advance owing to each
Lender from the date of such Term Advance until such principal amount shall be
paid in full, at the following rates per annum:

            (i) Base Rate Advances. During such periods as such Term Advance is
      a Base Rate Advance, a rate per annum equal at all times to the sum of (A)
      the Base Rate in effect from time to time plus (B) the Applicable Margin
      in effect from time to time, payable in arrears quarterly on the last day
      of each December, March, June and September during such periods and on the
      date such Base Rate Advance shall be Converted or paid in full.

            (ii) Eurodollar Rate Advances. During such periods as such Term
      Advance is a Eurodollar Rate Advance, a rate per annum equal at all times
      during each Interest Period for such Term Advance to the sum of (A) the
      Eurodollar Rate for such Interest Period for such Term Advance plus (B)
      the Applicable Margin in effect on the first day of such Interest Period,
      payable in arrears on the last day of such Interest Period and, if such
      Interest Period has a duration of more than three months, on each day that
      occurs during such Interest Period every three months from the first day
      of such Interest Period and on the date such Eurodollar Rate Advance shall
      be Converted or paid in full.

            (b) Default Interest. Upon the occurrence and during the continuance
of any Event of Default, the Borrowers shall pay interest on (i) the unpaid
principal amount of each Term Advance owing to each Lender, payable in arrears
on the dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a
rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on such Term Advance pursuant to clause (a)(i) or (a)(ii)
above and (ii) to the fullest extent permitted by law, the amount of any
interest, fee or other amount payable under the Loan Documents that is not paid
when due, from the date such amount shall be due until such amount shall be paid
in full, payable in arrears on the date such amount shall be paid in full and on
demand, at a rate per annum equal at all times to 2% per annum above the rate
per annum required to be paid, in the case of interest, on the Type of Term
Advance on which such interest has accrued pursuant to clause (a)(i) or (a)(ii)
above and, in all other cases, on Base Rate Advances pursuant to clause (a)(i)
above.

            (c) Notice of Interest Period and Interest Rate. Promptly upon
receipt of a Notice of Borrowing pursuant to Section 2.02(a), a notice of
Conversion pursuant to Section 2.09 or a notice of selection of an Interest
Period pursuant to the definition of "Interest Period", the Administrative Agent
shall give notice to the Borrowers and each Lender of the applicable Interest
Period and the applicable interest rate determined by the Administrative Agent
for purposes of clause (a)(i) or (a)(ii) above, and the applicable rate, if any,
furnished by the Reference Bank for the purpose of determining the applicable
interest rate under clause (a)(ii) above.

            (d) Interest Rate Determination. If Telerate Page 3750 (or a
successor page) is unavailable and the Reference Bank fails to furnish timely
information to the Administrative Agent for determining the Eurodollar Rate for
any Eurodollar Rate Advances,

            (i) the Administrative Agent shall forthwith notify the Borrowers
      and the Lenders that the interest rate cannot be determined for such
      Eurodollar Rate Advances,

                                       28


            (ii) each such Term Advance will automatically, on the last day of
      the then existing Interest Period therefor, Convert into a Base Rate
      Advance (or if such Term Advance is then a Base Rate Advance, will
      continue as a Base Rate Advance), and

            (iii) the obligation of the Lenders to make, or to Convert Term
      Advances into, Eurodollar Rate Advances shall be suspended until the
      Administrative Agent shall notify the Borrowers and the Lenders that the
      circumstances causing such suspension no longer exist.

            SECTION 2.07. Fees. The Borrowers shall pay to each Agent for its
own account the fees, in the amounts and on the dates, set forth in the Fee
Letter and such other fees as may from time to time be agreed between the
Borrowers and such Agent.

            SECTION 2.08. Conversion of Term Advances. (a) Optional. The
Borrower may on any Business Day, upon notice given to the Administrative Agent
not later than 12:00 Noon (New York City time) on the third Business Day prior
to the date of the proposed Conversion and subject to the provisions of Sections
2.06 and 2.09, Convert all or any portion of the Term Advances of one Type
comprising the same Borrowing into Term Advances of the other Type; provided,
however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances
shall be made only on the last day of an Interest Period for such Eurodollar
Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b), no Conversion of any Term Advances shall result in more
separate Borrowings than permitted under Section 2.02(b) and each Conversion of
Term Advances comprising part of the same Borrowing shall be made ratably among
the Lenders in accordance with their Term Commitments. Each such notice of
Conversion shall, within the restrictions specified above, specify (i) the date
of such Conversion, (ii) the Term Advances to be Converted and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for such Term Advances. Each notice of Conversion shall be
irrevocable and binding on the Borrowers.

            (b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $1,000,000, such
Term Advances shall automatically Convert into Base Rate Advances.

            (ii) If the applicable Borrower shall fail to select the duration of
any Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrowers and the Lenders,
whereupon each such Eurodollar Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate Advance.

            (iii) Upon the occurrence and during the continuance of any Event of
Default, (y) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(z) the obligation of the Lenders to make, or to Convert Term Advances into,
Eurodollar Rate Advances shall be suspended.

            SECTION 2.09. Increased Costs, Etc. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender of agreeing to make

                                       29


or of making, funding or maintaining Eurodollar Rate Advances (excluding, for
purposes of this Section 2.09, any such increased costs resulting from (y) Taxes
or Other Taxes (as to which Section 2.11 shall govern) and (z) changes in the
basis of taxation of overall net income or overall gross income by the United
States or by the foreign jurisdiction or state under the laws of which such
Lender is organized or has its Applicable Lending Office or any political
subdivision thereof), then the Borrowers shall from time to time, upon demand by
such Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost; provided, however,
that a Lender claiming additional amounts under this Section 2.09(a) agrees to
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, such increased cost that may thereafter accrue and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.
A certificate as to the amount of such increased cost, submitted to the
Borrowers by such Lender, shall be conclusive and binding for all purposes,
absent manifest error.

      (b) If any Lender determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender's commitment to lend and other
commitments of such type (or similar contingent obligations), then, upon demand
by such Lender or such corporation (with a copy of such demand to the
Administrative Agent), the Borrowers shall pay to the Administrative Agent for
the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend. A certificate as to such amounts submitted to the Borrowers by such
Lender shall be conclusive and binding for all purposes, absent manifest error.

            (c) If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Eurodollar Rate Advances will not adequately reflect
the cost to such Lenders of making, funding or maintaining their Eurodollar Rate
Advances for such Interest Period, the Administrative Agent shall forthwith so
notify the Borrowers and the Lenders, whereupon (i) each such Eurodollar Rate
Advance will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance and (ii) the obligation of the
Lenders to make, or to Convert Term Advances into, Eurodollar Rate Advances
shall be suspended until the Administrative Agent shall notify the Borrowers
that such Lenders have determined that the circumstances causing such suspension
no longer exist.

            (d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrowers
through the Administrative Agent, (i) each Eurodollar Rate Advance will
automatically, upon such demand, Convert into a Base Rate Advance and (ii) the
obligation of the Lenders to make, or to Convert Term Advances into, Eurodollar
Rate Advances shall be suspended until the Administrative Agent shall notify the
Borrowers that such Lender has determined that the circumstances causing such
suspension no

                                       30


longer exist; provided, however, that, before making any such demand, such
Lender agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different Eurodollar Lending
Office if the making of such a designation would allow such Lender or its
Eurodollar Lending Office to continue to perform its obligations to make
Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate
Advances and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.

            SECTION 2.10. Payments and Computations. (a) The Borrowers shall
make each payment hereunder and under the Notes, irrespective of any right of
counterclaim or set-off (except as otherwise provided in Section 2.12), not
later than 12:00 Noon (New York City time) on the day when due in U.S. dollars
to the Administrative Agent at the Administrative Agent's Account in same day
funds, with payments being received by the Administrative Agent after such time
being deemed to have been received on the next succeeding Business Day. The
Administrative Agent will promptly thereafter cause like funds to be distributed
(i) if such payment by the Borrowers is in respect of principal, interest,
commitment fees or any other Obligation then payable hereunder and under the
Notes to more than one Lender, to such Lenders for the account of their
respective Applicable Lending Offices ratably in accordance with the amounts of
such respective Obligations then payable to such Lenders and (ii) if such
payment by the Borrowers is in respect of any Obligation then payable hereunder
to one Lender, to such Lender for the account of its Applicable Lending Office,
in each case to be applied in accordance with the terms of this Agreement. Upon
its acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 9.07(d), from and after
the effective date of such Assignment and Acceptance, the Administrative Agent
shall make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.

            (b) Each Borrower hereby authorizes each Lender and each of such
Lender's Affiliates, if and to the extent payment owed to such Lender is not
made when due hereunder or, in the case of a Lender, under the Notes held by
such Lender, to charge from time to time, to the fullest extent permitted by
law, against any or all of such Borrower's accounts with such Lender any amount
so due.

            (c) All computations of interest based on the Base Rate shall be
made by the Administrative Agent on the basis of a year of 365 or 366 days, as
the case may be, and all computations of interest based on the Eurodollar Rate
or the Federal Funds Rate and of fees shall be made by the Administrative Agent
on the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest, fees or commissions are payable. Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.

            (d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or commitment fee, as
the case may be; provided, however, that if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

                                       31


            (e) Unless the Administrative Agent shall have received notice from
the Borrowers prior to the date on which any payment is due to any Lender
hereunder that the Borrowers will not make such payment in full, the
Administrative Agent may assume that the Borrowers have made such payment in
full to the Administrative Agent on such date and the Administrative Agent may,
in reliance upon such assumption, cause to be distributed to each such Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrowers shall not have so made such payment in full to the
Administrative Agent, each such Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.

            (f) Whenever any payment received by the Administrative Agent under
this Agreement or any of the other Loan Documents is insufficient to pay in full
all amounts due and payable to the Agents and the Lenders under or in respect of
this Agreement and the other Loan Documents on any date, such payment shall be
distributed by the Administrative Agent and applied by the Agents and the
Lenders in the following order of priority:

            (i) first, to the payment of all of the fees, indemnification
      payments, costs and expenses that are due and payable to the Agents
      (solely in their respective capacities as Agents) under or in respect of
      this Agreement and the other Loan Documents on such date, ratably based
      upon the respective aggregate amounts of all such fees, indemnification
      payments, costs and expenses owing to the Agents on such date;

            (ii) second, to the payment of all of the indemnification payments,
      costs and expenses that are due and payable to the Lenders under Section
      9.04 and any similar section of any of the other Loan Documents on such
      date, ratably based upon the respective aggregate amounts of all such
      indemnification payments, costs and expenses owing to the Lenders on such
      date;

            (iii) third, to the payment of all of the amounts that are due and
      payable to the Administrative Agent and the Lenders under Sections 2.09
      and 2.11 on such date, ratably based upon the respective aggregate amounts
      thereof owing to the Administrative Agent and the Lenders on such date;

            (iv) fourth, to the payment of all of the accrued and unpaid
      interest on the Obligations of the Borrower under or in respect of the
      Loan Documents that is due and payable to the Administrative Agent and the
      Lenders under Section 2.06(b) on such date, ratably based upon the
      respective aggregate amounts of all such interest owing to the
      Administrative Agent and the Lenders on such date;

            (v) fifth, to the payment of all of the accrued and unpaid interest
      on the Term Advances that is due and payable to the Administrative Agent
      and the Lenders under Section 2.06(a) on such date, ratably based upon the
      respective aggregate amounts of all such interest owing to the
      Administrative Agent and the Lenders on such date;

            (vi) sixth, to the payment of the principal amount of all of the
      outstanding Term Advances that are due and payable to the Lenders on such
      date, ratably based upon the respective aggregate amounts of all such
      principal the Lenders on such date; and

                                       32


            (vii) seventh, to the payment of all other Obligations of the Loan
      Parties owing under or in respect of the Loan Documents that are due and
      payable to the Administrative Agent and the other Secured Parties on such
      date, ratably based upon the respective aggregate amounts of all such
      Obligations owing to the Administrative Agent and the other Secured
      Parties on such date.

            SECTION 2.11. Taxes. (a) Any and all payments by any Loan Party to
or for the account of any Lender or any Agent hereunder or under any other Loan
Document shall be made, in accordance with Section 2.10 or the applicable
provisions of such other Loan Document, if any, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender and each Agent, taxes that are imposed on its overall
net income by the United States and taxes that are imposed on its overall net
income (and franchise taxes imposed in lieu thereof) by the state or foreign
jurisdiction under the laws of which such Lender or such Agent, as the case may
be, is organized or any political subdivision thereof and, in the case of each
Lender, taxes that are imposed on its overall net income (and franchise taxes
imposed in lieu thereof) by the state or foreign jurisdiction of such Lender's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payments hereunder or under any other Loan Document
being hereinafter referred to as "TAXES"). If any Loan Party shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder or
under any other Loan Document to any Lender or any Agent, and unless such
requirement arises from the failure of a Lender to furnish the documentation
described in Section 2.11(e), (i) the sum payable by the such Loan Party shall
be increased as may be necessary so that after such Loan Party and any Agent
have made all required deductions (including deductions applicable to additional
sums payable under this Section 2.11) such Lender or such Agent, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Loan Party shall make all such deductions and
(iii) such Loan Party shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.

            (b) In addition, each Loan Party shall pay any present or future
stamp, documentary, excise, property, intangible, mortgage recording or similar
taxes, charges or levies that arise from any payment made by such Loan Party
hereunder or under any other Loan Documents or from the execution, delivery or
registration of, performance under, or otherwise with respect to, this
Agreement, or the other Loan Documents (hereinafter referred to as "OTHER
TAXES").

            (c) The Loan Parties shall indemnify each Lender and each Agent for
and hold them harmless against the full amount of Taxes and Other Taxes, and for
the full amount of taxes of any kind imposed or asserted by any jurisdiction on
amounts payable under this Section 2.11, imposed on or paid by such Lender or
such Agent (as the case may be) and any liability (including penalties,
additions to tax, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 30 days from the date such
Lender or such Agent (as the case may be) makes written demand therefor.

            (d) Upon the request of the Administrative Agent, within 30 days
after the date of any payment of Taxes, the appropriate Loan Party shall furnish
to the Administrative Agent, at its address referred to in Section 9.02, the
original or a certified copy of a receipt evidencing such payment, to the extent
such receipt is issued therefor, or other evidence of payment thereof reasonably
satisfactory to the Administrative Agent. In the case of any payment hereunder
or under the other Loan Documents by or on behalf of a Loan Party through an
account or branch

                                       33


outside the United States or by or on behalf of a Loan Party by a payor that is
not a United States person, if such Loan Party determines that no Taxes are
payable in respect thereof, such Loan Party shall furnish, or shall cause such
payor to furnish, to the Administrative Agent, at such address, an opinion of
counsel acceptable to the Administrative Agent stating that such payment is
exempt from Taxes. For purposes of subsections (d) and (e) of this Section 2.11,
the terms "UNITED STATES" and "UNITED STATES PERSON" shall have the meanings
specified in Section 7701 of the Internal Revenue Code.

            (e) Each Lender organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date of its execution and delivery
of this Agreement in the case of the Initial Lender, and on the date of the
Assignment and Acceptance pursuant to which it becomes a Lender in the case of
each other Lender, and from time to time thereafter as reasonably requested in
writing by the Borrowers (but only so long thereafter as such Lender remains
lawfully able to do so), provide each of the Administrative Agent and the
Borrowers with two original Internal Revenue Service Forms W8-BEN or W-8EC1, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that such Lender is exempt from or entitled to a reduced
rate of United States withholding tax on payments pursuant to this Agreement or
any other Loan Document. If the forms provided by a Lender at the time such
Lender first becomes a party to this Agreement indicate a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes unless and until such Lender provides the
appropriate forms certifying that a lesser rate applies, whereupon withholding
tax at such lesser rate only shall be considered excluded from Taxes for periods
governed by such forms; provided, however, that if, at the effective date of the
Assignment and Acceptance pursuant to which a Lender becomes a party to this
Agreement, the Lender assignor was entitled to payments under subsection (a) of
this Section 2.11 in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender assignee on such date. If any form or
document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form W8-BEN
or W8-EC1, that the applicable Lender reasonably considers to be confidential,
such Lender shall give notice thereof to the Borrowers and shall not be
obligated to include in such form or document such confidential information.
Upon the request of the Borrowers, any Lender that is a United States person and
is not an exempt recipient for U.S. backup withholding purposes shall deliver to
the Borrowers two copies of Internal Revenue Service form W-9 (or any successor
form).

            (f) For any period with respect to which a Lender has failed to
provide the Borrowers with the appropriate form or other document described in
subsection (e) above (other than if such failure is due to a change in law, or
in the interpretation or application thereof, occurring after the date on which
a form or other document originally was required to be provided or if such form
or other document otherwise is not required under subsection (e) above), such
Lender shall not be entitled to indemnification under subsection (a) or (c) of
this Section 2.11 with respect to Taxes imposed by the United States by reason
of such failure; provided, however, that should a Lender become subject to Taxes
because of its failure to deliver a form or other document required hereunder,
the Loan Parties shall take such steps as such Lender shall reasonably request
to assist such Lender to recover such Taxes.

            (g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.11 agrees to use reasonable efforts (consistent with its internal
policy and legal and

                                       34


regulatory restrictions) to change the jurisdiction of its Eurodollar Lending
Office if the making of such a change would avoid the need for, or reduce the
amount of, any such additional amounts that may thereafter accrue and would not,
in the reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender.

            (h) In the event that an additional payment is made under Section
2.11(a) or (c) for the account of any Lender and such Lender, in its sole
discretion, determines that it has finally and irrevocably received or been
granted a credit against or release or remission for, or repayment of, any tax
paid or payable by it in respect of or calculated with reference to the
deduction or withholding giving rise to such payment, such Lender shall, to the
extent that it determines that it can do so without prejudice to the retention
of the amount of such credit, relief, remission or repayment, pay to the
applicable Loan Party such amount as such Lender shall, in its sole discretion,
have determined to be attributable to such deduction or withholding and which
will leave such Lender (after such payment) in no worse position that it would
have been in if the applicable Loan Party had not been required to make such
deduction or withholding. Nothing herein contained shall interfere with the
right of a Lender to arrange its tax affairs in whatever manner it thinks fit
nor oblige any Lender to claim any tax credit or to disclose any information
relating to its affairs or any computations in respect thereof, and no Loan
Party shall be entitled to review the tax records of any Lender or the
Administrative Agent, or require any Lender to do anything that would prejudice
its ability to benefit from any other credits, reliefs, remissions or repayments
to which it may be entitled.

            SECTION 2.12. Sharing of Payments, Etc. If any Lender shall obtain
at any time any payment (whether voluntary, involuntary, through the exercise of
any right of set off, or otherwise, other than as a result of an assignment
pursuant to Section 9.07) (a) on account of Obligations due and payable to such
Lender hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations due and
payable to such Lender at such time to (ii) the aggregate amount of the
Obligations due and payable to all Lenders hereunder and under the Notes at such
time) of payments on account of the Obligations due and payable to all Lenders
hereunder and under the Notes at such time obtained by all the Lenders at such
time or (b) on account of Obligations owing (but not due and payable) to such
Lender hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations owing to such
Lender at such time to (ii) the aggregate amount of the Obligations owing (but
not due and payable) to all Lenders hereunder and under the Notes at such time)
of payments on account of the Obligations owing (but not due and payable) to all
Lenders hereunder and under the Notes at such time obtained by all of the
Lenders at such time, such Lender shall forthwith purchase from the other
Lenders such interests or participating interests in the Obligations due and
payable or owing to them, as the case may be, as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each other
Lender shall be rescinded and such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such Lender's ratable share
(according to the proportion of (i) the purchase price paid to such Lender to
(ii) the aggregate purchase price paid to all Lenders) of such recovery together
with an amount equal to such Lender's ratable share (according to the proportion
of (i) the amount of such other Lender's required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. Each Borrower agrees that any Lender so purchasing an interest or
participating interest from another Lender pursuant to this Section 2.12 may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such interest or participating
interest, as the case

                                       35


may be, as fully as if such Lender were the direct creditor of such Borrower in
the amount of such interest or participating interest, as the case may be.

            SECTION 2.13. Use of Proceeds. The proceeds of the Term Advances
shall be available (and the Borrower agrees that it shall use such proceeds)
solely (a) to refinance certain Existing Debt and Surviving Debt secured by
mortgage Liens encumbering the Mortgage Assets plus the amount of any applicable
premiums and expenses, and (b) to pay fees, costs and expenses related to the
Term Facility, the TRS Recapitalization Transactions and the other transactions
contemplated by the Loan Documents.

            SECTION 2.14. Evidence of Debt. (a) 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 Term Advance
owing to such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder. Each
Borrower agrees that upon notice by any Lender to the Borrowers (with a copy of
such notice to the Administrative Agent) to the effect that a promissory note or
other evidence of indebtedness is required or appropriate in order for such
Lender to evidence (whether for purposes of pledge, enforcement or otherwise)
the Term Advances owing to, or to be made by, such Lender, the Borrowers shall
promptly execute and deliver to such Lender, with a copy to the Administrative
Agent, a Note, in substantially the form of Exhibit A hereto, payable to the
order of such Lender in a principal amount equal to the Term Commitment of such
Lender. All references to Notes in the Loan Documents shall mean Notes, if any,
to the extent issued hereunder.

            (b) The Register maintained by the Administrative Agent pursuant to
Section 9.07(d) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, the Type of Term Advances
comprising such Borrowing and, if appropriate, the Interest Period applicable
thereto, (ii) the terms of each Assignment and Acceptance delivered to and
accepted by it, (iii) the amount of any principal or interest due and payable or
to become due and payable from the Borrowers to each Lender hereunder, and (iv)
the amount of any sum received by the Administrative Agent from the Borrowers
hereunder and each Lender's share thereof.

            (c) Entries made in good faith by the Administrative Agent in the
Register pursuant to subsection (b) above, and by each Lender in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the
amount of principal and interest due and payable or to become due and payable
from the Borrowers to, in the case of the Register, each Lender and, in the case
of such account or accounts, such Lender, under this Agreement, absent manifest
error; provided, however, that the failure of the Administrative Agent or such
Lender to make an entry, or any finding that an entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the
obligations of the Borrowers under this Agreement.

            SECTION 2.15. Extension of Maturity Date. At least 30 days but not
more than 60 days prior to the Maturity Date, the Borrowers, by written notice
to the Administrative Agent, may request, with respect to the Term Advances then
outstanding, a single one-year extension of the Maturity Date. The
Administrative Agent shall promptly notify each Lender of such request and the
Maturity Date in effect at such time shall, effective as at the Maturity Date
(the "EXTENSION DATE"), be extended for an additional one year period, provided
that on the Maturity Date the following statements shall be true and the
Administrative Agent shall have received for

                                       36


the account of each Lender a certificate signed by a Responsible Officer of the
Borrowers, dated the Extension Date, stating that: (i) the representations and
warranties contained in Section 4.01 are true and correct on and as of the
Extension Date, and (ii) no Default or Event of Default has occurred and is
continuing or would result for such extension. In the event that extension is
effected pursuant to this Section 2.15 (but subject to the provisions of
Sections 2.04, 2.05 and 6.01), (x) the aggregate outstanding principal amount of
all Term Advances shall be repaid in full ratably to the Lenders on the Maturity
Date as so extended, and (y) a corresponding adjustment shall be made to the
table of scheduled principal amortization payments set forth in Section 2.03 to
reflect such extension, as determined by the Administrative Agent. As of the
Extension Date, any and all references to this Agreement, the Notes, if any, or
any other Loan Documents to the "Maturity Date" shall refer to the Maturity Date
as so extended.

                                   ARTICLE III
                              CONDITIONS OF LENDING

            SECTION 3.01. Conditions Precedent to Initial Borrowing. The
obligation of each Lender to make a Term Advance in respect of the initial
Borrowing on the Closing Date is subject to the satisfaction of the following
conditions precedent on or before such date:

            (a) The Administrative Agent shall have received on or before the
      Closing Date the following, each dated such day (unless otherwise
      specified), in form and substance satisfactory to the Administrative Agent
      (unless otherwise specified) and (except for the Notes) in sufficient
      copies for each Lender:

                  (i) A Note executed by the Initial Borrower payable to the
            order of each Lender.

                  (ii) Certified copies of the resolutions of the Board of
            Directors (or an appropriate committee thereof) of each Loan Party
            approving the transactions contemplated by the Loan Documents and
            each Loan Document to which such Loan Party is or is to be a party,
            and of all documents evidencing other necessary corporate action and
            governmental and other third party approvals and consents, if any,
            with respect to the transactions under the Loan Documents and each
            Loan Document to which such Loan Party is or is to be a party.

                  (iii) A copy of a certificate of the Secretary of State (or
            equivalent authority) of the jurisdiction of incorporation,
            organization or formation of each Loan Party and of each general
            partner or managing member (if any) of each Loan Party, dated
            reasonably near the Closing Date, certifying, if and to the extent
            such certification is generally available for entities of the type
            of such Loan Party, (A) as to a true and correct copy of the
            charter, certificate of limited partnership, limited liability
            company agreement or other organizational document of such Loan
            Party, general partner or managing member, as the case may be, and
            each amendment thereto on file in such Secretary's office, (B) that
            (1) such amendments are the only amendments to the charter,
            certificate of limited partnership, limited liability company
            agreement or other organizational document, as applicable, of such
            Loan Party, general partner or managing member, as the case may be,
            on file in such Secretary's office, (2) such Loan Party, general
            partner or managing member, as the case may be, has paid all
            franchise taxes to the date of such certificate and (C) such Loan
            Party, general partner or managing member, as the case may be, is
            duly incorporated, organized

                                       37


            or formed and in good standing or presently subsisting under the
            laws of the jurisdiction of its incorporation, organization or
            formation.

                  (iv) A copy of a certificate of the Secretary of State (or
            equivalent authority) of each jurisdiction in which any Borrower
            Party or any general partner or managing member of a Borrower Party
            owns or leases property or in which the conduct of its business
            requires it to qualify or be licensed as a foreign corporation
            except where the failure to so qualify or be licensed would not be
            reasonably likely to have a Material Adverse Effect, dated
            reasonably near (but prior to) the Closing Date, stating, with
            respect to each such Borrower Party, general partner or managing
            member, that such Borrower Party, general partner or managing
            member, as the case may be, is duly qualified and in good standing
            as a foreign corporation, limited partnership or limited liability
            company in such State and has filed all annual reports required to
            be filed to the date of such certificate.

                  (v) A certificate of each Loan Party and of each general
            partner or managing member (if any) of each Loan Party, signed on
            behalf of such Loan Party, general partner or managing member, as
            applicable, by its President or a Vice President and its Secretary
            or any Assistant Secretary (or those of its general partner or
            managing member, if applicable), dated the Closing Date (the
            statements made in which certificate shall be true on and as of the
            date of the initial Borrowing), certifying as to (A) the absence of
            any amendments to the constitutive documents of such Loan Party,
            general partner or managing member, as applicable, since the date of
            the certificate referred to in Section 3.01(a)(v), (B) a true and
            correct copy of the bylaws, operating agreement, partnership
            agreement or other governing document of such Loan Party, general
            partner or managing member, as applicable, as in effect on the date
            on which the resolutions referred to in Section 3.01(a)(iv) were
            adopted and on the Closing Date, (C) the due incorporation,
            organization or formation and good standing or valid existence of
            such Loan Party, general partner or managing member, as applicable,
            as a corporation, limited liability company or partnership organized
            under the laws of the jurisdiction of its incorporation,
            organization or formation and the absence of any proceeding for the
            dissolution or liquidation of such Loan Party, general partner or
            managing member, as applicable, (D) the truth of the representations
            and warranties contained in the Loan Documents as though made on and
            as of the Closing Date and (E) the absence of any event occurring
            and continuing, or resulting from the initial Borrowing, that
            constitutes a Default.

                  (vi) A certificate of the Secretary or an Assistant Secretary
            of each Loan Party (or Responsible Officer of the general partner or
            managing member of any Loan Party) and of each general partner or
            managing member (if any) of each Loan Party certifying the names and
            true signatures of the officers of such Loan Party, or of the
            general partner or managing member of such Loan Party, authorized to
            sign each Loan Document to which it is or is to be a party and the
            other documents to be delivered hereunder and thereunder.

                  (vii) Such financial, business and other information regarding
            each Loan Party and its Subsidiaries as the Lenders shall have
            reasonably requested, including, without limitation, information as
            to possible contingent liabilities, tax matters, environmental
            matters, obligations under Plans, Multiemployer Plans

                                       38


            and Welfare Plans, collective bargaining agreements and other
            arrangements with employees, audited annual financial statements of
            FLLP for the year ending December 31, 2004, interim financial
            statements of FLLP dated the end of the most recent fiscal quarter
            for which financial statements are available (or, in the event the
            Lenders' due diligence review reveals material changes since such
            financial statements, as of a later date within 45 days of the
            Closing Date).

                  (viii) An opinion of Jenkens & Gilchrist, counsel for the Loan
            Parties, with respect to the matters (and in substantially the form)
            set forth in Exhibit I hereto and as to such other matters as any
            Lender through the Administrative Agent may reasonably request.

                  (ix) An opinion of Shearman & Sterling LLP, counsel for the
            Administrative Agent, in form and substance satisfactory to the
            Administrative Agent.

                  (x) A Notice of Borrowing relating to the initial Borrowing.

            (b) The Lenders shall be satisfied with the financial condition of
      FLLP and the corporate and legal structure and capitalization of the
      Borrower Parties and the Subsidiaries of the Borrower Parties, including
      the terms and conditions of the charter and bylaws, operating agreement,
      partnership agreement or other governing document of each of them.

            (c) The Lenders shall be satisfied that all Existing Debt, other
      than Surviving Debt, has been (or will be, upon the application of the
      proceeds of the initial Borrowing on the Closing Date) prepaid, redeemed
      or defeased in full or otherwise satisfied and extinguished and that all
      Surviving Debt shall be on terms and conditions satisfactory to the
      Lenders.

            (d) Those TRS Recapitalization Transactions scheduled to occur on or
      about the Closing Date shall have been, substantially concurrently with
      the execution of this Agreement, consummated.

            (e) Before and after giving effect to the transactions contemplated
      by the Loan Documents, there shall have occurred no Material Adverse
      Change since December 31, 2004.

            (f) There shall exist no action, suit, investigation, litigation or
      proceeding affecting any Loan Party or any of its Subsidiaries pending or
      threatened before any court, governmental agency or arbitrator that (i)
      would be reasonably likely to have a Material Adverse Effect other than
      the matters described on Schedule 4.01(f) hereto (the "MATERIAL
      LITIGATION") or (ii) purports to affect the legality, validity or
      enforceability of any Loan Document or the consummation of the
      transactions contemplated thereby, and there shall have been no adverse
      change in the status, or financial effect on any Loan Party or any of its
      Subsidiaries, of the Material Litigation from that described on Schedule
      4.01(f) hereto.

            (g) All governmental and third party consents and approvals
      necessary in connection with the transactions contemplated by the Loan
      Documents shall have been obtained (without the imposition of any
      conditions that are not acceptable to the Lenders)

                                       39


      and shall remain in effect, and no law or regulation shall be applicable
      in the reasonable judgment of the Lenders that restrains, prevents or
      imposes materially adverse conditions upon the transactions contemplated
      by the Loan Documents.

            (h) The Borrower shall have paid all accrued fees of the Agents and
      the Lenders and all reasonable, out-of-pocket expenses of the Agents
      (including the reasonable fees and expenses of counsel to the
      Administrative Agent).

            SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation
of each Lender to make a Term Advance on the occasion of each Borrowing
(including the initial Borrowing) and the extension of the Maturity Date
pursuant to Section 2.15 shall be subject to the further conditions precedent
that on the date of such Borrowing or extension (a) the following statements
shall be true and the Administrative Agent shall have received (i) in the case
of any Borrowing by an Additional Borrower, (A) an Accession Agreement in
substantially the form of Exhibit C hereto or otherwise in form and substance
satisfactory to the Administrative Agent, and (B) for the benefit of each
Lender, a Note executed and delivered by such Additional Borrower to the order
of such Lender in a principal amount up to the aggregate principal amount of
such Lender's Term Commitment, dated the date of the related Accession Agreement
and otherwise substantially in the form of Exhibit A hereto (in each case to the
extent not previously delivered pursuant to Section 5.01(j)(i) or this Section
3.02), and (ii) for the account of such Lender a certificate signed by a
Responsible Officer of the Borrowers, dated the date of such Borrowing or
extension, stating that:

            (A) the representations and warranties contained in each Loan
      Document are true and correct on and as of such date, before and after
      giving effect to (1) such Borrowing or extension, and (2) in the case of
      any Borrowing, the application of the proceeds therefrom, as though made
      on and as of such date;

            (B) no Default or Event of Default has occurred and is continuing,
      or would result from (1) such Borrowing or extension or (2) in the case of
      any Borrowing, from the application of the proceeds therefrom; and

            (C) for each Term Advance, before and after giving effect to such
      Term Advance, the Borrowers shall be in compliance with the covenants
      contained in Section 5.04, together with supporting information in form
      satisfactory to the Administrative Agent showing the computations used in
      determining compliance with such covenants;

and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Lender through the Administrative Agent may
reasonably request.

            SECTION 3.03. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Administrative Agent responsible for the transactions contemplated by the
Loan Documents shall have received notice from such Lender prior to the Closing
Date specifying its objection thereto and such Lender shall not have made
available to the Administrative Agent such Lender's ratable portion of such
Borrowing.

                                       40


                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

            SECTION 4.01. Representations and Warranties of the Loan Parties.
Each Loan Party represents and warrants as follows:

            (a) Organization and Powers; Qualifications and Good Standing. Each
      Loan Party and each Subsidiary of a Borrower Party and each general
      partner or managing member, if any, of each such Loan Party or Subsidiary
      of a Borrower Party (i) is a corporation, limited liability company or
      partnership duly incorporated, organized or formed, validly existing and
      in good standing under the laws of the jurisdiction of its incorporation,
      organization or formation, (ii) is duly qualified and in good standing as
      a foreign corporation, limited liability company or partnership in each
      other jurisdiction in which it owns or leases property or in which the
      conduct of its business requires it to so qualify or be licensed except
      where the failure to so qualify or be licensed would not be reasonably
      likely to have a Material Adverse Effect and (iii) has all requisite
      corporate, limited liability company or partnership power and authority
      (including, without limitation, all governmental licenses, permits and
      other approvals) to own or lease and operate its properties and to carry
      on its business as now conducted and as proposed to be conducted.

            (b) Subsidiaries. Set forth on Schedule 4.01(b) hereto is a complete
      and accurate list of all Borrower Parties and their respective
      Subsidiaries and all holders of any direct or indirect Equity Interest in
      any Borrower Party, showing as of the date hereof, and as of each other
      date such Schedule 4.01(b) is required to be supplemented hereunder, (i)
      as to each such Person, the jurisdiction of its incorporation,
      organization or formation, and the percentage of each class of Equity
      Interests in such Person owned (directly or indirectly) by any other
      Person (exclusive of limited partners in FLLP that are not Subsidiaries of
      the REIT), and (ii) as to each such Person other than the REIT, the number
      of shares (or the equivalent thereof) of each class of Equity Interests in
      such Person authorized, and the number outstanding, and the number of
      shares (or the equivalent thereof) covered by all outstanding options,
      warrants, rights of conversion or purchase and similar rights. Each of the
      Borrowers and TRS Guarantor is a direct or indirect wholly-owned
      Subsidiary of FLLP. All of the outstanding Equity Interests in the
      Borrower Parties and all Subsidiaries thereof has been validly issued, are
      fully paid and (except in the case of general partnership interests)
      non-assessable and to the extent owned by a Loan Party or one or more of
      its Subsidiaries, are owned by such Loan Party or Subsidiaries free and
      clear of all Liens (other than any Liens created by the Collateral
      Documents). Each Subsidiary, if any, of TRS Guarantor is a Guarantor
      hereunder. Each Subsidiary, if any, of a Borrower is a Borrower or
      Guarantor hereunder. Each Borrower is (or after the application of the
      proceeds of the applicable Borrowing, will be) the direct owner of one or
      more Mortgage Assets or all of the Equity Interests in one or more
      Subsidiaries that are the direct owners of one or more Mortgage Assets.

            (c) Due Authorization; No Conflict. The execution and delivery by
      each Loan Party and of each general partner or managing member (if any) of
      each Loan Party of each Loan Document to which it is or is to be a party,
      and the performance of its obligations thereunder, and the consummation of
      the TRS Recapitalization Transactions and the other transactions
      contemplated by the Loan Documents, are within the corporate, limited
      liability
                                       41


      company or partnership action, and do not (i) contravene the charter or
      bylaws, operating agreement, partnership agreement or other governing
      document of such Loan Party, general partner or managing member, (ii)
      violate any law, rule, regulation (including, without limitation,
      Regulation X of the Board of Governors of the Federal Reserve System),
      order, writ, judgment, injunction, decree, determination or award, (iii)
      conflict with or result in the breach of, or constitute a default or
      require any payment to be made under, any Material Contract, loan
      agreement, indenture, mortgage, deed of trust, lease or other instrument
      binding on or affecting any Loan Party, any of its Subsidiaries or any of
      their properties, or any general partner or managing member of any Loan
      Party or (iv) except for the Liens created under the Collateral Documents
      or Permitted Liens, result in or require the creation or imposition of any
      Lien upon or with respect to any of the properties of any Loan Party or
      any of its Subsidiaries. No Loan Party or any of its Subsidiaries is in
      violation of any such law, rule, regulation, order, writ, judgment,
      injunction, decree, determination or award or in breach of any such
      contract, loan agreement, indenture, mortgage, deed of trust, lease or
      other instrument, the violation or breach of which could reasonably be
      expected to have a Material Adverse Effect.

            (d) Authorizations and Consents. No authorization or approval or
      other action by, and no notice to or filing with, any governmental
      authority or regulatory body or any other third party is required for (i)
      the due execution, delivery, recordation, filing or performance by any
      Loan Party or any general partner or managing member of any Loan Party of
      any Loan Document to which it is or is to be a party or for the
      consummation of the TRS Recapitalization Transactions or the other
      transactions contemplated by the Loan Documents, (ii) the grant by any
      Loan Party (or the general partner or managing member of such Loan Party)
      of the Liens granted (or to be granted) by it pursuant to the Collateral
      Documents, (iii) the perfection or maintenance of the Liens created under
      the Collateral Documents (including the first priority nature thereof) or
      (iv) the exercise by any Agent, the Collateral Agent or any Lender of its
      rights under the Loan Documents or the remedies in respect of the
      Collateral pursuant to the Collateral Documents, except for (x)
      authorizations, approvals, actions, notices and filings which have been
      duly obtained, taken, given or made and are in full force and effect, and
      (y) at any date prior to the Collateral Delivery Date, those actions,
      notices and filings contemplated in Section 5.01(j)(ii).

            (e) Binding Obligation. This Agreement has been, and each other Loan
      Document when delivered hereunder will have been, duly executed and
      delivered by each Loan Party and general partner or managing member (if
      any) of each Loan Party party thereto. This Agreement is, and each other
      Loan Document when delivered hereunder will be, the legal, valid and
      binding obligation of each Loan Party and general partner or managing
      member (if any) of each Loan Party party thereto, enforceable against such
      Loan Party, general partner or managing member, as the case may be, in
      accordance with its terms.

            (f) Litigation. There is no action, suit, investigation, litigation
      or proceeding affecting any Loan Party or any of its Subsidiaries or any
      general partner or managing member (if any) of any Loan Party, including
      any Environmental Action, pending or threatened before any court,
      governmental agency or arbitrator that (i) could reasonably be expected to
      have a Material Adverse Effect (other than the Material Litigation) or
      (ii) purports to affect the legality, validity or enforceability of any
      Loan Document or the consummation of the TRS Recapitalization Transactions
      or the other transactions contemplated by the Loan Documents, and there
      has been no adverse change in the

                                       42


      status, or financial effect on any Loan Party or any of its Subsidiaries
      or any general partner or managing member (if any) of any Loan Party, of
      the Material Litigation from that described on Schedule 4.01(f) hereto.

            (g) Financial Condition. The Consolidated balance sheets of FLLP as
      at December 31, 2004 and the related Consolidated statements of income and
      Consolidated statements of cash flows of FLLP for the fiscal year then
      ended, accompanied by unqualified opinions of PriceWaterhouseCoopers LLP,
      independent public accountants and the Consolidated balance sheets of FLLP
      as at June 30, 2005, and the related Consolidated statements of income and
      Consolidated statements of cash flows of FLLP for the six months then
      ended, copies of which have been furnished to each Lender, fairly present,
      subject, in the case of such balance sheets as at June 30, 2005, and such
      statements of income and cash flows for the six months then ended, to
      year-end audit adjustments, the Consolidated financial condition of FLLP
      as at such dates and the Consolidated results of operations of FLLP for
      the periods ended on such dates, all in accordance with generally accepted
      accounting principles applied on a consistent basis. Since December 31,
      2004, there has been no Material Adverse Change.

            (h) Forecasts. The Consolidated forecasted balance sheets,
      statements of income and statements of cash flows of the Loan Parties and
      their Subsidiaries delivered to the Lenders pursuant to Section
      3.01(a)(vii) or 5.03 were prepared in good faith on the basis of the
      assumptions stated therein, which assumptions were fair in light of the
      conditions existing at the time of delivery of such forecasts, and
      represented, at the time of delivery, such Loan Parties' best estimate of
      the future financial performance of such Loan Parties.

            (i) Full Disclosure. None of the information, exhibits or reports
      furnished by or on behalf of any Loan Party to any Agent or any Lender in
      connection with the negotiation or syndication of the Loan Documents or
      pursuant to the terms of the Loan Documents contained any untrue statement
      of a material fact or omitted to state a material fact necessary to make
      the statements made therein not misleading. The Loan Parties have
      disclosed to the Administrative Agent, in writing, any and all existing
      facts that have or may have (to the extent the Loan Parties can now
      reasonably foresee) a Material Adverse Effect.

            (j) Margin Regulations. No Loan Party is engaged in the business of
      extending credit for the purpose of purchasing or carrying Margin Stock,
      and no proceeds of any Term Advance will be used to purchase or carry any
      Margin Stock or to extend credit to others for the purpose of purchasing
      or carrying any Margin Stock.

            (k) Certain Governmental Regulations. Neither any Loan Party nor any
      of its Subsidiaries nor any general partner or managing member of any Loan
      Party, as applicable, is an "investment company", or an "affiliated
      person" of, or "promoter" or "principal underwriter" for, an "investment
      company", as such terms are defined in the Investment Company Act of 1940,
      as amended. Without limiting the generality of the foregoing, each Loan
      Party and each of its Subsidiaries and each general partner or managing
      member of any Loan Party, as applicable: (i) is primarily engaged,
      directly or through a wholly-owned subsidiary or subsidiaries, in a
      business or businesses other than that of (A) investing, reinvesting,
      owning, holding or trading in securities or (B) issuing face-amount
      certificates of the installment type; (ii) is not engaged in, does not
      propose to engage in and does not hold itself out as being engaged in the
      business of (A) investing, reinvesting, owning, holding or trading in
      securities or (B) issuing face-amount

                                       43


      certificates of the installment type; (iii) does not own or propose to
      acquire investment securities (as defined in the Investment Company Act of
      1940, as amended) having a value exceeding forty percent (40%) of the
      value of such company's total assets (exclusive of government securities
      and cash items) on an unconsolidated basis; (iv) has not in the past been
      engaged in the business of issuing face-amount certificates of the
      installment type; and (v) does not have any outstanding face-amount
      certificates of the installment type. Neither any Loan Party nor any of
      its Subsidiaries nor any general partner or managing member of any Loan
      Party or Subsidiary of a Loan Party that is a partnership or limited
      liability company, as applicable, is a "holding company", or a "subsidiary
      company" of a "holding company", or an "affiliate" of a "holding company"
      or of a "subsidiary company" of a "holding company", as such terms are
      defined in the Public Utility Holding Company Act of 1935, as amended.
      Neither the making of any Term Advances, nor the application of the
      proceeds or repayment thereof by the Borrowers, nor the consummation of
      the other transactions contemplated by the Loan Documents, will violate
      any provision of any such Act or any rule, regulation or order of the
      Securities and Exchange Commission thereunder.

            (l) Materially Adverse Agreements. Neither any Loan Party nor any of
      its Subsidiaries is a party to any indenture, loan or credit agreement or
      any lease or other agreement or instrument or subject to any charter,
      corporate, partnership, membership or other governing restriction that
      could reasonably be expected to have a Material Adverse Effect.

            (m) Perfection and Priority of Security Interests. At any date from
      and after the Collateral Delivery Date, (i) all filings and other actions
      necessary to perfect and protect the security interest in the Collateral
      created under the Collateral Documents have been duly made or taken and
      are in full force and effect, and the Collateral Documents create in favor
      of the Administrative Agent for the benefit of the Secured Parties a valid
      and, together with such filings and other actions, perfected first
      priority security interest in the Collateral, securing the payment of the
      Secured Obligations, and all filings and other actions necessary or
      desirable to perfect and protect such security interest have been duly
      taken, and (ii) the Borrower Parties are the legal and beneficial owners
      of the Collateral free and clear of any Lien, except for Permitted Liens
      and the Liens created under the Collateral Documents.

            (n) Existing Debt. Set forth on Schedule 4.01(n) hereto is a
      complete and accurate list of all Existing Debt (other than Surviving
      Debt), showing as of the date hereof the obligor and the principal amount
      outstanding thereunder immediately prior to the Closing Date.

            (o) Surviving Debt. Set forth on Schedule 4.01(o) hereto is a
      complete and accurate list of all Surviving Debt, showing as of the date
      hereof the obligor and the principal amount outstanding thereunder, the
      maturity date thereof and the amortization schedule therefor.

            (p) Surviving Liens. Set forth on Schedule 4.01(p) hereto is a
      complete and accurate list showing as of the date hereof following
      consummation of the TRS Recapitalization Transactions scheduled to occur
      contemporaneously with the Closing Date, all Liens securing Debt for
      Borrowed Money on the property or assets of any Borrower Party or any
      Subsidiary thereof, the lienholder thereof, the principal amount of

                                       44


      the obligations secured thereby and the property or assets of such
      Borrower Party or such Subsidiary subject thereto.

            (q) Real Property; Hotel Assets. (i) Set forth on Part I of Schedule
      4.01(q) hereto is a complete and accurate list of all real property owned
      in fee by any Borrower Party or any of its Subsidiaries, showing as of the
      close of business on the date hereof, and as of each other date such
      Schedule 4.01(q) is required to be supplemented hereunder, the street
      address, state, record owner and book value thereof. Each such Borrower
      Party or Subsidiary has good, marketable and insurable fee simple title to
      such real property, free and clear of all Liens, other than Permitted
      Liens.

                  (ii) Set forth on Part II of Schedule 4.01(q) hereto is a
            complete and accurate list of all leases of real property under
            which any Borrower Party or any of its Subsidiaries is the lessee,
            showing as of the close of business on the date hereof, and as of
            each other date such Schedule 4.01(q) is required to be supplemented
            hereunder, the street address, state, lessor, lessee, expiration
            date and annual rental cost thereof. Each such lease is the legal,
            valid and binding obligation of the lessor thereof, enforceable in
            accordance with its terms.

                  (iii) The real property assets listed on Schedule 4.01(q) as
            of the date hereof, and as of each other date such Schedule 4.01(q)
            is required to be supplemented hereunder, consist solely of Mortgage
            Assets and Unencumbered Assets. No real property other than Mortgage
            Assets is owned (whether in fee or leased) by any Borrower or
            Subsidiary thereof. No real property other than Unencumbered Assets
            is owned (whether in fee or leased) by TRS Guarantor or any of its
            Subsidiaries. No material assets other than Hotel Assets (exclusive
            of cash and Cash Equivalents, FF&E, licenses, intangibles and other
            personal property related to or otherwise associated with the
            management and operation of such Hotel Assets) or Equity Interests
            in Subsidiaries that own Hotel Assets, are owned by any Borrower
            Party or any of its Subsidiaries.

                  (iv) Each Hotel Asset is operated and managed by an Approved
            Manager pursuant to a Management Agreement listed on Part III of
            Schedule 4.01(q).

                  (v) Each Hotel Asset is subject to a Franchise Agreement with
            an Approved Franchisor as listed on Part IV of Schedule 4.01(q).

                  (vi) No Borrower Party or Subsidiary thereof has previously
            owned any real property that is not a Mortgage Asset or Unencumbered
            Asset, except that FelCor Lodging Company, L.L.C. previously owned
            the Previously Owned Hotels.

                  (vii) Each Unencumbered Asset and each Initial Mortgage Asset
            satisfies all Qualifying Asset Conditions. At any date from and
            after the Collateral Delivery Date, each Mortgage Asset satisfies
            all Qualifying Asset Conditions.

            (r) Environmental Matters. (i) Except as otherwise set forth on Part
      I of Schedule 4.01(r) hereto, the operations and properties of each
      Borrower Party and each of its Subsidiaries comply in all material
      respects with all applicable Environmental Laws

                                       45


      and Environmental Permits, all past material non-compliance with such
      Environmental Laws and Environmental Permits has been resolved without
      ongoing material obligations or costs, and, to the knowledge of each
      Borrower Party and its Subsidiaries, no circumstances exist that could be
      reasonably likely to (A) form the basis of an Environmental Action against
      any Borrower Party or any of its Subsidiaries or any of their properties
      that could have a Material Adverse Effect or (B) cause any such property
      to be subject to any restrictions on ownership, occupancy, use or
      transferability under any Environmental Law.

                  (ii) Except as otherwise set forth on Part II of Schedule
            4.01(r) hereto, none of the properties currently or formerly owned
            or operated by any Borrower Party or any of its Subsidiaries is
            listed or, to the knowledge of each Borrower Party and its
            Subsidiaries, proposed for listing on the NPL or on the CERCLIS or
            any analogous foreign, state or local list or is adjacent to any
            such listed property; there are no underground or above ground
            storage tanks or any surface impoundments, septic tanks, pits, sumps
            or lagoons in which Hazardous Materials are being or have been
            treated, stored or disposed on any property currently owned or
            operated by any Borrower Party or any of its Subsidiaries in
            violation of any Environmental Law; there is no asbestos or
            asbestos-containing material on any property currently owned or
            operated by any Borrower Party or any of its Subsidiaries except for
            any non-friable asbestos-containing material that is being managed
            pursuant to, and in compliance with, an operations and maintenance
            plan and that does not currently require removal, remediation,
            abatement or encapsulation under Environmental Law; and, to the
            knowledge of each Borrower Party and its Subsidiaries, Hazardous
            Materials have not been released, discharged or disposed of in any
            material amount or in violation of any Environmental Law or
            Environmental Permit on any property currently owned or operated by
            any Borrower Party or any of its Subsidiaries or, to the knowledge
            of each Borrower Party and its Subsidiaries, during the period of
            their ownership or operation thereof, on any property formerly owned
            or operated by any Borrower Party or any of its Subsidiaries.

                  (iii) Except as otherwise set forth on Part III of Schedule
            4.01(r) hereto, neither any Borrower Party nor any of its
            Subsidiaries is undertaking, and has not completed, either
            individually or together with other potentially responsible parties,
            any investigation or assessment or remedial or response action
            relating to any actual or threatened release, discharge or disposal
            of Hazardous Materials at any site, location or operation, either
            voluntarily or pursuant to the order of any governmental or
            regulatory authority or the requirements of any Environmental Law;
            all Hazardous Materials generated, used, treated, handled or stored
            at, or transported to or from, any property currently or formerly
            owned or operated by any Borrower Party or any of its Subsidiaries
            have been disposed of in a manner not reasonably expected to result
            in a Material Adverse Effect; and, with respect to any property
            formerly owned or operated by any Borrower Party or any of its
            Subsidiaries, all Hazardous Materials generated, used, treated,
            handled, stored or transported by or, to the knowledge of each
            Borrower Party and its Subsidiaries, on behalf of any Borrower Party
            or any of its Subsidiaries have been disposed of in a manner not
            reasonably expected to result in a Material Adverse Effect.

                                       46


            (s) Compliance with Laws. Each Loan Party and each Subsidiary is in
      compliance with the requirements of all Laws (including, without
      limitation, the Securities Act and the Securities Exchange Act, and the
      applicable rules and regulations thereunder, state securities law and
      "Blue Sky" laws) applicable to it and its business, where the failure to
      so comply could reasonably be expected to have a Material Adverse Effect.

            (t) Force Majeure. Neither the business nor the properties of any
      Loan Party or any of its Subsidiaries are affected by any fire, explosion,
      accident, strike, lockout or other labor dispute, drought, storm, hail,
      earthquake, embargo, act of God or of the public enemy or other casualty
      (whether or not covered by insurance) that could reasonably be expected to
      have a Material Adverse Effect.

            (u) Loan Parties' Credit Decisions. Each Loan Party has,
      independently and without reliance upon the Administrative Agent or any
      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 (and in the case of the Guarantors, to give the guaranty under
      this Agreement) and each other Loan Document to which it is or is to be a
      party, and each Loan Party has established adequate means of obtaining
      from each other Loan Party on a continuing basis information pertaining
      to, and is now and on a continuing basis will be completely familiar with,
      the business, condition (financial or otherwise), operations, performance,
      properties and prospects of such other Loan Party.

            (v) Solvency. Each Loan Party is, individually and together with its
      Subsidiaries, Solvent.

            (w) ERISA Matters. (i) Set forth on Schedule 4.01(w) hereto is a
      complete and accurate list of all Plans and Welfare Plans.

                  (ii) No ERISA Event has occurred within the preceding five
            plan years or is reasonably expected to occur with respect to any
            Plan that has resulted in or is reasonably expected to result in a
            material liability of any Loan Party or any ERISA Affiliate.

                  (iii) Schedule B (Actuarial Information) to the most recent
            annual report (Form 5500 Series) for each Plan, copies of which have
            been filed with the Internal Revenue Service and furnished to the
            Lenders, is complete and accurate and fairly presents the funding
            status of such Plan as of the date of such Schedule B, and since the
            date of such Schedule B there has been no material adverse change in
            such funding status.

                  (iv) Neither any Loan Party nor any ERISA Affiliate has
            incurred or is reasonably expected to incur any Withdrawal Liability
            to any Multiemployer Plan.

                  (v) Neither any Loan Party nor any ERISA Affiliate has been
            notified by the sponsor of a Multiemployer Plan that such
            Multiemployer Plan is in reorganization or has been terminated,
            within the meaning of Title IV of ERISA, and no such Multiemployer
            Plan is reasonably expected to be in reorganization or to be
            terminated, within the meaning of Title IV of ERISA.

                                       47


                                    ARTICLE V
                          COVENANTS OF THE LOAN PARTIES

      SECTION 5.01. Affirmative Covenants. So long as any Term Advance or any
other Obligation of any Loan Party under any Loan Document shall remain unpaid,
or any Lender shall have any Term Commitment hereunder:

            (a) Compliance with Laws, Etc. Each Borrower Party will comply, and
      cause each of its Subsidiaries to comply, in all material respects, with
      all applicable laws, rules, regulations and orders, such compliance to
      include, without limitation, compliance with ERISA and the Racketeer
      Influenced and Corrupt Organizations Chapter of the Organized Crime
      Control Act of 1970.

            (b) Payment of Taxes, Etc. Each Borrower Party will pay and
      discharge, and cause each of its Subsidiaries to pay and discharge, before
      the same shall become delinquent, (i) all taxes, assessments and
      governmental charges or levies imposed upon it or upon its property and
      (ii) all lawful claims that, if unpaid, might by law become a Lien upon
      its property; provided, however, that neither the Borrower Parties nor any
      of their Subsidiaries shall be required to pay or discharge any such tax,
      assessment, charge or claim that is the subject of a Good Faith Contest,
      unless and until any Lien resulting therefrom attaches to its property and
      becomes enforceable against its other creditors.

            (c) Compliance with Environmental Laws. Each Borrower Party will
      comply, and cause each of its Subsidiaries and all lessees and other
      Persons operating or occupying its properties to comply, in all material
      respects, with all applicable Environmental Laws and Environmental
      Permits; obtain and renew and cause each of its Subsidiaries to obtain and
      renew all Environmental Permits necessary for its operations and
      properties; and conduct, and cause each of its Subsidiaries to conduct,
      any investigation, study, sampling and testing, and undertake any cleanup,
      removal, remedial or other action necessary to remove and clean up all
      Hazardous Materials from any of its properties in material compliance with
      the requirements of all Environmental Laws; provided, however, that
      neither the Borrower Parties nor any of their Subsidiaries shall be
      required to undertake any such cleanup, removal, remedial or other action
      to the extent that its obligation to do so is the subject of a Good Faith
      Contest.

            (d) Maintenance of Insurance. Each Borrower Party will maintain, and
      cause each of its Subsidiaries to maintain, insurance (including, from and
      after the Collateral Delivery Date with respect to the Mortgage Assets,
      the insurance required by the terms of the Mortgages) with responsible and
      reputable insurance companies or associations in such amounts and covering
      such risks as is usually carried by companies engaged in similar
      businesses and owning similar properties in the same general areas in
      which such Borrower Party or such Subsidiaries operate.

            (e) Preservation of Partnership or Corporate Existence, Etc. Each
      Loan Party will preserve and maintain, and cause each Subsidiary of a
      Borrower Party to preserve and maintain, its existence (corporate or
      otherwise), legal structure, legal name, rights (charter and statutory),
      permits, licenses, approvals, privileges and franchises except, in the
      case of Subsidiaries of the Borrower Parties (other than TRS Guarantor,
      the Borrowers and any such Subsidiary that owns a Hotel Asset) only, if in
      the reasonable business judgment of such Subsidiary it is in its best
      economic interest not to preserve and maintain such

                                       48


      rights or franchises and such failure to preserve and maintain such rights
      or franchises could not reasonably be expected to result in a Material
      Adverse Effect (it being understood that the foregoing shall not prohibit,
      or be violated as a result of any transaction by or involving any Borrower
      Party or Subsidiary thereof otherwise permitted under Section 5.02(d) or
      (e) below).

            (f) Visitation Rights. Each Borrower Party will at any reasonable
      time and from time to time, permit any of the Agents or Lenders, or any
      agent or representatives thereof, to examine and make copies of and
      abstracts from the records and books of account of, and visit any Hotel
      Assets owned by, any Borrower Party and any of its Subsidiaries, and to
      discuss the affairs, finances and accounts of any Borrower Party and any
      of its Subsidiaries with any of their general partners, managing members,
      officers or directors and with their independent certified public
      accountants.

            (g) Keeping of Books. Each Borrower Party will keep, and cause each
      of its Subsidiaries to keep, proper books of record and account, in which
      full and correct entries shall be made of all financial transactions and
      the assets and business of such Borrower Party and each such Subsidiary in
      accordance with GAAP.

            (h) Maintenance of Properties, Etc. Each Borrower Party will
      maintain and preserve, and cause each of its Subsidiaries to maintain and
      preserve, all of its properties that are used or useful in the conduct of
      its business in good working order and condition, ordinary wear and tear
      excepted and will from time to time make or cause to be made all
      appropriate repairs, renewals and replacement thereof except where failure
      to do so would not have a Material Adverse Effect.

            (i) Transactions with Affiliates. Each Loan Party will conduct, and
      cause each Subsidiary of a Borrower Party to conduct, all transactions
      otherwise permitted under the Loan Documents with any of their Affiliates
      (other than transactions exclusively among or between TRS Guarantor and/or
      one or more of the Borrowers) on terms that are fair and reasonable and no
      less favorable to such Loan Party or such Borrower Party Subsidiary than
      it would obtain in a comparable arm's-length transaction with a Person not
      an Affiliate.

            (j) Covenant to Guarantee Obligations and Give Security. Each
      Borrower Party will:

                  (i) Within 10 days after the formation or acquisition of any
            new direct or indirect Subsidiary by any Borrower Party, (A) cause
            each such Subsidiary, and cause each direct and indirect parent of
            such Subsidiary (if it has not already done so), to duly execute and
            deliver to the Administrative Agent a Guaranty Supplement in
            substantially the form of Exhibit D hereto or otherwise in form and
            substance satisfactory to the Administrative Agent, and (B) if such
            Subsidiary is intended to be an Additional Borrower, cause such
            Subsidiary to deliver (in lieu of the Guaranty Supplement by such
            Subsidiary required under clause (A) above) (1) an Accession
            Agreement in substantially the form of Exhibit C hereto or otherwise
            in form and substance satisfactory to the Administrative Agent, and
            (2) for the benefit of each Lender, a Note executed and delivered by
            such Additional Borrower to the order of such Lender in a principal
            amount up to the aggregate principal amount of such Lender's Term
            Commitment, dated the date of the related Accession Agreement and
            otherwise substantially in the form of Exhibit A hereto.

                                       49


                  (ii) On or before the Collateral Delivery Date, deliver (or
            cause to be delivered) to the Administrative Agent the following, in
            form and substance satisfactory to the Administrative Agent (unless
            otherwise specified) and in sufficient copies for each Lender:

                        (A) (1) A security agreement in substantially the form
                  of Exhibit F hereto (as amended, the "SECURITY AGREEMENT"),
                  duly executed by each Borrower Equity Holder, each Borrower
                  and each Subsidiary thereof that owns any Mortgage Asset,
                  together with acknowledgment copies of proper financing
                  statements, duly filed on or before the Collateral Delivery
                  Date under the Uniform Commercial Code of all jurisdictions
                  that the Collateral Agent may deem necessary or desirable in
                  order to perfect and protect the first priority liens and
                  security interests created under the Collateral Documents,
                  covering the Collateral described therein, and (2) a Guaranty
                  Supplement duly executed by each Borrower Equity Holder not
                  then a Borrower Party.

                        (B) Deeds of trust, trust deeds and mortgages in
                  substantially the form of Exhibit G hereto (in each case as
                  amended, the "MORTGAGES") and assignments of leases and rents
                  in substantially the form of Exhibit H hereto (in each case as
                  amended, the "ASSIGNMENTS OF LEASES") (in each case with such
                  changes as may be required to account for local law matters
                  and otherwise satisfactory in form and substance to the
                  Collateral Agent) covering all Mortgage Assets (and including,
                  in the case of any Mortgage Asset subject to a Qualifying
                  Ground Lease from an Affiliate of any Loan Party, a joinder by
                  the lessor under such Qualifying Ground Lease subordinating
                  its fee interest in such Mortgage Asset to the Mortgage), duly
                  executed by the appropriate Borrower Party (and, if
                  applicable, the fee owner), together with evidence that
                  counterparts of the Mortgages and Assignments of Leases have
                  been duly executed, acknowledged and delivered on or before
                  the Collateral Delivery Date and are in form suitable for
                  filing or recording in all filing or recording offices that
                  the Collateral Agent may deem necessary or desirable in order
                  to create a valid first and subsisting Lien on the collateral
                  described therein in favor of the Collateral Agent for the
                  benefit of the Secured Parties and that all required
                  affidavits, tax forms and filings pertaining to any applicable
                  documentary stamp, intangible and mortgage recordation taxes
                  have been executed and delivered by all appropriate parties
                  and are in form suitable for filing with all applicable
                  governmental authorities.

                        (C) Evidence of the completion of all other recordings
                  and filings of or with respect to the Security Agreement that
                  the Collateral Agent may deem necessary or desirable in order
                  to perfect and protect the Liens created thereby.

                  (iii) (A) Within 60 days after the Collateral Delivery Date
            (or such longer period as shall be approved by the Administrative
            Agent), deliver to the Agents the Collateral Deliverables, and (B)
            within two Business Days following completion of the delivery of all
            such Collateral Deliverables to the Agents pursuant to the preceding
            sentence, deliver to the Administrative Agent a certificate signed
            by a Responsible Officer of the Borrower Parties confirming

                                       50


            that (1) the representations and warranties contained in each Loan
            Document are true and correct on and as of such date, and (2) no
            Default or Event of Default has occurred and is continuing.

            (k) Further Assurances. Each Loan Party will:

                  (i) Promptly upon request by any Agent, or any Lender through
            the Administrative Agent, correct, and cause each Loan Party to
            promptly correct, any material defect or error that may be
            discovered in any Loan Document or in the execution, acknowledgment,
            filing or recordation thereof.

                  (ii) Promptly upon request by any Agent, or any Lender through
            the Administrative Agent, do, execute, acknowledge, deliver, record,
            re-record, file, re-file, register and re-register any and all such
            further acts, deeds, conveyances, pledge agreements, mortgages,
            deeds of trust, trust deeds, assignments of leases and rents,
            assignments, financing statements and continuations thereof,
            termination statements, notices of assignment, transfers,
            certificates, assurances and other instruments as any Agent, or any
            Lender through the Administrative Agent, may reasonably require from
            time to time (A) to carry out more effectively the purposes of the
            Loan Documents, (B) from and after the Collateral Delivery Date, to
            the fullest extent permitted by applicable law, to subject any Loan
            Party's or any of its Subsidiaries' properties, assets, rights or
            interests to the Liens now or hereafter intended to be covered by
            any of the Collateral Documents, (C) from and after the Collateral
            Delivery Date, to perfect and maintain the validity, effectiveness
            and priority of any of the Collateral Documents and any of the Liens
            intended to be created thereunder, and (D) to assure, convey, grant,
            assign, transfer, preserve, protect and confirm more effectively
            unto the Secured Parties the rights granted or now or hereafter
            intended to be granted to the Secured Parties under any Loan
            Document or under any other instrument executed in connection with
            any Loan Document to which any Loan Party or any of its Subsidiaries
            is or is to be a party, and cause each of its Subsidiaries to do so.

            (l) Performance of Material Contracts. Each Loan Party will perform
      and observe, and cause each of its Subsidiaries to perform and observe,
      all the terms and provisions of each Material Contract to be performed or
      observed by it, maintain each such Material Contract in full force and
      effect, enforce each such Material Contract in accordance with its terms,
      take all such action to such end as may be from time to time requested by
      the Administrative Agent, and, upon request of the Administrative Agent,
      make to each other party to each such Material Contract such demands and
      requests for information and reports or for action as any Loan Party or
      any of its Subsidiaries is entitled to make under such Material Contract,
      and cause each of its Subsidiaries to do so.

            (m) Compliance with Leases. Each Borrower Party will make all
      payments and otherwise perform all obligations in respect of all leases of
      real property to which any such Borrower Party or any of its Subsidiaries
      is party, keep such leases in full force and effect and not allow such
      leases to lapse or be terminated or any rights to renew such leases to be
      forfeited or cancelled (except if in the reasonably business judgment of
      such Borrower Party or Subsidiary it is in its best economic interest not
      to maintain such lease or prevent such lapse, termination, forfeiture or
      cancellation and such failure to maintain such lease or prevent such
      lapse, termination, forfeiture or cancellation is not in respect of

                                       51


      a Qualifying Ground Lease of a Hotel Asset and could not otherwise
      reasonably be expected to result in a Material Adverse Effect), notify the
      Administrative Agent of any default by any party with respect to such
      leases and cooperate with the Administrative Agent in all respects to cure
      any such default, and cause each of its Subsidiaries to do so.

            (n) Management Agreements. Each Borrower Party will at all times
      cause each Hotel Asset to be managed and operated by an Approved Manager
      who has (i) entered into a management agreement with respect to such
      Borrowing Base Asset in form and substance satisfactory to the
      Administrative Agent, and (ii) to the extent required pursuant to Section
      5.01(j)(iii) with respect to Mortgage Assets only, executed and delivered
      a management agreement subordination agreement in form and substance
      satisfactory to the Administrative Agent.

            (o) Franchise Agreements. Each Borrower Party will at all times
      cause each Hotel Asset to be subject to a franchise agreement or similar
      arrangement with an Approved Franchisor who has (i) entered into a
      franchise agreement or similar agreement with respect to such Hotel Asset
      in form and substance satisfactory to the Administrative Agent, and (ii)
      to the extent required pursuant to Section 5.01(j)(iii) with respect to
      Mortgage Assets only, executed and delivered a franchisor comfort letter
      in form and substance satisfactory to the Administrative Agent.

            (p) Qualifying Asset Conditions. Each Borrower Party will (i) at all
      times cause each Unencumbered Asset and Initial Mortgage Asset to satisfy
      all Qualifying Asset Conditions; and (ii) at all times from and after the
      Collateral Delivery Date, cause each Mortgage Asset to satisfy all
      Qualifying Asset Conditions.

            (q) Transfer of Leased TRS Hotels. The Loan Parties will (i) cause
      the leasehold estates in the Leased TRS Hotels located in Miami, Florida
      and Stamford, Connecticut to be assigned to TRS Guarantor or a Subsidiary
      thereof on or prior to the Collateral Delivery Date, and (ii) use
      commercially reasonable efforts to obtain the requisite landlord consents
      necessary to assign (and, upon receipt of such consents shall promptly
      cause to be assigned) the leasehold estates in the Leased TRS Hotels
      located in San Antonio, Texas and Amarillo, Texas to TRS Guarantor or a
      Subsidiary thereof on or prior to the Collateral Delivery Date. Upon the
      transfer of any Leased TRS Hotel to TRS Guarantor or a Subsidiary thereof,
      such Leased TRS Hotel shall become an Unencumbered Asset for all purposes
      of this Agreement. At all times prior to each such transfer, the Loan
      Parties will cause the leasehold estate in the applicable Leased TRS Hotel
      to be owned by a wholly-owned Subsidiary of FLLP, which shall hold the
      same free and clear of all Liens (other than Permitted Liens).

      SECTION 5.02. Negative Covenants. So long as any Term Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid, or any
Lender shall have any Term Commitment hereunder:

            (a) Liens, Etc. No Borrower Party shall create, incur, assume or
      suffer to exist, or permit any of its Subsidiaries to create, incur,
      assume or suffer to exist, any Lien on or with respect to any of its
      assets of any character (including, without limitation, accounts) whether
      now owned or hereafter acquired, or sign or file or suffer to exist, or
      permit any of its Subsidiaries to sign or file or suffer to exist, under
      the Uniform Commercial Code of any jurisdiction, a financing statement
      that names such Borrower Party or any of its Subsidiaries as debtor, or
      sign or suffer to exist, or permit any of its Subsidiaries to sign

                                       52


      or suffer to exist, any security agreement authorizing any secured party
      thereunder to file such financing statement, or assign, or permit any of
      its Subsidiaries to assign, any accounts or other right to receive income,
      except:

                  (i) Liens created under the Collateral Documents;

                  (ii) Permitted Liens;

                  (iii) Prior to the Collateral Delivery Date, Liens described
            on Schedule 4.01(p) hereto;

                  (iv) Purchase money Liens upon or in equipment acquired or
            held by such Borrower Party or any of its Subsidiaries in the
            ordinary course of business to secure the purchase price of such
            equipment or to secure Debt incurred solely for the purpose of
            financing the acquisition of any such equipment to be subject to
            such Liens, or Liens existing on any such equipment at the time of
            acquisition (other than any such Liens created in contemplation of
            such acquisition that do not secure the purchase price), or
            extensions, renewals or replacements of any of the foregoing for the
            same or a lesser amount; provided, however, that no such Lien shall
            extend to or cover any property other than the equipment being
            acquired, and no such extension, renewal or replacement shall extend
            to or cover any property not theretofore subject to the Lien being
            extended, renewed or replaced; provided further that the aggregate
            principal amount of the Debt secured by Liens permitted by this
            clause (iv) shall not exceed the amount permitted under Section
            5.02(b)(iii); and

                  (v) Liens arising in connection with Capitalized Leases
            permitted under Section 5.02(b)(iv), provided that no such Lien
            shall extend to or cover any Collateral or assets other than the
            assets subject to such Capitalized Leases.

            (b) Debt. No Borrower Party shall create, incur, assume or suffer to
      exist, or permit any of its Subsidiaries to create, incur, assume or
      suffer to exist, any Debt, except:

                  (i) Debt under the Loan Documents;

                  (ii) Debt owed to any other Borrower Party, provided that, in
            each case, such Debt (A) shall be on terms acceptable to the
            Administrative Agent and (B) shall be evidenced by promissory notes
            in form and substance satisfactory to the Administrative Agent,
            which promissory notes shall (unless payable to a Borrower) by their
            terms be subordinated to the Obligations of the Loan Parties under
            the Loan Documents;

                  (iii) Debt secured by Liens permitted by Section 5.02(a)(iv)
            not to exceed in the aggregate $3,000,000 at any time outstanding in
            respect of all Borrower Parties;

                  (iv) (A) Capitalized Leases not to exceed in the aggregate
            $3,000,000 at any time outstanding in respect of all Borrower
            Parties, and (B) in the case of any Capitalized Lease to which any
            Subsidiary of a Borrower Party is a party, any Contingent Obligation
            of such Borrower Party guaranteeing the Obligations of such
            Subsidiary under such Capitalized Lease;

                                       53


                  (v) Prior to the Collateral Delivery Date, the Surviving Debt
            described on Schedule 4.01(o);

                  (vi) Debt in respect of Hedge Agreements designed to hedge
            against fluctuations in interest rates incurred in the ordinary
            course of business and consistent with prudent business practices;

                  (vii) Endorsements of negotiable instruments for deposit or
            collection or similar transactions in the ordinary course of
            business; and

                  (viii) Any other Debt not to exceed $3,000,000 in the
            aggregate at any time outstanding in respect of all Borrower Parties
            and which is not secured by any Lien.

            (c) Change in Nature of Business. No Loan Party shall make, or
      permit any Subsidiary of a Borrower Party to make, any material change in
      the nature of its business as carried at the Closing Date (after giving
      effect to the TRS Recapitalization Transactions scheduled to occur on or
      about such date and the other transactions contemplated by the Loan
      Documents) or engage in, or permit any Subsidiary of a Borrower Party to
      engage in, any business other than ownership, development, licensing and
      management of hotel assets in the United States consistent in quality with
      the Hotel Assets presently owned by the Borrower Parties and their
      Subsidiaries, and other business activities incidental thereto.

            (d) Mergers, Etc. Neither FLLP nor any Borrower Party shall merge or
      consolidate with or into, or convey, transfer (except as permitted by
      Section 5.02(e)), lease or otherwise dispose of (whether in one
      transaction or in a series of transactions) all or substantially all of
      its assets (whether now owned or hereafter acquired) to, any Person, or
      permit any Subsidiary of any Borrower Party to do so; provided, however,
      that so long as no Default or Event of Default shall have occurred and be
      continuing at the time of such proposed transaction or would result
      therefrom, (x) FLLP may merge with any Person that is not a Borrower Party
      so long as FLLP is the surviving entity, and (y) after the FLLP Cap Date,
      FLLP may merge with any Person that is not a Borrower Party and need not
      be the surviving entity so long as (1) the surviving entity has a net
      worth immediately following the merger at least equal to the net worth of
      FLLP immediately preceding such merger, (2) the surviving entity executes
      an assumption agreement in form and substance satisfactory to the
      Administrative Agent expressly assuming all obligations of FLLP under the
      Loan Documents and (3) the Loan Parties acknowledge and agree that all
      references in the Loan Documents to FLLP shall be deemed to be references
      to such surviving entity). Notwithstanding any other provision of this
      Agreement, (i) any Subsidiary of a Borrower Party (other than TRS
      Guarantor or any Borrower) 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 the assets or proceeds from the
      liquidation or dissolution of such Subsidiary are transferred to a
      Borrower Party, provided that no Default or Event of Default shall have
      occurred and be continuing at the time of such proposed transaction or
      would result therefrom, and (ii) any Borrower Party or Subsidiary thereof
      shall be permitted to effect any Transfer of Assets through the sale or
      transfer of direct or indirect Equity Interests in the Person that owns
      such Assets so long as Section 5.02(e) would otherwise permit the Transfer
      of all Assets owned by such Subsidiary at the time of such sale or
      transfer of such Equity Interests. Upon the sale or transfer of Equity
      Interests in a Person permitted under clause

                                       54


      (ii) above, provided that (x) no Default or Event of Default shall have
      occurred and be continuing or would result therefrom, (y) any prepayment
      of Term Advances required pursuant to Section 2.05(b) shall have been
      made, and (z) if such Person is the sole Borrower hereunder, all
      Obligations of the Loan Parties under the Loan Documents have been paid in
      full in cash, all Secured Hedge Agreements shall have expired or been
      terminated and all Term Commitments shall have expired or been terminated,
      then the Administrative Agent shall, upon the request of the Borrowers,
      release such Person from its Obligations under the Loan Documents.

            (e) Sales, Etc. of Assets. No Borrower Party shall sell, lease,
      transfer or otherwise dispose of, or grant any option or other right to
      purchase, lease or otherwise acquire, or permit any of its Subsidiaries to
      sell, lease (other than by entering into Tenancy Leases), transfer or
      otherwise dispose of, or grant any option or other right to purchase,
      lease (other than any option or right to enter into Tenancy Leases) or
      otherwise acquire (each such action, including without limitation and Sale
      and Leaseback Transaction, being a "TRANSFER"), any Hotel Asset (or any
      direct or indirect Equity Interests in the owner thereof) other than the
      following Transfers, which shall be permitted hereunder only so long as no
      Default or Event of Default shall exist on the date of such Transfer or
      would result therefrom: (i) the Transfer of any Mortgage Asset to a
      Borrower on or prior to the Collateral Delivery Date pursuant to the TRS
      Recapitalization Transactions, (ii) the Transfer of any Hotel Asset from
      any Borrower Party to any wholly-owned Subsidiary of such Borrower Party
      that is itself a Borrower Party (or that becomes a Borrower Party on the
      date of such Transfer), and (iii) the Transfer of any Hotel Asset at any
      time to any Person, provided that any Transfer described in this clause
      (iii) satisfies the following requirements: (A) the purchase price paid to
      the applicable Borrower Party for such Hotel Asset shall not be less than
      the fair market value of such Hotel Asset at the time of such sale, (B)
      the entire purchase price paid for such Hotel Asset shall be paid to the
      applicable Borrower Party solely in cash, and (C) all gross sales proceeds
      from such Transfer, net of actual expenses incurred in connection
      therewith (the "NET SALES PROCEEDS"), shall be applied to prepay the Term
      Advances to the extent required pursuant to Section 2.05(b).

            (f) Investments. No Borrower Party shall make or hold, or permit any
      of its Subsidiaries to make or hold, any Investment other than:

                  (i) In the case of the Borrowers and their Subsidiaries,
            Investments in the Mortgage Assets;

                  (ii) In the case of TRS Guarantor and its Subsidiaries,
            Investments in the Unencumbered Assets;

                  (iii) Investments in Cash Equivalents;

                  (iv) Investments consisting of intercompany Debt permitted
            under Section 5.02(b)(ii);

                  (v) Investments by the Borrower in Hedge Agreements permitted
            under Section 5.02(b)(vi);

                  (vi) Investments consisting of extensions of credit in the
            nature of accounts receivable or notes receivable arising from the
            grant of trade credit

                                       55


            extended in the ordinary course of business in an aggregate amount
            for all Borrower Parties not to exceed at any time $3,000,000; and

                  (vii) Investments received in satisfaction or partial
            satisfaction thereof from financially troubled account debtors to
            the extent reasonably necessary in order to prevent or limit loss.

            (g) Restricted Payments. No Borrower Party shall, following the
      occurrence and during the continuance of any Default or Event of Default,
      without the prior consent of the Required Lenders, declare or pay any
      dividends, purchase, redeem, retire, defease or otherwise acquire for
      value any of its Equity Interests now or hereafter outstanding, return any
      capital to its stockholders, partners or members (or the equivalent
      Persons thereof) as such, make any distribution of assets, Equity
      Interests, obligations or securities to its stockholders, partners or
      members (or the equivalent Persons thereof); provided, however, that
      nothing in this Section 5.02(g) shall limit or restrict the ability of TRS
      Guarantor or its Subsidiaries to make the Permitted Distribution to FLLP.

            (h) Amendments of Constitutive Documents. No Loan Party shall amend,
      in each case in any material respect, its limited liability company
      agreement, partnership agreement, certificate of incorporation or bylaws
      or other constitutive documents, provided that any amendment to any such
      constitutive document that would be adverse to any of the Secured Parties
      shall be deemed "material" for purposes of this Section; provided further
      that any amendment to any such constitutive document that would designate
      such Subsidiary as a "special purpose entity" or otherwise confirm such
      Subsidiary's status as a "special purpose entity" shall be deemed "not
      material" for purposes of this Section; and provided still further that
      this Section 5.02(h) shall not apply to FLLP (but it shall continue to
      apply to the other Loan Parties) after the FLLP Cap Date.

            (i) Accounting Changes. No Loan Party shall make or permit any
      change in (i) accounting policies or reporting practices, except as
      required or permitted by generally accepted accounting principles, or (ii)
      Fiscal Year.

            (j) Speculative Transactions. No Loan Party shall engage, or permit
      any of its Subsidiaries to engage, in any transaction involving commodity
      options or futures contracts or any similar speculative transactions.

            (k) Payment Restrictions Affecting Subsidiaries. No Borrower Party
      shall directly or indirectly, enter into or suffer to exist, or permit any
      of its Subsidiaries to enter into or suffer to exist, any agreement or
      arrangement limiting the ability of any of its Subsidiaries to declare or
      pay dividends or other distributions in respect of its Equity Interests or
      repay or prepay any Debt owed to, make loans or advances to, or otherwise
      transfer assets to or invest in, such Borrower Party (whether through a
      covenant restricting dividends, loans, asset transfers or investments, a
      financial covenant or otherwise), except (i) prior to the Collateral
      Delivery Date, any agreement or instrument evidencing Surviving Debt, and
      (ii) any agreement in effect at the time such Subsidiary becomes a
      Subsidiary of such Borrower Party, so long as such agreement was not
      entered into solely in contemplation of such Person becoming a Subsidiary
      of such Borrower Party.

                                       56


            (l) Amendment, Etc. of Material Contracts. No Loan Party shall
      cancel or terminate any Material Contract or consent to or accept any
      cancellation or termination thereof, amend or otherwise modify any
      Material Contract or give any consent, waiver or approval thereunder,
      waive any default under or breach of any Material Contract, agree in any
      manner to any other amendment, modification or change of any term or
      condition of any Material Contract or take any other action in connection
      with any Material Contract that would impair in any material respect the
      value of the interest or rights of any Loan Party thereunder or that would
      impair or otherwise adversely affect in any material respect the interest
      or rights, if any, of any Agent or any Lender, or permit any of its
      Subsidiaries to do any of the foregoing; provided, however, that this
      Section 5.02(l) shall not apply to FLLP (but it shall continue to apply to
      the other Loan Parties) after the FLLP Cap Date.

            (m) Negative Pledge. No Borrower Party shall enter into or suffer to
      exist, or permit any of its Subsidiaries to enter into or suffer to exist,
      any agreement prohibiting or conditioning the creation or assumption of
      any Lien upon any of its property or assets except (i) pursuant to the
      Loan Documents, or (ii) in connection with (A) any Surviving Debt (but
      only prior to the Collateral Delivery Date), (B) any purchase money Debt
      permitted under Section 5.02(b)(iii) solely to the extent that the
      agreement or instrument governing such Debt prohibits a Lien on the
      property acquired with the proceeds of such Debt, or (C) any Capitalized
      Lease permitted by Section 5.02(b)(iv) solely to the extent that such
      Capitalized Lease prohibits a Lien on the property subject thereto.

            (n) Multiemployer Plans. Neither any Loan Party nor any ERISA
      Affiliate will contribute to or be required to contribute to any
      Multiemployer Plan.

            SECTION 5.03. Reporting Requirements. So long as any Term Advance or
any other Obligation of any Loan Party under any Loan Document shall remain
unpaid or any Lender shall have any Term Commitment hereunder, the Borrower
Parties will furnish to the Agents and the Lenders in accordance with Section
9.02(b):

            (a) Default Notice. As soon as possible and in any event within two
      days after the occurrence of each Default or any event, development or
      occurrence reasonably likely to have a Material Adverse Effect continuing
      on the date of such statement, a statement of the Chief Financial Officer
      (or other Responsible Officer) of the Borrower Parties setting forth
      details of such Default or such event, development or occurrence and the
      action that the Borrower Parties have taken and propose to take with
      respect thereto.

            (b) Annual Financials. (i) As soon as available and in any event
      within 90 days after the end of the Fiscal Year ending December 31, 2005,
      a copy of the annual audit report for such year for FLLP and its
      Subsidiaries, including therein Consolidated balance sheets of FLLP and
      its Subsidiaries as of the end of such Fiscal Year and Consolidated
      statements of income and a Consolidated statement of cash flows of FLLP
      and its Subsidiaries for such Fiscal Year, in each case accompanied by an
      opinion acceptable to the Required Lenders of PriceWaterhouseCoopers LLP
      or other independent public accountants of recognized standing acceptable
      to the Required Lenders, together with (A) a certificate of such
      accounting firm to the Lenders stating that in the course of the regular
      audit of the business of FLLP and its Subsidiaries, which audit was
      conducted by such accounting firm in accordance with generally accepted
      auditing standards, such accounting firm has obtained no knowledge of
      non-compliance with the covenants contained in Section 5.04, or if, in the
      opinion of such accounting

                                       57


      firm, any such non-compliance has occurred, a statement as to the nature
      thereof, (B) a schedule in form satisfactory to the Administrative Agent
      of the computations used by such accountants in determining, as of the end
      of such Fiscal Year, compliance with the covenants contained in Section
      5.04, provided that in the event of any change in GAAP used in the
      preparation of such financial statements, FLLP shall also provide, if
      necessary for the determination of compliance with Section 5.04, a
      statement of reconciliation conforming such financial statements to GAAP
      and (C) a certificate of the Chief Financial Officer (or other Responsible
      Officer) of FLLP stating that no Default has occurred and is continuing
      or, if a Default has occurred and is continuing, a statement as to the
      nature thereof and the action that FLLP has taken and proposes to take
      with respect thereto.

                  (ii) As soon as available and in any event within 90 days
            after the end of each Fiscal Year commencing with the Fiscal Year
            ending December 31, 2006, a copy of the annual audit report for such
            year for TRS Guarantor and the Borrowers and their respective
            Subsidiaries as a Consolidated group (the "REPORTING PARTIES"),
            including therein a Consolidated balance sheet for the Reporting
            Parties as of the end of such Fiscal Year and a Consolidated
            statement of income and a Consolidated statement of cash flows for
            the Reporting Parties for such Fiscal Year, in each case accompanied
            by an opinion acceptable to the Required Lenders of
            PriceWaterhouseCoopers LLP or other independent public accountants
            of recognized standing acceptable to the Required Lenders, together
            with (A) a certificate of such accounting firm to the Lenders
            stating that in the course of the regular audit of the business of
            the Reporting Parties, which audit was conducted by such accounting
            firm in accordance with generally accepted auditing standards, such
            accounting firm has obtained no knowledge of non-compliance with the
            covenants contained in Section 5.04, or if, in the opinion of such
            accounting firm, any such non-compliance has occurred, a statement
            as to the nature thereof, (B) a schedule in form satisfactory to the
            Administrative Agent of the computations used by such accountants in
            determining, as of the end of such Fiscal Year, compliance with the
            covenants contained in Section 5.04, provided that in the event of
            any change in GAAP used in the preparation of such financial
            statements, the Reporting Parties shall also provide, if necessary
            for the determination of compliance with Section 5.04, a statement
            of reconciliation conforming such financial statements to GAAP and
            (C) a certificate of the Chief Financial Officer (or other
            Responsible Officer) of each Reporting Party stating that no Default
            has occurred and is continuing or, if a Default has occurred and is
            continuing, a statement as to the nature thereof and the action that
            such Reporting Party has taken and proposes to take with respect
            thereto.

            (c) Quarterly Financials. Commencing with the fiscal quarter ending
      March 31, 2006, as soon as available and in any event within 45 days after
      the end of each of the first three quarters of each Fiscal Year,
      Consolidated balance sheets of each Reporting Party and its Subsidiaries
      as of the end of such quarter and Consolidated statements of income and a
      Consolidated statement of cash flows of such Reporting Party and its
      Subsidiaries for the period commencing at the end of the previous fiscal
      quarter and ending with the end of such fiscal quarter and Consolidated
      statements of income and a Consolidated statement of cash flows of such
      Reporting Party and its Subsidiaries for the period commencing at the end
      of the previous Fiscal Year and ending with the end of such quarter,
      setting forth in each case in comparative form the corresponding figures
      (to the extent available) for the corresponding date or period of the
      preceding Fiscal Year, all

                                       58


      in reasonable detail and duly certified (subject to normal year-end audit
      adjustments) by the Chief Executive Officer, Chief Financial Officer or
      Treasurer (or other Responsible Officer performing similar functions) of
      such Reporting Party as having been prepared in accordance with GAAP,
      together with (i) a certificate of such officer stating that no Default
      has occurred and is continuing or, if a Default has occurred and is
      continuing, a statement as to the nature thereof and the action that such
      Reporting Party has taken and proposes to take with respect thereto and
      (ii) a schedule in form satisfactory to the Administrative Agent of the
      computations used by such Reporting Party in determining compliance with
      the covenants contained in Section 5.04, provided that in the event of any
      change in GAAP used in the preparation of such financial statements, each
      Reporting Party shall also provide, if necessary for the determination of
      compliance with Section 5.04, a statement of reconciliation conforming
      such financial statements to GAAP.

            (d) Monthly Operating Statements. As soon as available and in any
      event within 15 days after the end of each calendar month, commencing with
      the calendar month in which the FLLP Cap Date occurs, unaudited statements
      of gross revenues and operating and other expenses for each Hotel Asset,
      in each case in form and detail satisfactory to the Administrative Agent
      and duly certified by the Chief Executive Office, Chief Financial Office
      or Treasurer (or other Responsible Officer performing similar functions)
      of the applicable Reporting Party that owns such Hotel Asset pursuant to a
      certificate of such officer stating that such statements fairly present,
      in all material respects, the financial condition of the Hotel Assets
      indicated as of the dates indicated.

            (e) Material Litigation. Promptly after the commencement thereof,
      notice of all actions, suits, investigations, litigation and proceedings
      before any court or governmental department, commission, board, bureau,
      agency or instrumentality, domestic or foreign, affecting any Loan Party
      or any of its Subsidiaries of the type described in Section 4.01(f), and
      promptly after the occurrence thereof, notice of any adverse change in the
      status or the financial effect on any Loan Party or any of its
      Subsidiaries of the Material Litigation from that described on Schedule
      4.01(f) hereto.

            (f) Real Property. As soon as available and in any event within 15
      days after the end of each quarter of each Fiscal Year, commencing with
      the fiscal quarter in which the FLLP Cap Date occurs, a report
      supplementing Schedule 4.01(q) hereto, including an identification of all
      owned and leased real property disposed of by any Borrower Party or any of
      its Subsidiaries during such fiscal quarter and a description of such
      other changes in the information included in such Schedule as may be
      necessary for such Schedule to be accurate and complete.

            (g) Environmental Conditions. Notice in writing to the
      Administrative Agent (i) promptly upon obtaining knowledge of any material
      violation of any Environmental Law affecting any Hotel Asset or the
      operations thereof or the operations of any of its Subsidiaries, (ii)
      promptly upon obtaining knowledge of any known release, discharge or
      disposal of any Hazardous Materials at, from, or into any Hotel Asset
      which it reports in writing or is legally required to report in writing to
      any governmental authority and which is material in amount or nature or
      which could reasonably be expected to materially adversely affect the
      value of such Hotel Asset, (iii) promptly upon its receipt of any written
      notice of material violation of any Environmental Laws or of any material
      release, discharge or disposal of Hazardous Materials in violation of any
      Environmental Laws or any matter that could reasonably be expected to
      result in an Environmental Action,

                                       59


      including a notice or claim of liability or potential responsibility from
      any third party (including without limitation any federal, state or local
      governmental officials) and including notice of any formal inquiry,
      proceeding, demand, investigation or other action with regard to (A) such
      Borrower Party's or any other Person's operation of any asset or property
      in compliance with Environmental Laws, (B) Hazardous Materials
      contamination on, from or into any asset or property, or (C) investigation
      or remediation of off-site locations at which such Borrower Party or any
      of its predecessors are alleged to have directly or indirectly disposed of
      Hazardous Materials, or (iv) upon such Borrower Party's obtaining
      knowledge that any expense or loss has been incurred by such governmental
      authority in connection with the assessment, containment, removal or
      remediation of any Hazardous Materials with respect to which such Borrower
      Party could reasonably be expected to incur material liability or for
      which a Lien may be imposed on any asset of such Borrower Party, provided
      that notice is required only for any of the events described in clauses
      (i) through (iv) above that could reasonably be expected to have a
      Material Adverse Effect, could reasonably be expected to result in a
      material Environmental Action with respect to any Hotel Asset or could
      reasonably be expected to result in a Lien against any Hotel Asset.

            (h) Hotel Asset Value. Promptly after discovery of any setoff,
      claim, withholding or defense asserted or effected against any Loan Party,
      or to which any Hotel Asset is subject, which could reasonably be expected
      to (i) have a material adverse effect on the value of a Hotel Asset, (ii)
      have a Material Adverse Effect or (iii) result in the imposition or
      assertion of a Lien against any Hotel Asset which is not a Permitted Lien,
      provide the Administrative Agent with notice thereof.

            (i) Compliance with Qualifying Asset Conditions. Promptly after
      obtaining actual knowledge of any condition or event which causes any
      Hotel Asset to fail to satisfy any of the Qualifying Asset Conditions at a
      time when satisfaction of such conditions by such Hotel Asset is required
      pursuant to Section 5.01(p) (other than those Qualifying Asset Conditions,
      if any, that have theretofore been waived by the Required Lenders with
      respect to a particular Hotel Asset, to the extent of such waiver),
      provide the Administrative Agent with notice thereof.

            (j) Other Information. Promptly, such other information respecting
      the business, condition (financial or otherwise), operations, performance,
      properties or prospects of any Borrower Party or any Subsidiary thereof as
      the Administrative Agent, or any Lender through the Administrative Agent,
      may from time to time reasonably request.

      SECTION 5.04. Financial Covenants. So long as any Term Advance or any
other Obligation of any Loan Party under any Loan Document shall remain unpaid
or any Lender shall have any Term Commitment hereunder, the Borrowers will
maintain at the end of each fiscal quarter of the Borrowers a Mortgage Assets
Debt Service Coverage Ratio of not less than 1.25:1.00.

                                  ARTICLE VI
                                EVENTS OF DEFAULT

      SECTION 6.01. Events of Default. If any of the following events ("EVENTS
OF DEFAULT") shall occur and be continuing:

                                       60


            (a) Failure to Make Payments When Due. (i) The Borrowers shall fail
      to pay any principal of any Term Advance when the same shall become due
      and payable or (ii) the Borrowers shall fail to pay any interest on any
      Term Advance, or any Loan Party shall fail to make any other payment under
      any Loan Document, in each case under this clause (ii) within three
      Business Days after the same becomes due and payable; or

            (b) Breach of Representations and Warranties. Any representation or
      warranty made by any Loan Party (or any of its officers or the officers of
      its general partner or managing member, as applicable) under or in
      connection with any Loan Document shall prove to have been incorrect in
      any material respect when made; or

            (c) Breach of Certain Covenants. Any Loan Party (i) shall fail to
      perform or observe any term, covenant or agreement contained in Section
      2.13, 5.01(d), (e), (f), (i), (j), (n), (o) or (q), 5.02, 5.03(a), (e),
      (g), (h), (i) or (j) or 5.04; or (ii) shall fail to perform or observe any
      term, covenant or agreement contained in Section 5.03 (b), (c), (d) or (f)
      on its part to be performed or observed if such failure shall remain
      unremedied for five Business Days after the earlier of the date on which
      (A) a Responsible Officer becomes aware of such failure or (B) written
      notice thereof shall have been given to the Borrowers by any Agent or any
      Lender; or

            (d) Other Defaults under Loan Documents. Any Loan Party shall fail
      to perform or observe any other term, covenant or agreement contained in
      any Loan Document on its part to be performed or observed if such failure
      shall remain unremedied for 30 days after the earlier of the date on which
      (i) a Responsible Officer becomes aware of such failure or (ii) written
      notice thereof shall have been given to the Borrowers by any Agent or any
      Lender; or

            (e) Cross Defaults. (i) Any Loan Party or any Subsidiary of a
      Borrower Party shall fail to pay any principal of, premium or interest on
      or any other amount payable in respect of any Material Debt when the same
      becomes due and payable (whether by scheduled maturity, required
      prepayment, acceleration, demand or otherwise); or (ii) any other event
      shall occur or condition shall exist under any agreement or instrument
      relating to any such Material Debt, if (A) the effect of such event or
      condition is to permit the acceleration of the maturity of such Material
      Debt or otherwise permit the holders thereof to cause such Material Debt
      to mature, and (B) such event or condition shall remain unremedied or
      otherwise uncured for a period of 30 days; or (iii) the maturity of any
      such Material Debt shall be accelerated or any such Material Debt shall be
      declared to be due and payable or required to be prepaid or redeemed
      (other than by a regularly scheduled required prepayment or redemption),
      purchased or defeased, or an offer to prepay, redeem, purchase or defease
      such Material Debt shall be required to be made, in each case prior to the
      stated maturity thereof; or

            (f) Insolvency Events. Any Loan Party or any Subsidiary of a
      Borrower Party shall generally not pay its debts as such debts become due,
      or shall admit in writing its inability to pay its debts generally, or
      shall make a general assignment for the benefit of creditors; or any
      proceeding shall be instituted by or against any Loan Party or any
      Subsidiary of a Borrower Party seeking to adjudicate it a bankrupt or
      insolvent, or seeking liquidation, winding up, reorganization,
      arrangement, adjustment, protection, relief, or composition of it or its
      debts under any law relating to bankruptcy, insolvency or reorganization
      or relief of debtors, or seeking the entry of an order for relief or the
      appointment of a receiver, trustee, or other similar official for it or
      for any substantial part

                                       61


      of its property and, in the case of any such proceeding instituted against
      it (but not instituted by it) that is being diligently contested by it in
      good faith, either such proceeding shall remain undismissed or unstayed
      for a period of 60 days or any of the actions sought in such proceeding
      (including, without limitation, the entry of an order for relief against,
      or the appointment of a receiver, trustee, custodian or other similar
      official for, it or any substantial part of its property) shall occur; or
      any Loan Party or any Subsidiary of a Borrower Party shall take any
      corporate action to authorize any of the actions set forth above in this
      subsection (f); or

            (g) Monetary Judgments. Any judgments or orders, either individually
      or in the aggregate, for the payment of money in excess of $5,000,000
      shall be rendered against any Loan Party or any Subsidiary of a Borrower
      Party and either (i) enforcement proceedings shall have been commenced by
      any creditor upon such judgment or order or (ii) there shall be any period
      of 30 consecutive days during which a stay of enforcement of such judgment
      or order, by reason of a pending appeal or otherwise, shall not be in
      effect; provided, however, that any such judgment or order shall not give
      rise to an Event of Default under this Section 6.01(g) if and so long as
      (A) the amount of such judgment or order which remains unsatisfied is
      covered by a valid and binding policy of insurance between the respective
      Loan Party or Subsidiary and the insurer covering full payment of such
      unsatisfied amount and (B) such insurer, which shall be rated at least "A"
      by A.M. Best Company, has been notified, and has not disputed the claim
      made for payment, of the amount of such judgment or order; or

            (h) Non-Monetary Judgments. Any non-monetary judgment or order shall
      be rendered against any Loan Party or any Subsidiary of a Borrower Party
      that could reasonably be expected to have a Material Adverse Effect, and
      there shall be any period of 30 consecutive days during which a stay of
      enforcement of such judgment or order, by reason of a pending appeal or
      otherwise, shall not be in effect; or

            (i) Unenforceability of Loan Documents. Any provision of any Loan
      Document after delivery thereof pursuant to Section 3.01 or 5.01(j) shall
      for any reason (other than pursuant to the terms thereof) cease to be
      valid and binding on or enforceable against any Loan Party party to it, or
      any such Loan Party shall so state in writing; or

            (j) Security Failure. Any Collateral Document or financing statement
      after delivery thereof pursuant to Section 5.01(j) shall for any reason
      (other than pursuant to the terms thereof) cease to create a valid and
      perfected first priority lien on and security interest in the Collateral
      purported to be covered thereby; or

            (k) Change of Control. A Change of Control shall occur; or

            (l) ERISA Events. Any ERISA Event shall have occurred with respect
      to a Plan and the sum (determined as of the date of occurrence of such
      ERISA Event) of the Insufficiency of such Plan and the Insufficiency of
      any and all other Plans with respect to which an ERISA Event shall have
      occurred and then exist (or the liability of the Loan Parties and the
      ERISA Affiliates related to such ERISA Event) exceeds $5,000,000;

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrowers,
declare the Term Commitments of each Lender and the obligation of each Lender to
make Term Advances to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the

                                       62


consent, of the Required Lenders, by notice to the Borrowers, declare the Notes,
all interest thereon and all other amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon the Notes, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by each Borrower; provided, however, that
in the event of an actual or deemed entry of an order for relief with respect to
the Borrower under any Bankruptcy Law, (y) the Term Commitment of each Lender
and the obligation of each Lender to make Term Advances shall automatically be
terminated and (z) the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
each Borrower.

                                  ARTICLE VII
                                    GUARANTY

            SECTION 7.01. Guaranty; Limitation of Liability. (a) Each Guarantor
hereby absolutely, unconditionally and irrevocably guarantees the punctual
payment when due, whether at scheduled maturity or on any date of a required
prepayment or by acceleration, demand or otherwise, of all Obligations of each
other Loan Party now or hereafter existing under or in respect of the Loan
Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premiums, fees, indemnities, contract causes of action,
costs, expenses or otherwise (such Obligations being the "GUARANTEED
OBLIGATIONS"), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any other Secured Party in enforcing any rights under this Agreement or any
other Loan Document. Without limiting the generality of the foregoing, each
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by any other Loan Party to any Secured
Party under or in respect of the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other Loan Party. This
Guaranty is a guaranty of payment and not merely of collection.

            (b) Each Guarantor, the Administrative Agent and each Lender and, by
its acceptance of the benefits of this Guaranty, each other Secured Party,
hereby confirms that it is the intention of all such Persons that this Guaranty
and the Obligations of each Guarantor hereunder not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign,
federal or state law to the extent applicable to this Guaranty and the
Obligations of each Guarantor hereunder. To effectuate the foregoing intention,
the Guarantors, the Administrative Agent, the Lenders and, by their acceptance
of the benefits of this Guaranty, the other Secured Parties hereby irrevocably
agree that the Obligations of each Guarantor under this Guaranty at any time
shall be limited to the maximum amount as will result in the Obligations of such
Guarantor under this Guaranty not constituting a fraudulent transfer or
conveyance.

            (c) Each Guarantor hereby unconditionally and irrevocably agrees
that in the event any payment shall be required to be made to any Secured Party
under this Guaranty or any other guaranty, such Guarantor will contribute, to
the maximum extent permitted by law, such amounts to each other Guarantor and
each other guarantor so as to maximize the aggregate amount paid to the Secured
Parties under or in respect of the Loan Documents.

                                       63


            SECTION 7.02. Guaranty Absolute. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of
this Agreement and the other Loan Documents, 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 other Secured Party with
respect thereto. The Obligations of each Guarantor under or in respect of this
Guaranty are independent of the Guaranteed Obligations or any other Obligations
of any other Loan Party under or in respect of this Agreement or the other Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Borrowers (or any of them) or any other Loan Party
or whether the Borrowers (or any of them) or any other Loan Party is joined in
any such action or actions. The liability of each Guarantor under this Guaranty
shall be irrevocable, absolute and unconditional irrespective of, and each
Guarantor hereby irrevocably waives any defenses it may now have or hereafter
acquire in any way relating to, any or all of the following:

            (a) any lack of validity or enforceability of any Loan Document or
      any agreement or instrument relating thereto;

            (b) any change in the time, manner or place of payment of, or in any
      other term of, all or any of the Guaranteed Obligations or any other
      Obligations of any other Loan Party under or in respect of the Loan
      Documents, or any other amendment or waiver of or any consent to departure
      from any Loan Document, including, without limitation, any increase in the
      Guaranteed Obligations resulting from the extension of additional credit
      to the Borrowers (or any of them), any other Loan Party or any of their
      Subsidiaries or otherwise;

            (c) any taking, exchange, release or non-perfection of any
      collateral, or any taking, release or amendment or waiver of, or consent
      to departure from, any other guaranty, for all or any of the Guaranteed
      Obligations;

            (d) any manner of application of collateral, or proceeds thereof, to
      all or any of the Guaranteed Obligations, or any manner of sale or other
      disposition of any collateral for all or any of the Guaranteed Obligations
      or any other Obligations of any Loan Party under the Loan Documents or any
      other assets of any Loan Party or any of its Subsidiaries;

            (e) any change, restructuring or termination of the corporate
      structure or existence of any Loan Party or any of its Subsidiaries;

            (f) any failure of the Administrative Agent or any other Secured
      Party to disclose to any Loan Party any information relating to the
      business, condition (financial or otherwise), operations, performance,
      properties or prospects of any other Loan Party now or hereafter known to
      the Administrative Agent or such other Secured Party (each Guarantor
      waiving any duty on the part of the Administrative Agent and each other
      Secured Party to disclose such information);

            (g) the failure of any other Person to execute or deliver this
      Agreement, any other Loan Document, any Guaranty Supplement, any Accession
      Agreement or any other guaranty or agreement or the release or reduction
      of liability of any Guarantor or other guarantor or surety with respect to
      the Guaranteed Obligations; or

                                       64


            (h) any other circumstance (including, without limitation, any
      statute of limitations) or any existence of or reliance on any
      representation by the Administrative Agent or any other Secured Party that
      might otherwise constitute a defense available to, or a discharge of, any
      Loan Party or any other guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrowers (or any of them) or
any other Loan Party or otherwise, all as though such payment had not been made.

            SECTION 7.03. Waivers and Acknowledgments. (a) Each Guarantor hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that the
Administrative Agent or any other Secured Party protect, secure, perfect or
insure any Lien or any property subject thereto or exhaust any right or take any
action against any Loan Party or any other Person or any collateral.

            (b) Each Guarantor hereby unconditionally and irrevocably waives any
right (including without limitation any such right arising under California
Civil Code Section 2815) to revoke this Guaranty and acknowledges that this
Guaranty is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future.

            (c) Each Guarantor hereby unconditionally and irrevocably waives (i)
any and all rights and defenses available to it by reason of Sections 2787 to
2855, inclusive, 2899 and 3433 of the California Civil Code, including without
limitation any and all rights or defenses such Guarantor may have by reason of
protection afforded to the principal with respect to any of the Guaranteed
Obligations, or to any other guarantor of any of the Guaranteed Obligations with
respect to any of such guarantor's obligations under its guaranty, in either
case pursuant to the antideficiency or other laws of the State of California
limiting or discharging the principal's indebtedness or such guarantor's
obligations, including without limitation Section 580a, 580b, 580d or 726 of the
California Code of Civil Procedure, (ii) any defense arising by reason of any
claim or defense based upon an election of remedies by the Administrative Agent
or any other Secured Party that in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of such Guarantor or other rights of such
Guarantor to proceed against any of the other Loan Parties, any other guarantor
or any other Person or any collateral and (iii) any defense based on any right
of set-off or counterclaim against or in respect of the Obligations of such
Guarantor hereunder. No other provision of the Guaranty shall be construed as
limiting the generality of any of the covenants and waivers set forth in this
paragraph. As provided below, this Guaranty shall be governed by, and shall be
construed and enforced in accordance with, the laws of the State of New York.
This paragraph is included solely out of an abundance of caution, and shall not
be construed to mean that any of the above-referenced provisions of California
law are in any way applicable to this Guaranty or to any of the Guaranteed
Obligations.

            (d) Each Guarantor waives any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have against any Loan
Party or any of its assets in connection with this Guaranty or the performance
by such Guarantor of its obligations hereunder, in each case whether such claim,
right or remedy arises in equity, under contract, by statute (including without
limitation under California Civil Code Section 2847, 2848 or 2849), under

                                       65


common law or otherwise and including without limitation (a) any right of
subrogation, reimbursement or indemnification that such Guarantor now has or may
hereafter have against any such Loan Party, (b) any right to enforce, or to
participate in, any claim, right or remedy that any Secured Party now has or may
hereafter have against any Loan Party, and (c) any benefit of, and any right to
participate in, any collateral or security now or hereafter held by any Secured
Party.

            (e) Each Guarantor acknowledges that the Administrative Agent may,
without notice to or demand upon such Guarantor and without affecting the
liability of such Guarantor under this Guaranty, foreclose under any mortgage by
nonjudicial sale, and each Guarantor hereby waives any defense to the recovery
by the Administrative Agent and the other Secured Parties against such Guarantor
of any deficiency after such nonjudicial sale and any defense or benefits that
may be afforded by applicable law (including, without limitation, Sections 580a
and 580d of the California Code of Civil Procedure or any other law of any other
jurisdiction having similar effect).

            (f) Each Guarantor hereby unconditionally and irrevocably waives any
duty on the part of the Administrative Agent or any other Secured Party to
disclose to such Guarantor any matter, fact or thing relating to the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower, any other Loan Party or any of their Subsidiaries now
or hereafter known by the Administrative Agent or such other Secured Party.

            (g) Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by
this Agreement and the other Loan Documents and that the waivers set forth in
Section 7.02 and this Section 7.03 are knowingly made in contemplation of such
benefits.

            SECTION 7.04. Subrogation. Each Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against the Borrowers (or any of them), any other Loan Party or any
other insider guarantor that arise from the existence, payment, performance or
enforcement of such Guarantor's Obligations under or in respect of this
Guaranty, this Agreement or any other Loan Document, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Secured Party against the Borrowers (or any of them), any other Loan Party or
any other insider guarantor or any collateral, whether or not such claim, remedy
or right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from the Borrowers (or any of
them), any other Loan Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash, all Secured Hedge Agreements
shall have expired or been terminated and the Term Commitments shall have
expired or been terminated. If any amount shall be paid to any Guarantor in
violation of the immediately preceding sentence at any time prior to the latest
of (a) the payment in full in cash of the Guaranteed Obligations and all other
amounts payable under this Guaranty, (b) the latest date of expiration or
termination of all Secured Hedge Agreements, and (c) the Maturity Date, such
amount shall be received and held in trust for the benefit of the Secured
Parties, shall be segregated from other property and funds of such Guarantor and
shall forthwith be paid or delivered to the Administrative Agent in the same
form as so received (with any necessary endorsement or assignment) to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Loan Documents. If (i) any Guarantor shall make payment to any Secured
Party of all or any part of the Guaranteed Obligations, (ii) all of the

                                       66


Guaranteed Obligations and all other amounts payable under this Guaranty shall
have been paid in full in cash, (iii) all Secured Hedge Agreements shall have
expired or been terminated, and (iv) the Maturity Date shall have occurred, the
Administrative Agent and the other Secured Parties will, at such Guarantor's
request and expense, execute and deliver to such Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Obligations resulting from such payment made by such Guarantor
pursuant to this Guaranty.

            SECTION 7.05. Guaranty Supplements and Accession Agreements. Upon
the execution and delivery by any Person of a Guaranty Supplement or an
Accession Agreement, (a) such Person shall be referred to as an "ADDITIONAL
GUARANTOR" and shall become and be a Guarantor hereunder, and each reference in
this Agreement to a "Guarantor" or a "Loan Party" shall also mean and be a
reference to such Additional Guarantor, and each reference in any other Loan
Document to a "Guarantor" shall also mean and be a reference to such Additional
Guarantor, and (b) each reference herein to "this Agreement", "this Guaranty",
"hereunder", "hereof" or words of like import referring to this Agreement and
this Guaranty, and each reference in any other Loan Document to the "Loan
Agreement", "Guaranty", "thereunder", "thereof" or words of like import
referring to this Agreement and this Guaranty, shall mean and be a reference to
this Agreement and this Guaranty as supplemented by such Guaranty Supplement or
Accession Agreement.

            SECTION 7.06. Indemnification by Guarantors. (a) Without limitation
on any other Obligations of any Guarantor or remedies of the Administrative
Agent or the Secured Parties under this Agreement, this Guaranty or the other
Loan Documents, each Guarantor shall, to the fullest extent permitted by law,
indemnify, defend and save and hold harmless the Administrative Agent, each
other Secured Party and each of their Affiliates and their respective officers,
directors, employees, agents and advisors (each, an "INDEMNIFIED PARTY") from
and against, and shall pay on demand, any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party in connection with or as a result of any failure of any
Guaranteed Obligations to be the legal, valid and binding obligations of any
Loan Party enforceable against such Loan Party in accordance with their terms.

            (b) Each Guarantor hereby also agrees that no Indemnified Party
shall have any liability (whether direct or indirect, in contract, tort or
otherwise) to any of the Guarantors or any of their respective Affiliates or any
of their respective officers, directors, employees, agents and advisors, and
each Guarantor hereby agrees not to assert any claim against any Indemnified
Party on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Term Facility, the
actual or proposed use of the proceeds of the Term Advances, the Loan Documents
or any of the transactions contemplated by the Loan Documents.

            SECTION 7.07. Subordination. Each Guarantor hereby subordinates any
and all debts, liabilities and other Obligations owed to such Guarantor by each
other Loan Party (the "SUBORDINATED OBLIGATIONS") to the Guaranteed Obligations
to the extent and in the manner hereinafter set forth in this Section 7.07.

            (a) Prohibited Payments, Etc. Except during the continuance of a
      Default (including the commencement and continuation of any proceeding
      under any Bankruptcy Law relating to any other Loan Party), each Guarantor
      may receive regularly scheduled payments or payments made in the ordinary
      course of business from any other Loan Party on account of the
      Subordinated Obligations. After the occurrence and during the

                                       67


      continuance of any Default (including the commencement and continuation of
      any proceeding under any Bankruptcy Law relating to any other Loan Party),
      however, unless the Administrative Agent otherwise agrees, no Guarantor
      shall demand, accept or take any action to collect any payment on account
      of the Subordinated Obligations.

            (b) Prior Payment of Guaranteed Obligations. In any proceeding under
      any Bankruptcy Law relating to any other Loan Party, each Guarantor agrees
      that the Secured Parties shall be entitled to receive payment in full in
      cash of all Guaranteed Obligations (including all interest and expenses
      accruing after the commencement of a proceeding under any Bankruptcy Law,
      whether or not constituting an allowed claim in such proceeding ("POST
      PETITION INTEREST")) before such Guarantor receives payment of any
      Subordinated Obligations.

            (c) Turn-Over. After the occurrence and during the continuance of
      any Default (including the commencement and continuation of any proceeding
      under any Bankruptcy Law relating to any other Loan Party), each Guarantor
      shall, if the Administrative Agent so requests, collect, enforce and
      receive payments on account of the Subordinated Obligations as trustee for
      the Secured Parties and deliver such payments to the Administrative Agent
      on account of the Guaranteed Obligations (including all Post Petition
      Interest), together with any necessary endorsements or other instruments
      of transfer, but without reducing or affecting in any manner the liability
      of such Guarantor under the other provisions of this Guaranty.

            (d) Administrative Agent Authorization. After the occurrence and
      during the continuance of any Default (including the commencement and
      continuation of any proceeding under any Bankruptcy Law relating to any
      other Loan Party), the Administrative Agent is authorized and empowered
      (but without any obligation to so do), in its discretion, (i) in the name
      of each Guarantor, to collect and enforce, and to submit claims in respect
      of, Subordinated Obligations and to apply any amounts received thereon to
      the Guaranteed Obligations (including any and all Post Petition Interest),
      and (ii) to require each Guarantor (A) to collect and enforce, and to
      submit claims in respect of, Subordinated Obligations and (B) to pay any
      amounts received on such obligations to the Administrative Agent for
      application to the Guaranteed Obligations (including any and all Post
      Petition Interest).

            SECTION 7.08. Continuing Guaranty. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the latest of (i)
the payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty, (ii) the Maturity Date and (iii) the latest date of
expiration or termination of all Secured Hedge Agreements, (b) be binding upon
the Guarantors, their successors and assigns and (c) inure to the benefit of and
be enforceable by the Administrative Agent and the other Secured Parties and
their successors, transferees and assigns.

            SECTION 7.09. Recourse Nature of Guaranty; FLLP Cap Date. The
Guaranteed Obligations shall be full recourse obligations of FLLP; provided,
however, that notwithstanding any provision herein to the contrary, from and
after the FLLP Cap Date, the aggregate liability of FLLP in respect of the
Guaranteed Obligations shall be limited to an amount equal to the aggregate
amount of Losses comprising Recourse Carve-Out Liabilities (the "FLLP CAP"). The
FLLP Cap shall be reduced only by the final payments in such amount made by the
Borrowers in respect of their Obligations under the Loan Documents. The
Guaranteed Obligations shall at all times be full recourse obligations of each
Guarantor other than FLLP.

                                       68


                                  ARTICLE VIII
                                   THE AGENTS

            SECTION 8.01. Authorization and Action; Appointment of Supplemental
Collateral Agents. (a) Each Lender (on behalf of itself and its Affiliates as
potential Hedge Banks) hereby appoints and authorizes each Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Loan Documents as are delegated to such Agent by
the terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Notes), no Agent shall be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that no Agent shall be required to
take any action that exposes such Agent to personal liability or that is
contrary to this Agreement or applicable law. Each Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrowers pursuant to the
terms of this Agreement. Notwithstanding anything to the contrary in any Loan
Document, no Person identified as a syndication agent, documentation agent,
senior manager, sole lead arranger or sole book running manager, in such
Person's capacity as such, shall have any obligations or duties to any Loan
Party, the Administrative Agent or any other Secured Party under any of such
Loan Documents.

            (b) Anything contained herein or in the Collateral Documents to the
contrary notwithstanding, the Collateral Agent may from time to time, when the
Collateral Agent deems it to be necessary, appoint one or more trustees,
co-trustees, collateral co-agents or collateral subagents (each, a "SUPPLEMENTAL
COLLATERAL AGENT") with respect to all or any part of the Collateral. In the
event that the Collateral Agent so appoints any Supplemental Collateral Agent
with respect to any Collateral, (i) such Supplemental Collateral Agent shall
automatically be vested, in addition to the Collateral Agent, with all rights,
powers, privileges, interests and remedies of the Collateral Agent under the
Collateral Documents with respect to such Collateral; (ii) such Supplemental
Collateral Agent shall be deemed to be an "Agent" for purposes of this Agreement
and the other Loan Documents, and the provisions of this Article and Section
9.04 hereof that refer to the Agents (or either of them) shall inure to the
benefit of such Supplemental Collateral Agent, and all references therein and in
the other Loan Documents to the Collateral Agent shall be deemed to be
references to the Collateral Agent and/or such Supplemental Collateral Agent, as
the context may require; and (iii) the term "Collateral Agent", when used herein
or in any applicable Collateral Document in relation to the Liens on or security
interests in such Collateral granted in favor of the Collateral Agent, and any
rights, powers, privileges, interests and remedies of the Collateral Agent with
respect to such Collateral, shall be deemed to include such Supplemental
Collateral Agent; provided, however, that no such Supplemental Collateral Agent
shall be authorized to take any action with respect to any such Collateral
unless and except to the extent expressly authorized in writing by the
Collateral Agent. Should any instrument in writing from any Borrower or any
other Loan Party be required by any Supplemental Collateral Agent so appointed
by the Collateral Agent to more fully or certainly vest in and confirming to
such Supplemental Collateral Agent such rights, powers, privileges and duties,
the applicable Borrower shall, or shall cause such Loan Party to, execute,
acknowledge and deliver any and all such instruments promptly upon request by
the Collateral Agent. If any Supplemental Collateral Agent, or successor
thereto, shall die, become incapable of acting, resign or be removed, all the
rights, powers, privileges and duties of such Supplemental Collateral Agent, to
the extent permitted by law, shall automatically vest in and be exercised by the
Collateral Agent until the appointment of a new Supplemental Collateral Agent.

                                       69


            SECTION 8.02. Agents' Reliance, Etc. Neither any Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, each Agent: (a) in the
case of the Administrative Agent, may treat the payee of any Note as the holder
thereof until the Administrative Agent receives and accepts an Assignment and
Acceptance entered into by the Lender that is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, or, in the case of any other
Agent, such Agent has received notice from the Administrative Agent that it has
received and accepted such Assignment and Acceptance, as provided in Section
9.07; (b) may consult with legal counsel (including counsel for any Loan Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations (whether written or
oral) made in or in connection with the Loan Documents; (d) shall not have any
duty to ascertain or to inquire as to the performance, observance or
satisfaction of any of the terms, covenants or conditions of any Loan Document
on the part of any Loan Party or the existence at any time of any Default under
the Loan Documents or to inspect the property (including the books and records)
of any Loan Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy or telex or other electronic communication) believed by it to be
genuine and signed or sent by the proper party or parties.

            SECTION 8.03. CNAI and Affiliates. With respect to its Term
Commitment, the Term Advances made by it and the Notes issued to it, CNAI shall
have the same rights and powers under the Loan Documents as any other Lender and
may exercise the same as though it were not an Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include CNAI in its
individual capacity. CNAI and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party, any Subsidiary of any Loan Party and any Person that may do business with
or own securities of any Loan Party or any such Subsidiary, all as if CNAI were
not the Administrative Agent or the Collateral Agent and without any duty to
account therefor to the Lenders.

            SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon any Agent or any other Lender
and based on the financial statements referred to in Section 4.01 and such other
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 any Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.

            SECTION 8.05. Indemnification by Lenders. (a) Each Lender severally
agrees to indemnify each Agent (to the extent not promptly reimbursed by the
Borrowers) from and against such Lender's ratable share (determined as provided
below) of any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or

                                       70


disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against such Agent in any way relating to or arising out of the
Loan Documents or any action taken or omitted by such Agent under the Loan
Documents (collectively, the "INDEMNIFIED COSTS"); provided, however, that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from any Agent's gross negligence or willful misconduct as found in a
final, non-appealable judgment by a court of competent jurisdiction. Without
limitation of the foregoing, each Lender agrees to reimburse each Agent promptly
upon demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrowers under Section
9.04, to the extent that such Agent is not promptly reimbursed for such costs
and expenses by the Borrowers. In the case of any investigation, litigation or
proceeding giving rise to any Indemnified Costs, this Section 8.05 applies
whether any such investigation, litigation or proceeding is brought by any
Lender or any other Person.

            (b) For purposes of this Section 8.05, the Lenders' respective
ratable shares of any amount shall be determined, at any time, according to
their respective Term Commitments at such time. The failure of any Lender to
reimburse any Agent promptly upon demand for its ratable share of any amount
required to be paid by the Lenders to such Agent as provided herein shall not
relieve any other Lender of its obligation hereunder to reimburse such Agent for
its ratable share of such amount, but no Lender shall be responsible for the
failure of any other Lender to reimburse such Agent for such other Lender's
ratable share of such amount. Without prejudice to the survival of any other
agreement of any Lender hereunder, the agreement and obligations of each Lender
contained in this Section 8.05 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the other Loan
Documents.

            SECTION 8.06. Successor Agents. Any Agent may resign at any time by
giving 30 days' prior written notice thereof to the Lenders and the Borrower and
may be removed at any time with or without cause by the Required Lenders;
provided, however, that any removal of the Administrative Agent will not be
effective until it has been replaced as Collateral Agent and released from all
obligations in respect thereof. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint a successor Agent (which
successor Agent shall, provided no Event of Default shall then have occurred and
by continuing, be reasonably acceptable to the Borrowers). If no successor Agent
shall have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent (which
successor Agent shall, provided no Event of Default shall then have occurred and
by continuing, be reasonably acceptable to the Borrowers), which shall be a
commercial bank organized under the laws of the United States or of any State
thereof and having a combined capital and surplus of at least $250,000,000. Upon
the acceptance of any appointment as an Agent hereunder by a successor Agent,
and, in the case of a successor Collateral Agent, upon the execution and filing
or recording of such financing statements, or amendments thereto, and such
amendments or supplements to the Mortgages and Assignments of Leases, and such
other instruments or notices, as may be necessary or desirable, or as the
Required Lenders may request, in order to continue the perfection of the Liens
granted or purported to be granted by the Collateral Documents, such successor
Agent shall succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under the Loan Documents. If
within 45 days after written notice is given of the retiring Agent's resignation
or removal under this Section 8.06 no successor Agent shall have been appointed
and shall have accepted such appointment, then on such 45th day (i) the retiring
Agent's resignation or removal shall become effective, (ii) the retiring Agent
shall

                                       71


thereupon be discharged from its duties and obligations under the Loan Documents
and (iii) the Required Lenders shall thereafter perform all duties of the
retiring Agent under the Loan Documents until such time, if any, as the Required
Lenders appoint a successor Agent as provided above. After any retiring Agent's
resignation or removal hereunder as an Agent shall have become effective, the
provisions of this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was an Agent under this Agreement.

                                   ARTICLE IX
                                  MISCELLANEOUS

            SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor consent
to any departure by any Loan Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by the applicable Loan Party and
signed or consented to by the Administrative Agent and the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Lenders, do
any of the following at any time: (i) change the number of Lenders or the
percentage of (x) the Term Commitments or (y) the aggregate unpaid principal
amount of the Term Advances that, in each case, shall be required for the
Lenders or any of them to take any action hereunder, (ii) release the Borrowers
(or any of them) with respect to the Obligations (except to the extent permitted
pursuant to the last sentence of Section 5.02(d)) or, except to the extent
expressly permitted under this Agreement, reduce or limit the obligations of any
Guarantor under Article VII or release such Guarantor or otherwise limit such
Guarantor's liability with respect to the Guaranteed Obligations, (iii) release
all or substantially all of the Collateral (other than pursuant to Section
5.02(e) or 9.11), (iv) amend this Section 9.01, (v) increase the Term
Commitments of the Lenders or subject the Lenders to any additional obligations,
(vi) reduce the principal of, or interest on, the Obligations of the Loan
Parties under the Loan Documents or any fees or other amounts payable
thereunder, (vii) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder or (viii)
extend the Maturity Date (other than as provided by Section 2.15); provided
further that no amendment, waiver or consent shall, unless in writing and signed
by the Administrative Agent or the Collateral Agent in addition to the Lenders
required above to take such action, affect the rights or duties of the
Administrative Agent or the Collateral Agent, as the case may be, under this
Agreement or the other Loan Documents.

            SECTION 9.02. Notices, Etc. (a) All notices and other communications
provided for hereunder shall be either (x) in writing (including telecopier or
telegraphic communication) and mailed, telecopied, telegraphed or delivered, (y)
as and to the extent set forth in Section 9.02(b) and in the proviso to this
Section 9.02(a), in an electronic medium and delivered as set forth in Section
9.02(b) or (z) as and to the extent expressly permitted in this Agreement,
transmitted by e-mail, provided that such e-mail shall in all cases include an
attachment (in PDF format or similar format) containing a legible signature of
the person providing such notice, if to any Loan Party, at c/o FelCor Lodging
Trust Incorporated, 545 E. John Carpenter Freeway, Suite 1300, Irving, Texas
75062-3933, Attention: Andrew J. Welch or, if applicable, at awelch@felcor.com
(and in the case of transmission by e-mail, with a copy by U.S. mail to the
attention of Andrew J. Welch and Joel Eastman at 545 E. John Carpenter Freeway,
Suite 1300, Irving, Texas 75062-3933); if to the Initial Lender, at its Domestic
Lending Office or, if applicable, at the e-mail address specified opposite its
name on Schedule I hereto (and in the case of a transmission by e-mail, with a
copy by U.S. mail to its Domestic Lending Office); if to any other Lender, at
its Domestic Lending Office or, if applicable, at the e-mail address specified
in the Assignment and Acceptance pursuant to which it became a Lender (and

                                       72


in the case of a transmission by e-mail, with a copy by U.S. mail to its
Domestic Lending Office); and if to the Administrative Agent or the Collateral
Agent, at its address at Two Penns Way, Suite 100, New Castle, Delaware 19720,
Attention: Annemarie E. Pavco, Global Loans, or, if applicable, at
annemarie.e.pavco@citigroup.com (and in the case of a transmission by e-mail,
with a copy by U.S. mail to Two Penns Way, Suite 110, New Castle, Delaware
19720, Attention: Annemarie E. Pavco, Global Loans) or, as to any Loan Party or
any Agent, at such other address as shall be designated by such party in a
written notice to the other parties and, as to each other party, at such other
address as shall be designated by such party in a written notice to the
Borrowers and the Administrative Agent. All such notices and communications
shall, when mailed, telecopied, telegraphed or e-mailed, be effective when
deposited in the mails, telecopied, delivered to the telegraph company or
confirmed by e-mail, respectively, except that notices and communications to any
Agent pursuant to Article II, III or VIII or to the Collateral Agent under the
Collateral Documents shall not be effective until received by such Agent or the
Collateral Agent, as the case may be. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of an original executed counterpart thereof.

            (b) So long as CNAI is the Administrative Agent, materials required
to be delivered pursuant to Sections 5.03(a), (b), (c), (d), (e) and (i) shall
be delivered to the Administrative Agent in an electronic medium in a format
acceptable to the Administrative Agent and the Lenders by e-mail at
oploanswebadmin@citigroup.com. Each Borrower agrees that the Administrative
Agent may make such materials, as well as any other written information,
documents, instruments and other material relating to any Borrower, any Loan
Party, any of their Subsidiaries or any other materials or matters relating to
this Agreement, the Notes or any of the transactions contemplated hereby
(collectively, the "COMMUNICATIONS") available to the Lenders by posting such
notices on Intralinks or a substantially similar electronic transmission system
(the "PLATFORM"). Each Borrower acknowledges that (i) the distribution of
material through an electronic medium is not necessarily secure and that there
are confidentiality and other risks associated with such distribution, (ii) the
Platform is provided "as is" and "as available" and (iii) neither the
Administrative Agent nor any of its Affiliates warrants the accuracy, adequacy
or completeness of the Communications or the Platform and each expressly
disclaims liability for errors or omissions in the Communications or the
Platform. No warranty of any kind, express, implied or statutory, including,
without limitation, any warranty of merchantability, fitness for a particular
purpose, non-infringement of third party rights or freedom from viruses or other
code defects, is made by the Administrative Agent or any of its Affiliates in
connection with the Platform.

            (c) Each Lender agrees that notice to it (as provided in the next
sentence) (a "NOTICE") specifying that any Communications have been posted to
the Platform shall constitute effective delivery of such information, documents
or other materials to such Lender for purposes of this Agreement, provided that
if requested by any Lender, the Administrative Agent shall deliver a copy of the
Communications to such Lender by e-mail or telecopier. Each Lender agrees (i) to
notify the Administrative Agent in writing of such Lender's e-mail address to
which a Notice may be sent by electronic transmission (including by electronic
communication) on or before the date such Lender becomes a party to this
Agreement (and from time to time thereafter to ensure that the Administrative
Agent has on record an effective e-mail address for such Lender) and (ii) that
any Notice may be sent to such e-mail address.

            SECTION 9.03. No Waiver; Remedies. No failure on the part of any
Lender or any Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any

                                       73


other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.

            SECTION 9.04. Costs and Expenses. (a) Each Loan Party agrees jointly
and severally to pay on demand (i) all reasonable out-of-pocket costs and
expenses of each Agent in connection with the preparation, execution, delivery,
administration, modification and amendment of the Loan Documents (including,
without limitation, (A) all due diligence, collateral review, syndication,
transportation, computer, duplication, appraisal, audit, insurance, consultant,
search, filing and recording fees and expenses, (B) the reasonable fees and
expenses of counsel for such Agent with respect thereto (including, without
limitation, with respect to reviewing and advising on any matters required to be
completed by the Loan Parties on a post-closing basis), with respect to advising
such Agent as to its rights and responsibilities, or the perfection, protection
or preservation of rights or interests, under the Loan Documents, with respect
to negotiations with any Loan Party or with other creditors of any Loan Party or
any of its Subsidiaries arising out of any Default or any events or
circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto and (C) the reasonable fees and expenses of counsel
for such Agent with respect to the preparation, execution, delivery and review
of any documents and instruments at any time delivered pursuant to Section
5.01(j)) and (ii) all reasonable out-of-pocket costs and expenses of each Agent
and each Lender in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of the Loan Documents, whether in
any action, suit or litigation, or any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally (including, without limitation,
the reasonable fees and expenses of counsel for such Agent and each Lender with
respect thereto).

            (b) Each Loan Party agrees to indemnify, defend and save and hold
harmless each Indemnified Party from and against, and shall pay on demand, any
and all claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith) (i) the Term Facility, the actual or proposed
use of the proceeds of the Term Advances, the Loan Documents or any of the
transactions contemplated thereby or (ii) the actual or alleged presence of
Hazardous Materials on any property of any Loan Party or any of its Subsidiaries
or any Environmental Action relating in any way to any Loan Party or any of its
Subsidiaries, except to the extent such claim, damage, loss, liability or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 9.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, shareholders or
creditors or an Indemnified Party, whether or not any Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated by
the Loan Documents are consummated. Each Loan Party also agrees not to assert
any claim against any Agent, any Lender or any of their Affiliates, or any of
their respective officers, directors, employees, agents and advisors, on any
theory of liability, for special, indirect, consequential or punitive damages
arising out of or otherwise relating to the Facilities, the actual or proposed
use of the proceeds of the Term Advances, the Loan Documents or any of the
transactions contemplated by the Loan Documents.

                                       74


            (c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender other
than on the last day of the Interest Period for such Term Advance, as a result
of a payment or Conversion pursuant to Section 2.05, 2.08(b)(i) or 2.09(d),
acceleration of the maturity of the Notes pursuant to Section 6.01 or for any
other reason, or if the Borrowers fail to make any payment or prepayment of a
Term Advance for which a notice of prepayment has been given or that is
otherwise required to be made, whether pursuant to Section 2.03, 2.05 or 6.01 or
otherwise, the Borrowers shall, upon demand by such Lender (with a copy of such
demand to the Administrative Agent), pay to the Administrative Agent for the
account of such Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses that it may reasonably incur as a result of
such payment or Conversion or such failure to pay or prepay, as the case may be,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Term Advance.

            (d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by any Agent or any Lender, in its sole
discretion.

            (e) Without prejudice to the survival of any other agreement of any
Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower and the other Loan Parties contained in Sections
2.09 and 2.11, Sections 7.06 and 7.09 and this Section 9.04 shall survive the
payment in full of principal, interest and all other amounts payable hereunder
and under any of the other Loan Documents.

            SECTION 9.05. Right of Set-off. Upon (a) the occurrence and during
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Agent and each Lender and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Agent, such Lender or such
Affiliate to or for the credit or the account of any Borrower or any other Loan
Party against any and all of the Obligations of such Borrower or such Loan Party
now or hereafter existing under the Loan Documents, irrespective of whether such
Agent or such Lender shall have made any demand under this Agreement or such
Note or Notes and although such obligations may be unmatured. If such deposits
are not pledged pursuant to a valid security agreement, the prior written
consent of the Administrative Agent shall be obtained before any right of
set-off shall be exercised. Each Agent and each Lender agrees promptly to notify
such Borrower or such Loan Party after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Agent and each
Lender and their respective Affiliates under this Section 9.05 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Agent, such Lender and their respective Affiliates may have.

            SECTION 9.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Initial Borrower and each Guarantor
named on the signature pages hereto and the Administrative Agent shall have been
notified by the Initial Lender that such Initial Lender has executed it and
thereafter shall be binding upon and inure to the benefit of each Borrower and
Guarantor named on the signature pages hereto and each Agent and each Lender

                                       75


and their respective successors and assigns, except that no Borrower or any
other Loan Party shall have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lenders.

            SECTION 9.07. Assignments and Participations; Replacement Notes. (a)
At any time following the six-month anniversary of the Closing Date, each Lender
may assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Term Commitment, the Term Advances owing to it and the Notes held
by it); provided, however, that (i) each such assignment shall be of a uniform,
and not a varying, percentage of all rights and obligations under and in respect
of the Term Facility, (ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender, an Affiliate of any Lender
or a Fund Affiliate of any Lender or an assignment of all of a Lender's rights
and obligations under this Agreement, the aggregate amount of the Term
Commitments being assigned to such Eligible Assignee pursuant to such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof (or such lesser amount as shall be approved by the
Administrative Agent and, so long as no Default shall have occurred and be
continuing at the time of effectiveness of such assignment, the Borrowers),
(iii) each such assignment shall be to an Eligible Assignee, (iv) no such
assignments shall be permitted at any time without the consent of the
Administrative Agent (which consent shall not be unreasonably withheld) and (v)
the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and, except if such assignment is being made by a Lender to an
Affiliate or Fund Affiliate of such Lender, a processing and recordation fee of
$3,500.

            (b) Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and Acceptance, (i)
the assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender, hereunder and (ii)
the Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (other than its rights under Sections 2.09, 2.11, 7.06,
7.09, 8.05, and 9.04 to the extent any claim thereunder relates to an event
arising prior to such assignment) and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all of
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).

            (c) By executing and delivering an Assignment and Acceptance, each
Lender assignor thereunder and each assignee thereunder confirm to and agree
with each other and the other parties thereto and hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any Loan
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, any
Loan Document or any other instrument or document furnished pursuant thereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under any
Loan Document or any other instrument or document furnished pursuant thereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of

                                       76


the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon any Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes each Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under the Loan Documents as are delegated to such Agent by the terms hereof and
thereof, together with such powers and discretion as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Agreement are
required to be performed by it as a Lender.

            (d) The Administrative Agent shall maintain at its address referred
to in Section 9.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Term Commitment of, and principal amount of the Term
Advances owing to, each Lender from time to time (the "REGISTER"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Agents and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or any Agent or any Lender at any reasonable time and from time to
time upon reasonable prior notice.

            (e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit D
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrowers and each other Agent. In the case of any assignment by a Lender,
within five Business Days after their receipt of such notice, each Borrower, at
its own expense, shall, if requested by the applicable Lender, execute and
deliver to the Administrative Agent in exchange for the surrendered Note or
Notes a substitute Note to the order of such Eligible Assignee in an amount
equal to the Term Commitment assumed by it pursuant to such Assignment and
Acceptance and, if any assigning Lender has retained a Term Commitment
hereunder, a substitute Note to the order of such assigning Lender in an amount
equal to the Term Commitment retained by it hereunder. Such substitute Note or
Notes, if any, shall be in an aggregate principal amount up to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of Exhibit A hereto.

            (f) Each Lender may sell participations to one or more Persons
(other than any Loan Party or any of its Affiliates) in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Term Commitment, the Term Advances owing to
it and the Note or Notes held by it); provided, however, that (i) such Lender's
obligations under this Agreement (including, without limitation, its Term
Commitment) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (iv) the Borrower, the Agents 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, (v) no participant under
any such participation shall have any right to approve any amendment or waiver
of any provision of any Loan Document, or any

                                       77


consent to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, or postpone any date fixed for any payment
of principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation, or release
all or substantially all of the Collateral and (vi) if, at the time of such
sale, such Lender was entitled to payments under Section 2.11(a) in respect of
United States withholding tax with respect to interest paid at such date, then,
to such extent, the term Taxes shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to such
participant on such date, provided that such participant complies with the
requirements of Section 2.11(e) as if it were a Lender hereunder.

            (g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Loan Parties (or any of them)
furnished to such Lender by or on behalf of any Loan Party; provided, however,
that, prior to any such disclosure, the assignee or participant or proposed
assignee or participant shall agree to preserve the confidentiality of any
Confidential Information received by it from such Lender.

            (h) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Term
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.

            (i) Upon notice to the Borrowers from the Administrative Agent or
any Lender of the loss, theft, destruction or mutilation of any Lender's Note,
the Borrowers will execute and deliver, in lieu of such original Note, a
replacement promissory note, identical in form and substance to, and dated as of
the same date as, the Note so lost, stolen or mutilated, subject to delivery by
such Lender to the Borrowers of an affidavit of lost note and indemnity in
customary form. Upon the execution and delivery of the replacement Note, all
references herein or in any of the other Loan Documents to the lost, stolen or
mutilated Note shall be deemed references to the replacement Note.

            SECTION 9.08. Execution in Counterparts. This Agreement 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
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.

            SECTION 9.09. Confidentiality. Neither any Agent nor any Lender
shall disclose any Confidential Information to any Person without the consent of
the Borrowers, other than (a) to such Agent's or such Lender's Affiliates and
their officers, directors, employees, agents and advisors and to actual or
prospective Eligible Assignees and participants, and then only on a confidential
basis, (b) as required by any law, rule or regulation or judicial process, (c)
as requested or required by any state, Federal or foreign authority or examiner
regulating such Lender and (d) to any rating agency when required by it,
provided that, prior to any such

                                       78


disclosure, such rating agency shall undertake to preserve the confidentiality
of any Confidential Information relating to the Loan Parties received by it from
such Lender.

            SECTION 9.10. Release of Collateral. (a) Upon the sale, lease,
transfer or other disposition of any item of Collateral of any Loan Party
(including, without limitation, (i) as a result of the sale of the Equity
Interests in the Loan Party that owns such Collateral, and (ii) any Transfer
pursuant to Section 5.02(e)) that is permitted in accordance with the terms of
the Loan Documents, then, in either such event, the Collateral Agent will, at
the Borrowers' expense, execute and deliver to such Loan Party such documents as
such Loan Party may reasonably request to evidence the release of such item of
Collateral from the assignment and security interest granted under the
Collateral Document in accordance with the terms of the Loan Documents.

            (b) Upon the latest to occur of (i) the payment in full in cash of
the Secured Obligations, (ii) the termination or expiration of all Secured Hedge
Agreements, and (iii) the Maturity Date, the Liens granted by the Collateral
Documents shall terminate and all rights to the Collateral shall revert to the
applicable Loan Party. Upon any such termination, the Collateral Agent will, at
the Borrowers' expense, execute and deliver to the applicable Loan Parties such
documents as such Loan Parties shall reasonably request to evidence such
termination.

            SECTION 9.11. Patriot Act Notification. Each Lender and each Agent
(for itself and not on behalf of any Lender) hereby notifies the Loan Parties
that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the "PATRIOT ACT"), it is required
to obtain, verify and record information that identifies each Loan Party, which
information includes the name and address of such Loan Party and other
information that will allow such Lender or such Agent, as applicable, to
identify such Loan Party in accordance with the Patriot Act. The Loan Parties
shall, and shall cause each of their Subsidiaries to, provide, to the extent
commercially reasonable, such information and take such actions as are
reasonably requested by any Agents or any Lenders in order to assist the
Administrative Agent and the Lenders in maintaining compliance with the Patriot
Act.

            SECTION 9.12. Jurisdiction, Etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, 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 any such New York State
court 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 any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Loan Documents in the
courts of any jurisdiction.

            (b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that 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 or any of the
other Loan Documents to which it is a party in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent

                                       79


permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

            SECTION 9.13. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.

            SECTION 9.14. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE OTHER
LOAN PARTIES, THE AGENTS AND THE LENDERS IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE
TERM ADVANCES OR THE ACTIONS OF ANY AGENT OR ANY LENDER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

                   [Balance of page intentionally left blank]

                                       80



            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

                                      INITIAL BORROWER:

                                           FELCOR TRS BORROWER 1, L.P.

                                           By: FELCOR TRS BORROWER GP 1,
                                               L.L.C., its General Partner

                                               By /s/ Joel M. Eastman
                                                  -----------------------------
                                                  Name: JOEL M. EASTMAN
                                                  Title: VICE PRESIDENT

                                      TRS GUARANTOR:

                                           FELCOR TRS GUARANTOR, L.P.

                                           By: FELCOR TRS GUARANTOR GP,
                                               L.L.C., its General Partner

                                               By /s/ Joel M. Eastman
                                                  -----------------------------
                                                  Name: JOEL M. EASTMAN
                                                  Title: VICE PRESIDENT

                                      FLLP:

                                           FELCOR LODGING LIMITED
                                           PARTNERSHIP

                                           By: FELCOR LODGING TRUST
                                               INCORPORATED, its General Partner

                                               By /s/ Joel M. Eastman
                                                  -----------------------------
                                                  Name: JOEL M. EASTMAN
                                                  Title:VICE PRESIDENT

Credit Agreement Signature Page


                                       INITIAL LENDER, ADMINISTRATIVE AGENT
                                       AND COLLATERAL AGENT:

                                            CITICORP NORTH AMERICA, INC.

                                            By /s/ David Bouton
                                               -----------------------------
                                               Name: DAVID BOUTON
                                               Title: VICE PRESIDENT

Credit Agreement Signature Page


                             SCHEDULES AND EXHIBITS

                              INTENTIONALLY OMITTED

                                      Sch 1

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Thomas J. Corcoran, Jr., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of FelCor Lodging Trust Incorporated;
2.	Based on my knowledge, this quarterly 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 quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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 quarterly 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 quarterly 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 quarterly 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: November 8, 2005	/s/ Thomas J. Corcoran, Jr.
	Thomas J. Corcoran, Jr.
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Richard A. Smith, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of FelCor Lodging Trust Incorporated;
2.	Based on my knowledge, this quarterly 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 quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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 quarterly 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 quarterly 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 quarterly 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: November 8, 2005	/s/ Richard A. Smith
	Richard A. Smith
	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 Quarterly Report of FelCor Lodging Trust Incorporated (the “Registrant”) on Form 10-Q for the three and nine months ended September 30, 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.

November 8, 2005	/s/ Thomas J. Corcoran, Jr.
	Thomas J. Corcoran, Jr.
	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 Quarterly Report of FelCor Lodging Trust Incorporated (the “Registrant”) on Form 10-Q for the three and nine months ended September 30, 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.

November 8, 2005	/s/ Richard A. Smith
	Richard A. Smith
	Chief Financial Officer