FELCOR SUITE HOTELS INC, S-4, 1998-04-20

FELCOR SUITE HOTELS INC
S-4, 1998-04-20
REAL ESTATE INVESTMENT TRUSTS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 20, 1998

REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
FELCOR SUITE HOTELS, INC.
(Exact name of registrant as specified in its charter)

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MARYLAND 7011 75-2541756
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
LAWRENCE D. ROBINSON, ESQ.
SENIOR VICE PRESIDENT & GENERAL COUNSEL
545 E. JOHN CARPENTER FRWY., SUITE 1300 545 E. JOHN CARPENTER FRWY., SUITE 1300
IRVING, TEXAS 75062 IRVING, TEXAS 75062
(972) 444-4900 (972) 444-4900
(Address, including zip code and telephone number, Name, address, including zip code and telephone
including number,
area code, of registrant's principal executive including area code, of agent for service)
offices)
</TABLE>

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With copies to:

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ROBERT W. DOCKERY, ESQ. ROBERT A. PROFUSEK, ESQ.
JENKENS & GILCHRIST, JONES, DAY, REAVIS & POGUE
A PROFESSIONAL CORPORATION 599 LEXINGTON AVENUE, 32ND FLOOR
1445 ROSS AVENUE, SUITE 3200 NEW YORK, NEW YORK 10022
DALLAS, TEXAS 75202-2799 (212) 326-3939
(214) 855-4500
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:

AT THE EFFECTIVE TIME OF THE PROPOSED MERGER (THE "MERGER") OF BRISTOL HOTEL
COMPANY ("BRISTOL") WITH AND INTO FELCOR SUITE HOTELS, INC. ("FELCOR"), AS
DESCRIBED IN THE AGREEMENT AND PLAN OF MERGER, DATED AS OF MARCH 23, 1998 (THE
"MERGER AGREEMENT"), ATTACHED AS ANNEX A TO THE JOINT PROXY STATEMENT/PROSPECTUS
FORMING A PART OF THIS REGISTRATION STATEMENT, WHICH SHALL OCCUR AS PROMPTLY AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE AND THE
SATISFACTION OF ALL CONDITIONS TO THE CLOSING OF THE MERGER.
---------------------
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------------
CALCULATION OF REGISTRATION FEE

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<CAPTION>
=================================================================================================================================
PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per 31,133,057(2) $35.0625(3) $1,091,602,237(3) $322,023
share(1)............................ 1,276,800(4) $17.256(4) $22,032,461(4) 6,500
=================================================================================================================================
</TABLE>

(1) This Registration Statement relates to securities of the Registrant issuable
to holders of common stock and options to purchase common stock of Bristol,
in connection with the proposed Merger.

(2) Represents the maximum number of shares of FelCor Common Stock expected to
be issued in connection with the Merger.

(3) Estimated solely for the purpose of calculating the registration fee under
Rule 457(f)(1) based on the average of the high and low prices reported on
the New York Stock Exchange of $26.8438 for the common stock of Bristol on
April 16, 1998, as adjusted to reflect the distribution of shares of the
spin-off company prior to consummation of the Merger, resulting in an
adjusted price of $24.0178.

(4) Represents the maximum number of shares of FelCor Common Stock that may be
issued upon the exercise of outstanding options held by certain existing and
former employees, officers and directors of Bristol and estimates of
offering prices based on the weighted average exercise price at which the
options may be exercised for purposes of calculating the registration fee
under Rule 457(h)(1).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
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SUBJECT TO COMPLETION DATED

[FELCOR LOGO] [BRISTOL LOGO]

MERGER PROPOSED--
YOUR VOTE IS VERY IMPORTANT

The Boards of Directors of FelCor Suite Hotels, Inc. and Bristol Hotel
Company have unanimously approved and recommend to you a merger of the two
companies in a transaction that they believe will create two of the premier
lodging companies in the United States--one focused exclusively on hotel
ownership, and the other focused primarily on hotel operations. The transaction
includes the spin-off of Bristol's hotel operating business as a separate
publicly traded company named Bristol Hotels & Resorts. The spin-off will be
followed by the merger of Bristol's remaining assets, including its 109 owned
hotels (giving effect to a pending acquisition), into FelCor.

Each of the Bristol hotels acquired by FelCor in the merger will be leased
to and operated by the new spin-off company. The merged company, which will be
renamed FelCor Lodging Trust, Ltd., will be the largest non-paired share lodging
REIT and the spin-off company will be the largest independent hotel operating
company in the U.S. The two companies will be separately owned and managed, but
are expected to work together in the acquisition and leasing of additional
hotels.

In the spin-off, Bristol stockholders will receive one common share of the
spin-off company for every two of their existing Bristol common shares. In the
merger, Bristol stockholders will receive 0.685 FelCor common shares for each of
their existing Bristol common shares. FelCor stockholders will continue to hold
their current FelCor common shares. As a result of these transactions, existing
Bristol stockholders will own all of the new spin-off company's equity and 44%
of FelCor's outstanding common equity. The spin-off will be taxable to Bristol
and its stockholders, while the merger will be tax-free to FelCor and Bristol
stockholders.

The merger transactions cannot be completed unless you approve them and
certain other customary conditions are satisfied. We are asking you to approve
the merger transactions, which will also result in changes to FelCor's charter
to increase the authorized number of FelCor common shares and preferred shares
and to change its name to "FelCor Lodging Trust, Ltd." at our annual
stockholders meetings. At the annual meetings, you also will be asked to approve
other matters, including the election of directors and the approval and
expansion of equity incentive programs.

WHETHER OR NOT YOU PLAN TO ATTEND A MEETING, PLEASE COMPLETE, SIGN AND MAIL
THE ENCLOSED PROXY CARD. IF YOU SIGN, DATE AND MAIL YOUR PROXY CARD WITHOUT
INDICATING HOW YOU WANT TO VOTE, YOUR PROXY WILL BE COUNTED AS A VOTE IN FAVOR
OF THE MERGER TRANSACTIONS AND THE OTHER MATTERS DESCRIBED IN THE ENCLOSED
MATERIALS. IF YOU FAIL TO RETURN YOUR PROXY CARD OR TO VOTE IN PERSON AT A
MEETING, THE EFFECT WILL BE A VOTE AGAINST THE MERGER.

Additional information regarding the annual meetings follows:

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FOR FELCOR STOCKHOLDERS:
Date/Time: June , 1998,
at 10:00 a.m. Central Time
Place: Embassy Suites Park Central
13131 N. Central Expressway
Dallas, Texas 75243
Record Date: April 28, 1998
FOR BRISTOL STOCKHOLDERS:
Date/Time: June , 1998,
at 10:00 a.m. Central Time
Place: Crowne Plaza Hotel
14315 Midway Road
Dallas, Texas 75244
Record Date: April 28, 1998
</TABLE>

The accompanying Joint Proxy Statement/Prospectus provides additional
information about the proposed merger and other proposals. Please read this
entire document carefully. You may also obtain information about our companies
from documents that we have filed with the SEC.

- ---------------------------------------------------------

Thomas J. Corcoran, Jr.
President and Chief Executive Officer
FelCor Suite Hotels, Inc.

- ---------------------------------------------------------

J. Peter Kline
President and Chief Executive Officer
Bristol Hotel Company

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED IF THIS JOINT PROXY
STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

This Joint Proxy Statement/Prospectus is being mailed to stockholders on
April , 1998.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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TABLE OF CONTENTS

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QUESTIONS AND ANSWERS........................ 4
SUMMARY...................................... 7
The Companies.............................. 7
The Annual Meetings........................ 7
Recommendations to Stockholders............ 8
The Merger................................. 8
The Spin-Off............................... 10
Selected Consolidated Pro Forma and
Historical Financial Data of Felcor and
DJONT.................................... 12
Selected Consolidated Historical Financial
Data of Bristol.......................... 18
Selected Comparative Per Share Data........ 21
Comparative Market Data.................... 22
RISK FACTORS................................. 23
THE ANNUAL MEETINGS.......................... 30
Times, Places and Dates of the Annual
Meetings................................. 30
Purposes of the FelCor Annual Meeting...... 30
Purposes of the Bristol Annual Meeting..... 30
Record Dates; Quorum....................... 30
Voting Rights; Votes Required for
Approval................................. 31
Proxies; Revocation and Solicitation of
Proxies.................................. 31
THE COMPANIES................................ 33
FelCor..................................... 33
Bristol.................................... 33
The Combined Company....................... 34
THE SPIN-OFF................................. 37
The Reorganization......................... 37
BHR Percentage Leases...................... 37
Conditions to the Spin-Off................. 37
Federal Income Tax Consequences............ 37
Business and Management of BHR............. 37
Employee Option Plans...................... 38
Listing.................................... 38
Stockholder Approval....................... 38
Additional Information About the
Spin-Off................................. 38
THE MERGER................................... 38
General.................................... 38
Effective Time............................. 38
Terms of the Merger........................ 39
Background of the Merger................... 39
FelCor's Reasons for the Merger;
Recommendations of the FelCor Board...... 40
Bristol's Reasons for the Merger;
Recommendations of the Bristol Board..... 42
Opinion of FelCor's Financial Advisor...... 43
Opinion of Bristol's Financial Advisor..... 48
Interests of Certain Persons in the
Merger................................... 53
Accounting Treatment....................... 54
No Appraisal Rights........................ 55
THE MERGER AGREEMENT......................... 55
THE VOTING AGREEMENT......................... 60
PRO FORMA FINANCIAL INFORMATION.............. 63
DESCRIPTION OF FELCOR'S CAPITAL STOCK........ 77
Description of FelCor Common Shares........ 77
Description of FelCor Series A Preferred
Shares................................... 77
Certain Charter and Bylaw Provisions....... 82
Maryland Anti-Takeover Statutes............ 84
Comparison of Rights of Stockholders....... 85
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.... 92
OTHER FELCOR ANNUAL MEETING PROPOSALS........ 110
Election of Directors of FelCor............ 110
Ratification of FelCor's 1998 Restricted
Stock and Stock Option Plan.............. 113
OTHER BRISTOL ANNUAL MEETING PROPOSALS....... 116
Election of Bristol Directors.............. 116
Approval of Amendment to Bristol's 1995
Equity Incentive Plan.................... 119
Approval of BHR's 1998 Equity Incentive
Plan and 1998 Non-Employee Director Stock
Option Plan.............................. 120
MANAGEMENT AND OWNERSHIP OF FELCOR........... 127
MANAGEMENT AND OWNERSHIP OF BRISTOL.......... 141
SELLING SECURITYHOLDERS...................... 147
PLAN OF DISTRIBUTION......................... 147
LEGAL MATTERS................................ 149
EXPERTS...................................... 149
INDEPENDENT PUBLIC ACCOUNTANTS............... 150
ANNUAL REPORTS............................... 150
SUBMISSION OF STOCKHOLDER PROPOSALS.......... 150
WHERE YOU CAN FIND MORE INFORMATION.......... 151
Available Information...................... 151
Incorporation of Certain Documents by
Reference................................ 151
Certain Forward-Looking Statements......... 152
OTHER MATTERS................................ 152
INDEX OF CERTAIN DEFINED TERMS............... 153
ANNEXES
A. The Merger Agreement
B. BT Wolfensohn Fairness Opinion
C. Merrill Lynch, Pierce, Fenner & Smith
Fairness Opinion
D. FelCor 1998 Restricted Stock and Stock
Option Plan
E. BHR 1998 Equity Incentive Plan
F. BHR Non-Employee Directors Stock Option
Plan
</TABLE>

3
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QUESTIONS AND ANSWERS
ABOUT THE FELCOR/BRISTOL MERGER
AND OTHER MATTERS TO BE VOTED ON

Q: WHY ARE THE TWO COMPANIES PROPOSING THE SPIN-OFF AND MERGER?

A: The Boards of Directors of FelCor and Bristol have each determined that the
merger is fair to and in the best interests of the stockholders of their
respective companies. The FelCor Board determined, among other things, that
the acquisition of Bristol's hotels in the merger was at a fair price, will
be accretive to FelCor's funds from operations and, when combined with
FelCor's existing hotel portfolio, will give FelCor sufficient size to
enable it to remain a substantial participant in the rapidly consolidating
lodging industry. The transactions will also result in a strategic
alignment of interests between FelCor and the new spin-off company. The
Bristol Board determined, among other things, that the exchange ratio was
fair and that the merger would permit Bristol stockholders to participate
in the ownership of hotel assets in an entity having a lower overall cost
of capital and greater financial flexibility to fund future growth through
hotel acquisitions. The Bristol Board also determined that the merger
transactions would provide Bristol stockholders the opportunity to continue
to own an equity stake in Bristol's hotel operating business, which FelCor
is not permitted to own under the special limitations that apply to REITs.

Q: WHEN WILL THE SPIN-OFF OCCUR?

A: If the merger is approved by the stockholders of both companies, the
spin-off will occur on the business day before the merger. Completion of
the spin-off is a condition to the merger. If the merger is not approved,
the spin-off will not occur.

Q: WHAT DO I GET IN THE MERGER AND SPIN-OFF?

A: FelCor stockholders will continue to hold the shares they now own. Bristol
stockholders will receive:

- 0.685 FelCor common shares for each existing Bristol common share they
own at the time of the Merger;

- One common share of the new spin-off company for every two existing
Bristol common shares they own at the time of the spin-off; and

- The opportunity to participate with all other stockholders of FelCor
in a special distribution in an amount at least equal to Bristol's
current and accumulated earnings and profits at the time of the
Merger. To obtain this special distribution, you must remain a FelCor
stockholder on the record date for this distribution, which is
expected to be set for December 1998.

The spin-off company shares were assigned an estimated value of $6.38
(based on a spin-off ratio of one-for-two) by the Bristol board in
connection with its evaluation of the transactions. The actual trading
value of the spin-off company shares may be higher or lower and will depend
on many factors.

No stockholder will receive fractional shares from FelCor or Bristol.
Instead, Bristol stockholders will receive cash based on the market value
of any fractional FelCor or spin-off company shares.

EXAMPLE:

- If you currently own 100 FelCor common shares, then after the merger,
your FelCor common shares continue unaffected by the transactions.

- If you currently own 100 Bristol common shares, then after the merger
and the spin-off, you will be entitled to receive 68 FelCor common
shares, 50 common shares of the spin-off company and a check for the
market value of the 0.5 fractional FelCor common share.

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Q: WHAT ARE THE TAX CONSEQUENCES OF THE SPIN-OFF AND MERGER?

A: If you currently own FelCor common shares, the merger will be tax-free to
you for federal income tax purposes. If you currently own Bristol common
shares, the merger will be tax-free to you for federal income tax purposes
except for cash paid instead of fractional shares. The shares of the new
spin-off company received by Bristol stockholders in the spin-off, however,
will be taxable to Bristol stockholders. To review the tax consequences to
stockholders in greater detail, see the discussion beginning on page 92.

Q: WHAT OTHER MATTERS WILL BE VOTED ON AT THE ANNUAL MEETINGS?

A: In addition to the merger transactions, FelCor and Bristol stockholders
will be asked to elect certain directors pending completion of the merger.
After the merger, the Board of Directors of FelCor will be as described on
page 58.

FelCor stockholders will also be asked to approve a new restricted stock
and stock option plan for FelCor personnel. Bristol stockholders will also
be asked to approve an amendment to Bristol's equity incentive plan to
increase the number of shares authorized for issuance and to approve the
adoption of new equity incentive plans for the spin-off company.

Q: WHAT DO I NEED TO DO NOW?

A: Please mail your signed proxy card in the enclosed return envelope as soon
as possible so that your shares may be represented at the appropriate
annual meeting. The Bristol and FelCor annual meetings will both take place
on June , 1998.

Q: IF MY SHARES ARE HELD BY MY BROKER, WILL MY BROKER VOTE MY SHARES FOR ME?

A: Your broker may vote your shares as to the election of directors if you
have given him that power. Your broker will vote your shares on any other
matter, including this merger, only if you instruct your broker on how to
vote. You should follow the directions provided by your broker regarding
how to instruct your broker to vote your shares. If you do not tell your
broker how to vote, your shares will not be voted on these other matters.
Your failure to vote will have the effect of a vote against the merger.

Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?

A: Yes. You may change your vote at any time before your proxy is voted at the
stockholders meetings. You may do this by sending a written notice stating
that you would like to revoke your proxy or by completing and submitting a
new proxy card. You may also attend the stockholders meetings and vote in
person. Simply attending the meetings, however, will not revoke your proxy.
If you have instructed a broker to vote your shares, you must follow the
directions received from your broker to change your vote.

Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

A: No. After the merger is completed, we will send Bristol stockholders
written instructions for exchanging their stock certificates for FelCor
common shares. FelCor stockholders will keep their existing FelCor stock
certificates.

Q: WHEN DO YOU EXPECT THE SPIN-OFF AND MERGER TO BE COMPLETED?

A: We are working towards completing the transactions as quickly as possible.
We expect to complete the transactions promptly after the stockholders
meetings.

Q: WHEN WILL BRISTOL STOCKHOLDERS BEGIN RECEIVING CASH DISTRIBUTIONS FROM
FELCOR?

A: If the merger is completed, Bristol stockholders will receive cash
distributions from FelCor beginning with its regular distribution for the
third quarter of 1998. The third quarter distribution is presently

5
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expected to be paid in October 1998. FelCor's current regular quarterly
distribution rate is $0.55 per share.

Q: WILL FELCOR AND BRISTOL STOCKHOLDERS RECEIVE ANY SPECIAL CASH
DISTRIBUTIONS?

A: FelCor's stockholders will receive a 1998 fourth quarter distribution that
will include, in addition to the regular quarterly distribution, a special
cash distribution. This special distribution will at least equal Bristol's
accumulated earnings and profits at the time of the merger. Bristol
stockholders will participate in this special distribution to the extent
they retain their new FelCor common shares until the December 1998 record
date for the special distribution. The amount of the special distribution
cannot be determined until after the spin-off and merger and will depend on
various factors. FelCor currently estimates this distribution to total
between $40 million and $70 million. The per share amount of this special
distribution will depend upon the final determination of Bristol's
accumulated earnings and profits and the number of FelCor preferred and
common shares outstanding. The entire amount of the special cash
distribution will be taxable to stockholders.

Q: WHOM SHOULD I CALL WITH QUESTIONS?

A: If you are a FelCor stockholder, you should contact Randall L. Churchey,
Senior Vice President and Chief Financial Officer, at FelCor at (972)
444-4900 or by e-mail to "[email protected]". If you are a Bristol
stockholder, you should contact Ed Nolan, Vice President of Corporate
Finance, at Bristol at (972) 391-3231 or by e-mail to
"[email protected]".

If you would like additional copies of this Joint Proxy
Statement/Prospectus or related agreements or documents, you should contact
Corporate Investor Communications, at (800) .

6
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SUMMARY

This summary highlights selected information from this Joint Proxy
Statement/Prospectus document and may not contain all of the information that is
important to you. Accordingly, we encourage you to carefully read this entire
document and the documents to which we have referred you. See "Where You Can
Find More Information".

THE COMPANIES

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FELCOR SUITE HOTELS, INC. BRISTOL HOTEL COMPANY
545 E. John Carpenter Freeway, Suite 1300 14295 Midway Road
Irving, Texas 75062 Dallas, Texas 75244
(972) 444-4900 (972) 391-3910
</TABLE>

FelCor Suite Hotels, Inc. is a REIT that has focused on upscale
full-service and all-suite hotels and is the world's largest owner of Embassy
Suites(R) hotels. Its current portfolio of 76 hotels contains an aggregate of
18,596 suites and rooms and consists of 52 Embassy Suites hotels (of which 28
were converted from other brands), 14 Doubletree Guest Suites(R) hotels, seven
Sheraton(R) hotels (five of which are upscale, full-service traditional
non-suite hotels), two traditional non-suite Doubletree(R) hotels (one of which
is in the process of conversion to a Doubletree hotel), and one Hilton Suites(R)
hotel. FelCor has also entered into an agreement to purchase eight hotels, six
of which will be operated as Embassy Suites hotels and two of which will be
operated as Sheraton Suites(R) hotels.

Bristol Hotel Company is one of the largest owner/operators of full-service
hotels in the United States. Bristol operates 101 hotels in 22 states and
Canada, of which 89 are owned or leased. Bristol's hotels are primarily
full-service hotels that operate in the midscale to upscale segments of the
lodging industry. Bristol is the largest franchisee of Holiday Hospitality's
brands of hotels, including Crowne Plaza(R), Holiday Inn Select(R) and Holiday
Inn(R), and also operates 19 hotels under other brands, including Hampton
Inn(R), Courtyard by Marriott(R) and Fairfield Inn(R). Bristol has also entered
into an agreement to purchase 20 hotels, 14 of which are operated under Holiday
Hospitality brands.

THE ANNUAL MEETINGS

DATE, TIME AND PLACE

The FelCor annual meeting will be held at 10:00 a.m. (Central time) on June
, 1998 at the Embassy Suites Park Central hotel, 13131 North Central
Expressway, Dallas, Texas. The Bristol annual meeting will be held at 10:00 a.m.
(Central time) on June , 1998 at the Crowne Plaza Hotel, 14315 Midway Road,
Dallas, Texas.

MATTERS TO BE CONSIDERED

At the FelCor annual meeting, FelCor stockholders will be asked to adopt
the merger agreement. As a result of the merger, FelCor's charter will be
changed to increase the number of authorized FelCor common shares and FelCor
preferred shares and to change FelCor's name to "FelCor Lodging Trust, Ltd.,"
all as provided for in the Merger Agreement. FelCor stockholders will also be
asked to elect two directors, and to approve the adoption of a new restricted
stock and stock option plan for FelCor employees and directors.

At the Bristol annual meeting, Bristol stockholders will be asked to adopt
the merger agreement. Because the spin-off is a condition to the merger,
approval of the adoption of the merger agreement will also be deemed to be an
approval of the spin-off and the other transactions required by the merger
agreement. Bristol stockholders will also be asked to elect nine directors, to
ratify an amendment to Bristol's equity incentive plan to increase the number of
shares reserved for issuance and to approve the adoption of new equity incentive
plans for the spin-off company and its personnel.

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RECORD DATE; QUORUM

Only FelCor and Bristol stockholders of record as of the close of business
on the April 28, 1998 record date are entitled to vote at the applicable annual
meeting. On that date, there were 36,591,080 FelCor common shares and 43,806,401
Bristol common shares entitled to vote. A majority of the FelCor or Bristol
common shares must be present or represented at the appropriate annual meeting
in order for a quorum to exist. A quorum is required to hold an annual meeting.

REQUIRED VOTES

FelCor and Bristol stockholders each have one vote for each common share
owned on the record date. The affirmative votes of a majority of the FelCor
common shares and Bristol common shares outstanding on the record date are
required to approve the merger transactions. Accordingly, if you fail to return
your proxy card or to vote in person at the applicable meeting, the effect will
be a vote against the merger. The two candidates receiving the most votes at the
FelCor annual meeting will be elected as FelCor directors. The nine directors
receiving the most votes at the Bristol annual meeting will be elected as
Bristol directors. The affirmative vote of a majority of the FelCor common
shares actually voted on the proposal is required to approve FelCor's incentive
plan proposal. The affirmative vote of a majority of the Bristol common shares
actually voted on each proposal is required to approve the Bristol incentive
plan proposals.

SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS

On the record date, FelCor directors and executive officers controlled
1,576,464 FelCor common shares (approximately 4.3% of FelCor's outstanding
common shares), and Bristol directors and executive officers owned 4,014,479
Bristol common shares (approximately 9.0% of Bristol's outstanding common
shares). These directors and executive officers have indicated that they intend
to vote in favor of the merger transactions and the other proposals. Three
Bristol stockholders who own a majority of the outstanding Bristol common shares
have agreed to vote in favor of the merger transactions and the other proposals.
Accordingly, these matters will be approved regardless of how other Bristol
stockholders vote.

RECOMMENDATIONS TO STOCKHOLDERS

THE FELCOR BOARD AND THE BRISTOL BOARD BELIEVE THAT THE MERGER AND THE
OTHER PROPOSALS OF THEIR RESPECTIVE COMPANIES ARE IN THE BEST INTERESTS OF THEIR
STOCKHOLDERS AND RECOMMEND THAT THEIR STOCKHOLDERS VOTE FOR THE MERGER
TRANSACTIONS AND ALL SUCH OTHER PROPOSALS.

THE MERGER

The merger agreement is attached as Annex A to this Joint Proxy
Statement/Prospectus. The merger agreement is the legal document that governs
the merger. We encourage you to read it in its entirety.

WHAT FELCOR STOCKHOLDERS WILL RECEIVE IN THE MERGER

After the merger, each certificate representing FelCor common shares will,
without any action on the part of FelCor stockholders, continue to represent the
same number of common shares in the combined company. FelCor stockholders do not
need to exchange their stock certificates after the merger.

WHAT BRISTOL STOCKHOLDERS WILL RECEIVE IN THE MERGER

Bristol stockholders will receive in the merger 0.685 FelCor common shares
for each existing Bristol common share. No fractional shares will be issued.
Instead, Bristol stockholders will receive a check in payment for any fractional
shares based on the market value of FelCor common shares. Bristol stockholders
should not send in their stock certificates until instructed to do so after the
merger is completed.

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BOARD OF DIRECTORS AND MANAGEMENT OF FELCOR FOLLOWING THE MERGER

After the merger, FelCor's Board of Directors will add three members from
the current Bristol Board. Following the merger, none of FelCor's directors will
serve as a director of the spin-off company. Donald J. McNamara, the current
Chairman of the Board of Bristol, will become Chairman of the Board of FelCor.
Hervey A. Feldman will retire from FelCor's Board at the annual meeting and
assume the title of Chairman Emeritus. The remaining management of FelCor will
be the same following the merger.

INTERESTS OF DIRECTORS, OFFICERS AND CERTAIN STOCKHOLDERS OF BRISTOL IN THE
MERGER

Certain directors, executive officers and stockholders of Bristol have
interests in the merger transactions that may be different from your interests
as stockholders. Upon completion of the merger, certain directors of Bristol
will be appointed as directors of FelCor. FelCor will grant three Bristol
stockholders that are affiliates of certain directors and executive officers of
Bristol the right to maintain their ownership percentages in FelCor under
certain circumstances. As a condition to the merger, the spin-off company will
redeem from two of these stockholders $25.8 million of its common shares that
are issued in the spin-off. This redemption is necessary to protect FelCor's
REIT status. One of Bristol's principal stockholders will continue as a
franchisor of a substantial number of the Bristol hotels. The indemnification
and insurance against liability for existing directors and officers of Bristol
will also be continued by FelCor.

CONDITIONS TO THE MERGER

The merger will be completed if a number of conditions are met, including
the following:

- The approval by the stockholders of FelCor and Bristol;

- The occurrence of the spin-off; and

- The receipt of legal opinions regarding certain tax consequences of the
merger and FelCor's status as a REIT for tax purposes.

TERMINATION OF THE MERGER AGREEMENT AND PAYMENT OF FEES

FelCor and Bristol could agree to terminate the merger agreement, and
either party may terminate the merger agreement if, in general:

- We do not receive stockholder approval;

- We do not complete the transactions by September 30, 1998;

- An injunction prevents the merger or the spin-off;

- The other party materially breaches the merger agreement and cannot cure
the breach by September 30, 1998;

- The Board of Directors of the other party adversely changes its
recommendation of the merger; or

- The other party takes certain actions in connection with a competing
transaction.

Bristol also may terminate the merger agreement if the volume weighted average
trading price for the FelCor common shares is less than $28.00 per share over
any ten trading-day period.

The merger agreement generally requires FelCor or Bristol to pay to the
other a termination fee of $60 million if the merger agreement terminates under
the circumstances described in the last three indented clauses in the preceding
paragraph. The merger agreement also requires FelCor or Bristol to pay the other
$5 million as reimbursement of transaction costs if the merger agreement is
terminated in those circumstances or because such party's stockholders failed to
approve the merger.

9
<PAGE> 10

OPINIONS OF FINANCIAL ADVISORS

In deciding to approve the merger, our Boards considered opinions from our
respective financial advisors as to the fairness of the exchange ratio of 0.685
from a financial point of view. FelCor received an opinion from its financial
advisor, BT Wolfensohn, and Bristol received an opinion from its financial
advisor, Merrill Lynch, Pierce, Fenner & Smith, Incorporated.

These opinions are attached as Annexes B and C to this Joint Proxy
Statement/Prospectus. You are encouraged to read them. The financial advisors
performed several analyses in connection with delivering their opinions. These
analyses included comparing FelCor and Bristol historical stock prices,
comparing FelCor and Bristol to other publicly traded companies and other
business combinations and estimating the relative values of FelCor and Bristol
and their contributions to the combined company based on past and estimated
future financial performance.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

We have structured the merger so that the stockholders of FelCor and
Bristol should recognize no gain or loss in the merger except for cash paid to
Bristol stockholders instead of fractional shares. The distribution of the
common shares of the spin-off company will be a taxable dividend to Bristol
stockholders. We have conditioned the merger on our receipt of legal opinions
regarding certain tax consequences of the spin-off and the merger.

Tax matters are very complicated. The tax consequences of the merger and
the spin-off to you will depend on the facts of your own situation. You should
consult your tax advisor for a full understanding of the tax consequences to you
of the merger and spin-off.

NO APPRAISAL RIGHTS

Under applicable law, neither FelCor nor Bristol stockholders have rights
to an appraisal of the value of their shares in connection with the merger or
the spin-off.

COMPARATIVE MARKET PRICE INFORMATION; LISTING

The FelCor common stock and Bristol common stock are each listed on the New
York Stock Exchange. FelCor will also list the FelCor common shares to be issued
in the merger on that exchange. On March 23, 1998, the last full trading day
prior to the public announcement of the transaction, FelCor common shares closed
at $36 1/8 per share and Bristol common shares closed at $27 5/8 per share. On
April , 1998, FelCor common shares closed at $ per share and Bristol
common shares closed at $ per share. We encourage you to obtain current
market quotations.

THE SPIN-OFF

WHY BRISTOL IS EFFECTING THE SPIN-OFF

The spin-off is a condition to the proposed merger of Bristol into FelCor.
The spin-off will permit Bristol stockholders to continue to own an equity stake
in Bristol's hotel operating business, which FelCor is not permitted to own
under the special limitations that apply to REITs.

WHEN WILL THE SPIN-OFF OCCUR

If the merger is approved by the stockholders of both companies, the
spin-off will occur on the business day before the merger. Completion of the
spin-off is a condition to the merger. If the merger is not approved, the
spin-off will not occur.

10
<PAGE> 11

WHAT BRISTOL AND FELCOR STOCKHOLDERS WILL RECEIVE IN THE SPIN-OFF

In the spin-off, Bristol stockholders will receive one common share of the
spin-off company for every two existing Bristol common shares held by them on
the date the spin-off occurs. FelCor stockholders will not receive any shares in
the spin-off company.

FEDERAL INCOME TAX CONSEQUENCES OF SPIN-OFF

The spin-off of the common shares of the spin-off company to Bristol
stockholders will be a taxable event to Bristol and a taxable dividend to
Bristol's stockholders. The amount of that dividend is based on various factors
but is currently estimated to be between $5.00 and $7.00 per spin-off company
common share. The final amount may be higher or lower and will be reported to
Bristol stockholders as promptly as practicable after the spin-off. The tax
basis of a Bristol stockholder in the spin-off company common shares will equal
the amount of dividend income reported for federal income tax purposes.

BUSINESS OF SPIN-OFF COMPANY

Following the spin-off, by continuing Bristol's current hotel operating
business, the spin-off company will be the largest U.S. operator of third party
owned and branded hotels. The spin-off company will be the largest franchisee of
Holiday Hospitality branded hotels. The spin-off company will lease from FelCor
the Bristol hotels included in the merger. The initial terms of these leases
will be from five to fifteen years, with optional renewals of up to a total term
of 15 years. The spin-off company will operate primarily full-service hotels in
the upscale and midscale segments of the hotel market and expects to work
together with FelCor in the acquisition and leasing of additional hotels.

BOARD OF DIRECTORS, MANAGEMENT AND EMPLOYEES OF SPIN-OFF COMPANY

After the merger, the employees and management of Bristol will generally
become the employees and management of the spin-off company. The spin-off
company's board of directors will initially consist of eight directors, five of
whom are current Bristol directors. J. Peter Kline will become Chairman of the
Board and Chief Executive Officer and John A. Beckert will become President and
Chief Operating Officer of the spin-off company.

LISTING OF SPIN-OFF COMPANY'S COMMON STOCK

Bristol will apply to list the common shares of the spin-off company on the
New York Stock Exchange, The Nasdaq Stock Market or another national securities
exchange or quotation system. There is no guarantee such listing will be
obtained.

STOCKHOLDER APPROVAL

Although Bristol does not believe that stockholder approval of the spin-off
is required under applicable law, a vote to adopt the merger agreement will be
deemed to constitute approval of the spin-off because the merger cannot occur
unless the spin-off is completed. The holders of a majority of Bristol's common
shares have agreed to vote their shares to adopt the merger agreement.

ADDITIONAL INFORMATION ABOUT THE SPIN-OFF

An information statement related to the new spin-off company is being
furnished to Bristol stockholders together with this document. Bristol
stockholders are encouraged to review the information statement in its entirety.

11
<PAGE> 12

SELECTED CONSOLIDATED PRO FORMA AND HISTORICAL
FINANCIAL DATA OF FELCOR AND DJONT

The following tables set forth selected pro forma and historical operating
and financial data for FelCor and DJONT and selected combined historical
financial data for the FelCor Initial Hotels that were the predecessor to
FelCor. The selected historical financial data for FelCor and DJONT for the
years ended December 31, 1997, 1996 and 1995 and the period from July 28, 1994
(inception of operations) to December 31, 1994 has been derived from the
historical financial statements of FelCor and DJONT and the notes thereto,
audited by Coopers & Lybrand, L.L.P., independent accountants. The selected
historical financial data for FelCor and DJONT is qualified in its entirety by,
and should be read in conjunction with, the Consolidated Financial Statements
and Notes of FelCor and DJONT contained in FelCor's Annual Report on Form 10-K
for the year ended December 31, 1997, which is incorporated herein by reference.

The selected combined historical financial statements for the FelCor
Initial Hotels are presented for the year ended December 31, 1993 and the period
from January 1, 1994 to July 27, 1994 and represent the operations of the six
hotels acquired by FelCor upon completion of FelCor's initial public offering of
common stock in July 1994. The FelCor Initial Hotels data is derived by
combining the selected combined historical financial data of the E-5 Hotels for
periods prior to the acquisition of such hotels by a FelCor affiliate and the
selected combined historical financial data of a FelCor affiliate prior to the
FelCor initial public offering. The selected combined historical financial data
for the E-5 Hotels and the FelCor Hotels have been derived from the historical
financial statements and notes thereto, audited by Coopers & Lybrand L.L.P.,
independent accountants.

The FelCor selected pro forma operating and financial data set forth below
is qualified in its entirety, by, and should be read in conjunction with, the
unaudited pro forma financial statements of FelCor included elsewhere herein.
The pro forma financial information is not necessarily indicative of what the
actual financial position and results of operations of FelCor would have been as
of and for the periods indicated, nor does it purport to represent the future
financial position and results of operations of FelCor.

12
<PAGE> 13

FELCOR SUITE HOTELS, INC.

SELECTED PRO FORMA AND HISTORICAL OPERATING AND FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
HISTORICAL
PRO ----------------------------------------------------------------
FORMA
(UNAUDITED) YEAR ENDED DECEMBER 31, PERIOD FROM JULY 28, 1994
----------- ----------------------------------- (INCEPTION OF OPERATIONS)
1997 1997 1996 1995 THROUGH DECEMBER 31, 1994
----------- ---------- -------- --------- -------------------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
REVENUE
Percentage lease revenue.... $ 441,768 $ 169,114 $ 97,950 $ 23,787 $ 6,043
Equity in income from
unconsolidated entities
.......................... 8,788 6,963 2,010 513
Other revenue............... 574 984 1,691 207
---------- ---------- -------- --------- ---------
TOTAL REVENUE................. 450,556 176,651 100,944 25,991 6,250
---------- ---------- -------- --------- ---------
EXPENSES
General and
administrative............ 5,163 3,743 1,819 870 355
Depreciation................ 122,907 50,798 26,544 5,232 1,487
Taxes, insurance and
other..................... 68,206 23,093 13,897 2,563 881
Interest expense............ 110,938 28,792 9,803 2,004 109
Minority interest in FelCor
Operating Partnership..... 6,096 5,817 5,590 3,131 907
Minority interest in other
partnerships.............. 1,157 573
---------- ---------- -------- --------- ---------
TOTAL EXPENSES................ 314,467 112,816 57,653 13,800 3,739
---------- ---------- -------- --------- ---------
INCOME BEFORE EXTRAORDINARY
CHARGE...................... 136,089 63,835 43,291 12,191 2,511
Extraordinary charge from
write off of deferred
financing fees............ 185 2,354
---------- ---------- -------- --------- ---------
NET INCOME.................... 136,089 63,650 40,937 12,191 2,511
Preferred dividends......... 25,110 11,797 7,734
---------- ---------- -------- --------- ---------
NET INCOME APPLICABLE TO
COMMON SHAREHOLDERS......... $ 110,979 $ 51,853 $ 33,203 $ 12,191 $ 2,511
========== ========== ======== ========= =========
BASIC EARNINGS PER SHARE(1)
Income applicable to common
shareholders before
extraordinary charge...... $ 1.64 $ 1.67 $ 1.54 $ 1.71 $ 0.54
Extraordinary charge........ (0.01) (0.10)
---------- ---------- -------- --------- ---------
Net income applicable to
common shareholders....... $ 1.64 $ 1.66 $ 1.44 $ 1.71 $ 0.54
========== ========== ======== ========= =========
Weighted average common
shares outstanding........ 67,630 31,269 23,023 7,137 4,690
========== ========== ======== ========= =========
DILUTED EARNINGS PER SHARE(1)
Income applicable to common
shareholders before
extraordinary charge...... $ 1.62 $ 1.65 $ 1.53 $ 1.69 $ 0.54
Extraordinary charge........ (0.01) (0.10)
---------- ---------- -------- --------- ---------
Net income.................. $ 1.62 $ 1.64 $ 1.43 $ 1.69 $ 0.54
========== ========== ======== ========= =========
Weighted average common
shares outstanding........ 68,627 31,610 23,218 7,199 4,690
========== ========== ======== ========= =========
</TABLE>

13
<PAGE> 14

FELCOR SUITE HOTELS, INC.

SELECTED PRO FORMA AND HISTORICAL OPERATING AND FINANCIAL DATA -- (CONTINUED)

- ---------------

(1) In 1997, FelCor adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" which established new standards for computing and
presenting earnings per share. Earnings per share for all periods presented
have been calculated according to this standard. Basic earnings per share
have been computed by dividing net income applicable to common shares by the
weighted average number of common shares outstanding. Diluted earnings per
share have been computed by dividing net income applicable to common shares
by the weighted average number of common shares and equivalents outstanding.
Common share and unit equivalents that have a dilutive effect represent
stock options issued to officers and key employees and unvested restricted
stock grants issued to certain officers of FelCor.

(2) Pro forma cash dividends per common share do not include a one-time
distribution of accumulated earnings and profits.

(3) The White Paper on Funds From Operations approved in March 1995 by the Board
of Governors of NAREIT, the National Association of Real Estate Investment
Trusts, defines Funds From Operations as net income (loss) (computed in
accordance with GAAP), excluding gains (or losses) from debt restructuring
and sales of properties, plus real estate related depreciation and
amortization and after comparable adjustments for FelCor's portion of these
items related to unconsolidated entities and joint
14
<PAGE> 15

FELCOR SUITE HOTELS, INC.

SELECTED PRO FORMA AND HISTORICAL OPERATING AND FINANCIAL DATA -- (CONTINUED)

ventures. FelCor believes that Funds From Operations is helpful to
investors as a measure of the performance of an equity REIT because, along with
cash flow from operating activities, financing activities and investing
activities, it provides investors with an indication of the ability of
FelCor to incur and service debt, to make capital expenditures and to fund
other cash needs. FelCor computes Funds From Operations in accordance with
standards established by NAREIT which may not be comparable to Funds From
Operations 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 FelCor. Funds From Operations does not
represent cash generated from operating activities determined by GAAP and
should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indication of FelCor's financial performance or
to cash flow from operating activities (determined in accordance with GAAP)
as a measure of FelCor's liquidity, nor is it indicative of funds available
to fund FelCor's cash needs, including its ability to make cash
distributions. Funds From Operations may include funds that may not be
available for management's discretionary use due to functional requirements
to conserve funds for capital expenditures and property acquisitions, and
other commitments and uncertainties.

The following is a reconciliation of net income to Funds From Operations:

<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------------------
PERIOD FROM
JULY 28, 1994
(INCEPTION OF
PRO OPERATIONS)
FORMA YEAR ENDED DECEMBER 31, THROUGH
(UNAUDITED) ------------------------------ DECEMBER 31,
1997 1997 1996 1995 1994
----------- -------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Net income................. $136,089 $ 63,650 $40,937 $12,191 $2,511
Less: Dividends on
nonconvertible preferred
shares................... (13,313)
Add:
Minority interest in FelCor
Operating Partnership.... 6,096 5,817 5,590 3,131 907
Depreciation............... 122,907 50,798 26,544 5,232 1,487
Depreciation from
unconsolidated
entities................. 10,172 9,365 1,716 153
Extraordinary charge from
write off of deferred
financing fees........... 185 2,354
-------- -------- ------- ------- ------
Funds From Operations
(FFO).................... $261,951 $129,815 $77,141 $20,707 $4,905
======== ======== ======= ======= ======
</TABLE>

(4) Weighted average common shares and units are computed including dilutive
options, unvested restricted stock grants and assuming conversion of
convertible preferred stock to common stock.

(5) EBITDA is computed by adding net income, minority interest in the FelCor
Operating Partnership, interest expense, FelCor's portion of interest
expense from unconsolidated entities, income taxes, depreciation expense,
amortization expense, extraordinary expenses and cash distributions paid by

15
<PAGE> 16

FELCOR SUITE HOTELS, INC.

SELECTED PRO FORMA AND HISTORICAL OPERATING AND FINANCIAL DATA -- (CONTINUED)

unconsolidated entities and deducting extraordinary income and equity in
income from unconsolidated entities. A reconciliation of Funds From Operations
to EBITDA is as follows (in thousands):

<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------------------
PERIOD FROM
YEAR ENDED DECEMBER 31, JULY 28, 1994
------------------------------ (INCEPTION OF
PRO OPERATIONS)
FORMA THROUGH
(UNAUDITED) DECEMBER 31,
1997 1997 1996 1995 1994
----------- -------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Funds From Operations...... $261,951 $129,815 $77,141 $20,707 $4,905
Add back:
Interest expense...... 110,938 28,792 9,803 2,004 109
Interest expense from
unconsolidated
entities............ 6,453 5,896 819
Amortization
expense............. 1,110 1,110 592 158
Cash distributions
from unconsolidated
entities............ 4,211 4,211 1,954
Dividends on
nonconvertible
preferred shares.... 13,313
Deduct:
Equity in income from
unconsolidated
entities............ (8,788) (6,963) (2,010) (513)
Depreciation from
unconsolidated
entities............ (10,172) (9,365) (1,716) (153)
-------- -------- ------- ------- ------
EBITDA..................... $379,016 $153,496 $86,583 $22,203 $5,014
======== ======== ======= ======= ======
</TABLE>

(6) For purpose of computing the ratio of earnings to combined fixed charges and
preferred dividends, earnings consist of net income plus fixed charges and
minority interest in the FelCor Operating Partnership, excluding capitalized
interest, and fixed charges consist of interest, whether expensed or
capitalized, and amortization of loan costs.

16
<PAGE> 17

FELCOR INITIAL HOTELS

SELECTED COMBINED HISTORICAL FINANCIAL DATA
(IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 1, 1994 COMBINED E-5 HOTELS FELCOR HOTELS
THROUGH YEAR ENDED YEAR ENDED YEAR ENDED
JULY 27, 1994 DECEMBER 31, 1993 DECEMBER 31, 1993 DECEMBER 31, 1993
--------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Statement of Operations
Data:
Suite revenue.............. $21,884 $33,550 $15,684 $17,866
Other revenue.............. 1,307 2,002 910 1,092
------- ------- ------- -------
Total revenue.... 23,191 35,552 16,594 18,958
Hotel expenses............. 15,238 22,048 10,006 12,042
Depreciation............... 2,325 4,092 2,331 1,761
Interest expense........... 3,446 5,437 2,615 2,822
Other corporate expenses... 620 3,260 1,670 1,590
------- ------- ------- -------
Net income....... $ 1,562 $ 715 $ (28) $ 743
======= ======= ======= =======
</TABLE>

DJONT OPERATIONS, L.L.C.

SELECTED HISTORICAL OPERATING AND FINANCIAL DATA
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, PERIOD FROM JULY 28, 1994
------------------------------- (INCEPTION OF OPERATIONS)
1997 1996 1995 THROUGH DECEMBER 31, 1994
-------- -------- ------- -------------------------
<S> <C> <C> <C> <C>
Suite revenue.......................... $456,614 $234,451 $65,649 $16,094
Food and beverage rent................. 4,393 2,334 534 61
Food and beverage revenue.............. 34,813 15,119 2,462 1,112
Other revenue.......................... 38,690 17,340 3,924 1,020
-------- -------- ------- -------
Total revenue................ 534,510 269,244 72,569 18,287
Hotel expenses......................... 128,077 66,236 18,455 4,699
Operating expenses..................... 189,783 98,727 26,575 7,330
Percentage lease expenses.............. 216,990 107,935 26,945 6,043
Lessee overhead expense................ 2,332 1,776 834 106
-------- -------- ------- -------
Net income (loss)............ $ (2,672) $ (5,430) $ (240) $ 109
======== ======== ======= =======
</TABLE>

17
<PAGE> 18

SELECTED CONSOLIDATED HISTORICAL
FINANCIAL DATA OF BRISTOL

The following tables set forth selected historical financial data for
Bristol for the years ended December 31, 1997 and 1996, and the 11 months ended
December 31, 1995 and for Bristol's predecessor, a group of entities referred to
as the "Harvey Hotel Companies", for the two years ended December 31, 1994 and
1993, and for the month ended January 31, 1995. The selected balance sheet data
for Bristol is presented as of December 31, 1997, 1996 and 1995. The selected
balance sheet data for the Harvey Hotel Companies is presented as of December
31, 1994 and 1993.

The selected financial data for Bristol set forth below is qualified in its
entirety by, and should be read in conjunction with, the consolidated financial
statements and notes thereto for Bristol included in Bristol's Annual Report on
Form 10-K for the year ended December 31, 1997, which is incorporated herein by
reference.

The selected financial data for the Harvey Hotel Companies has been derived
from financial statements audited by Price Waterhouse LLP, independent
accountants, each of which financial statements is included or incorporated by
reference herein. The selected financial data for the Harvey Hotel Companies set
forth below is qualified in its entirety by, and should be read in conjunction
with, the financial statements and notes thereto included in the Bristol 1997
10-K, which is incorporated herein by reference.

18
<PAGE> 19

BRISTOL HOTEL COMPANY

SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
ELEVEN MONTHS
ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,
----------------------- -------------
1997 1996 1995
---------- ---------- -------------
<S> <C> <C> <C>
OPERATING DATA:
REVENUE:
Rooms................................................... $377,380 $149,794 $115,771
Food, beverage and other................................ 127,138 62,046 49,424
-------- -------- --------
Total revenue................................... 504,518 211,840 165,195
-------- -------- --------
OPERATING COSTS AND EXPENSES:
Departmental expenses:
Rooms................................................ 105,063 37,706 32,692
Food, beverage and other............................. 79,092 35,810 31,376
Undistributed operating expenses:
Administration and general, marketing................ 78,694 33,821 28,254
Property operating costs............................. 79,633 28,402 24,738
Depreciation and amortization........................ 39,690 18,377 13,505
Corporate expense.................................... 24,450 10,958 8,035
-------- -------- --------
Operating income................................ 97,896 46,766 26,595
-------- -------- --------
Other expenses:
Interest expense..................................... 44,591 18,616 18,374
Other non-operating expenses......................... -- -- 430
Equity in income of joint ventures................... (1,916) -- --
Income taxes......................................... 22,007 10,401 2,822
-------- -------- --------
Income before extraordinary item.......................... 33,214 17,749 4,969
Extraordinary loss on early extinguishment of debt, net of
income taxes............................................ 12,741 -- 1,908
-------- -------- --------
Net income................................................ $ 20,473 $ 17,749 $ 3,061
======== ======== ========
Diluted earnings per common and common equivalent share:
Income before extraordinary item........................ $ 0.87 $ 0.70 $ 0.28
Net income.............................................. $ 0.53 $ 0.70 $ 0.17
Weighted average number of common and common equivalent
shares outstanding -- diluted (in thousands)............ 38,332 25,526 17,909
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1997 1996 1995
---------- -------- --------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 86,167 $ 4,666 $ 7,906
Property and equipment -- net............................. 1,439,167 552,564 470,705
Total assets.............................................. 1,666,638 592,788 512,901
Long-term debt including current portion.................. 717,319 232,694 170,544
Stockholders' equity...................................... 648,794 252,157 236,122
</TABLE>

19
<PAGE> 20

HARVEY HOTEL COMPANIES (PREDECESSOR)

SELECTED HISTORICAL COMBINED FINANCIAL DATA
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
MONTH ENDED ------------------
JANUARY 31, 1995 1994 1993
---------------- ------- -------
<S> <C> <C> <C>
OPERATING DATA:
REVENUE:
Rooms.................................................. $4,006 $44,972 $39,968
Food, beverage and other............................... 1,937 25,379 24,054
------ ------- -------
Total revenue.......................................... 5,943 70,351 64,022
------ ------- -------
OPERATING COSTS AND EXPENSES:
Departmental expenses:
Rooms.................................................. 1,124 10,344 9,469
Food, beverage and other............................... 1,055 14,835 14,600
Undistributed operating expenses:
Administrative and general, marketing.................. 579 11,369 10,285
Property operating costs............................... 629 10,563 10,086
Depreciation........................................... 309 4,041 3,963
Corporate expense...................................... 315 3,761 2,827
------ ------- -------
Operating income............................... 1,932 15,438 12,792
------ ------- -------
Other (income) expenses:
Interest expense, net.................................. 652 7,631 7,737
Other non-operating income............................. -- (337) (241)
------ ------- -------
Income before extraordinary item......................... $1,280 $ 8,144 $ 5,296
====== ======= =======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
-------- --------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 4,118 $ 395
Property and equipment, net................................. 80,635 72,387
Total assets................................................ 109,874 99,635
Long-term debt, including current portion................... 114,054 112,963
Equity...................................................... (11,988) (20,604)
</TABLE>

20
<PAGE> 21

SELECTED COMPARATIVE PER SHARE DATA

The following table sets forth selected historical per share data for
FelCor and Bristol, selected unaudited pro forma per share data for FelCor
giving effect to the merger using the purchase method of accounting and the
equivalent pro forma per share amounts for Bristol. The pro forma data is not
necessarily indicative of actual financial position or future operating results
or that which would have occurred or will occur upon consummation of the merger.

The information shown below should be read in conjunction with (i) the
consolidated financial statements and notes thereto incorporated herein by
reference and (ii) the selected pro forma financial data included elsewhere in
this Joint Proxy Statement/Prospectus.

Unless otherwise indicated, all references to the number of shares and per
share amounts for Bristol have been restated to reflect the impact of the
3-for-2 stock split on the Bristol common shares effected in the form of a stock
dividend distributed on June 30, 1997.

COMPARATIVE PER SHARE INFORMATION

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1997
------------------------------------------------------
BRISTOL
FELCOR BRISTOL FELCOR PRO FORMA
HISTORICAL HISTORICAL PRO FORMA(1) EQUIVALENT(2)
---------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Basic net income per common share before
extraordinary items.............................. $ 1.67 $ .89 $ 1.64 $ 1.12
Diluted net income per common share before
extraordinary items.............................. 1.65 .87 1.62 1.11
Cash distributions per common share................ 2.10 -- 2.10 --
Book value per common share........................ 25.33(3) 14.87(3) 30.42(3) 20.84
</TABLE>

- ---------------

(1) The pro forma per share data for FelCor for the year ended December 31, 1997
is presented as if the merger and the transactions contemplated thereby, and
certain other recent transactions (which include the transactions described
in "Pro Forma Financial Information") had occurred as of January 1, 1997.

(2) The equivalent per share amounts of Bristol are calculated by multiplying
pro forma net income per FelCor common share, pro forma cash
distributions/dividends per FelCor common share and pro forma book value per
FelCor common share (post-merger) by the Exchange Ratio of 0.685.

(3) Book value per common share was calculated using stockholders' equity as
reflected in the historical and pro forma financial statements divided by
the number of FelCor or Bristol common shares outstanding.

DISTRIBUTION POLICIES

FelCor has adopted a policy of paying regular quarterly distributions on
FelCor common shares and has paid cash distributions on FelCor common shares
each quarter since its inception. In order to qualify for the tax benefits
accorded to REITs under the Internal Revenue Code of 1986, FelCor must make
annual distributions of at least 95% of its taxable income (which does not
include net capital gains). See "Certain Federal Income Tax Considerations."

FelCor currently anticipates that it will maintain at least the current
dividend rate for the immediate future, unless actual results of operations,
economic conditions or other factors differ from its current expectations.
Future distributions, if any, paid by FelCor will be at the discretion of
FelCor's Board of Directors and will depend on the actual cash flow of FelCor,
its financial condition, capital requirements, the annual distribution
requirements under the REIT provisions of the Code and such other factors as the
FelCor Board deems relevant. FelCor expects to make a special cash distribution
before the end of 1998 in an amount sufficient to eliminate Bristol's
accumulated earnings and profits at the time of the merger. See "Certain Federal
Income Tax Considerations -- Qualification and Operation of FelCor as a REIT;
Ownership and Disposition of FelCor Common Shares -- Distribution Requirements."

The provisions of the FelCor Series A preferred shares prohibit the
declaration and payment of distributions on FelCor common shares unless full
cumulative dividends on the FelCor Series A preferred shares have been or
contemporaneously are declared and paid or set aside for payment. The annual
dividend

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rate for the FelCor Series A preferred shares is a minimum of $1.95 per share.
All preferred dividends on the FelCor Series A preferred shares are current. In
addition, the terms of FelCor's debt instruments further restrict FelCor's
ability to make distributions with respect to its capital stock, although FelCor
generally is permitted to make distributions in amounts necessary to maintain
its status as a REIT.

Bristol has not paid any cash dividends on the Bristol common shares since
its inception in December 1995 and does not anticipate that it will do so in the
foreseeable future. Instruments governing certain of Bristol's indebtedness
restrict the payment of dividends on its common shares.

COMPARATIVE MARKET DATA

FelCor's common shares and Bristol's common shares are listed on the New
York Stock Exchange. FelCor common shares trade under the ticker symbol "FCH",
and Bristol common shares trade under the ticker symbol "BH". Prior to March 13,
1996, FelCor common shares traded on The Nasdaq Stock Market under the ticker
symbol "FLCO".

The following table sets forth the quarterly high and low closing sales
prices of FelCor common shares and Bristol common shares, as well as the
quarterly distributions declared per share with respect to FelCor common shares,
for the periods indicated below. Bristol has not paid any dividends on Bristol
common shares since Bristol's initial public offering in December 1995.

<TABLE>
<CAPTION>
BRISTOL COMMON
FELCOR COMMON SHARES SHARES
----------------------------------------- ----------------------
DISTRIBUTIONS
HIGH LOW PER SHARE HIGH(1) LOW(1)
---- --- ------------- ------- ------
<S> <C> <C> <C> <C> <C>
1996
First Quarter........................... $32 $27 1/8 $0.46 $19 1/12 $16 1/4
Second Quarter.......................... 31 5/8 28 1/2 0.46 21 2/3 18 1/4
Third Quarter........................... 32 1/2 27 3/4 0.50 21 5/12 17 1/2
Fourth Quarter.......................... 36 3/4 30 3/8 0.50 21 1/6 16 2/3
1997
First Quarter........................... $37 1/2 $33 1/2 $0.50 $29 2/3 $21 1/12
Second Quarter.......................... 37 3/4 34 1/2 0.50 28 11/12 24 1/12
Third Quarter........................... 41 1/2 36 0.55 28 1/4 25 1/2
Fourth Quarter.......................... 42 7/8 34 15/16 0.55 29 3/4 23 15/16
1998
First Quarter........................... $39 1/2 $34 9/16 $0.55 $28 1/2 $24 1/2
Second Quarter (through April ,
1998)................................
</TABLE>

- ---------------

(1) As adjusted for a three-for-two stock split in the form of a stock dividend
distribution effective June 30, 1997.

On March 23, 1998, the last full trading day prior to the public
announcement of the merger, FelCor common shares closed at $36 1/8 per share and
Bristol common shares closed at $27 5/8 per share.

BECAUSE THE 0.685 RATIO AT WHICH BRISTOL COMMON SHARES ARE EXCHANGED INTO
FELCOR COMMON SHARES AS A RESULT OF THE MERGER IS FIXED AND THE MARKET PRICE OF
FELCOR COMMON SHARES IS SUBJECT TO FLUCTUATION, THE MARKET VALUE OF FELCOR
COMMON SHARES THAT BRISTOL STOCKHOLDERS WILL RECEIVE IN THE MERGER MAY INCREASE
OR DECREASE PRIOR TO AND FOLLOWING THE MERGER. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR FELCOR COMMON SHARES AND BRISTOL COMMON SHARES.

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RISK FACTORS

You should carefully consider the following risk factors, together with the
other information provided, before voting on the proposed merger. Each of these
risk factors could adversely affect FelCor's revenues and, consequently, its
ability to pay its obligations and make distributions to its stockholders.

RISKS ASSOCIATED WITH THE MERGER

Fixed Exchange Ratio. Upon completion of the merger, each share of Bristol
will be converted into 0.685 FelCor common shares. This exchange ratio is fixed
and will not adjust to reflect changes in the relative values of FelCor and
Bristol stock. These changes in relative value could occur due to changes in the
business, operations or prospects of either of the companies or other factors.
In addition, the trading prices of FelCor common shares will vary and,
accordingly, the value of the merger consideration will fluctuate with such
changes in trading prices and may differ between the date of this Joint
Proxy/Prospectus, the date of the annual meetings, and the effective time of the
merger.

Integration of Bristol's Assets; Realization of Anticipated Benefits. If
the proposed merger is completed, it will more than double the number of hotels
owned by FelCor. Although the newly acquired hotels will be operated by the
spin-off company under long-term leases, FelCor will be required to integrate
these hotels into its hotel portfolio and may need additional people and
resources to handle the increased work load. If FelCor is unable to successfully
integrate the newly acquired hotels into its portfolio, FelCor's business,
financial condition and results of operations could suffer. A large number of
the Bristol hotels to be acquired by FelCor in the merger are in the process of,
or awaiting, substantial renovation, modernization and repositioning. The
exchange ratio was established, in part, based upon the anticipated effects of
such renovations, modernization and repositioning plans. If the implementation
of these plans do not yield the anticipated results, then FelCor may have paid
too much or too little for the Bristol hotels.

RISKS OF LEVERAGE, FLOATING RATE DEBT AND INABILITY TO RETAIN EARNINGS

Bristol is more highly leveraged than FelCor, which will result in an
increase in FelCor's leverage following the merger. At December 31, 1997, on a
pro forma basis (assuming that the merger, acquisitions and related transactions
had been completed), FelCor would have had outstanding indebtedness of $1.5
billion, 46.3% of which would have been secured. FelCor's pro forma ratio of
EBITDA to interest paid for the year ended December 31, 1997 was 3.5x. Of
FelCor's pro forma indebtedness at December 31, 1997, $410 million provided for
the payment of interest at floating rates. Most of this floating rate debt bears
interest at a rate equal to between 0.45% and 1.75% plus the 30-day LIBOR rate.
At December 31, 1997, LIBOR was 5.71875%. Changes in economic conditions could
result in higher interest rates, thereby increasing FelCor's interest expense on
its floating rate debt and reducing funds available for distribution to FelCor's
stockholders. In order to qualify as a REIT, FelCor must distribute to its
stockholders, annually, at least 95% of its net taxable income (excluding
capital gains) and, accordingly, cannot retain any substantial portion of its
earnings to meet its capital needs.

After the merger, FelCor anticipates refinancing a substantial portion of
Bristol's long-term debt. However, the capital markets are volatile, and there
can be no assurance that FelCor will be successful in refinancing Bristol's
debt.

DEPENDENCE ON LESSEES' HOTEL OPERATIONS

FelCor's revenues currently and in the future will consist primarily of
rents received under its leases. The lessees' payment of such rental obligations
is generally unsecured. As the lessee of the hotels being acquired by FelCor in
the merger, the spin-off company will initially have a net worth of $30 million
and will be obligated to maintain certain net worth and liquidity requirements.
DJONT Operations, L.L.C., which leases FelCor's current hotels, has limited
assets, derives its revenue solely from the operation of FelCor's hotels and, at
December 31, 1997, had a shareholders' deficit of approximately $9.1 million.
However, DJONT or its subsidiaries have the right to borrow, on a subordinated
basis and subject to certain limitations, up to an aggregate of $17.0 million to
meet its rental obligations from its equity owners and certain of the equity

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<PAGE> 24

owners and managers of hotels leased by it. FelCor will be substantially
dependent upon the operations of its hotels to enable the lessees (particularly
DJONT) to meet their rental obligations under the leases.

The leases with DJONT and the spin-off company have varying terms,
generally no longer than 15 years. At the expiration of the lease terms, FelCor
will be required to negotiate renewals or seek replacement leases, which could
adversely affect its results of operations.

CONFLICTS OF INTEREST

Certain FelCor Directors. DJONT currently leases all of FelCor's current
hotels, either directly or through subsidiaries. All of the voting interests
(and a 50% equity interest) in DJONT are beneficially owned by Hervey A. Feldman
and Thomas J. Corcoran, Jr. All of the non-voting interests (and the remaining
50% equity interest) in DJONT are beneficially owned by the children of Charles
N. Mathewson. Mr. Feldman is a co-founder and the current Chairman of the Board
of FelCor. He plans to retire from the board and become Chairman Emeritus
following the 1998 annual meeting of stockholders. Mr. Corcoran is a co-founder
and the President and Chief Executive Officer of FelCor and, together with Mr.
Mathewson, will continue to serve as a director of FelCor following the merger.

In an effort to reduce any conflict of interest, Mr. Feldman and Mr.
Corcoran have agreed to use any distributions to them from DJONT, in excess of
their tax liabilities for DJONT's earnings, to purchase additional FelCor shares
or limited partnership units in FelCor's operating partnership at then current
market prices.

All of the Bristol hotels to be acquired by FelCor in the merger will be
leased to the spin-off company. It is not anticipated that any person who is an
officer or director of the spin-off company will also be an officer or director
of FelCor. However, Donald J. McNamara, who will become the Chairman of the
Board of FelCor following the merger, is a principal in a firm that controls the
general partner of United/Harvey Holdings, L.P., which will beneficially own
approximately 40.6% of the stock of the spin-off company. In addition, Michael
D. Rose and Richard C. North are expected to join FelCor's Board. Mr. Rose is a
director of Promus Hotel Corporation. Mr. North is the Group Finance Director of
the parent of Holiday Hospitality Corporation. Promus is, and will continue to
be, the franchisor and manager of most of FelCor's current hotels. Holiday
Hospitality will be the franchisor of most of the Bristol hotels to be acquired
by FelCor in the merger and, together with its affiliates, will own
approximately 9.9% of the stock of the spin-off company.

Issues may arise under these leases, franchise agreements and management
contracts, and in the allocation of acquisition and leasing opportunities, that
present conflicts of interest due to the affiliations of these directors. It is
anticipated that any director who has a conflict of interest with respect to an
issue presented to the FelCor Board will abstain from voting upon that issue.

No Arms-Length Bargaining on Percentage Leases. The terms of the leases
between FelCor and DJONT were not negotiated on an arms-length basis.
Accordingly, these percentage leases may not reflect fair market values or
terms. However, the management of FelCor believes that the terms of these leases
are fair to FelCor. The rental terms of these leases are set based upon
historical financial information and projected operating performance of the
applicable hotel. The other terms of the leases are typical of the provisions
found in other leases entered into in similar circumstances. The leases have
been approved by a majority of the independent directors of FelCor, who are not
officers or employees of FelCor, DJONT or affiliates of either of them.

Adverse Tax Consequences to Certain Affiliates on a Sale of Certain
Hotels. Messrs. Feldman, Corcoran and Mathewson may have additional tax
liability if FelCor sells its investments in six hotels acquired by FelCor in
July 1994 from partnerships controlled by these individuals. Consequently, the
interests of FelCor and of Messrs. Feldman, Corcoran and Mathewson could be
different in the event that FelCor decided to consider a sale of any of these
hotels. Decisions regarding a sale of any of these six hotels must be made by
FelCor's Board and approved by at least a majority of its independent directors.

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<PAGE> 25

RESTRICTIVE DEBT COVENANTS

The agreements governing FelCor's line of credit and senior notes contain
various restrictive covenants, including, among others, provisions restricting
FelCor from incurring indebtedness, making investments, engaging in transactions
with stockholders and affiliates, incurring liens, merging or consolidating with
another person, disposing of all or substantially all of its assets or
permitting limitations on its subsidiaries with respect to the payment of
dividends or other amounts to FelCor. In addition, these agreements require
FelCor to maintain certain specified financial ratios. These limitations may
restrict FelCor's ability to obtain additional debt capital or limit its ability
to engage in certain transactions. In addition, any breach of these limitations
could result in the acceleration of most of FelCor's outstanding indebtedness.
FelCor may not be able to refinance or repay this indebtedness in full under
such circumstances.

HOTEL INDUSTRY RISKS

Growth Opportunities. There has been substantial consolidation in, and
capital allocated to, the U.S. lodging industry since the early 1990s. This has
generally resulted in higher prices for hotels and fewer attractive acquisition
opportunities. An important part of FelCor's growth strategy is the acquisition
and, in many instances the renovation and repositioning, of hotels at less than
replacement cost. Continued industry consolidation and competition for
acquisitions could adversely affect FelCor's growth prospects. FelCor competes
for hotel investment opportunities with other companies, some of which have
greater financial or other resources. The larger competitors may be able to pay
higher prices or assume greater risks than would be appropriate for FelCor.

Operating Risks. The hotels owned by FelCor are subject to all of the risks
common to the hotel industry. These risks could adversely affect hotel occupancy
and the rates that can be charged for hotel rooms, and generally include:

- The existence of competition from other hotels;

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

- The increase in energy costs and other travel expenses that reduce
business and leisure travel;

- The adverse effects of declines in general and local economic activity;
and

- The risks generally associated with the ownership of real estate.

In addition, annual adjustments (based on changes in the Consumer Price Index)
are made to the base rent and the thresholds used to compute percentage rent
under FelCor's percentage leases. These adjustments, unless offset by increases
in hotel revenues, would reduce the amount of rent payable to FelCor under its
percentage leases and, consequently, FelCor's results of operations.

Competition. Each of FelCor's hotels competes with other hotels in its
geographic area. A number of additional hotel rooms have been or may be built in
a number of the geographic areas in which FelCor's hotels are located, which
could adversely affect the results of operations of these hotels.

Seasonality. The hotel industry is seasonal in nature. Generally, hotel
revenues are highest in the second and third quarters of each year. Seasonality
causes quarterly fluctuations in FelCor's revenue. FelCor may be able to reduce,
but not eliminate, the effects of seasonality by continuing to diversify the
geographic location and primary customer base of its hotels.

Investment Concentration in a Single Industry. Historically, FelCor has
only invested in hotel-related assets. In the event of a downturn in the hotel
industry, the adverse effect on FelCor may be greater than on a more diversified
company with assets outside of the hotel industry.

Risks of Operating Hotels Under Franchise Agreements. Most of FelCor's
hotels are and, following the proposed merger will be, operated under various
franchise licenses. Each license agreement requires that the franchised hotel be
maintained and operated in accordance with certain standards. The franchisors
also may require substantial improvements to FelCor's hotels, for which FelCor
would be responsible under the

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<PAGE> 26

percentage leases, as a condition to the renewal or continuation of these
franchise licenses. The consent of certain franchisors to the transfer of
Bristol's hotels to FelCor in the merger has not yet been obtained. If a consent
is withheld, the merger could result in the termination of such licenses. If a
franchise license terminates due to FelCor's failure to make required
improvements or to obtain necessary consents (and under certain other
circumstances), FelCor may be liable for substantial termination payments. The
loss of a substantial number of franchise licenses could have a material adverse
effect on FelCor's results of operations.

LIMITATIONS ON ACQUISITIONS AND IMPROVEMENTS

FelCor intends to continue its current growth strategy, which includes
acquiring and improving hotel properties. FelCor generally cannot fund its
growth from cash from its operating activities because FelCor must distribute to
its stockholders at least 95% of its taxable income each year to maintain its
status as a REIT. Consequently, FelCor must rely primarily upon the availability
of debt or equity capital to fund hotel acquisitions and improvements. There can
be no assurance that FelCor will continue to have access to the capital markets
to fund future growth at an acceptable cost. In addition, FelCor's Board has
adopted a policy of limiting indebtedness to not more than 40% of FelCor's
investment in hotel assets, at historical cost, which could also limit FelCor's
ability to incur additional indebtedness to fund its continued growth.

TAX RISKS

Failure to Qualify as a REIT Would Subject FelCor to Federal Income
Tax. FelCor has operated and, following the merger, will continue to operate in
a manner that is intended to qualify it as a REIT under federal income tax laws.
The REIT qualification requirements are extremely complicated and
interpretations of the federal income tax laws governing qualification as a REIT
are limited. Accordingly, FelCor cannot be certain that it has been or will
continue to be successful in operating so as to qualify as a REIT. At any time,
new laws, interpretations or court decisions may change the federal tax laws or
the federal income tax consequences of qualification as a REIT.

If FelCor failed to qualify as a REIT, FelCor would be required to pay
federal income tax on its taxable income. FelCor might need to borrow money or
sell hotels in order to pay any such tax. FelCor's payment of income tax would
decrease the amount of its income available to be paid out to its stockholders.
In addition, FelCor would no longer be required to pay out most of its taxable
income to its stockholders. Unless its failure to qualify as a REIT were excused
under federal income tax laws, FelCor could not re-elect REIT status until the
fifth calendar year following the year in which it failed to qualify.

At the closing of the merger, Hunton & Williams, special tax counsel to
FelCor, will give FelCor an opinion letter to the effect that (i) commencing
with its taxable year ended December 31, 1994, FelCor has qualified as a REIT
and (ii) the merger will not prevent FelCor from continuing to qualify as a
REIT. This opinion will, however, be based upon customary assumptions,
representations and limitations, including assumptions regarding Bristol's
estimate of its accumulated earnings and profits for federal income tax purposes
through the completion of the merger, and will not be binding upon the Internal
Revenue Service.

Failure to Make Required Distributions Would Subject FelCor to Tax. In
order to qualify as a REIT, each year FelCor must pay out to its stockholders at
least 95% of its taxable income (other than any net capital gain). In addition,
FelCor would be subject to a 4% nondeductible tax if the actual amount it pays
out to its stockholders in a calendar year were less than the minimum amount
specified under federal tax laws. FelCor has paid out and intends to continue to
pay out its income to its stockholders in a manner intended to satisfy the 95%
test and to avoid the 4% tax. In doing so, FelCor may be required to borrow
money or sell assets to pay out enough of its taxable income to satisfy the 95%
test and to avoid the 4% tax in a particular year.

Failure to Distribute Bristol's Earnings and Profits in 1998 Would Cause
FelCor to Fail to Qualify as a REIT. At the end of any taxable year, a REIT may
not have any accumulated earnings and profits (described generally for federal
income tax purposes as cumulative undistributed net income) from a non-REIT
corporation. Accordingly, by the end of 1998, FelCor must pay out to its
stockholders an amount equal to Bristol's
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<PAGE> 27

accumulated earnings and profits through the date of the merger. If FelCor
failed to pay out such amount for its 1998 taxable year, it would fail to
qualify as a REIT.

Prior to the merger, Bristol will provide FelCor with an estimate of
Bristol's earnings and profits through the date of the merger and a confirmation
of that estimate from Arthur Andersen LLP. Within three months after the merger,
Arthur Andersen LLP will prepare a final computation of Bristol's accumulated
earnings and profits through the date of the merger. However, the determination
of a company's accumulated earnings and profits for federal income tax purposes
is extremely complex and the computations by Bristol and Arthur Andersen LLP
will not be binding upon the Internal Revenue Service. In giving its REIT
qualification opinion, Hunton & Williams will rely on these computations of
Bristol's earnings and profits. Should the Internal Revenue Service successfully
assert that Bristol's accumulated earnings and profits were greater than the
amount distributed by FelCor for 1998, based on such calculations, FelCor would
fail to qualify as a REIT.

Sale of Assets Acquired from Bristol Within Ten Years After the Merger Will
Result in Corporate Tax. If FelCor sells any asset acquired from Bristol within
ten years after the merger and recognizes gain, FelCor will be taxed at the
highest corporate rate on an amount equal to the fair market value of the asset
minus the adjusted basis of the asset as of the merger.

EFFECT OF MARKET INTEREST RATES ON THE PRICE OF FELCOR COMMON SHARES

One of the factors that may affect the price of your FelCor common shares
is the amount of its distributions to stockholders in comparison to yields on
other financial instruments. An increase in market interest rates would provide
higher yields on other financial instruments, which could adversely affect the
price of your FelCor common shares.

RELIANCE ON KEY PERSONNEL AND BOARD OF DIRECTORS

As a stockholder, you will have no right to participate in FelCor's
management, except through the exercise of your voting rights. FelCor's Board of
Directors will be responsible for oversight of the management of FelCor.
FelCor's future success will be dependent in part on its ability to retain key
personnel, including Mr. Corcoran.

REAL ESTATE INVESTMENT RISKS

General. FelCor's investments in hotels are, and following the merger will
continue to be, subject to the numerous risks generally associated with owning
real estate. These risks include, among others, adverse changes in general or
local economic or real estate market conditions, zoning laws, traffic patterns
and neighborhood characteristics, real estate tax assessments and rates,
governmental regulations and fiscal policies, the potential for uninsured or
underinsured casualty and other losses, the impact of environmental laws and
regulations (discussed below) and other circumstances beyond the control of
FelCor. Moreover, real estate investments are relatively illiquid, which means
that FelCor's ability to vary its portfolio in response to changes in economic
and other conditions may be limited.

Environmental Matters. There are numerous federal, state and local
environmental laws and regulations to which owners of real estate are subject.
Under these laws a current or prior owner of real estate may be liable for the
costs of cleaning up and removing hazardous or toxic substances found on its
property, whether or not it was responsible for their presence. In addition, if
an owner of real property arranges for the disposal of hazardous or toxic
substances at another site, it may also be liable for the costs of cleaning up
and removing such substances from the disposal site, even if it did not own or
operate the disposal site. A property owner may also be liable to third parties
for personal injuries or property damage sustained as a result of its release of
hazardous or toxic substances (including asbestos-containing materials) into the
environment. Environmental laws may require FelCor to incur substantial expenses
and limit the use of its properties. FelCor could be liable for substantial
amounts for a failure to comply with applicable environmental laws, which may be
enforced by the government or, in certain instances, by private parties. The
existence of hazardous or toxic

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substances on a property can also adversely affect the value of, and the owner's
ability to use, sell or borrow against, the property.

OWNERSHIP LIMITATION

In order for FelCor to maintain its status as a REIT, no more than 50% in
value of its outstanding stock may be owned (actually or constructively under
the applicable tax rules) by five or fewer persons during the last half of any
taxable year. In connection with this requirement, FelCor's charter prohibits,
subject to certain exceptions, any person from owning more than 9.9% (determined
in accordance with the Internal Revenue Code and the Securities Exchange Act of
1934, as amended) of the number of outstanding shares of any class of its
capital stock. FelCor's charter also prohibits any transfer of its capital stock
that would result in a violation of the 9.9% ownership limit, reduce the number
of stockholders below 100 or otherwise result in FelCor failing to qualify as a
REIT. Any attempted transfer in violation of the charter prohibitions will be
void and the intended transferee will not acquire any right in the shares
resulting in such violation. FelCor has the right to take any lawful action that
it believes necessary or advisable to ensure compliance with these ownership and
transfer restrictions and to preserve its status as a REIT, including refusing
to recognize any transfer of capital stock in violation of its charter.

If you hold or attempt to acquire shares in excess of FelCor's ownership
and transfer restrictions, these shares will be immediately designated as
"shares-in-trust" and transferred automatically and by operation of law, in
trust, to a trustee designated by FelCor. The trustee will have the right to
receive all distributions on, to vote and to sell these shares. You will have no
right or interest in these shares, except the right (under certain
circumstances) to receive the lesser of: (i) the proceeds of any sale of these
shares by the trustee to a permitted owner and (ii) the amount you paid for
these shares (or the market value of these shares, determined in accordance with
the charter, if you received them by gift, bequest or otherwise without
payment). Accordingly, if you are the record owner of any shares designated as
shares-in-trust you would suffer a financial loss if the price at which these
shares are sold to a permitted owner is less than what you paid for these
shares.

If the merger had been completed on the date the merger agreement was
signed, the two largest beneficial owners of Bristol's shares would have each
beneficially owned more than 9.9% of FelCor's common shares. Subject to certain
limitations, FelCor has agreed to waive the 9.9% ownership limit in its charter
with respect to such Bristol stockholders, each of which initially will be
allowed to own up to 15% of FelCor's common shares.

CERTAIN ANTITAKEOVER AND CORPORATE GOVERNANCE PROVISIONS

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

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

Authority to Issue Additional Shares. Under the FelCor charter, the FelCor
Board may issue preferred stock without stockholder action. The preferred stock
may be issued, in one or more series, with the preferences, qualifications and
terms, designated by the FelCor Board that may discourage, delay or prevent a
change in control of FelCor, even if such change were in the best interests of
stockholders. FelCor currently has outstanding 6,050,000 shares of its $1.95
Series A Cumulative, Convertible Preferred Stock and currently plans to issue
approximately $150 million of additional preferred stock prior to the merger to
finance a portion of the purchase price of eight hotels from Starwood Hotels &
Resorts. The preferred stock will reduce the amount of dividends available to,
and will have dividend, liquidation and other rights superior to the

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holders of FelCor's common shares. The charter and bylaws of FelCor will contain
other provisions that also may have the effect of delaying, deferring or
preventing such a transaction or change in control of FelCor.

Maryland Anti-Takeover Statutes. As a Maryland corporation, FelCor is
subject to various provisions under the Maryland General Corporation Law,
including the Maryland business combination statute, which sets forth certain
procedures that must be followed in, and otherwise restricts, certain takeovers
and business combinations. FelCor's charter currently exempts FelCor from the
operation of the Maryland share control statute, which may deny voting rights to
shares involved in an acquisition of one-fifth or more of the voting stock of a
Maryland corporation. To the extent these laws are applicable to FelCor, they
may discourage a tender offer for, or other attempt to acquire, control of
FelCor even though such an attempt might be beneficial to FelCor's stockholders.

IMPACT OF YEAR 2000 ISSUE

The year 2000 issue relates to computer programs that were written using
two digits rather than four to define the applicable year. In those programs,
the year 2000 may be incorrectly identified as the year 1900, this could result
in a system failure or miscalculations causing a disruption of operations,
including a temporary inability to process transactions, prepare financial
statements or engage in other normal business activities.

Bristol has reviewed its computer systems and has determined that the
majority of the systems are year 2000 compliant. There are, however, a few
computer systems including automated time clock systems, certain embedded
systems such as phone systems and certain other third-party reservation systems
that may require reprogramming. Bristol has initiated a comprehensive program to
identify, correct or reprogram, and test these systems and anticipates that all
reprogramming efforts will be substantially complete by December 31, 1998,
thereby allowing adequate time for testing. Bristol will assess the year 2000
compliance expense and related potential effect on Bristol's earnings by June
1998.

FelCor has recently assessed its internal computer systems and believes
that they will properly utilize dates beyond the year 2000. FelCor has been
informed that the companies leasing and managing hotels owned by it are in the
process of studying the year 2000 issue, including inquiries of their vendors.
Upon completion of these studies, which are expected in late 1998, FelCor will
determine the extent to which it may be vulnerable to third parties' failure to
remedy their year 2000 problems and potential effects of any such failures.

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THE ANNUAL MEETINGS

TIMES, PLACES AND DATES OF THE ANNUAL MEETINGS

FelCor's 1998 Annual Meeting of Stockholders (the "FelCor Annual Meeting")
will be held at 10:00 a.m., local time, on , June , 1998, at the Embassy
Suites Park Central hotel, located at 13131 North Central Expressway, Dallas
Texas. Bristol's 1998 Annual Meeting of Stockholders (the "Bristol Annual
Meeting") will be held at 10:00 a.m., local time, on , June , 1998, at
the Crowne Plaza Hotel, located at 14315 Midway Road, Dallas, Texas.

PURPOSES OF THE FELCOR ANNUAL MEETING

At the FelCor Annual Meeting, FelCor stockholders will be asked to consider
and vote upon a proposal to adopt the Agreement and Plan of Merger between
Bristol and FelCor (the "Merger Agreement"). Pursuant to the Merger Agreement,
Bristol will be merged with and into FelCor (the "Merger") and FelCor's Articles
of Amendment and Restatement, as previously amended and supplemented (the
"FelCor Charter") will be changed (i) to increase the authorized number of
shares of FelCor's common stock (the "FelCor Common Shares") from 100 million to
200 million and of shares of FelCor's preferred stock from 10 million to 20
million and (ii) to change the name of FelCor to "FelCor Lodging Trust, Ltd.",
all as provided for in the Merger Agreement. A copy of the Merger Agreement is
attached to this Joint Proxy Statement/Prospectus as Annex A. In addition,
FelCor stockholders will be asked (i) to elect two directors to the FelCor Board
of Directors (the "FelCor Board"), in each case to serve until the earlier of
the consummation of the Merger and FelCor's 2001 annual meeting of stockholders,
and (ii) to ratify the adoption of FelCor's 1998 Restricted Stock and Stock
Option Plan (the "FelCor 1998 Plan").

PURPOSES OF THE BRISTOL ANNUAL MEETING

At the Bristol Annual Meeting, Bristol stockholders will be asked to
consider and vote upon a proposal to adopt the Merger Agreement. Approval of the
adoption of the Merger Agreement will also be deemed to be approval of certain
other transactions to be completed before the Merger, including the distribution
by Bristol (the "Spin-Off") of all of the common shares of Bristol Hotels &
Resorts ("BHR") pro rata to the holders of the outstanding shares of Bristol's
common stock (the "Bristol Common Shares"). The Merger cannot be completed
unless the Spin-Off is also completed. In addition, Bristol stockholders will be
asked (i) to elect nine directors to the Bristol Board of Directors (the
"Bristol Board"), in each case to serve until the earlier of the consummation of
the Merger and Bristol's 1999 annual meeting of stockholders, (ii) to approve
BHR's adoption of a 1998 Equity Incentive Plan, (iii) to approve BHR's adoption
of a 1998 Non-Employee Director Stock Option Plan (collectively, the "BHR
Incentive Plans"), and (iv) to approve the adoption of an amendment that
increases the number of Bristol Common Shares reserved for issuance pursuant to
Bristol's 1995 Amended and Restated Equity Incentive Plan (the "Bristol
Incentive Plan") from 1,950,000 to 3,130,000.

RECORD DATES; QUORUM

Stockholders of record of FelCor and Bristol at the close of business on
April 28, 1998 (the "Record Date") will be entitled to notice of and to vote at
their respective Annual Meetings and at any adjournments or postponements
thereof. There were issued and outstanding 36,591,080 FelCor Common Shares, as
of the Record Date, held by approximately 250 stockholders of record. There were
issued and outstanding 43,806,401 Bristol Common Shares as of the Record Date,
held by approximately stockholders of record.

Holders of a majority of the FelCor Common Shares or Bristol Common Shares
entitled to vote at the respective Annual Meetings, represented in person or by
proxy, will constitute a quorum for each meeting. A quorum is necessary for a
valid Annual Meeting.

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VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL

Each holder of FelCor Common Shares or Bristol Common Shares will be
entitled to cast one vote for each share so held. The adoption of the Merger
Agreement by the stockholders of FelCor and Bristol requires the affirmative
vote of the holders of at least a majority of each of the outstanding FelCor
Common Shares and Bristol Common Shares.

The two candidates for director receiving the highest number of affirmative
votes cast at the FelCor Annual Meeting will be elected as directors of FelCor.
The nine candidates for director receiving the highest number of affirmative
votes cast at the Bristol Annual Meeting will be elected as directors of
Bristol. The affirmative vote of the holders of a majority of FelCor Common
Shares or Bristol Common Shares voting thereon at the respective Annual Meetings
is required to approve each of the other proposals.

As of the Record Date, 1,576,464 FelCor Common Shares (approximately 4.3%
of the shares outstanding as of the Record Date) were entitled to be voted by
the directors and officers of FelCor and their affiliates, and 4,014,479 Bristol
Common Shares (approximately 9.0% of the shares outstanding as of the Record
Date) were entitled to be voted individually by the directors and officers of
Bristol. These directors and officers have indicated that they intend to vote in
favor of the proposals expected to be presented at the FelCor Annual Meeting or
Bristol Annual Meeting, as appropriate. Bass America, Inc., Holiday Corporation
and United/ Harvey Holdings, L.P. (collectively, the "Bristol Majority
Stockholders") have entered into a Voting and Cooperation Agreement, dated as of
March 23, 1998, with FelCor (the "Voting Agreement") pursuant to which the
Bristol Majority Stockholders have agreed to vote their Bristol Common Shares in
favor of the adoption of the Merger Agreement. See "The Voting Agreement." The
Bristol Majority Stockholders beneficially owned as of the Record Date an
aggregate of Bristol Common Shares, constituting approximately % of
the Bristol Common Shares outstanding on the Record Date. Accordingly, the
adoption of the Merger Agreement will be approved regardless of how other
Bristol stockholders vote.

PROXIES; REVOCATION AND SOLICITATION OF PROXIES

FelCor Common Shares and Bristol Common Shares represented by properly
executed and unrevoked proxies will be voted at the FelCor or Bristol Annual
Meeting, as the case may be, in accordance with the directions contained
therein. BRISTOL STOCKHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS. If no direction is made in a properly executed and unrevoked proxy,
the FelCor Common Shares or Bristol Common Shares represented by such proxy will
be voted FOR the adoption of the Merger Agreement and FOR each other proposal
expected to be considered at the respective Annual Meeting.

Any FelCor or Bristol stockholder may revoke a proxy at any time before its
exercise. A proxy may be revoked by filing with the Secretary of FelCor or
Bristol, as the case may be, a written revocation or a duly executed proxy
bearing a later date. Any written notice revoking a proxy for the FelCor Annual
Meeting should be sent to: FelCor Suite Hotels, Inc., 545 East John Carpenter
Freeway, Suite 1300, Irving, Texas 75062, Attention: Secretary, or hand
delivered to the Secretary at or before the taking of the vote at the FelCor
Annual Meeting. Any written notice revoking a proxy for the Bristol Annual
Meeting should be sent to: Bristol Hotel Company, 14295 Midway Road, Dallas,
Texas 75244, Attention: Secretary, or hand delivered to the Secretary at or
before the taking of the vote at the Bristol Annual Meeting. Any FelCor or
Bristol stockholder may attend the FelCor or Bristol Annual Meeting, as the case
may be, and vote in person, whether or not he has previously given a proxy.

FelCor and Bristol will bear their respective costs of soliciting proxies
from FelCor and Bristol stockholders. In addition to soliciting proxies by mail,
directors, officers and employees of FelCor and Bristol may solicit proxies by
telephone, in person or otherwise, each without receiving additional
compensation therefor. Arrangements will also be made with brokerage firms and
other custodians, nominees and fiduciaries (collectively, "Fiduciaries") to
forward solicitation materials to the beneficial owners of FelCor Common Shares
or Bristol Common Shares held of record by such persons, and arrangements may be
made with Fiduciaries to obtain authority to sign proxies. FelCor and Bristol
will reimburse such Fiduciaries for reasonable out-of-pocket expenses incurred
by them in connection therewith.

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Shares represented at the meetings but not voted for or against a proposal,
such as abstentions or "broker non-votes," will be counted in determining a
quorum. For purposes of determining the votes required for adoption of the
Merger Agreement, FelCor Common Shares or Bristol Common Shares that are not
voted in favor of that matter, including abstentions and "broker non-votes,"
will have the same legal effect as a vote against the matter. Abstentions and
"broker non-votes" will have no effect on the outcome of the votes on any other
matters proposed for adoption at the Annual Meetings. A "broker non-vote" refers
to shares represented at an Annual Meeting in person or by proxy by a broker or
nominee where such broker or nominee does not vote the shares because it (i) has
not received voting instructions on a particular matter from the beneficial
owners or persons entitled to vote and (ii) does not have discretionary voting
power on such matter.

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THE COMPANIES

FELCOR

FelCor is a real estate investment trust ("REIT") which, at April 17, 1998,
owned interests in 76 hotels with a aggregate of 18,596 suites/rooms in 28
states (collectively the "FelCor Hotels") through its 92.7% general partner
interest in FelCor Suites Limited Partnership (the "FelCor Operating
Partnership"). Limited partner units ("Units") in the FelCor Operating
Partnership are redeemable for FelCor Common Shares or cash, at the option of
FelCor, and have terms which make them substantially similar in economic effect
to FelCor Common Shares. Fifty-two of the FelCor Hotels are operated as Embassy
Suites hotels (of which 28 were converted from other brands), 14 are operated as
Doubletree Guest Suites hotels, seven are operated as Sheraton hotels (five of
which are upscale, full-service traditional non-suite hotels), two are operated
as traditional non-suite Doubletree hotels (one of which is in the process of
conversion to a Doubletree hotel) and one is operated as a Hilton Suites hotel.
Sixty-six of the FelCor Hotels are managed by subsidiaries of Promus Hotel
Corporation ("Promus") which, following its recent merger with Doubletree
Corporation, includes Doubletree Hotel Corporation and its subsidiaries
("Doubletree"). Promus is the largest operator of all-suite, full-service hotels
in the United States. Of the remaining FelCor Hotels, seven are managed by a
subsidiary of ITT Sheraton Corporation ("Sheraton") and three are managed by
independent management companies. At March 31, 1998, FelCor was the owner of the
largest number of Embassy Suites hotels in the world.

To enable FelCor to satisfy certain requirements for qualification as a
REIT, neither it nor the FelCor Operating Partnership can operate the hotels in
which they invest. Accordingly, the FelCor Operating Partnership and its
subsidiaries typically lease the FelCor Hotels to DJONT Operations, L.L.C., or
one of its consolidated subsidiaries (collectively, "DJONT"), pursuant to leases
("Percentage Leases") generally with initial terms of ten years that provide for
rent equal to the greater of a minimum base rent ("Base Rent") or a percentage
rent ("Percentage Rent") based on hotel suite/room revenues and food and
beverage revenues and rents. See "Management and Ownership of FelCor -- Certain
Transactions."

Recent Developments

Recent Acquisitions

During the period from January 1, 1998, to April 15, 1998, FelCor acquired
three additional hotels with an aggregate 596 suites and rooms for approximately
$57.4 million in cash and Units. These three hotels are as follows: a 194-suite
Doubletree Guest Suites hotel located in downtown Columbus, Ohio, a traditional
154-room hotel located in Wilmington, Delaware which is scheduled to be
converted into a Doubletree hotel prior to March 31, 1999, and a traditional
248-room Doubletree hotel located in Aurora, Colorado. The addition of these
hotels brings FelCor's total hotel portfolio to 76 hotels with an aggregate of
18,596 suites and rooms located in 28 states.

Pending Acquisition

FelCor has entered into an agreement to purchase eight hotels from Starwood
Hotels & Resorts ("Starwood") for an aggregate cash purchase price of
approximately $245 million. The hotels have a total of 1,898 suites and consist
of five Embassy Suites and three Doubletree Guest Suites located in seven
states. Six of the eight hotels, following the acquisition, are expected to be
operated as Embassy Suites hotels and be managed by Promus. The remaining two
hotels are expected to be operated as Sheraton Suites hotels and will continue
to be managed by Starwood Hotels & Resorts Worldwide, Inc.

BRISTOL

Bristol is one of the largest owner/operators of full-service hotels in the
United States, currently operating 101 hotels containing over 29,306 rooms, of
which 89 hotels are owned or leased by Bristol. Bristol's hotels are primarily
full-service hotels that operate in the mid-scale to upscale segments of the
lodging industry. Bristol is the largest franchisee of Holiday Hospitality
Corporation ("Holiday Hospitality") brands of hotels, including

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Crowne Plaza, Holiday Inns and Holiday Inns Select hotels, and also operates 19
hotels under other hotel brands, including Hampton Inn, Courtyard by Marriott
and Fairfield Inn. Bristol's hotels are located in 22 states and Canada, with
hotels concentrated in major metropolitan areas of the South, East, Southwest
and Pacific regions of the United States.

Recent Developments

Pending Acquisitions.

On February 2, 1998, Bristol announced a definitive agreement to acquire 20
midwestern hotels with a total of 3,456 rooms (the "Omaha Acquisition"). In the
Omaha Acquisition, Bristol will acquire by merger Omaha Hotel, Inc. and will
purchase an individual hotel. The total consideration for the Omaha Acquisition
is as follows: $19.1 million in cash, $40.9 million in assumed debt and 1.43
million shares of newly issued Bristol Common Shares. Consummation of the Omaha
Acquisition is subject to certain conditions, and there can be no assurance that
the Omaha Acquisition will be consummated if any such condition is not
satisfied.

The hotels in the Omaha Acquisition consist of nine full-service Holiday
Inn hotels, five Holiday Inn Express hotels, five Hampton Inn hotels and one
Homewood Suites hotel, with locations in Omaha, Nebraska; Moline, Illinois;
Davenport, Iowa; central Kansas and Midland/Odessa, Texas. Seven of the nine
full-service hotels have undergone major property improvement plans over the
past 24 months. Of the five Holiday Inn Express hotels, one is a new
construction project set to open for business in mid-1998 and two others are
newly built hotels that opened in the past two years.

Redevelopment and Rebranding.

In November 1997, Bristol initiated a comprehensive redevelopment and
rebranding program (the "Redevelopment and Rebranding Program") which entails
exterior and interior reconstruction of and renovations to 41 of its hotels that
were acquired from Holiday Inns, Inc. in April 1997, three hotels acquired
during 1997, as well as the rebranding of seven hotels operated under the
Bristol's own brand names to Crowne Plaza and Holiday Inn & Suites properties.
The Redevelopment and Rebranding Program is expected to be substantially
complete by the end of 1999.

In addition to the renovations, Bristol expects to rebrand 13 of its 41
Holiday Inn hotels primarily to the Crowne Plaza brand. Bristol believes the
conversions to the Crowne Plaza brand will enable the hotels to more effectively
compete in the markets in which they operate.

THE COMBINED COMPANY

General. As a result of the Merger, Bristol will be merged into FelCor,
which will be the surviving corporation. FelCor's name will change as a result
of the Merger to "FelCor Lodging Trust, Ltd." FelCor will succeed to the
ownership, either directly or through Bristol's subsidiaries, of Bristol's owned
and leased hotels (the "Bristol Hotels") and continue to operate as a REIT. It
is expected that FelCor will contribute such ownership of the Bristol Hotels to
the FelCor Operating Partnership, following which FelCor will have a 95.7%
general partner interest in the FelCor Operating Partnership.

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FelCor will own interests in 193 hotels after the Merger and completion of
the pending acquisitions and the Redevelopment and Rebranding Program, with an
aggregate of 49,255 suites/rooms in 34 states and Canada (collectively the
"Hotels"), as shown in the following table.

COMBINED COMPANY PORTFOLIO COMPOSITION

<TABLE>
<CAPTION>
COMBINED
------------------
BRAND HOTELS ROOMS
----- ------ ------
<S> <C> <C>
Upscale All Suite
Embassy Suites............................................ 58 14,265
Doubletree Guest Suites................................... 14 2,713
Sheraton Suites........................................... 4 984
Hilton Suites............................................. 1 174
Crowne Plaza suites....................................... 1 295
Homewood Suites........................................... 1 108
Bristol House............................................. 1 127
--- ------
Subtotal............................................. 80 18,666
Upscale Full Service
Crowne Plaza.............................................. 19 6,814
Doubletree Hotel.......................................... 2 402
Harvey Hotel.............................................. 5 1,486
Sheraton.................................................. 5 1,956
--- ------
Subtotal............................................. 31 10,658
Full Service
Holiday Inn............................................... 48 13,139
Holiday Inn Select........................................ 6 2,145
Ramada.................................................... 1 220
Days Inn.................................................. 1 157
Courtyard by Marriott..................................... 2 420
Holiday Inn & Suites...................................... 1 285
Independent............................................... 1 181
--- ------
Subtotal............................................. 60 16,547
Limited Service
Holiday Inn Express....................................... 8 1,113
Fairfield Inn............................................. 5 931
Hampton Inn............................................... 9 1,310
--- ------
Subtotal............................................. 22 3,354
Total............................................. 193 49,225
</TABLE>

The FelCor Hotels will continue to be leased by the FelCor Operating
Partnership to DJONT. DJONT is currently considering the possibility of
transferring its leasehold interests to unrelated third parties, including the
possible transfer of leases covering ten hotels to BHR. The Bristol Hotels will
be leased by the FelCor Operating Partnership to BHR, pursuant to leases similar
to the Percentage Leases. BHR and FelCor will be independent public companies
with no overlap in management or boards of directors. However, BHR's two largest
stockholders will also have significant ownership interests in FelCor and will
have representatives on the Boards of Directors of both companies, including the
Chairman of the Board of FelCor. Because of this ownership and the substantial
relationship between the two companies arising out of BHR's leasing and
operation of the Bristol Hotels following the Merger, it is anticipated that the
two companies will have a strategic alliance in the acquisition and
redevelopment of additional hotels. FelCor will maintain its existing
headquarters facilities in Dallas, and BHR will assume responsibility for
Bristol's employees and existing headquarters facilities in Dallas.

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FelCor and BHR intend to continue Bristol's Redevelopment and Rebranding
Program following the Merger.

FelCor will also succeed to the ownership of the 20 midwestern hotels to be
acquired by Bristol in the Omaha Acquisition. The Omaha Acquisition, which is
subject to customary closing conditions, is expected to close in the second
quarter of this year.

Indebtedness, Liquidity and Financial Resources. Assuming the consummation
of the Merger, at December 31, 1997, FelCor would have had approximately $1.5
billion of pro forma total indebtedness, as compared to $477 million in actual
total indebtedness for FelCor alone as of December 31, 1997. The pro forma ratio
of EBITDA to interest paid for the year ended December 31, 1997 would have been
3.5x. Of FelCor's pro forma indebtedness as of December 31, 1997, $410 million
would have provided for the payment of interest at floating rates.

FelCor expects to raise approximately $150 million from the sale of
preferred stock to finance the costs of its acquisition of hotels from Starwood.
Following the Merger, FelCor anticipates refinancing a substantial portion of
Bristol's debt through the issuance of debt and equity securities. FelCor will
seek to repay a portion of the Bristol debt to reduce interest cost and replace
certain existing secured debt of Bristol with unsecured debt or equity
financing. No assurance can be given that FelCor will be successful in effecting
any such refinancing.

Directors and Officers of Surviving Corporation. In connection with the
Merger, the FelCor Board will be reconstituted. See "The Merger
Agreement -- Reconstitution of FelCor Board." The number of directors will
increase from seven to 10 members. The seven directors of FelCor, two of whom
will be elected at the FelCor Annual Meeting, will continue as directors of
FelCor following the Merger but their terms of office will be revised as a
result of the Merger. Hervey A. Feldman will retire from the FelCor Board at the
FelCor Annual Meeting and will assume the title of Chairman Emeritus. See "Other
FelCor Annual Meeting Proposals -- Election of Directors" for a description of
the identities and business experiences of each of the seven directors. In
addition, the following three Bristol directors will be added to the FelCor
Board in connection with the Merger: Donald J. McNamara, Robert L. Lutz, Jr.,
and Richard C. North. See "Other Bristol Annual Meeting Proposals -- Election of
Directors" for a description of the business experience of each of the three new
directors. In connection with the Merger, the Bristol Majority Stockholders will
agree to vote their FelCor Common Shares to elect one designee each of Bass
America, Inc. and Holiday Corporation (the "Holiday Entities"), on the one hand,
and United/Harvey Holdings, L.P. ("Holdings"), on the other hand, to the FelCor
Board, so long as each of the Holiday Entities and their affiliates, on the one
hand, and Holdings and its affiliates, on the other hand, continues to own at
least 25% of their respective FelCor Common Shares obtained in the Merger.

Other than Mr. Feldman's retirement and the appointment of Donald J.
McNamara as Chairman of the Board of FelCor, the officers of FelCor are not
expected to change as a result of the Merger.

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THE SPIN-OFF

In the Spin-Off, Bristol stockholders will receive one share of common
stock of BHR ("BHR Common Shares") for every two Bristol Common Shares (the
"Spin-Off Ratio") held by them on the date the Spin-Off occurs. FelCor
stockholders will not receive BHR Common Shares in the Spin-Off. The Spin-Off is
a condition precedent to the Merger and is expected to occur on the business day
before the Effective Time of the Merger.

THE REORGANIZATION

Prior to the Spin-Off, Bristol will effect a series of mergers, asset and
stock transfers and liability assumptions among itself and its subsidiaries in
order to separate all of the management and leasing business of Bristol from
Bristol's hotel real estate assets. BHR will retain all the assets and assume
the associated liabilities associated with the management and leasing business,
and Bristol will retain all the other assets and liabilities, including all of
Bristol's existing indebtedness other than trade accounts payable. The
reorganization will take place pursuant to the terms of an agreement (the
"Spin-Off Agreement") entered into among Bristol, BHR and Bristol Hotel
Management Corporation.

Pursuant to the Spin-Off Agreement, Bristol has agreed (i) to contribute,
if necessary, sufficient assets to BHR so that BHR will have a net worth of $30
million and (ii) to lend, if necessary, sufficient cash to BHR so that BHR will
have at least $15 million in cash at the time of the Spin-Off. These agreements
were made to ensure that BHR would have sufficient liquidity to satisfy its
obligations immediately following the Spin-Off. Under the Percentage Leases, BHR
will be obligated to maintain certain minimum levels of net worth and liquidity.

Each of Bristol and BHR has agreed to indemnify the other for all
liabilities that have been assumed by such party pursuant to the Spin-Off
Agreement, other than liabilities resulting from the intentional misconduct or
gross negligence of the other party that have not previously been disclosed.

BHR PERCENTAGE LEASES

BHR will lease all of the Bristol Hotels acquired by FelCor in the Merger
pursuant to long-term leases. The leases will be for initial terms of five to 15
years, with optional renewals upon the same terms for up to a total, including
the initial term, of 15 years. The lease will require BHR to pay FelCor a
monthly rent equal to the greater of base rent and percentage rent based on
specified percentages of certain hotel revenues. The leases may be terminated by
FelCor if BHR fails to satisfy certain performance targets, if BHR fails to
maintain a minimum liquid net worth or otherwise breaches its material
obligations under the leases.

CONDITIONS TO THE SPIN-OFF

The obligation of Bristol to consummate the Spin-Off is subject to the
satisfaction or waiver of the same conditions to the consummation of the Merger
set forth in the Merger Agreement. Accordingly, the Spin-Off will not occur if
the Merger is not approved.

FEDERAL INCOME TAX CONSEQUENCES

The distribution of BHR Common Shares to Bristol stockholders will be a
taxable dividend to Bristol stockholders. A more detailed discussed of the
federal income tax consequences to Bristol stockholders is contained in the
Information Statement that is being distributed together with this document to
Bristol stockholders.

BUSINESS AND MANAGEMENT OF BHR

Following the Spin-Off, BHR will operate 101 primarily full-service hotels
in the upscale and midscale segments of the hotel market under leases from
FelCor. BHR will be the largest operator of third party owned and branded hotels
and will be the largest franchisee of Holiday Hospitality branded hotels. BHR
has also agreed to add 8,700 Holiday Hospitality branded rooms to its portfolio
of owned or managed hotels over the
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next five years. BHR intends to work with FelCor after the Merger in the
acquisition and leasing of additional hotels. BHR will continue to pursue leases
and management contracts for large, full-service hotels, especially those that
can be redeveloped and repositioned.

EMPLOYEE OPTION PLANS

Effective as of the date of the Spin-Off, each outstanding Bristol stock
option will be split into two options, one to purchase Bristol Common Shares and
the other to purchase BHR Common Shares. The BHR options will be assumed by BHR
in the Spin-Off. The options to purchase Bristol Common Shares will be assumed
by FelCor in the Merger and converted into options to purchase FelCor Common
Shares. See "The Merger Agreement -- Treatment of Bristol Stock Options."

LISTING

Bristol will cause the BHR Common Shares to be listed on the New York Stock
Exchange ("NYSE"), the American Stock Exchange or The Nasdaq Stock Market,
subject to final notification of issuance. Bristol expects to apply to have the
BHR Common Shares listed on the NYSE, although no assurance can be given that
such listing will be approved.

STOCKHOLDER APPROVAL

Bristol believes that stockholder approval of the Spin-Off is not required
under applicable law. However, a vote to adopt the Merger Agreement will be
deemed to constitute approval of the Spin-Off because the Merger cannot occur
unless the Spin-Off is completed. The Bristol Majority Stockholders have agreed
to vote their shares to adopt the Merger Agreement.

ADDITIONAL INFORMATION ABOUT THE SPIN-OFF

An Information Statement related to BHR is being furnished to Bristol
stockholders together with this document. Bristol stockholders are encouraged to
review the Information Statement in its entirety.

THE MERGER

GENERAL

The Merger Agreement provides for a business combination between FelCor and
Bristol in which Bristol would be merged with and into FelCor and Bristol Common
Shares would be converted into the right to receive FelCor Common Shares. As a
result of the Merger, FelCor would be the surviving corporation, and the
separate existence of Bristol would cease. The discussion in this Joint Proxy
Statement/Prospectus of the principal terms of the Merger is subject to and
qualified in its entirety by reference to the Merger Agreement, a copy of which
is attached to this Joint Proxy Statement/Prospectus as Annex A.

EFFECTIVE TIME

If the Merger Agreement is adopted by the requisite vote of the
stockholders of FelCor and Bristol and the other conditions to the Merger are
satisfied or waived (if permissible), the Merger will be consummated and
effected at the time a Certificate of Merger is filed with the Secretary of
State of Delaware and Articles of Merger are accepted for recording by the
Maryland State Department of Assessments and Taxation or at such later time as
the parties to the Merger Agreement agree and specify in such Certificate of
Merger and Articles of Merger. The Merger Agreement provides that FelCor and
Bristol will cause the effective time of the Merger (the "Effective Time") to
occur at 9:00 a.m., New York City time, on the first NYSE trading day after the
Merger closing, which will occur no later than the third business day (unless
the parties agree to another date) following the satisfaction or waiver of all
the conditions set forth in the Merger Agreement.

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TERMS OF THE MERGER

In the Merger, each Bristol Common Share outstanding at the Effective Time
(other than Bristol Common Shares held in Bristol's treasury or owned by FelCor
or any subsidiary of FelCor) will be converted into the right to receive 0.685
(the "Exchange Ratio") FelCor Common Shares. No fractional FelCor Common Shares
will be issued, and cash will be paid in lieu of any such fractional shares.

BACKGROUND OF THE MERGER

In 1997, FelCor determined that it would be advisable for it to consider
pursuit of one or more possible strategic relationships with entities in
addition to Promus/Doubletree. Accordingly, in June 1997, FelCor completed the
acquisition of five Sheraton hotels, establishing a new strategic alliance with
Sheraton. Sheraton has subsequently been acquired by Starwood, another lodging
REIT. FelCor's management determined that it was desirable for FelCor to develop
another strategic alliance through a substantial business combination
transaction with another lodging company. Such transaction would also provide
FelCor with sufficient scale to continue to be a substantial participant in the
rapidly consolidating lodging industry. Among the possible companies considered
by FelCor was Bristol.

From time to time, Bristol's management has considered various strategic
alternatives, including possible recapitalization and business combination
transactions, in light of, among other things, the high level of consolidation
in the lodging industry and the generally higher stock market valuations
accorded in the past several years to REITs and other tax pass-through real
estate companies than have been accorded C corporations that own real estate. In
connection therewith, Bristol engaged in preliminary discussions regarding a
number of these alternatives with representatives of other lodging and real
estate related companies. Such alternatives involved a range of possible
transactions, including entity acquisitions, business combinations and
recapitalizations. However, except as discussed in reports filed by Bristol with
the SEC, these discussions did not give rise to any agreements providing for any
material transaction.

On December 24, 1997, Thomas J. Corcoran, Jr., FelCor's President and Chief
Executive Officer, and Donald J. McNamara, Bristol's Chairman of the Board, met
at Mr. Corcoran's suggestion and discussed a possible business combination
involving FelCor and Bristol. These discussion were exploratory in nature, but
Mr. McNamara was generally familiar with FelCor and its assets, having served as
a member of FelCor's Board of Directors until November 1997. Following that
meeting, FelCor, Bristol and their respective financial and legal advisors
exchanged certain financial and operational information and considered possible
alternative transactions and structures over the course of the next several
weeks.

At a meeting on January 13, 1998, representatives of the two companies
determined that there was mutual interest in continuing to explore a possible
business combination. To obtain advice and assistance in considering the
possible transaction and the issues that would be required to be considered if
such a transaction were to be pursued, Bristol requested the assistance of
Jones, Day, Reavis & Pogue ("Jones Day"), which is Bristol's regular outside
counsel in respect of securities, transactional and finance matters, and
Merrill, Lynch, Pierce, Fenner & Smith, Inc. ("Merrill Lynch"), which had acted
as Bristol's lead underwriter in Bristol's initial public offering and as
Bristol's financial advisor in the acquisition of Holiday Inns, Inc. FelCor
requested the assistance of BT Wolfensohn, which firm had from time to time
provided financial advisory assistance to FelCor, Jenkens & Gilchrist, a
Professional Corporation ("Jenkens & Gilchrist"), FelCor's regular outside
counsel in respect of securities, transactional and finance matters, and Hunton
& Williams, FelCor's primary outside REIT tax counsel. Over the course of the
next several weeks, representatives of the companies and their respective legal
and financial advisors had numerous discussions of the operational, financial,
structural and tax considerations involved in a possible business combination
transaction and exchanged information with respect thereto.

The Boards of Directors of FelCor and Bristol considered the possible
transaction on a number of occasions. The FelCor Board was initially advised of
a possible transaction and preliminary information was informally communicated
to the directors in January and February, 1998. Following such communications,
management received preliminary approval to proceed with discussions. The
transaction was reviewed in detail by the FelCor Board at a regular meeting on
March 5, 1998. At that meeting, in which representatives of

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Jenkens & Gilchrist and BT Wolfensohn participated, the FelCor Board received
specific information regarding the terms of the proposed transaction,
information regarding Bristol, the status of negotiations, issues relating to
the transaction and a timetable for completion of the transaction. The possible
transaction was first reviewed by the Bristol Board at a regular meeting on
February 17, 1998. At that meeting, in which representatives of Jones Day and
Merrill Lynch participated, the Bristol Board considered Bristol's strategic
alternatives, possible transaction structures and issues and the expected
timetable for a transaction. The Bristol Board received an update regarding the
possible transaction at a March 10, 1998 special meeting in which
representatives of Jones Day and Merrill Lynch also participated.

At about this time, the parties' respective legal and financial advisors
had jointly determined that a transaction structure involving a spin-off of
Bristol's hotel operations business and subsequent parent-to-parent merger would
be workable, exchanged drafts of definitive documentation and began a
substantially continuous series of discussions and negotiations regarding the
terms of a possible transaction which culminated in daily meetings during the
week of March 16, 1998. In a series of meetings leading up to and including the
weekend of March 21, 1998, the parties discussed and resolved key financial and
other issues, including the Exchange Ratio, conditions to the Merger, the
allocation of liabilities between FelCor and BHR, the composition of the FelCor
Board following the Merger and other matters. Substantially simultaneously
therewith, representatives of FelCor and the Bristol Majority Stockholders
discussed and resolved issues relating to the relationship of Holiday Entities
and Holdings with each of FelCor and BHR following the Spin-Off and the Merger.

A special meeting of the FelCor Board was held on March 23, 1998 at which
the possible transaction with Bristol was reviewed in detail with the FelCor
Board by FelCor's senior management with the assistance of Jenkens & Gilchrist
and BT Wolfensohn. The presentations and discussions at the meeting were
wide-ranging and detailed and included, among other things, (i) a presentation
by management regarding the terms of the proposed transaction and the relative
benefits and risks thereof, (ii) a presentation by BT Wolfensohn regarding the
transaction and the fairness of the transaction from a financial point of view
to FelCor and (iii) presentations by FelCor's general counsel and Jenkens &
Gilchrist regarding the duties of the directors and issues relating to the
transaction. Thereafter, BT Wolfensohn orally advised the FelCor Board, which
advice was subsequently confirmed in writing as of March 23, 1998, of BT
Wolfensohn's opinion that, as of March 23, 1998, the Exchange Ratio was fair
from a financial point of view to FelCor. Thereafter, the FelCor Board, by
unanimous vote, approved the Merger Agreement and related documents.

A special meeting of the Bristol Board was held on March 23, 1998, at which
the possible transaction with FelCor was reviewed in detail with the Bristol
Board by Bristol's senior management with the assistance of Jones Day and
Merrill Lynch. The presentations and discussions at the meeting were
wide-ranging and detailed and included, among other things, (i) a presentation
by management regarding events since the March 10, 1998 meeting of the Bristol
Board, (ii) a description by Jones Day of the material terms of the Merger
Agreement and related documents, including the Voting Agreement, (iii) a
presentation by Jones Day regarding the duties of the directors, (iv)
presentations by Merrill Lynch regarding the fairness of the possible
transaction with FelCor from a financial point of view, and (v) a presentation
by Jones Day regarding the provisions of the documentation in respect of the
Merger and other matters in which management, Holiday or Holdings might be said
to have interests different from or in addition to the interests of Bristol
stockholders generally. Thereafter, Merrill Lynch orally advised the Board,
which advice was subsequently confirmed in writing as of March 23, 1998, of
Merrill Lynch's opinion that, as of March 23, 1998, the Exchange Ratio was fair
from a financial point of view to Bristol's stockholders. Thereafter, the
Bristol Board, by unanimous vote, approved the Merger Agreement and related
documents.

Following additional discussions of the terms of the definitive
documentation, the parties executed the Merger Agreement and publicly announced
the transaction during the evening of March 23, 1998.

FELCOR'S REASONS FOR THE MERGER; RECOMMENDATIONS OF THE FELCOR BOARD

The FelCor Board believes that the terms of the Merger are fair to, and the
Merger is in the best interests of, FelCor and its stockholders. Accordingly,
the FelCor Board has approved and adopted the Merger Agreement, including the
Merger and amendments to the FelCor Charter provided for therein, and

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<PAGE> 41

determined to submit the Merger Agreement to FelCor's stockholders for
consideration and adoption. In forming this belief, the FelCor Board consulted
with FelCor's management, as well as FelCor's outside legal counsel, accountants
and its financial advisor, BT Wolfensohn, and considered the following material
positive factors:

1. The Merger would represent a further extension of FelCor's
developing multi-brand strategy that focuses on full-service hotels;

2. The addition of Bristol's real estate assets would enhance FelCor's
critical mass and market presence, and result in FelCor being the largest,
non-paired lodging REIT and the third largest lodging REIT in terms of
total market capitalization. In this regard, the FelCor Board determined
that the surviving company's size itself would enhance overall financing
ability, access to deal flow and acquisition opportunities;

3. The Merger would result in an on-going, strategic alliance with
BHR, the management of which has a demonstrated expertise in hotel
acquisitions, management and repositioning strategy, and with Bristol's
principal stockholders, including the parent of Holiday Hospitality which
franchises Holiday Inns and Crowne Plaza hotels. The Holiday Inns name is
one of the most recognized brand names in America. While there will be
significant ownership of FelCor by the Bristol Majority Stockholders, the
Board believed that FelCor's flexibility would continue by its decision not
to adopt a so-called "clipped" share structure with BHR;

4. The introduction of BHR as an independent, third party lessee is
expected to be viewed positively by investors. The execution of new
Percentage Leases with BHR covering the Bristol Hotels as part of the
Spin-Off would constitute the initial step in a new strategy of seeking
independent, third party lessees to operate FelCor's hotels;

5. The Merger would be accretive to FelCor's forecasted per share
funds from operations in 1998, 1999 and 2000;

6. The real estate assets of Bristol would further diversify FelCor's
assets by category of hotel and by geographic location;

7. The ongoing program of Holiday Hospitality to upgrade its image and
franchise system by substantial system-wide upgrades and refurbishment; and

8. FelCor's enhanced size and financing capabilities, the ongoing
strategic alliance with BHR, the post-Merger relationship between BHR and
the Holiday Entities and the significant ownership of FelCor Common Shares
by the Holiday Entities should provide new opportunities to FelCor to
acquire, upgrade and reposition hotels, especially those franchised by
Holiday Hospitality.

The FelCor Board also considered the presentations and analyses of BT
Wolfensohn, financial advisor to FelCor, BT Wolfensohn's opinion to the effect
that, as of March 23, 1998, the Exchange Ratio is fair to FelCor from a
financial point of view and the terms and structure of the Merger, including the
provisions of the Merger Agreement and the Voting Agreement. See "-- Opinion of
FelCor's Financial Advisor," "The Merger Agreement" and "The Voting Agreement."

The FelCor Board also considered certain potential risks and detriments
related to the Merger summarized as follows: (i) the relative market perception
of the Holiday Inns brand versus the Embassy Suites, Doubletree and Sheraton
brands under which most of FelCor's current hotels are operated, (ii) the Merger
would represent a further departure from FelCor's historical all-suite hotel
strategy, (iii) the substantial debt of Bristol being assumed could adversely
affect FelCor's ability to obtain additional financing and result in higher
borrowing costs, (iv) the risk that third parties may make alternative proposals
to Bristol, (v) the risk that the Merger may negatively impact FelCor's existing
strategic alliances, (vi) the likelihood of achieving the forecast results of
operations for Bristol's hotels as a result of Bristol's repositioning strategy,
and (vii) the differences between FelCor's existing strategic alliances and the
new strategic alliance with BHR, and BHR's lack of control over the Holiday
Hospitality brands. The FelCor Board concluded, however, that

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these potential risks and detriments were outweighed by the potential positive
factors considered by the FelCor Board described above. Accordingly, the FelCor
Board voted unanimously to approve and adopt the Merger Agreement and to submit
the Merger proposal to the stockholders of FelCor for consideration and
approval.

In view of the wide variety of factors considered, the FelCor Board did not
find it practicable to, and did not, quantify or otherwise attempt to assign
relative weights to the specific factors considered in making its determination.

THE FELCOR BOARD BELIEVES THE MERGER IS FAIR AND IN THE BEST INTERESTS OF
FELCOR AND ITS STOCKHOLDERS. THE FELCOR BOARD UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF FELCOR VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT.

BRISTOL'S REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BRISTOL BOARD

On March 23, 1998, the Bristol Board determined by unanimous vote that the
Merger is in the best interests of Bristol and Bristol stockholders and resolved
to recommend that Bristol stockholders vote for adoption of the Merger
Agreement. The decision of the Bristol Board to approve the Merger Agreement and
recommend the adoption thereof by Bristol stockholders was based upon various
factors, including, in addition to the factors relevant to Bristol referred to
in "-- Background of the Merger," the following:

1. The Bristol Board's understanding of conditions in the lodging
industry in the United States, the strategic options available to Bristol
and the likelihood of future consolidation in the lodging industry;

2. Bristol's prospects as a standalone entity, including that, with
respect to Bristol's owned hotels, the belief that those assets would
receive a higher valuation in the public securities markets if owned by a
REIT or other tax pass-through entity;

3. The Bristol Board's consideration of information regarding the
business, financial condition, results of operations, prospects and
management of Bristol and FelCor, the fit between Bristol's owned assets
and the FelCor Hotels and the expectation that, based on the Exchange
Ratio, the Merger would be accretive to FelCor's per share funds from
operations;

4. The Exchange Ratio and related terms of the Merger Agreement,
including the possibility that, because the Exchange Ratio was fixed, the
market value of FelCor Common Shares into which Bristol Common Shares would
be converted as of the Effective Time could be lower than the price per
FelCor Common Share prior to the execution of the Merger Agreement as a
result of changes in the market prices for FelCor Common Shares, the
historical trading prices for FelCor and Bristol Common Shares, Bristol's
right to terminate the Merger Agreement if the volume weighted average
sales price for FelCor Common Shares was less from $28.00 per share over a
10 trading day period and the course of the negotiations relating to the
terms of the Merger (see "-- Background of the Merger");

5. The other terms of the Merger Agreement, including the terms
relating to the relationship between the Holiday Entities, Holdings and
FelCor following the Merger, the composition of the FelCor Board and the
terms of the Voting Agreement and the other matters described in
"-- Interests of Certain Persons in the Merger," including the interests of
Bristol Board members in such matters;

6. The support for the transaction by the Holiday Entities and
Holdings and their willingness to modify existing agreements between or
among them and Bristol to facilitate the transaction, including the Holiday
Entities amendment of the Bristol-Holiday Entities Hotel Properties
Agreement to eliminate the requirement that, in general, 85% of Bristol's
hotels operate under a Holiday Hospitality brand (see "-- Interests of
Certain Persons in the Merger -- Hotel Properties Agreement");

7. The expectation that the Merger could be accomplished on a tax-free
basis to Bristol stockholders (other than cash received in lieu of
fractional shares);

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8. The willingness of Messrs. Kline and Beckert to modify their
existing employment and option agreements so that the Merger and the
Spin-Off would not constitute events that would give them rights to
severance or other benefits;

9. The no-shop and related terms of the Merger Agreement, as well as
the terms of the Merger Agreement which, subject to certain restrictions,
would permit Bristol to terminate the Merger Agreement upon payment of a
$60 million termination fee and a $5 million expense reimbursement to
FelCor if a superior proposal were made to Bristol prior to the vote by
Bristol stockholders on the Merger (see "The Merger
Agreement -- Solicitation of Other Proposals; Break-up Fee");

10. The opinion of Merrill Lynch described below that, as of March 23,
1998, the Exchange Ratio was fair from a financial point of view to holders
of the Bristol Common Shares (see "-- Opinion of Bristol's Financial
Advisor to Bristol"); and

11. Potential risks and detriments to the Spin-Off and the Merger,
including that (i) as a result of the leases between FelCor and BHR, BHR
would have fixed obligations to FelCor and the potential effects thereunder
of adverse market conditions, (ii) the Spin-Off would be a taxable
transaction for federal income tax purposes, (iii) BHR would be
substantially dependent on FelCor and had an expectation that it would have
an important strategic relationship with FelCor, but would not have
contractual rights to operate properties FelCor might acquire in the
future, and (iv) various risks referred to in "Risk Factors" above.

The foregoing discussion of the factors considered and given weight by the
Bristol Board in approving the Merger Agreement is not intended to be
exhaustive. In view of the variety of factors considered in connection with its
evaluation of the Merger, the Bristol Board did not find it practicable to and
did not attempt to rank or assign relative weights to the foregoing factors. In
addition, individual members of the Bristol Board may have given different
weights to different factors. However, Bristol believes that, in general, the
foregoing are the material factors considered by the Bristol Board in its
analysis of the Merger.

THE BRISTOL BOARD BELIEVES THAT THE MERGER IS FAIR TO AND IN THE BEST
INTERESTS OF BRISTOL AND ITS STOCKHOLDERS. THE BOARD UNANIMOUSLY RECOMMENDS THAT
BRISTOL STOCKHOLDERS VOTE FOR ADOPTION OF THE MERGER AGREEMENT.

OPINION OF FELCOR'S FINANCIAL ADVISOR

BT Wolfensohn has acted as financial advisor to FelCor in connection with
the Merger. At the March 23, 1998 meeting of the FelCor Board, BT Wolfensohn
delivered its oral opinion, subsequently confirmed in writing as of the same
date, to the FelCor Board to the effect that, as of the date of such opinion,
the Exchange Ratio was fair, from a financial point of view, to FelCor.

THE FULL TEXT OF BT WOLFENSOHN'S WRITTEN OPINION, DATED MARCH 23, 1998 (THE
"BT WOLFENSOHN OPINION"), WHICH SETS FORTH, AMONG OTHER THINGS, THE ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN BY BT WOLFENSOHN IN
CONNECTION WITH THE OPINION, IS ATTACHED AS ANNEX B TO THIS JOINT PROXY
STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. FELCOR
STOCKHOLDERS ARE URGED TO READ THE BT WOLFENSOHN OPINION IN ITS ENTIRETY. THE
SUMMARY OF THE BT WOLFENSOHN OPINION SET FORTH IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF THE BT WOLFENSOHN OPINION.

In connection with BT Wolfensohn's role as financial advisor to FelCor, and
in arriving at its opinion, BT Wolfensohn has, among other things, reviewed
certain publicly available financial information and other information
concerning FelCor and Bristol and certain internal analyses and other
information furnished to it by FelCor and Bristol. BT Wolfensohn also held
discussions with the members of the senior managements of FelCor and Bristol
regarding the businesses and prospects of their respective companies and the
joint prospects of a combined enterprise. In addition, BT Wolfensohn (i)
reviewed the reported prices and trading activity for the common stock of both
FelCor and Bristol, (ii) compared certain financial and stock market information
for FelCor and Bristol with similar information for selected companies whose
securities are

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publicly traded, (iii) reviewed the financial terms of selected recent business
combinations which it deemed comparable in whole or in part, (iv) reviewed the
financial terms of certain hotel portfolio transactions it deemed comparable in
whole or in part, (v) reviewed the terms of the Merger Agreement and certain
related documents, and (vi) performed such other studies and analyses and
considered such other factors as it deemed appropriate.

In preparing its opinion, BT Wolfensohn did not assume responsibility for
the independent verification of, and did not independently verify, any
information, whether publicly available or furnished to it, concerning FelCor or
Bristol, including, without limitation, any financial information, forecasts or
projections, considered in connection with the rendering of its opinion.
Accordingly, for purposes of its opinion, BT Wolfensohn assumed and relied upon
the accuracy and completeness of all such information. BT Wolfensohn did not
conduct a physical inspection of any of the properties or assets, and did not
prepare or obtain any independent evaluation or appraisal of any of the assets
or liabilities of FelCor or Bristol. With respect to the financial forecasts
made available to BT Wolfensohn and used in its analysis, BT Wolfensohn has
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the management of FelCor or
Bristol as to the matters covered thereby. In rendering its opinion, BT
Wolfensohn expressed no view as to the reasonableness of such forecasts or the
assumptions on which they are based. The BT Wolfensohn Opinion was necessarily
based upon economic, market and other conditions as in effect on, and the
information made available to BT Wolfensohn as of, the date of such opinion.

For purposes of rendering its opinion, BT Wolfensohn has assumed that, in
all respects material to its analysis, the representations and warranties of
FelCor and Bristol contained in the Merger Agreement are true and correct, that
FelCor and Bristol will each perform all of the covenants and agreements to be
performed by it under the Merger Agreement and all conditions to the obligation
of each of FelCor and Bristol to consummate the Merger will be satisfied without
any waiver thereof. BT Wolfensohn has also assumed that all material
governmental, regulatory or other approvals and consents required in connection
with the consummation of the transactions contemplated by the Merger Agreement
will be obtained and that in connection with obtaining any necessary
governmental, regulatory or other approvals and consents, or any amendments,
modifications or waivers to any agreements, instruments or orders to which
either FelCor or Bristol is a party or subject or by which it is bound, no
limitations, restrictions or conditions will be imposed or amendments,
modifications or waivers made that would have a material adverse effect on
FelCor or Bristol or materially reduce the contemplated benefits of the Merger
to FelCor. In addition, BT Wolfensohn has assumed that following the
consummation of the Merger, FelCor will continue to qualify as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"). In addition, BT
Wolfensohn has been advised by FelCor, and accordingly has assumed for purposes
of its opinion, that the Merger will be tax-free to the stockholders of each of
FelCor and Bristol except for the receipt of cash in lieu of fractional shares
by Bristol stockholders. The Spin-Off will be taxable to Bristol and its
stockholders.

Set forth below is a brief summary of certain financial analyses performed
by BT Wolfensohn in connection with its opinion and reviewed with the FelCor
Board at its meeting on March 23, 1998. In analyzing Bristol, BT Wolfensohn gave
pro forma effect to the Spin-Off, which will result in Bristol owning only its
real estate assets.

Analysis of Selected Publicly Traded Companies. BT Wolfensohn compared
certain financial information and commonly used valuation measurements for
Bristol to corresponding information and measurements for a group of ten
publicly traded lodging companies (consisting of American General Hospitality
Corporation, Sunstone Hotel Investors, Inc., Innkeepers USA Trust, Hospitality
Properties Trust, Boykin Lodging Company and Equity Inns, Inc. (the "Selected
REITs") and Host Marriott Corporation, CapStar Hotel Company, Servico, Inc. and
Prime Hospitality Corp. (the "Selected C-Corps", and together with the Selected
REITs, the "Selected Companies"). Such financial information and valuation
measurements included, among other things, (i) common equity market valuation,
(ii) common equity market valuation as adjusted for debt and cash ("Enterprise
Value"), and (iii) in the case of the Selected REITs, the ratio of common equity
market valuation to estimated 1998 funds from operations ("FFO") and the ratio
of Enterprise Value to number of rooms, or, in the case of the Selected C-Corps,
the ratio of Enterprise Value to earnings before interest expense, income taxes,
depreciation and amortization ("EBITDA"). To calculate the trading

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multiples for Bristol and the Selected Companies, BT Wolfensohn used publicly
available information concerning historical and projected financial performance,
including published historical financial information and earnings and FFO
estimates reported by Institutional Brokers Estimate System ("IBES") and First
Call Corporation ("First Call"), respectively. IBES and First Call are data
services that monitor and publish compilations of earnings and FFO estimates by
selected research analysts regarding companies of interest to institutional
investors. BT Wolfensohn calculated that on a one-year forward-looking basis,
the multiple of Equity Value to FFO for Bristol was 8.9x compared to a range for
the Selected REITs of 8.8x to 9.6x, with a median of 9.3x, and the ratio of
Enterprise Value to number of rooms for Bristol was approximately $65,900
compared to a range of $68,700 to $106,400, with a median of $83,600, for the
Selected REITs. BT Wolfensohn also calculated that the multiple of Enterprise
Value to one-year forward-looking EBITDA for Bristol was 10.3x compared to a
range of 6.2x to 8.9x, with a median of 8.3x, for the Selected C-Corps.

None of the companies utilized as a comparison is identical to Bristol or
FelCor. Accordingly, BT Wolfensohn believes the analysis of publicly traded
comparable companies is not simply mathematical. Rather, it involves complex
considerations and qualitative judgments, reflected in BT Wolfensohn's opinion,
concerning differences in financial and operating characteristics of the
comparable companies and other factors that could affect the public trading
value of the comparable companies.

Analysis of Selected Precedent Transactions. BT Wolfensohn reviewed the
financial terms, to the extent publicly available, of 13 proposed, pending or
completed mergers and acquisition transactions since January 1996 involving
companies in the lodging industry (the "Selected Transactions"). BT Wolfensohn
calculated various financial multiples based on certain publicly available
information for each of the Selected Transactions and compared them to
corresponding financial multiples and premiums over market value for the Merger,
based on the Exchange Ratio. The transactions reviewed (and the dates of their
announcement) were: Inter-Continental Hotels/Bass plc (2/20/98), Chartwell
Leisure/Whitehall Real Estate L.P. (11/13/97), Doubletree Corporation/Promus
Hotel Corporation (9/2/97), Vacation Break U.S.A., Inc./ Fairfield Communities,
Inc. (8/11/97), Clubhouse Hotels, Inc./Wyndham Hotel Corporation (7/22/97),
Renaissance Hotel Group/Marriott International, Inc. (2/18/97), Studio Plus
Hotels, Inc./Extended Stay America, Inc. (1/17/97), Red Lion Hotels/Doubletree
Corporation (9/12/96) (collectively, the "Selected C-Corp Transactions") and
American General Hospitality Corporation/CapStar Hotel Company (3/15/98), La
Quinta Inns, Inc./Meditrust Corporation (1/4/98), Interstate Hotels
Company/Patriot American Hospitality, Inc.(12/2/97), ITT Corp./Starwood Lodging
Trust (10/20/97) and Wyndham Hotel Corporation/Patriot American Hospitality,
Inc. (4/14/97) (collectively, the "Selected REIT Transactions"). BT Wolfensohn
calculated that the multiple of Enterprise Value to one-year forward-looking
EBITDA was 10.3x for the Merger compared to a range of 9.6x to 29.8x latest 12
months EBITDA, with a median of 16.3x, for the Selected C-Corp Transactions,
10.2x and 11.0x one-year forward-looking EBITDA for the two Selected C-Corp
Transactions for which there was publicly available information and a range of
10.2x to 12.7x one-year forward-looking EBITDA, with a median of 10.9x, for the
Selected REIT Transactions. BT Wolfensohn further calculated that the multiple
of Equity Value to one-year forward-looking FFO was 8.8x for the Merger compared
to a range of 9.3x to 14.5x, with a median of 9.9x, for the Selected REIT
Transactions.

Analysis of Selected Precedent Portfolio Transactions. BT Wolfensohn also
reviewed the financial terms, to the extent publicly available, of eleven
proposed, pending or completed hotel portfolio acquisitions announced since
December 1996 (collectively, the "Selected Portfolio Transactions"). The
transactions reviewed were: Boykin Lodging Company's acquisition of Doubletree
licensed hotels from Red Lion Inns Limited Partnership (12/31/97), Innkeepers
USA Trust's acquisition of Marriott brand hotels from Marriott International,
Inc. (12/23/97), American General Hospitality Corporation's acquisition of
various full-service hotels from Financial Security Assurance Corporation
(12/15/97), American General Hospitality Corporation's acquisition of various
full-service assets from Prime Hospitality Corporation (12/3/97), Hospitality
Properties Trust's acquisition of Candlewood brand properties from Candlewood
Hotel Company, Inc. (11/20/97), Hospitality Properties Trust's acquisition of
various Sumner Suites brand hotels from ShoLodge, Inc. (10/27/97), Hospitality
Properties Trust's acquisition of Marriott brand hotels from Marriott
International, Inc. (10/13/97), Equity Inns Inc.'s acquisition of AmeriSuites
brand hotels from Prime Hospitality Corporation (9/22/97), Sunstone Hotel
Investors' acquisition of various full-service hotels from Kahler

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Hotels, Inc. (8/6/97), Hospitality Properties Trust's acquisition of Marriott
brand hotels from Marriott International, Inc. (4/3/97), and Bristol Hotel
Company's acquisition of Holiday Inn brand hotels from Bass plc (12/16/96). BT
Wolfensohn calculated the multiple of Enterprise Value to number of rooms was
approximately $65,900 for the Merger compared to a range of $35,700 to $127,400,
with a median $85,300, for the Selected Portfolio Transactions.

All multiples for the Selected Transactions and the Selected Portfolio
Transactions were based on public information available at the time of
announcement of such transaction, without taking into account differing market
and other conditions during the two-year period during which the Selected
Transactions or the Selected Portfolio Transactions occurred. Because the
reasons for, and circumstances surrounding, each of the precedent transactions
analyzed were so diverse, and due to the inherent differences between the
operations and financial conditions of Bristol and FelCor and the companies
involved in the Selected Transactions and the Selected Portfolio Transactions,
BT Wolfensohn believes that a comparable transaction analysis is not simply
mathematical. Rather, it involves complex considerations and qualitative
judgments, reflected in BT Wolfensohn's opinion, concerning differences between
the characteristics of these transactions and the Merger that could affect the
value of the subject companies and businesses and Bristol and FelCor.

Discounted Cash Flow Analysis. BT Wolfensohn performed a discounted cash
flow analysis ("DCF") for Bristol. BT Wolfensohn calculated the discounted cash
flow values of Bristol as the sum of the net present values of (i) the estimated
future cash flow that Bristol will generate for the years 1998 through 2002,
plus (ii) the value of Bristol at the end of such period. The estimated future
cash flows were based on internal forecasts for Bristol for the years 1998
through 2002 prepared by Bristol's management. The terminal value of Bristol was
calculated based on projected EBITDA for 2002 and a range of multiples of 8.0x
to 10.0x. BT Wolfensohn used discount rates ranging from 9.5% to 10.5%. BT
Wolfensohn used such discount rates based on its judgment of the estimated
weighted average cost of capital of Selected REITs, and used such multiples
based on its review of the trading characteristics of the common stock of the
Selected REITs and the Selected C-Corps. This analysis indicated a range of
equity values of $1,303 million to $1,779 million.

Contribution Analysis. BT Wolfensohn analyzed the relative contributions of
Bristol and FelCor, as compared to FelCor's relative ownership of approximately
61% of the outstanding capital of the combined company, to the pro forma income
statement of the combined company, based on managements' internal forecasts for
their respective companies. This analysis showed that on a pro forma combined
basis (excluding non-recurring expenses relating to the Merger), based on the
one-year periods ending 1998, 1999 and 2000, Bristol and FelCor would account
for approximately 41% and 59%, respectively, 42% and 58%, respectively, and
approximately 45% and 55%, respectively, of the combined company's pro forma
FFO.

Pro Forma Combined FFO Analysis. BT Wolfensohn analyzed the pro forma
effects of the Merger on FelCor's estimated future FFO per share. The estimated
FFO for FelCor and Bristol was based on internal forecasts for the years 1998
through 2000 provided by respective managements. Based on such analysis, BT
Wolfensohn computed the resulting dilution/accretion to the FelCor's FFO per
share estimate for the fiscal years ending 1998, 1999 and 2000 before
non-recurring costs relating to the Merger. BT Wolfensohn noted that, before
taking into account non-recurring costs, the Merger would be accretive in 1998,
1999 and 2000 to FelCor's internally forecasted FFO per share.

Pro Forma Share Price Analysis. BT Wolfensohn performed an analysis of
FelCor's potential share price assuming the Merger were to be consummated. Based
on hypothetical multiples of 1998 FFO ranging from FelCor's current multiple
minus one to FelCor's current multiple plus one, and after giving effect to the
Exchange Ratio of 0.685, BT Wolfensohn calculated pro forma equity market values
per share ranging from $33.67 to $41.59 compared to FelCor's price of $36.25 on
March 20, 1998.

Other Analyses. BT Wolfensohn analyzed the pro forma impact of the Merger
on FelCor's coverage ratios. In this regard, BT Wolfensohn noted that while the
pro forma debt/capital ratios for the combined company are greater than
FelCor's, the pro forma EBITDA/interest expense ratio and FFO/debt (calculated
without considering non-recurring charges associated with the Merger) of the
combined company were lower than FelCor's and the pro forma debt/EBITDA of the
combined company was higher than FelCor's, they remain within published S&P
credit statistics for BB-rated companies. BT Wolfensohn also considered pro

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forma DCF values for the combined company, prepared by combining stand-alone
projections provided by respective managements and in accordance with the
procedures described under the caption "Discounted Cash Flow Analysis" above. BT
Wolfensohn compared pro forma DCF value ranges implied for FelCor stockholders
(the "Implied Combined DCF Valuation") with the FelCor stand-alone DCF value
range (the "Stand-alone FelCor DCF Valuation"). BT Wolfensohn noted that the
Implied Combined DCF Valuation compared favorably to the Stand-alone FelCor DCF
Valuation without considering any cost savings.

The foregoing summary describes all analyses and factors that BT Wolfensohn
deemed material in its presentation to the FelCor Board, but is not a
comprehensive description of all analyses performed and factors considered by BT
Wolfensohn in connection with preparing its opinion. The preparation of a
fairness opinion is a complex process involving the application of subjective
business judgment in determining the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances and, therefore, is not readily susceptible to summary description.
BT Wolfensohn believes that its analyses must be considered as a whole and that
considering any portion of such analyses and of the factors considered without
considering all analyses and factors could create a misleading view of the
process underlying the opinion. In arriving at its fairness determination, BT
Wolfensohn did not assign specific weights to any particular analyses.

In conducting its analyses and arriving at its opinions, BT Wolfensohn
utilized a variety of generally accepted valuation methods. The analyses were
prepared solely for the purpose of enabling BT Wolfensohn to provide its opinion
to the FelCor Board as to the fairness to FelCor of the Exchange Ratio and does
not purport to be appraisals or necessarily reflect the prices at which
businesses or securities actually may be sold, which are inherently subject to
uncertainty. In connection with its analyses, BT Wolfensohn made, and was
provided by FelCor management with, numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond FelCor's or Bristol's control. Analyses based
on estimates or forecasts of future results are not necessarily indicative of
actual past or future values or results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are inherently
subject to uncertainty, being based upon numerous factors or events beyond the
control of FelCor, Bristol or their respective advisors, none of FelCor, BT
Wolfensohn, Bristol, Merrill Lynch or any other person assumes responsibility if
future results or actual values are materially different from these estimates,
forecasts or assumptions.

The terms of the Merger were determined through negotiations between FelCor
and Bristol and were approved by the FelCor Board. Although BT Wolfensohn
provided advice to FelCor during the course of these negotiations, the decision
to enter into the Merger was solely that of the FelCor Board. As described
above, the opinion and presentation of BT Wolfensohn to the FelCor Board were
only one of a number of factors taken into consideration by the FelCor Board in
making its determination to approve the Merger. BT Wolfensohn's opinion was
provided to the FelCor Board to assist it in connection with it consideration of
the Merger and does not constitute a recommendation to any holder of FelCor
Common Shares as to how to vote with respect to the Merger.

FelCor selected BT Wolfensohn as financial advisor in connection with the
Merger based on BT Wolfensohn's qualifications, expertise, reputation and
experience in mergers and acquisitions. BT Wolfensohn is engaged in the merger
and acquisition and client advisory business and, for legal and regulatory
purposes, is a division of BT Alex. Brown Incorporated, a registered broker
dealer and member of the New York Stock Exchange. FelCor has retained BT
Wolfensohn pursuant to a letter agreement, dated March 21, 1998 (the "Engagement
Letter"). As compensation for BT Wolfensohn's services in connection with the
Merger, FelCor will pay a cash fee of $3 million if the Merger is consummated.
Regardless of whether the Merger is consummated, FelCor has agreed to reimburse
BT Wolfensohn for reasonable fees and disbursements of BT Wolfensohn's counsel
and all of BT Wolfensohn's reasonable travel and other out-of-pocket expenses
incurred in connection with the Merger or otherwise arising out of the retention
of BT Wolfensohn under the Engagement Letter. FelCor has also agreed to
indemnify BT Wolfensohn and certain related persons to the full extent lawful
against certain liabilities, including certain liabilities under the federal
securities laws arising out of its engagement or the Merger.

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<PAGE> 48

BT Wolfensohn is an internationally recognized investment banking firm
experienced in providing advice in connection with mergers and acquisitions and
related transactions. BT Wolfensohn or one of its affiliates (together, the "BT
Group") has, from time to time, provided investment banking services to FelCor
and Bristol or their affiliates and has provided commercial lending services to
Bristol or its affiliates for which it has received compensation. The BT Group
will also provide commercial lending services to BHR after consummation of the
Spin-Off. BT Wolfensohn and its affiliates may actively trade securities of
FelCor or Bristol for their own account or the account of their customers and,
accordingly, may from time to time hold a long or short position in such
securities.

OPINION OF BRISTOL'S FINANCIAL ADVISOR

Bristol retained Merrill Lynch to act as its financial advisor in
connection with the Merger. On March 23, 1998, Merrill Lynch rendered its oral
opinion to the Bristol Board, which was subsequently confirmed in writing, that,
as of such date and based upon and subject to the factors and assumptions set
forth therein, the Exchange Ratio was fair from a financial point of view to the
holders of Bristol Common Shares.

THE FULL TEXT OF THE OPINION OF MERRILL LYNCH DATED AS OF THE DATE OF THIS
JOINT PROXY STATEMENT/ PROSPECTUS (THE "MERRILL LYNCH OPINION"), WHICH SETS
FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED, AND QUALIFICATIONS AND
LIMITATIONS ON THE REVIEW UNDERTAKEN BY MERRILL LYNCH, IS ATTACHED AS ANNEX C
HERETO AND IS INCORPORATED HEREIN BY REFERENCE. THE MERRILL LYNCH OPINION IS
NECESSARILY BASED ON ECONOMIC, MARKET AND OTHER CONDITIONS IN EFFECT ON, AND THE
INFORMATION MADE AVAILABLE TO IT AS OF, THE DATE THEREOF. SUBSEQUENT
DEVELOPMENTS MAY AFFECT SUCH OPINION. STOCKHOLDERS OF BRISTOL ARE URGED TO READ
THE MERRILL LYNCH OPINION IN ITS ENTIRETY AND CONSIDER IT CAREFULLY. THE
FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF
THE MERRILL LYNCH OPINION. THE MERRILL LYNCH OPINION WAS PROVIDED TO THE BRISTOL
BOARD FOR ITS INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL
POINT OF VIEW OF THE EXCHANGE RATIO TO THE HOLDERS OF THE BRISTOL COMMON SHARES
AND DOES NOT ADDRESS THE MERITS OF THE UNDERLYING DECISION BY BRISTOL TO ENGAGE
IN THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER OF
BRISTOL AS TO HOW SUCH STOCKHOLDER SHOULD VOTE ON THE ADOPTION OF THE MERGER
AGREEMENT OR ANY MATTER RELATED THERETO. MERRILL LYNCH WAS NOT ASKED TO AND DID
NOT RENDER A FAIRNESS OPINION WITH REGARD TO THE SPIN-OFF. IN ADDITION, MERRILL
LYNCH WAS NOT ASKED TO CONSIDER, AND THE MERRILL LYNCH OPINION DOES NOT IN ANY
MANNER ADDRESS, THE PRICES AT WHICH FELCOR COMMON SHARES WILL ACTUALLY TRADE
FOLLOWING CONSUMMATION OF THE MERGER OR THE PRICES AT WHICH THE BHR COMMON
SHARES WILL TRADE FOLLOWING THE SPIN-OFF.

The Exchange Ratio was determined through an analysis by the managements of
both Bristol and FelCor of current and projected financial and operating data,
in addition to negotiations between Bristol and FelCor, and after substantial
analysis and consideration was authorized by the Bristol Board.

The summary set forth below does not purport to be a complete description
of the analyses underlying the Merrill Lynch Opinion or the presentation made by
Merrill Lynch to the Bristol Board. The preparation of a fairness opinion is a
complex and analytical process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances and, therefore, such an opinion is
not readily susceptible to partial analysis or summary description. In arriving
at its opinion, Merrill Lynch did not attribute any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments as to
the significance and relevance of each analysis and factor. Accordingly, Merrill
Lynch believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering all of its analyses,
would create an incomplete view of the process underlying the Merrill Lynch
Opinion.

In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Merrill Lynch, Bristol and FelCor. Any estimates contained in the analyses
performed by Merrill Lynch are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses. Additionally, estimates of the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
such businesses or securities might actually be sold. Accordingly, such analyses
and estimates are inherently subject to

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substantial uncertainty. In addition, the Merrill Lynch Opinion was among
several factors taken into consideration by the Bristol Board in making its
determination to approve the Merger. Consequently, the Merrill Lynch analyses
described below should not be viewed as determinative of the decision of the
Bristol Board or Bristol's management with respect to the fairness of the
Exchange Ratio.

In arriving at the Merrill Lynch Opinion, Merrill Lynch, among other
things: (i) reviewed certain publicly available business and financial
information relating to Bristol and FelCor that Merrill Lynch deemed to be
relevant; (ii) reviewed certain information, including internal financial
forecasts, relating to the business, earnings, cash flow, assets, liabilities
and prospects of Bristol and FelCor, furnished by Bristol and FelCor,
respectively; (iii) conducted discussions with members of senior management of
Bristol and FelCor concerning the matters in clauses (i) and (ii) above, as well
as their respective businesses and prospects before and after giving effect to
the Spin-Off and the Merger; (iv) reviewed the market prices and valuation
multiples for Bristol Common Shares and the FelCor Common Shares and compared
them with those of certain publicly traded companies that Merrill Lynch deemed
to be relevant; (v) reviewed the results of operations of Bristol and FelCor and
compared them with those of certain publicly traded companies that Merrill Lynch
deemed to be relevant; (vi) participated in certain discussions and negotiations
among representatives of Bristol and FelCor and their financial and legal
advisors; (vii) reviewed the potential pro forma impact of the Merger; (viii)
reviewed the Merger Agreement and certain other agreements referred to therein;
and (ix) reviewed such other financial studies and analyses and took into
account such other matters as Merrill Lynch deemed necessary, including Merrill
Lynch's assessment of general economic, market and monetary conditions.

In preparing the Merrill Lynch Opinion, Merrill Lynch assumed and relied on
the accuracy and completeness of all information supplied or otherwise made
available to Merrill Lynch, discussed with or reviewed by or for Merrill Lynch,
or publicly available, and Merrill Lynch did not assume any responsibility for
independently verifying such information, did not undertake an independent
evaluation or appraisal of any of the assets or liabilities of Bristol or FelCor
and was not furnished with any such evaluation or appraisal. In addition,
Merrill Lynch did not conduct any physical inspection of the properties or
facilities of Bristol or FelCor. With respect to the financial forecast
information furnished to or discussed with Merrill Lynch by Bristol or FelCor,
Merrill Lynch assumed that they were reasonably prepared and reflected the best
currently available estimates and judgments of Bristol's or FelCor's management
as to the expected future financial performance of Bristol or FelCor, as the
case may be. Merrill Lynch further assumed that the Merger will qualify as a
tax-free reorganization for U.S. federal income tax purposes and that, following
the Merger, FelCor will retain its status as a real estate investment trust for
such purposes.

The Bristol Fairness Opinion is necessarily based upon market, economic and
other conditions as they existed and could be evaluated on the date of such
opinion. Merrill Lynch was not authorized by Bristol to solicit, nor did it
solicit, third-party indications of interest for the acquisition of all or any
part of Bristol. Bristol did not impose any limitations on the scope of Merrill
Lynch's analyses.

At the meeting of the Bristol Board held on March 23, 1998, Merrill Lynch
presented certain financial analyses in connection with such firm's delivery of
the Merrill Lynch Opinion. The following is a summary of the material financial
and comparative analyses performed by Merrill Lynch in arriving at the Merrill
Lynch Opinion.

Historical Trading Performance and Current Capitalization. Merrill Lynch
reviewed certain trading information for Bristol and FelCor and, on the basis
thereof, calculated their respective trading multiples based on closing stock
prices of $27.94 for Bristol as of March 19, 1998, and $36.25 for FelCor as of
March 19, 1998. Merrill Lynch then calculated Bristol's Enterprise Value
("Enterprise Value" or "Market Capitalization" is defined as the product of the
number of shares outstanding and market price, plus total debt, plus minority
interest, plus liquidation value of redeemable preferred stock less cash and
marketable securities as of the latest available public disclosure) as multiples
of estimated EBITDA, based on recent publicly available equity research reports.
For Bristol, Market Capitalization as multiples of EBITDA for 1997, 1998 and
1999 were 14.2x, 10.0x and 8.4x, respectively. Merrill Lynch then calculated the
market value of FelCor as a

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multiple of FFO (based on mean estimates of funds from operations provided by
First Call). FelCor's FFO multiples for 1997, 1998 and 1999 were 10.9x, 9.5x and
8.5x, respectively.

Comparable Public Company Trading Analysis -- Bristol. Merrill Lynch
reviewed and compared certain financial information, ratios and public market
multiples relating to Bristol to corresponding financial information, ratios and
public market multiples for the following publicly traded companies: Marriott
International, Inc., Hilton Hotels Corporation, Host Marriott Corporation,
Promus Hotel Corporation, Prime Hospitality Corporation, CapStar Hotel Company,
Choice Hotels International Inc., Red Roof Inns Inc., John Q. Hammons Inc.,
Servico Inc. and Sunburst Hospitality Corporation (collectively, the "Bristol
Comparable Companies"). The Bristol Comparable Companies were chosen because
they are publicly traded companies with financial and operating characteristics
which Merrill Lynch deemed to be similar to those of Bristol. Merrill Lynch
calculated various financial ratios for the Bristol Comparable Companies and
compared them to the Bristol financial ratios. The ratios for the Bristol
Comparable Companies were based on estimates of EBITDA provided by recent equity
research reports and estimates of EPS provided by First Call. This analysis
indicated for the Bristol Comparable Companies that (i) Market Capitalization
multiples of 1998 estimated EBITDA ranged from 5.3x to 14.2x, with a mean of
9.3x and a median of 8.8x (as compared to 10.0x for Bristol), (ii) price to
earnings multiples, based on 1998 estimated earnings per share ("EPS"), ranged
from 12.9x to 27.3x, with a mean and median of 20.1x and 21.4x, respectively (as
compared to 24.3x for Bristol), and (iii) price to earnings multiples, based on
1999 estimated EPS, ranged from 12.5x to 23.0x, with a mean and median of 17.7x
and 17.8x, respectively (as compared to 20.1x for Bristol).

None of the Bristol Comparable Companies is identical to Bristol.
Accordingly, an analysis of the results of the foregoing is not purely
mathematical. Rather, it involves complex considerations and judgements
concerning differences in financial and operating characteristics of the Bristol
Comparable Companies and other factors that could affect the public trading
value of the comparable companies or company to which they are being compared.

Discounted Cash Flow Analysis -- Bristol. Merrill Lynch performed DCF
analyses (i.e., an analysis of the present value of the projected unlevered free
cash flows (EBIT tax effected, plus depreciation and amortization minus capital
expenditures minus (plus) increases (decreases) in working capital) for the
periods and using the discount rates indicated) of Bristol as of December 31,
1997 using internal forecasts for the years 1998 -- 2002 provided by Bristol
management and a year-end 2002 terminal value of Bristol based upon a range of
multiples of internally forecasted year 2002 EBITDA. Using discount rates based
upon a weighted average cost of capital analysis for Bristol and the Bristol
Comparable Companies of from 10.0% to 12.0% and terminal value multiples of
calender year 2002 estimated EBITDA ranging from 8.0x to 9.0x, the DCF analysis
yielded a range of equity per share values for the Bristol Common Shares of
approximately $25.00 to $33.00.

Comparable Public Company Trading Analysis -- Bristol REIT. Merrill Lynch
reviewed certain financial information, ratios and public market multiples for
the following publicly traded companies: FelCor Suite Hotels, Inc., Hospitality
Properties Trust, Sunstone Hotel Investors, Inc., Innkeepers USA Trust, Equity
Inns, Inc., RFS Hotel Investors, Inc., American General Hospitality Corporation,
Boykin Lodging Company, Winston Hotels, Inc. and Jameson Inns, Inc.
(collectively, the "Bristol REIT Comparable Companies"). The Bristol REIT
Comparable Companies were chosen because they are publicly traded companies with
financial and operating characteristics which Merrill Lynch deemed to be similar
to those of Bristol after giving effect to the Spin-Off ("Bristol REIT").
Merrill Lynch calculated various financial ratios for the Bristol REIT
Comparable Companies. The ratios for the Bristol REIT Comparable Companies were
based on estimates of EBITDA provided by recent equity research reports and
estimates of FFO provided by First Call. This analysis indicated for the Bristol
REIT Comparable Companies that (i) Market Capitalization multiples of 1998
estimated EBITDA ranged from 6.1x to 10.2x, with a mean of 8.1x and a median of
8.2x, (ii) price to FFO multiples, based on 1998 estimated FFO, ranged from 7.6x
to 9.6x, with a mean of 8.8x and median of 9.0x, and (iii) price to FFO
multiples, based on 1999 estimated FFO, ranged from 7.2x to 9.0x, with a mean
and median of 8.1x. Based upon this analysis of the Bristol REIT Comparable
Companies, Merrill Lynch observed that implied value for Bristol REIT (i.e.,
after giving effect to the Spin-Off) would be 7.5x to 9.0x 1998 estimated FFO or
$21.00 to $25.00 per Bristol Common Share.

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None of the Bristol REIT Comparable Companies is identical to Bristol REIT.
Accordingly, an analysis of the results of the foregoing is not purely
mathematical. Rather, it involves complex considerations and judgements
concerning differences in financial and operating characteristics of the Bristol
REIT Comparable Companies and other factors that could affect the public trading
value of the comparable companies or company to which they are being compared.

Discounted Cash Flow Analysis -- Bristol REIT. Merrill Lynch estimated the
net present value of the future FFO per Bristol Common Share as of December 31,
1997 using internal forecasts for the years 1998 -- 2002 provided by Bristol
management and a year-end 2002 terminal value of Bristol REIT per share based
upon a range of multiples of internally forecasted year 2002 FFO per share.
Based on an analysis of the Bristol REIT Comparable Companies, discount rates
reflecting an equity cost of capital ranging from 16.0% to 18.0% and terminal
value multiples of calender year 2002 estimated FFO ranging from 8.0x to 9.0x
were used to calculate a range of equity per share values of approximately
$23.00 to $28.00 per Bristol Common Share.

Comparable Public Company Trading Analysis -- BHR. Merrill Lynch reviewed
certain financial information, ratios and public market multiples for a group of
publicly traded companies comprising two large capitalization lodging companies:
Marriott International, Inc. (reflecting pro forma estimates for its pending
spin-off of "New Marriott International") and Promus Hotel Corporation, three
mid-capitalization lodging companies: Prime Hospitality Corporation, CapStar
Hotel Company and Service, Inc. and three non-lodging companies: Central Parking
Corporation, CB Commercial Real Estate Services Group, Inc. and Insignia
Financial Group, Inc. (collectively, the "BHR Comparable Companies"). The BHR
Comparable Companies were chosen because they are publicly traded companies with
financial and operating characteristics which Merrill Lynch deemed to be similar
to BHR. Merrill Lynch calculated various financial ratios for the BHR Comparable
Companies and applied them to the BHR financial statistics. The ratios for the
BHR Comparable Companies were based on estimates of EBITDA provided by recent
equity research reports and estimates of earnings provided by First Call. This
analysis indicated for the BHR Comparable Companies that (i) Enterprise Value
multiples of 1997 estimated EBITDA ranged from 8.6x to 16.7x, with a mean of
12.9x and a median of 12.5x, (ii) Enterprise Value multiples of 1998 estimated
EBITDA ranged from 6.4x to 13.4x, with a mean of 9.5x and a median of 8.9x,
(iii) price to earnings multiples, based on 1998 estimated EPS, ranged from
16.3x to 27.1x, with a mean and median of 21.0x and 20.1x, respectively, (iv)
projected five year annual EPS growth rates ranged from 18.0% to 27.0%, with a
mean and median of 22.5%, and (v) the ratio of 1998 price to earnings multiples
to five year annual EPS growth rates ("PEG Ratio") ranged from 0.65x to 1.65x,
with a mean of 1.07x and a median of 0.95x. Based upon this analysis of the BHR
Comparable Companies, Merrill Lynch advised the Bristol Board that the implied
value for BHR would be 12.0x to 14.0x 1998 net income or $2.75 to $3.25 per
Bristol Common Share.

Merrill Lynch is of the view that none of the BHR Comparable Companies is
identical to BHR. Accordingly, an analysis of the results of the foregoing is
not purely mathematical. Rather, it involves complex considerations and
judgements concerning differences in financial and operating characteristics of
the BHR Comparable Companies and other factors that could affect the public
trading value of the comparable companies or company to which they are being
compared.

Discounted Cash Flow Analysis -- BHR. Merrill Lynch estimated the net
present value of the future cash flows per share of BHR as of December 31, 1997
using internal forecasts for the years 1998 through 2002 provided by Bristol
management and a year-end 2002 terminal value of BHR based upon a range of
multiples of projected year 2002 EBITDA. Based on Merrill Lynch's judgment,
discount rates reflecting a weighted average cost of capital ranging from 13.0%
to 15.0% and terminal value multiples of calender year 2002 estimated EBITDA
ranging from 7.0x to 8.0x were used to calculate a range of equity per share
values of approximately $3.60 to $4.20 per Bristol Common Share.

Comparable Public Company Trading Analysis -- FelCor. Merrill Lynch
reviewed and compared certain financial information, ratios and public market
multiples relating to FelCor to corresponding financial information, ratios and
public market multiples for the following publicly traded companies: Hospitality
Properties Trust, Sunstone Hotel Investors, Inc., Innkeepers USA Trust, Equity
Inns, Inc., RFS Hotel Investors, Inc., American General Hospitality, Boykin
Lodging Company, Winston Hotels, Inc. and Jameson

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Inns, Inc. (collectively, the "FelCor Comparable Companies"). The FelCor
Comparable Companies were chosen because they are publicly traded companies with
financial and operating characteristics which Merrill Lynch deemed to be similar
to those of FelCor. Merrill Lynch calculated various financial ratios for the
FelCor Comparable Companies and compared them to the FelCor financial ratios.
The ratios for the FelCor Comparable Companies were based on estimates of EBITDA
provided by recent equity research reports and estimates of FFO provided by
First Call. The ratios for FelCor were provided by First Call estimates. This
analysis indicated for the FelCor Comparable Companies that (i) Market
Capitalization multiples of 1998 estimated EBITDA ranged from 6.1x to 10.2x with
a mean and median of 7.9x (as compared to 10.8x for FelCor), (ii) price to FFO
multiples, based on 1998 estimated FFO, ranged from 7.6x to 9.6x, with a mean of
8.8x and a median of 9.0x (as compared to 9.5x for FelCor), and (iii) price to
FFO multiples, based on 1999 estimated FFO, ranged from 7.2x to 9.0x, with a
mean of 8.0x and a median of 8.1x (as compared to 8.5x for FelCor).

None of the FelCor Comparable Companies is identical to FelCor.
Accordingly, an analysis of the results of the foregoing is not purely
mathematical. Rather, it involves complex considerations and judgements
concerning differences in financial and operating characteristics of the FelCor
Comparable Companies and other factors that could affect the public trading
value of the comparable companies or company to which they are being compared.

Discounted Cash Flow Analysis -- FelCor. Merrill Lynch estimated the net
present value of the future FFO per FelCor Common Share as of December 31, 1997
using internal forecasts for the years 1998 through 2002 provided by FelCor
management and a year-end 2002 terminal value per share based upon a range of
multiples of projected year 2002 FFO per share. Based on Merrill Lynch's
judgment and an analysis of the FelCor Comparable Companies, discount rates
reflecting an equity cost of capital ranging from 15.0% to 17.0% and terminal
value multiples of calender year 2002 estimated FFO ranging from 9.5x to 10.5x
were used to calculate a range of equity values of approximately $37.00 to
$43.00 per FelCor Common Share.

Merger Consequences and Relative Valuation

Based upon forecasts provided to Merrill Lynch by Bristol and FelCor and
assuming, among other things, the Cash E&P Distribution and corporate tax
resulting from the Spin-Off, Merrill Lynch analyzed certain pro forma effects of
the Merger. This analysis indicated that the Merger would be accretive to
projected FFO per share for FelCor based on both FelCor's forecasts and First
Call estimates in 1998 and beyond.

Using a DCF valuation analysis, Merrill Lynch compared the respective value
per share of Bristol REIT to the respective value per share of FelCor and
calculated the implied exchange ratios resulting from such relative values as
ranging from 0.63 to 0.75. Using a comparable public company valuation analysis,
Merrill Lynch compared the respective value per share of Bristol REIT to the
respective value per share of FelCor and calculated the implied exchange ratio
resulting from such relative values as ranging from 0.55 to 0.74.

Merrill Lynch analyzed the respective contributions of each of Bristol REIT
and FelCor to the estimated FFO and free cash flow of the combined company after
giving effect to the Merger on a pro forma basis for the years 1998 and 1999.
Such analysis indicated that (i) Bristol REIT and FelCor would contribute 42.8%
and 57.2%, respectively, of estimated FFO for 1998 and 43.7% and 56.3%,
respectively, of 1999 estimated FFO, and (ii) FelCor would contribute 100% of
1998 and 1999 forecasted free cash flow.

Merrill Lynch Financial Advisor Fee

Pursuant to a letter agreement dated March 23, 1998, between Bristol and
Merrill Lynch, Bristol has agreed to pay Merrill Lynch a fee of $3 million,
payable upon the consummation of a business combination with FelCor. Bristol has
also agreed to reimburse Merrill Lynch for its reasonable out-of-pocket
expenses, including subject to certain limitations reasonable fees and
disbursements of its legal counsel. Additionally, Bristol has agreed to
indemnify Merrill Lynch and certain related persons for certain liabilities
related to or arising out of its engagement, including certain liabilities under
federal securities laws.

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Bristol retained Merrill Lynch based upon Merrill Lynch's experience and
expertise. Merrill Lynch is an internationally recognized investment banking and
advisory firm. Merrill Lynch, as part of its investment banking business, is
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Merrill Lynch has in the past
provided financial advisory and/or financing services to Bristol and FelCor and
may continue to do so and has received, and may receive, fees for the rendering
of such services. In the ordinary course of its business, Merrill Lynch and its
affiliates may actively trade the debt and equity securities of Bristol and
FelCor (and anticipates trading after the Merger and Spin-Off in the securities
of FelCor and BHR) for their own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendation of the Bristol Board to adopt the Merger
Agreement, stockholders should be aware that certain directors and executive
officers of Bristol have interests that may be different from the interests of
Bristol stockholders generally, and that the directors having such interests
participated in the discussion, deliberation and voting of the Bristol Board to
adopt the Merger Agreement.

Election of New FelCor Directors and Chairman of the Board. Upon
consummation of the Merger, three persons designated by Bristol will become
directors of FelCor. These directors are expected to be Donald J. McNamara,
Richard C. North and Robert L. Lutz, Jr. Mr. McNamara will also become FelCor's
Chairman of the Board. At the Effective Time, the Bristol Majority Stockholders
will enter into a stockholders' and registration rights agreement (the "FelCor
Stockholders' Agreement") that requires such stockholders to vote their FelCor
Common Shares and take all other necessary action to ensure that two designees
of such stockholders are elected to the FelCor Board. This obligation will
terminate if either party no longer holds 25% of its ownership of FelCor Common
Shares at the Effective Time.

Treatment of Bristol Options. The officers and directors of Bristol hold
options to purchase Bristol Common Stock under the Bristol 1995 Equity Incentive
Plan and the Bristol Non-Employee Directors Stock Option Plan (collectively, the
"Bristol Plans"). At the Effective Time, these options will continue on the same
terms and conditions as set forth in the Bristol Plans, except that they will be
split into options exercisable for FelCor Common Shares, and options exercisable
for BHR Common Shares. FelCor will assume the Bristol Plans and Bristol's
obligations under the options to purchase FelCor Common Shares, while BHR will
assume all of Bristol's obligations for each option to purchase BHR Common
Shares. The exercise prices and numbers of shares covered by the newly split
options will be adjusted as appropriate to reflect the Spin-Off Ratio and the
Exchange Ratio. Service with BHR or FelCor will satisfy the vesting requirements
for all options. Accordingly, officers and directors of Bristol will preserve
the current value of their existing Bristol options and be able to participate
as option holders in future stock appreciation of both FelCor and BHR. As of
March 31, 1998, the officers and directors of Bristol held options to purchase
an aggregate of 1,212,750 Bristol Common Shares at a weighted average price of
$12.29 per share (at exercise prices ranging from $8.33 to $26.00 per share), of
which options to purchase 556,050 shares were exercisable at a weighted average
price of $9.59. As a result of the Merger these options will be converted into
options to purchase an aggregate of 830,734 FelCor Common Shares at a weighted
average price of $15.90 per share and 606,375 BHR Common Shares at a weighted
average price of $2.88 per share.

Franchise Agreements. A subsidiary of the Holiday Entities, Holiday
Hospitality, is the franchisor for the existing 70 Holiday Inn hotels owned or
leased by Bristol. Bristol is in the process of redeveloping and converting 17
of these hotels and seven of its other hotels to Crowne Plaza and Holiday Inn
hotels, which will also be franchised by Holiday Hospitality. Bristol has
undertaken an extensive refurbishment and renovation of these hotels, which will
be continued following the Merger through funds provided by FelCor. See "The
Companies -- The Combined Company." Any increases in revenues from these hotels
will result in increased franchise fees payable to Holiday Hospitality.

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Redemption of Holiday Entities' BHR Common Shares. After the Spin-Off but
prior to the Effective Time, BHR will redeem all BHR Common Shares received by
the Holiday Entities in the Spin-Off that exceed 9.9% of the outstanding BHR
Common Shares for $25.8 million. This redemption was agreed to in order to
assure that the Merger does not result in FelCor losing its status as a REIT for
federal income tax purpose as a result of the Holiday Entities owning more than
10% of both BHR and FelCor. See "Certain Federal Income Tax
Considerations -- Qualification and Operation of FelCor as a REIT; Ownership and
Disposition of FelCor Common Shares -- Income Tests."

Hotel Properties Agreement. In connection with the Spin-Off, BHR will agree
to add 8,700 Holiday Hospitality-branded rooms to its existing portfolio of
owned and operated hotels over the next five years. If BHR fails to meet certain
threshold targets for adding additional rooms over that period, BHR is required
to pay the Holiday Entities damages in accordance with a specified formula
unless it satisfies certain exceptions. In return, the Holiday Entities have
agreed to offer BHR each opportunity it may have to acquire or develop a
mid-scale lodging facility in the U.S. or Canada, subject to certain exceptions,
and to terminate their existing agreement with Bristol that required Bristol to
offer the Holiday Entities franchise rights with respect to at least 85% of
Bristol's owned and managed hotel rooms.

Waiver of Ownership Limit. The FelCor Charter prohibits ownership by any
person of more than 9.9% of the outstanding FelCor Common Shares. See
"Description of FelCor's Capital Stock -- Certain Charter and Bylaw
Provisions -- Restrictions on Ownership and Transfer." This prohibition may be
waived by the FelCor Board. The FelCor Board has waived, subject to certain
conditions, this limitation for the Holdings Entities and the Holiday Entities,
each of which may initially own up to 15% of the outstanding FelCor Common
Shares. This percentage will be reduced to the extent a Bristol Majority
Stockholder fails to exercise its preemptive rights with respect to future
issuances of FelCor equity securities.

Preemptive Rights. FelCor has agreed that the Bristol Majority Stockholders
will have the preemptive right, in connection with any offering for cash in
excess of $100 million of FelCor Common Stock, to purchase on the same terms as
such offering a sufficient number of FelCor Common Shares to maintain their
respective percentage ownerships of FelCor Common Shares immediately prior to
the offering. This right will expire as to any Bristol Majority Stockholder who
does not exercise such right with respect to three offerings or who no longer
owns at least 50% of the FelCor Common Shares owned by it at the Effective Time.

Indemnification; Insurance. Under the Merger Agreement, FelCor has agreed
to honor existing indemnification rights of Bristol directors, officers and
employees. FelCor does not maintain and has no current plans to maintain
directors and officers liability insurance. Bristol has agreed to extend its
existing directors and officers liability insurance for a period beyond the
Effective Time to provide coverage for Bristol's officers and directors.

Registration Rights. This Joint Proxy Statement/Prospectus covers the
reoffer and resale of shares of FelCor Common Stock received by the Bristol
Majority Stockholders and those officers and directors who may be deemed to be
"affiliates" of Bristol for purposes of Rule 145. See "Plan of Distribution" and
"Selling Securityholders." FelCor agreed to register these shares with the SEC
for this purpose in connection with the Merger Agreement and to maintain such
registration until such shares have been sold or may be otherwise sold without
registration under Rule 144. The Bristol Majority Stockholders will agree,
however, not to sell or transfer their FelCor Common Shares until the six-month
anniversary of the Effective Time.

The Bristol Board was aware of the foregoing interests but did not consider
them to be of a nature that would affect the objectivity of any director's
determination that the Merger was in the best interests of all of the Bristol
stockholders. See "-- Bristol's Reasons for the Merger; Recommendation of the
Bristol Board."

ACCOUNTING TREATMENT

The Merger will be accounted for by FelCor under the purchase method of
accounting in accordance with Accounting Principles Board Opinion No. 16,
"Business Combinations." Under the purchase method of accounting, the aggregate
Merger consideration will be allocated to Bristol's assets and liabilities based
on

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their estimated fair values at the Effective Time, and the results of operations
of Bristol will be included in the results of operations of FelCor only for
periods subsequent to the Effective Time.

NO APPRAISAL RIGHTS

Holders of Bristol Common Shares and FelCor Common Shares will not have
appraisal or dissenters' rights under applicable law with respect to the Merger
or the Spin-Off.

THE MERGER AGREEMENT

The following summarizes the material terms of the Merger Agreement, which
is attached hereto as Annex A. The Merger Agreement is the legal document that
governs the Merger. Accordingly, stockholders of FelCor and Bristol are urged to
read the Merger Agreement in its entirety for a more complete description of the
terms of the Merger.

EXCHANGE OF SHARE CERTIFICATES

Promptly after the Effective Time, FelCor will cause its transfer agent
(the "Exchange Agent") to mail to each stockholder of record of Bristol as of
the Effective Time instructions for exchanging certificates of Bristol Common
Shares for certificates of FelCor Common Shares and cash in payment for any
fractional shares resulting from the exchange. Upon surrender of a certificate
representing Bristol Common Shares, the holder of such certificate will receive
in exchange (i) a certificate representing a whole number of FelCor Common
Shares; (ii) a check representing the amount of unpaid distributions, if any,
that have been declared since June 15, 1998; and (iii) a check or the right to
receive a check representing the amount of cash in lieu of fractional shares
such surrendering holder is entitled to receive. A Bristol stockholder will not
be paid dividends with respect to his FelCor Common Shares until he has
delivered his Bristol stock certificate to the Exchange Agent. No stockholder
will be paid interest on any unpaid dividends or cash in lieu of fractional
shares. Certificates surrendered by any person considered an "affiliate" of
Bristol under the Securities Act will not be exchanged for a certificate of
FelCor Common Shares until FelCor has received an Affiliate Agreement from such
person. See "The Merger -- Resale Restrictions on Bristol Affiliates."

Fractional FelCor Common Shares will not be issued in the Merger. No
stockholder will be entitled to dividends, voting rights or any other
stockholder rights in respect of any fractional share. Instead, the Exchange
Agent will pay each Bristol stockholder the market value of his fractional share
determined either upon the consummation of the Merger or upon the sale of all
such fractional shares by the Exchange Agent within 90 calendar days after the
Effective Time.

TREATMENT OF BRISTOL STOCK OPTIONS

In connection with the Spin-Off and the Merger, each outstanding option
under the Bristol Plans will continue on the same terms and conditions as set
forth in the Bristol Plans, except that they will be split into options
exercisable for FelCor Common Shares, and options exercisable for BHR Common
Shares. FelCor will assume the Bristol Plans and Bristol's obligations under the
options to purchase FelCor Common Shares, while BHR will assume all of Bristol's
obligations for each option to purchase BHR Common Shares. The exercise prices
and numbers of shares covered by the newly split options will be adjusted as
appropriate to reflect the Spin-Off Ratio and the Exchange Ratio. Service with
BHR or FelCor will satisfy the vesting requirements for all options.

BUSINESS PENDING THE MERGER

Prior to the consummation or termination of the Merger Agreement, FelCor
and Bristol have agreed to conduct their respective businesses in the ordinary
course and in substantially the same manner as prior to the execution of the
Merger Agreement. FelCor and Bristol have agreed to take certain actions and to
refrain from taking certain actions during such period that are customary in
merger transactions. Except for pending acquisitions and indebtedness assumed or
incurred in connection with these acquisitions, FelCor and Bristol

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have agreed not to acquire (other than pursuant to existing agreements), sell or
lease any additional real property, borrow any additional money (other than
under existing agreements) or encumber or create any liens on their respective
properties.

FelCor has agreed not to enter into any new, or amend any existing,
agreement or commitment to improve, develop or construct real estate projects or
to make any other capital expenditure other than expenditures that are within
FelCor's 1998 capital expenditures budget. In addition, Bristol has agreed not
to enter into any new, or amend any existing, agreement or commitment to
improve, develop or construct real estate projects or to make any other capital
expenditure where the amount involved exceeds $1.0 million, except that Bristol
may continue transactions, projects or other capital expenditures relating to
the improvement, development or construction of real estate projects to the
extent the expenditures are within Bristol's 1998 capital expenditures budget
and for which Bristol has commenced paying expenditures to third parties or
obligated itself to do so.

FelCor is permitted to continue payment of its regular quarterly
distributions on its stock, to redeem Units for FelCor Common Shares or cash and
to issue FelCor Common Shares upon conversion of FelCor Series A Preferred
Shares. Without FelCor's consent, Bristol may not amend any contract in a manner
that would adversely affect FelCor after the merger in order to obtain the
consent of a third party to the Merger or Spin-Off. Both parties may continue to
issue stock upon the exercise of outstanding options.

FelCor and Bristol have established a committee of their respective chief
executive officers to approve actions that are prohibited pending completion of
the Merger.

SOLICITATION OF OTHER PROPOSALS; BREAK-UP FEE

Prior to the Effective Time or the termination of the Merger Agreement,
FelCor and Bristol have agreed not to initiate, solicit, engage in negotiations
or discussions concerning, or provide confidential information in connection
with any competing transaction, including a merger, acquisition, tender offer,
exchange offer, business combination, consolidation, sale of assets or similar
transaction involving more than 10% of the equity securities of Bristol or
FelCor or a substantial portion of Bristol's or FelCor's assets (an "Acquisition
Proposal"). Each of FelCor and Bristol has agreed to notify the other
immediately if it receives any offer relating to an Acquisition Proposal. If in
response to an unsolicited Acquisition Proposal, the Bristol Board or the FelCor
Board determines after consultation with its financial adviser that such
Acquisition Proposal, if consummated, would result in a transaction more
favorable to such company's stockholders (a "Superior Proposal") than the
Merger, it may explore the Superior Proposal following notice to the other party
of the discussions.

If FelCor or Bristol takes any of the actions described above with respect
to an Acquisition Proposal, withdraws or fails to confirm its recommendation of
the Merger, recommends or approves a Superior Proposal or enters into a letter
of intent or other agreement with respect to an Acquisition Proposal, the other
party may terminate the Merger Agreement and receive from the other party a
break-up fee of $60 million plus $5 million as reimbursement for its transaction
costs. The break-up fee is also payable to FelCor or Bristol if such party
terminates the Merger Agreement due to a material breach by the other party of
its representations, warranties or covenants under the Merger Agreement which
cannot be cured prior to September 30, 1998. If the Merger Agreement is
terminated due to the failure by FelCor or Bristol to obtain the approval of its
stockholders, the other party is entitled to receive from the company whose
stockholders did not approve the Merger a break-up expense fee of $5 million as
reimbursement for its transaction costs. If (i) the Merger is not consummated
under certain circumstances, (ii) at the time of the termination of the Merger
Agreement an Acquisition Proposal had been received by FelCor or Bristol, and
(iii) within 12 months after the termination of the Merger Agreement such party
or any of its subsidiaries enters into an agreement providing for an Acquisition
Proposal that is subsequently consummated, then such party must pay the other
party the break-up fee and the break-up expenses.

Any payment of the break-up fee or break-up expenses by Bristol may be
reduced or delayed for up to five years to the extent FelCor's receipt of the
payment would cause FelCor not to satisfy the REIT qualification requirements.

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REPRESENTATIONS AND WARRANTIES

The Merger Agreement contains customary representations and warranties by
FelCor and Bristol relating to, among other things, their respective businesses,
capital structures, SEC filings, real properties, environmental and tax matters,
absences of adverse changes, compliance with laws and financial statements.
These representations and warranties do not survive the closing of the Merger.

CERTAIN COVENANTS OF FELCOR AND BRISTOL

The Merger Agreement contains customary covenants by FelCor and Bristol
relating to, among other things, the preparation and filing of this Joint Proxy
Statement/Prospectus, access to properties and records, the obtaining of
necessary covenants from third parties for the Merger and the Spin-Off, the
qualification of the Merger as a tax-free reorganization under the Code, press
releases and publicity, real property transfer taxes, the prohibition of any
dividends on distributions other than the Spin-Off and FelCor's regular
distributions and the listing of the FelCor Common Shares to be issued in the
Merger on the NYSE. In addition, FelCor has agreed to deliver a waiver of the
stock ownership limits in the FelCor Charter, which would permit the Bristol
Majority Stockholders to initially own up to 15% of the outstanding FelCor
Common Shares and, after the Effective Time, to exculpate and indemnify the
officers and directors of Bristol and its subsidiaries to the same extent as
they would have been exculpated or indemnified under the charter documents of
Bristol and its subsidiaries as in effect on the date of the Merger Agreement.
FelCor has no obligation to purchase directors and officers liability insurance.

Bristol also agreed (i) to use all reasonable efforts to obtain the
resignations of the officers and directors of Bristol and its remaining
subsidiaries after the Spin-Off, (ii) to purchase an extension of Bristol's
existing directors and officers liability insurance to cover claims made after
the Effective Time against Bristol's officers and directors, (iii) to deliver
prior to the closing of the Merger an estimate of the accumulated earnings and
profits ("E&P") of Bristol after the Spin-Off and a confirmation of that
estimate from Arthur Andersen LLP, and (iv) to take such actions as may be
reasonably necessary to preserve FelCor's status as a REIT under the Code so
long as these actions have no material adverse economic effect on Bristol if the
Merger is not consummated or on BHR if the Merger is consummated.

CONDITIONS TO THE MERGER

The Merger is subject to the satisfaction or waiver of various customary
conditions, including, among others:

(i) Approval of the stockholders of FelCor and Bristol;

(ii) The occurrence of the Spin-Off;

(iii) No law, injunction or order prohibits the Merger or the
Spin-Off;

(iv) The receipt of legal opinions regarding certain tax consequences
of the Spin-Off and Merger and FelCor's status as a REIT for federal income
tax purposes;

(v) The absence of any governmental actions that causes or could
reasonably be expected to cause FelCor to cease to qualify as a REIT for
federal income tax purposes;

(vi) The absence of any material adverse change with respect to either
party; and

(vii) The performance by each party of its material obligations under
the Merger Agreement, including the delivery by Bristol to FelCor of a
statement of its accumulated E&P confirmed by Arthur Andersen LLP.

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TERMINATION; AMENDMENT

The Merger Agreement may be terminated at any time prior to filing of the
Articles of Merger with the State of Maryland by the mutual written consent of
FelCor and Bristol. Either FelCor or Bristol may also terminate the Merger
Agreement if:

(i) The other party materially breaches the Merger Agreement and
cannot cure the breach by September 30, 1998;

(ii) An injunction prevents the Merger or the Spin-Off;

(iii) The Merger is not consummated by September 30, 1998, other than
due to the fault of the party terminating the Merger Agreement;

(iv) Stockholder approval is not received;

(v) The Merger is not consummated by September 30, 1998; or

(vi) The other party adversely changes its recommendation of the
Merger or takes certain actions with respect to a competing transaction.

Bristol may terminate the Merger Agreement if the volume weighted average
trading price for FelCor Common Shares is less than $28.00 per share over any
ten trading day period.

INTERIM CREDIT FACILITY

Under the Merger Agreement, FelCor has agreed to provide Bristol a $56.2
million interim credit facility which has been subsequently increased by mutual
agreement to $80 million (the "Interim Credit Facility"). Under the Interim
Credit Facility, FelCor will loan to Bristol (i) $40 million to fund a portion
of the cash purchase price and to prepay certain indebtedness assumed by Bristol
in connection with the Omaha Acquisition, (ii) $31.2 million to fund the
prepayment of $30 million in outstanding principal amount of Bristol's Senior
Secured Notes and a related prepayment premium, and (iii) $9 million for general
corporate purposes. The Interim Credit Facility will be secured by real estate
acceptable to FelCor. If the Merger Agreement is terminated due to the failure
of FelCor's stockholders to approve the Merger, the Interim Credit Facility will
be converted into unsecured indebtedness of Bristol with a maturity of December
31, 2003; however, any loan balance in excess of $56.2 million will remain
secured and due 120 days after the termination of the Merger or, if later, when
FelCor pays the Break-Up Fee if it is so obligated (the "Post-Termination
Maturity Date"). If the Merger Agreement is terminated for any other reason, the
Interim Credit Facility will be due on the Post-Termination Maturity Date.

RECONSTITUTION OF FELCOR BOARD

Upon the effectiveness of the Merger, the Merger Agreement provides that
FelCor Board will be reconstituted as follows: (i) the number of directors
comprising the FelCor Board will be increased from seven to 10; (ii) the
existing directors of FelCor (assuming election of the Nominees) will continue
as directors and three new directors designated by Bristol, Donald J. McNamara,
Richard C. North and Robert H. Lutz, Jr., each of whom is currently a director
of Bristol, will become directors of FelCor; (iii) Mr. McNamara will become
Chairman of the Board of Directors; and (iv) the directors will be reclassified
and will serve for the

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terms expiring with the annual meetings of stockholders, or until their
successor shall be elected and shall qualify or until their earlier resignation
or removal, as set forth below:

<TABLE>
<CAPTION>
NAME CLASS TERM EXPIRES
---- ----- ------------
<S> <C> <C>
Thomas J. Corcoran, Jr................................... II 1999
Thomas A. McChristy...................................... II 1999
Donald J. McNamara....................................... II 1999
Richard C. North......................................... II 1999
Richard S. Ellwood....................................... III 2000
Richard O. Jacobson...................................... III 2000
Charles N. Mathewson..................................... III 2000
Charles A. Ledsinger, Jr................................. I 2001
Robert H. Lutz, Jr....................................... I 2001
Michael D. Rose.......................................... I 2001
</TABLE>

Information regarding the three Bristol directors is set forth under the
caption "Other Bristol Annual Meeting Proposals -- Election of Bristol
Directors." Information regarding the FelCor directors is set forth under the
caption "Other FelCor Annual Meeting Proposals -- Election of FelCor Directors."

CHANGES TO FELCOR CHARTER

Pursuant to the Merger Agreement, upon the effectiveness of the Merger, the
FelCor Charter will be changed (i) to revise the name of FelCor to "FelCor
Lodging Trust, Ltd." and (ii) to increase the authorized FelCor Common Shares
from 100 million to 200 million and the authorized FelCor Preferred Shares from
10 million to 20 million. Adoption of the Merger Agreement by the holders of
FelCor Common Shares will constitute approval of these amendments to the FelCor
Charter.

The FelCor Board believes the name change is desirable to reflect FelCor's
diversification from primarily upscale, full service all-suite hotels prior to
the Merger, to reflect its expansion, through the Merger, into full service
hotels primarily in the upscale and midscale segments of the lodging industry
and its intention to seek further diversification to include properties in the
resort segment of the industry.

The FelCor Charter currently authorizes the issuance of up to 100 million
FelCor Common Shares. Of such authorized shares, as of March 31, 1998, 36.6
million FelCor Common Shares were issued and outstanding and an additional 9.5
million shares were reserved for issuance upon conversion of outstanding Series
A Preferred Shares, upon redemption of FelCor Operating Partnership Units, and
under existing FelCor stock-based compensation plans. In connection with the
Merger, FelCor expects to issue an additional 31.1 million shares and to reserve
an additional 1.3 million shares for issuance under outstanding Bristol options
assumed by FelCor, thereby utilizing a substantial number of the authorized
FelCor Common Shares. At a special meeting of stockholders held October 22,
1997, the holders of FelCor Common Shares approved an amendment to the FelCor
Charter increasing the number of authorized FelCor Common Shares from 50 million
to 100 million in order, at that time, to provide flexibility to FelCor in
structuring its capitalization, in financing future acquisitions and internal
growth, and in accommodating the other needs of FelCor for available FelCor
Common Shares. Most of the additional availability provided by such amendment
will be used in connection with the Merger.

In addition, the FelCor Charter currently authorizes the issuance of up to
10 million FelCor Preferred Shares, of which 6.1 million shares were issued and
outstanding as of March 31, 1998.

The FelCor Board believes that if the Merger were to be consummated without
an increase in the number of authorized shares of stock, the flexibility
provided by the October amendment would be substantially restricted. FelCor
would not have a sufficient number of authorized but unissued shares of stock to
enable it to carry out its plans for the refinancing of the Bristol indebtedness
and have the flexibility to meet a variety of business needs as they may arise
and to enhance FelCor's flexibility in connection with possible future
opportunities.

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Consequently, upon the effectiveness of the Merger, Paragraph A of Article
V of FelCor's Charter will be amended to read in its entirety as follows:

"A. Authorized Shares. The total number of shares of capital
stock that the Corporation shall have authority to issue is Two
Hundred Twenty Million (220,000,000) shares, consisting of Two Hundred
Million (200,000,000) shares of Common Stock, of the par value of One
Cent ($0.01) each, and Twenty Million (20,000,000) shares of Preferred
Stock, of the par value of One Cent ($0.01) each, amounting in
aggregate par value to Two Million Two Hundred Thousand Dollars
($2,200,000.00)."

Stockholders generally do not have any preemptive or similar rights to
subscribe for or purchase any additional shares that may be issued in the future
and, therefore, future issuances of FelCor Common Shares or FelCor Preferred
Shares, depending upon the circumstances, may have a dilutive effect on the
earnings per share, book value per share, voting power and other interests of
the existing stockholders.

This increase in the authorized number of shares could have an
anti-takeover effect, although that is not its purpose. For example, if FelCor
were the subject of a hostile takeover attempt, it could try to impede the
takeover by issuing FelCor Common Shares or FelCor Preferred Shares, thereby
diluting the voting power of the other outstanding shares and increasing the
potential cost of the takeover. The availability of this defensive strategy to
FelCor could discourage unsolicited takeover attempts, thereby limiting the
opportunity for FelCor's stockholders to realize a higher price for their shares
than might otherwise be available in the public markets. The FelCor Board is not
aware of any attempt, or contemplated attempt, to acquire control of FelCor, and
the amendment is not being presented for the purpose of creating an
anti-takeover device.

THE VOTING AGREEMENT

The following summarizes the material terms of the Voting Agreement, which
is filed as an exhibit to the Registration Statement of which this Joint Proxy
Statement/Prospectus is a part.

AGREEMENT TO VOTE

Under the Voting Agreement, each of the Bristol Majority Stockholders
agreed to vote its Bristol Common Shares in favor of the adoption of the Merger
Agreement, and the actions contemplated thereby, and against any Adverse
Proposal. The term "Adverse Proposal" includes any Acquisition Proposal, any
change in the composition of the majority of the Bristol Board, and any act
intended or reasonably expected to hinder, delay or result in the failure of the
Merger to occur.

RESTRICTIONS ON TRANSFERS BEFORE EFFECTIVE TIME

Prior to the Effective Time, the Bristol Majority Stockholders may not sell
or transfer their shares in Bristol if the aggregate number of Bristol Common
Shares held by the Bristol Majority Stockholders would be less than a majority
of the outstanding Bristol Common Shares as of the Record Date. Otherwise, the
Bristol Majority Stockholders are not prohibited from transferring or disposing
of their Bristol Common Shares except that a transfer of more than 100,000
shares to a single purchaser requires the agreement of the purchaser to be bound
by the Voting Agreement.

OTHER AGREEMENTS

Before the Spin-Off is effective, the Holiday Entities will review and
approve the form of lease between BHR and FelCor, and when the Spin-Off is
effected, the Holiday Entities will enter into the following agreements: (i)
Hotel Properties Agreement between Holiday Hospitality and BHR, relating to
certain agreements for the franchise, ownership, development and management of
hotels; (ii) Confirmation Agreement among Bristol, BHR, the Holiday Entities,
FelCor and the FelCor Operating Partnership, relating to the confirmation of
certain indemnification rights and obligations; (iii) the FelCor Stockholders'
Agreement among FelCor, the Holiday Entities and two partnerships to be formed
by Holdings (the "Holdings Entities"), relating to, among other things,
registration rights with respect to FelCor Common Shares owned

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by the Holiday Entities and the Holdings Entities, restrictions on the transfer
of such shares and preemptive right to purchase additional securities of FelCor
under certain circumstances; (iv) Stockholders' Agreement ("BHR Stockholders'
Agreement") among BHR, the Holiday Entities and Holdings, relating to, among
other things, corporate governance of BHR, restrictions on transfer of BHR
Common Shares and preemptive rights to acquire additional securities of BHR; and
(v) Registration Rights Agreement among Bristol, the Holiday Entities and
Holdings relating to registration rights with respect to BHR Common Shares owned
by the Holiday Entities and Holdings. Before the Effective Time, the existing
Stockholders' Agreement, the Registration Rights Agreement, and the Management
Stockholders Agreement, each dated April 28, 1997, will terminate.

REDEMPTION OF BHR COMMON SHARES

After the Spin-Off and prior to the Effective Time, the Holiday Entities
will transfer to BHR for redemption their BHR Common Shares in excess of 9.9% of
the total number of outstanding BHR Common Shares as of the Spin-Off Time after
giving effect to the redemption (the "Aggregate Excess Shares") in consideration
for payment by BHR to the Holiday Entities of the cash amount of $25.8 million
(the "Aggregate Excess Shares Redemption Amount"). If, before the Spin-Off, the
Holiday Entities or their Affiliates, (i) decrease the number of Bristol Common
Shares held by them, then the Aggregate Excess Shares Redemption Amount will be
decreased proportionately by an amount corresponding to the decrease in
Aggregate Excess Shares or (ii) increases the number of Bristol Common Shares,
resulting in an increase in Aggregate Excess Shares, then the additional
Aggregate Excess Shares will also be redeemed, with no corresponding increase in
the Aggregate Excess Shares Redemption Amount. Neither the Holiday Entities nor
their Affiliates will increase or decrease the number of BHR Common Shares they
hold.

CONTRIBUTION TO PARTNERSHIPS

Immediately after the Spin-Off and prior to the Effective Time, Holdings
will contribute all the Bristol Common Shares it owns to two limited
partnerships organized by Holdings and its partners, in the proportion Holdings
deems appropriate and with FelCor approval. This step will reduce the beneficial
ownership of Holdings, for REIT tax purposes, to less than 9.9% of the
outstanding FelCor Common Shares.

INDEMNIFICATION AND RELEASE

FelCor has agreed to indemnify and defend each Bristol Majority Stockholder
to the fullest extent permitted by law against any judgments, penalties, and
expenses, paid or incurred in connection with the investigation or defense of
any claim relating to the Voting Agreement and the transactions contemplated
thereby. The indemnity will not include any loss incurred by a Bristol Majority
Stockholder as a result of any breach of a representation, warranty or covenant.
Each Bristol Majority Stockholder has released any and all claims it had against
Bristol and its directors, officers or employees for actions or events arising
prior to and including the Effective Time that would give rise to a claim for
indemnification by such directors, officers or employees under the Bristol
Charter, the Bristol Bylaws or any indemnification agreement or under Bristol's
insurance policy for directors' and officers' liability.

FELCOR STOCKHOLDERS' AGREEMENT

Transfer Restrictions. Pursuant to the FelCor Stockholders' Agreement, each
of the Bristol Majority Stockholders will agree that it will not, directly or
indirectly, transfer, sell, pledge or otherwise dispose of, any of the FelCor
Common Shares received by the Bristol Majority Stockholder pursuant to the
Merger until the six-month anniversary of the Effective Time (the "Lock-Up
Period"), except (i) to a Permitted Transferee (as defined in the FelCor
Stockholders' Agreement), (ii) in compliance with the limitations of Rule 145 of
the Securities Act, (iii) pursuant to a tender offer or other transaction
approved by the Bristol Board and made to all holders of FelCor Common Shares,
(iv) any pledge made in connection with a bona fide loan to the Bristol Majority
Stockholder, (v) any involuntary transfer resulting from a lender foreclosing on
any pledge, or (vi) any transfer made with FelCor's prior written consent.
FelCor will agree that after the Lock-Up Period and as long as necessary to
permit each Bristol Majority Stockholder to sell its FelCor Common

61
<PAGE> 62

Shares pursuant to Rule 144, FelCor will use its reasonable efforts to file on a
timely basis all reports required to be filed by it pursuant to the Exchange Act
and the regulations thereunder.

Registration Rights. Pursuant to the FelCor Stockholders' Agreement, FelCor
will agree to file with the SEC a registration statement under Rule 415 with
respect to the FelCor Common Shares received by the Holiday Entities and the
Holdings Entities in the Merger and other FelCor Common Shares (subject to
certain limitations) (the "Registrable Securities") and use its reasonable best
efforts to cause such registration statement to become effective no later than
the expiration of the Lock-Up Period. FelCor, in its sole discretion, may
convert the Registration Statement of which this Joint Proxy
Statement/Prospectus is a part to a registration statement on another form for
use as a registration statement relating to the resale of the Registrable
Securities. In connection with any underwritten offering of FelCor's capital
stock in which the expected gross proceeds of the offering equal or exceed $100
million, the Holiday Entities and the Holdings Entities will agree not to sell
any Registrable Securities without the prior written consent of the underwriter;
provided, however, that the period of time may not exceed 90 calendar days
during any 12-month period. In no event will the Holiday Entities and the
Holdings Entities be required to enter into more than two such agreements in any
12-month period. FelCor will bear all fees and expenses relating to the
preparation and filing of such registration statement, other than underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities, which will be borne by the stockholders.

Preemptive Rights. Except for the issuance of certain equity securities
(generally employee stock options, securities issued upon exercise of previously
outstanding option or upon conversion or redemption of previously outstanding
securities or any securities issued to all stockholders), FelCor will agree to
provide the Holiday Entities and the Holdings Entities with written notice of
any sale by it for cash of any equity security of FelCor in which the gross
proceeds of such sale to FelCor equals or exceeds $100 million (a "Qualified
Offering") no later than the closing date of such Qualified Offering. Not later
than five calendar days after receipt of such notice, each Stockholder must
deliver to FelCor a written notice stating whether such Stockholder desires to
acquire the same type of securities that were issued and the number of
securities it intends to purchase. The rights to purchase such securities will
terminate (i) with respect to any Stockholder that fails three times to elect to
purchase the full number of securities purchasable following receipt of notice
of a Qualified Offering and (ii) as to the Holiday Entities or the Holdings
Entities, as applicable, on the date the Holiday Entities or the Holdings
Entities, respectively, beneficially own less than 50% of the FelCor Common
Shares owned by such parties as of the Effective Time.

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<PAGE> 63

PRO FORMA FINANCIAL INFORMATION

FELCOR SUITE HOTELS, INC.

INTRODUCTION TO
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

BACKGROUND

FelCor is a self-administered real estate investment trust formed to own
hotel properties. At December 31, 1997, FelCor owned interests in 73 hotels with
an aggregate of 17,933 suites/rooms (the "FelCor Hotels") through its 92.7%
general partnership interest in FelCor Operating Partnership. The following
table sets forth information regarding the acquisitions of the FelCor Hotels:

<TABLE>
<CAPTION>
HOTELS NUMBER OF
ACQUIRED SUITES/ ROOMS
-------- -------------
<S> <C> <C>
1994.................................. 7 1,730
1995.................................. 13 2,649
1996.................................. 23 5,769
1997.................................. 30 7,608
Suites constructed since
acquisition......................... 177
-- ------
73 17,933
== ======
</TABLE>

FelCor owns 100% equity interests in 55 of the FelCor Hotels (13,430
suites/rooms), a 90% or greater interest in partnerships owning four of the
FelCor Hotels (1,041 suites/rooms), and 50% interests in separate unconsolidated
entities that own 14 of the FelCor Hotels (3,462 suites/rooms). At December 31,
1997, 52 of the FelCor Hotels were operated as Embassy Suites hotels, 13 as
Doubletree Guest Suites Hotels, five as Sheraton hotels, two as Sheraton Suites
hotels, and one as a Hilton Suites hotel. The FelCor Hotels are located in 27
states, with 31 hotels in California, Florida and Texas.

FelCor leases all of the FelCor Hotels to DJONT or a consolidated
subsidiary thereof under operating leases providing for the payment of
percentage rent (the "Percentage Leases"). DJONT is a Delaware limited liability
company, of which all the voting interests (constituting a 50% equity interest)
are beneficially owned by Hervey A. Feldman and Thomas J. Corcoran, Jr., who are
directors and officers of FelCor, and the non-voting interests (constituting the
remaining 50% equity interest) is owned by RGC Leasing, Inc., a Nevada
corporation owned by the children of Charles N. Mathewson, a major investor in
and a director of FelCor. DJONT has entered into management agreements pursuant
to which, at December 31, 1997, 63 of the FelCor Hotels were managed by
subsidiaries of Promus Hotel Corporation ("Promus"), seven were managed by
subsidiaries of ITT Sheraton Corporation ("Sheraton"), and three were managed by
two independent management companies.

1998 ACQUISITIONS

Since January 1, 1998, FelCor has completed the acquisitions of three
hotels and announced the pending acquisition of eight hotels (collectively, the
"1998 Acquisitions"). On February 17, 1998, FelCor acquired a 194-suite
Doubletree Guest Suites Hotel in Columbus, Ohio for total consideration of
approximately $19.1 million (approximately $14.1 million in cash and
approximately 134,000 Units valued at $37.06 each). On March 23, 1998, FelCor
completed the acquisition of a 90% interest in a 154-room Radisson Hotel in
Wilmington, Delaware (to be converted to a Doubletree Hotel) for approximately
$12.6 million in cash. On April 14, 1998, FelCor completed the acquisition of a
90% interest in a 248 room Doubletree Hotel located in Denver, Colorado for
approximately $21.8 million in cash.

On April 20, 1998, FelCor announced the pending acquisition of eight hotels
with an aggregate of 1,898 suites for a total purchase price of $245 million in
cash. Five of the eight hotels are currently operated under the Embassy Suites
brand and three are operated under the Doubletree Guest Suites brand. It is
anticipated

63
<PAGE> 64

that one of the Doubletree Guest Suites will be converted to an Embassy Suites
hotel and the other two will be converted to Sheraton Suites hotels. The
acquisition is expected to close at the end of April 1998.

1997 AND ANTICIPATED 1998 FINANCING TRANSACTIONS

During 1997, FelCor completed two secondary equity offerings (collectively,
the "1997 Offerings") of 3.0 million common shares at $35.50 per share on
February 3, 1997 and of 11.2 million common shares at $36.625 per share on June
30, 1997. Proceeds from the 1997 Offerings amounted to approximately $489
million, net of offering costs, and were used to fund acquisitions, reduce
amounts outstanding under FelCor's unsecured revolving line of credit (the "Line
of Credit"), and repurchase 1.2 million FelCor common shares from Promus at
$36.625 per share less the related offering costs.

On October 1, 1997, FelCor completed a private placement of $300 million in
aggregate principal amount of its long term senior unsecured notes (the
"Notes"). The Notes were issued in two maturities, consisting of $175 million of
7 3/8% senior notes due 2004 priced at 99.489% to yield 7.47% and $125 million
of 7 5/8% senior notes due 2007 priced at 99.209% to yield 7.74%. The proceeds
from the Notes were used to fund acquisitions and reduce amounts outstanding
under the Line of Credit. On March 21, 1998, FelCor completed an exchange
offering for the Notes, issuing new notes which were identical in amount and
terms except that the new notes were registered under the Securities Act.

In order to fund the 1998 Acquisitions previously discussed, FelCor
currently intends to issue $150 million in perpetual preferred stock (the "1998
Offering"). Net proceeds to FelCor of the 1998 Offering is expected to be
approximately $145.2 million. The preferred stock is presently expected to be
cumulative and assumes the payment of dividends at a rate of 8 7/8%.

THE BRISTOL MERGER

On March 24, 1998, FelCor and Bristol announced a proposed merger whereby
FelCor will acquire all the real estate assets and related liabilities of
Bristol existing at the merger date. Pursuant to the Merger Agreement and the
transactions contemplated thereby, each of Bristol's outstanding common shares
and equivalents will be exchanged for 0.685 newly issued FelCor Common Shares
and Bristol will merge with and into FelCor, with FelCor being the surviving
corporation. Prior to the Merger, Bristol will spin-off, as a taxable dividend,
all of its non-real estate holdings into BHR. As part of the Merger, all of
Bristol's hotels will be leased to BHR by FelCor under Percentage Leases.

64
<PAGE> 65

At March 31, 1998, Bristol owned 89 hotels (and had announced the pending
acquisition of 20 hotels (the "Omaha Acquisition")) (collectively the "Bristol
Hotels") which in the aggregate contain 28,731 rooms. The Bristol Hotels, upon
conversion, will include three upscale all-suite hotels, 24 upscale full service
hotels, 60 full-service hotels and 22 limited service hotels. The Bristol Hotels
will be operated under the following franchise affiliations:

<TABLE>
<CAPTION>
HOTELS PENDING TOTAL
FRANCHISE OWNED ACQUISITIONS BRISTOL HOTELS ROOMS
- --------- ------ ------------ -------------- ------
<S> <C> <C> <C> <C>
Upscale All Suite:
Crowne Plaza Suites.................... 1 0 1 295
Homewood Suites........................ 0 1 1 108
Bristol House.......................... 1 0 1 127
Upscale Full Service:
Crowne Plaza........................... 19 0 19 6,814
Harvey Hotel........................... 5 0 5 1,486
Full Service:
Holiday Inn............................ 39 9 48 13,139
Holiday Inn Select..................... 6 0 6 2,145
Courtyard by Marriott.................. 2 0 2 420
Independent............................ 1 0 1 181
Ramada................................. 1 0 1 220
Holiday Inn and Suites................. 1 0 1 285
Days Inn............................... 1 0 1 157
Limited Service:
Hampton Inn............................ 4 5 9 1,310
Holiday Inn Express.................... 3 5 8 1,113
Fairfield Inn.......................... 5 0 5 931
-- -- --- ------
89 20 109 28,731
== == === ======
</TABLE>

65
<PAGE> 66

FELCOR SUITE HOTELS, INC.

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)

The following unaudited Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1997 is based in part upon:

(i) the Consolidated Statement of Operations of FelCor for the year
ended December 31, 1997 incorporated by reference herein;

(ii) the Consolidated Statement of Operations of Bristol for the year
ended December 31, 1997 incorporated by reference herein;

(iii) the Pro Forma Condensed Combined Statements of Operations of the
Combined Lessees included elsewhere herein.

The Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1997 assumes that all the following occurred on January 1, 1997 (i)
the acquisition of the interests in 30 hotels (the "1997 Acquisitions") during
1997, (ii) the consummation of the 1997 Offerings, (iii) the 1997 placement of
the Notes, (iv) the 1998 Acquisitions, (v) the 1998 Offering, (vi) the Omaha
Acquisition, (vii) the Spin-Off, and (viii) the Merger.

In management's opinion, all material adjustments necessary to reflect the
effects of the foregoing transactions have been made. The following unaudited
pro forma consolidated statement of operations is not necessarily indicative of
what the actual results of operations of FelCor would have been assuming such
transactions had been completed as of January 1, 1997, nor do they purport to
represent the results of operations for future periods.

66
<PAGE> 67

FELCOR SUITE HOTELS, INC.

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FELCOR 1997 1998 BRISTOL
HISTORICAL TRANSACTIONS ACQUISITIONS MERGER OTHER PRO FORMA
(A) (B) (C) (D) ADJUSTMENTS TOTAL
---------- ------------ ------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Percentage lease revenue..... $169,114 $34,808(E) $35,345(E) $202,501(E) $441,768
Equity in income of
unconsolidated entities.... 6,963 (26)(F) 1,851(F) 8,788
Other revenue................ 574 (574)(G)
-------- ------- ------- -------- --------
Total revenue.......... $176,651 $34,208 $35,345 $204,352 $450,556
======== ======= ======= ======== ========
Expenses:
General and administrative... 3,743 420(H) 1,000(H) 5,163
Depreciation................. 50,798 8,389(I) 8,470(I) 55,250(I) 122,907
Taxes, insurance and other... 23,093 2,840(J) 3,940(J) 38,333(J) 68,206
Interest..................... 28,792 8,735(K) 20,843(K) 52,568(K) 110,938
Minority interest in FelCor
Operating Partnership...... 5,817 325(L) $ (46)(M) 6,096
Minority interest in other
partnerships............... 573 90(N) 494(N) 1,157
-------- ------- ------- -------- -------- --------
Total expenses......... 112,816 20,799 33,747 147,151 (46) 314,467
-------- ------- ------- -------- -------- --------
Net income..................... 63,835 $13,409 $ 1,598 $ 57,201 46 136,089
======= ======= ======== ========
Preferred dividends............ 11,797 13,313(O) 25,110
-------- -------- --------
Net income applicable to common
shareholders................. $ 52,038 $(13,267) $110,979
======== ======== ========
Net income per common share --
basic........................ $ 1.66 $ 1.64
======== ========
Weighted average common shares
outstanding -- basic......... 31,269 5,227 31,134 67,630
======== ======= ======== ========
Net income per common share --
diluted...................... $ 1.65 $ 1.62
======== ========
Weighted average common shares
outstanding -- diluted....... 31,610 5,228 31,789 68,627
======== ======= ======== ========
</TABLE>

See notes on following page.

67
<PAGE> 68

NOTES TO FELCOR PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1997

(A)Represents FelCor's historical results of operations (excluding a
$185,000 extraordinary charge from write off of deferred financing fees)
for the year ended December 31, 1997

(B)Represents adjustment to FelCor's historical results of operations
assuming the 1997 Acquisitions, the 1997 Offerings, and the placement of
the Notes had occurred as of January 1, 1997.

(C)Represents adjustment to FelCor's historical results of operations
assuming the 1998 Acquisitions had occurred as of January 1, 1997.

(D)Represents adjustment to FelCor's results of operations assuming the
Omaha Acquisition, the Spin-Off and the Merger and related transactions
had been consummated as of January 1, 1997.

(E)Represents pro forma lease revenue from DJONT or BHR to FelCor
calculated by applying the contractual or anticipated rent provisions of
the Percentage Leases to the historical suite/room revenues, food and
beverage rents, food and beverage revenues, and other revenues of all
the FelCor Hotels and Bristol Hotels which are consolidated for
financial reporting purposes. The equity in income of unconsolidated
entities is included as a separate line item in the accompanying Pro
Forma Consolidated Statement of Operations as described in Note (F).
Historical suite revenues for the time period prior to the acquisition
by FelCor and the contractual or anticipated pro forma Percentage Lease
revenue for the time period prior to acquisition by FelCor for the year
ended December 31, 1997 follows (in thousands):

<TABLE>
<CAPTION>
PERCENTAGE LEASE REVENUE
SUITE REVENUE FOR THE PERIOD FOR THE PERIOD
PRIOR TO ACQUISITION PRIOR TO ACQUISITION
---------------------------- ------------------------
<S> <C> <C>
Consolidated hotels:
1997 Acquisitions............. $ 73,113 $ 34,808
1998 Acquisitions............. 65,841 35,345
Merger........................ 503,099 202,501
-------- --------
Total consolidated
hotels.............. $642,053 $272,654
======== ========
Unconsolidated entity hotels:
1997 Acquisitions............. $ 7,053 $ 3,071
======== ========
</TABLE>

(F)Represents pro forma equity in income of unconsolidated entities of
FelCor calculated by applying FelCor's pro rata ownership percentage to
the net earnings of the unconsolidated partnerships, computed using the
contractual or anticipated rent provisions of the Percentage Leases to
the historical suite/room revenues, food and beverage rents, food and
beverage revenues and other revenues of the FelCor Hotels and the
Bristol Hotels; historical taxes, insurance, and other; historical
depreciation expense; and historical interest expense. The amortization
of FelCor's cost in excess of book value of the partnership assets is
deducted to arrive at equity in income of unconsolidated entities. The
computation is as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
Statements of operations information:
Percentage lease revenue................................. $3,071
Depreciation............................................. 1,262
Taxes, insurance and other............................... 509
Interest expense......................................... 1,115
------
Net income............................................... 185
50% of income attributable to the Company................ 93
Amortization of cost in excess of net book value......... (119)
------
Loss from unconsolidated entities........................ $ (26)
------
</TABLE>

68
<PAGE> 69

In addition, the pro forma adjustment of $1,851,000 for the Bristol
Merger relates to the equity in income of unconsolidated entities
acquired from Bristol.

(G)Represents elimination of historical interest income earned on excess
cash.

(H)Pro forma general and administrative expenses represent executive
compensation, legal, audit and other expenses. These amounts are based
on historical general and administrative expenses as well as probable
1998 expenses.

(I)Represents depreciation on the FelCor Hotels and the Bristol Hotels.
Depreciation is computed based on estimated useful lives of 40 years for
buildings and improvements and five years for furniture, fixtures and
equipment. These estimated useful lives are based on management's
knowledge of the properties and the hotel industry in general. The pro
forma depreciation adjustment for 1997 is as follows (in thousands):

<TABLE>
<CAPTION>
ASSET COST PRO FORMA DEPRECIATION EXPENSE
--------------------------------------------------- -------------------------------------
BUILDING AND FURNITURE BUILDING AND FURNITURE
LAND IMPROVEMENTS AND FIXTURES TOTAL IMPROVEMENTS AND FIXTURES TOTAL
-------- ------------ ------------ ---------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Hotels:
1997
Acquisitions..... $ 64,233 $ 492,369 $26,488 $ 583,090 $ 5,830 $ 2,559 $ 8,389
1998
Acquisitions..... 27,064 266,215 9,071 302,350 6,656 1,814 8,470
Merger............. 199,098 1,732,156 59,730 1,990,984 43,304 11,946 55,250
-------- ---------- ------- ---------- ------- ------- -------
Total Consolidated
Hotels............. $290,395 $2,490,740 $95,289 $2,876,424 $55,790 $16,319 $72,109
======== ========== ======= ========== ======= ======= =======
</TABLE>

(J)Pro forma real and personal property taxes, property insurance, ground
lease and other expenses for the year ended December 31, 1997 represent
expenses to be paid by the FelCor Operating Partnership. Such amounts
were primarily derived from historical amounts paid with respect to the
1997 Acquisitions, 1998 Acquisitions and the Bristol Hotels. A schedule
of pro forma adjustments for property taxes, insurance, and ground
leases and other derived from the historical amounts paid for the Hotels
during the year ended December 31, 1997 follows (in thousands):

<TABLE>
<CAPTION>
GROUND LEASES
PROPERTY TAXES PROPERTY INSURANCE AND OTHER TOTAL
-------------- ------------------ ------------- -------
<S> <C> <C> <C> <C>
Consolidated hotels:
1997 Acquisitions...... $ 2,706 $ 402 $ (268) $ 2,840
1998 Acquisitions...... 3,610 214 116 3,940
Merger................. 20,065 2,827 15,441 38,333
------- ------ ------- -------
Total
consolidated
hotels....... $26,381 $3,443 $15,289 $45,113
======= ====== ======= =======
Unconsolidated entity
hotels acquired during
1997................... $ 419 $ 28 $ 62 $ 509
======= ====== ======= =======
</TABLE>

69
<PAGE> 70

(K)Represents both historical and pro forma interest expense computed based
on borrowings multiplied by the applicable fixed or variable interest
rate as stated in the applicable debt instruments. The pro forma
adjustment assumes additional borrowings against the Line of Credit in
the amount of $323.1 million (after reduction for the net proceeds of
the 1998 Offering) were required in order to finance the 1997 and 1998
Acquisitions and the Merger as well as debt assumed from Bristol, and
includes additional pro forma interest expense incurred prior to the
acquisition date by FelCor. The variable interest rates used to
calculate the pro forma adjustment to interest expense were the same as
the historical rates used to calculate the outstanding borrowings on the
Line of Credit for the year ended December 31, 1997. The year end pro
forma debt balances, average interest rates and pro forma interest
expense for the year ended December 31, 1997 follows (dollars in
thousands):

<TABLE>
<CAPTION>
DEBT INTEREST INTEREST
BALANCE RATE EXPENSE(1)
---------- -------- ----------
<S> <C> <C> <C>
Line of Credit............................... $ 459,108 7.10% $ 32,436
Senior mortgage note payable................. 455,000 7.66 34,835
Senior mortgage note payable................. 144,834 7.46 10,802
$175M Senior unsecured notes, net of
discount................................... 174,122 7.47 13,612
$125M Senior unsecured notes, net of
discount................................... 124,023 7.74 10,017
Renovation Loan.............................. 25,000 6.40 1,610
Mortgage note payable -- Harvey Hotels....... 16,126 8.55 1,379
Mortgage note payable -- Philadelphia........ 13,400 9.00 1,206
Mortgage note payable -- St. Louis........... 8,365 9.50 795
Mortgage note payable -- Omaha Central....... 6,776 11.25 762
Mortgage note payable -- Salina.............. 5,196 10.38 539
Mortgage note payable -- Express Moline I.... 2,009 13.13 264
Mortgage note payable -- Express Moline II... 785 12.00 94
Mortgage note payable -- Hays & Hampton...... 932 9.75 91
Collateralized mortgage note................. 5,931 10.22 612
Other........................................ 650 7.97 52
Capital leases............................... 15,491 10.70 1,832
---------- --------
$1,457,748 $110,938
========== ========
</TABLE>

-----------------------

(1) Pro forma interest expense represents interest expense applicable to
the pro forma weighted average borrowings outstanding during the
period presented which at times differs from the pro forma
borrowings outstanding at the end of the period.

(L)Represents pro forma adjustment to minority interest in the FelCor
Operating Partnership to reflect the ownership percentage in the FelCor
Operating Partnership at December 31, 1997, calculated as approximately
7.3% of income before minority interest.

(M)Represents pro forma adjustment to minority interest in the FelCor
Operating Partnership to reflect FelCor's increased ownership in the
FelCor Operating Partnership following the Merger, calculated as
approximately 4.3% of income before minority interest.

(N)Represents pro forma adjustment to minority interest related to six
hotels (four of the 1997 Acquisitions and two of the 1998 Acquisitions)
in which FelCor has a 90% general partnership interest. Minority
interest is calculated as 10% of net income computed using the rent
provisions of the Percentage Leases to the historical suite/room
revenues, food and beverage rents, food and beverage revenues and other
revenues; historical taxes, insurance and other; historical depreciation

70
<PAGE> 71

expense; and historical interest expense. This computation for the year
ended December 31, 1997 follows (in thousands):

<TABLE>
<CAPTION>
1997 1998
ACQUISITIONS ACQUISITIONS
------------ ------------
<S> <C> <C>
Statement of operations information:
Percentage lease revenue................... $2,040 $5,307
Depreciation............................... 671 301
Taxes, insurance and other................. 251 64
Interest expense........................... 217
------ ------
Net income before minority interest........ $ 901 $4,942
====== ======
Minority interest expense -- 10% of net
income.................................. $ 90 $ 494
====== ======
</TABLE>

(O) Represents pro forma dividends on the preferred stock issued in the
1998 Offering.

71
<PAGE> 72

FELCOR SUITE HOTELS, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(UNAUDITED)

The following unaudited Pro Forma Consolidated Balance Sheet assumes that
(i) the 1998 Acquisitions, (ii) the 1998 Offering, (iii) the acquisition of the
Pending Acquisition Hotels by Bristol, (iv) the Spin-Off and (v) the Merger
transactions all occurred as of December 31, 1997.

In management's opinion, all material adjustments necessary to reflect the
effect of these transactions have been made.

The following unaudited Pro Forma Consolidated Balance Sheet is derived
from FelCor's and Bristol's Consolidated Balance Sheets as of December 31, 1997
and should be read in conjunction with the consolidated financial statements of
FelCor and Bristol incorporated by reference herein.

The following Pro Forma Consolidated Balance Sheet is not necessarily
indicative of what the actual financial position would have been assuming such
transactions had been completed as of December 31, 1997, nor does it purport to
represent the future financial position of FelCor.

72
<PAGE> 73

FELCOR SUITE HOTELS, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
ASSETS
FELCOR 1998 BRISTOL
HISTORICAL ACQUISITIONS MERGER OTHER PRO FORMA
(A) (B) (C) ADJUSTMENTS TOTAL
---------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net investment in hotel
properties....................... $1,489,764 $302,350 $2,022,284(E) $3,814,398
Investment in unconsolidated
entities......................... 132,991 12,396(E) 145,387
Cash and cash equivalents.......... 17,543 17,543
Cash held in escrow................ 7,639(F) 7,639
Due from DJONT..................... 18,908 18,908
Deferred expenses, net............. 10,593 10,593
Other assets....................... 3,565 8,885(G) 12,450
---------- -------- ---------- ----------
Total assets................ $1,673,364 $302,350 $2,051,204 $4,026,918
========== ======== ========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Debt and capital lease
obligations...................... $ 476,819 $293,559 $ 832,570(H) $(145,200)(L) $1,457,748
Accrued expenses and other
liabilities...................... 11,331 66,562(I) 77,893
Distributions payable.............. 24,671 24,671
Minority interest in FelCor
Operating Partnership............ 73,451 4,966 13,882(M) 92,299
Minority interest in other
partnerships..................... 8,594 3,825(D) 12,419
---------- -------- ---------- --------- ----------
Total liabilities........ 594,866 302,350 899,132 (131,318) 1,665,030
---------- -------- ---------- --------- ----------
Shareholders equity:
Preferred stock.................. 151,250 150,000(L) 301,250
Common stock..................... 378 311(J) 689
Additional paid-in capital....... 1,003,501 1,150,888(J) (18,682)(N) 2,135,707
Unearned officers' and
directors' compensation..... (1,754) 873(K) (881)
Distributions in excess of
earnings...................... (33,771) (33,771)
Less common stock in treasury, at
cost.......................... (41,106) (41,106)
---------- ---------- --------- ----------
Total shareholders'
equity................... 1,078,498 1,152,072 131,318 2,361,888
---------- -------- ---------- --------- ----------
Total liabilities and
shareholders' equity... $1,673,364 $302,350 $2,051,204 $4,026,918
========== ======== ========== ==========
</TABLE>

See notes on following page.

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<PAGE> 74

NOTES TO FELCOR PRO FORMA CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997:

(A) Represents the historical financial position of FelCor as of December 31,
1997.

(B) Represents adjustments to reflect the acquisition of the 1998 Acquisitions
as of December 31, 1997 with borrowings against FelCor's Line of Credit of
$293.6 million and issuance of Units valued at $5.0 million.

(C) Represents adjustments to reflect (i) the Omaha Acquisition, (ii) the
Spin-Off and (iii) the Merger and related transactions as if the
transactions were consummated as of December 31, 1997.

(D) Represents adjustment for 10% minority interests in two of the 1998
Acquisitions.

(E) Represents adjustment for the allocation of the purchase price of the
Bristol Hotels and unconsolidated entities.

(F) Represents adjustment for cash held in escrow acquired from Bristol. These
amounts are on deposit with lenders pursuant to the borrowing agreements
discussed in Note (H).

(G) Represents adjustment for receivables and other deposits acquired related
to the Bristol Hotels.

(H) Represents adjustment for borrowings of Bristol assumed by FelCor in
connection with the acquisition of the Bristol Hotels.

(I) Represents adjustment for accrued interest, accrued real and personal
property taxes and other liabilities assumed related to the Bristol Hotels.

(J) Represents adjustment for the aggregate value of the FelCor common shares
issued to Bristol shareholders in connection with the Merger.

(K) Represents adjustment for the unearned compensation of Mr. Feldman,
FelCor's current chairman of the board, who will become Chairman Emeritus
following the 1998 annual meeting of stockholders.

(L) Represents adjustment for the issuance of preferred stock in connection
with the 1998 Offering. The net proceeds of $145.2 million will be used to
reduce borrowings on FelCor's line of credit.

(M) Represents adjustment to reflect consolidated minority interest in the
FelCor Operating Partnership at 4.3%.

(N) Represents adjustments to additional paid in capital as follows (in
thousands):

<TABLE>
<S> <C>
Adjustment for minority interest (see note (M).... $13,882
Adjustment for 1998 Offering expenses............. 4,800
-------
$18,682
=======
</TABLE>

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<PAGE> 75

COMBINED LESSEES

INTRODUCTION TO
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

FelCor leases each of the 73 hotels owned at December 31, 1997, and leases
or will lease its 1998 Acquisitions, to DJONT. Additionally, FelCor intends to
lease the Bristol Hotels to BHR. DJONT and BHR are collectively referred to as
the "Combined Lessees".

The Combined Lessees' unaudited Pro Forma Combined Statements of Operations
for the year ended December 31, 1997 is presented as if the 73 hotels and the
1998 Acquisitions that FelCor leases to DJONT and the Bristol Hotels (that will
be leased to BHR pursuant to Percentage Leases) had been leased as of January 1,
1997. The pro forma information is based in part upon the Consolidated
Statements of Operations of DJONT and the Consolidated Statement of Operations
of Bristol for the year ended December 31, 1997, both incorporated by reference
herein. In management's opinion, all adjustments necessary to reflect the
effects of these transactions have been made.

The unaudited Pro Forma Condensed Combined Statement of Operations is not
necessarily indicative of what the actual results of operations of the Combined
Lessees would have been assuming such transactions had been completed as of
January 1, 1997, nor do they purport to represent the results of operations for
future periods.

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<PAGE> 76

COMBINED LESSEES

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
DJONT 1997 1998 COMBINED
HISTORICAL TRANSACTIONS ACQUISITIONS BHR PRO FORMA
(A) (B) (C) (D) TOTAL
---------- ------------ ------------ -------- ----------
<S> <C> <C> <C> <C> <C>
Revenue:
Suite/room revenue............ $456,614 $ 80,166 $65,841 $503,099 $1,105,720
Food and beverage revenue..... 34,813 27,460 12,427 122,766 197,466
Other revenue................. 43,083 2,167 7,237 37,203 89,690
-------- -------- ------- -------- ----------
Total revenue......... $534,510 $109,793 $85,505 $663,068 $1,392,876
-------- -------- ------- -------- ----------
Expenses:
Property operating costs........ 161,196 39,860 29,133 289,091 519,280
Other operating costs........... 124,079 24,815 19,061 106,769 274,724
Management and franchise fees... 25,286 4,372 1,505 24,506 55,669
Taxes, insurance and other...... 7,299 1,414 828 6,685 16,226
Percentage lease................ 216,990 37,732 35,345 202,501 492,568
Lessee overhead................. 2,332 146 54 22,858 25,390
-------- -------- ------- -------- ----------
Total expenses........ 537,182 108,339 85,926 652,410 1,383,857
-------- -------- ------- -------- ----------
Net income (loss) before
taxes......................... (2,672) 1,454 (421) 10,658 9,019
Income tax provision............ 4,253 4,253
-------- -------- ------- -------- ----------
Net income (loss)............... $ (2,672) $ 1,454 $ (421) $ 6,405 $ 4,766
======== ======== ======= ======== ==========
</TABLE>

- ---------------

(A) Represents DJONT's historical results of operations for the year ended
December 31, 1997.

(B) Represents adjustments to DJONT's historical results of operations assuming
1997 Acquisitions had occurred as of January 1, 1997 and the related hotels
were leased to DJONT pursuant to the Percentage Leases beginning on January
1, 1997.

(C) Represents adjustments to DJONT's historical results of operations assuming
the 1998 Acquisitions had occurred as of January 1, 1997 and the related
hotels were leased to DJONT pursuant to the Percentage Leases beginning on
January 1, 1997.

(D) Represents BHR's pro forma results of operations (relating only to the
Bristol Hotels) assuming the Omaha Acquisition, the Spin-Off and the Merger
and related transactions occurred as of January 1, 1997 and the Bristol
Hotels were leased to BHR pursuant to the Percentage Leases beginning on
January 1, 1997.

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<PAGE> 77

DESCRIPTION OF FELCOR'S CAPITAL STOCK

DESCRIPTION OF FELCOR COMMON SHARES

The description of the FelCor Common Shares set forth below does not
purport to be complete and is qualified in its entirety by reference to FelCor's
Charter and Bylaws. See "-- Certain Charter and Bylaw Provisions."

General

Under the Charter, FelCor has authority to issue up to 100,000,000 FelCor
Common Shares and 10,000,000 shares of preferred stock (the "FelCor Preferred
Shares"). Under Maryland law, stockholders generally are not responsible for the
corporation's debts or obligations. At March 31, 1998, FelCor had outstanding
36,591,080 FelCor Common Shares. If the Merger is consummated, the FelCor
Charter will be amended to increase the authorized number of FelCor Common
Shares to 200,000,000 and of FelCor Preferred Shares to 20,000,000.

Terms

Subject to the preferential rights of any series of FelCor Preferred Shares
outstanding, the holders of FelCor Common Shares are entitled to one vote per
share on all matters voted on by stockholders, including in the election of
directors. FelCor's Charter does not provide for cumulative voting in the
election of directors. Except as otherwise required by law or provided in
Articles Supplementary relating to FelCor Preferred Shares of any series, the
holders of FelCor Common Shares exclusively possess all voting power. See
"-- Certain Charter and Bylaw Provisions."

Subject to any preferential rights of any series of FelCor Preferred Shares
outstanding, the holders of FelCor Common Shares are entitled to such dividends,
if any, as may be declared from time to time by the FelCor Board from funds
legally available therefor and, upon liquidation, are entitled to receive, pro
rata, all assets of FelCor available for distribution to such holders. All
FelCor Common Shares will, when issued, be fully paid and nonassessable and will
have no preemptive rights. FelCor may, however, enter into contracts with
certain stockholders to grant such holders preemptive rights.

Restrictions on Ownership and Transfer

The FelCor Common Shares are subject to certain restrictions upon the
ownership and transfer thereof which were adopted for the purpose of enabling
FelCor to preserve its status as a REIT. For a description of such restrictions
and the Maryland Anti-Takeover Statutes, see "-- Certain Charter and Bylaw
Provisions -- Restrictions on Ownership and Transfer" and "-- Maryland
Anti-Takeover Statutes."

Exchange Listing

The FelCor Common Shares are listed on the NYSE under the symbol "FCH."

Transfer Agent

The transfer agent and registrar for the FelCor Common Shares is SunTrust
Bank, Atlanta, Georgia.

DESCRIPTION OF FELCOR SERIES A PREFERRED SHARES

The summary of certain terms and provisions of FelCor's $1.95 Series A
Cumulative Convertible Preferred Stock (the "FelCor Series A Preferred Shares")
set forth below does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the terms and provisions of FelCor's Charter
(including the Articles Supplementary to the Charter setting forth the
particular terms of the FelCor Series A Preferred Shares ("Series A Articles
Supplementary")), and Bylaws.

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<PAGE> 78

No series of Preferred Stock (other than the FelCor Series A Preferred
Shares) have been designated or issued. The Preferred Stock may be issued from
time to time in one or more series, without stockholder approval, with such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption thereof as shall be established by the FelCor Board. Thus, without
stockholder approval, FelCor could authorize the issuance of FelCor Preferred
Shares with voting, conversion and other rights that could dilute the voting
power and other rights of the holders of FelCor Common Shares and FelCor Series
A Preferred Shares.

General

In April 1996, the FelCor Board authorized FelCor to classify and issue the
FelCor Series A Preferred Shares as part of the 10,000,000 shares of authorized
FelCor Preferred Shares.

The outstanding FelCor Series A Preferred Shares are validly issued, fully
paid and nonassessable. The holders of the FelCor Series A Preferred Shares have
no preemptive rights with respect to any shares of capital stock of FelCor or
any other securities of FelCor convertible into or carrying rights or options to
purchase any such shares. The FelCor Series A Preferred Shares are not subject
to any sinking fund or other obligation of FelCor to redeem or retire the FelCor
Series A Preferred Shares. Unless converted or redeemed by FelCor into FelCor
Common Shares, the FelCor Series A Preferred Shares will have a perpetual term,
with no maturity.

Ranking

The FelCor Series A Preferred Shares rank senior to the FelCor Common
Shares with respect to the payment of dividends and amounts upon liquidation,
dissolution or winding up of FelCor.

While any FelCor Series A Preferred Shares are outstanding, FelCor may not
authorize, create or increase the authorized amount of any class or series of
stock that ranks senior to the FelCor Series A Preferred Shares with respect to
the payment of dividends or amounts upon liquidation, dissolution or winding up
without the consent of the holders of two-thirds of the outstanding FelCor
Series A Preferred Shares. However, FelCor may create additional classes of
stock, increase the authorized number of FelCor Preferred Shares or issue series
of FelCor Preferred Shares ranking junior to or on a parity with the FelCor
Series A Preferred Shares with respect, in each case, to the payment of
dividends and amounts upon liquidation, dissolution and winding up without the
consent of any holder of FelCor Series A Preferred Shares. See "-- Voting
Rights" below.

Dividends

Holders of FelCor Series A Preferred Shares are entitled to receive, when,
as and if declared by the FelCor Board, out of funds of FelCor legally available
for payment, cash distributions declared or paid for the corresponding period
payable in an amount per share equal to the greater of $0.4875 per quarter
(equivalent to $1.95 per annum) or the cash dividends (determined as of the
record date for each of the respective quarterly dividend payment dates referred
to below) on the number of FelCor Common Shares, or portion thereof, into which
a FelCor Series A Preferred Share is then convertible. Dividends on the FelCor
Series A Preferred Shares are payable quarterly in arrears on the last calendar
day of January, April, July and October of each year, commencing July 31, 1996
(and, in the case of any accrued but unpaid dividends, at such additional times
and for such interim periods, if any, as determined by the FelCor Board). Each
such dividend is payable to holders of record as they appear on the stock
records of FelCor at the close of business on such record dates, not exceeding
60 days preceding the payment dates thereof, as shall be fixed by the FelCor
Board. Dividends will be cumulative, whether or not in any dividend period or
periods there shall be funds of FelCor legally available for the payment of such
dividends. Accumulations of dividends on FelCor Series A Preferred Shares will
not bear interest. Dividends payable on the FelCor Series A Preferred Shares for
any period greater or less than a full dividend period will be computed on the
basis of a 360-day year consisting of twelve 30-day months.

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<PAGE> 79

Except as provided in the next sentence, no dividend will be declared or
paid on any Parity Stock (as herein defined) unless full cumulative dividends
have been or contemporaneously are declared and paid, or declared and a sum
sufficient for the payment thereof is set apart for such payment, on the FelCor
Series A Preferred Shares for all prior dividend periods and the then current
dividend period. If accrued dividends on the FelCor Series A Preferred Shares
and any Parity Stock for all prior dividend periods have not been paid in full,
then any dividend declared on the FelCor Series A Preferred Shares and any
Parity Stock for any dividend period will be declared ratably in proportion to
accrued and unpaid dividends on the FelCor Series A Preferred Shares and such
Parity Stock.

Unless all dividends then required to be paid on the FelCor Series A
Preferred Shares and any Parity Stock have been or contemporaneously are
declared and paid, or declared and a sum sufficient for the payment thereof is
set apart for payment, FelCor will not (i) declare, pay or set apart funds for
the payment of any dividend or other distribution with respect to any Junior
Stock (as herein defined) or (ii) except as set forth in the following sentence,
redeem, purchase or otherwise acquire for consideration any Junior Stock
(subject to certain exceptions), through a sinking fund or otherwise.
Notwithstanding the foregoing limitations, FelCor may, at any time, acquire
shares of its capital stock, without regard to rank, for the purpose of
preserving its status as a REIT or for purposes of an employee benefit plan of
FelCor.

As used herein, (i) the term "dividend" does not include dividends payable
solely in shares of Junior Stock on Junior Stock, or in options, warrants or
rights to holders of Junior Stock to subscribe for or purchase any Junior Stock
and (ii) the term "Junior Stock" means the FelCor Common Shares, and any other
class of capital stock of FelCor now or hereafter issued and outstanding that
ranks junior to the FelCor Series A Preferred Shares as to the payment of
dividends or amounts upon liquidation, dissolution or winding up of FelCor and
(iii) the term "Parity Stock" means any other class or series of capital stock
of FelCor now or hereafter issued and outstanding that ranks equally with the
FelCor Series A Preferred Shares as to the payment of dividends and amounts upon
liquidation, dissolution or winding up of FelCor.

Redemption

FelCor Series A Preferred Shares are not redeemable by FelCor prior to
April 30, 2001. On and after April 30, 2001, the FelCor Series A Preferred
Shares will be redeemable, in whole or in part, at the option of FelCor, for (i)
such number of FelCor Common Shares as are issuable at a conversion rate of
0.7752 FelCor Common Shares for each FelCor Series A Preferred Share, subject to
adjustment in certain circumstances, or (ii) cash in an amount equal to the
aggregate market value (determined as of the date of the notice of redemption)
of such number of FelCor Common Shares as specified by FelCor in the notice of
redemption. FelCor may exercise this redemption option only if for 20 trading
days within any period of 30 consecutive trading days, including the last
trading day of such period, the closing price of the FelCor Common Shares on the
New York Stock Exchange ("NYSE") equals or exceeds the Conversion Price (as
defined in the Series A Articles Supplementary) per share, subject to adjustment
in certain circumstances. If fewer than all of the FelCor Series A Preferred
Shares are to be redeemed, the shares shall be selected by lot or pro rata or in
some other equitable manner determined by FelCor.

On the redemption date, FelCor must pay on each share of FelCor Series A
Preferred Shares to be redeemed any accrued and unpaid dividends, in arrears,
for any dividend period ending on or prior to the redemption date. In the case
of a redemption date falling after a dividend payment record date and prior to
the related payment date, the holders of the FelCor Series A Preferred Shares at
the close of business on such record date will be entitled to receive the
dividend payable on such shares on the corresponding dividend payment date,
notwithstanding the redemption of such shares prior to such dividend payment
date. Except as provided for in the preceding sentence, no payment or allowance
will be made for accrued dividends on any FelCor Series A Preferred Shares
called for redemption or on the shares of FelCor Common Shares issuable upon
such redemption.

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<PAGE> 80

and FelCor may not, except as set forth in the following sentence, redeem,
purchase or otherwise acquire for consideration any FelCor Series A Preferred
Shares, otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of FelCor Series A Preferred Shares. Notwithstanding the
foregoing limitations, FelCor may, at any time, acquire shares of its capital
stock, without regard to rank, for the purpose of preserving its status as a
REIT or for purposes of an employee benefit plan of FelCor.

On and after the date fixed for redemption, provided that FelCor has made
available at the office of the registrar and transfer agent a sufficient number
of FelCor Common Shares and/or an amount of cash to effect the redemption,
dividends will cease to accrue on the FelCor Series A Preferred Shares called
for redemption (except that, in the case of a redemption date after a dividend
payment record date and prior to the related dividend payment date, holders of
FelCor Series A Preferred Shares on the dividend payment record date will be
entitled on such dividend payment date to receive the dividend payable on such
shares), such shares shall no longer be deemed to be outstanding and all rights
of the holders of such FelCor Series A Preferred Shares shall cease, except for
the right to receive the FelCor Common Shares and/or any cash payable upon such
redemption, without interest from the date of such redemption. At the close of
business on the redemption date, each holder of FelCor Series A Preferred Shares
(unless FelCor defaults in the delivery of the FelCor Common Shares or cash)
will be, without any further action, (i) deemed a holder of the number of FelCor
Common Shares for which such FelCor Series A Preferred Shares are redeemable or
(ii) be entitled to receive the cash amount applicable to such shares.

Fractional FelCor Common Shares are not to be issued upon redemption of the
FelCor Series A Preferred Shares, but, in lieu thereof, FelCor will pay a cash
adjustment based on the current market price of the FelCor Common Shares on the
day prior to the redemption date.

Liquidation Preference

The holders of FelCor Series A Preferred Shares are entitled to receive in
the event of any liquidation, dissolution or winding up of FelCor, whether
voluntary or involuntary, $25.00 per FelCor Series A Preferred Share plus an
amount per FelCor Series A Preferred Share equal to all dividends (whether or
not earned or declared) accrued and unpaid thereon to the date of final
distribution to such holders ("Liquidation Preference"), and no more.

Until the holders of the FelCor Series A Preferred Shares have been paid
the Liquidation Preference in full, no payment will be made to any holder of
Junior Stock upon the liquidation, dissolution or winding up of FelCor. If, upon
any liquidation, dissolution or winding up of FelCor, the assets of FelCor, or
proceeds thereof, distributable among the holders of the FelCor Series A
Preferred Shares and any Parity Stock are insufficient to pay in full the
Liquidation Preference and the liquidation preference applicable with respect to
any such Parity Stock, then such assets, or the proceeds thereof, will be
distributed among the holders of FelCor Series A Preferred Shares and any such
Parity Stock, ratably, in accordance with the respective amounts which would be
payable on such FelCor Series A Preferred Shares and any such Parity Stock if
all amounts payable thereon were to be paid in full. Neither a consolidation or
merger of FelCor with another corporation, a statutory share exchange by FelCor
nor a sale, lease or transfer of all or substantially all of FelCor's assets
will be considered a liquidation, dissolution or winding up, voluntary or
involuntary, of FelCor.

Voting Rights

Except as indicated below, or except as otherwise from time to time
required by applicable Maryland law, the holders of FelCor Series A Preferred
Shares have no voting rights.

If six quarterly dividends (whether or not consecutive) payable on the
FelCor Series A Preferred Shares, or any Parity Stock, are in arrears, whether
or not earned or declared, the number of directors then constituting the FelCor
Board will be increased by two and the holders of FelCor Series A Preferred
Shares and any such other Parity Stock, voting together as a single class
("Voting Preferred Shares"), will have the right to elect two additional
directors to serve on the FelCor Board at an annual meeting of stockholders or a
properly called special meeting of the holders of the Voting Preferred Shares
and at each subsequent annual

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<PAGE> 81

meeting of stockholders until all such dividends, together with the dividends
for the current quarterly period, on the Voting Preferred Shares have been paid
or declared and set aside for payment.

The approval of two-thirds of the outstanding FelCor Series A Preferred
Shares and any Parity Stock similarly affected, voting together as a single
class, is required in order to amend the FelCor Charter to affect materially and
adversely the rights, preferences or voting power of the holders of the FelCor
Series A Preferred Shares and such Parity Stock, or to amend the FelCor Charter
to authorize, create or increase the authorized amount of any class of stock
having rights senior to the FelCor Series A Preferred Shares and such Parity
Stock with respect to the payment of dividends or amounts upon the liquidation,
dissolution or winding up of FelCor. However, FelCor may create additional
classes of Parity Stock and Junior Stock, increase the authorized number of
shares of Parity Stock and Junior Stock and issue additional series of Parity
Stock and Junior Stock, all without the consent of any holder of FelCor Series A
Preferred Shares.

Except as required by law, the holders of FelCor Series A Preferred Shares
are not entitled to vote on any merger or consolidation involving FelCor or a
sale, lease or transfer of all or substantially all of the assets of FelCor. See
"-- Conversion Price Adjustments" below.

Conversion Rights

FelCor Series A Preferred Shares are convertible, in whole or in part, at
any time, at the option of the holders thereof, into FelCor Common Shares at a
conversion price of $32.25 per share of FelCor Common Shares (equivalent to a
conversion rate of 0.7752 FelCor Common Shares for each FelCor Series A
Preferred Share), subject to adjustment as described below ("-- Conversion Price
Adjustments"). The right to convert FelCor Series A Preferred Shares called for
redemption will terminate at the close of business on such redemption date.

Holders of FelCor Series A Preferred Shares at the close of business on a
dividend payment record date will be entitled to receive the dividend payable on
such shares on the corresponding dividend payment date, notwithstanding the
conversion of such shares following such dividend payment record date and prior
to such dividend payment date. However, FelCor Series A Preferred Shares
surrendered for conversion during the period between the close of business on
any dividend payment record date and the opening of business on the
corresponding dividend payment date (except shares converted after the issuance
by FelCor of a notice of redemption providing for a redemption date during such
period, which shares will be entitled to such dividend) must be accompanied by
payment of an amount equal to the dividend payable on such shares on such
dividend payment date. A holder of FelCor Series A Preferred Shares on a
dividend payment record date who (or whose transferee) tenders any such shares
for conversion into FelCor Common Shares on such dividend payment date will
receive the dividend payable by FelCor on such FelCor Series A Preferred Shares
on such date, and the converting holder need not include payment of the amount
of such dividend upon surrender of FelCor Series A Preferred Shares for
conversion. Except as provided above, FelCor will make no payment or allowance
for unpaid dividends, whether or not in arrears, on converted shares or for
dividends on the FelCor Common Shares issued upon such conversion.

Fractional FelCor Common Shares are not to be issued upon conversion but,
in lieu thereof, FelCor will pay a cash adjustment based on the current market
price of the FelCor Common Shares on the day prior to the conversion date.

Conversion Price Adjustments

The Conversion Price is subject to adjustment upon certain events,
including (i) dividends (and other distributions) payable in FelCor Common
Shares, (ii) the issuance to all holders of FelCor Common Shares of certain
rights or warrants entitling them to subscribe for or purchase FelCor Common
Shares at a price per share less than the fair market value per FelCor Common
Share, (iii) subdivisions, combinations and reclassifications of FelCor Common
Shares and (iv) distributions to all holders of FelCor Common Shares of
evidences of indebtedness of FelCor or assets (including securities, but
excluding those dividends, rights, warrants and distributions referred to above
for which an adjustment previously has been made and excluding Permitted FelCor
Common Stock Cash Distributions (as herein defined), and cash dividends which
result in

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<PAGE> 82

a payment of an equal cash dividend to the holders of the FelCor Series A
Preferred Shares). "Permitted FelCor Common Stock Cash Distributions" means cash
dividends and distributions paid with respect to the FelCor Common Shares after
December 31, 1995 not in excess of the sum of FelCor's cumulative undistributed
net earnings at December 31, 1995, plus the cumulative amount of funds from
operations, as determined by the FelCor Board on a basis consistent with the
financial reporting practices of FelCor, after December 31, 1995, minus the
cumulative amount of dividends accrued or paid on the FelCor Series A Preferred
Shares or any other class of FelCor Preferred Shares after January 1, 1996. In
addition to the foregoing adjustments, FelCor will be permitted to make such
reductions in the Conversion Price as it considers to be advisable in order that
any event treated for Federal income tax purposes as a dividend of stock or
stock rights will not be taxable to the holders of the FelCor Common Shares, or,
if that is not possible, to diminish any income taxes that are otherwise payable
because of such event.

In case FelCor shall be a party to any transaction (including without
limitation a merger, consolidation, statutory share exchange, tender offer for
all or substantially all of the FelCor Common Shares or sale of all or
substantially all of FelCor's assets), in each case as a result of which FelCor
Common Shares will be converted into the right to receive stock, securities or
other property (including cash or any combination thereof), each FelCor Series A
Preferred Share, if convertible after the consummation of the transaction, will
thereafter be convertible into the kind and amount of shares of stock and other
securities and property receivable (including cash or any combination thereof)
upon the consummation of such transaction by a holder of that number of shares
or fraction thereof of FelCor Common Shares into which one FelCor Series A
Preferred Share was convertible immediately prior to such transaction (assuming
such holder of FelCor Common Shares failed to exercise any rights of election
and received per share the kind and amount received per share by a plurality of
non-electing shares). FelCor may not become a party to any such transaction
unless the terms thereof are consistent with the foregoing.

No adjustment of the Conversion Price will be required to be made in any
case until cumulative adjustments amount to 1% or more of the Conversion Price.
Any adjustments not so required to be made will be carried forward and taken
into account in subsequent adjustments.

Exchange Listing

The FelCor Series A Preferred Shares are listed on the NYSE under the
symbol "FCHpA".

Transfer Agent

The transfer agent and registrar for the FelCor Series A Preferred Shares
is SunTrust Bank, Atlanta, Georgia.

CERTAIN CHARTER AND BYLAW PROVISIONS

Restrictions on Ownership and Transfer

For FelCor to qualify as a REIT under the Code, it must meet certain
requirements concerning the ownership of its outstanding stock. Specifically,
not more than 50% in value of FelCor's outstanding stock may be owned, actually
and constructively under the applicable attribution provisions of the Code, by
five or fewer individuals (as defined in the Code to include certain entities)
during the last half of a taxable year (the "5/50 Rule"), and FelCor must be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year or during a proportionate part of a shorter taxable year. See "Certain
Federal Income Tax Considerations -- Qualification and Operation of FelCor as a
REIT; Ownership and Disposition of FelCor Common Shares." For the purpose of
preserving FelCor's REIT qualification, the FelCor Charter contains certain
provisions that restrict the ownership and transfer of FelCor's capital stock
under certain circumstances (the "Ownership Limitation Provisions").

The "Ownership Limitation Provisions" provide that, subject to certain
exceptions specified in the FelCor Charter, no person may own, or be deemed to
own by virtue of the applicable attribution provisions of the Code, more than
9.9% of the outstanding shares of any class of FelCor's capital stock (the
"Ownership

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Limit"). The FelCor Board may, but in no event will be required to, waive the
Ownership Limit if it determines that such ownership will not jeopardize
FelCor's status as a REIT. As a condition of such waiver, the FelCor Board may
require opinions of counsel satisfactory to it and/or undertakings or
representations from the applicant with respect to preserving the REIT status of
FelCor. The FelCor Board has waived the Ownership Limit with respect to the
ownership of outstanding FelCor stock by Franklin Resources, Inc. and intends to
waive the Ownership Limit, subject to certain conditions, to permit the Holiday
Entities initially to own up to 15% of the outstanding FelCor Common Shares as a
result of the Merger. The Ownership Limitation Provisions will not apply if the
FelCor Board and the holders of 66 2/3% of the outstanding shares of capital
stock entitled to vote on such matter determine that it is no longer in the best
interests of FelCor to attempt to qualify, or to continue to qualify, as a REIT.

Any purported transfer of capital stock of FelCor and any other event that
would otherwise result in any person or entity violating the Ownership Limit
will be void and of no force or effect as to that number of shares in excess of
the Ownership Limit, and the purported transferee ("Prohibited Transferee")
shall acquire no right or interest (or, in the case of any event other than a
purported transfer, the person or entity ("Prohibited Owner") holding record
title to any such shares in excess of the Ownership Limit ("Excess Shares")
shall cease to own any right or interest) in such Excess Shares. In addition, if
any purported transfer of capital stock of FelCor or any other event otherwise
would cause FelCor to become "closely held" under the Code or otherwise fail to
qualify as a REIT under the Code (other than as a result of a violation of the
requirement that a REIT have at least 100 stockholders), then any such purported
transfer will be void and of no force or effect as to that number of shares in
excess of the number that could have been transferred without such result, and
the Prohibited Transferee shall acquire no right or interest (or, in the case of
any event other than a transfer, the Prohibited Owner shall cease to own any
right or interest) in such Excess Shares. Also, if any purported transfer of
capital stock of FelCor or any other event would otherwise cause FelCor to
violate the 5/50 Rule or to own, or be deemed to own by virtue of the applicable
attribution provisions of the Code, 10% or more of the ownership interests in
DJONT or the subsidiaries of BHR that will lease the Bristol Hotels or in any
sublessee, then any such purported transfer will be void and of no force or
effect as to that number of shares in excess of the number that could have been
transferred without such result, and the Prohibited Transferee shall acquire no
right or interest (or, in the case of any event other than a transfer, the
Prohibited Owner shall cease to own any right or interest) in such Excess
Shares.

Any such Excess Shares will be transferred automatically, by operation of
law, to a trust, the beneficiary of which will be a qualified charitable
organization selected by FelCor (the "Beneficiary"). The trustee of the trust
who shall be designated by FelCor and be unaffiliated with FelCor and any
Prohibited Owner, will be empowered to sell such Excess Shares to a qualified
person or entity and distribute to a Prohibited Transferee an amount equal to
the lesser of the price paid by the Prohibited Transferee for such Excess Shares
or the sales proceeds received by the trust for such Excess Shares. In the case
of any Excess Shares resulting from any event other than a transfer, or from a
transfer for no consideration, the trustee will be empowered to sell such Excess
Shares to a qualified person or entity and distribute to the Prohibited Owner an
amount equal to the lesser of the fair market value of such Excess Shares on the
date of such event or the sales proceeds received by the trust for such Excess
Shares. Prior to a sale of any such aggregate fractional shares by the trust,
the trustee will be entitled to receive, in trust for the benefit of the
Beneficiary, all dividends and other distributions paid by FelCor with respect
to such Excess Shares, and also will be entitled to exercise all voting rights
with respect to such Excess Shares.

Any purported transfer of capital stock of FelCor that would otherwise
cause FelCor to be beneficially owned by fewer than 100 persons will be null and
void in its entirety, and the intended transferee will acquire no rights in such
stock.

All certificates representing shares of capital stock will bear a legend
referring to the restrictions described above.

Every owner of more than 5% (or such lower percentage as may be required by
the Code or Treasury Regulations) of the outstanding shares of capital stock of
FelCor must file a written notice with FelCor containing the information
specified in the FelCor Charter no later than January 30 of each year. In
addition,

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each stockholder shall upon demand be required to disclose to FelCor in writing
such information as FelCor may request in order to determine the effect, if any,
of such stockholder's actual and constructive ownership on FelCor's status as a
REIT and to ensure compliance with the Ownership Limit.

The Ownership Limitation Provisions may have the effect of precluding an
acquisition of control of FelCor without approval of the FelCor Board.

Operations

FelCor generally is prohibited from engaging in certain activities,
including acquiring or holding property or engaging in any activity that would
cause FelCor to fail to qualify as a REIT.

Other Provisions

See "-- Comparison of Rights of Stockholders" for a discussion of certain
provisions in the FelCor Charter and FelCor Bylaws regarding directors and
officers.

MARYLAND ANTI-TAKEOVER STATUTES

Under the Maryland General Corporation Law (the "Maryland Law"), certain
"business combinations" (including a merger, consolidation, share exchange or,
in certain circumstances, an asset transfer or issuance or reclassification of
equity securities) between a Maryland corporation and (i) any person who
beneficially owns 10% or more of the voting power of the corporation's shares,
(ii) an affiliate of the corporation who, at any time within the two-year period
prior to the date in question, was the beneficial owner of 10% or more of the
voting power of the then outstanding voting stock of the corporation (an
"Interested Stockholder"), or (iii) an affiliate thereof are prohibited for five
years after the most recent date on which the Interested Stockholder became an
Interested Stockholder. Thereafter, any "business combination" must be
recommended by the board of directors of the corporation and approved by the
affirmative vote of at least (a) 80% of the votes entitled to be cast by holders
of outstanding voting shares of the corporation and (b) two-thirds of the votes
entitled to be cast by holders of outstanding voting shares of the corporation
other than shares held by the Interested Stockholder with whom the business
combination is to be effected, unless, among other conditions, the corporation's
stockholders receive a minimum price (as defined under the Maryland Law) for
their shares and the consideration is received in cash or in the same form as
previously paid by the Interested Stockholder for its shares. These provisions
of the Maryland Law do not apply, however, to business combinations that are (i)
with respect to specifically identified or unidentified existing or future
Interested Stockholders, approved or exempted by the board of directors of the
corporation prior to the time that the Interested Stockholder becomes an
Interested Stockholder, or (ii) if the original articles of incorporation of the
corporation contain a provision expressly electing not to be governed by Section
3-602 of the Maryland Law or the stockholders of the corporation adopt a charter
amendment by a vote of at least 80% of the votes entitled to be cast by
outstanding shares of voting stock of the corporation, voting together in a
single group, and two-thirds of the votes entitled to be cast by persons (if
any) who are not Interested Stockholders. The FelCor Charter has exempted from
these provisions of Maryland law, any business combination involving Mr. Feldman
or Mr. Corcoran or any present or future affiliates, associates or other persons
acting in concert or as a group with Mr. Feldman or Mr. Corcoran.

Sections 3-701 et seq. of the Maryland Law (the "Control Share Statute")
provides that "control shares" of a Maryland corporation acquired in a "control
share acquisition" have no voting rights except to the extent approved by a vote
of two-thirds of the votes entitled to be cast on the matter, excluding shares
of stock owned by the acquiring person, or by officers or directors who are
employees of the corporation. "Control shares" are voting shares of stock which,
if aggregated with all other shares of stock previously acquired by that person
or in respect of which the acquiring person is able to exercise or direct the
exercise of voting power, would entitle the acquiror to exercise voting power in
electing directors within one of the following ranges of voting power: (i)
one-fifth or more but less than one-third, (ii) one-third or more but less than
a majority, or (iii) a majority or more of all voting power. Control shares do
not include shares the acquiring person is then entitled to vote as a result of
having previously obtained stockholder approval. A "control share acquisition"
means the

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acquisition of control shares, subject to certain exceptions. Voting rights will
not be denied to "control shares" if the acquisition of such shares, as to
specifically identified or unidentified future or existing stockholders or their
affiliates, has been approved in the charter or bylaws of the corporation prior
to the acquisition of such shares.

A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of directors of the corporation to call a special meeting
of stockholders to be held within 50 days of demand to consider the voting
rights of the shares. If no request for a meeting is made, the corporation may
itself present the question at any stockholders' meeting.

If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the control shares (except those for which voting rights have previously
been approved) for fair value determined, without regard to the absence of
voting rights for the control shares, as of the date of the last control share
acquisition or of any meeting of stockholders at which the voting rights of such
shares are considered and not approved. If voting rights for control shares are
approved at a stockholders meeting and the acquiring person becomes entitled to
vote a majority of the shares entitled to vote, all other stockholders may
exercise appraisal rights. The fair value of the shares as determined for
purposes of the appraisal rights may not be less than the highest price per
share paid by the acquiring person in the control share acquisition. Certain
limitations and restrictions otherwise applicable to the exercise of dissenters'
rights do not apply in the context of a control share acquisition.

The Maryland Control Share Statute does not apply to shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by a corporation's articles
of incorporation or bylaws.

The FelCor Charter and FelCor Bylaws contain a provision exempting any and
all acquisitions of FelCor's shares of capital stock from the Control Share
Statute. There can be no assurance that this provision will not be amended or
eliminated in the future. If the foregoing exemption in the bylaws is rescinded,
the control share acquisition statute could have the effect of discouraging
offers to acquire FelCor and of increasing the difficulty of consummating any
such offer.

COMPARISON OF RIGHTS OF STOCKHOLDERS

FelCor is organized as a corporation under the laws of the State of
Maryland, and Bristol is organized as a corporation under the laws of the State
of Delaware. FelCor is governed by the Maryland Law and by its Articles of
Amendment and Restatement, as amended and supplemented (the "FelCor Charter"),
and Bylaws (the "FelCor Bylaws"). Bristol is governed by the Delaware General
Corporation Law (the "Delaware Law"), and by its Fourth Amended and Restated
Certificate of Incorporation (the "Bristol Charter") and Amended and Restated
Bylaws (the "Bristol Bylaws").

The following comparison of the Maryland Law, the FelCor Charter and the
FelCor Bylaws, on the one hand, and the Delaware Law, the Bristol Charter and
the Bristol Bylaws, on the other hand, is not intended to be complete and is
qualified in its entirety by reference to the FelCor Charter and FelCor Bylaws,
and the Bristol Charter and the Bylaws. Copies of the FelCor Charter and FelCor
Bylaws are available for inspection at the principal executive offices of FelCor
and copies will be sent upon request. Copies of the Bristol Charter and Bristol
Bylaws are available for inspection at the principal executive offices of
Bristol and copies will be sent upon request.

Although it is impractical to note all of the differences between the
Maryland Law and Delaware Law, the most significant differences, in the judgment
of the management of FelCor, are summarized below. The summary is not intended
to be complete and reference should be made to the Maryland Law and Delaware
Law. Since this summary may not contain all the information that is important to
you, we encourage you to read carefully all the documents we refer to in this
discussion.

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Directors

The Maryland Law permits a classified board of directors. Under the FelCor
Charter and FelCor Bylaws, the number of directors of FelCor may not be less
than three. The FelCor Charter currently provides that the FelCor Board of
Directors will consist of not fewer than three nor more than nine directors
unless otherwise determined by a resolution of 80% of the Board. The FelCor
Board has taken the action necessary to increase the maximum number of directors
to 10. The FelCor Charter provides for a staggered Board consisting of three
classes as nearly equal in size as practicable. Assuming consummation of the
Merger, one class will hold office initially for a term expiring at the annual
meeting of stockholders to be held in 1999, another class will hold office
initially for a term expiring at the annual meeting of stockholders to be held
in 2000 and another class will hold office initially for a term expiring at the
annual meeting of stockholders to be held in 2001. As the term of each class
expires, directors in that class will be elected for a term of three years and
until their successors are duly elected and qualify.

The classification of directors has the effect of making it more difficult
for stockholders to change the composition of the FelCor Board. FelCor believes,
however, that the longer time required to elect a majority of the FelCor Board
will help to ensure continuity and stability of FelCor's management and
policies. The classification provisions could also have the effect of
discouraging a third party from accumulating large blocks of FelCor's stock or
attempting to obtain control of FelCor, even though such an attempt might be
beneficial to FelCor and its stockholders. Accordingly, stockholders could be
deprived of certain opportunities to sell their FelCor Common Shares at a higher
price than might otherwise be the case.

At all times a majority of the directors of FelCor shall be Independent
Directors, as defined by the FelCor Charter, except that upon the death, removal
or resignation of an Independent Director, such requirement shall not be
applicable for 60 days. As of December 31, 1997, there were seven directors,
four of whom were Independent Directors. The FelCor Charter provides that,
subject to any rights of holders of FelCor Preferred Shares, and unless the
FelCor Board otherwise determines, any vacancies will be filled by the
affirmative vote of a majority of the remaining directors, though such directors
may constitute less than a quorum. Any director so elected may qualify as an
Independent Director only if he has received the affirmative vote of at least a
majority of the remaining Independent Directors, if any. Accordingly, the FelCor
Board could temporarily prevent any holder of FelCor Common Shares from
enlarging the FelCor Board and filling the new directorships with such
stockholder's own nominees. Any director so elected shall serve for the
unexpired term of the class to which he is elected.

Holders of FelCor Common Shares have no right to cumulative voting for the
elections of directors. Consequently, at each annual meeting of stockholders,
the holders of a majority of outstanding FelCor Common Shares will be able to
elect all of the successors of the class of directors whose term expires at that
meeting. Any vacancy on the FelCor Board will be filled, at any regular meeting
or at any special meeting called for that purpose, by a majority of the
remaining directors, even though such directors may constitute less than a
quorum, except that a vacancy resulting from an increase in the number of
directors will be filled by an affirmative vote of a majority of the entire
board of directors.

The Delaware Law permits the certificate of incorporation or the bylaws of
a corporation to establish the number and qualifications of directors. If the
certificate of incorporation or bylaws contain provisions fixing the number of
directors, such number may not be changed without amending the certificate of
incorporation or bylaws, as applicable.

The Bristol Charter provides for a minimum of three and a maximum of 15
directors, which number is determined by (i) a majority of the entire Board or
(ii) the holders of at least 80% of Bristol's voting shares, voting together as
a single class. There are currently nine directors serving on the Bristol Board.
Each director is elected to serve until his successor is elected and qualified.

Pursuant to the Bristol Bylaws, persons may be nominated for election as
directors of Bristol at the annual stockholders' meeting only (i) by the Board
or (ii) by any stockholder who delivers a notice to the principal executive
offices of Bristol not less than 60 calendar days prior to the annual
stockholders' meeting or, if public notice of such meeting has not been made
more than 75 calendar days prior to the date of the annual

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stockholders' meeting, within ten calendar days following the day on which
public announcement is first made of the date of the annual stockholders'
meeting.

These provisions of the Bristol Charter and Bristol Bylaws relating to the
number and term of office of directors and the advance notice of stockholder
nominations may discourage or make more difficult the acquisition of control of
Bristol by means of a tender offer, open market purchase, proxy contest or other
transaction not supported by the Bristol Board.

Removal of Directors; Vacancies on the Board of Directors

Under the Maryland Law, if the directors have been divided into classes,
unless the corporation's charter provides otherwise, the stockholders of a
corporation may remove any director, with cause, by the affirmative vote of a
majority of all the votes entitled to be cast for the election of directors
except an increase in the number of directors for which the vote of a majority
of the entire board of directors is required.

The Maryland Law permits the stockholders or the directors of a Maryland
corporation to fill vacancies in its Board of Directors. Under the Maryland Law,
stockholders may elect a successor to fill a vacancy on the Board of Directors
which results from the removal of a director. Otherwise, a majority of the
remaining directors, whether or not a quorum, may fill a vacancy on the board of
directors which results from any cause.

A director may be removed with cause by the vote of the holders of a
majority of the outstanding shares of FelCor Common Shares at a special meeting
of the stockholders called for the purpose of removing him. Additionally, the
FelCor Charter and the Maryland Law provide that if stockholders of any class of
capital stock of FelCor are entitled separately to elect one or more directors,
such directors may not be removed except by the affirmative vote of a majority
of all of the shares of such class or series entitled to vote for such
directors. This provision, when coupled with the provision in the FelCor Bylaws
authorizing the FelCor Board to fill vacant directorships, could preclude
stockholders from removing incumbent directors except upon an affirmative vote
of the stockholders electing such director and from filling the vacancies
created by such removal with their own nominees.

Under the Delaware Law, directors generally may be removed, with or without
cause, by the holders of a majority of shares entitled to vote at an election of
directors. The Bristol Bylaws, however, permit a director to be removed from
office (a) with or without cause by the vote of a majority of the whole Bristol
Board and (b) by the stockholders only for cause and only if the holders of at
least 80% of the outstanding voting shares, voting together as a single class,
have voted for such removal.

As permitted under the Delaware Law, the Bristol Bylaws provide that
vacancies and newly created directorships resulting from an increase in the
authorized number of directors may be filled only by the affirmative vote of a
majority of the remaining directors then in office, even if less than a quorum
of the Bristol Board, or by a sole remaining director. Any director elected in
accordance with the preceding sentence will hold office until such director's
successor is elected and qualified. No decrease in the number of directors
constituting the Bristol Board may shorten the term of an incumbent director.

Additionally, if, at the time of filling any vacancy or newly created
directorship, the directors then in office constitute less than a majority of
the whole Bristol Board (as constituted immediately prior to such increase), the
Delaware Court of Chancery may, if requested by stockholders holding at least
10% of the total number of outstanding voting shares, require that an election
be held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office.

Limitation on Personal Liability of Directors

The FelCor Charter limits the monetary liability of FelCor's directors and
officers to FelCor and its stockholders to the fullest extent permitted from
time to time by Maryland statutory or decisional law as amended or interpreted.
The Maryland Law presently permits the liability of directors and officers to a
corporation or its stockholders for money damages to be limited, except (i) to
the extent that it is proved that the director or officer actually received an
improper benefit or profit, or (ii) if a judgment or other final adjudication is
entered in a proceeding based on a finding that the director's or officer's
action, or failure to act,

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was the result of active and deliberate dishonesty and was material to the cause
of action adjudicated in the proceeding. This provision does not limit the
ability of FelCor or its stockholders to obtain other relief, such as an
injunction or rescission.

Delaware corporations are permitted to adopt charter provisions limiting,
or even eliminating, the liability of a director of a corporation and its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such liability does not arise from certain proscribed conduct,
including breach of the duty of loyalty, acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law or liability
to the corporation based on unlawful dividends or distributions or improper
personal benefit.

Under the Bristol Charter, Bristol directors are indemnified to the full
extent of the Delaware Law for acts or omissions in the performance of their
duties as Bristol directors.

Indemnification of Officers and Directors and Advancement of Expenses

The Maryland Law presently permits a corporation to indemnify its
directors, officers, employees and agents against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service to
the corporation, unless it is established that (i) the act or omission of the
indemnified party was material to the matter giving rise to the proceeding, and
was committed in bad faith or was the result of active and deliberate
dishonesty; or (ii) the indemnified party actually received an improper personal
benefit in money, property or services; or (iii) in the case of any criminal
proceeding, the indemnified party had reasonable cause to believe that the act
or omission was unlawful. Unless limited by the charter, indemnification is
mandatory if the indemnified party has been successful on the merits or
otherwise in the defense of any proceeding unless such indemnification is not
otherwise permitted as provided in the preceding sentence. In addition to the
foregoing, a court of competent jurisdiction, under certain circumstances, may
order indemnification if it determines that the director is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances. A director may not be indemnified if the proceeding was an action
by or in the right of the corporation and the director was adjudged to be
liable, or the proceeding involved a determination that the director received an
improper personal benefit.

The FelCor Charter and FelCor Bylaws require FelCor to indemnify its
directors, officers, employees and agents to the fullest extent permitted from
time to time by the Maryland Law.

Delaware and Maryland have similar provisions regarding indemnification by
a corporation of its officers, directors, employees and agents. However, the
Delaware Law permits a court to allow indemnification where the person seeking
indemnification has been found liable to the corporation, whereas the Maryland
Law does not permit indemnification, other than fees and expenses, in that
circumstance. Under the Delaware Law, a corporation may indemnify any person who
is or was a director, officer, employee or agent of the corporation or who is or
was acting at the request of the corporation in a similar capacity against his
reasonable expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement of any judicial or administrative proceeding. Such
indemnification is limited to situations in which such person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.

Under the Delaware Law, no indemnification may be made in respect of any
claim in which such person has been found liable to the corporation unless and
only to the extent that the Delaware court in which such action was brought
determines that such person is fairly and reasonably entitled to be indemnified
for his expenses only. Unless limited by a corporation's charter, a Delaware
corporation must indemnify any such person for his reasonable expenses in
connection with his successful defense of any proceeding subject to the Delaware
Law's indemnification provisions.

Delaware and Maryland law differ in their provisions for advancement of
expenses incurred by an officer or director in defending a civil or criminal
action, suit or proceeding. Both give the corporation discretion to advance
expenses incurred by an officer or director in defending any civil, criminal,
administrative or

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investigative action, suit or proceeding prior to the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined that he
is not entitled to be indemnified by the corporation. However, the Maryland Law
does not require security for the undertaking to repay or verification of
financial ability to repay, which would be required by the Delaware Law.

The Bristol Charter and the Bristol Bylaws require Bristol to indemnify its
officers and directors in the manner described above and to advance expenses
incurred by such officers and directors to the full extent permitted by the
Delaware Law.

Stockholder Inspection

Any stockholders of a Maryland corporation who (individually or in the
aggregate) own five percent of the outstanding stock of any class and have been
stockholders for at least six months are entitled to inspect and copy (among
other things) the corporation's stock ledger, and if the corporation does not
maintain its stockholders list at its principal place of business, to request in
writing a list of stockholders. Upon such request, the corporation has 20 days
to provide such a list. The Delaware Law permits any stockholder to inspect the
stockholder list of the corporation for certain permitted purposes. Bristol
stockholders also have a right to examine a list of stockholders of the
corporation for a period of ten calendar days prior to any stockholders' meeting
and during such meeting for any proper purpose.

Action by Written Consent

The Maryland Law and FelCor Bylaws provide that actions may be taken
without a stockholders' meeting but only by unanimous written consent. Because
of the number of FelCor stockholders, it is unlikely that any such unanimous
written consent could be obtained.

Under the Delaware Law, unless otherwise provided in the certificate or
articles of incorporation, stockholders may take action without a meeting,
without prior notice and without a vote, upon the written consent of
stockholders having not less than the minimum number of votes that would be
necessary to authorize the proposed action at a meeting at which all shares
entitled to vote were present and voted. The Bristol Charter does not permit
action to be taken by stockholders by written consent.

These provisions both deter hostile takeovers because a holder or group of
holders controlling a majority of voting shares would not be able to take
actions outside of a stockholders' meeting.

Special Meetings

Under the Maryland Law, a special meeting of stockholders may be called by
the President, the Board of Directors or any other person specified in the
corporation's charter or bylaws. Additionally, the Chairman, Chief Executive
Officer, or President may, and the Secretary shall, at the request of a majority
of the Board or a majority of the Independent Directors call a special meeting
under the FelCor Bylaws. In order for FelCor stockholders to call special
meetings, the FelCor Bylaws require the written request of stockholders owning
not less than 10% of the shares of the entire capital stock issued, outstanding
and entitled to vote. Such provisions do not, however, affect the ability of
stockholders to submit a proposal to the vote of all stockholders of FelCor in
accordance with the FelCor Bylaws, which provide for the additional notice
requirements for stockholder nominations and proposals at the annual meetings of
stockholders as described herein.

The Bristol Bylaws provide that special meetings of the stockholders may
only be called by (i) the Chairman or a Vice Chairman of Bristol and (ii) the
Secretary of Bristol within ten calendar days after receipt of the written
request of a majority of the whole Bristol Board. Written notice of every
meeting of stockholders, stating the place, date and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called, must be given not less than ten nor more than 60 calendar days before
the date of the meeting to each stockholder entitled to vote at such meeting.
The business permitted to be conducted at any special meeting is limited to that
brought before the meeting by Bristol's Chairman or Vice Chairman or a majority
of the total number of directors of Bristol. The Bristol Board, the Chairman or
a

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Vice Chairman of Bristol may postpone and reschedule any previously scheduled
annual or special stockholders' meeting.

Upon the written request of the holders of not less than a majority of
Bristol's voting stock, the Bristol Board must (i) call a meeting of
stockholders for any lawful purpose, other than the election of directors and
(ii) fix a record date within 60 calendar days after such notice for the
determination of stockholders entitled to notice of and to vote at such meeting.
No separate special meeting of stockholders as so requested will be required to
be convened if the Bristol Board calls an annual or special meeting of
stockholders to be held not later than 90 calendar days after receipt of any
such written request, and the purposes of such annual or special meeting
includes those specified in such written request of the stockholders.

The effect of this provision, together with the provisions of the Bristol
Charter that do not permit stockholder action by written consent, is to prevent
or make it more difficult for Bristol stockholders to take stockholder actions
other than at an annual stockholders' meeting.

Cumulative Voting

Under both the Delaware Law and the Maryland Law, cumulative voting of
stock applies only when so provided in the certificate or articles of
incorporation. Neither the FelCor Charter nor the Bristol Charter provide for
cumulative voting.

Distributions

Unless prohibited by a corporation's charter, the Maryland Law permits a
corporation to make a distribution, including the payment of dividends, unless
the corporation would not be able to pay its debts in the ordinary course as
they become due or the corporation's total assets would be less than the sum of
the corporation's total liabilities plus, unless the charter permits otherwise,
the amount that would be needed, if the corporation were to be dissolved at the
time of such dividends, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights on dissolution are superior to those
receiving the dividends. Subject to the foregoing restrictions, holders of
FelCor Common Shares are entitled to distributions if, as and when declared by
the FelCor Board. Current distributions are $0.55 per share per quarter. Future
distributions are at the discretion of the FelCor Board.

Under the Delaware Law, unless otherwise provided in the certificate of
incorporation, a corporation may declare and pay dividends, out of surplus, or
if no surplus exists, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year, provided that the amount
of capital of the corporation following the declaration and payment of the
dividends is not less than the aggregate amount of the capital represented by
the issued and outstanding stock of all classes having a preference upon the
distribution of assets. Surplus is defined by the Delaware Law to be the excess
of the net assets of the corporation over the amount determined as its capital.
In addition, the Delaware Law provides that a corporation may redeem or
repurchase its shares only out of surplus.

Amendment or Repeal of the Certificate of Incorporation and Bylaws

Under the Maryland Law, the affirmative vote of at least two-thirds of the
votes entitled to be cast is required to amend a Maryland corporation's charter,
provided that a Maryland corporation may require in its charter a greater or
lesser proportion of the votes cast to approve a charter amendment as long as
the vote is not less than a majority of the votes entitled to be cast. Under the
Maryland Law, the power to amend a Maryland corporation's bylaws is vested in
the corporation's stockholders, except to the extent the corporation's charter
or bylaws vest it in the Board of Directors.

Subject to the rights of any FelCor Preferred Shares outstanding from time
to time (including the rights of the FelCor Series A Preferred Shares), the
FelCor Charter may be amended by the affirmative vote of the holders of a
majority of the outstanding FelCor Common Shares entitled to vote on the matter
after the directors have adopted a resolution proposing the amendment and
submitted the resolution to the stockholders at either an annual or special
meeting, with the stockholders voting as a class with one vote per share;

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provided, that the FelCor Charter provision providing for the classification of
the FelCor Board into three classes may not be amended, altered, changed or
repealed without the affirmative vote of at least 80% of the members of the
FelCor Board and the affirmative vote of holders of 75% of the outstanding
shares of capital stock entitled to vote generally in the election of directors
voting as a class. The Ownership Limitation Provisions may not be amended,
altered, changed or repealed without the affirmative vote of a majority of the
members of the FelCor Board and adopted by an affirmative vote of the holders of
not less than 66 2/3% of the outstanding shares of capital stock of FelCor
entitled to vote generally in the election of directors, voting together as a
class.

The FelCor Charter provides that the FelCor Board may amend, alter, change
or repeal the Bylaws.

Under Delaware law, the approval of the Bristol Board, in addition to
stockholder approval, is required to adopt any amendment to the Bristol Charter.
The Bristol Bylaws may be amended either by action of Bristol stockholders or,
if the Bristol Charter or Bristol Bylaws so permit, by action of the Bristol
Board. Pursuant to the Bristol Charter and the Bristol Bylaws, the provisions
relating to (i) the calling of stockholders' meetings, (ii) the nomination
procedures for directors, (iii) the number and term of office of directors, (iv)
the removal of directors, (v) the filling of director vacancies, and (vi) the
restriction on the taking of stockholder action by written consent may not be
amended or repealed by the stockholders, nor may any provision inconsistent
therewith be adopted by the stockholders, unless approved by the holders of at
least 80% of Bristol's voting shares, voting together as a single class. If any
such action (other than with respect to the requirement that stockholder action
be taken at a meeting of stockholders rather than by written consent in lieu of
a meeting) is approved by the holders of a majority, but less than 80%, of the
then-outstanding voting shares (in addition to any other approvals required by
law, including approval by the Bristol Board with respect to any amendment to
the Bristol Charter), such action will be effective as of 15 months from the
date of adoption. The Bristol Bylaws which relate to the right of stockholders
to cause special meetings of stockholders to be called and to the composition of
certain directorate committees may not be amended by the Board without
stockholder approval.

Advance Notice of Director Nominations and New Business

The FelCor Bylaws provide that (i) with respect to an annual meeting of
stockholders, nominations of persons for election to the FelCor Board and the
proposal of business to be considered by stockholders may be made only (a)
pursuant to FelCor's notice of the meeting, (b) by the FelCor Board, or (c) by a
stockholder who is entitled to vote at the meeting and has complied with the
advance notice procedures set forth in the FelCor Bylaws, and (ii) with respect
to special meetings of stockholders, only the business specified in FelCor's
notice of meeting may be brought before the meeting of stockholders, or provided
that the FelCor Board has determined that directors shall be elected at such
meeting, nominations of persons for election to the FelCor Board may be brought
by a stockholder who is entitled to vote at the meeting and has complied with
the advance notice provisions set forth in the FelCor Bylaws.

The Bristol Bylaws allow a stockholder to nominate persons for election as
directors if the stockholder is of record at the time of giving notice, entitled
to vote for the election of directors at such meeting and complies with the
advance notice procedures more fully set forth in the Bristol Bylaws.

Restrictions on Business Combinations/Corporate Control

Both the Delaware Law and the Maryland Law contain provisions restricting
the ability of a corporation to engage in business combinations with an
interested stockholder.

Under the Delaware Law, a corporation is not permitted to engage in a
business combination with any interested stockholder for a three-year period
following the time such stockholder became an interested stockholder, unless (i)
approved by the board of directors and holders of at least two-thirds of the
outstanding voting shares (other than shares controlled by the interested
stockholder), (ii) the board of directors approved the acquisition of voting
shares pursuant to which such person became an interested stockholder, or (iii)
an exemption is available. The Delaware Law defines an interested stockholder,
generally, as a person who owns 15% or more of the outstanding shares of such
corporation's voting stock.

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For provisions of the Maryland Law, see "-- Maryland Anti-Takeover
Statutes."

Stockholder Vote for Mergers

Except with respect to certain mergers with subsidiary corporations, both
the Delaware Law and the Maryland Law generally require the affirmative vote of
the outstanding shares of the constituent corporations in a merger. The Delaware
Law requires a majority vote, and, unless the charter provides otherwise, the
Maryland Law requires a two-thirds vote. The Felcor Charter contains a provision
reducing the proportion of votes required to approve a merger to a majority of
all votes entitled to be cast on the matter. Neither the Delaware Law nor the
Maryland Law require a stockholder vote of the surviving corporation in a merger
if (a) the merger agreement does not amend the existing certificate or articles
of incorporation, (b) the merger agreement does not reclassify or change its
stock, and (c) the number of shares to be issued by the surviving corporation in
a merger does not exceed 20% (Delaware Law) or 15% (Maryland Law) of the shares
outstanding immediately prior to such issuance.

Dissenters' Rights in Mergers

Both the Delaware Law and the Maryland Law provide that stockholders have
the right, in some circumstances, to dissent from certain corporate
reorganizations and to instead demand payment of the fair cash value of their
shares. Unless a corporation's certificate or articles of incorporation provides
otherwise, neither the Delaware Law nor the Maryland Law provides for presently
applicable dissenters' rights of appraisal. In the case of the Delaware Law,
dissenters' rights of appraisal do not apply to a merger or consolidation by a
corporation, the shares of which are either listed on a national securities
exchange or widely-held (by more than 2,000 stockholders), if such stockholders
receive shares of the surviving corporation or of such a listed or widely-held
corporation. Dissenters' rights are not available under the Maryland Law for
shares registered on a national securities exchange on the record date for the
meeting at which the transaction is considered by the stockholders.
Additionally, the Delaware Law does not provide for such dissenters' rights of
appraisal with respect to a sale-of-assets reorganization. Like the Delaware
Law, the Maryland Law generally does not provide for dissenters' rights if no
vote of the stockholders of the surviving corporation is required in a merger.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of the material United States federal income tax
consequences of the Merger and related transactions to FelCor, Bristol and their
respective stockholders as well as certain other tax considerations for U.S.
holders of FelCor Common Shares. The following discussion is based upon current
provisions of the Code, existing temporary and final regulations thereunder and
current administrative rulings and court decisions. No assurance can be given
that future legislative, judicial or administrative actions or decisions, which
may be retroactive in effect, will not affect the accuracy of any statements in
this Joint Proxy Statement/Prospectus with respect to the transactions entered
into or contemplated prior to the effective date of such changes. No attempt has
been made to comment on all United States federal income tax consequences of the
Merger that may be relevant to U.S. stockholders of FelCor and Bristol. The tax
discussion set forth below is included for general information only and should
not be construed to be legal or tax advice to a particular stockholder of FelCor
or Bristol. Jenkens & Gilchrist, a Professional Corporation ("Jenkens &
Gilchrist") counsel for FelCor, and Jones, Day, Reavis & Pogue ("Jones Day"),
counsel for Bristol, have reviewed the summary below in "The Merger, the
Spin-Off and the Post-Merger Dividend" and are of the opinion that such summary
fairly summarizes the federal income tax consequences of the transactions
referred to therein that are likely to be material to U.S. stockholders of
FelCor or Bristol. Hunton & Williams, special tax counsel for FelCor, has
reviewed the summary set forth below in "Qualification and Operation of FelCor
as a REIT; Ownership and Disposition of FelCor Common Shares" and is of the
opinion that such summary fairly summarizes the federal income tax consequences
that are likely to be material to FelCor or Bristol stockholders. Each of the
opinions discussed above have been filed as exhibits to the Registration
Statement. These opinions, and the opinions described below to be delivered by
Jones Day, Jenkens & Gilchrist or Hunton & Williams pursuant to the Merger
Agreement, are based on various

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assumptions and subject to certain limitations, including as to factual matters
represented by FelCor, Bristol or BHR and that the parties to the Merger
Agreement take certain actions contemplated by and otherwise satisfying their
obligations under the Merger Agreement and are not binding on the IRS or any
court. No assurance can be given that the IRS will not challenge part or all of
these opinions or that a challenge would not be successful.

THE FOLLOWING DISCUSSION MAY NOT APPLY TO PARTICULAR CATEGORIES OF FELCOR
OR BRISTOL STOCKHOLDERS SUBJECT TO SPECIAL TREATMENT UNDER THE CODE, SUCH AS
INSURANCE COMPANIES, FINANCIAL INSTITUTIONS, BROKER-DEALERS, TAX-EXEMPT
ORGANIZATIONS (EXCEPT AS PROVIDED BELOW), NON-U.S. STOCKHOLDERS (EXCEPT AS
PROVIDED BELOW) AND HOLDERS WHOSE SHARES WERE ACQUIRED PURSUANT TO THE EXERCISE
OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION. STOCKHOLDERS OF FELCOR
AND BRISTOL ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC TAX
CONSEQUENCES OF THE TRANSACTIONS AND MATTERS REFERRED TO HEREIN, INCLUDING THE
STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE TRANSACTIONS AND MATTERS
REFERRED TO HEREIN, AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.

THE MERGER, THE SPIN-OFF AND THE POST-MERGER E&P DIVIDEND

Tax Consequences of the Merger

Jenkens & Gilchrist will deliver an opinion to FelCor dated the Closing
Date to the effect that, based upon representations, assumptions and conditions
substantially in the form set forth in Exhibit D to the Merger Agreement and
dated the Closing Date, the Merger will be treated for United States federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code. Jones Day will deliver an opinion to Bristol dated the Closing Date to
the effect that, based upon representations, assumptions and conditions
substantially in the form set forth in Exhibit D to the Merger Agreement and
dated the Closing Date, the Merger will be treated for United States federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code.

Assuming, consistent with the above-described opinions, the Merger is
treated for United States federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code, the following United States federal
income tax consequences generally will occur:

(i) Neither FelCor nor Bristol will recognize gain or loss with
respect to their transfers of assets and stock pursuant to the Merger;

(ii) No gain or loss will be recognized by the stockholders of Bristol
as the result of the Merger;

(iii) The aggregate tax basis of the FelCor Common Shares received by
a stockholder of Bristol in the Merger (including any fractional FelCor
Common Shares for which cash is received) will be the same as the aggregate
tax basis of the stockholder's Bristol Common Shares exchanged therefor;

(iv) The holding period for the FelCor Common Shares received by a
stockholder of Bristol in the Merger will include the period that such
Bristol Common Shares were held by such stockholder, provided such shares
were held as capital assets at the Closing Date; and

(v) Cash received by a stockholder of Bristol in lieu of a fractional
FelCor Common Share will be treated as received in exchange for such
fractional interest, and gain or loss will be recognized in an amount equal
to the difference between the amount of cash received and the portion of
the such stockholder's adjusted tax basis in the Bristol Common Shares
allocated to such fractional interest. Such gain or loss generally will be
treated as capital gain or loss if the stockholder holds its Bristol Common
Shares as a capital asset at the Closing Date.

Tax Consequences of the Spin-Off

At or prior to the Closing Date, Jones Day will deliver an opinion to
Bristol to the effect that the Spin-Off will be treated as a taxable dividend of
Bristol's earnings and profits (as determined for federal income tax purposes)
("E&P") to the stockholders of Bristol. Each stockholder of Bristol will
recognize taxable ordinary

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dividend income pursuant to the Spin-Off in an amount equal to the fair market
value ("FMV") of the BHR Common Shares received by such stockholder assuming for
this purpose that Bristol's E&P totals in excess of the aggregate FMV of the BHR
Common Shares distribution in the Spin-Off. The aggregate tax basis of the BHR
Common Shares received by a stockholder of Bristol in the Merger will be equal
to the FMV of the BHR Common Shares received as of effective time of the
Spin-Off. The holding period for the BHR Common Shares received by a stockholder
of Bristol pursuant to the Spin-Off will begin on the day such shares are
distributed. The Spin-Off will result in the recognition of taxable gain to
Bristol in an amount equal to the difference between the FMV of the BHR Common
Shares and the adjusted tax basis of Bristol in such shares. The tax liability
relating to such gain will be assumed by FelCor by virtue of the Merger. The
amount of such tax liability will decrease Bristol's E&P.

Post-Merger E&P Dividend

To maintain its qualification as a REIT, following the Merger, FelCor will
be required to distribute any current or accumulated E&P of Bristol remaining at
the Effective Time (the "Post-Merger E&P Dividend"). The Post-Merger E&P
Dividend will be taken into account by the stockholders of FelCor (including
former stockholders of Bristol who become FelCor stockholders in the Merger and
remain FelCor stockholders as of the record date for the Post-Merger E&P
Dividend) as ordinary dividend income. Although the law is not entirely clear,
such Post-Merger E&P Dividend should be eligible for the dividends received
deduction generally available for corporate stockholders.

QUALIFICATION AND OPERATION OF FELCOR AS A REIT; OWNERSHIP AND DISPOSITION OF
FELCOR COMMON SHARES

General

FelCor elected to be taxed as a REIT under sections 856 through 860 of the
Code commencing with its short taxable year ended December 31, 1994. FelCor
believes that, commencing with such taxable year, it has been organized and has
operated in such a manner as to qualify for taxation as a REIT under the Code,
and FelCor intends to continue to operate in such a manner, but no assurance can
be given that FelCor will continue to operate in a manner so as to continue to
qualify as a REIT.

The sections of the Code relating to qualification and operation as a REIT
are highly technical and complex. The following discussion sets forth the
material aspects of the Code sections that govern the federal income tax
treatment of a REIT and its stockholders. The discussion is qualified in its
entirety by the applicable Code provisions, Treasury Regulations promulgated
thereunder and administrative and judicial interpretations thereof, all of which
are subject to change prospectively or retrospectively.

Hunton & Williams has acted as special tax counsel to FelCor in connection
with the Merger. In the opinion of Hunton & Williams, beginning with its taxable
year ended December 31, 1994, FelCor was organized and has operated in
conformity with the requirements for qualification as a REIT under the Code, and
the Merger will not adversely affect FelCor's continued qualification as a REIT
under the Code. Investors should be aware, however, that opinions of counsel are
not binding upon the Service or any court. It is a condition to Bristol's
obligations under the Merger Agreement that Hunton & Williams deliver an opinion
to that effect as of the Closing Date. It must be emphasized that Hunton &
Williams' opinion is based on various assumptions and is conditioned upon
certain representations made by FelCor as to factual matters, including
representations regarding the nature of FelCor's properties and the future
conduct of its business. Moreover, such qualification and taxation as a REIT
depend upon FelCor's ability to meet on a continuing basis, through actual
annual operating results, distribution, stock ownership and various other
qualification tests imposed under the Code discussed below. While Hunton &
Williams reviewed and will review those matters to its satisfaction in
connection with the foregoing opinions, Hunton & Williams will not review
FelCor's compliance with those tests on a continuing basis. Accordingly, no
assurance can be given that the actual results of FelCor's operation for any
particular taxable year will satisfy such requirements. For a discussion of the
tax consequences of failure to qualify as a REIT, see "-- Failure to Qualify."

As a REIT, FelCor generally is not subject to federal corporate income tax
on its net income that is distributed currently to its stockholders. That
treatment substantially eliminates the "double taxation" of

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income (i.e., taxation at both the corporate and stockholder levels) that
generally results from investment in a corporation. However, FelCor will be
subject to federal income tax in the following circumstances. First, FelCor will
be taxed at regular corporate rates on any undistributed REIT taxable income,
including undistributed net capital gains. Second, under certain circumstances,
FelCor may be subject to the "alternative minimum tax" on its undistributed
items of tax preference. Third, if FelCor has (i) net income from the sale or
other disposition of "foreclosure property" that is held primarily for sale to
customers in the ordinary course of business or (ii) other nonqualifying income
from foreclosure property, it will be subject to tax at the highest corporate
rate on such income. Fourth, if FelCor has net income from prohibited
transactions (which are, in general, certain sales or other dispositions of
property (other than foreclosure property) held primarily for sale to customers
in the ordinary course of business), such income will be subject to a 100% tax.
Fifth, if FelCor should fail to satisfy the 75% gross income test or the 95%
gross income test (as discussed below), and has nonetheless maintained its
qualification as a REIT because certain other requirements have been met, it
will be subject to a 100% tax on the gross income attributable to the greater of
the amount by which FelCor fails the 75% or 95% gross income test, multiplied by
a fraction intended to reflect FelCor's profitability. Sixth, if FelCor should
fail to distribute during each calendar year at least the sum of (i) 85% of its
REIT ordinary income for such year, (ii) 95% of its REIT capital gain net income
for such year, and (iii) any undistributed taxable income from prior periods,
FelCor would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. To the extent that FelCor
elects to retain and pay income tax on its net capital gain, but elects to treat
such amount as having been distributed to its stockholders, such amount also
will be deemed to have been distributed for purposes of the 4% excise tax.

Finally, if FelCor acquires any asset from a C corporation (i.e., a
corporation such as Bristol that generally is subject to full corporate-level
tax) in a transaction in which the basis of the asset in FelCor's hands is
determined by reference to the basis of the asset (or any other asset) in the
hands of the C corporation and FelCor recognizes gain on the disposition of such
asset during the 10-year period beginning on the date on which such asset was
acquired by FelCor, then to the extent of such asset's "built-in gain" (i.e.,
the excess of the fair market value of such asset at the time of acquisition by
FelCor over the adjusted basis in such asset at such time), such gain will be
subject to tax at the highest regular corporate rate applicable (as provided in
Treasury Regulations that have not yet been promulgated). The results described
above with respect to the recognition of "built-in gain" assume that FelCor
would make an election pursuant to IRS Notice 88-19 if it were to make any such
acquisition. FelCor intends to make an election pursuant to IRS Notice 88-19
with respect to the assets it acquires from Bristol in the Merger (the "Bristol
Assets"). Accordingly, assuming FelCor makes such election, any gain recognized
by FelCor on the disposition of any Bristol Asset during the 10-year period
beginning on the Closing Date, to the extent of such asset's "built-in gain,"
will be subject to tax at the highest regular corporate rate. See "-- Proposed
Tax Legislation."

Requirements for Qualification

The Code defines a REIT as a corporation, trust or association (i) that is
managed by one or more directors or trustees; (ii) the beneficial ownership of
which is evidenced by transferable shares, or by transferable certificates of
beneficial interest; (iii) that would be taxable as a domestic corporation, but
for sections 856 through 860 of the Code; (iv) that is neither a financial
institution nor an insurance company subject to certain provisions of the Code;
(v) the beneficial ownership of which is held by 100 or more persons; (vi) not
more than 50% in value of the outstanding capital stock of which is owned,
directly or indirectly, by five or fewer individuals (as defined in the Code to
include certain entities) during the last half of each taxable year; (vii) that
makes an election to be a REIT (or has made such election for a previous taxable
year) and satisfies all relevant filing and other administrative requirements
established by the Service that must be met in order to elect and to maintain
REIT status; (viii) that uses a calendar year for federal income tax purposes
and complies with the recordkeeping requirements of the Code and Treasury
Regulations promulgated thereunder; and (ix) that meets certain other tests,
described below, regarding the nature of its income and assets. The Code
provides that conditions (i) to (iv), inclusive, must be met during the entire
taxable year and that condition (v) must be met during at least 335 days of a
taxable year of 12 months, or during a proportionate part of a taxable year of
less than 12 months. FelCor has issued sufficient FelCor Common

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Stock with sufficient diversity of ownership to allow it to satisfy requirements
(v) and (vi). In addition, FelCor's Charter provides for restrictions regarding
ownership and transfer of its capital stock that are intended to assist FelCor
in continuing to satisfy the share ownership requirements described in (v) and
(vi) above.

For purposes of determining share ownership under the 5/50 Rule, a
supplemental unemployment compensation benefits plan, a private foundation or a
portion of a trust permanently set aside or used exclusively for charitable
purposes generally is considered an individual. A trust that is a qualified
trust under Code section 401(a), however, generally is not considered an
individual and the beneficiaries of such trust are treated as holding shares of
a REIT in proportion to their actuarial interests in the pension trust for
purposes of the 5/50 Rule.

In the case of a REIT that is a partner in a partnership, Treasury
Regulations provide that the REIT is deemed to own its proportionate share
(based on the REIT's interest in partnership capital) of the assets of the
partnership and is deemed to be entitled to the gross income of the partnership
attributable to such share. In addition, the character of the assets and gross
income of the partnership retain the same character in the hands of the REIT for
purposes of section 856 of the Code, including satisfying the gross income and
asset tests, described below. Thus, FelCor's proportionate share of the assets,
liabilities and items of income of the Operating Partnership and its subsidiary
partnerships (the "Subsidiary Partnerships") are treated as assets and gross
income of FelCor for purposes of applying the requirements described herein.

Income Tests

In order for FelCor to maintain its qualification as a REIT, there are two
requirements relating to FelCor's gross income that must be satisfied annually.
First, at least 75% of FelCor's gross income (excluding gross income from
prohibited transactions) for each taxable year must consist of defined types of
income derived directly or indirectly from investments relating to real property
or mortgages on real property (including "rents from real property" and, in
certain circumstances, interest) or temporary investment income. Second, at
least 95% of FelCor's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived from such real property or
temporary investments, and from dividends, other types of interest, and gain
from the sale or disposition of stock or securities, or from any combination of
the foregoing. The specific application of these tests to FelCor is discussed
below.

Rent received by FelCor will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if
several conditions are met. First, the amount of rent must not be based in whole
or in part on the income or profits of any person. However, an amount received
or accrued generally will not be excluded from the term "rents from real
property" solely by reason of being based on a fixed percentage or percentages
of receipts or sales. Second, the Code provides that rents received from a
tenant will not qualify as "rents from real property" in satisfying the gross
income tests if FelCor, or an owner of 10% or more of FelCor, directly or
constructively owns 10% or more of such tenant (a "Related Party Tenant").
Third, if rent attributable to personal property, leased in connection with a
lease of real property, is greater than 15% of the total rent received under the
lease, then the portion of rent attributable to such personal property will not
qualify as "rents from real property." Finally, for rents received to qualify as
"rents from real property," FelCor generally must not operate or manage the
property or furnish or render services to the tenants of such property, other
than through an "independent contractor" who is adequately compensated and from
whom FelCor derives no revenue. The "independent contractor" requirement,
however, does not apply to the extent the services provided by FelCor are
"usually or customarily rendered" in connection with the rental of space for
occupancy only and are not otherwise considered "rendered to the occupant." In
addition, FelCor may furnish or render a de minimis amount of "noncustomary
services" to the tenants of a Hotel other than through an independent contractor
as long as the amount that FelCor receives that is attributable to such services
does not exceed 1% of its total receipts from the Hotel. For that purpose, the
amount attributable to FelCor's noncustomary services will be at least equal to
150% of FelCor's cost of providing the services.

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Pursuant to the Percentage Leases (including the leases that FelCor will
enter into with subsidiaries of BHR (collectively, the "BHR Lessee")) with
respect to the Bristol Hotels, the Lessee and the BHR Lessee (together, the
"Lessees") lease or will lease from the FelCor Operating Partnership or the
Subsidiary Partnerships (together, the "Hotel Partnerships") the land,
buildings, improvements, furnishings and equipment comprising the Hotels, for
terms of five to 10 years, with options to renew for total terms, including the
initial term, of not more than 15 years. The Percentage Leases provide that the
Lessees are obligated to pay to the Hotel Partnerships (i) the greater of Base
Rent or Percentage Rent (collectively, the "Rent") and (ii) "Additional Charges"
or other expenses, as defined in the Percentage Leases. Percentage Rent is
calculated by multiplying fixed percentages by gross room/suite revenues, and
food and beverage revenues and rent for each of the Hotels. Both Base Rent and
the thresholds in the Percentage Rent formulas are adjusted for inflation. Base
Rent and Percentage Rent accrues and is due monthly.

In order for Base Rent, Percentage Rent, and the Additional Charges to
constitute "rents from real property," the Percentage Leases must be respected
as true leases for federal income tax purposes and not treated as service
contracts, joint ventures, or some other type of arrangement. The determination
of whether the Percentage Leases are true leases depends on an analysis of all
the surrounding facts and circumstances. In making such a determination, courts
have considered a variety of factors, including the following: (i) the intent of
the parties, (ii) the form of the agreement, (iii) the degree of control over
the property that is retained by the property owner (e.g., whether the lessee
has substantial control over the operation of the property or whether the lessee
is required simply to use its best efforts to perform its obligations under the
agreement), and (iv) the extent to which the property owner retains the risk of
loss with respect to the property (e.g., whether the lessee bears the risk of
increases in operating expenses or the risk of damage to the property) or the
potential for economic gain (e.g., appreciation) with respect to the property.

In addition, Code section 7701(e) provides that a contract that purports to
be a service contract (or a partnership agreement) will be treated instead as a
lease of property if the contract is properly treated as such, taking into
account all relevant factors, including whether or not: (i) the service
recipient is in physical possession of the property, (ii) the service recipient
controls the property, (iii) the service recipient has a significant economic or
possessory interest in the property (e.g., the property's use is likely to be
dedicated to the service recipient for a substantial portion of the useful life
of the property, the recipient shares the risk that the property will decline in
value, the recipient shares in any appreciation in the value of the property,
the recipient shares in savings in the property's operating costs or the
recipient bears the risk of damage to or loss of the property), (iv) the service
provider does not bear any risk of substantially diminished receipts or
substantially increased expenditures if there is nonperformance under the
contract, (v) the service provider does not use the property concurrently to
provide significant services to entities unrelated to the service recipient, and
(vi) the total contract price does not substantially exceed the rental value of
the property for the contract period. Since the determination whether a service
contract should be treated as a lease is inherently factual, the presence or
absence of any single factor may not be dispositive in every case.

FelCor believes that the Percentage Leases will be treated as true leases
for federal income tax purposes. Such belief is based, in part, on the following
facts: (i) the Hotel Partnerships and the Lessees intend for their relationship
to be that of a lessor and lessee and such relationship is documented by lease
agreements, (ii) the Lessees have the right to the exclusive possession, use and
quiet enjoyment of the Hotels during the term of the Percentage Leases, (iii)
the Lessees bear the cost of, and are responsible for, day-to-day maintenance
and repair of the Hotels, other than the cost of maintaining underground
utilities, structural elements and capital improvements, and generally dictate
how the Hotels are operated, maintained, and improved, (iv) the Lessees bear all
of the costs and expenses of operating the Hotels (including the cost of any
inventory used in their operation) during the term of the Percentage Leases
(other than real estate and personal property taxes and property and casualty
insurance premiums), (v) the Lessees benefit from any savings in the costs of
operating the Hotels during the term of the Percentage Leases, (vi) the Lessees
generally have indemnified the Hotel Partnerships against all liabilities
imposed on the Hotel Partnerships during the term of the Percentage Leases by
reason of (A) injury to persons or damage to property occurring at the Hotels,
(B) the Lessees' use, management, maintenance or repair of the Hotels, (C) any
environmental liability caused by acts or grossly negligent failures to act of
the Lessees, (D) taxes and assessments in respect of the Hotels that are the

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obligations of the Lessees, or (E) any breach of the Percentage Leases or of any
sublease of a Hotel by the Lessees, (vii) the Lessees is obligated to pay
substantial fixed rent for the period of use of the Hotels, (viii) the Lessees
stand to incur substantial losses (or reap substantial gains) depending on how
successfully they operate the Hotels, (ix) the Hotel Partnerships cannot use the
Hotels concurrently to provide significant services to entities unrelated to the
Lessees, and (x) the total contract price under the Percentage Leases does not
substantially exceed the rental value of the Hotels for the term of the
Percentage Leases.

Investors should be aware that there are no controlling Treasury
Regulations, published rulings or judicial decisions involving leases with terms
substantially the same as the Percentage Leases that discuss whether such leases
constitute true leases for federal income tax purposes. If the Percentage Leases
are characterized as service contracts or partnership agreements, rather than as
true leases, part or all of the payments that the Hotel Partnerships receive
from the Lessees may not be considered rent or may not otherwise satisfy the
various requirements for qualification as "rents from real property." In that
case, FelCor likely would not be able to satisfy either the 75% or 95% gross
income test and, as a result, would lose its REIT status.

In order for the Rent to constitute "rents from real property," several
other requirements must be satisfied. One requirement is that the Percentage
Rent must not be based in whole or in part on the income or profits of any
person. The Percentage Rent, however, will qualify as "rents from real property"
if it is based on percentages of receipts or sales and the percentages (i) are
fixed at the time the Percentage Leases are entered into, (ii) are not
renegotiated during the term of the Percentage Leases in a manner that has the
effect of basing Percentage Rent on income or profits, and (iii) conform with
normal business practice. More generally, the Percentage Rent will not qualify
as "rents from real property" if, considering the Percentage Leases and all the
surrounding circumstances, the arrangement does not conform with normal business
practice, but is in reality used as a means of basing the Percentage Rent on
income or profits. Since the Percentage Rent is based on fixed percentages of
the gross revenues from the Hotels that are established in the Percentage
Leases, and FelCor has represented that the percentages (i) will not be
renegotiated during the terms of the Percentage Leases in a manner that has the
effect of basing the Percentage Rent on income or profits and (ii) conform with
normal business practice, the Percentage Rent should not be considered based in
whole or in part on the income or profits of any person. Furthermore, FelCor has
represented that, with respect to other hotel properties that it acquires in the
future, it will not charge rent for any property that is based in whole or in
part on the income or profits of any person (except by reason of being based on
a fixed percentage of gross revenues, as described above).

Another requirement for qualification of the Rent as "rents from real
property" is that FelCor must not own, actually or constructively, 10% or more
of any Lessee. The constructive ownership rules generally provide that, if 10%
or more in value of the stock of FelCor is owned, directly or indirectly, by or
for any person, FelCor is considered as owning the stock owned, directly or
indirectly, by or for such person. FelCor does not own any stock of the Lessees.
The Holiday Entities are stockholders of the BHR Lessee and own in the aggregate
more than 10% of FelCor Common Shares. However, because the Holiday Entities
own, directly and indirectly, less than 10% of the stock of the BHR Lessee, the
BHR Lessee will not be a Related Party Tenant after the Merger as a result of
attribution of the Holiday Entities' stock in the BHR Lessee to FelCor. In
addition, the Charter prohibits transfers of FelCor Common Shares or FelCor
Preferred Shares that would cause FelCor to own, actually or constructively, 10%
or more of the ownership interests in a tenant of FelCor's real property, within
the meaning of section 856(d)(2)(B) of the Code. Thus, FelCor should never own,
actually or constructively, 10% of more of any Lessee. Furthermore, FelCor has
represented that, with respect to other hotel properties that it acquires in the
future, it will not rent any property to a Related Party Tenant. However,
because the Code's constructive ownership rules for purposes of the Related
Party Tenant rules are broad and it is not possible to monitor continually
direct and indirect transfers of FelCor Common Shares, no absolute assurance can
be given that such transfers or other events of which FelCor has no knowledge
will not cause FelCor to own constructively 10% or more of a Lessee at some
future date.

A third requirement for qualification of the Rent as "rents from real
property" is that the Rent attributable to the personal property leased in
connection with the Percentage Lease with respect to a Hotel must not be greater
than 15% of the total Rent received under the Percentage Lease. The Rent
attributable to the personal property contained in a Hotel is the amount that
bears the same ratio to total Rent for the taxable

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year as the average of the adjusted bases of the personal property at the
beginning and at the end of the taxable year bears to the average of the
aggregate adjusted basis of both the real and personal property contained in the
Hotel at the beginning and at the end of such taxable year (the "Adjusted Basis
Ratio"). With respect to each Hotel (or interest therein) that the FelCor
Operating Partnership has acquired or will acquire in exchange for Units and the
Bristol Hotels, the initial adjusted basis of both the real and personal
property contained in such Hotel generally was or will be the same as the
adjusted bases of such property in the hands of the previous owner. With respect
to each Hotel (or interest therein) that the FelCor Operating Partnership has
acquired or will acquire for cash, the initial adjusted basis of the real and
personal property contained in such Hotel generally equaled or will equal the
purchase price paid for the Hotel by the FelCor Operating Partnership. Such
basis generally will be allocated among real and personal property based on
relative fair market values. The Percentage Leases provide that the Adjusted
Basis Ratio for each Hotel may not exceed 15%. With respect to each Hotel,
FelCor believes either that the Adjusted Basis Ratio for the Hotel is less than
15% or that any income attributable to excess personal property will not
jeopardize FelCor's ability to qualify as a REIT. There can be no assurance,
however, that the IRS would not challenge FelCor's calculation of an Adjusted
Basis Ratio, or that a court would not uphold such assertion. If such a
challenge were successfully asserted, FelCor could fail to satisfy the 95% or
75% gross income test and thus lose its REIT status.

A fourth requirement for qualification of the Rent as "rents from real
property" is that, other than within the 1% de minimis exception described
above, FelCor cannot furnish or render noncustomary services to the tenants of
the Hotels, or manage or operate the Hotels, other than through an independent
contractor who is adequately compensated and from whom FelCor itself does not
derive or receive any income. Provided that the Percentage Leases are respected
as true leases, FelCor should satisfy that requirement, because no Hotel
Partnership performs or will perform any services other than customary ones for
the Lessees. Furthermore, FelCor has represented that, with respect to other
hotel properties that it acquires in the future, it will not perform
noncustomary services with respect to the tenant of the property.

If a portion of the Rent from a Hotel does not qualify as "rents from real
property" because the Rent attributable to personal property exceeds 15% of the
total Rent for a taxable year, the portion of the Rent that is attributable to
personal property will not be qualifying income for purposes of either the 75%
or 95% gross income test. Thus, if such Rent attributable to personal property,
plus any other income that is nonqualifying income for purposes of the 95% gross
income test, during a taxable year exceeds 5% of FelCor's gross income during
the year, FelCor would lose its REIT status. If, however, the Rent from a
particular Hotel does not qualify as "rents from real property" because either
(i) the Percentage Rent is considered based on the income or profits of the
related Lessee, (ii) FelCor owns, actually or constructively, 10% or more of the
Lessee, or (iii) FelCor furnishes noncustomary services to the tenants of the
Hotel, or manages or operates the Hotels, other than through a qualifying
independent contractor, none of the Rent from that Hotel would qualify as "rents
from real property." In that case, FelCor likely would lose its REIT status
because it would be unable to satisfy either the 75% or 95% gross income test.

In addition to the Rent, the Lessees are required to pay to the Hotel
Partnerships the Additional Charges. To the extent that the Additional Charges
represent either (i) reimbursements of amounts that the Hotel Partnerships are
obligated to pay to third parties or (ii) penalties for nonpayment or late
payment of such amounts, the Additional Charges should qualify as "rents from
real property." However, to the extent that the Additional Charges represent
interest that is accrued on the late payment of the Rent or Additional Charges,
such Additional Charges will not qualify as "rents from real property," but
instead should be treated as interest that qualifies for the 95% gross income
test.

The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of receipts
or sales. Furthermore, to the extent that interest from a loan that is based on
the residual cash proceeds from the sale of the property securing the loan
constitutes a "shared appreciation provision" (as defined in the Code), income
attributable to such participation feature will be treated as gain from the sale
of the secured property.

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The net income derived from any prohibited transaction is subject to a 100%
tax. The term "prohibited transaction" generally includes a sale or other
disposition of property (other than foreclosure property) that is held primarily
for sale to customers in the ordinary course of a trade or business. All
inventory required in the operation of the Hotels will be owned by the tenants
under the terms of the Percentage Leases. Accordingly, FelCor believes no asset
owned by FelCor or the Hotel Partnerships is held for sale to customers and that
a sale of any such asset will not be in the ordinary course of business of
FelCor or a Hotel Partnership. Whether property is held "primarily for sale to
customers in the ordinary course of a trade or business" depends, however, on
the facts and circumstances in effect from time to time, including those related
to a particular property. Nevertheless, FelCor will attempt to comply with the
terms of safe-harbor provisions in the Code prescribing when asset sales will
not be characterized as prohibited transactions. Complete assurance cannot be
given, however, that FelCor can comply with the safe-harbor provisions of the
Code or avoid owning property that may be characterized as property held
"primarily for sale to customers in the ordinary course of a trade or business."

FelCor will be subject to tax at the maximum corporate rate on any income
from foreclosure property (other than income that would be qualifying income for
purposes of the 75% gross income test), less expenses directly connected with
the production of such income. However, gross income from such foreclosure
property will qualify under the 75% and 95% gross income tests. "Foreclosure
property" is defined as any real property (including interests in real property)
and any personal property incident to such real property (i) that is acquired by
a REIT as the result of such REIT having bid in such property at foreclosure, or
having otherwise reduced such property to ownership or possession by agreement
or process of law, after there was a default (or default was imminent) on a
lease of such property or on an indebtedness that such property secured and (ii)
for which such REIT makes a proper election to treat such property as
foreclosure property. However, a REIT will not be considered to have foreclosed
on a property where such REIT takes control of the property as a
mortgagee-in-possession and cannot receive any profit or sustain any loss except
as a creditor of the mortgagor. Under the Code, property generally ceases to be
foreclosure property with respect to a REIT at the end of the third taxable year
following the taxable year in which the REIT acquired such property (or longer
if an extension is granted by the Secretary of the Treasury). The foregoing
grace period is terminated and foreclosure property ceases to be foreclosure
property on the first day (i) on which a lease is entered into with respect to
such property that, by its terms, will give rise to income that does not qualify
for purposes of the 75% gross income test or any amount is received or accrued,
directly or indirectly, pursuant to a lease entered into on or after such day
that will give rise to income that does not qualify for purposes of the 75%
gross income test, (ii) on which any construction takes place on such property
(other than completion of a building, or any other improvement, where more than
10% of the construction of such building or other improvement was completed
before default became imminent), or (iii) which is more than 90 days after the
day on which such property was acquired by the REIT and the property is used in
a trade or business which is conducted by the REIT (other than through an
independent contractor from whom the REIT itself does not derive or receive any
income). As a result of the rules with respect to foreclosure property, if a
Lessee defaults on its obligations under a Percentage Lease for a Hotel, FelCor
terminates the Lessee's leasehold interest and FelCor is unable to find a
replacement lessee for such Hotel within 90 days of such foreclosure, gross
income from hotel operations conducted by FelCor from such Hotel would cease to
qualify for the 75% and 95% gross income tests. In such event, FelCor likely
would be unable to satisfy the 75% and 95% gross income tests and, thus, would
fail to qualify as a REIT.

It is possible that, from time to time, FelCor or a Hotel Partnership will
enter into hedging transactions with respect to one or more of its assets or
liabilities. Any such hedging transactions could take a variety of forms,
including interest rate swap contracts, interest rate cap or floor contracts,
futures or forward contracts and options. To the extent that FelCor or a Hotel
Partnership enters into an interest rate swap or cap contract, option, futures
contract, forward rate agreement or similar financial instrument to reduce
interest rate risk with respect to indebtedness incurred or to be incurred to
acquire or carry real estate assets, any periodic income or gain from the
disposition of such contract should be qualifying income for purposes of the 95%
gross income test, but not the 75% gross income test. To the extent that FelCor
or a Hotel Partnership hedges with other types of financial instruments or in
other situations, it may not be entirely clear how the income from those

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transactions will be treated for purposes of the various income tests that apply
to REITs under the Code. FelCor intends to structure any hedging transactions in
a manner that does not jeopardize its status as a REIT.

If FelCor fails to satisfy one or both of the 75% or 95% gross income tests
for any taxable year, it nevertheless may qualify as a REIT for such year if it
is entitled to relief under certain provisions of the Code. Those relief
provisions generally will be available if FelCor's failure to meet such tests is
due to reasonable cause and not due to willful neglect, FelCor attaches a
schedule of the sources of its income to its return, and any incorrect
information on the schedule was not due to fraud with intent to evade tax. It is
not possible, however, to state whether in all circumstances FelCor would be
entitled to the benefit of those relief provisions. As discussed above in
"Qualification and Operation of FelCor as a REIT; Ownership and Disposition of
FelCor Common Shares -- General," even if those relief provisions apply, a 100%
tax would be imposed with respect to the gross income attributable to the
greater of the amount by which FelCor fails the 75% or 95% gross income test,
multiplied by a fraction intended to reflect FelCor's profitability.

Asset Tests

FelCor, at the close of each quarter of each taxable year, also must
satisfy two tests relating to the nature of its assets. First, at least 75% of
the value of FelCor's total assets must be represented by cash or cash items
(including certain receivables), government securities, "real estate assets" or,
in cases where FelCor raises new capital through stock or long-term (at least
five-year) debt offerings, temporary investments in stock or debt instruments
during the one-year period following FelCor's receipt of such capital. The term
"real estate assets" includes interests in real property, interests in mortgages
on real property, to the extent the principal balance of the mortgage does not
exceed the value of the associated real property, and shares of other REITs. For
purposes of the 75% asset test, the term "interest in real property" includes an
interest in land and improvements thereon, such as buildings or other inherently
permanent structures (including items that are structural components of such
buildings or structures), a leasehold in real property and an option to acquire
real property (or a leasehold in real property). Second, of the investments not
included in the 75% asset class, the value of any one issuer's securities owned
by FelCor may not exceed 5% of the value of FelCor's total assets and FelCor may
not own more than 10% of any one issuer's outstanding voting securities (except
for its ownership interest in the Hotel Partnerships and any qualified REIT
subsidiary). See "-- Proposed Tax Legislation."

For purposes of the asset tests, FelCor is deemed to own its proportionate
share of the assets of the Hotel Partnerships, rather than its partnership
interests in the Hotel Partnerships. FelCor believes that immediately after the
Merger, at least 75% of the value of its total assets will be represented by
real estate assets, cash and cash items (including receivables) and government
securities. The FelCor Operating Partnership owns 100% of the nonvoting stock of
Kingston Plantation Development Corp. ("Kingston"), which represents 97% of the
value of the outstanding stock of such entity. FelCor is deemed to own its
proportionate share of the Kingston stock owned by the FelCor Operating
Partnership. FelCor does not own, directly or indirectly, any of the voting
stock of Kingston, and FelCor believes that the value of its proportionate share
of the Kingston stock owned by the FelCor Operating Partnership does not exceed
5% of the value of FelCor's total assets. See "-- Proposed Tax Legislation." In
addition, FelCor has represented that it will not acquire or dispose, or cause a
Hotel Partnership to acquire or dispose, of assets in the future in a way that
would cause it to violate either asset test.

If FelCor should fail to satisfy the asset tests at the end of a calendar
quarter, such a failure would not cause it to lose its REIT status if (i) it
satisfied all of the asset tests at the close of the preceding calendar quarter
and (ii) the discrepancy between the value of FelCor's assets and the asset test
requirements arose from changes in the market values of its assets and was not
wholly or partly caused by an acquisition of one or more nonqualifying assets.
If the condition described in clause (ii) of the preceding sentence were not
satisfied, FelCor still could avoid disqualification by eliminating any
discrepancy within 30 days after the close of the calendar quarter in which it
arose.

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Distribution Requirements

FelCor, in order to qualify for the tax benefits accorded to REITs under
the Code, is required to distribute dividends (other than capital gain dividends
or retained capital gains) to its stockholders in an amount at least equal to
(i) the sum of (A) 95% of its "REIT taxable income" (computed without regard to
the dividends paid deduction and its net capital gain) and (B) 95% of the net
income (after tax), if any, from foreclosure property, minus (ii) the sum of
certain items of noncash income. Such distributions must be paid in the taxable
year to which they relate, or in the following taxable year if declared before
FelCor timely files its tax return for such year and if paid on or before the
first regular dividend payment date after such declaration. To the extent that
FelCor does not distribute all of its net capital gain or distributes at least
95%, but less than 100%, of its "REIT taxable income," as adjusted, it will be
subject to tax thereon at regular ordinary and capital gains corporate tax
rates. Furthermore, if FelCor should fail to distribute during each calendar
year at least the sum of (i) 85% of its REIT ordinary income for such year, (ii)
95% of its REIT capital gain income for such year, and (iii) any undistributed
taxable income from prior periods, FelCor would be subject to a 4% nondeductible
excise tax on the excess of such required distribution over the amounts actually
distributed. FelCor may elect to retain and pay income tax on the net long-term
capital gain it receives in a taxable year. Any such retained amounts would be
treated as having been distributed by FelCor for purposes of the 4% excise tax.
FelCor has made, and has represented that it will continue to make, timely
distributions sufficient to satisfy all annual distribution requirements.

It is possible that, from time to time, FelCor may experience timing
differences between (i) the actual receipt of income and actual payment of
deductible expenses and (ii) the inclusion of that income and deduction of such
expenses in arriving at its REIT taxable income. For example, it is possible
that, from time to time, FelCor may be allocated a share of net capital gain
attributable to the sale of depreciated property that exceeds its allocable
share of cash attributable to that sale. In addition, FelCor may incur
expenditures (such as repayment of loan principal) that do not give rise to a
deduction. Therefore, FelCor may have less cash available for distribution than
is necessary to meet its annual 95% distribution requirement or to avoid
corporate income tax or the excise tax imposed on certain undistributed income.
In such a situation, FelCor may find it necessary to arrange for short-term (or
possibly long-term) borrowings or to raise funds through the issuance of
additional shares of common or preferred stock.

Under certain circumstances, FelCor may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency dividends" to
its stockholders in a later year, which may be included in FelCor's deduction
for dividends paid for the earlier year. Although FelCor may be able to avoid
being taxed on amounts distributed as deficiency dividends, it will be required
to pay to the Service interest based upon the amount of any deduction taken for
deficiency dividends.

To maintain its qualification as a REIT following the Merger, FelCor will
be required to distribute the accumulated E&P of Bristol as of the Effective
Time by the end of 1998. If FelCor fails to distribute such amount by December
31, 1998 (or January 31, 1999 if certain declaration and record date
requirements are met), it will fail to qualify as a REIT.

At least 21 days before the Closing Date, Bristol will deliver to FelCor an
estimate of Bristol's accumulated E&P as of the Closing Date, together with a
confirmation of that estimate from Arthur Andersen LLP (the "E&P Statement").
Within three months after the Effective Time, Arthur Andersen LLP will prepare a
final computation of Bristol's accumulated E&P as of the Effective Time (the
"Final Statement"). In giving its opinion regarding FelCor's qualification as a
REIT, Hunton & Williams will rely upon the E&P Statement. In addition, in
determining the amount it must distribute during 1998, FelCor will rely on both
the E&P Statement and the Final Statement.

FelCor's distribution(s) will be treated as made first from Bristol's
earliest accumulated E&P. Accordingly, even if Bristol's actual accumulated E&P
as of the Closing Date exceeds the calculation of such E&P in the Final
Statement, it is possible that FelCor will have distributed all of Bristol's
accumulated E&P in 1998 and, thus, will not fail to qualify as a REIT. In that
case, FelCor likely would incur corporate income and/or excise tax for failing
to distribute sufficient amounts of its taxable income in 1998. However, if
Bristol's actual accumulated E&P as of the Closing Date greatly exceeds the
calculation of such E&P in the Final Statement,
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FelCor likely would not distribute all of Bristol's accumulated E&P by the end
of 1998 and, as a result, would fail to qualify as a REIT.

Recordkeeping Requirements

Pursuant to applicable Treasury Regulations, FelCor must maintain certain
records and request on an annual basis certain information from its stockholders
designed to disclose the actual ownership of its outstanding capital stock.
FelCor has complied and intends to continue to comply with such requirements.

Failure to Qualify

If FelCor fails to qualify for taxation as a REIT in any taxable year, and
the relief provisions do not apply, FelCor will be subject to tax (including any
applicable alternative minimum tax) on its taxable income at regular corporate
rates. Distributions to the stockholders in any year in which FelCor fails to
qualify will not be deductible by FelCor nor will they be required to be made.
In such event, to the extent of current and accumulated E&P, all distributions
to stockholders will be taxable as ordinary income and, subject to certain
limitations of the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific statutory
provisions, FelCor also will be disqualified from taxation as a REIT for the
four taxable years following the year during which FelCor ceased to qualify as a
REIT. It is not possible to state whether in all circumstances FelCor would be
entitled to such statutory relief.

Taxation of Taxable U.S. Stockholders

As long as FelCor qualifies as a REIT, distributions made to FelCor's
taxable U.S. stockholders out of current or accumulated E&P (and not designated
as capital gain dividends or retained capital gains) will be taken into account
by such U.S. stockholders as ordinary income and will not be eligible for the
dividends received deduction generally available to corporations. For purposes
of determining whether distributions on FelCor Common Shares are out of current
or accumulated E&P, the E&P of FelCor will be allocated first to outstanding
FelCor Preferred Shares and then allocated to FelCor Common Shares. As used
herein, the term "U.S. stockholder" means a holder of FelCor Common Shares that
for U.S. federal income tax purposes is (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political subdivision thereof,
(iii) an estate whose income from sources without the United States is
includible in gross income for U.S. federal income tax purposes regardless of
its connection with the conduct of a trade or business within the United States,
or (iv) any trust with respect to which (a) a U.S. court is able to exercise
primary supervision over the administration of such trust and (b) one or more
U.S. persons have the authority to control all substantial decisions of the
trust.

Distributions that are designated as capital gain dividends will be taxed
as long-term capital gains (to the extent they do not exceed FelCor's actual net
capital gain for the taxable year) without regard to the period for which the
stockholder has held his FelCor Common Shares. However, corporate stockholders
may be required to treat up to 20% of certain capital gain dividends as ordinary
income. FelCor may elect to retain and pay income tax on the net long-term
capital gain it receives in a taxable year. In that case, FelCor's stockholders
would include in income their proportionate share of FelCor's undistributed
long-term capital gain. In addition, the stockholders would be deemed to have
paid their proportionate share of the tax paid by FelCor, which would be
credited or refunded to the stockholders. Each stockholder's basis in his FelCor
Common Shares would be increased by the amount of the undistributed long-term
capital gain, included in the stockholder's income, less the stockholder's share
of the tax paid by FelCor.

Distributions in excess of FelCor's current and accumulated E&P will not be
taxable to a stockholder to the extent that they do not exceed the adjusted
basis of the stockholder's FelCor Common Shares, but rather will reduce the
adjusted basis of such stock. To the extent that such distributions in excess of
current and accumulated E&P exceed the adjusted basis of a stockholder's FelCor
Common Shares, such distributions will be included in income as long-term
capital gain (or short-term capital gain if the FelCor Common Shares has been
held for one year or less), assuming the FelCor Common Shares are a capital
asset in the hands of

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the stockholder. In addition, any distribution declared by FelCor in October,
November or December of any year and payable to a stockholder of record on a
specified date in any such month will be treated as both paid by FelCor and
received by the stockholder on December 31 of such year, provided that the
distribution is actually paid by FelCor during January of the following calendar
year.

Stockholders may not include in their individual income tax returns any net
operating losses or capital losses of FelCor. Instead, such losses would be
carried over by FelCor for potential offset against its future income (subject
to certain limitations). Taxable distributions from FelCor and gain from the
disposition of FelCor Common Shares will not be treated as passive activity
income and, therefore, stockholders generally will not be able to apply any
"passive activity losses" (such as losses from certain types of limited
partnerships in which the stockholder is a limited partner) against such income.
In addition, taxable distributions from FelCor generally will be treated as
investment income for purposes of the investment interest limitations. Capital
gains from the disposition of FelCor Common Shares (or distributions treated as
such) will be treated as investment income only if the stockholder so elects, in
which case such capital gains will be taxed at ordinary income rates. FelCor
will notify stockholders after the close of FelCor's taxable year as to the
portions of the distributions attributable to that year that constitute ordinary
income, return of capital and capital gain.

Taxation of Stockholders on the Disposition of FelCor Common Shares

In general, any gain or loss realized upon a taxable disposition of FelCor
Common Shares by a stockholder who is not a dealer in securities will be treated
as long-term capital gain or loss if the FelCor Common Shares have been held for
more than one year and otherwise as short-term capital gain or loss. However,
any loss upon a sale or exchange of FelCor Common Shares by a stockholder who
has held such stock for six months or less (after applying certain holding
period rules) will be treated as a long-term capital loss to the extent of
distributions from FelCor required to be treated by such stockholder as
long-term capital gain. All or a portion of any loss realized upon a taxable
disposition of the FelCor Common Shares may be disallowed if other FelCor Common
Shares are purchased within 30 days before or after the disposition.

Capital Gains and Losses

A capital asset generally must be held for more than one year in order for
gain or loss derived from its sale or exchange to be treated as long-term
capital gain or loss. The highest marginal individual income tax rate is 39.6%.
The maximum tax rate on net capital gains applicable to noncorporate taxpayers
is 28% for sales and exchange of assets held for more than one year but not more
than 18 months, and 20% for sales and exchanges of assets held for more than 18
months. The maximum tax rate on net capital gain from the sale or exchange of
"section 1250 property" (i.e., depreciable real property) held for more than 18
months is 25% to the extent that such gain would have been treated as ordinary
income if the property were "section 1245 property." With respect to
distributions designated by FelCor as capital gain dividends and any retained
capital gains that FelCor is deemed to distribute, FelCor may designate (subject
to certain limits) whether such a distribution is taxable to its noncorporate
stockholders at a 20%, 25% or 28% rate. Thus, the tax rate differential between
capital gain and ordinary income for individuals may be significant. In
addition, the characterization of income as capital or ordinary may affect the
deductibility of capital losses. Capital losses not offset by capital gains may
be deducted against an individual's ordinary income only up to a maximum annual
amount of $3,000. Unused capital losses may be carried forward. All net capital
gain of a corporate taxpayer is subject to tax at ordinary corporate rates. A
corporate taxpayer can deduct capital losses only to the extent of capital
gains, with unused losses being carried back three years and forward five years.

Information Reporting Requirements and Backup Withholding

FelCor reports to its U.S. stockholders and the IRS the amount of
distributions paid during each calendar year, and the amount of tax withheld, if
any. Under the backup withholding rules, a stockholder may be subject to backup
withholding at the rate of 31% with respect to distributions paid unless such
holder (i) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, or (ii) provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding,

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and otherwise complies with the applicable requirements of the backup
withholding rules. A stockholder who does not provide FelCor with his correct
taxpayer identification number also may be subject to penalties. Any amount paid
as backup withholding will be creditable against the stockholder's income tax
liability. In addition, FelCor may be required to withhold a portion of capital
gain distributions to any stockholders who fail to certify their nonforeign
status to FelCor. The IRS has issued final regulations regarding the backup
withholding rules as applied to non-U.S. stockholders. Those regulations alter
the current system of backup withholding compliance and are effective for
distributions made after December 31, 1999. See "-- Taxation of Non-U.S.
Stockholders."

Taxation of Tax-Exempt Stockholders

Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts ("Exempt Organizations"),
generally are exempt from federal income taxation. However, they are subject to
taxation on their unrelated business taxable income ("UBTI"). While many
investments in real estate generate UBTI, amounts distributed by FelCor to
Exempt Organizations generally should not constitute UBTI, provided that the
FelCor Common Shares are not otherwise used in an unrelated trade or business of
the Exempt Organization. However, if an Exempt Organization finances its
acquisition of FelCor Common Shares with debt, a portion of its income from
FelCor will constitute UBTI pursuant to the "debt-financed property" rules.
Furthermore, social clubs, voluntary employee benefit associations, supplemental
unemployment benefit trusts, and qualified group legal services plans that are
exempt from taxation under paragraphs (7), (9), (17) and (20), respectively, of
Code section 501(c) are subject to different UBTI rules, which generally will
require them to characterize distributions from FelCor as UBTI. In addition, in
certain circumstances, a pension trust that owns more than 10% of FelCor's stock
is required to treat a percentage of the dividends from FelCor as UBTI (the
"UBTI Percentage"). The UBTI Percentage is the gross income derived by FelCor
from an unrelated trade or business (determined as if FelCor were a pension
trust) divided by the gross income of FelCor for the year in which the dividends
are paid. The UBTI rule applies to a pension trust holding more than 10% of
FelCor's stock only if (i) the UBTI Percentage is at least 5%, (ii) FelCor
qualifies as a REIT by reason of the modification of the 5/50 Rule that allows
the beneficiaries of the pension trust to be treated as holding stock of FelCor
in proportion to their actuarial interests in the pension trust, and (iii)
either (A) one pension trust owns more than 25% of the value of FelCor's capital
stock or (B) a group of pension trusts individually holding more than 10% of the
value of FelCor's capital stock collectively owns more than 50% of the value of
FelCor's capital stock.

Taxation of Non-U.S. Stockholders

The rules governing U.S. federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
stockholders (collectively, "Non-U.S. Stockholders") are complex and no attempt
has been made herein to provide more than a summary of such rules. PROSPECTIVE
NON-U.S. STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS TO DETERMINE
THE IMPACT OF FEDERAL, STATE AND LOCAL INCOME TAX LAWS WITH REGARD TO OWNERSHIP
OF THE FELCOR COMMON SHARES, INCLUDING ANY REPORTING REQUIREMENTS.

Distributions to Non-U.S. Stockholders that are not attributable to gain
from sales or exchanges by FelCor of U.S. real property interests and are not
designated by FelCor as capital gains dividends or retained capital gains will
be treated as dividends of ordinary income to the extent that they are made out
of current or accumulated E&P of FelCor. For purposes of determining whether
distributions on the FelCor Common Shares are out of current or accumulated E&P,
the E&P of FelCor will be allocated first to FelCor's outstanding preferred
stock and then allocated to the FelCor Common Shares. Such distributions
ordinarily will be subject to a withholding tax equal to 30% of the gross amount
of the distribution unless an applicable tax treaty reduces or eliminates that
tax. However, if income from the investment in FelCor Common Shares is treated
as effectively connected with the Non-U.S. Stockholder's conduct of a U.S. trade
or business, the Non-U.S. Stockholder generally will be subject to federal
income tax at graduated rates, in the same manner as U.S. stockholders are taxed
with respect to such distributions (and also may be subject to the 30% branch
profits tax in the case of a Non-U.S. Stockholder that is a non-U.S.
corporation). FelCor expects to withhold

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U.S. income tax at the rate of 30% on the gross amount of any such distributions
made to a Non-U.S. Stockholder unless (i) a lower treaty rate applies and any
required form evidencing eligibility for that reduced rate is filed with FelCor
or (ii) the Non-U.S. Stockholder files an IRS Form 4224 with FelCor claiming
that the distribution is effectively connected income. The Service has issued
final regulations that modify the manner in which FelCor complies with the
withholding requirements. Those regulations are effective for distributions made
after December 31, 1999.

Distributions in excess of current and accumulated E&P of FelCor will not
be taxable to a stockholder to the extent that such distributions do not exceed
the adjusted basis of the stockholder's FelCor Common Shares, but rather will
reduce the adjusted basis of such stock. To the extent that such distributions
in excess of current and accumulated E&P exceed the adjusted basis of a Non-U.S.
Stockholder's FelCor Common Shares, such distributions will give rise to tax
liability if the Non-U.S. Stockholder otherwise would be subject to tax on any
gain from the sale or disposition of his FelCor Common Shares, as described
below. Because it generally cannot be determined at the time a distribution is
made whether or not such distribution will be in excess of current and
accumulated E&P, the entire amount of any distribution normally will be subject
to withholding at the same rate as a dividend. However, a Non-U.S. Stockholder
can file a claim for refund with the Service for the over withheld amount to the
extent it is determined subsequently that a distribution was, in fact, in excess
of the current and accumulated E&P of FelCor.

FelCor is required to withhold 10% of any distribution in excess of its
current and accumulated E&P. Consequently, although FelCor intends to withhold
at a rate of 30% on the entire amount of any distribution, to the extent that
FelCor does not do so, any portion of a distribution not subject to withholding
at a rate of 30% will be subject to withholding at a rate of 10%.

For any year in which FelCor qualifies as a REIT, distributions that are
attributable to gain from sales or exchanges by FelCor of U.S. real property
interests will be taxed to a Non-U.S. Stockholder under the provisions of the
Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). Under FIRPTA,
distributions attributable to gain from sales of U.S. real property interests
are taxed to a Non-U.S. Stockholder as if such gain were effectively connected
with a U.S. business. Non-U.S. Stockholders thus would be taxed at the normal
capital gain rates applicable to U.S. stockholders (subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of
nonresident alien individuals). Distributions subject to FIRPTA also may be
subject to a 30% branch profits tax in the hands of a non-U.S. corporate
stockholder not entitled to treaty relief or exemption. FelCor is required to
withhold 35% of any distribution that is designated by FelCor as a capital gains
dividend. The amount withheld is creditable against the Non-U.S. Stockholder's
FIRPTA tax liability.

Gain recognized by a Non-U.S. Stockholder upon a sale of his FelCor Common
Shares generally will not be taxed under FIRPTA if FelCor is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by non-U.S. persons. However, because the FelCor Common Shares are
traded publicly, no complete assurance can be given that FelCor is or will
continue to be a "domestically controlled REIT." In addition, a Non-U.S.
Stockholder that owned, actually or constructively, 5% or less of the
outstanding FelCor Common Shares at all times during a specified testing period
will not be subject to tax under FIRPTA if the FelCor Common Shares are
"regularly traded" on an established securities market. Furthermore, gain not
subject to FIRPTA will be taxable to a Non-U.S. Stockholder if (i) investment in
the FelCor Common Shares is effectively connected with the Non-U.S.
Stockholder's U.S. trade or business, in which case the Non-U.S. Stockholder
will be subject to the same treatment as U.S. stockholders with respect to such
gain, or (ii) the Non-U.S. Stockholder is a nonresident alien individual who was
present in the United States for 183 days or more during the taxable year and
certain other conditions apply, in which case the nonresident alien individual
will be subject to a 30% tax on the individual's capital gains. If the gain on
the sale of the FelCor Common Shares were to be subject to taxation under
FIRPTA, the Non-U.S. Stockholder would be subject to the same treatment as U.S.
stockholders with respect to such gain (subject to applicable alternative
minimum tax, a special alternative minimum tax in the case of nonresident alien
individuals and the possible application of the 30% branch profits tax in the
case of non-U.S. corporations).

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Proposed Tax Legislation

On February 2, 1998, President Clinton released his budget proposal for
fiscal year 1999 (the "Proposal"). Two provisions contained in the Proposal
potentially could affect FelCor if enacted in final form as presently proposed.
First, the Proposal would prohibit a REIT from owning, directly or indirectly,
more than 10% of the voting power or value of all classes of a C corporation's
stock (other than the stock of a qualified REIT subsidiary). Currently, a REIT
may own no more than 10% of the voting stock of a C corporation, but its
ownership of the nonvoting stock of a C corporation is not limited (other than
by the rule that the value of a REIT's combined equity and debt interests in a C
corporation may not exceed 5% of the value of a REIT's total assets). That
provision is proposed to be effective with respect to stock in a C corporation
acquired by a REIT on or after the date of "first committee action" with respect
to the provision. A REIT that owns stock in a C corporation in excess of the new
ownership limit prior to "first committee action" would be "grandfathered," but
only to the extent that the C corporation does not engage in a new trade or
business or acquire substantial new assets on or after the effective date of the
legislation. Through the FelCor Operating Partnership, FelCor currently owns
more than 10% of the value of the Kingston stock. If enacted as presently
proposed, that provision would prevent Kingston from expanding its business and
would limit the use by FelCor of other taxable subsidiaries to conduct
businesses the income from which would be nonqualifying income if received
directly by FelCor.

Second, the Proposal would require recognition of any "built-in gain"
associated with the assets of a "large" C corporation (i.e., a C corporation
whose stock has a fair market value of more than $5 million) upon its conversion
to REIT status or merger into a REIT. That provision is proposed to be effective
for conversions to REIT status effective for taxable years beginning after
January 1, 1999 and mergers of C corporations into REITs that occur after
December 31, 1998. Because the Closing Date is expected to occur prior to
December 31, 1998, this provision should not require FelCor to recognize the
"built-in gain" associated with the Merger.

Neither of the two provisions described in this section is included in
Representative Archer's or Senator Roth's proposed tax legislation, introduced
on March 26, 1998, involving REITs. Neither of those provisions will become
effective unless legislation is duly passed by Congress and signed by the
President. However, legislation containing provisions similar to those described
in this section could be introduced in Congress at any time and, although it is
not believed to be likely, the effective date for any such legislation could be
March 26, 1998 (i.e., the date of "first committee action"). In addition, other
legislation, as well as administrative interpretations or court decisions, also
could change the tax laws with respect to FelCor's qualification as a REIT and
the federal income tax consequences of such qualification.

Tax Aspects of the Hotel Partnerships

The following discussion summarizes certain federal income tax
considerations applicable to FelCor's direct or indirect investment in the Hotel
Partnerships. The discussion does not cover state or local tax laws or any
federal tax laws other than income tax laws.

Classification as a Partnership

FelCor is entitled to include in its income its distributive share of each
Hotel Partnership's income and to deduct its distributive share of each Hotel
Partnership's losses only if each Hotel Partnership is classified for federal
income tax purposes as a partnership rather than as a corporation or an
association taxable as a corporation. An entity will be classified as a
partnership rather than as a corporation for federal income tax purposes if the
entity (i) is treated as a partnership under Treasury regulations, effective
January 1, 1997, relating to entity classification (the "Check-the-Box
Regulations") and (ii) is not a "publicly traded" partnership. Pursuant to the
Check-the-Box Regulations, an unincorporated entity with at least two members
may elect to be classified either as an association or as a partnership. If such
an entity fails to make an election, it generally will be treated as a
partnership for federal income tax purposes. The federal income tax
classification of an entity that was in existence prior to January 1, 1997, such
as the Hotel Partnerships, will be respected for all periods prior to January 1,
1997 if (i) the entity had a reasonable basis for its claimed

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classification, (ii) the entity and all members of the entity recognized the
federal tax consequences of any changes in the entity's classification within
the 60 months prior to January 1, 1997, and (iii) neither the entity nor any
member of the entity was notified in writing on or before May 8, 1996 that the
classification of the entity was under examination. The Hotel Partnerships
reasonably claimed partnership classification under the Treasury regulations in
effect prior to January 1, 1997, and the Hotel Partnerships intend to continue
to be treated as partnerships for federal income tax purposes. In addition,
FelCor has represented that no Hotel Partnership will elect to be treated as an
association taxable as a corporation under the Check-the-Box Regulations.

A publicly traded partnership is a partnership whose interests are traded
on an established securities market or are readily tradable on a secondary
market (or the substantial equivalent thereof). A publicly traded partnership
will not be taxed as a corporation, however, if 90% or more of its gross income
consists of "qualifying income" under section 7704(d) of the Code, which
generally includes any income that is qualifying income for purposes of the 95%
gross income test (the "90% Passive-Type Income Exception"). The U.S. Treasury
Department has issued regulations effective for taxable years beginning after
December 31, 1995 (the "PTP Regulations") that provide limited safe harbors from
the definition of a publicly traded partnership. Pursuant to one of those safe
harbors (the "Private Placement Exclusion"), interests in a partnership will not
be treated as readily tradable on a secondary market or the substantial
equivalent thereof if (i) all interests in the partnership were issued in a
transaction (or transactions) that was not required to be registered under the
Securities Act of 1933, as amended, and (ii) the partnership does not have more
than 100 partners at any time during the partnership's taxable year. In
determining the number of partners in a partnership, a person owning an interest
in a flow-through entity (i.e., a partnership, grantor trust, or S corporation)
that owns an interest in the partnership is treated as a partner in such
partnership only if (a) substantially all of the value of the person's interest
in the flow-through entity is attributable to the flow-through entity's interest
(direct or indirect) in the partnership and (b) a principal purpose of the use
of the flow-through entity is to permit the partnership to satisfy the
100-partner limitation. Each Hotel Partnership qualifies for the Private
Placement Exclusion. If any Hotel Partnership is considered a publicly traded
partnership under the PTP Regulations because it is deemed to have more than 100
partners, the Hotel Partnership should not be treated as a corporation because
it should be eligible for the 90% Passive-Type Income Exception.

FelCor has not requested, and does not intend to request, a ruling from the
IRS that the Hotel Partnerships will be classified as partnerships for federal
income tax purposes. Instead, at the Closing Date, Hunton & Williams will
deliver its opinion that the Hotel Partnerships will be treated for federal
income tax purposes as partnerships and not as corporations or associations
taxable as corporations or as publicly traded partnerships. Unlike a tax ruling,
an opinion of counsel is not binding upon the IRS, and no assurance can be given
that the IRS will not challenge the status of the Hotel Partnerships as
partnerships for federal income tax purposes. If such challenge were sustained
by a court, the Hotel Partnerships would be treated as corporations for federal
income tax purposes, as described below. The opinion of Hunton & Williams is
based on existing law, which to a great extent consists of administrative and
judicial interpretation. No assurance can be given that administrative or
judicial changes would not modify the conclusions expressed in the opinion.

If for any reason one of the Hotel Partnerships were taxable as a
corporation, rather than as a partnership, for federal income tax purposes,
FelCor would not be able to qualify as a REIT. See "-- Income Tests" and
"-- Asset Tests." In addition, any change in a Hotel Partnership's status for
tax purposes might be treated as a taxable event, in which case FelCor might
incur a tax liability without any related cash distribution. See
"-- Distribution Requirements." Further, items of income and deduction of such
Hotel Partnership would not pass through to its partners, and its partners would
be treated as stockholders for tax purposes. Consequently, such Hotel
Partnership would be required to pay income tax at corporate tax rates on its
net income and distributions to its partners would constitute dividends that
would not be deductible in computing such Hotel Partnership's taxable income.

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Income Taxation of Each Hotel Partnership and its Partners

Partners, Not the Hotel Partnerships, Subject to Tax. A partnership is not
a taxable entity for federal income tax purposes. Rather, each partner is
required to take into account its allocable share of each Hotel Partnership's
income, gains, losses, deductions and credits for any taxable year of such Hotel
Partnership ending within or with the taxable year of such partner, without
regard to whether the partner has received or will receive any distribution from
the Hotel Partnership.

Tax Allocations With Respect to Contributed Properties. Pursuant to section
704(c) of the Code, income, gain, loss and deduction attributable to appreciated
or depreciated property that is contributed to a partnership in exchange for an
interest in the partnership must be allocated for federal income tax purposes in
a manner such that the contributor is charged with, or benefits from, the
unrealized gain or unrealized loss associated with the property at the time of
the contribution. The amount of such unrealized gain or unrealized loss
generally is equal to the difference between the fair market value of the
contributed property at the time of contribution and the adjusted tax basis of
such property at the time of contribution. The Department of the Treasury has
issued regulations requiring partnerships to use a "reasonable method" for
allocating items affected by section 704(c) of the Code and outlining several
reasonable allocation methods.

Under the partnership agreements of the Hotel Partnerships, depreciation or
amortization deductions of the Hotel Partnerships generally are allocated among
the partners in accordance with their respective interests in the Hotel
Partnership, except to the extent that Code section 704(c) requires otherwise
with respect to the Hotels contributed to the Hotel Partnerships in exchange for
partnership interests (the "Contributed Hotels"). In addition, gain on the sale
of a Contributed Hotel will be specially allocated to the partners who
contributed the Hotel to the extent of any "built-in" gain with respect to such
Hotel for federal income tax purposes. The application of section 704(c) to the
Hotel Partnerships, however, is not entirely clear and may be affected by
Treasury Regulations promulgated in the future.

Basis in Partnership Interest. FelCor's adjusted tax basis in its
partnership interest in the FelCor Operating Partnership generally is equal to
(i) the amount of cash and the basis of any other property contributed to the
FelCor Operating Partnership by FelCor, (ii) increased by (a) its allocable
share of the FelCor Operating Partnership's income and (b) its allocable share
of indebtedness of the FelCor Operating Partnership, and (iii) reduced, but not
below zero, by (a) its allocable share of the FelCor Operating Partnership's
loss and (b) the amount of cash distributed to FelCor, and by constructive
distributions resulting from a reduction in FelCor's share of indebtedness of
the FelCor Operating Partnership.

If the allocation of FelCor's distributive share of the FelCor Operating
Partnership's loss would reduce the adjusted tax basis of FelCor's interest in
the FelCor Operating Partnership below zero, the recognition of such loss will
be deferred until such time as the recognition of such loss would not reduce
FelCor's adjusted tax basis below zero. To the extent that the FelCor Operating
Partnership's distributions, or any decrease in FelCor's share of the
indebtedness of the FelCor Operating Partnership (such decrease being considered
a constructive cash distribution to FelCor), would reduce FelCor's adjusted tax
basis below zero, such distributions (including such constructive distributions)
will constitute taxable income to FelCor. Such distributions and constructive
distributions normally will be characterized as capital gain, and, if FelCor's
interest in the FelCor Operating Partnership has been held for longer than the
long-term capital gain holding period (currently one year), the distributions
and constructive distributions will constitute long-term capital gain.

Depreciation Deductions Available to the FelCor Operating Partnership. To
the extent that the FelCor Operating Partnership acquired or will acquire, as
the case may be, the Hotels in exchange for cash, the FelCor Operating
Partnership's initial basis in such Hotels for federal income tax purposes
generally was or will be equal to the purchase price paid by the FelCor
Operating Partnership. The FelCor Operating Partnership depreciates such
depreciable hotel property for federal income tax purposes under the modified
accelerated cost recovery system of depreciation ("MACRS"). Under MACRS, the
FelCor Operating Partnership generally depreciates furnishings and equipment
over a seven-year recovery period using a 200% declining balance method and a
half-year convention. If, however, the FelCor Operating Partnership places more
than 40% of its furnishings and equipment in service during the last three
months of a taxable year, a

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mid-quarter depreciation convention must be used for the furnishings and
equipment placed in service during that year. Under MACRS, the FelCor Operating
Partnership generally depreciates buildings and improvements over a 39-year
recovery period using a straight line method and a mid-month convention. The
FelCor Operating Partnership's initial basis in Hotels acquired in exchange for
Units and the Bristol Hotels for federal income tax purposes should be the same
as the transferor's basis in such Hotels on the date of acquisition by the
FelCor Operating Partnership. Although the law is not entirely clear, the FelCor
Operating Partnership generally depreciates such depreciable hotel property for
federal income tax purposes over the same remaining useful lives and under the
same methods used by the transferors. The FelCor Operating Partnership's tax
depreciation deductions are allocated among the partners in accordance with
their respective interests in the FelCor Operating Partnership (except to the
extent that Code section 704(c) requires otherwise with respect to the
Contributed Hotels).

Sale of FelCor's or a Hotel Partnership's Property

Generally, any gain realized by FelCor or a Hotel Partnership on the sale
of property held by it for more than one year will be long-term capital gain,
except for any portion of such gain that is treated as depreciation or cost
recovery recapture. Any gain recognized on the disposition of the Contributed
Hotels will be allocated first to the partners who contributed those hotels
under section 704(c) of the Code to the extent of such partners' "built-in gain"
on those Hotels at the time of the disposition for federal income tax purposes.
The contributing partners' "built-in gain" on the Contributed Hotels sold will
equal the excess of the contributing partners' proportionate share of the book
value of those Hotels as reflected in the Hotel Partnership's capital accounts
over the contributing partners' adjusted tax basis allocable to those Hotels at
the time of the sale. Any remaining gain recognized by a Hotel Partnership on
the disposition of the Contributed Hotels will be allocated among the partners
in accordance with their respective percentage interests in the Hotel
Partnership.

FelCor's share of any gain realized by a Hotel Partnership on the sale of
any property held by a Hotel Partnership as inventory or other property held
primarily for sale to customers in the ordinary course of the Hotel
Partnership's trade or business will be treated as income from a prohibited
transaction that is subject to a 100% penalty tax. See "-- Income Tests." Such
prohibited transaction income also may have an adverse effect upon FelCor's
ability to satisfy the income tests for REIT status. FelCor, however, does not
presently intend to acquire or hold or allow the Hotel Partnerships to acquire
or hold any property that constitutes inventory or other property held primarily
for sale to customers in the ordinary course of FelCor's or a Hotel
Partnership's trade or business.

OTHER TAX CONSEQUENCES

FelCor, Bristol, or their respective stockholders may be subject to state
and local taxation in various state or local jurisdictions, including those in
which it or they transact business, own property or reside. The state and local
tax treatment of FelCor, Bristol and their respective stockholders may differ
from the federal income tax treatment described in this document. Consequently,
FelCor and Bristol stockholders should consult their own tax advisors regarding
the effect of state and local tax laws on the transaction and other matters
referred to herein.

OTHER FELCOR ANNUAL MEETING PROPOSALS

ELECTION OF DIRECTORS OF FELCOR

The FelCor Charter and Bylaws provide for three classes of directors, who
serve staggered three-year terms, with the term of each director expiring at the
annual meeting of stockholders held three years after his election. The FelCor
Board currently consists of seven members, four of whom are Independent
Directors. An "Independent Director" is a director of FelCor who is not an
officer or employee of FelCor, or any affiliate of FelCor or of an officer,
employee or affiliate of (i) any advisor to FelCor under an advisory agreement,
(ii) any lessee of any property of FelCor, (iii) any subsidiary of FelCor, or
(iv) any partnership which is an affiliate of FelCor.

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The terms of two of FelCor's directors, Mr. Hervey A. Feldman and Mr.
Charles N. Mathewson, expire at the FelCor Annual Meeting. Mr. Feldman has
decided not to seek re-election as a director and will assume the role of
Chairman Emeritus following the FelCor Annual Meeting. The FelCor Board has
nominated Mr. Michael D. Rose, a new director, and Mr. Mathewson, an incumbent
Class I director ("Nominees"), to be elected as Class I directors for a
three-year term expiring with the annual meeting of stockholders in 2001 or
until their successors shall be elected and shall qualify or until their earlier
resignation or removal.

Set forth below is certain information regarding the existing directors of
FelCor. All of the following directors were initially elected or appointed as a
director in 1994, except for Mr. Ledsinger who was initially appointed as a
director in November 1997 to fill the vacancy created by the resignation of Mr.
Donald J. McNamara, who had served as a director of FelCor from 1994 until his
resignation in November 1997.

<TABLE>
<CAPTION>
TERM
NAME POSITION CLASS EXPIRES
---- -------- --------- -------
<S> <C> <C> <C>
Hervey A. Feldman........... Chairman of the Board Class I 1998
Charles N. Mathewson........ Director Class I 1998
Thomas J. Corcoran, Jr...... President and Chief Executive Officer, Class II 1999
Director
Charles A. Ledsinger, Jr.... Independent Director Class II 1999
Richard S. Ellwood.......... Independent Director Class III 2000
Richard O. Jacobson......... Independent Director Class III 2000
Thomas A. McChristy......... Independent Director Class III 2000
</TABLE>

The following discussion sets forth the names, ages and business histories
of the Nominees and of the five directors whose terms will continue after the
FelCor Annual Meeting and the year of the annual meeting of stockholders at
which each director's term will expire (assuming, in the case of the Nominees,
that they are elected).

Nominees for Class I Directors (Terms Expiring in 2001)

Charles N. Mathewson (age 69) has served, for more than the past five
years, in various positions with International Game Technology ("IGT"), a
company engaged in the design and manufacture of microprocessor based gaming
products and gaming monitoring systems. Since February 1988, he has served as
the Chairman of the Board of IGT. He has served as a director of IGT since
December 1985, as President from December 1986 to February 1988, and as Chief
Executive Officer from December 1986 until June 1993 and from February 1996
until the present. Mr. Mathewson also is a member of the Board of Directors of
Baron Asset Fund.

Michael D. Rose (age 56) served as Chairman of the Board of Promus Hotel
Corporation from April 1995 through December 1997 and as a director since
December 1997. He served as Chairman of the Board of Harrah's Entertainment
Inc., from June 1995 until his retirement as of December 31, 1996. He also
served as Chairman of the Board of The Promus Companies Incorporated from
November 1989 through June 1995 and Chief Executive Officer from November 1989
to April 1994. Mr. Rose is also a director of Ashland, Inc., First Tennessee
National Corporation, General Mills, Inc., Stein Mart, Inc., and Darden
Restaurants, Inc.

Continuing Class III Directors (Terms Expiring in 2000)

Richard S. Ellwood (age 66) is the founder and principal owner of R. S.
Ellwood & Co., Inc., a real estate investment banking firm that was organized in
1987. Prior to 1987, as an investment banker, Mr. Ellwood was elected
successively in 1968 a general partner of White Weld & Co., in 1978 a managing
director of Warburg Paribas Becker, Incorporated and in 1984 a managing director
and senior banker of Merrill Lynch Capital Markets. Mr. Ellwood has extensive
experience in hotel financing. He was a founder of Hotel Investors Trust, REIT,
and served as a Trustee from 1970 until its merger with another REIT in 1987. He
is currently a director of one additional REIT, Apartment Investment and
Management Company.

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Richard O. Jacobson (age 61) is the Chairman of the Board of Jacobson
Warehouse Company, Inc., a privately held warehouse company with facilities in
17 locations in eight states, which Mr. Jacobson founded 31 years ago. He is
also Chairman of the Board of Jacobson Transportation Company, Inc., a truckload
common carrier with authority to operate in 48 states and Canada. Mr. Jacobson
is a member of the Boards of Directors of Atrion Corporation, Allied Group,
Inc., Firstar Bank Des Moines, N.A., Firstar Bank of Iowa, N.A. and Heartland
Express, Inc.

Thomas A. McChristy (age 71) was the President of T. A. McChristy Co. Inc.,
a real estate investment company, from 1957 to 1996. Mr. McChristy also served
as the President and Chief Operating Officer of Syntech International Inc., a
lottery systems and equipment manufacturing company, from 1986 to 1988 and as
its Chief Executive Officer from 1989 to 1992.

Continuing Class II Directors (Terms Expiring in 1999)

Thomas J. Corcoran, Jr. (age 49) is the President and Chief Executive
Officer of FelCor and has served in such capacity since its formation in May
1994. He is also a co-founder of FelCor, Inc. and has served as its President
and Chief Executive Officer since its formation in 1991. From October 1990 to
December 1991, he served as the Chairman, President and Chief Executive Officer
of Fiesta Foods, Inc., a manufacturer of tortilla chips and taco shells. From
1979 to 1990, Mr. Corcoran held various positions with Integra -- A Hotel and
Restaurant Company (formerly Brock Hotel Corporation), including serving as the
President and Chief Executive Officer of that company from 1986 to 1990, and
with ShowBiz Pizza Time, Inc., an operator and franchisor of family
entertainment center/pizza restaurants.

Charles A. Ledsinger, Jr. (age 48) has served as an officer of St. Joe
Corporation since May 1997. He has served as President and Chief Operating
Officer since February 1998 and as Senior Vice President and Chief Financial
Officer prior to that. From June 1995 until May 1997, Mr. Ledsinger was Senior
Vice President and Chief Financial Officer of Harrah's Entertainment, Inc. For
more than three years prior, Mr. Ledsinger served as Senior Vice President and
Chief Financial Officer of The Promus Companies Incorporated, the former parent
of Harrah's Entertainment, Inc. Mr. Ledsinger is also a director of TBC
Corporation, Perkins Management Company, Inc. and Friendly Ice Cream
Corporation. He is a member and a past chairman of the Real Estate Financial
Advisory Council of the American Hotel and Motel Association.

There are no family relationships between any of the directors. Except as
described above, none of FelCor's directors hold directorships in any company
with a class of securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934 (the "Exchange Act") or pursuant to the requirements of
Section 15(d) of the Exchange Act or any company registered as an investment
company under the Investment Company Act of 1940. There are no arrangements or
understandings between any director and any other person pursuant to which that
director was nominated.

Committees and Meetings of the Board of Directors

Director Meetings. The business of FelCor is under the general management
of the FelCor Board as required by the FelCor Bylaws and the laws of Maryland,
FelCor's state of incorporation. The FelCor Charter requires that a majority of
FelCor's directors be Independent Directors. There are presently seven
directors, including four Independent Directors. The FelCor Board held 10
meetings during 1997. In addition, significant communications between the
directors and FelCor occur apart from the formal meetings of the FelCor Board
and the committees thereof. Accordingly, management does not regard attendance
at meetings to be the primary criterion in evaluating the contributions a
director makes to FelCor. Each of FelCor's directors other than Messrs. Feldman
and McNamara, attended at least 75% of the aggregate of all meetings of the
FelCor Board and all meetings of committees thereof on which such director
served.

The FelCor Board presently has an Executive Committee, an Audit Committee
and a Compensation Committee. In addition, FelCor has a Capital Approval
Committee consisting of the senior executive officers of FelCor. FelCor has no
standing Nominating Committee of the FelCor Board, with the entire FelCor Board
acting in such a capacity. FelCor may, from time to time, form other committees
as circumstances warrant. Such committees have authority and responsibility as
delegated by the FelCor Board.

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Executive Committee. The FelCor Board has established an Executive
Committee consisting of Messrs. Corcoran, Feldman and Mathewson. The Executive
Committee is empowered to exercise the powers of the FelCor Board in the
management of the business and affairs of FelCor, except when the FelCor Board
is in session and except for certain powers which may be exercised only by the
FelCor Board. Although informal communication among members of the Executive
Committee occurred frequently during 1997 and certain actions were taken by
unanimous written consent, the Executive Committee held only one formal meeting
during the year.

Audit Committee. The FelCor Board has established an Audit Committee
consisting of Messrs. Ellwood, Jacobson, McChristy and Ledsinger (who replaced
Mr. McNamara in November 1997), constituting all of the Independent Directors.
The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public accountants
the plans and results of the audit engagement, approves professional services
provided by the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and non-audit fees
and reviews the adequacy of FelCor's internal accounting controls. The Audit
Committee held two meetings in 1997.

Compensation Committee. The FelCor Board has established a Compensation
Committee consisting of Messrs. Ellwood, Jacobson, McChristy and Ledsinger (who
replaced Mr. McNamara in November 1997), constituting all of the Independent
Directors. The Compensation Committee determines compensation for FelCor's
executive officers and advises the FelCor Board on the adoption and
administration of employee benefit or compensation plans. The Compensation
Committee also administers the FelCor Stock Plans. The Compensation Committee
held five meetings in 1997.

Capital Approval Committee. The FelCor Board has established the Capital
Approval Committee consisting of FelCor's senior executive officers, Messrs.
Feldman (Chairman of the Board), Corcoran (President and Chief Executive
Officer), Randall L. Churchey (Senior Vice President, Chief Financial Officer
and Treasurer) and Lawrence D. Robinson (Senior Vice President and General
Counsel). The Capital Approval Committee has been delegated the authority to
authorize, take or cause to be taken, any action in connection with the
acquisition, improvement, disposition or financing of any hotel assets involving
an actual or reasonably anticipated investment by FelCor of up to $25 million
(relating to a single hotel transaction) and $50 million (relating to more than
a single hotel), subject, in both cases, to certain limitations.

Compensation of Directors

In lieu of cash compensation, on March 5, 1998, FelCor granted to each of
the Independent Directors, except Mr. Ledsinger, 1,500 shares of restricted
stock under the FelCor 1994 Plan or FelCor 1995 Plan for serving as a director
of FelCor during 1997. Mr. Ledsinger was granted 375 shares of restricted stock
from the FelCor 1995 Plan, reflecting the partial year he served as an
Independent Director. FelCor intends to provide a similar grant to each
Independent Director in lieu of cash compensation for service during 1998. None
of the other directors received any compensation for their service as directors
of FelCor during 1997 and 1996. FelCor reimburses directors for their
out-of-pocket expenses incurred in connection with their service on the FelCor
Board.

Effect of Merger Upon Board of Directors

If the Merger Agreement is adopted by the stockholders, it is expected that
the Merger will be consummated shortly after the FelCor Annual Meeting. Upon
effectiveness of the Merger, the FelCor Board will be reconstituted in the
manner described under "The Merger Agreement -- Reconstitution of FelCor Board."

RATIFICATION OF FELCOR'S 1998 RESTRICTED STOCK AND STOCK OPTION PLAN

The FelCor Board has approved and recommends to FelCor's stockholders that
they adopt the FelCor 1998 Plan. The FelCor 1998 Plan was approved by the FelCor
Board in November 1997.

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The FelCor 1998 Plan will be approved by FelCor's stockholders if a quorum
is present at the FelCor Annual Meeting and if the number of votes cast for
approval of the FelCor 1998 Plan exceeds the number of votes cast against
approval of the FelCor 1998 Plan.

The following summarizes certain significant aspects of the FelCor 1998
Plan. The summary is not intended to be complete and is subject in all respects
to the terms of the FelCor 1998 Plan, a complete copy of which is set forth as
Annex D to this Joint Proxy Statement/Prospectus.

Share Authorization. The FelCor 1998 Plan provides for the grant of stock
options to purchase a specified number of FelCor Common Shares ("Options") or
grants of FelCor Common Shares ("Restricted Shares"). Under the FelCor 1998
Plan, the total number of shares available for grant is equal to 1,000,000
FelCor Common Shares, of which not more than 50,000 shares may be grants of
Restricted Shares. Upon the occurrence of certain extraordinary events, the
FelCor Board or the Compensation Committee may make such adjustments in the
aggregate number and kind of shares reserved for issuance, the number of shares
and kind covered by outstanding awards and the exercise prices specified therein
as may be determined to be appropriate.

Purpose and Administration. The FelCor Board has approved the FelCor 1998
Plan to provide incentives to attract and retain Independent Directors,
executive officers and key employees. The FelCor 1998 Plan is administered by
the Compensation Committee or, in the case of grants to Independent Directors,
by the FelCor Board. The Compensation Committee generally has the authority,
within limitations set forth in the FelCor 1998 Plan, (i) to establish rules and
regulations concerning the FelCor 1998 Plan, (ii) to determine the persons to
whom Options and Restricted Shares may be granted, (iii) to fix the number of
FelCor Common Shares to be covered by each Option and the number of Restricted
Shares granted, and (iv) to set the terms and provisions of each grant of
Options or Restricted Shares to be granted. The Compensation Committee has the
right to cancel any outstanding Options and to issue new Options on such terms
and upon such conditions as may be consented to by the optionee affected.

Eligibility. Participants in the FelCor 1998 Plan may be directors,
officers or employees of the Company, its subsidiaries (including the FelCor
Operating Partnership) or designated affiliates, as are selected by the
Compensation Committee.

Options. Options granted under the FelCor 1998 Plan may be incentive stock
options ("ISOs") under Section 422 of the Code or non-qualified options, at the
discretion of the Compensation Committee. The FelCor 1998 Plan provides that the
exercise price of an Option will be fixed by the Compensation Committee on the
date of grant; however, the exercise price of an ISO must be not less than the
fair market value of a share of Common Stock on the date of the grant. In the
case of an ISO granted to any person who owns, directly or indirectly, stock
possessing more than 10% of the total combined voting power of all classes of
FelCor's stock ("Ten Percent Owner"), the option price will not be less than
110% of the Fair Market Value of a share of FelCor Common Shares on the date of
grant. Each Option must expire within ten years from the date of the grant
except that any ISO granted to a Ten Percent Owner must expire within five years
from the date of the grant. Moreover, Options granted under the FelCor 1998 Plan
will not be ISOs to an individual participant to the extent that the aggregate
fair market value of the FelCor Common Shares with respect to which such Options
under the FelCor 1998 Plan (or under any other plan maintained by the Company or
a subsidiary thereof) first become exercisable by such participant in any year
exceeds $100,000.

No Option may be exercised within six months after the date of grant or in
such circumstances where exercise would violate Federal or State securities
laws. Options will be non-transferable and non-assignable; provided, however,
that the estate of a deceased holder can exercise Options. Options generally
will be exercisable by the holder thereof subject to terms fixed by the
Compensation Committee. The right of any participant to exercise an Option may
not be transferred in any way other than by will or the laws of descent and
distribution.

Restricted Stock Awards. The FelCor 1998 Plan also permits the Compensation
Committee to grant up to 50,000 shares of Restricted Shares. Restricted Shares
will be subject to the terms and conditions imposed by the Compensation
Committee. Except for such restrictions on transfer as the Compensation
Committee

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may impose, the participants have all the rights of a holder of FelCor Common
Shares as to such Restricted Shares including the right to vote the shares and
the right to receive any cash distributions. Except as provided by the
Compensation Committee at the time of grant or otherwise, upon a termination of
employment for any reason during the restriction period, all unvested shares
will be forfeited by the participant.

Termination and Amendment. No Options shall be granted and no Restricted
Shares may be awarded under the FelCor 1998 Plan on or after November 1, 2007.
The FelCor Board may amend any award theretofore granted, prospectively or
retroactively. No such amendment may impair the rights of any participant under
any award without the consent of such participant (except for any amendment made
to cause the plan to qualify for an exemption provided by Rule 16b-3 under the
Exchange Act). The FelCor 1998 Plan may be terminated and may be modified or
amended by the FelCor Board at any time; however, (i) any modification or
amendment either increasing the aggregate number of shares which may be issued
under Options, increasing materially the benefits accruing to participants under
the FelCor 1998 Plan or materially modifying the requirements as to eligibility
to receive Options is subject to stockholder approval within one year of the
adoption of such amendment; and (ii) no such termination, modification or
amendment of the FelCor 1998 Plan will alter or affect the terms of any then
outstanding Options or Restricted Shares without the consent of the holders
thereof.

Initial Awards. Upon adoption of the FelCor 1998 Plan by the Compensation
Committee, the Compensation Committee also approved the grants of option to
purchase an aggregate of 270,500 FelCor Common Shares, subject to stockholder
approval of the FelCor 1998 Plan. See the table below captioned "New Plan
Benefits."

Federal Income Taxes. No income is recognized by a participant in the
FelCor 1998 Plan at the time the Option is granted. If the Option is an ISO, no
income will be recognized upon the participant's exercise of the Option. Income
is recognized by a participant when he disposes of shares acquired under an ISO.
The exercise of a nonqualified stock option generally is a taxable event that
requires the participant to recognize, as ordinary income, the difference
between the shares' fair market value and the option price.

A participant will recognize income on account of a Restricted Shares award
on the first day that the shares are either transferable or not subject to a
substantial risk of forfeiture. The amount of income recognized by the
participant is equal to the fair market value of the FelCor Common Shares
received on that date.

The employer (either FelCor or its affiliate) will be entitled to claim a
federal income tax deduction on account of the exercise of a nonqualified option
or the vesting of a stock award. The amount of the deduction is equal to the
ordinary income recognized by the participant. The employer will not be entitled
to a federal income tax deduction on account of the grant or the exercise of an
ISO. The employer may claim a federal income tax deduction on account of certain
dispositions of FelCor Common Shares acquired upon the exercise of an ISO.

THE FELCOR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE FELCOR
1998 PLAN.

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The following table sets forth information regarding the benefits that will
be received by each of the following persons and groups under the FelCor 1998
Plan should the FelCor 1998 Plan be approved by the stockholders at the FelCor
Annual Meeting.

NEW PLAN BENEFITS
FELCOR'S 1998 RESTRICTED STOCK AND STOCK OPTION PLAN

<TABLE>
<CAPTION>
MARKET PRICE
EXERCISE OF UNDERLYING NUMBER OF
NAME AND POSITION PRICE($)(2) STOCK($)(3) OPTIONS(1)
----------------- ------------ ------------- ----------
<S> <C> <C> <C>
Thomas J. Corcoran, Jr.,........................ 35.50 35.25 90,000
President and Chief Executive Officer
Lawrence D. Robinson............................ 35.50 35.25 20,000
Senior Vice President and General Counsel
Randall L. Churchey............................. 35.50 35.25 20,000
Senior Vice President and Chief Financial
Officer
William P. Stadler.............................. 35.50 35.25 40,000
Senior Vice President
Executive Officer Group......................... 35.50 35.25 235,000
Non-Executive Director Group.................... -- -- --
Non-Executive Officer Employee Group............ 35.50 35.25 35,000
</TABLE>

- ---------------

(1) Shares purchasable upon the exercise of Options which vest over a five year
period at the rate of 20% per year and expire on the tenth anniversary of
the date of grant.

(2) The exercise price of the Option is based upon the closing price of FelCor
Common Shares on the date of grant (which is either the date of commencement
of employment in the case of new employees, or the date as of which the
grant is approved by the Compensation Committee, in the case of existing
employees).

(3) Market price represents the closing sale price of FelCor Common Shares as of
April 15, 1998 as reported by the NYSE.

OTHER BRISTOL ANNUAL MEETING PROPOSALS

ELECTION OF BRISTOL DIRECTORS

The management of Bristol is under the direction of the Bristol Board. Each
director is elected to serve until his or her successor is elected and
qualified. Set forth below is certain information regarding the directors and
executive officers of Bristol.

<TABLE>
<CAPTION>
NAME POSITION YEAR FIRST ELECTED
- ---- -------- ------------------
<S> <C> <C>
John A. Beckert................. Chief Operating Officer, Executive 1995
Vice President and Director
Reginald K. Brack, Jr........... Director 1997
David A. Dittman................ Director 1995
Craig H. Hunt................... Director 1997
J. Peter Kline.................. Chief Executive Officer, President 1995
and Director
Robert H. Lutz, Jr.............. Director 1995
Donald J. McNamara.............. Chairman of the Board and Director 1994
Richard C. North................ Director 1997
Kurt C. Read.................... Director 1997
</TABLE>

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John A. Beckert, 44, has been a director of Bristol since February 1995.
Since 1981, Mr. Beckert has been the Chief Operating Officer and Executive Vice
President of Bristol (and its predecessor, Harvey Hotel Company). Mr. Beckert is
the brother of Richard N. Beckert, the Senior Vice President, Administration of
Bristol.

Reginald K. Brack, Jr., 60, has been a director of Bristol since May 1997.
Since July 1997, Mr. Brack has been the Chairman Emeritus of Time, Inc. Prior to
such period, Mr. Brack was the Chairman and Chief Executive Officer of Time,
Inc. from December 1986 to July 1997.

David A. Dittman, 52, has been a director of Bristol since December 1995.
Since 1990, Mr. Dittman has been the Dean of the Cornell University School of
Hotel Administration and an E.M. Statler Professor.

Craig H. Hunt, 45, has been a director of Bristol since April 1997. Mr.
Hunt has been President of Holiday Inns since 1997, and a member of the Holiday
Inns Board of Directors since 1990. During 1996 and 1997, Mr. Hunt was the
President of Americas Franchise Division of Holiday Inns. Prior to 1996, he
served as Senior Vice President and Chief Operating Officer for Company Managed
Hotels -- Americas, and Senior Vice President and managing director for the
United States, Caribbean and Latin American Region of Holiday Inn International.

J. Peter Kline, 50, has been a director of Bristol since February 1995.
Since 1981, Mr. Kline has been the President and Chief Executive Officer of
Bristol (and its predecessor, Harvey Hotel Company).

Robert H. Lutz, Jr., 48, has been a director of Bristol since December
1995. Since 1994, Mr. Lutz has been the Chairman and Chief Executive Officer,
and is a member of the executive committee, of Amresco, Inc., a financial
services company. From 1991 to 1994, Mr. Lutz served as President and Chief
Operating Officer of Balcor/Allegiance Realty Group, a subsidiary of American
Express Company engaged in real estate ownership and management.

Donald J. McNamara, 45, has been Chairman of the Board since November 1994.
Mr. McNamara has been the Chairman and Co-Chief Executive Officer of Hampstead,
a privately held real estate investment company and an affiliate of Holdings,
since the founding of the firm in 1988. Mr. McNamara also is a director of
Catellus Development Corporation. Mr. McNamara also served on the FelCor Board
from July 1994 until November 1997.

Richard C. North, 48, has been a director of Bristol since 1997. Mr. North
has been the Group Finance Director of Bass plc since 1994. Prior to 1994, Mr.
North served as the Group Finance Director of The Burton Group.

Kurt C. Read, 35, has been a director of Bristol since April 1997. Mr. Read
has been a Senior Vice President of Hampstead since 1989.

ALTHOUGH IT IS EXPECTED THAT THE MERGER WILL BE CONSUMMATED SHORTLY AFTER
THE BRISTOL ANNUAL MEETING, AND THEREUPON THE FELCOR BOARD WILL BE RECONSTITUTED
AS DESCRIBED UNDER "THE MERGER AGREEMENT -- RECONSTITUTION OF FELCOR BOARD," THE
BRISTOL BOARD HAS NOMINATED EACH OF THE ABOVE DIRECTORS FOR RE-ELECTION AS A
DIRECTOR OF BRISTOL AT THE BRISTOL ANNUAL MEETING.

The nine Bristol directors receiving the most votes at the Bristol Annual
Meeting will be elected as Bristol Directors. Each of such persons has consented
to being named in this document and to serve if elected. If any such person
should for any reason become unavailable for election, proxies may be voted with
discretionary authority by the persons named in the proxies for a substitute
designated by the Bristol Board.

Bristol Director Nomination Procedures

Bristol directors may be nominated for election by the Bristol Board or by
any stockholder entitled to vote in the election of Directors generally.
Stockholders intending to nominate candidates for election as Directors must
deliver written notice thereof to the Secretary of Bristol not later than 60
calendar days in advance of the stockholders' meeting. If the date of the
meeting is not publicly announced by Bristol more than 75 calendar days prior to
the meeting, stockholders must notify the Secretary of Bristol not later than
the close of business

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on the tenth day following the day on which the date of the meeting is so
announced. Stockholders must provide certain information concerning such
stockholder, such stockholder's stock ownership and the stockholder's nominees,
including their names and addresses, a description of all arrangements between
the stockholder and each nominee, such other information as would be required to
be included in a proxy statement soliciting proxies for the election of the
nominees of such stockholder, and the consent of each nominee to serve as a
director of Bristol if so elected. The chairman of the stockholders' meeting may
refuse to acknowledge the nomination of any person not made in compliance with
these requirements.

Pursuant to a stockholders' agreement, each of Holdings and the Holiday
Entities has agreed to vote its Bristol Common Shares and take all other
necessary actions in order to ensure that the Bristol Board is comprised of
three persons designated by Holdings, three persons designated by the Holiday
Entities and one person designated by Messrs. Kline and Beckert. This
stockholders' agreement will terminate upon the consummation of the Merger. One
of the three directors to be designated by each of Holdings and the Holiday
Entities, and the director designated by Messrs. Kline and Beckert, must be an
Outside Director. For this purpose, an "Outside Director" is a Director who is
not an employee, executive officer or affiliate of Bristol, the Holiday Entities
or Holdings and who is not an associate of a business primarily engaged in
operating, managing or developing Mid-Scale Lodging Facilities and who qualifies
as an "independent director" within the meaning of the NYSE Listed Company
Manual. A "Mid-Scale Lodging Facility" is a full-service lodging facility
providing a degree of sophistication and full-service amenities and facilities
which (i) are of a type and standard generally consistent with hotels operated
as Holiday Inn hotels, (ii) do not primarily offer suites, (iii) are not
designed to accommodate extended stays, and (iv) do not generally compete as
upscale or economy hotels.

Holdings has designated Donald J. McNamara, Kurt C. Read and Robert H.
Lutz, Jr. (Outside Director) as its designees; Messrs. Kline and Beckert have
designated David A. Dittman as their Outside Director designee; and the Holiday
Entities have designated Richard C. North, Reginald K. Brack, Jr. and Craig H.
Hunt (Outside Director) as their designees. Pursuant to a separate agreement,
Bass plc has agreed to cause the directors designated by the Holiday Entities to
vote for Donald J. McNamara to serve as Chairman of the Board so long as he is a
director of Bristol.

INFORMATION CONCERNING BRISTOL BOARD

The Bristol Board held a total of six meetings during 1997. No director
failed to participate in at least 75% of the meetings of the Bristol Board held
while he was a director. No director appointed to serve on one or more
committees of the Bristol Board failed to participate in at least 75% of the
meetings of such committee or committees held while he was a member thereof.

Bristol Board Committees

The Bristol Board has established five committees: the Executive Committee,
the Audit Committee, the Compensation Committee, the Director Plan Committee and
the Finance Committee.

Except as to certain matters for which action of the full Bristol Board is
required by law, the Executive Committee has the authority to exercise all of
the powers of the Bristol Board in the oversight of the management of the
business and affairs of Bristol. The Executive Committee also is responsible for
recommending to the Bristol Board nominees for election to the Bristol Board and
committees of the Bristol Board. During 1997, all actions by the Executive
Committee were taken by written consent. The current members of the Executive
Committee are Donald J. McNamara (Chairman), J. Peter Kline and Richard C.
North.

The Audit Committee reviews the professional services provided by Bristol's
independent accountants and the independence of such accountants from
management. The Audit Committee also reviews the scope of the audit by Bristol's
independent accountants, the annual financial statements of Bristol, Bristol's
system of internal accounting controls and the accounting, auditing and
financial reporting practices and procedures of Bristol. The Audit Committee
meets from time to time with members of Bristol's internal audit staff. The
Audit Committee met four times during 1997. At least two members of the Audit
Committee must be

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directors who are not employed by Bristol, Holdings, the Holiday Entities or any
of their respective affiliates. The current members of the Audit Committee are
David A. Dittman (Chairman), Reginald K. Brack, Jr., Craig H. Hunt and Kurt C.
Read.

The Compensation Committee reviews executive salaries, administers the
bonus, incentive compensation and stock option plans of Bristol and approves the
salaries and other benefits of the executive officers of Bristol. The
Compensation Committee also consults with Bristol's management regarding pension
and other benefit plans and compensation policies and practices of Bristol. This
committee met twice during 1997. Members of the Compensation Committee must be
persons who are not full time employees of Bristol and who are not eligible to
receive options or other rights under any employee stock or other benefit plan
(other than plans in which only directors may participate). The current members
of the Compensation Committee are Donald J. McNamara (Chairman), Robert H. Lutz,
Jr. and Richard C. North.

The sole function of the Director Plan Committee is to administer Bristol's
Stock Option Plan for Non-Employee Directors. This committee met once during
1997. The current members of the Director Plan Committee are Donald J. McNamara
(Chairman) and Richard C. North.

The Finance Committee has the authority to exercise all of the powers of
the Bristol Board in the oversight of the financial affairs of Bristol. The
Finance Committee did not meet in 1997. The current members of the Finance
Committee are Donald J. McNamara (Chairman) and J. Peter Kline.

Bristol's Director Compensation

Each director who is not a full-time employee of Bristol or an employee of
an affiliate of Bristol is granted annually a non-qualified option to purchase
7,500 Bristol Common Shares (after taking into account of the 3-for-2 stock
split in June 1997) at an exercise price equal to the market price of the
Bristol Common Shares at the close of business on the date of grant. Directors
are also reimbursed for their out-of-pocket expenses incurred in connection with
their attendance at meetings of the Bristol Board and committees of the Bristol
Board and other activities relating to their position as a director.

APPROVAL OF AMENDMENT TO BRISTOL'S 1995 EQUITY INCENTIVE PLAN

The Bristol Incentive Plan was amended by the Bristol Board on December 9,
1997 to increase the number of Bristol Common Shares available for issuance
under such Plan from 1,950,000 to 3,130,000, subject to the approval of
Bristol's stockholders. Bristol believes that it has been successful in the past
in attracting and retaining qualified employees, officers and directors in part
because of its ability to offer such persons options to purchase Bristol Common
Shares. Bristol believes that the increase in the number of shares reserved for
issuance pursuant to the Bristol Incentive Plan is necessary for Bristol to
continue to attract and retain qualified employees, officers and directors.

The Bristol Incentive Plan is administered by the Bristol Board or the
Compensation Committee. The Bristol Board or the Compensation Committee, as
appropriate, has discretionary authority (subject to certain restrictions) to
determine the individuals to whom options are granted, as well as the timing,
number and exercise price of such options. The Bristol Board or the Compensation
Committee may interpret the provisions of the Bristol Incentive Plan and may
prescribe, amend and rescind rules and regulations of the Bristol Incentive
Plan.

The option price of non-qualified options granted under the Bristol
Incentive Plan is determined by the Bristol Board or the Compensation Committee,
as appropriate, at the time such options are granted, but may in no event be
less than the minimum legal consideration required. Options granted at less than
fair market value are intended to qualify as performance-based compensation
under Section 162(m) of the Code, and are exercisable only upon the attainment
of pre-established, objective performance goals.

Employees and officers of Bristol are eligible to participate in the
Bristol Incentive Plan. As of April 1, 1998, there were approximately
Bristol employees and officers eligible to participate in the Bristol
Incentive Plan. Assuming approval of the proposed amendment to the Bristol
Incentive Plan and after giving

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effect thereto, there would be Bristol Common Shares available for
issuance under the Bristol Incentive Plan.

Pursuant to the Merger Agreement, the Bristol Incentive Plan will be
amended at the Effective Time to convert all outstanding options to purchase
Bristol Common Shares under the Bristol Incentive Plan into options to purchase
FelCor Common Shares and options to purchase BHR Common Shares. All obligations
with respect to options to purchase FelCor Common Shares will be assumed by
FelCor in the Merger, and all obligations with respect to options to purchase
BHR Common Shares will be assumed by BHR in the Spin-Off.

APPROVAL OF BHR'S 1998 EQUITY INCENTIVE PLAN AND 1998 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN

The Bristol Board and Bristol, as sole stockholder of BHR, has approved and
recommends that Bristol stockholders approve BHR's 1998 Equity Incentive Plan
(the "BHR Equity Incentive Plan") and 1998 Non-Employee Director Stock Option
Plan (the "BHR Director Plan"). The BHR Equity Incentive Plan and the BHR
Director Plan (collectively, the "BHR Plans") will be approved by Bristol's
stockholders if a quorum is present at the Bristol Annual Meeting and the
holders of a majority of the shares actually voted at the Bristol Annual Meeting
thereon voted for approval of the BHR Plans. If Bristol's stockholders do not
approve the BHR Equity Incentive Plan, no awards will be granted under such
plan.

The following summarizes certain significant aspects of the BHR Plans. The
summary is not intended to be complete and is subject in all respects to the
terms of the BHR Equity Incentive Plan and the BHR Director Plan, a copy of
which is set forth as Annex E and F, respectively to this Joint Proxy Statement/
Prospectus.

BHR Equity Incentive Plan

General. In connection with the spin-off, BHR will establish the BHR Equity
Incentive Plan, effective as of the date of the spin-off. The BHR Equity
Incentive Plan is intended to be substantially similar to the Bristol 1995
Equity Incentive Plan, under which stock-based awards are currently granted to
executive officers and other key employees of Bristol. The BHR Equity Incentive
Plan is designed to attract and retain qualified officers and other key
employees of BHR. The BHR Equity Incentive Plan authorizes the grant of options
to purchase BHR Common Shares ("Stock Options"), stock appreciation rights
("Appreciation Rights"), restricted shares ("Restricted Shares"), deferred
shares ("Deferred Shares"), performance shares ("Performance Shares") and
performance units ("Performance Units"). Because benefits earned under awards
granted under the BHR Equity Incentive Plan may extend over a period of years
into the future, the plan is designed so that certain awards would qualify under
Section 162(m) of the Code and BHR would be allowed a tax deduction for certain
future compensation over $1 million that could be paid, or otherwise taxable, to
persons who are "covered employees" under Section 162(m). "Covered employees"
means the employees who, on the last day of the applicable taxable year, are
BHR's chief executive officer and the four other highest paid officers.
Qualifying performance-based compensation is not subject to this deduction limit
if certain requirements are met. The Plan is also designed to comply with
revised Rule 16b-3 under the Exchange Act.

Unless the administration of the BHR Equity Incentive Plan is expressly
assumed by the Board of Directors of BHR, the BHR Equity Incentive Plan will be
administered by the compensation committee of the Board of Directors, or a
subcommittee thereof (the "Committee"), which will determine to whom awards are
to be granted and the terms and conditions, including the number of shares and
the period of exercisability, thereof. To the extent the BHR Board of Directors
assumes administration of the BHR Equity Incentive Plan, the BHR Board of
Directors will have all the authority and responsibility described below with
respect to the Committee.

Eligibility. Officers, including officers who are members of BHR's Board of
Directors, and other key employees and consultants to BHR and its subsidiaries
may be selected by the Committee to receive benefits under the BHR Equity
Incentive Plan. The Committee may also make awards under the BHR Equity
Incentive Plan to a person who has agreed to commence serving in any such
capacity within 90 days of the date of grant.

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Shares Available under the BHR Equity Incentive Plan. Subject to adjustment
as provided in the BHR Equity Incentive Plan, the number of BHR Common Shares
that may be issued or transferred (a) upon the exercise of Stock Options or
Appreciation Rights, (b) as Restricted Shares, (c) as Deferred Shares, (d) in
payment of Performance Shares or Performance Units that have been earned, or (e)
in payment of dividend equivalents paid with respect to awards made under the
Plan may not exceed in the aggregate, which may be shares of original
issuance or treasury shares or a combination thereof. Upon the payment of any
option price by the transfer to BHR of BHR Common Shares or upon satisfaction of
any withholding amount by means of transfer or relinquishment of BHR Common
Shares, only the net number of BHR Common Shares actually issued or transferred
by BHR will be deemed to have been issued or transferred under the Plan.

Limitations on Specific Kinds of Awards. In addition to the general
limitation on the number of BHR Common Shares available under the BHR Equity
Incentive Plan, the plan specifically limits the number of Restricted Shares
that are not conditioned on attainment of Management Objectives (described
below) plus the number of Deferred Shares (after taking forfeitures into
account) to in the aggregate, subject to adjustment. Additionally, the BHR
Equity Incentive Plan provides for certain specific limits and other
requirements in order that awards of Stock Options, Appreciation Rights,
Performance Shares and Performance Units may qualify as performance-based
compensation for the purpose of Section 162(m) of the Code. No participant may
be granted Stock Options and Appreciation Rights, in the aggregate, for more
than BHR Common Shares during any calendar year, subject to adjustment.
Moreover, no participant may receive in any calendar year an award of Restricted
Stock conditioned on attainment of Management Objectives, or an award of
Performance Shares or Performance Units, having an aggregate maximum value as of
their respective dates of grant of more than $ .

Stock Options. The Committee may grant Stock Options that entitle the
optionee to purchase BHR Common Shares at a price equal to or greater or less
than market value on the date of grant, and the Stock Options may be conditioned
on the achievement of specified Management Objectives (described below). The
Committee may provide that the option price is payable at the time of exercise
(i) in cash, (ii) by the transfer to BHR of nonforfeitable, unrestricted BHR
Common Shares that are already owned by the optionee, (iii) with any other legal
consideration the Committee may deem appropriate or (iv) by any combination of
the foregoing methods of payment. Any grant may provide for deferred payment of
the options price from the proceeds of sale through a broker on the date of
exercise of some or all of the BHR Common Shares to which the exercise relates.

Any grant may provide for automatic grant of reload options upon the
exercise of Stock Options, including reload Stock Options, for BHR Common Shares
or any other noncash consideration authorized under the BHR Equity Incentive
Plan; provided, however, that the term of any reload options shall not extend
beyond the term of the Stock Options originally exercised. The Committee has the
authority to specify at the time Stock Options are granted that BHR Common
Shares will not be accepted in payment of the option price until they have been
owned by the optionee for a specified period; however, the BHR Equity Incentive
Plan does not require any such holding period and would permit immediate
sequential exchanges of BHR Common Shares at the time of exercise of Stock
Options.

Stock Options granted under the BHR Equity Incentive Plan may be Stock
Options that are intended to qualify as "incentive stock options" within the
meaning of Section 422 of the Code, or Stock Options that are not intended to so
qualify. Any grant may provide for the payment of dividend equivalents to the
optionee on a current, deferred or contingent basis or may provide that dividend
equivalents be credited against the option price.

No Stock Option may be exercised more than 10 years from the date of grant.
Each grant must specify the period of continuous employment with, or continuous
engagement of consulting services by, BHR or any subsidiary that is necessary
before the Stock Options will become exercisable and may provide for the earlier
exercise of the Stock Options in the event of a change of control of BHR or
other similar transaction or event. Successive grants may be made to the same
optionee regardless of whether Stock Options previously granted to him or her
remain unexercised.

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Appreciation Rights. Appreciation Rights granted under the BHR Equity
Incentive Plan may be either freestanding Appreciation rights or Appreciation
Rights that are granted in tandem with Stock Options or any similar rights
granted under any other plan of BHR. An Appreciation Right represents the right
to receive from BHR up to 100% of the difference (the "Spread") between the base
price per BHR Common Share in the case of a free-standing Appreciation Right, or
the option price of the related Stock Option or similar right in the case of a
tandem Appreciation Right, and the market value of BHR Common Shares on the date
of exercise of the Appreciation Right. Tandem Appreciation Rights may only be
exercised at a time when the related Stock Options or similar right is
exercisable and the Spread is positive, and the exercise of a tandem
Appreciation Right must specify a base price, which may be equal to or greater
or less than the fair market value of a BHR Common Share on the date of grant,
must specify the period of continuous employment, or continuous engagement of
consulting services, that is necessary before the Appreciation Right becomes
exercisable (except that it may provide for its earlier exercise in the event of
a change in control of BHR or other similar transaction or event) and may not be
exercised more than 10 years from the date of grant. Successive grants of
free-standing Appreciation Rights may be made to the same participant regardless
of whether any free-standing Appreciation Rights previously granted to the
participant remain unexercised.

Any grant of Appreciation Rights may specify that the amount payable by BHR
upon exercise may be paid in cash, BHR Common Shares or a combination thereof
and may (i) either grant to the recipient or retain in the Committee the right
to elect among those alternatives or (ii) preclude the right of the participant
to receive, and BHR to issue, BHR Common Shares or other equity securities in
lieu of cash. In addition, any grant may specify that the Appreciation Right may
be exercised only in the event of a change in control of BHR. The Committee may
condition the award of Appreciation Rights on the achievement of one or more
Management Objectives and may provide with respect to any grant of Appreciation
Rights for the payment of dividend equivalents thereon in cash or BHR Common
Shares on a current, deferred or contingent basis.

Restricted Shares. An award of Restricted Shares involves the immediate
transfer by BHR to a participant of ownership of a specific number of BHR Common
Shares in consideration of the performance of services. The participant is
entitled immediately to voting, dividend and other ownership rights in the
shares, but the Committee may require that any dividends be automatically
deferred and reinvested in additional Restricted Shares. The transfer may be
made without additional consideration or for consideration in an amount that is
less than the market value of the shares on the date of grant, as the Committee
may determine. The Committee may condition the award on the achievement of
specified Management Objectives.

Restricted Shares must be subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code for a period to be determined by
the Committee. An example would be a provision that the Restricted Shares would
be forfeited if the participant ceased to serve BHR as an officer or other
salaried employee during a specified period of years. In order to enforce these
forfeiture provisions, the transferability of Restricted Shares will be
prohibited or restricted in a manner and to the extent prescribed by the
Committee on the date of grant. The Committee may provide for a shorter period
during which the forfeiture provisions are to apply in the event of a change in
control of BHR or other similar transaction or event.

Deferred Shares. An award of Deferred Shares constitutes an agreement by
BHR to deliver BHR Common Shares to the participant in the future in
consideration of the performance of services, subject to the fulfillment of such
conditions during the deferral period specified by the Committee. During the
deferral period, the participant has no right to transfer any rights covered by
the award and no right to vote the shares covered by the award. On or after the
date of any grant of Deferred Shares, the Committee may authorize the payment of
dividend equivalents thereon on a current, deferred or contingent basis in
either cash or additional BHR Common Shares. Grants of Deferred Shares may be
made without additional consideration or for consideration in an amount that is
less than the market value of the shares on the date of grant. Deferred Shares
must be subject to a deferral period, as determined by the Committee on the date
of grant, except that the Committee may provide for a shorter deferral period in
the event of a change in control of BHR or other similar transaction or event.

Performance Shares and Performance Units. A Performance Share is the
equivalent of one BHR Common Share, and a Performance Unit is the equivalent of
$1.00. A participant may be granted any number

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of Performance Shares or Performance Units, which shall be specified in any such
grant and may be adjusted to reflect changes in compensation or other factors
(unless the adjustment for certain participants would cause an award to lose its
Section 162(m) exemption). The participant will be given one or more Management
Objectives to meet within a specified performance period. The specified
performance period may be subject to earlier termination in the event of a
change in control of BHR or other similar transaction or event. A minimum level
of acceptable achievement will also be established by the Committee. If the
participant has not achieved the Management Objectives but has attained or
exceeded the predetermined minimum level of acceptable achievement, the
participant will be deemed to have partly earned the Performance Shares and/or
Performance Units in accordance with a predetermined formula. To the extent
earned, the Performance Shares or Performance Units will be paid to the
participant at the time and in the manner determined by the Committee in cash,
BHR Common Shares or any combination thereof.

Management Objectives. The Committee may establish performance objectives
for participants who have received awards of Performance Shares or Performance
Units or, if so determined, Option Rights, Appreciation Rights, Restricted
Shares or dividend credits. Section 162(m) of the Code requires that the BHR
Equity Incentive Plan and the performance measures which must be attained to
earn compensation under performance-based awards be disclosed to and approved by
shareholders prior to the first regularly scheduled meeting of BHR's
shareholders that occurs more than 12 months after the date of the spin-off.
Such performance measures, or "Management Objectives," may be described either
in terms of company-wide objectives or objectives that are related to
performance of the individual participant or the division, subsidiary,
department or function within BHR or a subsidiary in which the participant is
employed. The Management Objectives applicable to any award to a participant who
is or is likely to become a "covered employee" within the meaning of Section
162(m) of the Code will be based on specified levels of or growth in one or more
of the following criteria: (i) cash flow/net assets ratio; (ii) debt/capital
ratio; (iii) return on total capital; (iv) return on equity; (v) earnings per
share growth; (vi) revenue growth; and (vii) total return to shareholders.

If the Committee determines that a change in the business, operations,
corporate structure or capital structure of BHR, or the manner in which it
conducts its business, or other events or circumstances render the Management
Objectives unsuitable, the Committee may modify such Management Objectives or
the related minimum acceptable level of achievement, in whole or in part, as the
Committee deems appropriate and equitable, except in the case of a "covered
employee" where such action would result in the loss of the otherwise available
exemption of the award under Section 162(m) of the Code. The Committee will
certify that Management Objectives have been met before any payments of
participants may be made.

Transferability. Except as otherwise determined by the Committee, no Stock
Option, Appreciation Right or other award under the BHR Equity Incentive Plan is
transferable by a participant other than by will or the laws of descent and
distribution. Except as otherwise determined by the Committee, only the
participant (or the participant's guardian or legal representative in the event
of the participant's legal incapacity) may exercise Stock Options or
Appreciation Rights during the participant's lifetime.

The Committee may specify at or after the date of grant that Stock Option,
Appreciation Rights, Restricted Shares, Deferred Shares, Performance Shares and
Performance Units are transferable by a participant to members of the
participant's immediate family, without payment by the transferee, if reasonable
prior notice of the transfer was given to BHR, and the transfer was made
according to the terms and conditions specified by the Committee or BHR. Any
transferee will be subject to the same terms and conditions under the BHR Equity
Incentive Plan as apply to the participant.

The Committee may specify that part or all of the BHR Common Shares that
are (i) to be issued or transferred by BHR upon exercise of Stock Options or
Appreciation Rights, upon termination of the deferral period applicable to
Deferred Shares or upon payment under any grant of Performance Shares or
Performance Units or (ii) no longer subject to the substantial risk of
forfeiture and restrictions on transfer in the case of Restricted Shares, shall
be subject to further restrictions on transfer.

Adjustments. The number, kind, and price of shares covered by outstanding
Stock Options, Appreciation Rights, Deferred Shares and Performance Shares and
the prices per share applicable thereto, are subject to adjustment in the event
of stock dividends, splits and combinations, changes in capital structure of
BHR,

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mergers, spin-offs, partial or complete liquidation, and similar events. If any
such event occurs, the Committee has discretion to substitute for any or all
outstanding awards under the Plan such alternative consideration as it, in good
faith, may determine to be equitable in the circumstances and may require the
surrender of all awards so replaced. The Committee may also make or provide for
such adjustments in the numbers of shares available under the BHR Equity
Incentive Plan and available for specific kinds of awards under the plan as the
Committee may determine appropriate to reflect any such transaction or event.

Administration and Amendments. All of the members of the Committee, which
may not be less than two, are intended at all times to qualify as "outside
directors" within the meaning of Section 162(m) of the Code, and as
"non-employee directors" within the meaning of Rule 16b-3; provided, however,
that the failure of a member of the Committee to so qualify shall not be deemed
to invalidate any award granted by the Committee. In connection with its
administration of the BHR Equity Incentive Plan, the Committee is authorized to
interpret the BHR Equity Incentive Plan related agreements and other documents.
The Committee may make grants to participants under any or a combination of all
of the various categories of awards that are authorized under the BHR Equity
Incentive Plan and may condition the grant of awards on the surrender or
deferral by the participant of the participant's right to receive a cash bonus
or other compensation otherwise payable by BHR or a subsidiary of the
participant.

The BHR Equity Incentive Plan may be amended from time to time by the
Committee, but without further approval by the stockholders of BHR, no such
amendment may increase the aggregate number of BHR Common Shares that may be
issued or transferred and covered by outstanding awards or increase the number
of shares which may be granted to any participant in any calendar year.

The Committee may require participants, or permit participants to elect, to
defer issuance of shares or the settlement of cash awards and may provide for
payment of interest or dividend equivalents on the deferred amounts. The
Committee may also condition any award on the surrender or deferral by a
participant of his or her right to receive a cash bonus or other compensation.

Certain Terminations of Employment. If a participant holding (a) a Stock
Option or Appreciation Right that is not fully and immediately exercisable, (b)
Restricted Shares where the restrictions on transfer have not yet lapsed, (c)
Deferred Shares where the deferral period is not complete, (d) Performance
Shares or Performance Units that have not been fully earned, or (e) BHR Common
Shares distributed under the BHR Equity Incentive Plan and subject to continuing
restrictions, terminates employment or consulting service by reason of death,
disability, normal retirement, early retirement approved by BHR, entry into
public or military service with the consent of BHR or leave of absence approved
by BHR, or in the event of hardship or other special circumstances, the
Committee may take any action it deems equitable or in BHR's best interest,
including waiving or modifying any limitation or requirement with respect to an
award.

BHR Director Plan

General. In connection with the spin-off, BHR will also establish the BHR
Director Plan is intended to encourage outside directors of BHR to own BHR
Common Shares and thereby to align their interests more closely with the
interests of the other stockholders of BHR, to encourage the highest level of
outside director performance by providing such directors with a direct interest
in BHR's attainment of its financial goals and to provide financial incentives
that will help attract and retain the most qualified outside directors. Only
members of BHR's Board of Directors who are not employees of BHR or an employee
of a 10% beneficial owner or an affiliate thereof (each an "Eligible Director"),
will be eligible to participant in the BHR Director Plan. For purposes of the
BHR Director Plan, an "employee" is a person whose compensation from BHR or such
10% beneficial owner, or an affiliate thereof, as the case may be, is subject to
withholding under the Code.

Unless the administration of the BHR Director Plan is expressly assumed by
the Board of Directors of BHR, the BHR Director Plan will be administered by a
committee (the "BHR Director Plan Committee") of the Board of Directors to be
comprised of not less than two directors. The BHR Director Plan Committee will
have the power to interpret the BHR Director Plan, to determine all questions
thereunder and to adopt and amend rules and regulations for the administration
of the BHR Director Plan. Any interpretation, determination or other action made
or taken by the BHR Director Plan Committee shall be final, binding and

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conclusive. Notwithstanding the foregoing, the BHR Director Plan Committee will
have no authority, discretion or power to determine the terms or timing of
options to be granted under the BHR Director Plan. The members of the BHR
Director Plan Committee will not be personally liable for any good faith
interpretation, determination or other action with respect to the BHR Director
Plan. to the extent the BHR Board of Directors assumes administration of the BHR
Equity Incentive Plan, the BHR Board of Directors will have all the authority
and responsibility of the Committee with respect to the BHR Director Plan.

Subject to adjustment as described below, the number of BHR Common Shares
issued or transferred, plus the number of shares covered by outstanding options,
under the BHR Director Plan may not exceed . BHR Common Shares covered
by an option which is cancelled or terminated will again be available to be
issued or to be the subject of a stock option granted under the BHR Director
Plan. The BHR Director Plan Committee will make or provide for adjustments to
the maximum number of shares issuable pursuant to the BHR Director Plan, the
number and kind of BHR Common Shares or other securities that are covered by
outstanding options, and the exercise price applicable to outstanding options as
the BHR Director Plan Committee will in good faith determine to be equitably
required to prevent dilution or expansion of the rights of optionees which would
otherwise result from any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of BHR, any merger,
consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of warrants or
other rights to purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing.

Any person who becomes an Eligible Director will automatically receive at
such time an option to purchase BHR Common Shares at an exercise price per
share equal to the market value of a BHR Common Share on the date the individual
becomes a director (the options described in this sentence are hereinafter
referred to as "Initial Options"). Initial Options will become exercisable to
the extent of 34% of the shares covered thereby after the optionee continuously
has served as director through the next annual stockholders' meeting immediately
following such grant date, and to the extent of an additional 33% of the shares
covered thereby in each of next two successive years if the optionee has
continuously served as a director in such years. Notwithstanding the foregoing,
if an optionee dies or becomes disabled, all Initial Options held by such
optionee will become immediately exercisable in full to the extent the Initial
Options would have been exercisable had the optionee remained a director through
the date of BHR's next annual stockholders' meeting. To the extent exercisable,
each Initial Option will be exercisable in whole or in part.

On the date of the annual meeting of BHR's stockholders in each year,
commencing with the 1999 annual meeting, each Eligible Director elected at or
continuing his or her term after such meeting automatically will be granted a
non-qualified option to purchase BHR Common Shares at an exercise price per
share equal to the fair market value of a BHR Common Share on such date ("Annual
Option"). Annual Options will become exercisable to the extent of 100% of the
shares covered thereby on the date of the next annual stockholders' meeting.
Notwithstanding the foregoing, if an optionee dies or becomes disabled, all
Annual Options held by such optionee will become exercisable in full. To the
extent exercisable, each Annual Option will be exercisable in whole or in part.

The exercise price of stock options granted under the BHR Director Plan may
be paid in cash, BHR Common Shares held by the optionee for at least six months,
or a combination thereof. The requirement of payment in cash will be deemed to
be satisfied if the optionee provides for a broker who is a member of the
National Association of Securities Dealers, Inc. to sell a sufficient number of
BHR Common Shares being purchased so that the net sales proceeds equal, at
least, the exercise price, and such broker agrees to deliver the exercise price
to BHR not later than the settlement date of the sale. BHR Common Shares issued
pursuant to the BHR Director Plan may be authorized but unissued shares of
treasury stock. Fractional shares will not be issued in connection with the
exercise of a stock option, and cash in lieu thereof will be paid by BHR. Each
Initial Option and Annual Option (each an "Option") will terminate on the
earliest to occur of (i) three months after the optionee ceases to serve as a
director of BHR for a reason other than the optionee's death or disability, (in
one year following the optionee's death or disability, or (iii) five years from
the date of grant of the Option.

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Except as otherwise determined by the Committee, Options will not be
transferable other than by will or the laws of descent or distribution and will
be exercisable during the lifetime of the optionee only by the optionee or, in
the event of the optionee's incapacity, by the optionee's guardian or legal
representative acting in a fiduciary capacity. The Committee may specify at or
after the date of grant that an Option is transferable by a participant to
members of the participant's immediate family, without payment by the
transferee, if reasonable prior notice of the transfer was given to BHR, and the
transfer was made according to the terms and conditions specified by the
Committee or BHR. Any transferee will be subject to the same terms and
conditions under the BHR Director Plan as apply to the participant.

The BHR Board of Directors may at any time amend or terminate the BHR
Director Plan. Notwithstanding the foregoing, except for the adjustments
described above, without the approval of the stockholders of BHR no such
amendment will increase the maximum number of shares covered by the BHR Director
Plan or materially modify the requirements as to eligibility for participation
in the BHR Director Plan. No amendment or termination will adversely affect any
outstanding award without the consent of the Director holding such award.

Federal Income Tax Consequences

The following is a brief summary of the Federal income tax consequences of
certain transactions under the BHR Equity Incentive Plan, and of Options under
the BHR Director Plan, based on Federal income tax laws in effect on January 1,
1998. This summary is not intended to be complete and does not describe state or
local tax consequences.

Nonqualified Stock Options and Options under the BHR Director Plan. In
general, (i) no income will be recognized by an optionee at the time a
nonqualified Stock Option is granted; (ii) at the time of exercise of a
nonqualified Stock Option, ordinary income will be recognized by the optionee in
an amount equal to the difference between the option price paid for the shares
and the fair market value of the shares, if unrestricted, on the date of
exercise; and (iii) at the time of sale of shares acquired pursuant to the
exercise of a nonqualified Stock Option, appreciation (or depreciation) in value
of the shares after the date of exercise will be treated as a capital gain (or
loss). This paragraph applies to all Options granted under the BHR Director
Plan.

Incentive Stock Options. No income generally will be recognized by an
optionee upon the grant or exercise of an incentive Stock Option. If BHR Common
Shares are issued to the optionee pursuant to the exercise of an incentive Stock
Option, and if no disqualifying disposition of such shares is made by such
optionee within two years after the date of grant or within one year after the
transfer of such shares to the optionee, then upon sale of such shares, any
amount realized in excess of the option price will be taxed to the optionee as a
capital gain and any loss sustained will be a capital loss.

If BHR Common Shares acquired upon the exercise of an incentive Stock
Option are disposed of prior to the expiration of either holding period
described above, the optionee generally will recognize ordinary income in the
year of disposition in an amount equal to the excess (if any) of the fair market
value of such shares at the time of exercise (or, if less, the amount realized
on the disposition of such shares if a sale or exchange) over the option price
paid for such shares. Any further gain (or loss) realized by the participant
generally will be taxed as a capital gain (or loss).

Appreciation Rights. No income will be recognized by a participant in
connection with the grant of an Appreciation Right. When the Appreciation Right
is exercised, the participant normally will be required to include as taxable
ordinary income in the year of exercise an amount equal to the amount of cash
received and the fair market value of any unrestricted BHR Common Shares
received on the exercise.

Restricted Shares. The recipient of Restricted Shares generally will be
subject to tax at ordinary income rates on the fair market value of the
Restricted Shares (reduced by any amount paid by the participant for such
Restricted Shares) at such time as the shares are no longer subject to
forfeiture or restrictions on transfer for purposes of Section 83 of the Code
("Restrictions"). However, a recipient who so elects under Section 83(b) of the
Code within 30 days of the date of transfer of the shares will have taxable
ordinary

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income on the date of transfer of the shares equal to the excess of the fair
market value of such shares (determined without regard to the Restrictions) over
the purchase price, if any, of such Restricted Shares. If a Section 83(b)
election has not been made, any dividends received with respect to Restricted
Shares that are subject to the Restrictions generally will be treated as
compensation that is taxable as ordinary income to the participant.

Deferred Shares. No income generally will be recognized upon the award of
Deferred Shares. The recipient of a Deferred Share award generally will be
subject to tax at ordinary income rates on the fair market value of
nonrestricted BHR Common Shares on the date that such shares are transferred to
the participant under the award (reduced by any amount paid by the participant
for such Deferred Shares).

Performance Shares and Performance Units. No income generally will be
recognized upon the grant of Performance Shares or Performance Units. Upon
payment in respect of the earn-out of Performance Shares or Performance Units,
the recipient generally will be required to include as taxable ordinary income
in the year of receipt an amount equal to the amount of cash received and the
fair market value of any nonrestricted BHR Common Shares received.

Tax Consequences to BHR. To the extent that a participant recognizes
ordinary income in the circumstances described above, BHR or subsidiary for
which the participant performs services will be entitled to a corresponding
deduction provided that, among other things, the income meets the test of
reasonableness, is an ordinary and necessary business expense, is not an "excess
parachute payment" within the meaning of Section 280G of the Code and is not
disallowed by the $1 million limitation on certain executive compensation under
Section 162(m) of the Code.

MANAGEMENT AND OWNERSHIP OF FELCOR

PRINCIPAL STOCKHOLDERS OF FELCOR

Security Ownership of Certain Beneficial Owners of FelCor

The following table sets forth information, as of March 31, 1998, regarding
each person known to FelCor to be the beneficial owner of more than five percent
(5%) of the FelCor Common Shares. Unless otherwise indicated, such FelCor Common
Shares are owned directly and the indicated person has sole voting and
investment power with respect thereto.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
------------------- ---------- ----------
<S> <C> <C>
Franklin Resources, Inc..................................... 4,426,800(2) 11.7%
777 Mariners Island Blvd.
San Mateo, California 94404
FMR Corp.................................................... 3,182,956(3) 8.7%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>

- ---------------

(1) Based upon 36,591,080 shares outstanding as of March 31, 1998.

(2) Based solely upon information contained in Schedule 13G, dated January 16,
1998. Franklin Resources, Inc. reported that, through its subsidiaries, it
has sole voting and dispositive power with respect to 4,302,072 shares.
Includes 1,446,601 FelCor Common Shares issuable upon conversion of
1,866,100 FelCor Series A Preferred Shares.

(3) Based solely upon information contained in Schedule 13G, dated February 14,
1998. FMR Corp. reported that, through its subsidiaries, it had sole
dispositive power with respect to such shares and sole voting power with
respect to 566,070 of such shares.

127
<PAGE> 128

Security Ownership of Management of FelCor

The following table sets forth the beneficial ownership of FelCor Common
Shares and FelCor Series A Preferred Shares, as of March 31, 1998, by (i) each
director and director nominee, (ii) each FelCor Named Executive Officer and
(iii) all directors and executive officers as a group. Unless otherwise
indicated, such FelCor Common Shares and FelCor Series A Preferred Shares are
owned directly and the indicated person has sole voting and investment power.

<TABLE>
<CAPTION>
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
BENEFICIAL PERCENT BENEFICIAL PERCENT
NAME OF OWNERSHIP OF OF OWNERSHIP OF OF
BENEFICIAL OWNER COMMON SHARES CLASS(1) PREFERRED SHARES CLASS(1)
---------------- ------------- -------- ---------------- --------
<S> <C> <C> <C> <C>
Hervey A. Feldman........................ 524,515(2)(3) 1.4% 3,000(10) *
Thomas J. Corcoran, Jr................... 534,615(2)(4) 1.5% 3,000 *
Richard S. Ellwood....................... 6,000 * 0 0
Richard O. Jacobson...................... 15,000 * 0 0
Charles A. Ledsinger, Jr................. 375 * 0 0
Charles N. Mathewson..................... 609,777(5) 1.7% 90,000(11) 1.5%
Thomas A. McChristy...................... 47,400(6) * 0 0
Lawrence D. Robinson..................... 50,500(7) * 0 0
William S. McCalmont..................... 23,500(8) * 0 0
William P. Stadler....................... 13,577(9) * 100 *
All executive officers and directors as a
group (12 persons)..................... 1,576,464 4.3% 96,100 1.6%
</TABLE>

- ---------------

* Represents less than 1% of the outstanding shares of such class.

(1) Based upon 36,591,080 shares outstanding as of March 31, 1998.

(2) Includes 294,915 shares issuable to FelCor, Inc. upon exercise of
redemption rights with respect to FelCor Operating Partnership Units issued
to it in connection with the FelCor IPO. Messrs. Feldman and Corcoran are
the sole stockholders and directors of FelCor, Inc. and each may be deemed
to own beneficially all of the FelCor Operating Partnership Units owned by
FelCor, Inc. Also includes (i) an aggregate of 33,000 shares issued
pursuant to stock grants (9,000 in February 1995, 9,000 in December 1995,
and 15,000 in February 1997), which shares vest over a five-year period
from the date of grant at the rate of 20% per year and of which 167,200
shares are fully vested, (ii) 167,200 shares issuable pursuant to currently
exercisable stock options, and (iii) 2,325 shares issuable upon the
conversion of 3,000 FelCor Series A Preferred Shares. Does not include
283,800 shares issuable to Mr. Feldman and 333,800 shares issuable to Mr.
Corcoran pursuant to outstanding stock options which are not currently
exercisable.

(3) Includes 200 shares owned of record by Mr. Feldman's minor children.

(4) Includes 300 shares owned of record by Mr. Corcoran's minor children.

(5) Includes 540,009 shares issuable to or for the benefit of Mr. Mathewson
upon exercise of redemption rights with respect to FelCor Operating
Partnership Units, which represents Mr. Mathewson's pro rata interest in
FelCor Operating Partnership Units issued in connection with the FelCor IPO
to partnerships in which Mr. Mathewson is a limited partner. Also includes
69,768 shares issuable upon conversion of 90,000 FelCor Series A Preferred
Shares.

(6) Includes 38,000 shares owned of record by the T.A. McChristy Living Trust,
over which Mr. McChristy has sole investment and voting power, and 4,400
shares owned of record by his spouse's individual retirement account.

(7) Includes (i) 14,500 shares issued pursuant to stock grants, which shares
vest over a five-year period from the date of grant at the rate of 20% per
year and of which 2,900 shares are fully vested, and (ii) 22,000 shares
issuable pursuant to currently exercisable stock options. Does not include
148,000 shares issuable pursuant to outstanding stock options which are not
currently exercisable.

128
<PAGE> 129

(8) Represents (i) 5,000 shares issued in August 1996 pursuant to a stock
grant, which shares were fully vested prior to the termination of Mr.
McCalmont's employment on October 31, 1997, and (ii) 18,500 shares issuable
pursuant to currently exercisable stock options. Does not include shares
covered by stock grants or stock options which were forfeited or expired
upon the termination of Mr. McCalmont's employment with FelCor.

(9) Represents (i) 2,500 shares issued in July 1995 pursuant to a stock grant,
which shares vest over a five-year period from the date of grant at the
rate of 20% per year of which 1,000 shares are fully vested, (ii) 12,000
shares issuable pursuant to currently exercisable stock options and (iii)
77 shares issuable upon conversion of 100 FelCor Series A Preferred Shares.
Does not include 38,000 shares issuable pursuant to outstanding stock
options which are not currently exercisable.

(10) Includes 1,000 shares owned by Mr. Feldman's spouse and 1,000 shares owned
by trust for the benefit of his minor children.

(11) Represents shares owned of record by the Charles M. Mathewson Trust.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Exchange Act requires officers and directors, and
persons who beneficially own more than ten percent (10%) of any class of
FelCor's stock, to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission ("SEC"). Officers,
directors and greater than ten percent (10%) beneficial owners are required by
SEC regulations to furnish FelCor with copies of all Section 16(a) forms they
file.

Based solely on a review of the copies furnished to FelCor and
representations from the officers and directors, FelCor believes that all
Section 16(a) filing requirements for the year ended December 31, 1997
applicable to its officers, directors and greater than ten percent (10%)
beneficial owners were satisfied.

Based on written representations from the officers and directors, FelCor
believes that no Form 5 for any director, officer or greater than ten percent
(10%) beneficial owner was required to be filed with the SEC for the period
ended December 31, 1997.

CURRENT EXECUTIVE OFFICERS OF FELCOR

The executive officers of FelCor, their respective ages, positions held and
tenure as officers are as follows:

<TABLE>
<CAPTION>
OFFICER OF THE
NAME AGE POSITION(S) HELD FELCOR COMPANY SINCE
---- --- ----------------------- --------------
<S> <C> <C> <C>
Hervey A. Feldman(1)............ 60 Chairman of the Board 1994
Thomas J. Corcoran, Jr.......... 49 President and Chief Executive 1994
Officer
Randall L. Churchey............. 37 Senior Vice President, Chief 1997
Financial Officer and Treasurer
Lawrence D. Robinson............ 54 Senior Vice President, General 1996
Counsel and Secretary
William P. Stadler.............. 43 Senior Vice President, Director 1995
of Corporate Acquisitions
Jack Eslick..................... 46 Vice President, Director of 1996
Asset Management
June H. McCutchen............... 47 Vice President, Director of 1995
Design and Construction
Larry J. Mundy.................. 47 Vice President, Director of 1998
Hotel Acquisitions
</TABLE>

- ---------------

(1) Mr. Feldman will resign as Chairman of the Board and will become Chairman
Emeritus following the FelCor Annual Meeting.

129
<PAGE> 130

Business Experience of Executive Officers

Information concerning the business experience of Mr. Corcoran is provided
under the section captioned "Other FelCor Annual Meeting Proposals -- Election
of Directors."

Hervey A. Feldman is the Chairman of the Board of FelCor and has served in
that capacity since its formation in May 1994. He is also a co-founder of
FelCor, Inc. and has served as its Chairman since its formation in 1991. Prior
to that time, he held executive positions with Embassy Suites, Inc., serving as
its Chairman of the Board from June 1990 until January 1992, and as its
President and Chief Executive Officer from the founding of that company in
January 1983 to April 1990. Prior to 1990, Mr. Feldman had spent over 25 years
in the hotel industry, including serving in various management positions with
Brock Hotel Corporation during a period when that company was one of the largest
franchisees of Holiday Inn hotels in the U. S.; as Executive Vice President for
North American Development of Holiday Inns, Inc.; and President and Chief
Executive Officer of Brock Residence Inns, Inc., which founded the
extended-stay, all-suite chain now known as Residence Inns by Marriott.

Randall L. Churchey has served as Senior Vice President, Chief Financial
Officer and Treasurer of FelCor since November 1997. For approximately 15 years
prior to joining FelCor, Mr. Churchey held various positions with Coopers &
Lybrand, L.L.P. Most recently, Mr. Churchey served as the Chairman of the
Hospitality and Real Estate Practice of that firm for the Southwestern United
States.

Lawrence D. Robinson has served as Senior Vice President, General Counsel
and Secretary of FelCor since May 1996. From 1972 to 1989, Mr. Robinson was a
partner in the Kansas City based law firm of Stinson, Mag & Fizzell, for which
he founded and managed a Dallas, Texas office from 1982 to 1989. From 1989
through April 1996, Mr. Robinson was a partner in the Houston based law firm of
Bracewell & Patterson, L.L.P., where he served as the managing partner of its
Dallas office until 1992, as the head of that office's corporate and securities
law section and as chairman of its firmwide hospitality group.

William P. Stadler began his employment with FelCor in July 1995 as Vice
President, Director of Acquisition and Development. On January 14, 1998, Mr.
Stadler was promoted to Senior Vice President, Director of Corporate
Acquisitions. Mr. Stadler has over 17 years of experience in hotel acquisition
and development, having served as Vice President Development for Coastal Hotel
Group from 1994 until he joined FelCor in 1995, as Vice President-Development
for Embassy Suites, Inc. from 1992 to 1994, as Senior Vice President-Development
for Landmark Hotels, Inc. from 1989 to 1991 and as Vice President-Development
for Marriott Corporation from 1985 to 1989.

Jack Eslick joined FelCor in April 1996 as its Vice President, Director of
Asset Management. Mr. Eslick has over 20 years experience in hotel operations.
From April 1991 until he joined FelCor, Mr. Eslick served as Vice President of
Operations of Promus, where he had direct responsibility for all operations in a
region that grew from 14 hotels to 26 hotels. Prior to April 1991, he served in
various capacities with Holiday Inns, Inc., including serving as general manager
of various hotels and as a Regional Director of Operations.

June H. McCutchen joined FelCor in October 1995 as Vice President, Director
of Design and Construction. Her most recent experience was as Account Executive
for Hospitality Restoration & Builders, Inc. since 1994. From 1992 to 1994 she
was Project Manager for American General Hospitality, Inc. where she managed all
capital improvement work for over 35 properties. Prior to 1992, Ms. McCutchen
was Project Manager for Hilton Hotels, Inc. from 1987 to 1992, and prior to
1987, she served as design coordinator and purchasing manager for Embassy
Suites, Inc.

Larry J. Mundy joined FelCor in January 1998 as Vice President, Director of
Hotel Acquisitions. From 1995 until he joined FelCor he was Vice President of
Franchise Development for Motel 6. From 1987 to 1995 he was Vice President of
Development in the South/Southeast for Hilton Hotels and prior to 1987 he served
as corporate counsel for Residence Inns and Embassy Suites.

The officers of FelCor are elected annually by the FelCor Board at a
meeting held following each annual meeting of stockholders, or as soon
thereafter as necessary and convenient in order to fill vacancies or newly
created offices. Each officer holds office until his successor is duly elected
and qualified or until his death,

130
<PAGE> 131

resignation or removal, if earlier. Any officer or agent elected or appointed by
the FelCor Board may be removed by the FelCor Board whenever in its judgment the
best interests of FelCor will be served thereby, but such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.

There are no family relationships among the executive officers. There are
no arrangements or understandings between any officer and any other person
pursuant to which that officer was selected.

CERTAIN TRANSACTIONS RELATING TO FELCOR

Relationships with DJONT

All of the voting Class A membership interest in DJONT (representing a 50%
equity interest) is owned by FelCor, Inc., which is owned by Hervey A. Feldman
and Thomas J. Corcoran, Jr., the current Chairman of the Board and Chief
Executive Officer of FelCor, respectively. All of the non-voting Class B
membership interest in DJONT (representing the remaining 50% equity interest) is
owned by RGC Leasing, Inc., a Nevada corporation owned by the children of
Charles N. Mathewson, a director of FelCor. Mr. Feldman and Mr. Corcoran are
also officers and directors of DJONT.

FelCor and the FelCor Operating Partnership have entered into a number of
transactions with DJONT and certain other affiliates.

The Percentage Leases

The FelCor Operating Partnership and DJONT have entered into the Percentage
Leases, generally with terms of 10 to 15 years, relating to each hotel in which
FelCor owns an interest. Pursuant to the terms of the Percentage Leases, DJONT
is required to pay rent and certain other additional charges to the FelCor
Operating Partnership, and is entitled to all profits from the operation of the
hotels leased by it after the payment of operating, management and other
expenses. Lease rent paid by DJONT under the Percentage Leases totaled
approximately $217.0 million for the year ended December 31, 1997.

Sharing of Offices and Employees

FelCor shares its executive offices and certain employees with FelCor, Inc.
and DJONT, and each company bears its share of the costs thereof, including an
allocated portion of the rent, salaries of certain personnel (other than Messrs.
Feldman and Corcoran, whose salaries are borne solely by FelCor), office
supplies, telephones and depreciation of office furniture, fixtures and
equipment. Any such allocation of shared expenses to FelCor must be approved by
a majority of the Independent Directors. During 1997, FelCor paid approximately
$1.3 million (approximately 38%) of the allocable expenses under this agreement.

Employment Agreements

FelCor has entered into employment agreements with each of Messrs. Feldman
and Corcoran. See "-- Executive Compensation -- Employment Agreements."

Compensation of Director for Special Services

In connection with FelCor's acquisition, during February 1997, of interests
in 10 hotels at an aggregate cost of approximately $139 million (including
FelCor's share of certain assumed indebtedness), Mr. Richard S. Ellwood, an
Independent Director of FelCor, was paid a one-time fee in the amount of
$200,000 for his services in facilitating this transaction.

131
<PAGE> 132

FELCOR'S EXECUTIVE COMPENSATION

The following table sets forth information, for the fiscal years ended
December 31, 1997, 1996 and 1995, regarding the compensation of FelCor's Chief
Executive Officer and the four other most highly compensated executive officers
during 1997 ("FelCor Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------------------
----------------------------------- SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
COMPENSATION STOCK OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) AWARDS($)(4) SARS(#) ($)(13)
--------------------------- ---- --------- -------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas J. Corcoran, Jr.......... 1997 200,000 250,000 None 525,000(5) 201,000(12) 14,250
President and Chief 1996 123,240 None None None None 4,875
Executive Officer 1995 120,000 None None 194,625(6) 150,000 4,875
243,000(7)
Hervey A. Feldman............... 1997 150,000 None None 525,000(5) 151,000(12) 9,000
Chairman of the Board 1996 123,240 None None None None 4,875
1995 120,000 None None 194,625(6) 150,000 4,875
243,000(7)
Lawrence D. Robinson............ 1997 115,500 47,500 None 87,500(8) 70,000(12) None
Senior Vice President 1996(2) 66,667 None None 349,500(9) 100,000 None
General Counsel
William S. McCalmont............ 1997 140,291 34,500 None None 20,000(12) 38,733
Senior Vice President 1996 67,708 None None 457,500(10) 92,500 55,524
Chief Financial Officer(1)
William P. Stadler.............. 1997 99,383 115,000 None None 25,000(12) 14,250
Vice President, Director 1996 79,020 100,000 None None None 4,875
of New Development 1995(3) 34,125 45,000 None 66,100(11) 25,000 2,438
</TABLE>

- ---------------

(1) Mr. McCalmont was employed as FelCor's Chief Financial Officer from August
14, 1996 until October 31, 1997. The information for 1996 includes
compensation only during the period from August 14, 1996 through December
31, 1996 and for 1997 includes compensation through the date of his
resignation.

(2) Includes compensation only during the period from the date of commencement
of Mr. Robinson's employment (May 1996) through December 31, 1996.

(3) Includes compensation only during the periods from the date of commencement
of Mr. Stadler's employment (July 1995) through December 31, 1995.

(4) An aggregate of 37,500 shares of restricted stock were awarded in the 1997
fiscal year. An aggregate of 35,000 of these restricted stock grants vest
over a five-year period and 2,500 shares vest fully within two months of
issuance. Holders of restricted stock are entitled to vote and receive
dividends on such shares from the date of grant. The amount reported in this
table represents the market value of the shares awarded on the date of
grant, determined by the closing price of the FelCor Common Shares on such
date, without giving effect to the diminution of value attributable to the
restrictions on such stock. As of December 31, 1997, the aggregate unvested
restricted stock holdings by the Named Executive Officers consisted of
65,200 shares as set forth below, with a then current aggregate market
value, determined in the same manner as of December 31, 1997, of $1,924,000,
as follows: Mr. Corcoran (25,800 shares, $758,604 value); Mr. Feldman
(25,800 shares, $758,604 value); Mr. Robinson (12,100 shares, $367,132
value); and Mr. Stadler (1,500 shares, $39,660 value).

(5) Represents an award of 15,000 shares of restricted stock on February 19,
1997 which become vested over a five-year period at the rate of 20% per
year. The value is based upon the closing price of the FelCor Common Shares
on the date of grant of $35.00 per share.

(6) Represents an award of 9,000 shares of restricted stock on February 16, 1995
which becomes vested over a five-year period at the rate of 20% per year.
The value is based upon the closing price of the FelCor Common Shares on the
date of grant of $21.625 per share.

132
<PAGE> 133

(7) Represents an award of 9,000 shares of restricted stock as of December 15,
1995, which become vested over a five-year period from the date of grant at
the rate of 20% per year. The value is based upon the closing price of the
FelCor Common Shares on the date of grant of $27.00 per share.

(8) Represents an award of 2,500 shares of restricted stock as of February 19,
1997, which become vested over a five-year period from the date of grant at
the rate of 20% per year. The value is based upon the closing price of the
FelCor Common Shares on the date of grant of $35.00 per share.

(9) Represents an award of 12,000 shares of restricted stock as of May 1, 1996
which become vested over a five-year period from the date of grant at the
rate of 20% per year. The value is based upon the closing price of the
FelCor Common Shares on the date of grant of $29.125 per share.

(10) Represents an award of 15,000 shares of restricted stock as of August 14,
1996 of which 2,500 shares vested on January 1, 1997 and 2,500 shares
vested on August 14, 1997. The unvested shares were forfeited upon the
termination of Mr. McCalmont's employment on October 31, 1997. The value is
based upon the closing price of the FelCor Common Shares on the date of
grant of $30.50 per share.

(11) Represents an award of 2,500 shares of restricted stock on July 24, 1995
which become vested over a five-year period at the rate of 20% per year.
The value is based upon the closing price of the FelCor Common Shares on
the date of grant of $26.44 per share.

(12) Represent shares purchasable pursuant to options granted in 1997. See
"-- Option Grants" below.

(13) These amounts represent FelCor's contributions to FelCor's employee savings
and investment plan in the amount of up to $14,250 to each executive
officer and, in the case of Mr. McCalmont, a moving allowance of $77,382
paid to Mr. McCalmont in connection with the commencement of his employment
with FelCor, $26,733 of which was paid in 1997.

The executive officers receive health and disability insurance benefits
which do not exceed 10% of their respective salaries. These benefits are also
provided to all other employees of FelCor.

133
<PAGE> 134

Option Grants

The following table sets forth information regarding grants of stock
options to the FelCor Named Executive Officers during the 1997 fiscal year. The
options were granted pursuant to either FelCor's 1994 Restricted Stock and Stock
Option Plan (the "FelCor 1994 Plan") or the 1995 Restricted Stock and Stock
Option Plan (the "FelCor 1995 Plan"). No stock appreciation rights ("SARs") were
granted during the 1997 fiscal year.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATE OF
SECURITIES OPTIONS MARKET PRICE STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR ON DATE OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE OF GRANT EXPIRATION -------------------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) ($/SHARE) DATE 0%($) 5%($) 10%($)
---- ---------- ------------ ----------- ------------ ---------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas J. Corcoran, Jr. 46,000 6.2% 29.50 35.00 2/19/07 253,000 3,979,520 5,532,925
30,000 4.0% 35.50 35.00 2/19/07 0 2,775,339 3,788,430
10,000 1.3% 35.00 35.00 2/19/07 0 920,113 1,257,810
65,000 8.8% 36.63 36.63 6/24/07 0 6,259,267 8,556,521
50,000 6.7% 37.56 37.56 8/13/07 0 4,937,064 6,749,048
Hervey A. Feldman 46,000 6.2% 29.50 35.00 2/19/07 253,000 3,979,520 5,532,925
30,000 4.0% 35.50 35.00 2/19/07 0 2,775,339 3,788,430
10,000 1.3% 35.00 35.00 2/19/07 0 920,113 1,257,810
65,000 8.8% 36.63 36.63 6/24/07 0 6,259,267 8,556,521
Lawrence D. Robinson 10,000 1.3% 35.00 35.00 2/19/07 0 920,113 1,257,810
10,000 1.3% 36.63 36.63 6/24/07 0 962,964 1,316,388
50,000 6.7% 37.56 37.56 8/13/07 0 4,937,064 6,749,048
William S. McCalmont 10,000 1.3% 35.00 35.00 2/19/07(1) 0 0 0
10,000 1.3% 36.63 36.63 6/24/07(1) 0 0 0
William P. Stadler 10,000 1.3% 35.00 35.00 2/19/07 0 920,113 1,257,810
5,000 0.7% 36.63 36.63 6/24/07 0 481,482 658,194
10,000 1.3% 37.56 37.56 8/13/07 0 987,413 1,349,810
</TABLE>

- ---------------

(1) All of the options awarded to Mr. McCalmont during 1997 expired upon the
termination of his employment on October 31, 1997.

Each of the aforementioned options becomes exercisable over a five year
period, with 20% of the total number of shares covered thereby becoming
exercisable on each of the first five anniversaries of the date of grant, and
expires on the tenth anniversary of the date of grant.

The unexpired stock options to purchase FelCor Common Shares held by the
FelCor Named Executive Officers of FelCor at December 31, 1997 are summarized in
the following table:

FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas J. Corcoran, Jr............. 150,000 351,000 $1,822,500 $1,946,000
Hervey A. Feldman.................. 150,000 301,000 1,822,500 1,946,000
Lawrence D. Robinson............... 20,000 150,000 127,600 515,400
William S. McCalmont............... 18,500 0(2) 92,500 0(2)
William P. Stadler................. 10,000 40,000 90,600 140,900
</TABLE>

- ---------------

(1) Based on the difference between the option exercise price and the closing
sales prices for the FelCor Common Shares on the NYSE for December 31, 1997,
which was $35.50 per share.

(2) Mr. McCalmont's unvested options expired upon the termination of his
employment.

134
<PAGE> 135

Employment Agreements

FelCor has entered into employment agreements with each of Messrs. Feldman
and Corcoran (each an "Employment Agreement") that will continue in effect until
December 31, 1999 and automatically be renewed for successive one year terms,
unless otherwise terminated. Pursuant to such Employment Agreements, Mr. Feldman
serves as Chairman of the Board, and Mr. Corcoran serves as President and Chief
Executive Officer, of FelCor. Each was paid a base salary of $10,000 per month
in 1995 and $10,270 per month in 1996, and in 1997, Mr. Feldman received $12,500
per month and Mr. Corcoran received $16,667 per month. Effective January 1,
1998, Mr. Feldman is to receive $12,500 per month and Mr. Corcoran is to receive
$20,833 per month. In connection with Mr. Feldman's retirement from his position
as Chairman of the Board, effective upon the FelCor Annual Meeting, the
Compensation Committee has determined to continue to provide compensation to Mr.
Feldman under his Employment Agreement at the rate of $12,500 per month through
the end of its term on December 31, 1999. The Compensation Committee of the
FelCor Board may provide for additional compensation as a bonus should it
determine, in its discretion, based on merit, FelCor's anticipated financial
performance and other criteria, that such additional compensation is
appropriate. FelCor maintains a comprehensive medical plan for the benefit of
Messrs. Feldman and Corcoran and their dependents.

Savings Plan

FelCor has established an employee savings and investment plan ("Savings
Plan") covering substantially all employees, including executive officers. The
Savings Plan is designed to qualify under Section 401(k) of the Code. Each
participant has the option to defer taxation of a portion of his or her earnings
by directing FelCor to contribute a percentage of such earnings to the Savings
Plan. A participant may direct a minimum of 1% and a maximum of 20% of eligible
pre-tax earnings to the Savings Plan, subject to certain limitations set forth
in the Code. Participants may also elect after-tax contributions to the Savings
Plan in an amount not to exceed 10% of his or her eligible earnings. A
participant's contributions become distributable upon the termination of his or
her employment for any reason. The participants are fully vested at all times in
all amounts contributed by them to the Savings Plan.

Restricted Stock and Stock Option Plans

FelCor has adopted the FelCor 1994 Plan and the FelCor 1995 Plan
(collectively, the "Stock Plans"). The Stock Plans were adopted to provide
incentives to attract and retain Independent Directors, executive officers and
key employees. The Stock Plans are administered by the Compensation Committee
or, in the case of grants to Independent Directors, by the FelCor Board. The
Compensation Committee generally has the authority, within limitations set forth
in the Stock Plans, (i) to establish rules and regulations concerning the Stock
Plans, (ii) to determine the persons to whom Options (as defined below) and
Restricted Stock (as defined below) may be granted, (iii) to fix the number of
FelCor Common Shares to be covered by each Option and the number of Restricted
Shares granted, and (iv) to set the terms and provisions of each grant of
Options or Restricted Shares to be granted. The summary of the Stock Plans set
forth below is qualified in its entirety by reference to the text of the Stock
Plans.

The Stock Plans provide for the grant of stock options to purchase a
specified number of shares of Common Stock ("Options") or grants of restricted
shares of FelCor Common Shares ("Restricted Shares"). Under the FelCor 1994 Plan
the total number of shares originally available for grant was equal to 450,000
FelCor Common Shares, of which not more than 50,000 shares were to be grants of
Restricted Shares. Of the FelCor Common Shares, originally available under the
FelCor 1994 Plan, 433,500 shares were designated for grant to the officers and
employees of FelCor, of which 33,500 shares could be granted as Restricted
Shares. The remaining 16,500 FelCor Common Shares were designated for grant to
Independent Directors, all of which shares could be granted as Restricted
Shares. At March 10, 1998, there were no shares remaining available for the
grant of options to officers and eligible employees of FelCor and 2,500 shares
remaining available for grants to independent directors of FelCor under the
FelCor 1994 Plan. Under the FelCor 1995 Plan, the total number of shares
originally available for grant was equal to 1,200,000 FelCor Common Shares which
was subsequently amended to 1,500,000 FelCor Common Shares, of which not more
than

135
<PAGE> 136

133,333 shares could be grants of Restricted Shares. Of the FelCor Common Shares
originally available under the amended FelCor 1995 Plan, 1,450,000 shares were
designated for grants to the officers and eligible employees of FelCor, of which
83,333 shares could be granted as Restricted Shares. The remaining 50,000 FelCor
Common Shares were designated for grant to the Independent Directors, of which
50,000 shares could be granted as Restricted Shares. At March 10, 1998, there
remained available under the FelCor 1995 Plan only 65,167 shares available for
grants of options and 17,833 shares available for grants of Restricted Shares to
officers and eligible employees of FelCor. All of the 150,000 shares originally
available for grants to independent directors remained available. Upon the
occurrence of certain extraordinary events, the FelCor Board or the Compensation
Committee may make such adjustments in the aggregate number and kind of shares
reserved for issuance, the number of shares and kind covered by outstanding
awards and the exercise prices specified therein as may be determined to be
appropriate.

Participants in the Stock Plans, who may be directors, officers or
employees of FelCor, its subsidiaries (including the FelCor Operating
Partnership) or designated affiliates, are selected by the Compensation
Committee.

The Compensation Committee may amend any award granted, prospectively or
retroactively. No such amendment may impair the rights of any participant under
any award without the consent of that participant (except for any amendment made
to cause the plan to qualify for an exemption provided by Rule 16b-3 under the
Exchange Act).

Options granted under the Stock Plans may be incentive stock options
("ISOs") under Section 422 of the Code or non-qualified options, at the
discretion of the Compensation Committee, provided that no Independent Director
may receive a grant of ISOs. The Stock Plans provide that the exercise price of
an Option will be fixed by the Compensation Committee on the date of grant;
however, the exercise price of an ISO must be not less than the fair market
value of a share of FelCor Common Shares on the date of the grant. Any ISOs
granted to such participants also must expire within ten years from the date of
adoption of the Stock Plans. Moreover, Options granted under either Stock Plan
will not be ISOs to an individual participant to the extent that the aggregate
fair market value of the FelCor Common Shares with respect to which such Options
under the respective Stock Plan (or under any other plan maintained by FelCor or
a subsidiary thereof) first become exercisable by such participant in any year
exceeds $100,000. No Options shall be granted under the FelCor 1994 Plan on or
after March 31, 2004, or under the FelCor 1995 Plan on or after November 1,
2005.

Grants of Restricted Shares under the Stock Plans are subject to the terms
and conditions imposed by the Compensation Committee. Except for such
restrictions on transfer as the Compensation Committee may impose, the
participants have all the rights of a holder of FelCor Common Shares as to such
Restricted Shares including the right to vote the shares and the right to
receive any cash distributions. Except as provided by the Compensation Committee
at the time of grant or otherwise, upon a termination of employment for any
reason during the Restriction Period, all unvested shares will be forfeited by
the participant.

The Stock Plans may be terminated and may be modified or amended by the
FelCor Board at any time; however, (i) any modification or amendment either
increasing the aggregate number of shares which may be issued under Options,
increasing materially the benefits accruing to participants under the Stock
Plans or materially modifying the requirements as to eligibility to receive
Options is subject to stockholder approval within one year of the adoption of
such amendment; and (ii) no such termination, modification or amendment of the
Stock Plans will alter or affect the terms of any then outstanding Options or
Restricted Shares without the consent of the holders thereof.

136
<PAGE> 137

Other Future Plans and Agreements

The FelCor Board authorized, in March 1998, the adoption of a deferred
compensation plan for its executives. The plan would be funded at the individual
option of each executive using compensation otherwise payable to such executive
and would not require any contributions by FelCor. The FelCor Board also
authorized individual severance agreements with certain of its executive
officers. These agreements would have the effect of requiring substantial
severance payments to the executive upon any hostile change of control and may
tend to discourage any attempt to takeover FelCor, even though a takeover may be
beneficial to FelCor's stockholders.

REPORT OF COMPENSATION COMMITTEE ON FELCOR EXECUTIVE COMPENSATION

The Compensation Committee of the FelCor Board is currently comprised of
Messrs. Ellwood, Jacobson, Ledsinger and McChristy, none of whom is or was an
employee or officer of FelCor. Mr. Ellwood serves as the Chairman of the
Committee. The Compensation Committee is authorized to determine the
compensation of FelCor's executive officers, administer FelCor's employee
benefit plans, including determining the terms and conditions of the benefits
and the recipients thereof in accordance with the plans, review all existing and
proposed employee benefit plans and advise the FelCor Board regarding the
results and benefits thereof, and perform such other functions as necessary,
advisable or appropriate in the efficient discharge of its duties.

Compensation Philosophy

The Compensation Committee works with senior management to develop and
implement FelCor's executive compensation philosophy and the policies upon which
the Committee's decisions are based. Generally, FelCor's philosophy regarding
executive compensation is to provide a base cash compensation level that is at
or below the average of other equity hotel REITs, and to provide additional
incentive compensation, in the form of cash bonuses and grants of options and
restricted stock, based upon the realization of stated objectives, such as hotel
acquisitions, financings and renovations, improvements in funds from operations
and other similar criteria linked to realized or anticipated improvements in
total stockholder return. No variation from the standard terms of grants of
options or restricted stock may be made without prior Compensation Committee
approval. FelCor believes that the award of significant incentive compensation
in the form of options and restricted stock provides management with incentives
consistent with the interests of stockholders. As a consequence of this
philosophy, executive compensation may be at or below other equity hotel REITs
during periods of average performance and above that of the competitive set
during periods of above average growth or performance. The competitive set
utilized by the Committee to measure performance includes other equity hotel
REITs, with particular emphasis placed on those whose capitalization, revenues,
assets, market value and total stockholder returns are most nearly comparable to
those of FelCor. Since REITs do not pay taxes at the corporate level, no policy
has been established with respect to qualifying compensation paid to executive
officers under Section 162(m) of the Internal Revenue Code.

Executive Compensation

During the year ended December 31, 1997, the base compensation payable to
Thomas J. Corcoran, Jr., FelCor's Chief Executive Officer, and Hervey A.
Feldman, its Chairman of the Board, were set in part by the terms of their
respective employment contracts, which were entered into by FelCor at the
closing of FelCor's IPO in July 1994 prior to the formation of the Compensation
Committee, and subsequently were ratified by the Board of Directors, including
the members of the Compensation Committee. The Board did not review any
particular criteria or factors in determining whether to ratify the contracts,
except that the existence and basic terms of the contracts were disclosed in the
IPO Prospectus, that copies of the form of the contracts were filed with the SEC
in connection with the registration of the IPO and that the terms of the
employment agreements had been negotiated with representatives of the IPO's
underwriters. In 1997, Mr. Feldman received $12,500 per month and Mr. Corcoran
received $16,667 per month. The base cash compensation for the executive
officers of FelCor is related primarily to competitive factors and is not based
on or tied to FelCor's financial performance. The base cash compensation of each
of FelCor's executive officers is adjusted annually based upon changes in the
Consumer Price Index. In determining whether to further adjust base cash
137
<PAGE> 138

compensation or to award additional cash compensation to an executive officer,
the Committee takes into account competitive factors as well as the individual's
overall performance, including the achievement of stated objectives established
by senior management or, in the case of the Chairman of the Board and Chief
Executive Officer, by the Committee. In evaluating an executive's total
compensation (base cash compensation plus incentive compensation and benefits)
both objective and subjective factors are considered. Additional cash
compensation may be awarded as bonuses to such persons, as well as to other
officers of FelCor, as determined by the Compensation Committee. In this regard,
the Compensation Committee awarded Mr. Corcoran a cash bonus of $250,000 in 1997
in recognition of the substantial growth of FelCor and the related increase in
the duties and responsibilities of Mr. Corcoran. It is expected that future cash
bonuses, if any, payable to FelCor's executive officers will be similarly based
upon FelCor's future growth and financial performance, although no generally
applicable policy or formula has been established except as it relates to the
Dividend Equivalent Rights ("DER") bonus program described below.

FelCor added one new executive officer in 1997: Randall L. Churchey became
FelCor's Senior Vice President, Chief Financial Officer and Treasurer in
November 1997. The base compensation for Mr. Churchey ($175,000) was recommended
by the President and Chief Executive Officer and approved by the Compensation
Committee in accordance with the guidelines set forth above. In addition, in
connection with the commencement of employment of Mr. Churchey, the Compensation
Committee approved the grant of certain shares of restricted stock and options,
as discussed below.

Other Incentive Compensation

In connection with the employment of Mr. Churchey in November 1997, and as
an inducement to Mr. Churchey to accept such employment, the Compensation
Committee awarded a grant of 2,500 shares of Restricted Stock to him, which
shares vested on January 1, 1998. In addition, the Compensation Committee
awarded Mr. Churchey options to purchase 150,000 FelCor Common Shares at an
exercise price of $36.63 per share, the fair market value of the FelCor Common
Shares on the date of Mr. Churchey's employment. Such options will also become
vested over a five-year period at the rate of 20% per year.

In 1997, the Compensation Committee approved a DER bonus program whereby
the officers and certain employees can earn a cash bonus equal to the dividends
payable on shares subject to options held by such officers and employees (up to
a maximum of 10,000 shares) if FelCor achieves certain specified rates of return
with respect to the FelCor Common Shares. No bonuses were earned in 1997 under
the DER program.

In 1997, the Compensation Committee initially determined to continue the
practice of awarding options to Messrs. Feldman and Corcoran upon successful
completions of public offerings of equity securities by FelCor, with the options
to be granted equal to approximately 1% of the number of shares of Common Stock,
or Common Stock equivalents, sold by FelCor in the offering. In February 1997,
the Compensation Committee noted that Messrs. Feldman and Corcoran had not
previously received options in connection with FelCor's public offering of
6,000,000 Series A Preferred Shares at $25.00 per share in May 1996, and
consequently, consistent with this practice, awarded each of Messrs. Feldman and
Corcoran options to purchase 46,000 FelCor Common Shares at an exercise price of
$29.50 per share. The number of options awarded approximates the number of
FelCor Common Shares that would be issuable upon conversion of 1% of the Series
A Preferred Shares sold in the offering, and the exercise price was fixed at a
small premium over the closing price of the FelCor Common Shares on the date of
the offering. At the same time, the Compensation Committee awarded each of
Messrs. Feldman and Corcoran options to purchase 30,000 FelCor Common Shares at
an exercise price of $35.50 per share in connection with FelCor's offering, on
February 3, 1997, of 3,000,000 FelCor Common Shares at $35.50 per share.
Following the awards of such options, the Compensation Committee determined to
discontinue such practices for future equity offerings. Consequently, no other
options were issued to Messrs. Feldman and Corcoran with respect to equity
offerings undertaken by FelCor subsequent to February 1997.

In February 1997, Messrs. Feldman and Corcoran were each awarded 15,000
shares of Restricted Stock based upon 1996 performance. The Compensation
Committee adopted a policy to limit the number of grants of Restricted Stock
and, instead, to utilize grants of options as a means of providing incentive
compensation to

138
<PAGE> 139

the executive officers of FelCor. In this regard, during 1997, the Committee
granted options to the executive officers of FelCor to purchase an aggregate of
345,000 FelCor Common Shares as follows: Mr. Corcoran, 125,000 shares; Mr.
Feldman, 75,000 shares; Mr. Robinson, 70,000 shares; and Mr. Stadler, Mr. Eslick
and Ms. McCutchen, 25,000 shares each. These options were in addition to the
options granted to Messrs Corcoran and Feldman in connection with FelCor's
equity offering. The options were granted at an exercise price equal to the fair
market value of the FelCor Common Shares on the date of grant. FelCor also
maintains a 401(k) Plan, health insurance and other benefits generally available
to all employees.

This report has been furnished by the members of the Compensation
Committee.

Richard S. Ellwood, Chairman
Richard O. Jacobson
Thomas A. McChristy
Charles A. Ledsinger, Jr.

PERFORMANCE GRAPH

The following graph compares the change in FelCor's stockholder return on
the FelCor Common Shares for the period July 28, 1994 (the date upon which the
FelCor Common Shares was issued in the IPO at $21.25 per share) through December
31, 1997, with the changes in Standard & Poor's 500 Stock Index (the "S&P 500
Index") and the National Association of Real Estate Investment Trust Equity
Index (the "NAREIT Equity Index") for the same period, assuming a base
investment of $100 in the FelCor Common Shares in each index for comparative
purposes. Total return equals appreciation in stock price plus dividends paid,
and assumes that all dividends are reinvested. During the period presented, the
FelCor Common Shares was traded on The Nasdaq Stock Market under the symbol
"FLCO" until March 13, 1996, when it commenced trading on the NYSE under the
symbol "FCH." FelCor will provide upon request the names of the companies
included in the NAREIT Equity Index. The NAREIT Equity Index is published
monthly by the National Association of Real Estate Investment Trusts, Inc.
("NAREIT") in its publication, REITWatch. The index is available to the public
upon request to NAREIT.

<TABLE>
<CAPTION>
Measurement Period FelCor Suite NAREIT S&P 500
(Fiscal Year Covered) Hotels, Inc. Equity Index Index
<S> <C> <C> <C>
07/28/94 100.00 100.00 100.00
09/30/94 108.24 98.44 101.56
12/31/94 92.96 98.45 101.54
03/31/95 115.96 98.28 111.42
06/30/95 126.13 104.07 121.99
09/30/95 150.94 108.96 131.69
12/31/95 141.86 113.48 139.54
03/31/96 160.35 116.06 147.03
06/30/96 160.26 121.23 153.63
09/30/96 172.18 129.26 158.36
12/31/96 191.09 153.50 171.62
03/31/97 202.07 154.6 176.2
06/30/97 207.68 162.3 206.9
09/30/97 231.86 181.4 222.4
12/31/97 203.47 184.6 228.8
</TABLE>

139
<PAGE> 140

The foregoing graph is based upon the following data:

<TABLE>
<CAPTION>
07/28/94 09/30/94 12/31/94 03/31/95 06/30/95 09/30/95 12/31/95
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FelCor Suite Hotels,
Inc. .................. $100.00 $108.24 $ 92.96 $115.96 $126.13 $150.94 $141.86
NAREIT Equity Index...... 100.00 98.44 98.45 98.28 104.07 108.96 113.48
S&P 500 Index............ 100.00 101.56 101.54 111.42 121.99 131.69 139.54
</TABLE>

<TABLE>
<CAPTION>
03/31/96 06/30/96 09/30/96 12/31/96 03/31/97 06/30/97 09/30/97 12/31/97
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FelCor Suite Hotels,
Inc. .................. $160.35 $160.26 $172.18 $191.09 $202.07 $207.68 $231.86 $203.47
NAREIT Equity Index...... 116.06 121.23 129.26 153.50 154.6 162.3 181.4 184.6
S&P 500 Index............ 147.03 153.63 158.36 171.62 176.2 206.9 222.4 228.8
</TABLE>

There can be no assurance that FelCor's share performance will continue
into the future with the same or similar trends depicted in the graph above.
FelCor will not make or endorse any predictions as to future share performance.

140
<PAGE> 141

MANAGEMENT AND OWNERSHIP OF BRISTOL

BENEFICIAL OWNERSHIP OF BRISTOL

The following table sets forth certain information regarding the beneficial
ownership of Bristol Common Shares as of the close of business on April 1, 1998
by (i) each person known to Bristol to own beneficially more than 5% of Bristol
Common Shares, (ii) each director and Bristol Named Executive Officer, and (iii)
all directors and executive officers of Bristol as a group. Except as otherwise
indicated, the address for each of the individuals named below is 14295 Midway
Road, Dallas, Texas 75244. For purposes of the table, a person or group of
persons is deemed to have "beneficial ownership" of any shares as of a given
date, if that person has the right to acquire the shares within 60 calendar days
after such date.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
----------------------------
PERCENTAGE OF
NUMBER BRISTOL
OF BRISTOL OUTSTANDING
SHARES OWNED SHARES(1)
------------ -------------
<S> <C> <C>
United/Harvey Holdings, L.P.(2)............................ 14,059,677 31.08%
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, Texas 75201
Bass plc(3)................................................ 14,041,962 31.04%
20 North Audley Street
London, W1Y1WE
Baron Capital(4)........................................... 5,384,200 11.90%
767 Fifth Avenue, 24th Floor
New York, New York 10153
Cohen & Steers Capital Management, Inc.(5)................. 2,438,500 5.39%
757 Third Avenue
New York, New York 10017
J. Peter Kline(6).......................................... 1,343,601 2.97%
Robert L. Miars(7)......................................... 977,154 2.16%
John A. Beckert(6)......................................... 848,604 1.88%
Edward J. Rohling(8)....................................... 382,260 *
Jeffrey P. Mayer(9)........................................ 69,000 *
David A. Dittman(10)....................................... 22,500 *
Robert H. Lutz, Jr.(10).................................... 22,500 *
Reginald K. Brack, Jr.(11)................................. 9,600 *
Donald J. McNamara(12)..................................... -- --
Craig H. Hunt.............................................. -- --
Richard C. North........................................... -- --
Kurt C. Read............................................... -- --
All directors and executives officers as a group (14
persons)................................................. 4,014,479 8.88%
</TABLE>

- ---------------

* Less than 1%

(1) Assumes the issuance of 1,428,571 Bristol Common Shares in the Omaha
Acquisition.

(2) Includes 1,342,791 shares which may be purchased from Harvey Huie upon
exercise of a call option.

(3) Bass America Inc. owns 10,455,033 Bristol shares, which represents 23.11%
of outstanding Bristol shares, and Holiday Corporation owns 3,586,929
Bristol shares which represents 7.93% of outstanding Bristol shares. Both
corporations are subsidiaries of Bass plc.

(4) As reported in a Schedule 13 G/A filed with the SEC on February 13, 1998.

(5) As reported in a Schedule 13 G/A filed with the SEC on February 12, 1998.

(6) Includes 150,000 shares which Messrs. Kline and Beckert each have the right
to acquire through the exercise of options within 60 calendar days of the
Record Date.

141
<PAGE> 142

(7) Includes 3,000 shares which Mr. Miars has the right to acquire through the
exercise of options within 60 calendar days of the Record Date.

(8) Mr. Rohling left Bristol on March 15, 1998.

(9) Includes 69,000 shares which Mr. Mayer has the right to acquire through the
exercise of options within 60 calendar days of the Record Date.

(10) Includes 22,500 shares which Messrs. Dittman and Lutz each have the right
to acquire through the exercise of options, including 7,500 shares which
Messrs. Dittman and Lutz will each have the right to acquire after the
Bristol Annual Meeting.

(11) Includes 7,500 shares which Mr. Brack has the right to acquire after the
Bristol Annual Meeting through the exercise of options.

(12) Mr. McNamara is the founder, Chairman and Co-Chief Executive Officer of The
Hampstead Group, L.L.C. ("Hampstead"). Holdings and its general partner
were formed by Hampstead. The limited partners of Holdings include entities
affiliated with Hampstead and certain unaffiliated institutional investors,
none of which has the right to direct the management of the business of
Holdings. However, by virtue of the foregoing relationships, Mr. McNamara
may be deemed to beneficially own the Bristol Common Shares owned by
Holdings. Mr. McNamara disclaims beneficial ownership of all shares owned
by Holdings and, accordingly, such shares are not shown in the table as
being beneficially owned by him.

Section 16(a) Beneficial Ownership Compliance

Based solely on a review of copies of reports furnished to Bristol and
written representations of Bristol directors and executive officers that no
other reports were required with respect to their beneficial ownership of
Bristol Common Shares during 1997, Bristol believes that, with the exception of
Reginald K. Brack, Jr., all its directors and executive officers and all
beneficial owners of more than 10% of Bristol Common Shares outstanding complied
with all applicable filing requirements under Section 16(a) of the Exchange Act
with respect to their beneficial ownership of Bristol Common Shares during 1997.

BRISTOL'S EXECUTIVE COMPENSATION

The following table sets forth information regarding the compensation paid
to Bristol's Chief Executive Officer and each of the four other most highly
compensated executive officers of Bristol who earned at least $100,000 in total
salary and bonus in 1997 (collectively, the "Bristol Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) COMPENSATION(3)
--------------------------- ---- -------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
J. Peter Kline.......................... 1997 $457,307 $91,461 30,000 $ 4,750
President and Chief 1996 250,502 69,350 -- --
Executive Officer 1995 231,353 87,183 225,000 2,073
John A. Beckert......................... 1997 457,307 91,461 30,000 4,750
Chief Operating Officer and 1996 250,502 69,350 -- --
Executive Vice President 1995 231,353 79,724 225,000 2,072
Jeffrey P. Mayer(4)..................... 1997 257,115 51,423 25,000 44,723
Senior Vice President and 1996 188,159 56,448 195,000 46,633
Chief Financial Officer 1995 -- -- -- --
Edward J. Rohling(5).................... 1997 232,404 46,481 -- 3,567
Senior Vice President, 1996 199,541 55,480 30,000 --
Corporate Development 1995 163,576 82,922 216,000 2,088
Robert L. Miars......................... 1997 229,604 68,881 20,000 4,750
Vice President, 1996 144,503 35,037 15,000 --
Construction & Design 1995 126,422 74,282 49,500 --
</TABLE>

- ---------------

142
<PAGE> 143

(1) The bonus amounts for all years are based on amounts earned during the
calendar year regardless of when paid.

(2) Reflects options to acquire Bristol Common Shares granted pursuant to the
Bristol Incentive Plan, adjusted to reflect the 1997 stock split.

(3) Consists entirely of contributions by Bristol to Bristol's 401(k) Plan
except for Mr. Mayer, whose 1997 other compensation consists of $3,462 of
contributions to Bristol's 401(k) Plan and $41,261 for relocation expenses.
Mr. Mayer's 1996 other compensation consists entirely of relocation
expenses.

(4) Mr. Mayer joined Bristol in January 1996.

(5) Mr. Rohling left Bristol on March 15, 1998.

Stock Option Grants

The following table sets forth information with respect to options granted
to the Bristol Named Executive Officers during 1997.

OPTION GRANTS IN FISCAL YEAR 1997

<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES OR BASE EXPIRATION -----------------------
NAME GRANTED IN 1997 PRICE DATE 5% 10%
---- ---------- ------------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. Peter Kline................... 30,000 6.09% $26.00 2007 $490,538 $1,243,119
John A. Beckert.................. 30,000 6.09 26.00 2007 490,538 1,243,119
Jeffrey P. Mayer................. 25,000 5.07 26.00 2007 408,782 1,035,933
Edward J. Rohling................ -- -- -- -- -- --
Robert L. Miars.................. 20,000 4.06 26.00 2007 327,025 828,746
</TABLE>

- ---------------

(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates of
appreciation on Bristol Common Shares over the term of the options. These
numbers do not take into account provisions of certain options providing for
termination of the option following termination of employment,
nontransferability or vesting over periods. The use of the assumed 5% and
10% returns is established by the SEC and is not intended by Bristol to
forecast possible future appreciation of the price of Bristol Common Shares.

The following table sets forth certain information with respect to options
held at December 31, 1997 by the Bristol Named Executive Officers.

OPTION VALUES AT DECEMBER 31, 1997

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997(1) DECEMBER 31, 1997(2)
---------------------------- ----------------------------
NAME UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
---- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
J. Peter Kline..................... 255,000 -- $4,756,013 --
John A. Beckert.................... 255,000 -- 4,756,013 --
Jeffrey P. Mayer................... 181,000 39,000 2,331,885 $563,831
Edward J. Rohling.................. 240,000 6,000 4,749,480 67,977
Robert L. Miars.................... 81,500 3,000 1,223,314 33,989
</TABLE>

- ---------------

(1) This represents the total number of shares subject to stock options held by
the Bristol Named Executive Officers at December 31, 1997. These options
were granted on various dates during the years 1995 through 1997.

143
<PAGE> 144

(2) The closing price per Bristol Common Share as reported in the NYSE Composite
Transactions Report on December 31, 1997 was $29.0625. Value is calculated
on the basis of the difference between the option exercise price and
$29.0625 multiplied by the number of Bristol Common Shares covered by the
option.

BRISTOL'S COMPENSATION PLANS AND ARRANGEMENTS

Management Bonus Plan

Bristol's Management Bonus Plan provides key management employees of
Bristol with cash bonuses based upon the achievement of specified targets and
goals for Bristol and for the particular employees. Each officer of Bristol is
eligible to receive annual bonus awards based on the achievement of performance
criteria, as well as personal criteria, established by the Compensation
Committee.

401(k) Plan

Bristol maintains and offers to its employees and executive officers a
profit sharing plan with a 401(k) feature (the "Bristol 401(k) Plan"). Eligible
employees may contribute to the Bristol 401(k) Plan through salary deferral
elections of not less than 1% nor more than 16% of their salary. Bristol makes
matching contributions of $.50 for each dollar contributed, up to 6% of a
participant's salary. The Bristol Board may in its sole discretion grant
additional matching contributions, subject to statutory limitations.
Contributions by participants are 100% vested and contributions by Bristol vest
over a period of years, becoming fully vested after five years of continuous
employment. The Bristol 401(k) Plan is intended to qualify under Section 401 of
the Code so that contributions by participants or by Bristol to the Bristol
401(k) Plan, and income earned on such contributions, are not taxable to the
participants until withdrawn from the Bristol 401(k) Plan.

Incentive Plan

The Bristol Incentive Plan is designed to attract and retain qualified
officers and other key employees of Bristol. The Bristol Incentive Plan
authorizes the grant of options to purchase Bristol Common Shares, stock
appreciation rights, restricted shares, deferred shares, performance shares and
performance units. The Compensation Committee administers the Bristol Incentive
Plan and determines to whom awards are to be granted, as well as the number of
shares, the exercise period and other terms and conditions of a particular
grant.

As of December 31, 1997, there were outstanding options granted under the
Bristol Incentive Plan to purchase an aggregate of 2,069,441 Bristol Common
Shares. These options generally vest over four or five years from the date of
grant, with certain options becoming fully vested upon specified anniversary's
from the date of grant.

REPORT ON BRISTOL'S EXECUTIVE COMPENSATION

Bristol's executive compensation program has three principal components:
base salary, incentive bonus and long-term compensation in the form of stock
options. The Compensation Committee believes this mix of compensation provides
executive officers with a base salary that is competitive and an incentive
portion which is performance based.

Base Salary

Each of Bristol's executive officers receives an annual performance review.
In connection with this review, the Compensation Committee evaluates and adjusts
each executive officer's base salary based on existing compensation levels, the
level and scope of responsibility, experience and individual performance over
the past year, as well as the pay practices of other comparable lodging industry
companies.

Base salaries for the Chief Executive Officer and other Bristol Named
Executive Officers were increased substantially in 1997 following the Holiday
Inn transactions. The Compensation Committee believed such increases were needed
in order to make Bristol's salaries competitive with those of companies of
similar size.

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<PAGE> 145

Bonus Program

During 1997, Bristol paid cash bonuses to its executive officers and other
key employees based upon the achievement of Bristol's performance criteria, as
well as personal performance criteria established by the Compensation Committee.
Under the 1997 program, each of Bristol's executive officers was eligible to
receive an incentive award of up to 50% of his base salary.

Stock Options

Bristol has awarded stock options to the Bristol Named Executive Officers
and other senior management to provide incentives to Bristol's management. The
options become exercisable at the rate of 20% on each of the first five
anniversaries of the date of grant. In December 1997 the Compensation Committee
approved a formal Management Incentive Program which became effective January 1,
1998. This program provides for the granting of options to Bristol managers
earning between $60,000 and $150,000 per year based upon certain criteria. The
Compensation Committee authorized the grant of options on December ,
1997 to eligible Bristol managers pursuant to this program. Bristol's executive
officers are not eligible to receive these options due to the salary eligibility
requirements of such options.

Employment Agreements

Messrs. Kline and Beckert have entered into employment agreements with
Bristol that expire in 2001 and provide for the payment of an annual base salary
of at least $450,000. Messrs. Kline and Beckert are also eligible to receive
future grants of stock-based incentive awards and other benefits provided to
senior executives of Bristol, including bonuses of up to 50% of base pay.

Tax Effects

Bristol believes that the compensation paid to its executive officers
during 1997 is deductible to Bristol for federal income tax purposes. In
determining executive compensation in the future, the Compensation Committee
presently intends to consider, among other factors, whether such compensation
will be deductible for federal income tax purposes.

Respectfully submitted,

Robert H. Lutz, Jr.
Richard C. North
Donald J. McNamara, Chairman

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<PAGE> 146

PERFORMANCE GRAPH

The following graph compares the cumulative total stockholder return for
Bristol Common Shares with the Standard & Poor's 500 Stock Index and the BT
Alex. Brown Lodging Owner/Operator Index from the date trading of the Bristol
Common Shares on the NYSE commenced through December 31, 1997, assuming an
initial investment of $100 and the reinvestment of all dividends.

COMPARISON OF 24 MONTH CUMULATIVE TOTAL RETURN
AMONG BRISTOL HOTEL COMPANY, S&P 500 AND BT ALEX. BROWN LODGING OWNER/OPERATOR
INDEX

<TABLE>
<CAPTION>
BT ALEX.
BROWN
LODGING
MEASUREMENT PERIOD BRISTOL HOTEL OWNER/OPERATOR S&P 500
(FISCAL YEAR COVERED) COMPANY INDEX INDEX
<S> <C> <C> <C>
12/13/95 100.00 100.00 100.00
12/31/95 105.98 101.81 99.08
12/31/96 138.04 128.87 121.82
12/31/97 189.54 153.35 162.47
</TABLE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF BRISTOL

Hotel Properties Agreement

In April 1997, Bristol and the Holiday Entities entered into a hotel
properties agreement (the "Hotel Properties Agreement") pursuant to which
Bristol agreed to offer to the Holiday Entities the opportunity to enter into a
standard Holiday franchise agreement for each hotel that Bristol acquires,
manages or develops that meets specified criteria. The Hotel Properties
Agreement requires that 85% of the rooms in Bristol's owned, leased and managed
hotel portfolio be operated under a Holiday Inn brand, subject to certain
limitations and approvals. The Hotel Properties Agreement will terminate upon
the consummation of the Merger, and will be replaced by a new arrangement with
BHR. See "The Merger -- Interests of Certain Persons in the Merger -- Hotel
Properties Agreement."

In April 1997, Bristol also agreed to enter into franchise agreements with
Holiday Hospitality pursuant to which certain Bristol properties will be
rebranded to Holiday Hospitality brands, subject to normal franchising
procedures. Franchise fees for these rebranded hotels will equal 1% of room
revenue in 1998, 3% in 1999 and 5% in 2000. Amounts paid to the Holiday Entities
pursuant to franchise agreements and related marketing, advertising and
reservation services were $21.8 million in 1997, including $13.1 million as
franchise royalty fees and $4.5 million as franchise marketing fees. Bristol's
obligations under the Holiday franchise agreements will be assumed by BHR in the
Spin-Off.

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<PAGE> 147

As of April 1, 1998, the Holiday Entities owned approximately 31% of the
Bristol Common Shares. Richard C. North, Craig H. Hunt and Reginald K. Brack,
Jr. serve as designees of the Holiday Entities on the Bristol Board.

Interim Services Agreement

In April 1997, Bristol entered into an interim services agreement with
Holiday Hospitality pursuant to which Holiday Hospitality agreed to continue to
provide certain accounting, payroll, and employee benefit services to Bristol
during the transition period following Bristol's Holiday Inn acquisition.
Bristol reimbursed Holiday Hospitality $1.3 million for the estimated costs
incurred in providing such services during 1997. This agreement terminated in
October 1997.

SELLING SECURITYHOLDERS

This Joint Proxy Statement/Prospectus also relates to the potential offer
of the Stockholders' Shares from time to time following the Merger by the
holders of FelCor Common Shares identified in the table below (the "Registration
Rights Holders"). See "Plan of Distribution." The following table provides the
names of each Registration Rights Holder, the number of Bristol Common Shares
beneficially owned by such holder as of April 1, 1998, and the number of the
FelCor Common Shares that may be offered by each Registration Rights Holder, to
the best knowledge of FelCor.

<TABLE>
<CAPTION>
BRISTOL FELCOR COMMON PERCENT OF
COMMON SHARES SHARES OFFERED ALL OUTSTANDING
BENEFICIALLY BY THIS FELCOR
NAME OWNED PROSPECTUS(1) COMMON SHARES(1)(2)
- ---- ------------- ------------------ -------------------
<S> <C> <C> <C>
United/Harvey Holdings, L.P.(3)... 14,059,677 9,630,879 14.1%
Bass America, Inc................. 10,455,033 7,161,698 10.5%
Holiday Corporation............... 3,586,929 2,457,046 3.6%
J. Peter Kline(4)................. 1,448,601 992,292 1.5%
Robert L. Miars(5)................ 1,058,654 725,178 1.1%
John A. Beckert(4)................ 953,604 653,219 1.0%
</TABLE>

- ---------------

(1) Assumes consummation of the Merger and issuance of FelCor Common Shares to
Bristol's stockholders.

(2) Based upon 68,348,000 FelCor Common Shares outstanding.

(3) Includes 1,342,791 shares which may be purchased from Mr. Huie upon exercise
of Holding's portion of a call option.

(4) Includes 255,000 shares which Messrs. Kline and Beckert each have the right
to acquire through the exercise of options.

(5) Includes 84,500 shares which Mr. Miars has the right to acquire through the
exercise of options.

PLAN OF DISTRIBUTION

This Joint Proxy Statement/Prospectus also relates to the offer from time
to time following the Merger by the Registration Rights Holders of FelCor Common
Shares issued to them pursuant to the Merger (the "Stockholders' Shares").
FelCor has registered with the SEC the FelCor Common Shares issued pursuant to
the Merger. Such registration also applies to resales by the Registration Rights
Holders of Stockholders' Shares to satisfy FelCor's obligations under the FelCor
Stockholders' Agreement. Registration of the Stockholders' Shares does not
necessarily mean that any of the Stockholders' Shares will be offered or sold by
the Registration Rights Holders. Under the FelCor Stockholders' Agreement, the
Bristol Majority Stockholders will agree not to sell or transfer their FelCor
Common Shares for a period of six months after the Merger, except in compliance
with Rule 145 under the Securities Act. FelCor will not receive any of the
proceeds of the sale of the Stockholders' Shares offered by the Registration
Rights Holders.

147
<PAGE> 148

The distribution of Stockholders' Shares may be effected from time to time
in one or more underwritten transactions at a fixed price or prices, which may
be changed, or in other transactions at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. Any such underwritten offering may be on either a "best efforts" or a
"firm commitment" basis. In connection with any such underwritten offering,
underwriters or agents may receive compensation in the form of discounts,
concessions or commissions from the Registration Rights Holders and/or from
purchasers of the Stockholders' Shares for whom they may act as agents.
Underwriters may sell the Stockholders' Shares to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents.

The Registration Rights Holders and any underwriters, dealers or agents
that participated in the distribution of Stockholders' Shares may be deemed to
be "underwriters" within the meaning of the Securities Act, and any profit on
the sale of Stockholders' Shares by them and any discounts, commissions or
concessions received by any such underwriters, dealers or agents might be deemed
to be underwriting discounts and commissions under the Securities Act.

At a time a particular offer of Stockholders' Shares is made by a
Registration Rights Holder, a prospectus supplement, if required, will be
distributed that will set forth the names of any underwriters, dealers or agents
and any discounts, commissions and other terms constituting compensation from
the Registration Rights Holders and any other required information.

The sale of Stockholders' Shares by the Registration Rights Holders may
also be effected from time to time by selling Stockholders' Shares directly to
purchasers or to or through broker-dealers. In connection with any such sale,
any such broker-dealer may act as agent for the Registration Rights Holders or
may purchase from the Registration Rights Holders all or a portion of the
Stockholders' Shares as principal, and sales may be made pursuant to any of the
methods described below. Such sales may be made on the NYSE or other exchanges
on which the Stockholders' Shares are then traded, in the over-the-counter
market, in negotiated transactions or otherwise, in each case at prices and at
terms then prevailing or at prices related to the then-current market prices or
at prices otherwise negotiated.

The Stockholders' Shares may also be sold in one or more of the following
transactions: (i) block transactions (which may involve crosses) in which a
broker-dealer may sell all or a portion of such shares as agent but may position
and resell all or a portion of the block as principal to facilitate the
transaction; (ii) purchases by any such broker-dealer as principal and resale by
such broker-dealer for its own account pursuant to a prospectus supplement;
(iii) a special offering, an exchange distribution or a secondary distribution
in accordance with applicable NYSE or other stock exchange rules; (iv) ordinary
brokerage transactions and transactions in which any such broker-dealer solicits
purchasers; (v) sales "at the market" to or through a market maker or into an
existing trading market, on an exchange or otherwise, for such shares; and (vi)
sales in other ways not involving market makers or established trading markets,
including direct sales to purchasers. In effecting sales, broker-dealers engaged
by the Registration Rights Holders may arrange for other broker-dealers to
participate. Broker-dealers will receive commissions or other compensation from
the Registration Rights Holders in amounts to be negotiated immediately prior to
the sale that will not exceed those customary in the types of transactions
involved. Broker-dealers may also receive compensation from purchasers of
Stockholders' Shares which is not expected to exceed that customary in the types
of transactions involved.

In connection with distributions of Stockholders' Shares or otherwise, the
Registration Rights Holders may enter into hedging transactions with
broker-dealers or others prior to or after the Effective Time of the Merger.
Such broker-dealers may engage in short sales of Stockholders' Shares or other
transactions in the course of hedging the positions assumed by such persons in
connection with such hedging transactions or otherwise. The Registration Rights
Holders may also sell Stockholders' Shares short and redeliver Stockholders'
Shares to close out such short positions; enter into option or other
transactions with broker-dealers or others which may involve the delivery to
such persons of Stockholders' Shares offered hereby, which Stockholders' Shares
such persons may resell pursuant to this Joint Proxy Statement/Prospectus;
and/or pledge Stockholders' Shares to a broker or dealer or others and, upon a
default, such persons may effect sales

148
<PAGE> 149

of Stockholders' Shares pursuant to this Joint Proxy Statement/Prospectus. In
addition, any Stockholders' Shares covered by this Joint Proxy
Statement/Prospectus that qualify for resale pursuant to Rule 145 of the
Securities Act may be sold under Rule 145 rather than with this Joint Proxy
Statement/Prospectus.

In order to comply with securities laws of certain states, if applicable,
Stockholders' Shares may be sold only through registered or licensed brokers or
dealers.

Until the distribution of Stockholders' Shares is completed, rules of the
SEC may limit the ability of any underwriters and selling group members to bid
for and purchase Stockholders' Shares. As an exception to these rules,
underwriters are permitted to engage in certain transactions that stabilize the
price of Stockholders' Shares. Such transactions consist of bids or purchases
for the purpose of pegging, fixing or maintaining the price of Stockholders'
Shares.

The lead underwriters may also impose a penalty bid on certain other
underwriters participating in the offering and selling group members. This means
that if the lead underwriters purchase Stockholders' Shares in the open market
to reduce the underwriters' short position or to stabilize the price of
Stockholders' Shares, they may reclaim the amount of any selling concession from
the underwriters and selling group members who sold those Stockholders' Shares
as part of the offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resale of the security before the distribution is completed.

FelCor makes no representation or prediction as to the direction or
magnitude of any effect that the transactions described above might have on the
price of Stockholders' Shares. In addition, FelCor makes no representation that
underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

All expenses incident to the offering and sale of Stockholders' Shares
(other than brokerage and underwriting commissions and certain taxes) will be
paid by FelCor. FelCor has agreed to indemnify the Registration Rights Holders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.

LEGAL MATTERS

The validity of the issuance of the FelCor Common Shares to be issued in
connection with the Merger will be passed upon for FelCor by Jenkens &
Gilchrist, a Professional Corporation, Dallas, Texas. Jenkens & Gilchrist,
Jones, Day, Reavis & Pogue, New York, New York, and Hunton & Williams, Richmond,
Virginia, will render their separate opinions with respect to certain federal
income tax consequences of the Merger and Spin-Off and certain federal income
tax considerations regarding Bristol, FelCor and the FelCor Operating
Partnership, as described under the caption "Certain Federal Income Tax
Considerations." Jenkens & Gilchrist and Hunton & Williams will rely upon the
opinion of Miles & Stockbridge P.C., Baltimore, Maryland, with respect to
matters involving Maryland law.

EXPERTS

The consolidated financial statements of FelCor as of December 31, 1997 and
1996 and for the years ended December 31, 1997, 1996 and 1995 and the
consolidated financial statements of DJONT Operations, L.L.C. as of December 31,
1997 and 1996 and for the years ended December 31, 1997, 1996 and 1995, have
been incorporated by reference in this Joint Proxy Statement/Prospectus in
reliance on the reports of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.

The consolidated financial statements of Bristol as of December 31, 1997
and 1996 and for the years ended December 31, 1997 and 1996, and the
consolidated financial statements of Bristol Hotel Asset

149
<PAGE> 150

Company as of December 31, 1997 and 1996 and for the years ended December 31,
1997 and 1996 incorporated by reference in this Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.

The consolidated financial statements of Bristol for the eleven months
ended December 31, 1995 and the combined financial statements of Harvey Hotel
Companies for the one month ended January 31, 1995 incorporated in this Joint
Proxy Statement/Prospectus by reference to the annual report on Form 10-K of
Bristol Hotel Company for the year ended December 31, 1997, have been so
incorporated in reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

INDEPENDENT PUBLIC ACCOUNTANTS

The firm of Coopers & Lybrand L.L.P. has served as auditors for FelCor for
the year ended December 31, 1997 and will continue to so serve for the year
ending December 31, 1998 until and unless changed by action of the FelCor Board.
A representative of Coopers & Lybrand, L.L.P. is expected to be present and
available at the FelCor Annual Meeting to respond to appropriate questions and
will be given an opportunity to make a statement, if desired.

The firm of Arthur Andersen LLP has served as auditors for Bristol for the
year ended December 31, 1997 and will continue to so serve for the year ending
December 31, 1998 until and unless changed by action of the Bristol Board. A
representative of Arthur Andersen LLP is expected to be present and available at
the Bristol Annual Meeting to respond to appropriate questions and will be given
an opportunity to make a statement, if desired.

ANNUAL REPORTS

FelCor's 1997 Annual Report to Stockholders was mailed to FelCor
stockholders as of April 15, 1998 and will accompany this Joint Proxy
Statement/Prospectus in the case of persons who became record stockholders of
FelCor subsequent to that date. FelCor also will furnish to each beneficial
owner of FelCor Common Shares entitled to vote at the FelCor Annual Meeting,
upon written request to 545 E. John Carpenter Freeway, Suite 1300, Irving, Texas
75062, Attn: Corporate Secretary, a copy of FelCor's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, including the financial statements
and financial statement schedules filed by FelCor with the SEC.

Bristol's 1997 Annual Report to Stockholders is enclosed herewith to
Bristol stockholders. Bristol also will furnish to each beneficial owner of
Bristol Common Shares entitled to vote at the Bristol Annual Meeting, upon
written request to 14295 Midway Road, Dallas, Texas 75244, Attn: Corporate
Secretary, a copy of Bristol's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, including the financial statements and financial
statement schedules filed by Bristol with the SEC.

SUBMISSION OF STOCKHOLDER PROPOSALS

Any FelCor stockholder who wishes to present a proposal for action at
FelCor's 1999 annual meeting of stockholders and who wishes to have it set forth
in the proxy statement and identified in the form of proxy prepared by FelCor
must deliver such proposal to FelCor at its principal executive offices, no
later than [ ], 1998, in such form as is required under SEC
regulations.

If the Merger does not occur and the separate corporate existence of
Bristol does not cease, any Bristol stockholder who wishes to present a proposal
for action at Bristol's 1999 annual meeting of stockholders and who wishes to
have it set forth in the proxy statement and identified in the form of proxy
prepared by Bristol must deliver such proposal to Bristol at its principal
executive offices, no later than [ ], 1998, in such form as is required
under SEC regulations.
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<PAGE> 151

WHERE YOU CAN FIND MORE INFORMATION

AVAILABLE INFORMATION

FelCor and Bristol file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
"http://www.sec.gov." In addition, FelCor's and Bristol's filings can be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.

FelCor filed a Registration Statement on Form S-4 to register with the SEC
the FelCor Common Shares to be issued to Bristol stockholders in the Merger.
This Joint Proxy Statement/Prospectus is a part of that Registration Statement
and constitutes a prospectus of FelCor in addition to being a proxy statement of
Felcor for the FelCor Annual Meeting and of Bristol for the Bristol Annual
Meeting. As allowed by SEC rules, this Joint Proxy Statement/Prospectus does not
contain all the information contained in the Registration Statement or in the
exhibits to the Registration Statement.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to include certain information in this document by
"incorporating by reference." The following documents filed with the SEC by
FelCor and Bristol pursuant to the Exchange Act are incorporated by reference in
this Joint Proxy Statement/Prospectus:

FelCor Suite Hotels, Inc. (File No. 001-14236):

1. Annual Report on Form 10-K for the year ended December 31, 1997;
and

2. The description of the FelCor Common Shares contained in the
Registration Statement on Form 8-A filed with the SEC, including
any amendments or reports filed for the purpose of updating such
description.

Bristol Hotel Company (File No. 001-14062):

1. Annual Report on Form 10-K for the year ended December 31, 1997;

2. Current Report on Form 8-K filed with the SEC on March 30, 1998;
and

3. The description of the Bristol Common Shares contained in the
Registration Statement on Form 8-A filed with the SEC on November
7, 1995, including any amendments or reports filed for the purpose
of updating such description.

All documents and reports filed by FelCor or Bristol pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Joint Proxy
Statement/Prospectus and prior to the date the Registration Rights Holders sell
all of their Stockholders' Shares will be deemed to be incorporated by reference
in this Joint Proxy Statement/Prospectus and to be a part hereof from the dates
of filing of such documents or reports. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein will be deemed to
be modified or superseded for purposes of this Joint Proxy Statement/ Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Joint Proxy Statement/Prospectus.

THE DOCUMENTS WE INCORPORATE BY REFERENCE (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE) ARE
AVAILABLE TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS JOINT
PROXY STATEMENT/PROSPECTUS IS DELIVERED ON WRITTEN OR ORAL REQUEST, WITHOUT
CHARGE, IN THE CASE OF DOCUMENTS RELATING TO FELCOR, DIRECTED TO FELCOR SUITE
HOTELS, INC., 545 E. JOHN CARPENTER FREEWAY, SUITE 1300, IRVING, TEXAS 75062
(TELEPHONE NUMBER (972) 444-4900), ATTENTION: SECRETARY, OR, IN THE CASE OF
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<PAGE> 152

DOCUMENTS RELATING TO BRISTOL, DIRECTED TO BRISTOL HOTEL COMPANY, 14295 MIDWAY
ROAD, DALLAS, TEXAS 75244 (TELEPHONE NUMBER (972) 391-3910), ATTENTION:
SECRETARY. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUESTS
SHOULD BE MADE BY , 1998.

FelCor has supplied all information contained in this Joint Proxy
Statement/Prospectus relating to FelCor and its subsidiaries, and Bristol has
supplied all information contained in this Joint Proxy Statement/ Prospectus
relating to Bristol and its subsidiaries.

Unless the context otherwise requires, "FelCor" refers to both FelCor Suite
Hotels, Inc. and its consolidated subsidiaries, and "Bristol" refers to both
Bristol Hotel Company and its consolidated subsidiaries.

CERTAIN FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS JOINT PROXY STATEMENT/PROSPECTUS CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, AND CAN BE IDENTIFIED BY THE USE OF
FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL," "EXPECT," "ANTICIPATE,"
"ESTIMATE" OR "CONTINUE" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR
COMPARABLE TERMINOLOGY. THE STATEMENTS UNDER THE CAPTION "RISK FACTORS" IN THIS
JOINT PROXY STATEMENT/PROSPECTUS CONSTITUTE CAUTIONARY STATEMENTS IDENTIFYING
IMPORTANT FACTORS, INCLUDING MATERIAL RISKS AND UNCERTAINTIES, WITH RESPECT TO
SUCH FORWARD-LOOKING STATEMENTS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS.

OTHER MATTERS

FelCor's Board does not intend to bring any matters before the FelCor
Annual Meeting other than those specifically set forth in this Joint Proxy
Statement/Prospectus and it does not know of any matters to be brought before
the FelCor Annual Meeting by others. If any other matters properly come before
the FelCor Annual Meeting, it is the intention of the persons named in
accompanying proxies to vote such proxies in accordance with the judgment of the
FelCor Board.

The Bristol Board does not intend to bring any matters before the Bristol
Annual Meeting other than those specifically set forth in this Joint Proxy
Statement/Prospectus and it does not know of any matters to be brought before
the Bristol Annual Meeting by others. If any other matters properly come before
the Bristol Annual Meeting, it is the intention of the persons named in
accompanying proxies to vote such proxies in accordance with the judgment of the
Bristol Board.

NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATION OF PROXIES OR THE
OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY FELCOR,
BRISTOL OR ANY OTHER PERSON. THIS JOINT PROXY STATEMENT/ PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR
ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FELCOR OR
BRISTOL SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.

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INDEX OF CERTAIN DEFINED TERMS

Certain defined terms and the definitions thereof are located on the pages
set forth as follows:

<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Acquisition Proposal............... 56
Base Rent.......................... 33
BHR................................ 30
BHR Common Shares.................. 37
BHR Director Plan.................. 120
BHR Equity Incentive Plan.......... 120
BHR Incentive Plans................ 30
BHR Lessee......................... 97
BHR Stockholders' Agreement........ 61
Bristol............................ 1
Bristol Annual Meeting............. 30
Bristol Board...................... 30
Bristol Bylaws..................... 85
Bristol Charter.................... 85
Bristol Common Shares.............. 30
Bristol Hotels..................... 34
Bristol Incentive Plan............. 30
Bristol Majority Stockholders...... 31
Bristol Named Executive Officers... 142
Bristol Plans...................... 53
BT Wolfensohn Opinion.............. 43
Code............................... 44
Control Share Statute.............. 84
Delaware Law....................... 85
DJONT.............................. 33
Doubletree......................... 33
E&P................................ 57
EBITDA............................. 44
Effective Time..................... 38
EPS................................ 50
Exchange Act....................... 112
Exchange Agent..................... 55
Exchange Ratio..................... 39
FelCor............................. 1
FelCor 1998 Plan................... 30
FelCor Annual Meeting.............. 30
FelCor Board....................... 30
FelCor Bylaws...................... 85
FelCor Charter..................... 30
FelCor Common Shares............... 30
FelCor Hotels...................... 33
FelCor Named Executive Officers.... 132
FelCor Operating Partnership....... 33
FelCor Preferred Shares............ 77
FelCor Series A Preferred Shares... 77
FelCor Stockholders' Agreement..... 53
FFO................................ 44
</TABLE>

<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Hampstead.......................... 142
Holdings........................... 36
Holdings Entities.................. 60
Holiday Entities................... 36
Holiday Hospitality................ 33
Hotel Partnerships................. 97
Hotel Properties Agreement......... 146
Hotels............................. 35
Independent Director............... 110
Interim Credit Facility............ 58
Kingston........................... 101
Line of Credit..................... 64
Lock-Up Period..................... 61
Maryland Law....................... 84
Merger............................. 30
Merger Agreement................... 30
Merrill Lynch...................... 39
Merrill Lynch Opinion.............. 48
NAREIT............................. 139
Notes.............................. 64
NYSE............................... 38
Omaha Acquisition.................. 34
Outside Director................... 118
Ownership Limit.................... 82
Ownership Limitation Provisions.... 82
Percentage Leases.................. 33
Percentage Rent.................... 33
Promus............................. 33
Record Date........................ 30
Redevelopment and Rebranding
Program.......................... 34
REIT............................... 33
Rent............................... 97
Restricted Shares.................. 120
SEC................................ 129
Sheraton........................... 33
Spin-Off........................... 30
Spin-Off Agreement................. 37
Spin-Off Ratio..................... 37
Units.............................. 33
Voting Agreement................... 31
1997 Acquisitions.................. 66
1997 Offerings..................... 64
1998 Acquisitions.................. 63
1998 Offering...................... 64
5/50 Rule.......................... 82
</TABLE>

153
<PAGE> 154

ANNEX A

================================================================================

AGREEMENT AND PLAN OF MERGER

BETWEEN

BRISTOL HOTEL COMPANY

AND

FELCOR SUITE HOTELS, INC.

DATED MARCH 23, 1998

================================================================================
<PAGE> 155

TABLE OF CONTENTS
(NOT A PART OF THE AGREEMENT)

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
I. THE MERGER AND CERTAIN RELATED TRANSACTIONS....................... 1
1.1. The Merger.................................................. 1
1.2. Pre-Merger Transactions..................................... 2
1.3. Closing..................................................... 2
1.4. Effective Time.............................................. 2
1.5. Articles of Amendment and Restatement of Surviving
Corporation................................................. 2
1.6. Bylaws of Surviving Corporation............................. 2
1.7. Directors and Officers of Surviving Corporation............. 2
1.8. Effect of the Merger on the Capital Stock of FelCor and
Bristol..................................................... 3
1.9. Exchange of Certificates.................................... 4
1.10. Bristol Stock Options....................................... 5
II. REPRESENTATIONS AND WARRANTIES OF FELCOR......................... 6
2.1. Organization, Standing and Power of FelCor.................. 6
2.2. FelCor Subsidiaries......................................... 7
2.3. Capital Structures.......................................... 7
2.4. Authority; Noncontravention; Consents....................... 8
2.5. SEC Documents; Financial Statements; Undisclosed
Liabilities................................................. 9
2.6. Absence of Certain Changes or Events........................ 10
2.7. Litigation.................................................. 10
2.8. Properties.................................................. 10
2.9. Environmental Matters....................................... 12
2.10. Absence of Changes in Benefit Plans; ERISA Compliance....... 12
2.11. Taxes....................................................... 12
2.12. Brokers..................................................... 13
2.13. Compliance with Laws........................................ 13
2.14. Labor Matters............................................... 13
2.15. Compliance with Agreements.................................. 14
2.16. Opinion of Financial Advisor................................ 14
2.17. State Takeover Statutes..................................... 14
2.18. Proxy and Registration Statement............................ 14
2.19. Definition of Knowledge of FelCor........................... 14
III. REPRESENTATIONS AND WARRANTIES OF BRISTOL....................... 14
3.1. Organization, Standing and Power of Bristol................. 14
3.2. Bristol Subsidiaries........................................ 15
3.3. Capital Structure........................................... 15
3.4. Authority; Noncontravention; Consents....................... 16
3.5. SEC Documents; Financial Statements; Undisclosed
Liabilities................................................. 17
3.6. Absence of Certain Changes or Events........................ 18
3.7. Litigation.................................................. 18
3.8. Properties.................................................. 18
3.9. Environmental Matters....................................... 19
3.10. Absence of Changes in Benefit Plans; ERISA Compliance....... 20
3.11. Taxes....................................................... 20
3.12. No Payments to Employees, Officers or Directors............. 21
3.13. Brokers..................................................... 21
3.14. Compliance with Laws........................................ 21
3.15. Labor Matters............................................... 21
3.16. Compliance with Agreements.................................. 21
</TABLE>

i
<PAGE> 156
TABLE OF CONTENTS -- (CONTINUED)
(NOT A PART OF THE AGREEMENT)

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
3.17. Opinion of Financial Advisor................................ 21
3.18. State Takeover Statutes..................................... 22
3.19. Proxy and Registration Statement............................ 22
3.20. Definition of Knowledge of Bristol.......................... 22
IV. COVENANTS........................................................ 22
4.1. Acquisition Proposals....................................... 22
4.2. Conduct of FelCor's and Bristol's Business Pending Merger... 23
4.3. Other Actions............................................... 25
V. ADDITIONAL COVENANTS.............................................. 26
5.1. Preparation of the Registration Statements and the Proxy
Statement; FelCor Stockholders Meeting and Bristol
Stockholders Meeting........................................ 26
5.2. Access to Information; Confidentiality...................... 27
5.3. Consents; Notifications; Other Actions...................... 27
5.4. Tax Treatment............................................... 27
5.5. Public Announcements........................................ 27
5.6. Listing..................................................... 28
5.7. Transfer and Gains Taxes.................................... 28
5.8. Indemnification............................................. 28
5.9. Spin-Off Transactions....................................... 28
5.10. Declaration of Dividends and Distributions.................. 29
5.11. Affiliates; Etc. ........................................... 29
5.12. Bristol's Accumulated and Current Earnings and Profits...... 29
5.13. REIT-Related Matters........................................ 29
5.14 Interim Credit Facility..................................... 29
VI. CONDITIONS....................................................... 30
6.1. Conditions To Each Party's Obligation To Effect the
Merger...................................................... 30
6.2. Conditions To Obligations of FelCor......................... 31
6.3. Conditions To Obligations of Bristol........................ 32
6.4. Frustration of Closing Conditions........................... 32
VII. TERMINATION, AMENDMENT AND WAIVER........................... 32
7.1. Termination................................................. 32
7.2. Certain Fees and Expenses................................... 33
7.3. Effect of Termination....................................... 35
7.4. Amendment................................................... 35
7.5. Extension; Waiver........................................... 35
VIII. GENERAL PROVISIONS............................................. 35
8.1. Nonsurvival of Representations and Warranties............... 35
8.2. Notices..................................................... 35
8.3. Certain Definitions......................................... 36
8.4. Interpretation.............................................. 37
8.5. Counterparts................................................ 37
8.6. Entire Agreement; No Third-party Beneficiaries.............. 37
8.7. Governing Law............................................... 37
8.8. Assignment.................................................. 38
8.9. Enforcement................................................. 38
8.10. Severability................................................ 38
</TABLE>

ii
<PAGE> 157

LIST OF EXHIBITS
(NOT A PART OF THE AGREEMENT)

<TABLE>
<CAPTION>
EXHIBIT
-------
<S> <C>
Form of Affiliate's Agreement............................... A
Form of Tax Letters......................................... B
Form of REIT Opinion........................................ C
</TABLE>

LIST OF SCHEDULES
(NOT A PART OF THE AGREEMENT)

<TABLE>
<CAPTION>
SCHEDULE
--------
<S> <C>
Modifications to Articles of Amendment and Restatement of
FelCor.................................................... 1.5
Directors and Officers...................................... 1.7
Joint Operating Committee................................... 4.2
Form of Bristol E&P Statement............................... 5.12
</TABLE>

LIST OF SCHEDULES TO FELCOR DISCLOSURE LETTER
(NOT A PART OF THE AGREEMENT)

<TABLE>
<CAPTION>
SCHEDULE
--------
<S> <C>
Name, Formation Jurisdiction and Ownership of
Subsidiaries.............................................. 2.2
Outstanding Securities...................................... 2.3
Conflicts with Laws or Agreements and Necessary Consents.... 2.4
SEC Filings................................................. 2.5
Material Changes............................................ 2.6
Material Legal Proceedings.................................. 2.7
Properties.................................................. 2.8
Changes in Benefit Plans and Compliance with ERISA.......... 2.10
Tax Liabilities; Qualified REIT Subsidiaries................ 2.11
Union Contracts............................................. 2.14
Defaults in Agreements...................................... 2.15
Individuals Having "Knowledge".............................. 2.19
Acquisition Proposals....................................... 4.1
Exceptions to Pre-Closing Covenants......................... 4.2
</TABLE>

LIST OF SCHEDULES TO BRISTOL DISCLOSURE LETTER
(NOT A PART OF THE AGREEMENT)

<TABLE>
<CAPTION>
SCHEDULE
--------
<S> <C>
Bristol Subsidiaries........................................ 3.2
Capital Structure........................................... 3.3
Authority; Noncontravention; Consents....................... 3.4
SEC Documents............................................... 3.5
Absence of Certain Changes or Events........................ 3.6
Litigation.................................................. 3.7
Properties.................................................. 3.8
Environmental Issues........................................ 3.9
Absence of Changes in Benefit Plans; ERISA Compliance....... 3.10
Taxes....................................................... 3.11
No Payments to Employees, Officers or Directors............. 3.12
</TABLE>

iii
<PAGE> 158

<TABLE>
<CAPTION>
SCHEDULE
--------
<S> <C>
Labor Matters............................................... 3.15
Compliance with Agreements.................................. 3.16
Definition of Knowledge of Bristol.......................... 3.20
Acquisition Proposals....................................... 4.1
Conduct of Bristol's Business Pending Merger................ 4.2
</TABLE>

iv
<PAGE> 159

INDEX OF DEFINED TERMS
(NOT A PART OF THE AGREEMENT)

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Acquisition Agreement....................................... 22
Acquisition Proposal........................................ 22
Affiliate................................................... 36
Agreement................................................... 1
Amended Bristol Exercise Price.............................. 6
Amended Bristol Option...................................... 5
Articles of Merger.......................................... 2
Bankruptcy Exception........................................ 8
Base Amount................................................. 33
BHMC........................................................ 1
BHR......................................................... 1
BHR Common Shares........................................... 1
BHR Option.................................................. 5
Break-Up Expenses........................................... 34
Break-Up Fee................................................ 33
Break-Up Fee Tax Opinion.................................... 33
Bristol..................................................... 1
Bristol Benefit Plans....................................... 20
Bristol Board............................................... 1
Bristol Bylaws.............................................. 15
Bristol Certificate......................................... 15
Bristol Certificates........................................ 4
Bristol Common Shares....................................... 1
Bristol Corporate Subsidiaries.............................. 1
Bristol Director Plan....................................... 5
Bristol Disclosure Letter................................... 14
Bristol Filed SEC Documents................................. 17
Bristol Financial Statement Date............................ 18
Bristol Hotel............................................... 36
Bristol Hotel Subsidiaries.................................. 36
Bristol Incentive Plan...................................... 5
Bristol Material Adverse Change............................. 18
Bristol Material Adverse Effect............................. 14
Bristol Preferred Shares.................................... 15
Bristol Properties.......................................... 18
Bristol SEC Documents....................................... 17
Bristol Stockholder Approval................................ 16
Bristol Stockholders Meeting................................ 26
Bristol Subsidiaries........................................ 15
Business Day................................................ 36
Cash Distribution........................................... 34
Certificate of Merger....................................... 2
Closing..................................................... 2
Closing Date................................................ 2
Closing Price............................................... 3
Code........................................................ 1
Confidentiality Agreements.................................. 27
Department.................................................. 2
DGCL........................................................ 1
</TABLE>

v
<PAGE> 160
INDEX OF DEFINED TERMS
(NOT A PART OF THE AGREEMENT) -- (CONTINUED)

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Drop Dead Date.............................................. 32
E&P......................................................... 29
Effective Time.............................................. 2
Encumbrances................................................ 10
Environmental Law........................................... 36
ERISA....................................................... 12
Excess Shares............................................... 3
Exchange Act................................................ 9
Exchange Agent.............................................. 4
Exchange Ratio.............................................. 3
Exemptions.................................................. 29
Expense Fee................................................. 34
Federal Legislative or Regulatory Change.................... 30
FelCor...................................................... 1
FelCor 1994 Option Plan..................................... 7
FelCor 1995 Option Plan..................................... 7
FelCor 1998 Option Plan..................................... 7
FelCor Articles............................................. 7
FelCor Benefit Plans........................................ 12
FelCor Board................................................ 1
FelCor Bylaws............................................... 7
FelCor Common Shares........................................ 7
FelCor Disclosure Letter.................................... 6
FelCor Filed SEC Documents.................................. 9
FelCor Financial Statement Date............................. 10
FelCor Hotel................................................ 36
FelCor Material Adverse Change.............................. 10
FelCor Material Adverse Effect.............................. 6
FelCor OP Units............................................. 7
FelCor Operating Partnership................................ 6
FelCor Operating Partnership Agreement...................... 7
FelCor Option Plans......................................... 7
FelCor Properties........................................... 10
FelCor SEC Documents........................................ 9
FelCor Series A Preferred Shares............................ 7
FelCor Stockholder Approval................................. 8
FelCor Stockholders Meeting................................. 26
FelCor Subsidiaries......................................... 7
First Dividend Date......................................... 4
GAAP........................................................ 9
Governmental Entity......................................... 9
Hazardous Material.......................................... 36
HSR Act..................................................... 17
Indebtedness................................................ 36
Indemnified Parties......................................... 28
IRS......................................................... 33
Joint Operating Committee................................... 23
Knowledge................................................... 25
Knowledge of Bristol........................................ 21
</TABLE>

vi
<PAGE> 161
INDEX OF DEFINED TERMS
(NOT A PART OF THE AGREEMENT) -- (CONTINUED)

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Knowledge of FelCor......................................... 14
Laws........................................................ 9
Leasing Transactions........................................ 1
Liens....................................................... 7
Measurement Date............................................ 7
Merger...................................................... 1
Merrill..................................................... 21
MGCL........................................................ 1
Non-Corporate Bristol Hotel Subsidiaries.................... 36
NYSE........................................................ 3
Original Bristol Option..................................... 5
Payor....................................................... 34
Permits..................................................... 13
Person...................................................... 36
Preliminary E&P Statement................................... 29
Principal Stockholders...................................... 1
Property Restrictions....................................... 11
Proxy Statement............................................. 9
Qualifying Income........................................... 33
REA Agreement............................................... 11
Recipient................................................... 34
Record Date................................................. 36
Registration Statements..................................... 9
REIT........................................................ 13
REIT Requirements........................................... 33
SEC......................................................... 9
Securities Act.............................................. 5
Spin-Off Agreement.......................................... 1
Spin-Off Transactions....................................... 37
Stockholder Approvals....................................... 16
Subsidiary.................................................. 37
Superior Proposal........................................... 23
Superior Proposal Transaction Notice........................ 23
Surviving Certificates...................................... 4
Surviving Corporation....................................... 1
Surviving Corporation Common Shares......................... 3
Taxes....................................................... 37
Trading Day................................................. 3
Transaction Documents....................................... 37
Transfer and Gains Taxes.................................... 28
Valuation Ratio............................................. 5
Volume Weighted Average Trading Price....................... 37
Voting Agreement............................................ 1
</TABLE>

vii
<PAGE> 162

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated March 23, 1998,
is by and between Bristol Hotel Company, a Delaware corporation ("Bristol"), and
FelCor Suite Hotels, Inc., a Maryland corporation ("FelCor").

RECITALS:

A. The Board of Directors of Bristol (the "Bristol Board") and the Board of
Directors of FelCor (the "FelCor Board") deem it advisable and in the best
interests of their respective companies that, subject to the conditions and
other provisions contained herein, Bristol merge with and into FelCor (the
"Merger"), with FelCor as the surviving corporation in the Merger (as such, the
"Surviving Corporation");

B. For federal income tax purposes, it is intended that the Merger qualify
as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code");

C. FelCor has advised Bristol that, in order for FelCor to maintain its
status as a real estate investment trust following the Merger, FelCor must not
acquire certain assets and liabilities of the hotel management and operation
business of Bristol and the Bristol Subsidiaries as a result of the Merger.
Accordingly, prior to and as a condition precedent to the Merger, (i) Bristol
will, or will cause the Bristol Subsidiaries to, (a) reorganize internally and
contribute to Bristol Hotel Management Corporation, a Delaware corporation
("BHMC"), or another subsidiary of BHR certain of the assets and liabilities of
Bristol and the Bristol Subsidiaries and contribute to Bristol Hotels & Resorts,
Inc., a Delaware corporation ("BHR"), all the capital stock of BHMC, and (b)
distribute to the holders of common stock, par value of $0.01 per share, of
Bristol ("Bristol Common Shares") all of the outstanding shares of common stock,
par value of $0.01 per share, of BHR (the "BHR Common Shares") in a transaction
expected to be treated for federal income tax purposes as a taxable dividend of
Bristol's earnings and profits, (ii) Bristol and/or the Bristol Hotel
Subsidiaries, as the case may be, will enter into leases with one or more wholly
owned subsidiaries of BHR and will cancel certain existing management contracts
(the "Leasing Transactions"), and (iii) Bristol will cause those Bristol Hotel
Subsidiaries that are taxable as corporations under the Code ("Bristol Corporate
Subsidiaries") to merge with and into one or more Non-Corporate Bristol Hotel
Subsidiaries, all as provided in the Spin-Off Agreement entered into by Bristol,
BHMC and BHR contemporaneously with this Agreement (the "Spin-Off Agreement");

D. Contemporaneously with the execution of this Agreement, Bristol, FelCor
and certain other Persons (such other Persons, collectively, the "Principal
Stockholders") have entered into a Voting and Cooperation Agreement (the "Voting
Agreement") pursuant to which the Principal Stockholders have agreed to vote
their capital stock holdings for adoption of the Merger Agreement and to refrain
from taking certain actions; and

E. In connection with the transactions contemplated hereby, (i) the Bristol
Board has approved the Voting Agreement and other transactions contemplated
hereby so as to render inapplicable the special stockholder voting requirements
of Section 203 of the DGCL and (ii) the FelCor Board has adopted resolutions
relating to ownership of FelCor Common Shares by the Principal Stockholders.

Now, therefore, in consideration of the foregoing and the representations,
warranties and covenants contained herein, the parties hereto hereby agree as
follows:

I. THE MERGER AND CERTAIN RELATED TRANSACTIONS

1.1. The Merger. (a) On the terms and subject to the conditions of this
Agreement, and in accordance with the Maryland General Corporation Law (the
"MGCL") and the Delaware General Corporation Law (the "DGCL"), at the Effective
Time, Bristol will be merged with and into FelCor, whereupon the separate
corporate existence of Bristol will cease and FelCor will be the Surviving
Corporation.

1
<PAGE> 163

(b) From and after the Effective Time, the Surviving Corporation will
possess all the rights, privileges and powers and will assume all of the
liabilities, obligations and duties of Bristol and FelCor, all as provided under
the MGCL and the DGCL.

1.2. Pre-Merger Transactions. Prior to the Effective Time, Bristol will
cause BHMC, BHR and the Bristol Subsidiaries to consummate the transactions
contemplated by the Spin-Off Agreement and take such actions as are required
under the Spin-Off Agreement to be taken by it.

1.3. Closing. The closing of the Merger (the "Closing") will take place at
a date and time to be specified by the parties, which (subject to satisfaction
or waiver of the conditions set forth in Article VI) will be no later than the
third Business Day after satisfaction or waiver of the conditions set forth in
Article VI (the "Closing Date") at the offices of Jones, Day, Reavis & Pogue,
2300 Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas, unless another time,
date or place is agreed to in writing by the parties.

1.4. Effective Time. As soon as practicable following the satisfaction or
waiver of the conditions set forth in Article VI, (i) the parties will execute
and file articles of merger (the "Articles of Merger") with the State Department
of Assessments and Taxation of the State of Maryland (the "Department") in
accordance with the MGCL, (ii) the Surviving Corporation will execute and file a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware in accordance with the DGCL, and (iii) the parties will
make any other filings and recordings required under the MGCL and the DGCL. The
Merger will become effective (the "Effective Time") at 9:00 a.m., New York City
time, on the Trading Day immediately following the Closing Date or, if later,
such date and time as the Department accepts the Articles of Merger for
recording and the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware, or at such other time as Bristol and FelCor
agree should be specified in the Articles of Merger and Certificate of Merger
(not to exceed 30 calendar days after the Articles of Merger are accepted for
recording by the Department and the Certificate of Merger is accepted for filing
by the Secretary of State of the State of Delaware). Unless otherwise agreed,
the parties will cause the Effective Time to occur at 9:00 a.m., New York City
time, on the Trading Day immediately following the Closing Date.

1.5. Articles of Amendment and Restatement of Surviving Corporation. The
Articles of Amendment and Restatement of FelCor will be amended and restated at
the Effective Time in the manner specified in Schedule 1.5 or as otherwise
agreed between FelCor and Bristol, and will be the Articles of Amendment and
Restatement of the Surviving Corporation from and after the Effective Time until
further amended or restated in accordance therewith and the MGCL.

1.6. Bylaws of Surviving Corporation. From and after the Effective Time,
the Bylaws of the Surviving Corporation will be the Bylaws of FelCor as in
effect immediately prior to the Effective Time, until further amended or
restated in accordance therewith and the MGCL.

1.7. Directors and Officers of Surviving Corporation. From and after the
Effective Time, the individuals identified on or determined in accordance with
Schedule 1.7 will serve as directors of the Surviving Corporation and will be
divided into "Class I", "Class II" and "Class III" directors as specified on
Schedule 1.7 until the earlier of the resignation or removal of any such
individual or until their respective successors are duly elected and qualified,
as the case may be. In the event that any such person is unable or unwilling to
serve as a director at the Effective Time, the party that designated such
individual will have the right to designate a replacement for such individual,
which right of replacement will terminate at the Effective Time and is subject
to approval of the other party hereto, which approval may not be unreasonably
withheld or delayed. Upon such replacement, Schedule 1.7 will be, without
further action, deemed to have been amended to reflect such selection. The
officers of FelCor immediately prior to the Effective Time will be the officers
of the Surviving Corporation, until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be.

2
<PAGE> 164

1.8. Effect of the Merger on the Capital Stock of FelCor and Bristol. At
the Effective Time, by virtue of the Merger and without any action by the holder
of any Bristol Common Shares, FelCor Common Shares or FelCor Series A Preferred
Shares:

(a) Each FelCor Common Share and FelCor Series A Preferred Share
outstanding immediately prior to the Effective Time will remain
outstanding, and each certificate representing outstanding FelCor Common
Shares and FelCor Series A Preferred Shares will thereafter represent an
equal number of Surviving Corporation Common Shares and Surviving
Corporation Series A Preferred Shares, as the case may be;

(b) Subject to the provisions of Sections 1.8(c) and 1.8(d), each
Bristol Common Share outstanding immediately prior to the Effective Time
will be converted into the right to receive 0.685 (the "Exchange Ratio") of
a validly issued, fully paid and nonassessable share of common stock, par
value of $0.01 per share, of the Surviving Corporation ("Surviving
Corporation Common Shares"), and each Bristol Common Share theretofore
outstanding will cease to be outstanding and will cease to exist, and each
holder of a Bristol Certificate will thereafter cease to have any rights
with respect to such shares, except the right to receive, without interest,
the Surviving Corporation Common Shares as calculated pursuant to this
Section 1.8(b) and cash in lieu of fractional Surviving Corporation Common
Shares in accordance with Section 1.8(c) or Section 1.8(d), upon the
surrender of such Bristol Certificate in accordance with Section 1.9;

(c) Notwithstanding any other provision hereof, no fractional
Surviving Corporation Common Shares will be issued in connection with the
Merger. No such holder will be entitled to dividends, voting rights or any
other stockholder rights in respect of any fractional share. Instead, as
soon as practicable after the Effective Time, the Exchange Agent will
determine the excess of (i) the number of whole Surviving Corporation
Common Shares delivered to the Exchange Agent by FelCor pursuant to Section
1.9(a) over (ii) the aggregate number of whole Surviving Corporation Common
Shares to be distributed to holders of Bristol Common Shares pursuant to
Section 1.8(b) (such excess, the "Excess Shares"). FelCor will instruct the
Exchange Agent (i) to sell the Excess Shares at then-prevailing prices on
the New York Stock Exchange (the "NYSE") through one or more member firms
of the NYSE and (ii) to use reasonable efforts to complete the sale of the
Excess Shares as promptly following the Effective Time as, in the Exchange
Agent's sole judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions, and in
any event, within 90 calendar days following the Effective Time. The
Exchange Agent will hold such proceeds in trust for the holders of Bristol
Common Shares who would otherwise be entitled to receive a fraction of a
Surviving Corporation Common Share, and will determine the portion of the
proceeds to which each such holder is entitled, if any, by multiplying the
amount of the aggregate net proceeds of such sale by a fraction, the
numerator of which is the amount of the fractional share interest to which
such holder is entitled, and the denominator of which is the aggregate
amount of fractional share interests to which all such holders of Bristol
Common Shares are entitled. The Surviving Corporation will pay all
commissions, transfer taxes, Exchange Agent's fees and other out-of-pocket
transaction costs incurred in connection with the sale of such Excess
Shares;

(d) Notwithstanding the provisions of Section 1.8(c), FelCor may elect
at its option, exercised prior to the Effective Time, in lieu of the
issuance and sale of Excess Shares and the making of payments pursuant to
Section 1.8(c), to pay each holder of Bristol Common Shares who would
otherwise be entitled to receive a fraction of a Surviving Corporation
Common Share, an amount in cash equal to the Closing Price immediately
preceding the Effective Time multiplied by the fraction of a Surviving
Corporation Common Share to which such holder would otherwise be entitled.
For purposes of this Agreement, "Closing Price" means the closing price of
the FelCor Common Shares (as reported in the New York Stock Exchange, Inc.
Composite Tape) on the Closing Date and "Trading Day" means any day on
which the NYSE is open for trading; and

3
<PAGE> 165

(e) Each Bristol Common Share issued and held in Bristol's treasury or
by FelCor or any wholly owned FelCor Subsidiary at the Effective Time, if
any, will cease to be outstanding and will be canceled and retired and will
cease to exist without payment of any consideration therefor.

1.9. Exchange of Certificates. (a) As of the Effective Time, FelCor will
deposit with FelCor's transfer agent (the "Exchange Agent"), for the benefit of
the holders of certificates (the "Bristol Certificates") representing Bristol
Common Shares for exchange in accordance with this Section 1.9, certificates
(the "Surviving Certificates") representing Surviving Corporation Common Shares
to be issued pursuant to Article I.

(b) Promptly after the Effective Time, the Surviving Corporation will cause
the Exchange Agent to mail to each holder of record of Bristol Common Shares as
of the Effective Time a letter of transmittal which will specify (i) that
delivery will be effected, and risk of loss and title to Bristol Certificates
will pass, only upon delivery of such Bristol Certificates to the Exchange
Agent, and will be in such form and have such other provisions as the Surviving
Corporation may reasonably specify, and (ii) instructions for use in effecting
the surrender of such Bristol Certificates in exchange for Surviving
Certificates and cash in lieu of fractional shares. In addition, the Surviving
Corporation will enter into such other arrangements as Bristol may reasonably
request prior to the Effective Time to permit hand delivery of Bristol
Certificates in exchange for Surviving Certificates at the office of the
Exchange Agent maintained for such purposes in New York City commencing promptly
after the Effective Time. Upon surrender of a Bristol Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, the
holder of such Bristol Certificate will be entitled to receive in exchange
therefor (A) a Surviving Certificate representing the number of whole Surviving
Corporation Common Shares, (B) a check representing the amount of unpaid
dividends and distributions, if any, which such holder has the right to receive
pursuant to the provisions of Section 1.9(c) in respect of the Bristol
Certificate surrendered, and (C) a check or the right to receive a check
representing the amount of cash in lieu of a fractional Surviving Corporation
Common Share, if any, which such holder has the right to receive pursuant to the
provisions of Section 1.8 in respect of the Bristol Certificate surrendered, in
each case, after giving effect to any required withholding Tax, and the Bristol
Certificates so surrendered will forthwith be canceled. No interest will be paid
or accrued on the cash in lieu of fractional Surviving Corporation Common Shares
and unpaid dividends and distributions, if any, payable to holders of Bristol
Certificates. In the event of a transfer of rights to receive the consideration
provided herein with respect to Bristol Common Shares which is not registered in
the transfer records of Bristol, a Surviving Certificate representing the proper
number of Surviving Corporation Common Shares, together with a check for the
cash to be paid in lieu of any fractional Surviving Corporation Common Shares,
if any, and unpaid dividends and distributions, if any, which such holder has
the right to receive pursuant to the provisions of Section 1.8 and Section
1.9(c), respectively, in respect of the Bristol Certificate so surrendered,
after giving effect to any required withholding Tax, may be issued to such
transferee if the Bristol Certificate is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer Taxes have been paid. All Bristol
Certificates so surrendered will be canceled forthwith.

(c) Notwithstanding any other provisions of this Agreement, no dividends or
other distributions on Surviving Corporation Common Shares will be paid with
respect to any Bristol Common Shares represented by a Bristol Certificate until
the Bristol Certificate is surrendered for exchange as provided herein. Subject
to the effect of applicable escheat and other Laws, following surrender of any
Bristol Certificate, there will be paid to the holder of the Surviving
Certificate issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after July 15, 1998 (the "First Dividend Date") theretofore payable with
respect to such whole Surviving Corporation Common Shares and not paid, less the
amount of withholding Taxes, if any, which may be required thereon, and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the First Dividend Date but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole
Surviving Corporation Common Shares, less the amount of withholding Taxes, if
any, which may be required thereon.

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(d) From and after the Effective Time, there will be no transfers on the
stock transfer books of Bristol of the Bristol Common Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Bristol Certificates are presented to the Surviving Corporation, they will
be canceled and exchanged for certificates for Surviving Corporation Common
Shares and cash in lieu of fractional Surviving Corporation Common Shares, if
any, and unpaid dividends and distributions deliverable in respect thereof
pursuant to this Agreement in accordance with the procedures set forth in
Section 1.8 and this Section 1.9. Bristol Certificates surrendered for exchange
by any Person constituting an "affiliate" of Bristol for purposes of Rule 145(c)
under the Securities Act of 1933, as amended (the "Securities Act"), will not be
exchanged until the Surviving Corporation has received a written agreement from
such Person as contemplated by Section 5.11.

(e) Any portion of the Surviving Certificates made available to the
Exchange Agent pursuant to Section 1.9(a) which remains unclaimed by the holders
of Bristol Common Shares for 180 calendar days after the Effective Time will be
delivered to the Surviving Corporation, upon demand of the Surviving
Corporation, and any former Bristol stockholders who have not theretofore
complied with this Section 1.9 may look only to the Surviving Corporation for
payment of their Surviving Corporation Common Shares, cash in lieu of fractional
shares and unpaid dividends and distributions on the Surviving Corporation
Common Shares deliverable in respect of each Bristol Common Share such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.

(f) None of FelCor, Bristol, the Exchange Agent or any other Person will be
liable to any former holder of Bristol Common Shares for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar Laws.

(g) In the event any Bristol Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
or the Surviving Corporation will issue in exchange for such lost, stolen or
destroyed Bristol Certificate the Surviving Corporation Common Shares and cash
in lieu of fractional Surviving Corporation Common Shares, and unpaid dividends
and distributions on Surviving Corporation Common Shares as provided in Section
1.8 and Section 1.9(c), respectively, deliverable in respect thereof pursuant to
this Agreement.

1.10. Bristol Stock Options. (a) At the Spin-Off Time (as defined in the
Spin-Off Agreement), each outstanding option (each, an "Original Bristol
Option") to purchase Bristol Common Shares under Bristol's Amended and Restated
1995 Equity Incentive Plan (the "Bristol Incentive Plan") or Stock Option Plan
for Non-Employee Directors (the "Bristol Director Plan"), whether or not then
exercisable or vested, all of which Original Bristol Options that are
outstanding as of the Measurement Date are listed in Schedule 3.3 to the Bristol
Disclosure Letter, will continue to have, and be subject to, the same terms and
conditions as set forth in the Bristol Incentive Plan or the Bristol Director
Plan (as the case may be) and related option agreements pursuant to which the
Original Bristol Options were granted, provided that each Original Bristol
Option will be redenominated into two options which will be continuations of the
Original Bristol Options, effected through amendment of Original Bristol Options
to an "Amended Bristol Option" and a "BHR Option," each having identical terms
and conditions to the Original Bristol Options except: (i) the BHR Option will
be an option to purchase that number of BHR Common Shares equal to the product
of the number of Bristol Common Shares covered by such Original Bristol Option
immediately prior to the Spin-Off Time and the Spin-Off Conversion Ratio (as
defined in the Spin-Off Agreement), rounded to the nearest whole number of BHR
Common Shares, (ii) service with either Bristol, BHR or their respective
Subsidiaries following the Effective Time will satisfy the vesting requirements
and termination terms thereof, (iii) the per share exercise price for each BHR
Option will be an amount equal to the quotient of (A) the product of (x)
0.11385, subject to adjustment if and to the extent necessary to ensure that no
additional compensation expense results as specified in accordance with Emerging
Issues Task Force 90-9 (the "Valuation Ratio"), and (y) the exercise price for
the Original Bristol Options, divided by (B) the Spin-Off Conversion Ratio, (iv)
the per share exercise price for the Amended Bristol Options will be the product
of (x) 1 minus the Valuation Ratio and
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(y) the exercise price for the Original Bristol Options (the "Amended Bristol
Exercise Price"), and (v) all references to the Bristol Board or Bristol will,
with respect to the BHR Options, be deemed to be references to the Board of
Directors of BHR and BHR, respectively. Effective as of the Spin-Off Time, (A)
BHR will assume all obligations with respect to each BHR Option, (B) BHR will
reserve for issuance the number of BHR Common Shares that become issuable upon
the exercise of such BHR Options, and (C) Bristol will have no obligations with
respect to any BHR Options. Not later than the Spin-Off Time, Bristol and BHR
will amend (and each may restate) the Bristol Incentive Plan and the Bristol
Director Plan to effect the foregoing changes to such Plans.

(b) At the Effective Time, the Surviving Corporation will expressly assume
the Bristol Incentive Plan and the Bristol Director Plan and Bristol's
obligations under the Amended Bristol Options on and after the Effective Time.
Each Amended Bristol Option will continue to have, and be subject to, the same
terms and conditions as set forth in the Bristol Incentive Plan or the Bristol
Director Plan (as the case may be) and related option agreements as modified by
Section 1.10(a), provided that the Amended Bristol Options will be further
amended to provide that, (i) all references to Bristol Common Shares will be
deemed to be references to Surviving Corporation Common Shares, (ii) service
with either BHR, the Surviving Corporation or their respective Subsidiaries
following the Effective Time will satisfy the vesting requirements and
termination terms thereof, (iii) each Amended Bristol Option will be exercisable
for that number of whole Surviving Corporation Common Shares equal to the
product of the number of Bristol Common Shares covered by the Amended Bristol
Option immediately prior to the Effective Time and the Exchange Ratio, rounded
to the nearest whole number of Surviving Corporation Common Shares, (iv) the
exercise price per Surviving Corporation Common Share under each Amended Bristol
Option will be equal to the Amended Bristol Exercise Price divided by the
Exchange Ratio, rounded to the nearest cent, and (v) all references to the
Bristol Board or Bristol will be deemed to be references to the Board of
Directors of the Surviving Corporation and the Surviving Corporation,
respectively; provided, however that all decisions relating to the
interpretation or amendment of the Amended Bristol Options will require the
approval of the Compensation Committee of BHR, except for adjustments to the
exercise price or nature of securities to be awarded upon exercise of an Amended
Bristol Option in connection with a transaction in which the Amended Bristol
Options are treated in the same manner as options under other FelCor Option
Plans. The Surviving Corporation will reserve for issuance the number of
Surviving Corporation Common Shares that become issuable upon the exercise of
such Amended Bristol Options. As soon as practicable, the Surviving Corporation
will (i) amend (and each may restate) the Bristol Incentive Plan and the Bristol
Director Plan to effect the foregoing changes to such Plans, effective as of the
Effective Time and (ii) file with the SEC a registration statement on Form S-8
or other appropriate form with respect to the Surviving Corporation Common
Shares issuable pursuant to the Amended Bristol Options.

II. REPRESENTATIONS AND WARRANTIES OF FELCOR

Except as set forth in the letter of even date herewith signed by the
President or Vice President of FelCor in his capacity as such and delivered to
Bristol simultaneously with the execution and delivery of this Agreement (the
"FelCor Disclosure Letter"), FelCor represents and warrants to Bristol as
follows:

2.1. Organization, Standing and Power of FelCor. FelCor is a corporation
duly incorporated, validly existing and in good standing under the Laws of the
State of Maryland and has the requisite corporate power and authority to carry
on its business as now being conducted. FelCor is duly qualified or licensed to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on the business, financial condition or results of
operations of FelCor and the FelCor Subsidiaries, taken as a whole (a "FelCor
Material Adverse Effect"). FelCor has delivered to Bristol complete and correct
copies of its Articles of Amendment and Restatement, its Bylaws and the Amended
and Restated Agreement of Limited Partnership of FelCor Suites Limited
Partnership, a Delaware limited partnership (the "FelCor Operating
Partnership"), in each case as amended

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or supplemented to the date of this Agreement and currently in force and effect
(respectively, the "FelCor Articles", the "FelCor Bylaws" and the "FelCor
Operating Partnership Agreement").

2.2. FelCor Subsidiaries. (a) Schedule 2.2 to the FelCor Disclosure Letter
sets forth (i) the name and jurisdiction of incorporation or formation of each
Subsidiary of FelCor and of each other Person in which FelCor owns, directly or
indirectly, an equity or ownership interest (collectively, the "FelCor
Subsidiaries"), (ii) the name of the FelCor Hotel, if any, in which any FelCor
Subsidiary owns or holds an interest and the nature of that ownership or other
interest, and (iii) if such FelCor Subsidiary is not wholly owned (directly or
indirectly) by FelCor, (A) the percentage of capital stock or other equity
interests held by FelCor, and (B) the record owners (or class of owners with
respect to the FelCor Operating Partnership) of outstanding shares of its
capital stock or other equity interests.

(b) All the outstanding shares of capital stock of each FelCor Subsidiary
that is a corporation have been validly issued and are fully paid and
nonassessable. Except as set forth in Schedule 2.2 to the FelCor Disclosure
Letter, (i) all the outstanding shares of capital stock of each FelCor
Subsidiary that is a corporation are owned by FelCor or by another FelCor
Subsidiary free and clear of all pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever (collectively, "Liens"),
and (ii) all equity interests of each FelCor Subsidiary that is a partnership,
joint venture, limited liability company or trust are owned by FelCor or by
another FelCor Subsidiary free and clear of all Liens. Each FelCor Subsidiary
that is a corporation is duly incorporated, validly existing and in good
standing under the Laws of its jurisdiction of incorporation and has the
requisite corporate power and authority to carry on its business as now being
conducted, and each FelCor Subsidiary that is a partnership, limited liability
company or trust is duly organized, validly existing and in good standing under
the Laws of its jurisdiction of organization and has the requisite partnership,
limited liability company or trust power and authority to carry on its business
as now being conducted. Each FelCor Subsidiary is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed, individually or in the aggregate, could
not reasonably be expected to have a FelCor Material Adverse Effect. FelCor has
delivered or made available to Bristol complete and correct copies of the
articles or certificate of incorporation, bylaws, partnership, joint venture and
operating agreements and other organizational documents of each FelCor
Subsidiary, in each case, as amended or supplemented to the date of this
Agreement and currently in force and effect.

2.3. Capital Structures. (a) The authorized capital stock of FelCor
consists of 110,000,000 shares of capital stock, of which 100,000,000 are shares
of Common Stock, par value $0.01 per share ("FelCor Common Shares"), and
10,000,000 are FelCor Preferred Shares, 6,050,000 of which have been designated
as $1.95 Series A Cumulative Convertible Preferred Stock, par value of $0.01 per
share (the "FelCor Series A Preferred Shares"). As of the close of business on
March 20, 1998 (the "Measurement Date"), (i) 36,591,080 FelCor Common Shares and
6,050,000 FelCor Series A Preferred Shares were issued and outstanding, (ii)
1,212,500 FelCor Common Shares and no FelCor Series A Preferred Shares were held
in the treasury of FelCor, (iii) no more than 400,000 FelCor Common Shares were
reserved for issuance pursuant to FelCor's 1994 Restricted Stock and Stock
Option Plan (the "FelCor 1994 Option Plan"), (iv) no more than 1,400,000 FelCor
Common Shares were reserved for issuance pursuant to FelCor's 1995 Restricted
Stock and Stock Option Plan (the "FelCor 1995 Option Plan"), (v) no more than
1,000,000 FelCor Common Shares were reserved for issuance pursuant to FelCor's
1998 Restricted Stock and Stock Option Plan (the "FelCor 1998 Option Plan", and
together with the FelCor 1995 Option Plan and the FelCor 1994 Option Plan, the
"FelCor Option Plans"), (vi) since December 31, 1997, FelCor has not granted
options to purchase more than 400,000 FelCor Common Shares pursuant to the
FelCor Option Plans and (vii) a sufficient number of FelCor Common Shares were
reserved for issuance to permit the conversion of the then-outstanding FelCor
Series A Preferred Shares and the redemption of the then-outstanding units of
limited partner interest ("FelCor OP Units") of the FelCor Operating
Partnership. As of the Measurement Date, except as set forth in this Section
2.3, no shares of capital stock or other voting securities of FelCor were
issued, reserved for issuance or outstanding and during the period from and
following the Measurement Date to the Effective Time, there will be no change in
the issued and outstanding FelCor Common Shares and FelCor Series A

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Preferred Shares other than pursuant to (A) the exercise of options to purchase
FelCor Common Shares issued pursuant to the FelCor Option Plans and referred to
in this Section 2.3, (B) the exercise of conversion or redemption rights with
respect to the FelCor Series A Preferred Shares and the FelCor OP Units referred
to in this Section 2.3, or (C) the issuance of FelCor OP Units in connection
with transactions referred to on Schedule 4.2 to the FelCor Disclosure Letter.
Without limiting the generality or effect of any other provision hereof, neither
the Merger nor any other transaction contemplated hereby will accelerate the
vesting of or have any other effect under any options or other rights relating
to the acquisition of equity or other securities of FelCor or the FelCor
Operating Partnership.

(b) All of the issued and outstanding shares of capital stock of FelCor are
duly authorized, validly issued, fully paid and nonassessable and are not
subject to preemptive rights. Except as set forth in this Section 2.3 or in
Schedule 2.3 to the FelCor Disclosure Letter, as of the date of this Agreement,
there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
FelCor or any FelCor Subsidiary is a party or by which such entity is bound
obligating FelCor or any FelCor Subsidiary to issue, deliver, sell, repurchase,
redeem or otherwise acquire, or cause to be issued, delivered, sold,
repurchased, redeemed or acquired, additional shares of capital stock, voting
securities or other ownership interests of FelCor or any FelCor Subsidiary (or
securities convertible into or exchangeable for such ownership interests) or
obligating FelCor or any FelCor Subsidiary to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking (other than to FelCor or a FelCor Subsidiary). There
are no bonds, debentures, notes or other Indebtedness of FelCor having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which stockholders of FelCor may vote.

(c) As of the Measurement Date, the partnership interests in the FelCor
Operating Partnership consist of (i) the 36,591,080 units of general partner
interest and (ii) 2,897,019 FelCor OP Units. All of the units of general partner
interest in FelCor Operating Partnership are owned by FelCor, free and clear of
all Liens.

2.4. Authority; Noncontravention; Consents. (a) FelCor has the requisite
corporate power and authority (i) to enter into this Agreement and each
Transaction Document to which FelCor is a party, (ii) to perform its obligations
hereunder and thereunder, and (iii) subject to the requisite approval of the
Merger by the holders of a majority of the FelCor Common Shares outstanding as
of the Record Date (the "FelCor Stockholder Approval"), to consummate the
transactions contemplated hereunder and thereunder. The execution and delivery
by FelCor of this Agreement and each Transaction Document to which FelCor is a
party and the consummation by FelCor of the transactions contemplated hereunder
and thereunder have been duly authorized by the FelCor Board, the FelCor Board
has recommended adoption of this Agreement by its stockholders and directed that
this Agreement be submitted to a meeting of its stockholders for their
consideration, and no other corporate proceedings on the part of FelCor or its
stockholders are necessary to authorize any of the foregoing, other than the
FelCor Stockholder Approval. This Agreement and each Transaction Document to
which FelCor is a party have been duly executed and delivered by FelCor and
constitute valid and binding obligations of FelCor, enforceable against FelCor
in accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws relating to the enforcement of creditors' rights and by
general principles of equity (the foregoing exception, the "Bankruptcy
Exception").

(b) Except as set forth in Schedule 2.4 to the FelCor Disclosure Letter,
the execution and delivery by FelCor of this Agreement and each Transaction
Document to which FelCor is a party do not, and the consummation of the
transactions contemplated hereunder and thereunder and compliance by FelCor with
the provisions hereof and thereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of FelCor or any
FelCor Subsidiary under (i) the FelCor Articles or the FelCor Bylaws or the
comparable charter or organizational documents or partnership or similar
agreement (as the case may be) of any FelCor Subsidiary, including without
limitation the FelCor Operating Partnership, each as amended or supplemented,
(ii) any loan or credit agreement, note, bond, mortgage, indenture or any other
agreement evidencing, Indebtedness, reciprocal easement agreement, lease,
management or other agreement, instrument
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or Permit applicable to FelCor or any FelCor Subsidiary or their respective
properties or assets, or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation (collectively, "Laws") applicable to
FelCor or any FelCor Subsidiary or their respective properties or assets, other
than, in the case of clause (ii) or (iii), any such conflicts, violations,
defaults, rights, loss or Liens that, individually or in the aggregate, could
not reasonably be expected to (A) have a FelCor Material Adverse Effect or (B)
prevent or delay in any material respect the consummation of the transactions
contemplated by this Agreement and the Transaction Documents or otherwise
prevent FelCor from performing its obligations hereunder or thereunder in any
material respect. No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state or local government
or any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental Entity"),
is required by or with respect to FelCor or any FelCor Subsidiary, including
without limitation the FelCor Operating Partnership, in connection with the
execution and delivery by FelCor of this Agreement or any of the Transaction
Documents to which FelCor is a party or the consummation by FelCor of the
transactions contemplated hereunder or thereunder, except for (i) the filing
with the Securities and Exchange Commission (the "SEC") of (A) a joint proxy
statement relating to the approval by FelCor's stockholders and Bristol's
stockholders of the transactions contemplated by this Agreement (as amended or
supplemented from time to time, the "Proxy Statement"), (B) registration
statements on appropriate forms under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (as amended or
supplemented from time to time, the "Registration Statements"), and (C) such
reports under the Exchange Act as may be required in connection with this
Agreement and the Transaction Documents and the transactions contemplated
hereunder and thereunder, (ii) the filing of listing applications with the NYSE
with respect to the Surviving Corporation Common Shares to be issued in the
Merger, (iii) the filing of the Articles of Merger with the Department, the
Certificate of Merger with the Secretary of State of the State of Delaware and
other appropriate merger documents and filings with any local recording office
or authorities of other states in which FelCor or Bristol is qualified to do
business, and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations and filings (A) as are set forth in Schedule 2.4 to
the FelCor Disclosure Letter or (B) which, if not obtained or made, could not
reasonably be expected to prevent or delay in any material respect the
consummation of any of the transactions contemplated by this Agreement or any of
the Transaction Documents or otherwise prevent FelCor from performing its
obligations hereunder or thereunder in any material respect or have,
individually or in the aggregate, a FelCor Material Adverse Effect or a Bristol
Material Adverse Effect.

2.5. SEC Documents; Financial Statements; Undisclosed
Liabilities. (a) FelCor and the FelCor Subsidiaries have filed all required
reports, schedules, forms, statements and other documents with the SEC from July
28, 1994 through the date hereof (the "FelCor SEC Documents"). Schedule 2.5 to
the FelCor Disclosure Letter contains a complete list of all FelCor SEC
Documents filed by FelCor and the FelCor Subsidiaries with the SEC since January
1, 1996 and on or prior to the date of this Agreement (the "FelCor Filed SEC
Documents"). All of the FelCor SEC Documents (other than preliminary material),
as of their respective filing dates, complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act and, in each
case, the rules and regulations promulgated thereunder applicable to such FelCor
SEC Documents. None of the FelCor SEC Documents at the time of filing contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent such statements have been modified or
superseded by later FelCor Filed SEC Documents.

(b) The consolidated financial statements of FelCor and the FelCor
Subsidiaries included in the FelCor SEC Documents (i) complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) have been prepared
in accordance with United States generally accepted accounting principles
("GAAP") (except, in the case of unaudited statements, as permitted by the
applicable rules and regulations of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto
included in or incorporated into any FelCor Filed SEC Documents), and (iii)
present fairly, in all material respects, the consolidated financial
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position of FelCor and the FelCor Subsidiaries as of the dates thereof and the
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and immaterial year-end
audit adjustments). Except as set forth in Schedule 2.5 to the FelCor Disclosure
Letter, FelCor has no Subsidiaries which are not consolidated for accounting
purposes.

(c) Except for liabilities and obligations set forth in the FelCor Filed
SEC Documents or in Schedule 2.5 to the FelCor Disclosure Letter or for
liabilities and obligations specifically contemplated to be incurred in
connection with this Agreement, neither FelCor nor any of the FelCor
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of FelCor or in the notes thereto and which,
individually or in the aggregate, could be reasonably expected to have a FelCor
Material Adverse Effect.

(d) Each of the operating statements for the FelCor Hotels provided or to
be provided by FelCor to Bristol or its advisors was prepared in the ordinary
course of business consistent with past practice and was derived from the books
and records for the applicable FelCor Hotel.

2.6. Absence of Certain Changes or Events. Except as disclosed in (i) the
FelCor Filed SEC Documents or (ii) Schedule 2.6 to the FelCor Disclosure Letter,
since December 31, 1997 (the "FelCor Financial Statement Date"), FelCor and the
FelCor Subsidiaries have conducted their business only in the ordinary course
thereof, and there has not been (a) any material adverse change, event or
development in the business, financial condition or results of operations of
FelCor and the FelCor Subsidiaries, taken as a whole (a "FelCor Material Adverse
Change"), nor has there been any occurrence or circumstance that with the
passage of time could reasonably be expected to result in a FelCor Material
Adverse Change, (b) except for regular quarterly distributions (in the case of
FelCor) not in excess of $0.55 per FelCor Common Share, $0.55 per FelCor OP Unit
and $.4875 per FelCor Series A Preferred Share, in each case with customary
record and payment dates, any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to any of FelCor's capital stock, (c) any split, combination or reclassification
of any of FelCor's capital stock, (d) any damage, destruction or loss, whether
or not covered by insurance, that, individually or in the aggregate, could be
reasonably expected to have a FelCor Material Adverse Effect, or (e) any change
in accounting methods, principles or practices by FelCor or any FelCor
Subsidiary materially affecting its assets, liabilities or business, except
insofar as may have been disclosed in the FelCor Filed SEC Documents or required
by a change in GAAP. There are no accrued and unpaid dividends on the FelCor
Series A Preferred Shares that have not been paid on the date such payment is
due.

2.7. Litigation. Except as disclosed in the FelCor Filed SEC Documents or
in Schedule 2.7 to the FelCor Disclosure Letter, and other than personal injury
and other routine personal injury litigation arising from the ordinary course of
operations of FelCor and the FelCor Subsidiaries and which are covered by
adequate insurance, there is no suit, action, proceeding or investigation
pending or, to the Knowledge of FelCor, threatened against or affecting FelCor
or any FelCor Subsidiary that, individually or in the aggregate, if decided
adversely to FelCor, could be reasonably expected to (i) have a FelCor Material
Adverse Effect or (ii) prevent or delay in any material respect the consummation
of any of the transactions contemplated by this Agreement or any of the
Transaction Documents or otherwise prevent FelCor from performing its
obligations hereunder or thereunder in any material respect, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against FelCor or any FelCor Subsidiary which,
individually or in the aggregate, could reasonably be expected to have any such
effect.

2.8. Properties. (a) All of the real estate properties owned or leased by
FelCor and the FelCor Subsidiaries are listed on Schedule 2.8 to the FelCor
Disclosure Letter (the "FelCor Properties"). FelCor has no direct or indirect
ownership interest in any real property as of the date hereof other than the
FelCor Properties.

(b) Except as disclosed on Schedule 2.8 to the FelCor Disclosure Letter,
FelCor or one of the FelCor Subsidiaries owns fee simple title to, or a valid
leasehold or joint venture interest in, each of the FelCor Properties, free and
clear of all Liens, security interests or other encumbrances on title
("Encumbrances"), except for such Encumbrances which, individually and in the
aggregate, could not be reasonably expected to have a FelCor Material Adverse
Effect. Except as disclosed on Schedule 2.8 to the FelCor Disclosure Letter,
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the FelCor Properties are not subject to any easements, rights of way,
covenants, conditions, restrictions or other written agreements or Laws
affecting building use or occupancy, or reservations of an interest in title
(collectively, "Property Restrictions") or Encumbrances, except for (i) Property
Restrictions imposed or promulgated by Law or any Governmental Entity with
respect to real property, including zoning regulations, that do not adversely
affect the current use of the property, materially detract from the value of or
materially interfere with the present use of the property, (ii) Encumbrances and
Property Restrictions disclosed on existing title policies, commitments (and the
documents listed as exceptions therein) or surveys (in each case copies of which
title policies, commitments (and the documents listed as exceptions therein) and
surveys have been delivered or made available to Bristol), (iii) leases between
FelCor and DJONT Operations, L.L.C., a Delaware limited liability company and
its subsidiaries, which are described on Schedule 2.8 to the FelCor Disclosure
Letter, (iv) retail leases, including restaurant, gift shop and roof top leases,
and (v) mechanics', carriers', supplier's, workmen's or repairmen's Liens and
other Encumbrances, Property Restrictions and other limitations of any kind, if
any, which, individually and in the aggregate, could not be reasonably expected
to have a FelCor Material Adverse Effect.

(c) Except for such matters as, individually and in the aggregate, could
not be reasonably expected to have a FelCor Material Adverse Effect, valid
policies of title insurance have been issued insuring FelCor's or the applicable
FelCor Subsidiary's title to or interest in each of the FelCor Properties, and
such policies are, at the date hereof, in full force and effect and no claim has
been made against any such policy and FelCor has no Knowledge of any facts or
circumstances which would constitute the valid basis for such a claim.

(d) Except for such of the following as, individually and in the aggregate,
could not be reasonably expected to have a FelCor Material Adverse Effect, to
the Knowledge of FelCor, (i) no certificate, Permit or license from any
Governmental Entity having jurisdiction over any of the FelCor Properties or any
agreement, easement or other right which is necessary to permit the lawful use
and operation of the buildings and improvements on any of the FelCor Properties
as currently operated or which is necessary to permit the lawful use and
operation of all driveways, roads and other means of egress and ingress to and
from any of the FelCor Properties (an "REA Agreement") has not been obtained and
is not in full force and effect, and there is no pending threat of modification
or cancellation of any of the same, nor is FelCor or any of the FelCor
Subsidiaries currently in default under any REA Agreement and the FelCor
Properties are in full compliance with all Permits; (ii) no written notice of
any violation of any Law affecting any portion of any of the FelCor Properties
has been issued by any Governmental Entity; (iii) there are no material
structural defects relating to any of the FelCor Properties; (iv) there is no
FelCor Property whose building systems are not in working order; and (v) there
is no physical damage to any FelCor Property in excess of $500,000 for which
there is no insurance in effect (other than reasonable and customary
deductibles) covering the full cost of the restoration. Except for such of the
following as, individually and in the aggregate, could not be reasonably
expected to have a FelCor Material Adverse Effect, the use and occupancy of each
of the FelCor Properties complies in all material respects with all applicable
Laws, and FelCor has no Knowledge of any pending or threatened proceeding or
action that will in any manner affect the size of, use of, improvements on,
construction on, or access to any of the FelCor Properties, with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such FelCor Properties. Except for such of the following as,
individually and in the aggregate, could not be reasonably expected to have a
FelCor Material Adverse Effect, neither FelCor nor any of the FelCor
Subsidiaries has received any written notice to the effect that (x) any
betterment assessments have been levied against, or any condemnation or rezoning
proceedings are pending or threatened with respect to any of the FelCor
Properties or (y) any zoning, building or similar Law is or will be violated by
the continued maintenance, operation or use of any buildings or other
improvements on any of the FelCor Properties or by the continued maintenance,
operation or use of the parking areas. Except for such of the following as,
individually and in the aggregate, could not be reasonably expected to have a
FelCor Material Adverse Effect, following a casualty, each of the FelCor
Properties could be reconstructed and used for hotel purposes under applicable
zoning laws and regulations, except that in certain circumstances such
reconstruction would have to comply with the dimensional requirements of
applicable zoning Laws and regulations in effect at the time of reconstruction.

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(e) Except as otherwise could not be reasonably expected to have a FelCor
Material Adverse Effect, there are no outstanding abatement proceedings or
appeals with respect to the assessment of any FelCor Property for the purpose of
real property Taxes, and there are no agreements with any Governmental Entity
with respect to such assessments or Tax rates on any FelCor Property.

2.9. Environmental Matters. None of FelCor, any of the FelCor Subsidiaries
or, to FelCor's Knowledge, any other Person has caused or permitted (a) the
unlawful presence of any Hazardous Materials on any of the FelCor Properties or
(b) any unlawful spills, releases, discharges or disposal of Hazardous Materials
to have occurred or be presently occurring on or from the FelCor Properties,
which presence or occurrence, individually or in the aggregate, could reasonably
be expected to have a FelCor Material Adverse Effect; and, in connection with
the construction on or operation and use of the FelCor Properties, FelCor and
the FelCor Subsidiaries have not failed to comply in any material respect with
all applicable Environmental Laws, except to the extent such failure to comply,
individually or in the aggregate, could not be reasonably expected to have a
FelCor Material Adverse Effect. No notice, notification, demand, request for
information, citation, summons, complaint or order has been received by or is
pending, or to the Knowledge of FelCor, is threatened by, any Person against
FelCor or any FelCor Subsidiary, other than where such notice, notification,
demand, request for information, citation, summons, complaint or order has been
fully resolved, or where such resolution, individually and in the aggregate,
could not be reasonably expected to result in a FelCor Material Adverse Effect.
FelCor has previously delivered or made available to Bristol or its counsel true
and complete copies of all internally prepared or commissioned environmental
studies, assessments and reports in the possession or under the control of
FelCor that relate to the FelCor Properties and/or FelCor's compliance with
Environmental Laws.

2.10. Absence of Changes in Benefit Plans; ERISA Compliance. (a) Except as
disclosed in the FelCor Filed SEC Documents or in Schedule 2.10 to the FelCor
Disclosure Letter and except as specifically contemplated by this Agreement,
since the FelCor Financial Statement Date, there has not been any adoption or
amendment in any material respect by FelCor or any FelCor Subsidiary of any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other employee benefit plan, arrangement or understanding (whether or not
legally binding) providing benefits to any current or former employee, officer
or director of FelCor, any FelCor Subsidiary or any Person Affiliated with
FelCor under Section 414(b), (c), (m) or (o) of the Code (collectively, "FelCor
Benefit Plans").

(b) Except as described in the FelCor Filed SEC Documents or in Schedule
2.10 to the FelCor Disclosure Letter, (i) all FelCor Benefit Plans, including
any such plan that is an "employee benefit plan" as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), are
in compliance in all material respects with all applicable requirements of Law,
including without limitation ERISA and the Code, and (ii) neither FelCor nor any
FelCor Subsidiary has any material liabilities or obligations with respect to
any such FelCor Benefit Plan, whether accrued, contingent or otherwise, except
for any such noncompliance or liabilities that could not be reasonably expected
to have a FelCor Material Adverse Effect. Except as set forth in Schedule 2.10
to the FelCor Disclosure Letter, the execution of, and performance of the
transactions contemplated in, this Agreement and the Transaction Documents to
which FelCor is a party will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any FelCor Benefit
Plan, policy, arrangement or agreement or any trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee, officer or director of
FelCor or any FelCor Subsidiary. The only severance agreements or severance
policies applicable to officers or directors of FelCor or any of the FelCor
Subsidiaries are the agreements and policies specifically referred to in
Schedule 2.10 to the FelCor Disclosure Letter.

2.11. Taxes. (a) Each of FelCor and the FelCor Subsidiaries has timely
filed all Tax returns and reports required to be filed by it and for any
partnerships for which any of them is a general partner (after giving effect to
any filing extension properly granted by a Governmental Entity having authority
to do so) and has paid (or FelCor has paid on its behalf) all Taxes shown on
such returns and reports as required to be paid by it and all such Tax returns
and reports are complete and accurate in all material respects, except where the
failure to file
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such Tax returns or reports, the failure to pay such Taxes and the failure to be
complete and accurate in all material respects could not be reasonably expected
to have a FelCor Material Adverse Effect. The most recent audited financial
statements contained in the FelCor Filed SEC Documents reflect in accordance
with GAAP an adequate accrual for Taxes and for all deferred Taxes payable by
FelCor and the FelCor Subsidiaries for all taxable periods and portions thereof
through the date of such financial statements. Since the FelCor Financial
Statement Date, FelCor has incurred no liability for Taxes under Sections
857(b), 860(c) or 4981 of the Code, including without limitation any Tax arising
from a prohibited transaction described in Section 857(b)(6) of the Code, and
neither FelCor nor any FelCor Subsidiary has incurred any liability for Taxes
other than in the ordinary course of business. No event has occurred, and no
condition or circumstance exists, which presents a material risk that any
material Tax described in the preceding sentence will be imposed upon FelCor. To
the Knowledge of FelCor, (i) no deficiencies for any Taxes have been proposed,
asserted or assessed against FelCor or any of the FelCor Subsidiaries, (ii) no
requests for waivers of the time to assess any such Taxes are pending, and (iii)
no Tax returns of FelCor or any of the FelCor Subsidiaries are currently being
audited by any applicable taxing authority or threatened with any such audit.
There are no Tax Liens on any assets of FelCor or the FelCor Subsidiaries other
than Liens for current Taxes not past due. All payments for withholding Taxes,
unemployment insurance and other amounts required to be withheld and deposited
or paid to all taxing authorities have been so deposited or paid by FelCor and
the FelCor Subsidiaries.

(b) FelCor (and its predecessors) (i) for all taxable years commencing with
its taxable year beginning July 28, 1994 and ended December 31, 1994, and
through the most recent December 31, has been subject to taxation as a real
estate investment trust (a "REIT") within the meaning of Section 856 of the Code
and has satisfied all requirements to qualify as a REIT for such years, (ii) has
operated, and will continue to operate, in such a manner as to qualify as a REIT
for the taxable year ending December 31, 1998, and (iii) to FelCor's Knowledge,
no action, proceeding or investigation that could reasonably be expected to
result in the termination of FelCor's status as a REIT is pending or threatened.
No FelCor Subsidiary has since its formation owned any assets (including without
limitation securities) that would cause FelCor to incur tax under Section
857(b)(4) of the Code. Except as set forth in Schedule 2.11 to the FelCor
Disclosure Letter, each FelCor Subsidiary which is a corporation has been since
its formation a qualified REIT subsidiary under Section 856(i) of the Code.

(c) Neither FelCor nor any of its Subsidiaries has taken any action that
would create a material risk that the Merger would not qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Code.

2.12. Brokers. No broker, investment banker, financial advisor or other
Person, other than BT Wolfensohn, the fees and expenses of which will be paid by
FelCor, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of FelCor or any FelCor
Subsidiary. FelCor has furnished to Bristol true and complete copies of all
agreements under which any such fees or expenses are payable and all
indemnification and other agreements related to the engagement of BT Wolfensohn.

2.13. Compliance with Laws. Except as disclosed in the FelCor Filed SEC
Documents, neither FelCor nor any of the FelCor Subsidiaries has violated or
failed to comply with any Law, Permit, judgment, decree or order of any
Governmental Entity applicable to its business, properties or operations, except
to the extent that such violation or failure could not be reasonably expected to
have a FelCor Material Adverse Effect. Each of FelCor and each FelCor Subsidiary
has all licenses, franchises, permits, concessions, orders, approvals or
registrations from, of or with any applicable Governmental Entity (collectively,
"Permits") that are required in order to permit it to carry on its business as
it is presently conducted, except those Permits which the failure to have could
not, individually or in the aggregate, reasonably be expected to have a FelCor
Material Adverse Effect. All such Permits are in full force and effect, except
for any such Permit as to which the failure so to be in full force and effect
could not, individually or in the aggregate, reasonably be expected to have a
FelCor Material Adverse Effect.

2.14. Labor Matters. Schedule 2.14 to the FelCor Disclosure Letter sets
forth a true and complete list as of the Measurement Date of each labor union or
collective bargaining agreement to which FelCor or any of

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the FelCor Subsidiaries is a party or which governs the terms of employment of
any of their respective employees. There is no labor strike or work stoppage
pending or, to the Knowledge of FelCor, threatened against FelCor, any FelCor
Subsidiary or any of the FelCor Properties, except as could not reasonably be
expected to have a FelCor Material Adverse Effect.

2.15. Compliance with Agreements. Neither FelCor nor any FelCor Subsidiary
has received a written notice that FelCor or any FelCor Subsidiary is in
violation of or in default under (nor to the Knowledge of FelCor does there
exist any condition which upon the passage of time or the giving of notice or
both would cause such a violation of or default under) any material loan or
credit agreement, note, bond, mortgage, indenture or other agreement evidencing
Indebtedness, lease, Permit, concession, franchise, management, license or any
other material contract, agreement, arrangement or understanding, to which it is
a party or by which it or any of its properties or assets is bound, except to
the extent that such violation or default, individually or in the aggregate,
could not reasonably be expected to have a FelCor Material Adverse Effect or as
set forth in Schedule 2.15 to the FelCor Disclosure Letter.

2.16. Opinion of Financial Advisor. FelCor has received the opinion of BT
Wolfensohn, dated as of the date hereof, a copy of which has been provided to
Bristol, to the effect that, as of the date hereof, the consideration to be paid
by FelCor pursuant to the Merger is fair, from a financial point of view, to
FelCor.

2.17. State Takeover Statutes. FelCor has taken all action necessary to
exempt the transactions contemplated by this Agreement from the operation of any
"fair price," "moratorium," "control share acquisition" or any other
anti-takeover requirement existing under the Laws of the State of Maryland.

2.18. Proxy and Registration Statements. None of the information supplied
or to be supplied by FelCor or any of its representatives for inclusion or
incorporation by reference in the Proxy Statement or the Registration Statements
will at the time such Proxy Statement or Registration Statements are filed with
the SEC and at the time of the mailing of the Proxy Statement or Registration
Statements to the stockholders of FelCor and Bristol contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No representation is
made by FelCor with respect to statements made in the Proxy Statement or
Registration Statements based on information supplied by Bristol or any of its
Affiliates for inclusion therein, or with respect to information concerning
Bristol or any of its Subsidiaries incorporated by reference therein.

2.19. Definition of Knowledge of FelCor. As used in this Agreement, the
phrase to the "Knowledge of FelCor" (or words of similar import) means the
actual knowledge of those individuals identified in Schedule 2.19 to the FelCor
Disclosure Letter.

III. REPRESENTATIONS AND WARRANTIES OF BRISTOL

Except as set forth in the letter of even date herewith signed by the
President of Bristol in his capacity as such and delivered to FelCor
simultaneously with the execution and delivery of this Agreement (the "Bristol
Disclosure Letter"), Bristol represents and warrants to FelCor as follows:

3.1. Organization, Standing and Power of Bristol. Bristol is a corporation
duly incorporated, validly existing and in good standing under the Laws of the
State of Delaware and has the requisite corporate power and authority to carry
on its business as now being conducted. Bristol is duly qualified or licensed to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on the business, financial condition or results of
operations of Bristol and the Bristol Subsidiaries, taken as a whole; provided,
however, that any determination of whether any state of facts, event, change or
event would have a Bristol Material Adverse Effect will be made after giving
pro-forma effect to the Spin-Off (a "Bristol Material Adverse Effect"). Bristol
has delivered to FelCor complete and correct copies of its Fourth Amended and
Restated Certificate of Incorporation and

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its Amended and Restated Bylaws, in each case as amended or supplemented to the
date of this Agreement and currently in force and effect (respectively, the
"Bristol Certificate" and the "Bristol Bylaws").

3.2. Bristol Subsidiaries. (a) Schedule 3.2 to the Bristol Disclosure
Letter sets forth (i) the name and jurisdiction of incorporation or formation of
each Subsidiary of Bristol and of each other Person in which Bristol owns,
directly or indirectly, an equity or ownership interest (collectively, the
"Bristol Subsidiaries"), (ii) the name of the Bristol Hotel, if any, in which
any Bristol Subsidiary owns or holds an interest and the nature of that
ownership or other interest, and (iii) if such Bristol Subsidiary is not wholly
owned (directly or indirectly) by Bristol, (A) its authorized capital stock or
other equity interests, (B) the number of issued and outstanding shares of its
capital stock or other equity interests, and (C) the record owners of
outstanding shares of its capital stock or other equity interests.

(b) All the outstanding shares of capital stock of each Bristol Subsidiary
that is a corporation have been validly issued and are fully paid and
nonassessable. Except as set forth in Schedule 3.2 to the Bristol Disclosure
Letter, (i) all the outstanding shares of capital stock of each Bristol
Subsidiary that is a corporation are owned by Bristol or by another Bristol
Subsidiary free and clear of all Liens, and (ii) all equity interests of each
Bristol Subsidiary that is a partnership, joint venture, limited liability
company or trust are owned by Bristol or by another Bristol Subsidiary free and
clear of all Liens. Each Bristol Subsidiary that is a corporation is duly
incorporated, validly existing and in good standing under the Laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to carry on its business as now being conducted, and each Bristol
Subsidiary that is a partnership, limited liability company or trust is duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization and has the requisite partnership, limited
liability company or trust power and authority to carry on its business as now
being conducted. Each Bristol Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed, individually or in the aggregate, could not reasonably
be expected to have a Bristol Material Adverse Effect. Bristol has delivered to
FelCor complete and correct copies of the articles or certificate of
incorporation, bylaws, partnership, joint venture and operating agreements and
other organizational documents of each Bristol Subsidiary, in each case, as
amended or supplemented to the date of this Agreement and currently in force and
effect.

(c) Following completion of the Spin-Off Transactions and immediately prior
to the Effective Time, except for interests in the Non-Corporate Bristol Hotel
Subsidiaries, Bristol will not own, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation, partnership, joint
venture, trust or other entity.

3.3. Capital Structure. (a) The authorized capital stock of Bristol
consists of 200,000,000 shares of capital stock, of which 150,000,000 are
Bristol Common Shares and 50,000,000 are preferred shares, par value of $0.01
per share ("Bristol Preferred Shares"). As of the Measurement Date, (i)
43,800,401 Bristol Common Shares and no Bristol Preferred Shares were issued and
outstanding, (ii) no Bristol Common Shares were held in the treasury of Bristol,
(iii) 1,950,000 Bristol Common Shares were reserved for issuance pursuant to the
Bristol Incentive Plan, (iv) 150,000 Bristol Common Shares were reserved for
issuance pursuant to the Bristol Director Plan, and (v) 1,869,941 Bristol Common
Shares were issuable upon the exercise of outstanding Bristol Options. As of the
Measurement Date, except as set forth in this Section 3.3, no shares of capital
stock or other voting securities of Bristol were issued, reserved for issuance
or outstanding, and during the period from and following the Measurement Date to
the Effective Time, there will be no change in the issued and outstanding
Bristol Common Shares and Bristol Preferred Shares other than pursuant to the
exercise of outstanding Bristol Options referred to in this Section 3.3 or
Schedule 3.3 to the Bristol Disclosure Letter. Without limiting the generality
or effect of any other provision hereof, except as described in this Section 3.3
or Schedule 3.3 to the Bristol Disclosure Letter, neither the Merger nor any
other transaction contemplated hereby will accelerate the vesting of or have any
other effect under any options or other rights relating to the acquisition of
equity or other securities of Bristol.

(b) All of the issued and outstanding shares of capital stock of Bristol
are duly authorized, validly issued, fully paid and nonassessable and are not
subject to preemptive rights. Except as set forth in this Section 3.3 or

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in Schedule 3.3 to the Bristol Disclosure Letter, as of the date of this
Agreement, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which Bristol or any Bristol Subsidiary is a party or by which such entity is
bound obligating Bristol or any Bristol Subsidiary to issue, deliver, sell,
repurchase, redeem or otherwise acquire, or cause to be issued, delivered, sold,
repurchased, redeemed or acquired, additional shares of capital stock, voting
securities or other ownership interests of Bristol or of any Bristol Subsidiary
(or securities convertible into or exchangeable for such ownership interests) or
obligating Bristol or any Bristol Subsidiary to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking (other than to Bristol or a Bristol Subsidiary).
There are no bonds, debentures, notes or other Indebtedness of Bristol having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of Bristol may vote.

3.4. Authority; Noncontravention; Consents. (a) Bristol has the requisite
corporate power and authority (i) to enter into this Agreement and each
Transaction Document to which Bristol is a party, (ii) to perform its
obligations hereunder and thereunder, and (iii) subject to the adoption of the
Merger Agreement by the holders of a majority of the Bristol Common Shares
outstanding as of the Record Date (the "Bristol Stockholder Approval" and,
together with the FelCor Stockholder Approval, the "Stockholder Approvals"), to
consummate the transactions contemplated hereunder and thereunder. The execution
and delivery by Bristol of this Agreement and each Transaction Document to which
Bristol is a party and the consummation by Bristol of the transactions
contemplated hereunder and thereunder have been duly authorized by the Bristol
Board, the Bristol Board has recommended adoption of this Agreement by its
stockholders and directed that this Agreement be submitted to a meeting of its
stockholders for their consideration, and no other corporate proceedings on the
part of Bristol or its stockholders are necessary to authorize any of the
foregoing, other than the Bristol Stockholder Approval. This Agreement and each
Transaction Document to which Bristol is a party have been duly executed and
delivered by Bristol and constitute valid and binding obligations of Bristol,
enforceable against Bristol in accordance with their respective terms, except as
enforceability may be limited by the Bankruptcy Exception.

(b) Except as set forth in Schedule 3.4 to the Bristol Disclosure Letter,
the execution and delivery by Bristol of this Agreement and each Transaction
Document to which Bristol is a party do not, and the consummation of the
transactions contemplated hereunder and thereunder and compliance by Bristol
with the provisions hereof and thereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Bristol or any
Bristol Subsidiary under (i) the Bristol Certificate or the Bristol Bylaws or
the comparable charter or organizational documents or partnership or similar
agreement (as the case may be) of any Bristol Subsidiary, each as amended or
supplemented to the date of this Agreement, (ii) any loan or credit agreement,
note, bond, mortgage, indenture or any other agreement evidencing, Indebtedness,
reciprocal easement agreement, lease, management or other agreement, instrument
or Permit applicable to Bristol or any Bristol Subsidiary or their respective
properties or assets, or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any Laws applicable to Bristol or
any Bristol Subsidiary or their respective properties or assets, other than, in
the case of clause (ii) or (iii), any such conflicts, violations, defaults,
rights, loss or Liens that, individually or in the aggregate, could not
reasonably be expected to (A) have a Bristol Material Adverse Effect or (B)
prevent or delay in any material respect the consummation of the transactions
contemplated by this Agreement and the Transaction Documents or otherwise
prevent Bristol from performing its obligations hereunder or thereunder in any
material respect. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Bristol or any Bristol Subsidiary in connection with the
execution and delivery by Bristol of this Agreement or any of the Transaction
Documents to which Bristol is a party or the consummation by Bristol of any of
the transactions contemplated hereunder or thereunder, except for (i) the filing
with the SEC of (A) the Proxy Statement, (B) the Registration Statements, and
(C) such reports under the Exchange Act as may be required in connection with
this Agreement and the Transaction Documents and the transactions contemplated
hereunder and thereunder, (ii) the filing of listing applications with the NYSE
with respect to the BHR Common Shares to be distributed in the Spin-Off, (iii)
the filing of
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the Certificate of Merger with the Secretary of State of the State of Delaware
and other appropriate merger documents and filings with any local recording
office or authorities of other states in which FelCor or Bristol is qualified to
do business, (iv) the filing of a premerger notification and report form under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") with respect to the Spin-Off, and (v) such other consents, approvals,
orders, authorizations, registrations, declarations and filings (A) as are set
forth in Schedule 3.4 to the Bristol Disclosure Letter or (B) which, if not
obtained or made, could not reasonably be expected to prevent or delay in any
material respect the consummation of any of the transactions contemplated by
this Agreement or any of the Transaction Documents or otherwise prevent Bristol
from performing its obligations hereunder or thereunder in any material respect
or have, individually or in the aggregate, a Bristol Material Adverse Effect or
a FelCor Material Adverse Effect.

(c) Each of the Bristol Corporate Subsidiaries will, at the time of its
merger with and into one of the Non-Corporate Bristol Hotel Subsidiaries, be
duly authorized and empowered to enter into such merger, and except as set forth
on Schedule 3.4 to the Bristol Disclosure Letter, none of such mergers will
conflict with or violate the terms of (i) any charter or bylaws of such Bristol
Corporate Subsidiary or (ii) any material agreement, mortgage, note, material
contract, deed of trust or security interest by which the Bristol Corporate
Subsidiary or its assets or properties are bound.

3.5. SEC Documents; Financial Statements; Undisclosed
Liabilities. (a) Bristol and the Bristol Subsidiaries have filed all required
reports, schedules, forms, statements and other documents with the SEC from
December 13, 1995 through the date hereof (the "Bristol SEC Documents").
Schedule 3.5 to the Bristol Disclosure Letter contains a complete list of all
Bristol SEC Documents filed by Bristol and the Bristol Subsidiaries with the SEC
since January 1, 1996 and on or prior to the date of this Agreement (the
"Bristol Filed SEC Documents"). All of the Bristol SEC Documents (other than
preliminary material), as of their respective filing dates, complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act and, in each case, the rules and regulations promulgated thereunder
applicable to such Bristol SEC Documents. None of the Bristol SEC Documents at
the time of filing contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except to the extent such statements have been
modified or superseded by later Bristol Filed SEC Documents.

(b) The consolidated financial statements of Bristol and the Bristol
Subsidiaries included in the Bristol SEC Documents (i) complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) have been prepared
in accordance with GAAP (except, in the case of unaudited statements, as
permitted by the applicable rules and regulations of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto included in or incorporated into any Bristol Filed SEC Documents),
and (iii) present fairly, in all material respects, the consolidated financial
position of Bristol and the Bristol Subsidiaries as of the dates thereof and the
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and immaterial year-end
audit adjustments). Bristol has no Subsidiaries which are not consolidated for
accounting purposes.

(c) Except for liabilities and obligations set forth in (i) the Bristol
Filed SEC Documents, (ii) the draft copy of Bristol's Annual Report on Form 10-K
for the year ended December 31, 1997 provided to FelCor on the date of this
Agreement, or (iii) in Schedule 3.5 to the Bristol Disclosure Letter or for
liabilities and obligations specifically contemplated to be incurred in
connection with this Agreement, neither Bristol nor any Bristol Subsidiary has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of Bristol or in the notes thereto and which, individually or in
the aggregate, could be reasonably expected to have a Bristol Material Adverse
Effect.

(d) Each of the operating statements for the Bristol Hotels provided or to
be provided by Bristol to FelCor or its advisors was prepared in the ordinary
course of business consistent with past practice and was derived from the books
and records for the applicable Bristol Hotel.

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3.6. Absence of Certain Changes or Events. Except as disclosed in (i) the
Bristol Filed SEC Documents, (ii) Schedule 3.6 to the Bristol Disclosure Letter,
or (iii) the draft copy of Bristol's Annual Report on Form 10-K for the year
ended December 31, 1997 provided to FelCor on the date of this Agreement, since
December 31, 1997 (the "Bristol Financial Statement Date"), Bristol and the
Bristol Subsidiaries have conducted their business only in the ordinary course
thereof and there has not been (a) any material adverse change, event or
development in the business, financial condition or results of operations of
Bristol and the Bristol Subsidiaries, taken as a whole (a "Bristol Material
Adverse Change"), nor has there been any occurrence or circumstance that with
the passage of time could reasonably be expected to result in a Bristol Material
Adverse Change, (b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
Bristol's capital stock, (c) any split, combination or reclassification of any
of Bristol's capital stock, (d) any damage, destruction or loss, whether or not
covered by insurance, that, individually or in the aggregate, could be
reasonably expected to have a Bristol Material Adverse Effect, or (e) any change
in accounting methods, principles or practices by Bristol or any Bristol
Subsidiary materially affecting its assets, liabilities or business, except
insofar as may have been disclosed in the Bristol Filed SEC Documents or
required by a change in GAAP.

3.7. Litigation. Except as disclosed in (i) the Bristol Filed SEC
Documents, (ii) the draft copy of Bristol's Annual Report on Form 10-K for the
year ended December 31, 1997 provided to FelCor on the date of this Agreement,
or (iii) in Schedule 3.7 to the Bristol Disclosure Letter, and other than
personal injury and other routine personal injury litigation arising from the
ordinary course of operations of Bristol and the Bristol Subsidiaries and which
are covered by adequate insurance, there is no suit, action, proceeding or
investigation pending or, to the Knowledge of Bristol, threatened against or
affecting Bristol or any Bristol Subsidiary that, individually or in the
aggregate, if determined adversely to Bristol, could be reasonably expected to
(i) have a Bristol Material Adverse Effect or (ii) prevent or delay in any
material respect the consummation of any of the transactions contemplated by
this Agreement or any of the Transaction Documents or otherwise prevent Bristol
from performing its obligations hereunder or thereunder in any material respect,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Bristol or any Bristol Subsidiary
which, individually or in the aggregate, could reasonably be expected to have
any such effect.

3.8. Properties. (a) All of the real estate properties owned or leased by
Bristol and the Bristol Subsidiaries are listed on Schedule 3.8 to the Bristol
Disclosure Letter (the "Bristol Properties"). Bristol has no direct or indirect
ownership interest in any real property as of the date hereof other than the
Bristol Properties.

(b) Except as disclosed on Schedule 3.8 to the Bristol Disclosure Letter,
Bristol or one of the Bristol Subsidiaries owns fee simple title to, or a valid
leasehold interest or joint venture interest in, each of the Bristol Properties,
free and clear of all Encumbrances, except for such Encumbrances which,
individually and in the aggregate, could not be reasonably expected to have a
Bristol Material Adverse Effect. Except as disclosed on Schedule 3.8 to the
Bristol Disclosure Letter, the Bristol Properties are not subject to any
Encumbrances or Property Restrictions, except for (i) Property Restrictions
imposed or promulgated by Law or any Governmental Entity with respect to real
property, including zoning regulations, that do not adversely affect the current
use of the property, materially detract from the value of or materially
interfere with the present use of the property, (ii) Encumbrances and Property
Restrictions disclosed on existing title policies, commitments (and the
documents listed as exceptions therein) or surveys (in each case copies of which
title policies, commitments (and the documents listed as exceptions therein) and
surveys have been delivered or made available to FelCor), (iii) retail leases,
including restaurant, gift shop and roof top leases, and (iv) mechanics',
carriers', supplier's, workmen's or repairmen's Liens and other Encumbrances,
Property Restrictions and other limitations of any kind, if any, which,
individually and in the aggregate, could not be reasonably expected to have a
Bristol Material Adverse Effect.

(c) Except for such matters as, individually and in the aggregate, could
not be reasonably expected to have a Bristol Material Adverse Effect, valid
policies of title insurance have been issued insuring Bristol's or the
applicable Bristol Subsidiary's title to or interest in each of the Bristol
Properties, and such policies are, at

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the date hereof, in full force and effect and no claim has been made against any
such policy and Bristol has no Knowledge of any facts or circumstances which
would constitute the valid basis for such a claim.

(d) Except for such of the following as, individually and in the aggregate,
could not be reasonably expected to have a Bristol Material Adverse Effect, to
the Knowledge of Bristol, (i) no REA Agreement has not been obtained and is not
in full force and effect, and there is no pending threat of modification or
cancellation of any of the same, nor is Bristol or any of the Bristol
Subsidiaries currently in default under any REA Agreement and the Bristol
Properties are in full compliance with all Permits; (ii) no written notice of
any violation of any Law affecting any portion of any of the Bristol Properties
has been issued by any Governmental Entity; (iii) there are no material
structural defects relating to any of the Bristol Properties; (iv) except as set
forth on Schedule 3.8 to the Bristol Disclosure Letter, there is no Bristol
Property whose building systems are not in working order; and (v) there is no
physical damage to any Bristol Property in excess of $500,000 for which there is
no insurance in effect (other than reasonable and customary deductibles)
covering the full cost of the restoration. Except for such of the following as,
individually and in the aggregate, could not be reasonably expected to have a
Bristol Material Adverse Effect, the use and occupancy of each of the Bristol
Properties complies in all material respects with all applicable Laws, and
Bristol has no Knowledge of any pending or threatened proceeding or action that
will in any manner affect the size of, use of, improvements on, construction on,
or access to any of the Bristol Properties, with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
Bristol Properties. Except for such of the following as, individually and in the
aggregate, could not be reasonably expected to have a Bristol Material Adverse
Effect, neither Bristol nor any of the Bristol Subsidiaries has received any
written notice to the effect that (x) any betterment assessments have been
levied against, or any condemnation or rezoning proceedings are pending or
threatened with respect to any of the Bristol Properties or (y) any zoning,
building or similar Law is or will be violated by the continued maintenance,
operation or use of any buildings or other improvements on any of the Bristol
Properties or by the continued maintenance, operation or use of the parking
areas. Except for such of the following as, individually and in the aggregate,
could not be reasonably expected to have a Bristol Material Adverse Effect,
following a casualty, each of the Bristol Properties could be reconstructed and
used for hotel purposes under applicable zoning laws and regulations, except
that in certain circumstances such reconstruction would have to comply with the
dimensional requirements of applicable zoning Laws and regulations in effect at
the time of reconstruction.

(e) Except as otherwise could not be reasonably expected to have a Bristol
Material Adverse Effect, there are no outstanding abatement proceedings or
appeals with respect to the assessment of any Bristol Property for the purpose
of real property Taxes, and there are no agreements with any Governmental Entity
with respect to such assessments or Tax rates on any Bristol Property.

3.9. Environmental Matters. Except as disclosed in Schedule 3.9 to the
Bristol Disclosure Letter, none of Bristol, any of the Bristol Subsidiaries or,
to Bristol's Knowledge, any other Person has caused or permitted (a) the
unlawful presence of any Hazardous Materials on any of the Bristol Properties or
(b) any unlawful spills, releases, discharges or disposal of Hazardous Materials
to have occurred or be presently occurring on or from the Bristol Properties,
which presence or occurrence could, individually or in the aggregate, be
reasonably expected to have a Bristol Material Adverse Effect; and, in
connection with the construction on or operation and use of the Bristol
Properties, Bristol and the Bristol Subsidiaries have not failed to comply in
any material respect with all applicable Environmental Laws, except to the
extent such failure to comply, individually or in the aggregate, could not be
reasonably expected to have a Bristol Material Adverse Effect. No notice,
notification, demand, request for information, citation, summons, complaint or
order has been received by or is pending, or to the Knowledge of Bristol, is
threatened by, any Person against Bristol or any Bristol Subsidiary, other than
where such notice, notification, demand, request for information, citation,
summons, complaint or order has been fully resolved, or where such resolution,
individually and in the aggregate, could not be reasonably expected to result in
a Bristol Material Adverse Effect. Bristol has previously delivered or made
available to FelCor or its counsel true and complete copies of all internally
prepared or commissioned environmental studies, assessments and reports in the
possession or under the control of Bristol that relate to the Bristol Properties
and/or Bristol's compliance with Environmental Laws.

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3.10. Absence of Changes in Benefit Plans; ERISA Compliance. (a) Except as
disclosed in the Bristol Filed SEC Documents or in Schedule 3.10 to the Bristol
Disclosure Letter and except as specifically contemplated by this Agreement,
since the Bristol Financial Statement Date, there has not been any adoption or
amendment in any material respect by Bristol or any Bristol Subsidiary of any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other employee benefit plan, arrangement or understanding (whether or not
legally binding) providing benefits to any current or former employee, officer
or director of Bristol, any Bristol Subsidiary or any Person Affiliated with
Bristol under Section 414(b), (c), (m) or (o) of the Code (collectively,
"Bristol Benefit Plans").

(b) Except as described in the Bristol Filed SEC Documents or in Schedule
3.10 to the Bristol Disclosure Letter, (i) all Bristol Benefit Plans, including
any such plan that is an "employee benefit plan" as defined in Section 3(3) of
the ERISA, are in compliance in all material respects with all applicable
requirements of Law, including without limitation ERISA and the Code, and (ii)
neither Bristol nor any Bristol Subsidiary has any material liabilities or
obligations with respect to any such Bristol Benefit Plan, whether accrued,
contingent or otherwise, except for any such noncompliance or liabilities that
could not be reasonably expected to have a Bristol Material Adverse Effect.
Except as set forth in Schedule 3.10 to the Bristol Disclosure Letter, the
execution of, and performance of the transactions contemplated in, this
Agreement and the Transaction Documents to which Bristol is a party will not
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any Bristol Benefit Plan, policy, arrangement or
agreement or any trust or loan that will or may result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits with
respect to any employee, officer or director of Bristol or any Bristol
Subsidiary. The only severance agreements or severance policies applicable to
officers or directors of Bristol or any of the Bristol Subsidiaries are the
agreements and policies specifically referred to in Schedule 3.10 to the Bristol
Disclosure Letter.

3.11. Taxes. (a) Each of Bristol and the Bristol Subsidiaries has timely
filed all Tax returns and reports required to be filed by it and for any
partnerships for which any of them is a general partner (after giving effect to
any filing extension properly granted by a Governmental Entity having authority
to do so) and has paid (or Bristol has paid on its behalf) all Taxes shown on
such returns and reports as required to be paid by it and all such Tax returns
and reports are complete and accurate in all material respects, except where the
failure to file such Tax returns or reports, the failure to pay such Taxes and
the failure to be complete and accurate in all material respects could not be
reasonably expected to have a Bristol Material Adverse Effect. The most recent
audited financial statements contained in the Bristol Filed SEC Documents
reflect in accordance with GAAP an adequate accrual for Taxes and for all
deferred Taxes payable by Bristol and the Bristol Subsidiaries for all taxable
periods and portions thereof through the date of such financial statements. To
the Knowledge of Bristol, (i) no deficiencies for any Taxes have been proposed,
asserted or assessed against Bristol or any of the Bristol Subsidiaries, (ii) no
requests for waivers of the time to assess any such Taxes are pending, and (iii)
no Tax returns of Bristol or any of the Bristol Subsidiaries are currently being
audited by any applicable taxing authority or threatened with any such audit.
There are no Tax Liens on any assets of Bristol or the Bristol Subsidiaries
other than Liens for current Taxes not past due. All payments for withholding
Taxes, unemployment insurance and other amounts required to be withheld and
deposited or paid to all taxing authorities have been so deposited or paid by
Bristol and the Bristol Subsidiaries.

(b) Bristol (i) has not made or entered into, and does not own any asset
subject to, a consent filed pursuant to Section 341(f) of the Code or a "safe
harbor lease" subject to Section 168(f)(8) of the Internal Revenue Code of 1954,
as amended before the Tax Reform Act of 1984, (ii) is not required to include in
income any amount for an adjustment pursuant to Section 481 of the Code, and
(iii) is neither a party to nor obligated under any agreement or other
arrangement providing for the payment of any amount that would be an "excess
parachute payment" under Section 280G of the Code.

(c) Neither Bristol nor any of its Subsidiaries has taken any action that
would create a material risk that the Merger would not qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Code.
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(d) Assuming that the Spin-Off had been completed prior to the date hereof
and the Effective Time occurred on the date hereof, Bristol's E&P (excluding E&P
adjustments relating to the distribution of BHR stock, the taxable gain to
Bristol upon such distribution and the resulting income tax liability with
respect to such gain) would not be materially in excess of $125.0 million.

3.12. No Payments to Employees, Officers or Directors. Schedule 3.12 to the
Bristol Disclosure Letter sets forth a true and complete list of all cash and
non-cash payments which will become payable to each employee, officer or
director of Bristol or any Bristol Subsidiary as a result of the Merger, other
than the distribution of BHR Common Shares in the Spin-Off. Except as described
in Schedule 3.12 to the Bristol Disclosure Letter, or as otherwise provided for
in this Agreement, there is no employment or severance contract, or other
agreement requiring payments, cancellation of indebtedness or other obligation
to be made on a change of control or otherwise as a result of the consummation
of any of the transactions contemplated by this Agreement and the Transaction
Documents, with respect to any employee, officer or director of Bristol or any
Bristol Subsidiary.

3.13. Brokers. No broker, investment banker, financial advisor or other
Person, other than Merrill, Lynch, Pierce, Fenner & Smith Incorporated
("Merrill"), the fees and expenses of which will be paid by Bristol, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of Bristol or any Bristol Subsidiary. Bristol
has furnished to FelCor true and complete copies of all agreements under which
any such fees or expenses are payable and all indemnification and other
agreements related to the engagement of Merrill.

3.14. Compliance with Laws. Except as disclosed in the Bristol Filed SEC
Documents, neither Bristol nor any of the Bristol Subsidiaries has violated or
failed to comply with any Law, Permit, judgment, decree or order of any
Governmental Entity applicable to its business, properties or operations, except
to the extent that such violation or failure could not be reasonably expected to
have a Bristol Material Adverse Effect. Each of Bristol and each Bristol
Subsidiary has all Permits that are required in order to permit it to carry on
its business as it is presently conducted, except those Permits which the
failure to have could not, individually or in the aggregate, reasonably be
expected to have a Bristol Material Adverse Effect. All such Permits are in full
force and effect, except for any such Permit as to which the failure so to be in
full force and effect could not, individually or in the aggregate, reasonably be
expected to have a Bristol Material Adverse Effect.

3.15. Labor Matters. Schedule 3.15 to the Bristol Disclosure Letter sets
forth a true and complete list as of the Measurement Date of each labor union or
collective bargaining agreement to which Bristol or any of the Bristol
Subsidiaries is a party or which governs the terms of employment of any of their
respective employees. There is no labor strike or work stoppage pending or, to
the Knowledge of Bristol, threatened against Bristol, any Bristol Subsidiary or
any of the Bristol Properties, except as could not reasonably be expected to
have a Bristol Material Adverse Effect.

3.16. Compliance with Agreements. Neither Bristol nor any Bristol
Subsidiary has received a written notice that Bristol or any Bristol Subsidiary
is in violation of or in default under (nor to the Knowledge of Bristol does
there exist any condition which upon the passage of time or the giving of notice
or both would cause such a violation of or default under) any material loan or
credit agreement, note, bond, mortgage, indenture or other agreement evidencing
Indebtedness, lease, Permit, concession, franchise, management, license or any
other material contract, agreement, arrangement or understanding, to which it is
a party or by which it or any of its properties or assets is bound, except to
the extent such violation or default, individually or in the aggregate, could
not be reasonably expected to have a Bristol Material Adverse Effect or as set
forth in Schedule 3.16 to the Bristol Disclosure Letter.

3.17. Opinion of Financial Advisor. Bristol has received the opinion of
Merrill, dated the date hereof, a copy of which has been provided to FelCor, to
the effect that, as of the date hereof, the Exchange Ratio is fair, from a
financial point of view, to the holders of Bristol Common Shares.

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3.18. State Takeover Statutes. Bristol has taken all action necessary to
exempt the transactions contemplated by this Agreement from the operation of any
"fair price," "moratorium," "control share acquisition" or any other
anti-takeover requirement existing under the Laws of the State of Delaware.

3.19. Proxy and Registration Statements. None of the information supplied
or to be supplied by Bristol or any of its representatives for inclusion or
incorporation by reference in the Proxy Statement or the Registration Statements
will at the time such Proxy Statement or Registration Statements are filed with
the SEC and at the time of the mailing of the Proxy Statement or Registration
Statements to the stockholders of FelCor and Bristol contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of its
circumstances under which they were made, not misleading. No representation is
made by Bristol with respect to statements made in the Proxy Statement or
Registration Statements based on information supplied by FelCor or any of its
Affiliates for inclusion therein, or with respect to information concerning
FelCor or any of its Subsidiaries incorporated by reference therein.

3.20. Definition of Knowledge of Bristol. As used in this Agreement, the
phrase to the "Knowledge of Bristol" (or words of similar import) means the
actual knowledge of those individuals identified in Schedule 3.20 to the Bristol
Disclosure Letter.

IV. COVENANTS

4.1. Acquisition Proposals. (a) Prior to the Effective Time, each of FelCor
and Bristol agrees that:

(i) Neither it nor any of its Subsidiaries will (A) initiate or
solicit, directly or indirectly by furnishing any information or the making
of any proposal or offer (including without limitation any proposal or
offer to its stockholders), any Acquisition Proposal or (B) engage in any
negotiations concerning, provide any confidential information in connection
with or have any discussions with any Person relating to an Acquisition
Proposal. For purposes of this Agreement, "Acquisition Proposal" means any
proposal or offer from any Person (other than the transactions contemplated
by this Agreement or described in Schedule 4.1 to the FelCor Disclosure
Letter or Schedule 4.1 to the Bristol Disclosure Letter) relating to a
merger, acquisition, tender offer, exchange offer, business combination,
consolidation, sale of assets or similar transaction involving more than
10% of the equity securities of Bristol or FelCor or a substantial portion
of the assets or equity securities of Bristol and the Bristol Subsidiaries
or FelCor and the FelCor Subsidiaries (provided that, as to any sale or
exchange of assets, the transaction involves a total value including
assumed debt in excess of $100 million);

(ii) It will cause each of its officers, directors, employees,
financial advisors, attorneys, accountants and other representatives
retained by it or any of its Subsidiaries not to engage in any of the
activities described in Section 4.1(a)(i);

(iii) It will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any Persons conducted
heretofore with respect to any Acquisition Proposal and will take the
necessary steps to inform the Persons referred to in Section 4.1(a)(ii) of
the obligations undertaken in this Section 4.1; and

(iv) It will notify the other immediately if it receives any such
proposals or offers relating to an Acquisition Proposal, or any requests
for such information, which notice will describe the terms of any such
proposal, offer or request in reasonable detail, or if any such
negotiations or discussions relating to an Acquisition Proposal are sought
to be initiated or continued with it.

(b) Except as otherwise provided in Section 4.1(c), and in accordance with
Section 7.2, if applicable, neither the Bristol Board, the FelCor Board nor any
committee thereof may (i) withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to the other party the approval or recommendation by
the Bristol Board or the FelCor Board or such committee thereof of the Merger or
this Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal, or (iii) authorize or otherwise cause
Bristol or FelCor, as applicable, to enter into any letter of intent, agreement
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in principle, acquisition agreement or other similar agreement related to any
Acquisition Proposal (each, an "Acquisition Agreement").

(c) Notwithstanding the foregoing, if, in response to an unsolicited
Acquisition Proposal, the Bristol Board, the FelCor Board or a committee
thereof, as applicable, determines after consultation with its financial
advisors that such Acquisition Proposal is reasonably capable of being completed
on the terms proposed and would, if consummated, result in a transaction more
favorable to such company's stockholders than the Merger and the other
transactions contemplated by this Agreement (taking into account the nature of
the proposed transaction, the nature and amount of the consideration, the
likelihood of completion and any other factors deemed appropriate by such Board)
(a "Superior Proposal"), such Board or committee may, or cause its
representatives to, engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any Person relating
to the Superior Proposal or otherwise facilitate any effort or attempt to make
or implement the Superior Proposal; provided further, however, that, upon either
party's engaging in such negotiations or discussions, providing such information
or otherwise facilitating any effort or attempt to make or implement a Superior
Proposal, such party gives notice to the other party of its engagement in such
activities (a "Superior Proposal Transaction Notice"). Prior to furnishing
confidential information to, or entering into discussions or negotiations with,
any other Persons with respect to a Superior Proposal, such party must obtain
from such other Persons an executed confidentiality agreement with terms no more
favorable, taken as a whole, to such Person than those contained in the
applicable Confidentiality Agreements, but which confidentiality agreement may
not include any provision calling for an exclusive right to negotiate with such
Persons, and such party must advise the other party of the nature of such
confidential information delivered to such other Person reasonably promptly
following its delivery to the requesting party. With respect to any Superior
Proposal, the Bristol Board or the FelCor Board, as applicable, may, subject to
compliance with Section 7.2, on or after the fifth Trading Day following its
giving of a Superior Proposal Transaction Notice, (i) withdraw or modify its
approval or recommendation of the Merger or this Agreement, (ii) approve or
recommend such Superior Proposal, (iii) authorize or otherwise cause the company
of which it is the Board to enter into an Acquisition Agreement, and/or (iv)
terminate this Agreement pursuant to Section 7.1(h) or Section 7.1(i), as
applicable.

(d) Nothing contained in this Section 4.1 will prohibit Bristol or FelCor
from taking and disclosing to its stockholders a position contemplated by Rule
14e-1 under the Exchange Act or from making any disclosure to its stockholders
if such Board determines that such disclosure is necessary in order to comply
with such Board's fiduciary duties under applicable Law; provided, however, that
neither Bristol nor FelCor nor either of their respective Boards nor any
committee thereof may, except in accordance with Section 4.1(c), withdraw or
modify, or propose publicly to withdraw or modify, its position with respect to
this Agreement or the Merger or approve or recommend, or propose publicly to
approve or recommend, an Acquisition Proposal.

4.2. Conduct of FelCor's and Bristol's Business Pending Merger. Prior to
the Effective Time, except as (i) contemplated by this Agreement, (ii) necessary
to accomplish the Spin-Off Transactions, (iii) set forth on Schedule 4.2 to the
Bristol Disclosure Letter or Schedule 4.2 to the FelCor Disclosure Letter, or
(iv) consented to in writing by a majority of the individuals identified on
Schedule 4.2 or if either such individual is unable to serve in such capacity, a
replacement identified by the party that designated such individual (the "Joint
Operating Committee"), each of FelCor and Bristol will, and will cause each of
their respective Subsidiaries to:

(a) Conduct its business only in the usual, regular and ordinary
course and in substantially the same manner as heretofore;

(b) Use reasonable efforts to preserve intact its business
organization and goodwill and keep available the services of its officers
and key employees;

(c) Confer on a regular basis with one or more representatives of the
other party to report operational matters of materiality and, subject to
Section 4.1, any proposals to engage in material transactions;

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(d) Promptly notify the other party of any material emergency or other
material change in its business, financial condition, results of operations
or prospects;

(e) Promptly deliver to the other party true and correct copies of any
report, statement or schedule filed with the SEC by such party subsequent
to the date of this Agreement;

(f) Maintain its books and records in accordance with GAAP,
consistently applied, and not change in any material manner any of its
methods, principles or practices of accounting in effect at the applicable
Financial Statement Date, except as may be required by applicable Law or
GAAP;

(g) Duly and timely file all reports, Tax returns and other documents
required to be filed with federal, state, local and other authorities,
subject to extensions permitted by Law, provided such extensions do not
adversely affect FelCor's status as a qualified REIT under the Code;

(h) Not make or rescind any express or deemed election relative to
Taxes (unless required by Law or necessary to preserve FelCor's status as a
REIT or the status of any Subsidiary as a partnership for federal income
Tax purposes or as a qualified REIT subsidiary under Section 856(i) of the
Code, as the case may be);

(i) Not (i) acquire (other than pursuant to an existing agreement),
sell, lease, enter into any option to acquire, sell or lease, or exercise
an option or contract to acquire, sell or lease, additional real property,
(ii) make any loans, or advances to any other Person, except loans or
advances to employees in the ordinary course of business and except as
contemplated by Section 5.14, (iii) incur additional Indebtedness for
borrowed money other than under existing agreements or as permitted or
contemplated by this Agreement, (iv) encumber or subject to any Lien any of
its properties or assets, or (v) enter into any new agreement or
commitment, or amend any existing agreement or commitment, to improve,
develop or construct real estate projects or to make any other capital
expenditure after the date of this Agreement other than (A) with respect to
FelCor, expenditures that are within FelCor's 1998 budget attached to
Schedule 4.2 to the FelCor Disclosure Letter and (B) with respect to
Bristol, (1) in respect of transactions, projects or other capital
expenditures relating to the improvement, development or construction of
real estate projects, expenditures that are within Bristol's 1998 budget
attached to Schedule 4.2 to the Bristol Disclosure Letter as to which
Bristol or any of its Subsidiaries have either commenced the expenditure of
money to third parties or entered into agreements or obligations to do so,
(2) in respect of transactions, projects or other capital expenditures
approved by the Joint Operating Committee, which approval may not be
unreasonably withheld or delayed, and (3) amounts not otherwise covered by
subclauses (1) or (2) involving capital expenditures for purposes other
than the improvement, development or construction of real estate projects
of, in the aggregate, less than $1.0 million;

(j) Use reasonable efforts to enter into agreements to sell assets of
Bristol and the Bristol Subsidiaries as agreed from time to time by the
Joint Operating Committee on terms authorized by it, and to permit FelCor
and its financial and legal advisors a reasonable opportunity to
participate in such process; provided however, that (i) such agreements may
provide at Bristol's election that any such sale or disposition will not be
consummated until the Effective Time and that Bristol may terminate such
agreement if this Agreement is terminated for any reason and (ii) in no
event will any party bind Bristol or its Subsidiaries to any liability or
obligation with respect to a sale of any assets in respect of any
transaction not approved by the Joint Operating Committee in the sole
discretion of the members thereof;

(k) Except as contemplated by Section 1.5, not amend its articles or
certificate of incorporation, bylaws or comparable charter or
organizational document or the certificate or articles of incorporation,
bylaws, partnership agreement, operating agreement, joint venture agreement
or comparable charter or organizational document of any FelCor Subsidiary
or Bristol Hotel Subsidiary without the other party's prior written
consent, which consent will not be unreasonably withheld or delayed;

(l) Not amend any material terms of any contract of such party in a
manner adverse to the Surviving Corporation in order to obtain the consent
of the other party or parties to such contract to any of the transactions
contemplated by this Agreement or the Spin-Off Agreement without obtaining
the
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prior written consent of the other party hereto, which consent may not be
unreasonably withheld or delayed;

(m) Make no change in the number of shares of capital stock,
membership interests or units of limited partnership interest issued and
outstanding, other than pursuant to (i) the exercise of options disclosed
in the FelCor Filed SEC Documents, the Bristol Filed SEC Documents,
Schedule 3.3 to the Bristol Disclosure Letter or Schedule 2.3 to the FelCor
Disclosure Letter, (ii) the conversion of FelCor Series A Preferred Shares
pursuant to the terms of the FelCor Series A Preferred Shares, and (iii)
the redemption of FelCor OP Units for FelCor Common Shares pursuant to the
terms of the FelCor OP Units;

(n) Grant no options or other right or commitment relating to its
capital stock, membership interests or units of limited partnership
interest or any security convertible into its capital stock, membership
interests or units of limited partnership interest, or any security the
value of which is measured by shares of capital stock, or any security
subordinated to the claim of its general creditors;

(o) Not (i) authorize, declare, set aside or pay any dividend or make
any other distribution or payment with respect to any shares of its capital
stock or change such party's normal record date for the payment of any
permitted dividend or distribution, other than as provided in Schedule 4.2
to the FelCor Disclosure Letter or (ii) directly or indirectly redeem,
purchase or otherwise acquire any shares of capital stock, membership
interests or units of partnership interest or any option, warrant or right
to acquire, or security convertible into, shares of capital stock,
membership interests or units of partnership interest, other than pursuant
to (A) the conversion of FelCor Series A Preferred Shares pursuant to the
terms of the FelCor Series A Preferred Shares and (B) the redemption of
FelCor OP Units for FelCor Common Shares pursuant to the terms of the
FelCor OP Units;

(p) Not adopt any new employee benefit plan or amend any existing
plans or rights, except for changes which are required by Law or changes
which are not more favorable to participants than provisions presently in
effect;

(q) Not settle any stockholder derivative or class action claims
arising out of or in connection with any of the transactions contemplated
by this Agreement and the Transaction Documents;

(r) Not change the ownership of any of its Subsidiaries except
pursuant to the Spin-Off Agreement;

(s) Not amend any of the Transaction Documents in any material
respect;

(t) Not take any action that would cause the Merger not to qualify as
a tax-free reorganization under Section 368(a)(1)(A) of the Code;

(u) Promptly notify the other party of any action, suit, proceeding,
claim or audit pending against or with respect to such party or its
Subsidiaries in respect of any Taxes where there is a reasonable
possibility of a determination or decision which would materially increase
the Tax liabilities of such party, and not change any of the Tax elections,
accounting methods, conventions or principals which relate to such party or
its Subsidiaries that could reasonably be expected to increase such party's
liabilities;

(v) Continue to maintain and repair all of its assets and properties
in a manner consistent with past practices; and

(w) Maintain all licenses and Permits as may be required by any
Governmental Entity administering Laws regulating the sale of alcoholic
beverages at the Bristol Hotels or the FelCor Hotels and take whatever
actions are necessary to maintain the continuity of service of alcoholic
beverage at the Bristol Hotels or the FelCor Hotels.

4.3. Other Actions. Each of FelCor and Bristol will not, and will use
commercially reasonable efforts to cause its respective Subsidiaries not to,
take any action that would result in (i) any of the representations and
warranties of such party (without giving effect to any "Knowledge"
qualification) set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties (without

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giving effect to any "Knowledge" qualification) that are not so qualified
becoming untrue in any material respect, or (iii) except as contemplated by
Section 4.1, any of the conditions to the Merger set forth in Article VI not
being satisfied.

V. ADDITIONAL COVENANTS

5.1. Preparation of the Registration Statements and the Proxy Statement;
FelCor Stockholders Meeting and Bristol Stockholders Meeting. (a) As soon as
practicable following the date of this Agreement, FelCor and Bristol will
prepare and file with the SEC a preliminary Proxy Statement in form and
substance satisfactory to each of Bristol and FelCor and such Registration
Statements as may be required to effect the Merger and the Spin-Off. To the
extent practicable, the parties will utilize one document for transmittal to
their respective stockholders to meet applicable legal requirements. Each of
FelCor and Bristol will use its reasonable best efforts to (i) prepare and
provide the other party as promptly as practicable the financial information
required to be disclosed in the Proxy Statement, (ii) cause Merrill and BT
Wolfensohn, as appropriate, to bring-down the opinions referred to in Section
2.16 and Section 3.17 to the date of the Proxy Statement, (iii) respond to any
comments of the SEC, and (iv) have the Registration Statements declared
effective under the Securities Act and the rules and regulations promulgated
thereunder as promptly as practicable after such filing and to keep the
Registration Statements effective as long as is necessary to consummate the
Merger and the Spin-Off. Each of FelCor and Bristol will use its reasonable best
efforts to cause the Proxy Statement to be mailed to FelCor's stockholders and
Bristol's stockholders, respectively, as promptly as practicable after the
Registration Statements are declared effective under the Securities Act. Each
party agrees to date its Proxy Statement as of the same date, which will be the
approximate date of mailing to the stockholders of the respective parties. Each
party will notify the other promptly of the receipt of any comments from the SEC
and of any request by the SEC for amendments or supplements to the Registration
Statements or the Proxy Statement or for additional information and will supply
the other with copies of all correspondence between such party or any of its
representatives and the SEC with respect to the Registration Statements or the
Proxy Statement. The Registration Statements and the Proxy Statement will comply
in all material respects with all applicable requirements of Law. Whenever any
event occurs which is required to be set forth in an amendment or supplement to
the Registration Statements or the Proxy Statement, Bristol or FelCor, as the
case may be, will promptly inform the other of such occurrences and cooperate in
filing with the SEC and/or mailing to the stockholders of Bristol and the
stockholders of FelCor such amendment or supplement to the Registration
Statements or the Proxy Statement.

(b) Bristol will, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Bristol Stockholders Meeting") for the purpose of obtaining
the Bristol Stockholder Approval. Bristol will, through the Bristol Board,
recommend to its stockholders adoption of this Agreement; provided that,
notwithstanding any other provision of this Agreement, prior to the Bristol
Stockholders Meeting, such recommendation may be withdrawn, modified or amended
to the extent that, as a result of a Superior Proposal, the Bristol Board
determines that such withdrawal, modification or amendment is appropriate.

(c) FelCor will, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "FelCor Stockholders Meeting") for the purpose of obtaining
the FelCor Stockholder Approval. FelCor will, through the FelCor Board,
recommend to its stockholders adoption of this Agreement and the transactions
contemplated by this Agreement; provided that, notwithstanding any other
provision of this Agreement, prior to the FelCor Stockholders Meeting, such
recommendation may be withdrawn, modified or amended to the extent that, as a
result of a Superior Proposal, the FelCor Board determines that such withdrawal,
modification or amendment is appropriate.

(d) Bristol and FelCor will use their respective best efforts to hold their
respective stockholder meetings on the same day.

(e) If on the date for the Bristol Stockholders Meeting and FelCor
Stockholders Meeting established pursuant to Section 5.1(d), either Bristol or
FelCor has not received a sufficient number of proxies to approve the adoption
of this Agreement, then both parties will adjourn their respective stockholders
meetings until the
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first to occur of (i) the date ten calendar days after the originally scheduled
date of the stockholders meetings or (ii) the date on which the requisite number
of proxies approving the Merger has been obtained.

5.2. Access to Information; Confidentiality. Subject to the requirements of
confidentiality agreements with third parties, each of FelCor and Bristol will,
and will cause each of its Subsidiaries to, afford to the other party and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of such other party, reasonable access during normal business
hours prior to the Effective Time to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, each of
FelCor and Bristol will, and will cause each of its Subsidiaries to, furnish
promptly to the other party (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities Laws and (b) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Each of FelCor and Bristol will, and will cause its
Subsidiaries to, and will use commercially reasonable efforts to cause its
officers, employees, accountants, counsel, financial advisors and other
representatives and Affiliates to, hold any nonpublic information in confidence
to the extent required by, and in accordance with, and will comply with the
provisions of the letter agreements, dated as of January 14, 1998 and February
27, 1998, between FelCor and Bristol (the "Confidentiality Agreements").

5.3. Consents; Notifications; Other Actions. (a) Subject to the terms and
conditions herein provided, FelCor and Bristol will (i) use all reasonable best
efforts to cooperate with one another in (A) determining which filings are
required to be made prior to the Effective Time with, and which consents,
approvals, Permits or authorizations are required to be obtained prior to the
Effective Time from, any Governmental Entity and any third parties in connection
with the execution and delivery of this Agreement and the Transaction Documents
and the consummation of the transactions contemplated hereby and thereby and (B)
timely making all such filings and timely seeking all such consents, approvals,
Permits and authorizations, (ii) use all reasonable best efforts to obtain in
writing any consents required from third parties to effectuate the Merger, such
consents to be in such form and substance as may be reasonably satisfactory to
FelCor and Bristol, and in connection therewith, not pay any consent fees unless
approved by FelCor, and (iii) use all reasonable best efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement and the Transaction Documents. If,
at any time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper officers and
directors of FelCor and Bristol will take all such necessary action.

(b) Each of Bristol and FelCor will give prompt notice to the other (i) if
any representation or warranty made by it contained in this Agreement that is
qualified as to materiality becomes untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becomes untrue or
inaccurate in any material respect or (ii) of the failure by it to comply with
or satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification will affect the representations, warranties or covenants of
the parties or the conditions to the obligations of the parties under this
Agreement.

(c) Bristol will use all reasonable efforts to cause each of the directors
and officers of Bristol and the Bristol Subsidiaries (other than BHMC, BHR and
their respective Subsidiaries) to resign as a director or officer of each
applicable company effective as of the Effective Time.

5.4. Tax Treatment. Each of Bristol and FelCor will use its reasonable best
efforts to cause the Merger to qualify as a tax-free reorganization under the
provisions of Section 368(a)(1)(A) of the Code and to obtain the opinions of
counsel referred to in Sections 6.1(e), 6.1(f) and 6.2(f).

5.5. Public Announcements. Bristol and FelCor will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other written public statements with respect to the
transactions contemplated by this Agreement and the Transaction Documents,
including the Merger and the Spin-Off, and will not issue any such press release
or make any such written public statement prior to such consultation, except to
the extent it may be advised by counsel that it is required by applicable Law or
legal process. The parties agree that the initial press release to be issued
with respect to the
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transactions contemplated by this Agreement will be in the form agreed to by the
parties hereto prior to the execution of this Agreement.

5.6. Listing. Prior to the Effective Time, (a) FelCor will use its best
efforts to have the NYSE approve for listing, upon official notice of issuance,
the Surviving Corporation Common Shares to be issued in the Merger and (b)
Bristol will cause BHR to use reasonable efforts to have the NYSE, the NASDAQ or
another national securities exchange approve for listing, upon official notice
of issuance, the BHR Common Shares to be distributed in the Spin-Off.

5.7. Transfer and Gains Taxes. Bristol and FelCor will cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees and any similar Taxes which become payable in
connection with the transactions contemplated by this Agreement (together with
any related interests, penalties or additions to Tax, "Transfer and Gains
Taxes"). From and after the Effective Time, the Surviving Corporation will, or
will cause FelCor Operating Partnership, as appropriate, to pay or cause to be
paid, without deduction or withholding from any amounts payable to the holders
of Surviving Corporation Common Shares, all Transfer and Gains Taxes.

5.8. Indemnification. (a) From and after the Effective Time, the Surviving
Corporation will provide exculpation and indemnification for each individual who
is now or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, an officer or director of Bristol or any Bristol Subsidiary
(the "Indemnified Parties") which is the same as the exculpation and
indemnification provided to the Indemnified Parties by Bristol and the Bristol
Subsidiaries immediately prior to the Effective Time in the Bristol Certificate
and Bylaws or the applicable charter or other organizational document of such
Bristol Subsidiary, as in effect on the date hereof; provided, that such
exculpation and indemnification covers actions on or prior to the Effective
Time, including without limitation all transactions contemplated by this
Agreement and the Transaction Documents. In no event will the Surviving
Corporation be obligated to provide directors' and officers' liability
insurance. If the Surviving Corporation has directors' and officers' insurance,
such insurance will apply to all directors and officers of the Surviving
Corporation serving as such during the period such coverage is in effect.
Notwithstanding anything in this Agreement to the contrary, Bristol will
purchase insurance coverage for the directors and officers of Bristol who are
covered under Bristol's directors' and officers' insurance policy as of the
Effective Time for claims made after the Effective Time with respect to
liabilities arising or relating to periods prior to the Effective Time, which
insurance coverage will provide that FelCor is a named insured thereunder.

(b) The Surviving Corporation will continue in force and effect after the
Effective Time each indemnification agreement between Bristol or any Bristol
Subsidiary, on the one hand, and any Person, on the other hand, which was in
force and effect immediately prior to the Effective Time.

(c) The provisions of this Section 5.8 are intended to be for the benefit
of, and will be enforceable by, each Indemnified Party or other Person referred
to in this Section 5.8, his or her heirs, and his or her personal
representatives and will be binding on all successors and assigns of Bristol and
FelCor.

(d) In the event that the Surviving Corporation or any of its respective
successors or assigns (i) consolidates with or merges into any other Person and
will not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case the successors
and assigns of such entity will assume the obligations set forth in this Section
5.8, which obligations are expressly intended to be for the irrevocable benefit
of, and will be enforceable by, each Person covered hereby.

5.9. Spin-Off Transactions. (a) Bristol will diligently seek and use
reasonable best efforts to obtain prior to the Closing Date all material
consents required to be obtained by BHMC and BHR to perform their respective
obligations under the Spin-Off Agreement and the other agreements contemplated
hereby to which BHMC and BHR is a party. Bristol will keep FelCor apprised in
reasonable detail of its progress in obtaining such consents.

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(b) Bristol will furnish to FelCor copies of all documentation relating to
or to be delivered in connection with the Spin-Off Transactions. Without
limiting the generality or effect of the foregoing, Bristol will furnish to
FelCor copies of all documentation relating to (i) the transfers to BHR of the
Spin-Off Assets (as defined in the Spin-Off Agreement) and the assumptions by
BHR of the Spin-Off Liabilities (as defined in the Spin-Off Agreement), (ii) the
formation and organizational documents for the Non-Corporate Bristol Hotel
Subsidiaries, and (iii) the merger documents between the Bristol Corporate
Subsidiaries and the Non-Corporate Bristol Hotel Subsidiaries, and provide
FelCor an opportunity to comment thereon and consent to any of such
documentation.

5.10. Declaration of Dividends and Distributions. From and after the date
of this Agreement, except for the Spin-Off, Bristol will not declare or pay any
dividend or distribution to its stockholders. From and after the date of this
Agreement, FelCor will not declare or pay any dividend or other distribution to
the stockholders except in accordance with Schedule 4.2 to the FelCor Disclosure
Letter.

5.11. Affiliates; Etc. Prior to the Closing Date, Bristol will deliver to
FelCor a letter identifying all Persons who are, at the time this Agreement is
submitted for adoption by to the stockholders of Bristol, "affiliates" of
Bristol for purposes of Rule 145 under the Securities Act. Bristol will use
reasonable efforts to cause each such Person to deliver to FelCor on or prior to
the Closing Date a written agreement substantially in the form attached as
Exhibit A.

5.12. Bristol's Accumulated and Current Earnings and Profits. Bristol will
use all reasonable efforts to assist FelCor and Arthur Andersen LLP in the
calculation of the current and accumulated earnings and profits (as determined
for federal income Tax purposes) ("E&P") of Bristol as of the Closing Date,
giving effect to the Spin-Off. Bristol will deliver to FelCor not later than 21
calendar days prior to the expected Closing Date, (i) a statement of accumulated
and current E&P of Bristol as of a date not more than 30 calendar days prior to
the Closing Date but after giving effect to the Spin-Off and (ii) a statement of
estimated accumulated and current E&P of Bristol as of the Closing Date after
giving effect to the Spin-Off (together, the "Preliminary E&P Statement").
Bristol will use reasonable efforts to obtain from Arthur Andersen LLP (i) upon
delivery of the Preliminary E&P Statement, such firm's computation, or
confirmation of Bristol's computation, of accumulated and current E&P of Bristol
as set forth in the Preliminary E&P Statement and (ii) an undertaking to provide
within three months after the Closing Date, such firm's final computation, or
confirmation of Bristol's computation, of accumulated and current E&P of Bristol
as of the Closing Date, in substantially the form set forth on Schedule 5.12
(with such changes thereto as FelCor may reasonably request and to which Arthur
Andersen LLP may agree).

5.13. REIT-Related Matters. (a) Bristol will take such further actions and
engage in such further transactions as determined by FelCor, based on written
advice of FelCor's counsel, as may be reasonably necessary to preserve FelCor's
status as a REIT under the Code, provided that no such actions could reasonably
be expected to have a material adverse economic effect on Bristol or its
stockholders if the Merger is not consummated or on BHR following the Spin-Off
Transactions.

(b) At the Closing, FelCor will deliver to each of the Principal
Stockholders an exemption from the stock ownership limitations in the FelCor
Articles that permits each of the Principal Stockholders to own at any time up
to 15% of the FelCor Common Shares outstanding (the "Exemptions"). The
Exemptions will be conditioned upon the continuing accuracy of the
representations provided by the Principal Stockholders as to their ownership of
FelCor Common Shares and BHR Common Shares in connection with obtaining the
Exemptions. The percentage of FelCor Common Shares that each Principal
Stockholder may own under the Exemption will be reduced automatically (i) to the
extent FelCor issues additional FelCor Common Shares which entitle such
Principal Stockholder to purchase additional FelCor Common Shares to maintain
its percentage ownership and such Principal Stockholder elects not to maintain
its percentage ownership of FelCor Common Shares by acquiring additional shares
in connection with such issuance and (ii) to the extent necessary for FelCor to
maintain its REIT status.

5.14. Interim Credit Facility. As promptly as practicable and in any event
not later than April 15, 1998, the parties will enter into an interim credit
facility providing for loans of (i) $25.0 million to fund a portion of the cash
required in connection with the Omaha Hotel, Inc. acquisition as described in
Schedule 4.2 to the
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Bristol Disclosure Letter, and (ii) $31.2 million to fund the prepayment on June
15, 1998 of the $30 million Senior Secured Notes described in Schedule 3.4 to
the Bristol Disclosure Letter. Such loans will be secured by certain of the
Omaha assets so acquired or other real estate acceptable to FelCor, will bear a
market rate of interest and be on other commercially reasonable terms and
conditions. The loans will be due and payable 120 days following the termination
of this Agreement pursuant to Section 7.1 hereof ; provided, however, that (i)
if FelCor is obligated to pay the Break-up Fee in connection with such
termination, the maturity date of such loan will be extended to the date on
which FelCor pays the Break-up Fee (but in no event beyond December 31, 2003)
and (ii) if this Agreement is terminated prior to the Effective Time pursuant to
Section 7.1(f), any loans then outstanding will be converted into unsecured
indebtedness of Bristol, will bear a market rate of interest and be on other
commercially reasonable terms and will be due and payable on December 31, 2003.

VI. CONDITIONS

6.1. Conditions To Each Party's Obligation To Effect the Merger. The
obligations of each party to effect the Merger will be subject to the
fulfillment at or prior to the Closing Date of the following conditions:

(a) Stockholder Approvals. The Bristol Stockholder Approval and the
FelCor Stockholder Approval shall have been obtained;

(b) Listing of Shares. The NYSE shall have approved for listing the
Surviving Corporation Common Shares to be issued in the Merger, subject to
official notice of issuance;

(c) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of
any stop order or proceedings by the SEC seeking a stop order;

(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger, the Spin-Off or any of the other
transactions contemplated hereby shall be in effect;

(e) Tax Opinion. Bristol and FelCor shall have received an opinion,
dated the Closing Date, from Hunton & Williams, Jenkens & Gilchrist or
Jones, Day, Reavis & Pogue, based upon certificates and letters
substantially in the form set forth in Exhibit B hereto and dated the
Closing Date (and which the parties agree to provide as reasonably
requested by counsel), to the effect that the Merger will qualify as a
tax-free reorganization under the provisions of Section 368(a)(1)(A) of the
Code;

(f) Opinion Relating to REIT Status and Partnership Status. Bristol
and FelCor shall have received an opinion of Hunton & Williams, counsel to
FelCor, or Jones, Day, Reavis & Pogue, counsel to Bristol, in each case in
substantially the form set forth in Exhibit C hereto dated the Closing Date
to the effect that (i) commencing with its taxable year ended December 31,
1994, FelCor was organized and has operated in conformity with the
requirements for qualification as a REIT under the Code,(ii) FelCor
Operating Partnership has been since its formation in 1994 and continues to
be treated for federal income Tax purposes as a partnership, and not as a
corporation or association taxable as a corporation, and (iii) the Merger
will not prevent FelCor from continuing to operate in conformity with the
requirements for qualification as a REIT under the Code; and

(g) Change in Tax Laws. There shall not have been any Federal
Legislative or Regulatory Change. For purposes of this Agreement, the term
"Federal Legislative or Regulatory Change" means any enacted, promulgated
or proposed legislative, administrative or judicial action, interpretation
or decision that causes or if effected could be reasonably expected to
cause FelCor to cease to qualify as a REIT for federal income tax purposes.

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6.2. Conditions To Obligations of FelCor. The obligations of FelCor to
effect the Merger and to consummate the other transactions contemplated to occur
on the Closing Date is further subject to the following conditions, any one or
more of which may be waived by FelCor:

(a) Representations and Warranties of Bristol. The representations and
warranties of Bristol set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date (other than
changes thereto which occurred solely by reason of the Spin-Off
Transactions), as though made on and as of the Closing Date, except to the
extent the representation or warranty is expressly limited by its terms to
another date, and FelCor shall have received a certificate (which
certificate may be qualified by Knowledge to the same extent as the
representations and warranties of Bristol contained herein are so
qualified) signed on behalf of Bristol by the President of Bristol, in such
capacity, to such effect. For the purposes of Section 6.2(a), the
representations and warranties of Bristol will be deemed true and correct
unless the breach of such representations and warranties, in the aggregate,
could reasonably be expected to have a Bristol Material Adverse Effect;
provided, however, that for purposes of this Section 6.2(a), the
representation and warranty of Bristol set forth in Section 3.11(d) will be
deemed to be true and correct unless the breach thereof would have a FelCor
Material Adverse Effect;

(b) Performance of Covenants of Bristol. Bristol shall have performed
in all material respects all covenants required to be performed by it under
this Agreement at or prior to the Effective Time, and FelCor shall have
received a certificate signed on behalf of Bristol by the President of
Bristol, in such capacity, to such effect;

(c) Material Adverse Change. Since the date of this Agreement, there
shall have been no Bristol Material Adverse Change and FelCor shall have
received a certificate of the President of Bristol, in such capacity,
certifying to such effect;

(d) Spin-Off Transactions. The Spin-Off Transactions shall have been
completed and all documents required to be delivered in connection with the
Spin-Off Transactions pursuant to the Spin-Off Agreement shall have been
executed and delivered by all parties thereto;

(e) Delivery of E&P Statement. Arthur Andersen LLP shall have
delivered to FelCor its confirmation of Bristol's E&P set forth in the
Preliminary E&P Statement as required by Section 5.12; and

(f) Other Opinions. Bristol shall have received an opinion of Jones,
Day, Reavis & Pogue to the effect that (i) the Merger will not result in
either (A) the merger of Holiday Inns, Inc. with and into Bristol pursuant
to that certain Agreement and Plan of Merger dated as of December 15, 1996,
as amended as of April 1, 1997, among Holiday Corporation, Holiday Inns,
Inc., and Bristol or (B) the Exchange (as that term is defined in that
Agreement and Plan of Merger) failing to qualify for tax free treatment
under Section 368(a)(1)(D) of the Code and Section 355 of the Code and
Section 368(a)(1)(A) of the Code, respectively, and (ii) the distribution
to the holders of Bristol Common Shares of all of the BHR Common Shares as
provided in the Spin-Off Agreement will be treated for federal income tax
purposes as a taxable dividend by Bristol to the holders of Bristol Common
Shares.

6.3. Conditions To Obligations of Bristol. The obligations of Bristol to
effect the Merger and to consummate the other transactions contemplated to occur
on the Closing Date is further subject to the following conditions, any one or
more of which may be waived by Bristol:

(a) Representations and Warranties of FelCor. The representations and
warranties of FelCor set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date, as though made
on and as of the Closing Date, except to the extent the representation or
warranty is expressly limited by its terms to another date, and Bristol
shall have received a certificate (which certificate may be qualified by
Knowledge to the same extent as the representations and warranties of
FelCor contained herein are so qualified) signed on behalf of FelCor by the
President of FelCor, in such capacity, to such effect. For the purposes of
this Section 6.3(a), the representations and warranties of

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FelCor will be deemed true and correct unless the breach of such
representations and warranties, in the aggregate, could reasonably be
expected to have a FelCor Material Adverse Effect;

(b) Performance of Covenants of FelCor. FelCor shall have performed in
all material respects all covenants required to be performed by it under
this Agreement at or prior to the Effective Time, and Bristol shall have
received a certificate signed on behalf of FelCor by the President of
FelCor, in such capacity, to such effect; and

(c) Material Adverse Change. Since the date of this Agreement, there
shall have been no FelCor Material Adverse Change and Bristol shall have
received a certificate of the President of FelCor, in such capacity,
certifying to such effect.

6.4. Frustration of Closing Conditions. Neither FelCor nor Bristol may rely
on the failure of any condition set forth in Section 6.1, 6.2 or 6.3, as the
case may be, to be satisfied if such failure was caused by such party's failure
to use reasonable efforts to consummate the Merger, the Spin-Off and the other
transactions contemplated by this Agreement and the Spin-Off Agreement, as
required by and subject to Sections 5.3 and 5.9.

VII. TERMINATION, AMENDMENT AND WAIVER

7.1. Termination. This Agreement may be terminated at any time prior to the
filing of the Articles of Merger with the Department, whether before or after
either of the Stockholder Approvals are obtained:

(a) By mutual written consent duly authorized by the FelCor Board and
the Bristol Board;

(b) By FelCor, upon a breach of any representation, warranty or
covenant on the part of Bristol set forth in this Agreement, in any case
such that the conditions set forth in Section 6.2(a) or Section 6.2(b), as
the case may be, would be incapable of being satisfied by the Drop-Dead
Date;

(c) By Bristol, upon a breach of any representation, warranty or
covenant on the part of FelCor set forth in this Agreement, in any case
such that the conditions set forth in Section 6.3(a) or Section 6.3(b), as
the case may be, would be incapable of being satisfied by the Drop-Dead
Date;

(d) By either Bristol or FelCor, if any judgment, injunction, order,
decree or action by any Governmental Entity of competent authority
preventing the consummation of the Merger or the Spin-Off shall have become
final and nonappealable;

(e) By either FelCor or Bristol, if the Merger is not consummated by
September 30, 1998 or such later date to which the parties may agree in
their respective sole discretion (the "Drop Dead Date"); provided, in the
case of termination pursuant to this Section 7.1(e), the terminating party
shall not have breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the
occurrence of the failure referred to in this Section;

(f) By either Bristol or FelCor if, upon a vote at a duly held FelCor
Stockholders Meeting or any adjournment thereof, the FelCor Stockholder
Approval shall not have been obtained;

(g) By either Bristol or FelCor if, upon a vote at a duly held Bristol
Stockholders Meeting or any adjournment thereof, the Bristol Stockholder
Approval shall not have been obtained;

(h) By Bristol, if (i) prior to the FelCor Stockholders Meeting, the
FelCor Board shall have withdrawn or modified in any manner adverse to
Bristol, or failed within ten Business Days of a request therefor to
reconfirm, its approval or recommendation of the Merger or this Agreement,
or approved or recommended or resolved to approve or recommend any Superior
Proposal, (ii) FelCor shall have entered into an Acquisition Agreement, or
(iii) FelCor or any of its officers, directors, employees or
representatives shall have taken any action that would be prohibited by
Section 4.1 but for the exceptions therein allowing certain actions to be
taken pursuant to Section 4.1(c);

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(i) By FelCor, if (i) prior to the Bristol Stockholders Meeting, the
Bristol Board shall have withdrawn or modified in any manner adverse to
FelCor, or failed within ten Business Days of a request therefor to
reconfirm, its approval or recommendation of the Merger or this Agreement,
or approved or recommended or resolved to approve or recommend any Superior
Proposal, (ii) Bristol shall have entered into an Acquisition Agreement, or
(iii) Bristol or any of its officers, directors, employees or
representatives shall have taken any action that would be prohibited by
Section 4.1 but for the exceptions therein allowing certain actions to be
taken pursuant to Section 4.1(c); and

(j) By Bristol if the Volume Weighted Average Trading Price for FelCor
Common Shares as reported in the NYSE Composite Transactions Report for any
ten Trading Day period prior to the Effective Time is less than $28.00 per
share.

7.2. Certain Fees and Expenses. (a) If this Agreement shall be terminated
(i) pursuant to Section 7.1(c) or 7.1(h), then FelCor will pay Bristol (provided
FelCor was not entitled to terminate this Agreement pursuant to Section 7.1(b)
at the time of such termination) a fee equal to the Break-Up Fee and (ii)
pursuant to Section 7.1(b) or 7.1(i), then Bristol will pay FelCor (provided
Bristol was not entitled to terminate this Agreement pursuant to Section 7.1(c)
at the time of such termination) an amount equal to the Break-Up Fee. If this
Agreement shall be terminated (i) pursuant to Section 7.1(g), then Bristol will
pay FelCor (provided Bristol was not entitled to terminate this Agreement
pursuant to Section 7.1(c) at the time of such termination), an amount equal to
the Break-Up Expenses, and (ii) pursuant to Section 7.1(f), then FelCor will pay
Bristol (provided FelCor was not entitled to terminate this Agreement pursuant
to Section 7.1(b) at the time of such termination), an amount equal to the
Break-Up Expenses. Notwithstanding the foregoing, if the Merger is not
consummated (other than due to the termination of this Agreement pursuant to
Section 7.1(a), 7.1(d) or 7.1(j) or Bristol's failure to perform its obligations
under this Agreement in such a manner so as to entitle FelCor to terminate this
Agreement pursuant to Section 7.1(b)) and at the time of the termination of this
Agreement an Acquisition Proposal has been received by FelCor, and either prior
to the termination of this Agreement or within 12 months thereafter FelCor or
any FelCor Subsidiary enters into any agreement providing for an Acquisition
Proposal which is subsequently consummated (whether or not such Acquisition
Proposal is the same Acquisition Proposal which had been received at the time of
the termination of this Agreement), then FelCor will pay the Break-Up Fee and
the Break-Up Expenses to Bristol. If the Merger is not consummated (other than
due to the termination of this Agreement pursuant to Section 7.1(a), 7.1(d) or
7.1(j) or FelCor's failure to perform its obligations under this Agreement in
such a manner so as to entitle Bristol to terminate this Agreement pursuant to
Section 7.1(c)) and at the time of the termination of this Agreement an
Acquisition Proposal has been received by Bristol, and either prior to the
termination of this Agreement or within 12 months thereafter Bristol or any
Bristol Subsidiary enters into any agreement providing for an Acquisition
Proposal which is subsequently consummated (whether or not such Acquisition
Proposal is the same Acquisition Proposal which had been received at the time of
the termination of this Agreement), then Bristol will pay the Break-Up Fee and
the Break-Up Expenses to FelCor.

(b) Any payment of the Break-Up Fee and, if applicable, Break-Up Expenses,
as aforesaid, will be compensation and liquidated damages for the loss suffered
by Bristol or FelCor, as applicable, as a result of the failure of the Merger to
be consummated and to avoid the difficulty of determining damages under the
circumstances, and neither party will have any other liability to the other
after such payment. The Break-Up Fee and/or the Break-Up Expenses will be paid
by FelCor to Bristol or Bristol to FelCor (as applicable), in immediately
available funds within ten Business Days after the date the event giving rise to
the obligation to make such payment occurred, provided, however, that neither
party may enter into any agreement providing for an Acquisition Proposal unless,
prior thereto, this Agreement is terminated in accordance with its terms and the
required Break-Up Fee and Break-Up Expenses are paid or otherwise provided for.
As used in this Agreement, "Break-Up Fee" will be an amount equal to the lesser
of (i) $60 million plus Break-Up Expenses (the "Base Amount") and (ii) in the
case of FelCor, the sum of (A) the maximum amount that can be paid to FelCor
without causing it to fail to meet the requirements of Sections 856(c)(2) and
(3) of the Code determined as if the payment of such amount did not constitute
income described in Sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code
("Qualifying Income"), as determined by
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independent accountants to FelCor, and (B) in the event FelCor receives a letter
from outside counsel (the "Break-Up Fee Tax Opinion") indicating that FelCor has
received a ruling from the Internal Revenue Service ("IRS") holding that
FelCor's receipt of the Base Amount would either constitute Qualifying Income or
would be excluded from gross income within the meaning of Sections 856(c)(2) and
(3) of the Code (the "REIT Requirements") (and therefore would not cause FelCor
to fail to satisfy the REIT Requirements) or that the receipt by FelCor of the
remaining balance of the Base Amount following the receipt of and pursuant to
such ruling would not be deemed constructively received prior thereto, the Base
Amount less the amount payable under clause (A) above. Bristol's obligation to
pay any unpaid portion of the Break-Up Fee will terminate five years from the
date of this Agreement. In the event that FelCor is not able to receive the full
Base Amount, Bristol will place the unpaid amount in escrow and will not release
any portion thereof to FelCor unless and until Bristol receives any one or
combination of the following: (i) a letter from FelCor's independent accountants
indicating the maximum amount that can be paid at that time to FelCor without
causing FelCor to fail to meet the REIT Requirements or (ii) a Break-Up Fee Tax
Opinion, in which event Bristol will pay to FelCor the lesser of the unpaid Base
Amount or the maximum amount stated in the letter referred to in clause (i)
above.

(c) The "Break-Up Expenses" payable to Bristol or FelCor, as the case may
be (the "Recipient"), will be an amount equal to the lesser of (i) $5 million as
payment for all of the Recipient's out-of-pocket costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
(including without limitation all attorneys', consultants', accountants' and
investment bankers' fees and expenses and all other costs and expenses such as
travel, fax, long-distance telephone and other costs) (the "Expense Fee") and
(ii) in the case of FelCor, the sum of (A) the maximum amount that can be paid
to the Recipient without causing it to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code determined as if the payment of such amount did
not constitute Qualifying Income, as determined by independent accountants to
the Recipient, and (B) in the event the Recipient receives a Break-Up Fee Tax
Opinion indicating that the Recipient has received a ruling from the IRS holding
that the Recipient's receipt of the Expense Fee would either constitute
Qualifying Income or would be excluded from gross income within the meaning of
the REIT Requirements (and therefore would not cause FelCor to fail to satisfy
the REIT Requirements) or that receipt by the Recipient of the remaining balance
of the Expense Fee following the receipt of and pursuant to such ruling would
not be deemed constructively received prior thereto, the Expense Fee less the
amount payable under clause (A) above. The obligation of Bristol or FelCor, as
applicable ("Payor"), to pay any unpaid portion of the Break-Up Expenses will
terminate five years from the date of this Agreement. In the event that the
Recipient is not able to receive the full Expense Fee, the Payor will place the
unpaid amount in escrow and will not release any portion thereof to the
Recipient unless and until the Payor receives any one or combination of the
following: (i) a letter from the Recipient's independent accountants indicating
the maximum amount that can be paid at that time to the Recipient without
causing the Recipient to fail to meet the REIT Requirements or (ii) a Break-Up
Fee Tax Opinion, in which event the Payor will pay to the Recipient the lesser
of the unpaid Expense Fee or the maximum amount stated in the letter referred to
in clause (i) above.

(d) Following the Effective Time, FelCor and BHR will each reasonably
consult with the other as to the computation of the contemplated distribution of
cash (the "Cash Distribution") sufficient, after giving effect to the Spin-Off,
to effect the complete elimination of Bristol's historical and current E&P
accumulated since the formation of Bristol until the Effective Time, such Cash
Distribution to be made on or before December 31, 1998. In the event that it is
determined, subsequent to the making of the Cash Distribution, that the Cash
Distribution did not eliminate Bristol's E&P as contemplated above, BHR will (i)
to the extent of any such shortfall, indemnify FelCor for an amount equal to the
costs incurred (including Tax payments and any associated interest and penalties
and reasonable accounting, legal and other out-of-pocket expenses) in disputing
any claim that the E&P had not been completely eliminated upon payment of the
Cash Distribution, provided, however, that BHR will be solely responsible under
this sentence for costs incurred up to a maximum of $5 million, and (ii) if such
costs exceed $5 million, (A) BHR will be responsible for 10% of any such costs
exceeding $5 million, up to a total of $5 million of additional payments by BHR,
and (B) any excess costs of this nature will be borne solely by FelCor.

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7.3. Effect of Termination. In the event of termination of this Agreement
by either FelCor or Bristol as provided in Section 7.1, this Agreement will
forthwith become void and have no effect, without any liability or obligation on
the part of Bristol or FelCor (other than the last sentence of Section 5.2,
Section 7.2, this Section 7.3 and Article VIII); provided that (a) if this
Agreement is terminated by FelCor pursuant to Section 7.1(b), Bristol will not
be entitled to any of the benefits of Section 7.2, or (b) if this Agreement is
terminated by Bristol pursuant to Section 7.1(c), FelCor will not be entitled to
any of the benefits of Section 7.2.

7.4. Amendment. This Agreement may be amended by the parties in writing by
action of their respective Boards at any time before or after any Stockholder
Approvals are obtained and prior to the filing of the Articles of Merger with
the Department or the Certificate of Merger with the Secretary of State of the
State of Delaware; provided, however, that, after the Stockholder Approvals are
obtained, no such amendment, modification or supplement will be made which by
Law requires the further approval of stockholders without obtaining such further
approval.

7.5. Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement, or (c) subject to the proviso of Section
7.4, waive compliance with any of the agreements or conditions of the other
party contained in this Agreement. Any agreement on the part of a party to any
such extension or waiver will be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise will not
constitute a waiver of those rights.

VIII. GENERAL PROVISIONS

8.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement confirming the representations and warranties in this
Agreement will survive the Effective Time. This Section 8.1 will not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.

8.2. Notices. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by fax (providing confirmation of transmission) at the following
addresses or fax numbers (or at such other address or fax number for a party as
will be specified by like notice):

(a) if to Bristol, to:

Bristol Hotel Company
14295 Midway Road
Dallas, Texas 75244
Attention: President
Attention: General Counsel
Telecopy: (972) 391-1515

with a copy to:

Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek
Telecopy: (212) 755-7306

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(b) if to FelCor, to:

FelCor Suite Hotels, Inc.
545 E. John Carpenter Freeway
Suite 1300
Irving, Texas 75062
Attention: President
Attention: General Counsel
Telecopy: (972) 444-4949

with a copy to:

Jenkens & Gilchrist, P.C.
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Attention: Robert W. Dockery
Telecopy: (214) 855-4300

All notices will be deemed given only when actually received.

8.3. Certain Definitions. As used in this Agreement, the following terms
have the following meanings when used herein with initial capital letters:

(a) "Affiliate" (or words of similar import) has the same meaning as
such term is defined in Rule 405 promulgated under the Securities Act.

(b) "Bristol Hotel" means each of the hotels listed in Schedule 3.2 to
the Bristol Disclosure Letter, which constitutes all of the hotels in which
Bristol owns, directly or indirectly, an ownership interest.

(c) "Bristol Hotel Subsidiaries" means the Bristol Subsidiaries that
own or hold, directly or indirectly, an interest in a Bristol Hotel.

(d) "Business Day" means a day other than Saturday, Sunday or any day
on which commercial banks in New York, New York or Dallas, Texas are
authorized or obligated to close.

(e) "Environmental Law" means any Law or order of any Governmental
Entity relating to the regulation or protection of human health, safety or
the environment or to emissions, discharges, releases or threatened
releases of Hazardous Materials into the environment (including without
limitation, ambient air, soil, surface water, ground water, wetlands, land
or subsurface strata), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.

(f) "FelCor Hotel" means each of the hotels listed in Schedule 2.2 to
the FelCor Disclosure Letter, which constitutes all of the hotels in which
FelCor owns, directly or indirectly, an ownership interest.

(g) "Hazardous Material" means (i) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid containing
levels of polychlorinated biphenyls (PCBs), (ii) any chemicals or other
materials or substances which are now or hereafter become defined as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous wastes", "restricted hazardous
wastes", "toxic substances", "toxic pollutants" or words of similar import
under any Environmental Law, and (iii) any other chemical or other material
or substance, exposure to which is now or hereafter prohibited, limited or
regulated by any Governmental Entity under any Environmental Law.

(h) "Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money,
whether secured or unsecured, (ii) all obligations of such Person under
conditional sale or other title retention agreements relating to property
purchased by such Person, (iii) all
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capitalized lease obligations of such Person, (iv) all obligations of such
Person under interest rate cap, swap, collar or similar transaction or
currency hedging transactions (valued at the termination value thereof),
and (v) all guarantees of such Person of any such indebtedness of any other
Person.

(i) "Non-Corporate Bristol Hotel Subsidiaries" means those of the
Bristol Hotel Subsidiaries that are taxable as partnerships or are
disregarded as entities under the Code.

(j) "Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.

(k) "Record Date" means the date determined by the Bristol Board or
the FelCor Board as the record date for determining the stockholders
entitled to notice of, and to vote at, the Bristol Stockholders Meeting or
the FelCor Stockholders Meeting, as applicable.

(l) "Spin-Off Transactions" means, collectively, the Reorganization,
the Contribution, the Subsidiary Mergers, the Holdings Distribution, the
Excess Shares Redemption and the Spin-Off, each as defined in the Spin-Off
Agreement, and the Leasing Transactions.

(m) "Subsidiary" of any Person means another Person, at least 50% of
the equity or voting securities of which is owned, directly or indirectly,
by such first Person.

(n) "Taxes" means all federal, state, local and foreign income,
property, sales, franchise, employment, excise and other taxes, tariffs or
governmental charges of any nature whatsoever, together with penalties,
interest or additions to Tax with respect thereto.

(o) "Transaction Documents" means this Agreement, the Spin-Off
Agreement, the Voting Agreement, the FelCor Stockholders and Registration
Rights Agreement (as defined in the Voting Agreement), the BHR Stockholders
Agreement (as defined in the Voting Agreement), the BHR Registration Rights
Agreement (as defined in the Voting Agreement), the New Leases (as defined
in the Spin-Off Agreement), the Hotel Properties Agreement (as defined in
the Voting Agreement), the Articles of Merger, the Certificate of Merger
and each other agreement, document, certificate or instrument delivered in
connection with any of the foregoing and to which either FelCor, Bristol,
BHR, BHMC or any FelCor Subsidiary or Bristol Subsidiary is a party.

(p) "Volume Weighted Average Trading Price" means, during any relevant
period, the quotient of (i) the sum of the product of (A) the number of
shares sold at a particular price per share during such period and (B) such
per share trading price over (ii) the total number of shares sold during
such period.

8.4. Interpretation. When a reference is made in this Agreement to a
Section, Exhibit or Schedule such reference will be to a Section, Exhibit or
Schedule of or to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and will not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they will be deemed to be followed by the words "without
limitation."

8.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.

8.6. Entire Agreement; No Third-party Beneficiaries. This Agreement, the
FelCor Disclosure Letter, the Bristol Disclosure Letter, the Confidentiality
Agreement and the Transaction Documents (a) constitute the entire agreement of
the parties and supersede all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter of this
Agreement and (b) except as provided in Article I and Sections 5.8 and 5.9, are
not intended to confer upon any Person other than the parties hereto any rights
or remedies.

8.7. Governing Law. This Agreement will be governed by, and construed in
accordance with, the Laws of the State of Delaware, regardless of the Laws that
might otherwise govern under applicable conflict of laws principles thereof.

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<PAGE> 199

8.8. Assignment. Neither this Agreement, nor any of the rights, interests
or obligations under this Agreement, may be assigned or delegated, in whole or
in part, by operation of law or otherwise by any of the parties without the
prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.

8.9. Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Texas or Delaware or in any Texas or Delaware State
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) consents to submit
itself (without making such submission exclusive) to the personal jurisdiction
of any federal court located in the State of Texas or Delaware or any Texas or
Delaware State court in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement and (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court.

8.10. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision will be interpreted
to be only so broad as is enforceable.

IN WITNESS WHEREOF, Bristol and FelCor have caused this Agreement to be
signed by their respective officers thereunto duly authorized all as of the date
first written above.

BRISTOL HOTEL COMPANY

By: /s/ JOEL M. EASTMAN
----------------------------------
Joel M. Eastman
Vice President

FELCOR SUITE HOTELS, INC.

By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Lawrence D. Robinson
Senior Vice President

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<PAGE> 200

ANNEX B

[Letterhead of BT Wolfensohn]

April , 1998

Board of Directors
FelCor Suite Hotels, Inc.
545 E. John Carpenter Freeway
Suite 1300
Irving, TX 75062

Gentlemen:

BT Wolfensohn has acted as financial advisor to FelCor Suite Hotels, Inc.
("FelCor") in connection with the proposed merger of FelCor and Bristol Hotel
Company ("Bristol") pursuant to the Agreement and Plan of Merger, dated March
23, 1998, between Bristol and FelCor (the "Merger Agreement"), which provides,
among other things for the spin-off by Bristol of its hotel management
operations to its stockholders (the "Spin Off") and the merger of Bristol, which
will then own only the real estate assets, with and into FelCor (the
"Transaction"), with FelCor being the surviving corporation. As set forth more
fully in the Merger Agreement, as a result of the Transaction, each share of the
Common Stock, par value $0.01 per share, of Bristol ("Bristol Common Stock") not
owned directly or indirectly by Bristol or FelCor will be converted into the
right to receive 0.685 shares (the "Exchange Ratio") of Common Stock, par value
$0.01 per share, of FelCor ("FelCor Common Stock"). The terms and conditions of
the Transaction are more fully set forth in the Merger Agreement.

You have requested BT Wolfensohn's opinion, as investment bankers, as to
the fairness, from a financial point of view, of the Exchange Ratio to FelCor.

In connection with BT Wolfensohn's role as financial advisor to FelCor, and
in arriving at its opinion, BT Wolfensohn has reviewed certain publicly
available financial and other information concerning Bristol and FelCor and
certain internal analyses and other information furnished to it by Bristol and
FelCor. BT Wolfensohn has also considered the strategic objectives of FelCor as
outlined to BT Wolfensohn by FelCor management. BT Wolfensohn has also held
discussions with members of the senior managements of Bristol and FelCor
regarding the businesses and prospects of their respective companies and the
joint prospects of a combined company. In addition, BT Wolfensohn has (i)
reviewed the reported prices and trading activity for Bristol Common Stock and
FelCor Common Stock, (ii) compared certain financial and stock market
information for Bristol and FelCor with similar information for certain other
companies whose securities are publicly traded, (iii) reviewed the financial
terms of certain recent business combinations which it deemed comparable in
whole or in part, (iv) reviewed the financial terms of certain hotel portfolio
transactions it deemed comparable in whole or in part, (v) reviewed the
financial terms of the Merger Agreement and certain related documents, and (vi)
performed such other studies and analyses and considered such other factors as
it deemed appropriate.

BT Wolfensohn has not assumed responsibility for independent verification
of, and has not independently verified, any information, whether publicly
available or furnished to it, concerning Bristol or FelCor, including, without
limitation, any financial information, forecasts or projections considered in
connection with the rendering of its opinion. Accordingly, for purposes of its
opinion, BT Wolfensohn has assumed and relied upon the accuracy and completeness
of all such information and BT Wolfensohn has not conducted a physical
inspection of any of the properties or assets, and has not prepared or obtained
any independent evaluation or appraisal of any of the assets or liabilities, of
Bristol or FelCor. With respect to the financial forecasts and projections made
available to BT Wolfensohn and used in its analyses, BT Wolfensohn has assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of Bristol or FelCor, as the
case may be, as to the matters covered thereby. In rendering its opinion, BT
Wolfensohn expresses no view as to the reasonableness of such forecasts and
projections, or the
<PAGE> 201

assumptions on which they are based. BT Wolfensohn's opinion is necessarily
based upon economic, market and other conditions as in effect on, and the
information made available to it as of, the date hereof.

For purposes of rendering its opinion, BT Wolfensohn has assumed that, in
all respects material to its analysis, the representations and warranties of
FelCor and Bristol contained in the Merger Agreement are true and correct,
FelCor and Bristol will each perform all of the covenants and agreements to be
performed by it under the Merger Agreement and all conditions to the obligations
of each of FelCor and Bristol to consummate the Transaction will be satisfied
without any waiver thereof. BT Wolfensohn has also assumed that all material
governmental, regulatory or other approvals and consents required in connection
with the consummation of the Transaction will be obtained and that in connection
with obtaining any necessary governmental, regulatory or other approvals and
consents, or any amendments, modifications or waivers to any agreements,
instruments or orders to which either FelCor or Bristol is a party or is subject
or by which it is bound, no limitations, restrictions or conditions will be
imposed or amendments, modifications or waivers made that would have a material
adverse effect on FelCor or Bristol or materially reduce the contemplated
benefits of the Transaction to FelCor. In addition, BT Wolfensohn has assumed
that following the consummation of the transaction, FelCor will continue to
qualify as a Real Estate Investment Trust under the Internal Revenue Code of
1986, as amended. In addition, you have informed BT Wolfensohn, and accordingly
for purposes of rendering its opinion BT Wolfensohn has assumed, that the
Transaction will be tax-free to each of FelCor and Bristol and their respective
stockholders and that the Spin Off will be taxable to Bristol and their
respective stockholders.

This opinion is addressed to, and for the use and benefit of, the Board of
Directors of FelCor and is not a recommendation to the stockholders of FelCor to
approve the Transaction. This opinion is limited to the fairness, from a
financial point of view, to FelCor of the Exchange Ratio.

BT Wolfensohn is engaged in the merger and acquisition and client advisory
business of Bankers Trust (together with its affiliates the "BT Group") and, for
legal and regulatory purposes, is a division of BT Alex. Brown Incorporated, a
registered broker-dealer and member of the New York Stock Exchange. BT
Wolfensohn will be paid a fee for its services as financial advisor to FelCor in
connection with the Transaction, a portion of which is contingent upon
consummation of the Transaction. One or more members of the BT Group have, from
time to time, provided investment banking services to FelCor and Bristol or
their affiliates for which it has received compensation. In the ordinary course
of business, members of the BT Group may actively trade in the securities and
other instruments and obligations of FelCor and Bristol for their own accounts
and for the accounts of their customers. Accordingly, the BT Group may at any
time hold a long or short position in such securities, instruments and
obligations.

Based upon and subject to the foregoing, it is BT Wolfensohn's opinion as
investment bankers that the Exchange Ratio is fair, from a financial point of
view, to FelCor.

Very truly yours,

BT WOLFENSOHN

2
<PAGE> 202

ANNEX C

[Letterhead of Merrill Lynch]

April , 1998

Board of Directors
Bristol Hotel Company
14285 Midway Road
Dallas, TX 75244

Members of the Board of Directors:

Bristol Hotel Company ("Bristol") and Felcor Suite Hotels Inc. ("Felcor")
propose to enter into an Agreement and Plan of Merger and certain other
agreements referred to therein (collectively, the "Agreements") pursuant to
which, among other transactions, each of Bristol's outstanding common shares,
$0.01 par value (the "Bristol Shares"), would be converted into the right to
receive 0.685 (the "Exchange Ratio") of a common share, $.01 par value, of
Felcor (the "Felcor Shares") (together, the "Transaction"). Immediately
preceding the Transaction, a Spin-Off (as such term is defined in the
Agreements) shall occur in which all of the Management Corp. Common Shares (as
such term is defined in the Agreements) shall be distributed to the shareholders
of Bristol prior to the merger of Bristol into Felcor (the "Merger").

You have asked us whether, in our opinion, the Exchange Ratio is fair from
a financial point of view to the holders of the Bristol Shares.

In arriving at the opinion set forth below, we have, among other things:

(1) Reviewed certain publicly available business and financial
information relating to Bristol and Felcor that we deemed to be relevant;

(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets, liabilities and
prospects of Bristol and Felcor;

(3) Conducted discussions with members of senior management of Bristol
and Felcor concerning the matters described in clauses (1) and (2) above,
as well as their respective businesses and prospects before and after
giving effect to the Transaction;

(4) Reviewed the market prices and valuation multiples for the Bristol
Shares and the Felcor Shares and compared them with those of certain
publicly traded companies that we deemed to be relevant;

(5) Reviewed the results of operations of Bristol and Felcor and
compared them with those of certain publicly traded companies that we
deemed to be relevant;

(6) Participated in certain discussions and negotiations among
representatives of Bristol and Felcor and their financial and legal
advisors;

(7) Reviewed the potential pro forma impact of the Transaction;

(8) Reviewed drafts dated March 21, 1998 of the Agreements; and

(9) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our assessment
of general economic, market and monetary conditions.

In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of Bristol or Felcor or been
<PAGE> 203

furnished with any such evaluation or appraisal. In addition, we have not
assumed any obligation to conduct, nor have we conducted, any physical
inspection of the properties or facilities of Bristol or Felcor. With respect to
the financial forecast information furnished to or discussed with us by Bristol
or Felcor, we have assumed that they have been reasonably prepared and reflect
the best currently available estimates and judgment of Bristol's or Felcor's
management as to the expected future financial performance of Bristol or Felcor,
as the case may be. We have also assumed that the final form of the Agreements
will be substantially similar to the last drafts reviewed by us. We have further
assumed that the Merger will qualify as a tax-free reorganization for United
States federal income tax purposes and that, following the Transaction, Felcor
will retain its status as a real estate investment trust for such purposes.

Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of, the date hereof. We have assumed that in the course of obtaining the
necessary regulatory or other consents or approvals (contractual or otherwise)
for the Transaction, no restrictions, including any divestiture requirements or
amendments or modifications, will be imposed that will have a material adverse
effect on the contemplated benefits of the Transaction.

In connection with the preparation of this opinion, we have not been
requested to solicit, nor have we solicited, third-party indications of interest
for the acquisition of all or any part of Bristol.

We are acting as financial advisor to Bristol in connection with the
Transaction and will receive a fee from Bristol for our services, a significant
portion of which is contingent upon the consummation of the Transaction. In
addition, Bristol has agreed to indemnify us for certain liabilities arising out
of our engagement. We have, in the past, provided financial advisory and
financing services to Bristol and may continue to do so and have received, and
may receive, fees for the rendering of such services. In addition, in the
ordinary course of our business, we may actively trade the Bristol Shares and
other securities of Bristol, as well as the Felcor Shares and other securities
of Felcor, for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.

This opinion is for the use and benefit of the Board of Directors of
Bristol. Our opinion does not address the merits of the underlying decision by
Bristol to engage in the Transaction or the Spin-Off and does not constitute a
recommendation to any shareholder of Bristol as to how such shareholder should
vote on the proposed Transaction or any matter related thereto.

We are not expressing any opinion herein as to the prices at which the
Felcor Shares will trade following the announcement or consummation of the
Merger or the prices at which the Management Corp. Common Shares will trade
following the Spin-Off.

On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Exchange Ratio is fair from a financial point of view
to the holders of the Bristol Shares.

Very truly yours,

MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED

2
<PAGE> 204

ANNEX D

FELCOR SUITE HOTELS, INC.

1998 RESTRICTED STOCK AND STOCK OPTION PLAN
<PAGE> 205

FELCOR SUITE HOTELS, INC.

1998 RESTRICTED STOCK AND STOCK OPTION PLAN

TABLE OF CONTENTS

<TABLE>
<S> <C>
SECTION 1. Establishment, Purpose, and Effective Date of
Plan...................................................... 1
1.1 Establishment....................................... 1
1.2 Purpose............................................. 1
1.3 Effective Date...................................... 1
SECTION 2. Definitions..................................... 1
2.1 Definitions......................................... 1
2.2 Gender and Number................................... 2
SECTION 3. Eligibility and Participation................... 2
3.1 Eligibility and Participation....................... 2
SECTION 4. Administration.................................. 2
4.1 Administration...................................... 2
SECTION 5. Stock Subject to Plan........................... 2
5.1 Number.............................................. 2
5.2 Lapsed Awards....................................... 2
5.3 Adjustment in Capitalization........................ 2
SECTION 6. Shareholder Approval and Duration of Plan....... 3
6.1 Shareholder Approval................................ 3
6.2 Duration of Plan.................................... 3
SECTION 7. Stock Options................................... 3
7.1 Grant of Options.................................... 3
7.2 Option Agreement.................................... 3
7.3 Option Price........................................ 3
7.4 Duration of Options................................. 3
7.5 Exercise of Options................................. 3
7.6 Payment............................................. 4
7.7 Restrictions on Stock Transferability............... 4
7.8 Termination of Employment Due to Death or
Disability............................................. 4
7.9 Termination of Employment Other than for Death or
Disability............................................. 4
7.10 Nontransferability of Options....................... 4
SECTION 8. Restricted Stock................................ 4
8.1 Grant of Restricted Stock........................... 4
8.2 Transferability..................................... 4
8.3 Other Restrictions.................................. 4
8.4 Voting Rights....................................... 4
8.5 Dividends and Other Distributions................... 4
8.6 Termination of Employment........................... 4
SECTION 9. Rights of Employees............................. 5
9.1 Employment.......................................... 5
9.2 Participation....................................... 5
SECTION 10. Amendment, Modification, and Termination of
Plan...................................................... 5
10.1 Amendment, Modification, and Termination of Plan.... 5
SECTION 11. Miscellaneous Provisions....................... 5
11.1 Tax Withholding..................................... 5
11.2 Stock Withholding Elections......................... 5
</TABLE>

i
<PAGE> 206
<TABLE>
<S> <C>
SECTION 12. Indemnification................................ 5
12.1 Indemnification..................................... 5
SECTION 13. Requirements of Law............................ 6
13.1 Requirements of Law................................. 6
13.2 Governing Law....................................... 6
</TABLE>

ii
<PAGE> 207

FELCOR SUITE HOTELS, INC.

1998 RESTRICTED STOCK AND STOCK OPTION PLAN

SECTION 1. Establishment, Purpose, and
Effective Date of Plan

1.1 Establishment. FelCor Suite Hotels, Inc., a Maryland corporation,
hereby establishes the "FELCOR SUITE HOTELS, INC. 1998 RESTRICTED STOCK AND
STOCK OPTION PLAN" (THE "PLAN") for Independent Directors, executive officers
and key employees. The Plan permits the grant of stock options and restricted
stock as a payout media for payments under the plan.

1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, by encouraging and providing for the acquisition of an equity interest
in the success of the Company by Independent Directors, executive officers and
key employees, by providing additional incentives and motivation toward superior
performance of the Company, and by enabling the Company to attract and retain
the services of Independent Directors, executive officers and key employees upon
whose judgment, interest, and special effort the successful conduct of its
operations is largely dependent.

1.3 Effective Date. The Plan shall become effective immediately upon its
adoption by the Board of Directors of the Company ("Effective Date"), although
it is subject to shareholder approval as provided in Section 6.1.

SECTION 2. Definitions

2.1 Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:

(a) "Award" means any Stock Option or Restricted Stock granted under
this Plan.

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

(d) "Committee" means the Compensation Committee of the Board;
provided, however, that for any grant to an Independent Director, the
remaining members of the Board shall serve as the Compensation Committee
with respect to such grant, including, but not limited to, the approval of
the grant. The Board, as a whole, may take any action which the Committee
is authorized to take hereunder.

(e) "Company" means FelCor Suite Hotels, Inc., a Maryland corporation.

(f) "Disability" means an individual who is unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted, or can be expected to last, for a continuous period of
not less than twelve (12) months.

(g) "Employee" means an employee (including officers and directors who
are also employees) of the Company or its subsidiaries, affiliates
(including partnerships) or any branch or division thereof.

(h) "Fair Market Value" of a share of Stock means the reported closing
sales price of the Stock on the New York Stock Exchange Composite Tape on
that date, or if no closing price is reported on that date, on the last
preceding date on which such closing price of the Stock was so reported. If
the Stock is not traded on the New York Stock Exchange at the time a
determination of its Fair Market Value is required to be made hereunder,
its Fair Market Value shall be deemed to be equal to the average between
the closing bid and asked prices of the Stock on the most recent date on
which the Stock was publicly traded. In the event the Stock is not publicly
traded at the time a determination of its value is required to be made
hereunder, the determination of its Fair Market Value shall be made by the
Committee in such manner as it deems appropriate.
<PAGE> 208

(i) "Independent Director" means a director of the Company who is not
an officer or employee of the Company, any affiliate of an officer or
employee or any affiliate of (i) any advisor to the Company under an
advisory agreement, (ii) any lessee of any property of the Company, (iii)
any subsidiary of the Company or (iv) any partnership which is an affiliate
of the Company.

(j) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan, an Option may be either
(i) an "incentive stock option" within the meaning of Section 422 of the
Code or (ii) a "nonstatutory stock option."

(k) "Participant" means any Employee or Independent Director
designated by the Committee to participate in the Plan.

(l) "Period of Restriction" means the period during which the transfer
of shares of Restricted Stock is restricted pursuant to Section 8 of the
Plan.

(m) "Restricted Stock" means Stock granted to a Participant pursuant
to Section 8 of the Plan.

(n) "Stock" means the common stock of the Company, par value of $.01.

2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender when used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.

SECTION 3. Eligibility and Participation

3.1 Eligibility and Participation. Participants in the Plan shall be
selected by the Committee from among the independent Directors and Employees
who, in the opinion of the Committee, are in a position to contribute materially
to the Company's continued growth and development and to its long-term financial
success.

SECTION 4. Administration

4.1 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to the Plan, to provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Company, and to
make all other determinations necessary or advisable for the administration of
the Plan. Determinations, interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final and binding and
conclusive for all purposes and upon all persons whomsoever.

SECTION 5. Stock Subject to Plan

5.1 Number. The total number of shares of Stock subject to Awards under
the Plan may not exceed 1,000,000, subject to adjustment upon the occurrence of
any of the events indicated in Section 5.3 hereof. Of this total number, not
more than 50,000 shares of Stock may be issued as Restricted Stock. The shares
to be delivered under the Plan may consist, in whole or in part, of authorized
but unissued Stock or treasury Stock, not reserved for any other purpose.
Notwithstanding any other provision hereof to the contrary, no Participant shall
be eligible to receive Awards pursuant to this Plan in excess of 250,000 shares
of Common Stock in any fiscal year (the "Section 162(m) Maximum").

5.2 Lapsed Awards. If any Award granted under the Plan terminates, expires
or lapses for any reason, any shares subject to such Award again shall be
available for the grant of an Award hereunder.

5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs after the Effective Date by reason of a
Stock dividend or split, recapitalization, merger, consolidation, combination,
exchange of shares, or other similar corporate change, the aggregate number of
shares of Stock

2
<PAGE> 209

subject to the Plan and to each Award hereunder, and to the stated Option price
of each Award, shall be adjusted appropriately by the Committee or the Board,
whose determination shall be conclusive; provided, however, that fractional
shares shall be rounded to the nearest whole share. In such event, the Committee
or the Board also shall have discretion to make appropriate adjustments in the
number and type of shares subject to an Award of Restricted Stock under the Plan
pursuant to the terms of such an Award.

SECTION 6. Shareholder Approval and Duration of Plan

6.1 Shareholder Approval. All Awards granted under this Plan are subject
to, and may not be exercised before, and will be rescinded and become void in
the absence of, the approval of this Plan by a majority of the shareholders
voting thereon at a meeting of shareholders, at which a quorum is present, held
prior to the first anniversary date of the board meeting held to approve this
Plan.

6.2 Duration of Plan. The Plan shall remain in effect, subject to the
Board's right to earlier terminate pursuant to Section 10 hereof, until all
Stock subject to it shall have been purchased or acquired pursuant to the
provisions hereof. Notwithstanding the foregoing, no Option may be granted under
the Plan on or after November 1, 2007.

SECTION 7. Stock Options

7.1 Grant of Options. Subject to the provisions of Section 5 and 6,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Options granted to each Participant. The
Committee may grant any type of Option to purchase Stock that is permitted by
law at the time of grant; provided however, that the aggregate Fair Market Value
(determined at the time the Option is granted) of the Stock, with respect to
which all incentive stock options granted under any plan of the Company are
exercisable for the first time by a Participant during any calendar year, may
not exceed $100,000. Nothing in this Section 7 of the Plan shall be deemed to
prevent the grant of nonstatutory stock options in amounts that exceed the
maximum established by Section 422 of the Code.

7.2 Option Agreement. Each Option shall be evidenced by an Option
agreement that shall specify the type of Option granted, the Option price, the
duration of the Option, the number of shares of Stock to which the Option
pertains, and such other provisions as the Committee shall determine.

7.3 Option Price. The Option price of each share of Stock subject to each
Option granted pursuant to this Plan shall be determined by the Committee at the
time the Option is granted and, in the case of incentive stock options, shall
not be less then 100% of the Fair Market Value of a share of Stock on the date
the Option is granted, as determined by the Committee. In the case of incentive
stock options granted to any person who owns, directly or indirectly, Stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of Stock ("Ten Percent Owner"), the Option price shall not be less than
110% of the Fair Market Value of a share of Stock on the date the Option is
granted. The Option price of each share of Stock subject to a nonstatutory stock
option under this Plan shall be determined by the Committee, in its sole
discretion, prior to granting the Option.

7.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time it is granted, provided, however, that no
incentive stock option shall be exercisable later than ten (10) years from the
date of its grant, and no incentive stock option granted to a Ten Percent Owner
shall be exercisable later than five (5) years from the date of its grant.

7.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for all
Participants. No Option may be exercised within six (6) months after the date of
grant. Each Option that is intended to qualify as an incentive stock option
pursuant to Section 422 of the Code shall comply with the applicable provisions
of the Code pertaining to such Options.

3
<PAGE> 210

7.6 Payment. The Option price of Stock acquired upon exercise of any
Option shall be paid in full on the date of exercise, by certified or cashier's
check, by wire transfer, by money order, with Stock (but with Stock only if
expressly permitted by the terms of the Option), or by a combination of the
above. If the Option price is permitted to be, and is, paid in whole or in part
with Stock, the value of the Stock surrendered shall be its Fair Market Value on
the date surrendered. The proceeds from payment of Option prices shall be added
to the general funds of the Company and shall be used for general corporate
purposes.

7.7 Restrictions on Stock Transferability. The Committee shall impose such
restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable federal securities law, under the requirements of
any stock exchange upon which such shares of Stock are then listed, and under
any blue sky or state securities laws applicable to such shares.

7.8 Termination of Employment Due to Death or Disability. Unless otherwise
expressly provided in the Option, if the employment of a Participant is
terminated by reason of death or Disability, the rights under any then
outstanding Option shall terminate upon the first to occur of (i) the expiration
date of the Option or (ii) the first anniversary of such date of termination of
employment.

7.9 Termination of Employment Other than for Death or Disability. Unless
otherwise expressly provided in the Option, if the employment of the Participant
shall terminate for any reason other than death or Disability, the rights under
any then outstanding Option shall terminate upon the first to occur of (i) the
expiration date of the Option or (ii) ninety (90) days after such date of
termination of employment.

7.10 Nontransferability of Options. No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.

SECTION 8. Restricted Stock

8.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and
6, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Each grant of Restricted Stock shall be evidenced by a
Restricted Stock agreement.

8.2 Transferability. Except as provided in Sections 8.6 and 8.7 hereof,
the shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated for such period of
time as shall be determined by the Committee and shall be specified in the
Restricted Stock agreement, or upon earlier satisfaction of other conditions as
specified by the Committee in its sole discretion and set forth in the
Restricted Stock agreement.

8.3 Other Restrictions. The Committee may impose such other restrictions
on any shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, restrictions under applicable federal
or state securities laws, and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions.

8.4 Voting Rights. Participants holding shares of Restricted Stock granted
hereunder may exercise full voting rights with respect to those shares during
the Period of Restriction.

8.5 Dividends and Other Distributions. During the Period of Restriction,
Participants holding shares of Restricted Stock granted hereunder shall be
entitled to receive all cash dividends distributed with respect to those shares
while they are so held.

8.6 Termination of Employment. Except as provided by the Committee at the
time of grant, in the event that a Participant terminates his employment with
the Company for any reason during the Period of Restriction (including death),
then any shares of Restricted Stock still subject to restrictions at the date of
such termination automatically shall be forfeited and shall again be available
for issuance under the Plan.

4
<PAGE> 211

SECTION 9. Rights of Employees

9.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.

9.2 Participation. No Committee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a Participant.

SECTION 10. Amendment, Modification,
and Termination of Plan

10.1 Amendment, Modification, and Termination of Plan. The Board at any
time may terminate, and from time to time may amend or modify the Plan, and may
amend or modify Awards hereunder; provided, however, that no amendment of the
Plan or of any Award hereunder, without approval of the shareholders within one
year after the adoption of such amendment, may:

(a) increase the aggregate number of shares of Stock that may be
issued under the Plan;

(b) extend the term of the Plan;

(c) effect a repricing of previously granted Options, whether directly
or indirectly through the cancellation of outstanding Options and the
concurrent reissuance of Options for a like number of shares but at a
lesser exercise price;

(d) extend the period during which Awards may be granted; or

(e) materially modify the requirements as to eligibility to receive
Awards under the Plan.

No amendment, modification, or termination of the Plan shall in any manner
adversely affect any Award theretofore granted under the Plan, without the
consent of the Participant.

SECTION 11. Miscellaneous Provisions

11.1 Tax Withholding. The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, and local withholding tax requirements on any Award under the
Plan.

11.2 Stock Withholding Elections. Subject to the consent of the Committee,
due to the (i) exercise of a nonstatutory stock option or (ii) lapse of
restrictions on a Restricted Stock Award, a Participant may make an irrevocable
election to (a) have shares of Stock otherwise issuable thereunder withheld or
(b) tender to the Company shares of Stock then held by the Participant (whether
received pursuant to (i) or (ii) or in any other transaction) having an
aggregate Fair Market Value sufficient to satisfy all or part of the
Participant's estimated total federal, state and local tax obligations
associated with the transaction. Such elections must be made by a Participant on
or prior to the tax date.

SECTION 12. Indemnification

12.1 Indemnification. Each person who is or shall have been a member of
the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
made in good faith and against and from any and all amounts paid by him in
settlement thereof, with the Company's approval, or paid by him in satisfaction
of any judgment in any such action, suit or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not apply to any acts of willful
misconduct by any member of the
5
<PAGE> 212

Committee or the Board. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Charter or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

SECTION 13. Requirements of Law

13.1 Requirements of Law. The granting of Awards and the issuance of
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

13.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Maryland.

FELCOR SUITE HOTELS, INC.

By: /s/ LAWRENCE D. ROBINSON

------------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President and
General Counsel

ATTEST:

/s/ LESTER C. JOHNSON
- ------------------------------------
Lester C. Johnson, Vice President

6
<PAGE> 213

ANNEX E

BRISTOL HOTELS & RESORTS

1998 EQUITY INCENTIVE PLAN

1. PURPOSE. The purpose of this Plan is to attract and retain qualified
officers and other key employees, or consultants, for Bristol Hotels & Resorts,
Inc. (the "Corporation") and its Subsidiaries and to provide such persons with
appropriate incentives.

2. DEFINITIONS. As used in this Plan,

"APPRECIATION RIGHT" means a right granted pursuant to Section 5 of this
Plan, including a Free-standing Appreciation Right and a Tandem Appreciation
Right.

"BASE PRICE" means the price to be used as the basis for determining the
Spread upon the exercise of a Freestanding Appreciation Right.

"BOARD" means the Board of Directors of the Corporation.

"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

"COMMITTEE" means the Compensation Committee of the Board of Directors, as
described in Section 14(a) of this Plan, and, to the extent the administration
of the Plan has been assumed by the Board pursuant to Section 14(a), the Board.

"COMMON SHARES" means (i) shares of the Common Stock, par value $0.01 per
share, of the Corporation and (ii) any security into which Common Shares may be
converted by reason of any transaction or event of the type referred to in
Section 10 of this Plan.

"DATE OF GRANT" means the date specified by the Committee on which a grant
of Option Rights, Appreciation Rights or Performance Shares or Performance Units
or a grant or sale of Restricted Shares or Deferred Shares shall become
effective, which shall not be earlier than the date on which the Committee takes
action with respect thereto.

"DEFERRAL PERIOD" means the period of time during which Deferred Shares are
subject to deferral limitations under Section 7 of this Plan.

"DEFERRED SHARES" means an award pursuant to Section 7 of this Plan of the
right to receive Common Shares at the end of a specified Deferral Period.

"FREE-STANDING APPRECIATION RIGHT" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is not granted in tandem with an Option
Right or similar right.

"INCENTIVE STOCK OPTION" means an Option Right that is intended to qualify
as an "incentive stock option" under Section 422 of the Code or any successor
provision thereto.

"MANAGEMENT OBJECTIVES" means the achievement of a performance objective or
objectives established pursuant to this Plan for Participants who have received
grants of Performance Shares or Performance Units or, when so determined by the
Committee, Restricted Shares, Option Rights or Appreciation Rights. Management
Objectives may be described in terms of Corporation-wide objectives or
objectives that are related to the performance of the individual Participant or
the Subsidiary, division, department or function within the Corporation or
Subsidiary in which the Participant is employed or with respect to which the
Participant provides consulting services. The Management Objectives applicable
to any award to a Participant who is, or is determined by the Committee to be
likely to become, a "covered employee" within the meaning of Section 162(m) of
the Code (or any successor provision) shall be limited to specified levels of or
growth in:

(i) return on invested capital;

(ii) return on equity;

(iii) return on operating assets;
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(iv) earnings per share; and/or

(v) market value per share.

Except in the case of such a covered employee, if the Committee determines that
a change in the business, operations, corporate structure or capital structure
of the Corporation, or the manner in which it conducts its business, or other
events or circumstances render the Management Objectives unsuitable, the
Committee may modify such Management Objectives or the related minimum
acceptable level of achievement, in whole or in part, as the Committee deems
appropriate and equitable.

"MARKET VALUE PER SHARE" means the fair market value of the Common Shares
as determined by the Committee from time to time.

"NONQUALIFIED OPTION" means an Option Right that is not intended to qualify
as a Tax-qualified Option.

"OPTIONEE" means the person so designated in an agreement evidencing an
outstanding Option Right.

"OPTION PRICE" means the purchase price payable upon the exercise of an
Option Right.

"OPTION RIGHT" means the right to purchase Common Shares from the
Corporation upon the exercise of a Nonqualified Option or a Tax-qualified Option
granted pursuant to Section 4 of this Plan.

"PARTICIPANT" means a person who is selected by the Committee to receive
benefits under this Plan and (i) is at that time an officer, including without
limitation an officer who may also be a member of the Board, or other key
employee of or a consultant to the Corporation or any Subsidiary or (ii) has
agreed to commence serving in any such capacity.

"PERFORMANCE PERIOD" means, in respect of a Performance Share or
Performance Unit, a period of time established pursuant to Section 8 of this
Plan within which the Management Objectives relating thereto are to be achieved.

"PERFORMANCE SHARE" means a bookkeeping entry that records the equivalent
of one Common Share awarded pursuant to Section 8 of this Plan.

"PERFORMANCE UNIT" means a bookkeeping entry that records a unit equivalent
of $1.00 awarded pursuant to Section 8 of this Plan.

"PLAN" means this Bristol Hotels & Resorts 1998 Equity Incentive Plan, as
amended from time to time.

"RELOAD OPTION RIGHTS" means additional Option Rights automatically granted
to an Optionee upon the exercise of Option Rights pursuant to Section 4(f) of
this Plan.

"RESTRICTED SHARES" means Common Shares granted or sold pursuant to Section
6 of this Plan as to which neither the substantial risk of forfeiture nor the
restrictions on transfer referred to in Section 6 hereof has expired.

"RULE 16B-3" means Rule 16b-3, as promulgated and amended from time to time
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, or any successor rule to the same effect.

"SPREAD" means, in the case of a Free-standing Appreciation Right, the
amount by which the Market Value per Share on the date when the Appreciation
Right is exercised exceeds the Base Price specified therein or, in the case of a
Tandem Appreciation Right, the amount by which the Market Value per Share on the
date when the Appreciation Right is exercised exceeds the Option Price specified
in the related Option Right.

"SUBSIDIARY" means a corporation, partnership, joint venture,
unincorporated association or other entity in which the Corporation has a direct
or indirect ownership or other equity interest; provided, however, for purposes
of determining whether any person may be a Participant for purposes of any grant
of Incentive Stock Options, "Subsidiary" means any corporation in which the
Corporation owns or controls directly or indirectly more than 50% of the total
combined voting power represented by all classes of stock issued by such
corporation at the time of the grant.

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<PAGE> 215

"TANDEM APPRECIATION RIGHT" means an Appreciation Right granted pursuant to
Section 5 of this Plan that is granted in tandem with an Option Right or any
similar right granted under any other plan of the Corporation.

"TAX-QUALIFIED OPTION" means an Option Right that is intended to qualify
under particular provisions of the Code, including without limitation an
Incentive Stock Option.

3. SHARES AVAILABLE UNDER THE PLAN. (a) Subject to adjustment as provided
in Section 10 of this Plan, the number of Common Shares which may be (i) issued
or transferred upon the exercise of Option Rights or Appreciation Rights, (ii)
awarded as Restricted Shares and released from substantial risk of forfeiture
thereof or Deferred Shares or (iii) issued or transferred in payment of
Performance Shares or Performance Units that have been earned, shall not in the
aggregate exceed 5 million Common Shares, which may be Common Shares of original
issuance or Common Shares held in treasury or a combination thereof; provided,
however, that the number of Restricted Shares shall not in the aggregate exceed
1 million (excluding any forfeitures), subject to adjustment as provided in
Section 10 of this Plan. For the purposes of this Section 3(a):

(i) Upon payment in cash of the benefit provided by any award granted
under this Plan, any Common Shares that were covered by that award shall
again be available for issuance or transfer hereunder.

(ii) Upon the full or partial payment of any Option Price by the
transfer to the Company of Common Shares or upon satisfaction of tax
withholding obligations in connection with any such exercise or any other
payment made or benefit realized under this Plan by the transfer or
relinquishment of Common Shares, there shall be deemed to have been issued
or transferred under this Plan only the net number of Common Shares
actually issued or transferred by the Corporation less the number of Common
Shares so transferred or relinquished.

(b) Notwithstanding anything in Section 3(a) hereof, or elsewhere in this
Plan, to the contrary, and subject to adjustment as provided in Section 10 of
this Plan, (i) the aggregate number of Common Shares actually issued or
transferred by the Corporation upon the exercise of the Incentive Stock Options
shall not exceed the total number of Common Shares first specified in Section
3(a) hereof; (ii) no Participant shall be granted Option Rights and Appreciation
Rights, in the aggregate, for more than 750,000 Common Shares during any
calendar year; and (iii) the number of shares issued as Restricted Shares that
are not conditioned on the attainment of Management Objectives, plus the number
of Deferred Shares, shall not exceed 1 million Common Shares in the aggregate.

(c) The number of Performance Units that may be granted under this Plan
shall not in the aggregate exceed 5 million. Performance Units that are granted
under this Plan and are paid in Common Shares or are not earned by the
Participant at the end of the Performance Period shall be available for future
grants of Performance Units hereunder.

(d) Notwithstanding any other provision of this Plan to the contrary, in no
event shall any Participant in any calendar year receive awards of Restricted
Stock conditioned on attainment of Management Objectives, Performance Shares or
Performance Units having an aggregate value as of their respective Dates of
Grant in excess of $250,000.

4. OPTION RIGHTS. The Committee may from time to time authorize grants to
Participants of options to purchase Common Shares upon such terms and conditions
as the Committee may determine in accordance with the following provisions:

(a) Each grant shall specify the number of Common Shares to which it
pertains.

(b) Each grant shall specify an Option Price per Common Share, which
may be equal to, or greater than, or less than the Market Value per Share
on the Date of Grant.

(c) Each grant shall specify the form of consideration to be paid in
satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or check
or other cash equivalent acceptable to the Corporation, (ii)
nonforfeitable, unrestricted Common
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<PAGE> 216

Shares, which are already owned by the Optionee, (iii) any other legal
consideration that the Committee may deem appropriate, including without
limitation any form of consideration authorized under Section 4(d) below,
on such basis as the Committee may determine in accordance with this Plan
and (iv) any combination of the foregoing.

(d) Any grant of a Nonqualified Option may provide that payment of the
Option Price may also be made in whole or in part in the form of Restricted
Shares or other Common Shares that are subject to risk of forfeiture or
restrictions on transfer. Unless otherwise determined by the Committee on
or after the Date of Grant, whenever any Option Price is paid in whole or
in part by means of any of the forms of consideration specified in this
Section 4(d), the Common Shares received by the Optionee upon the exercise
of the Nonqualified Option shall be subject to the same risks of forfeiture
or restrictions on transfer as those that applied to the consideration
surrendered by the Optionee; provided, however, that such risks of
forfeiture and restrictions on transfer shall apply only to the same number
of Common Shares received by the Optionee as applied to the forfeitable or
restricted Common Shares surrendered by the Optionee.

(e) Any grant may, if there is then a public market for the Common
Shares, provide for deferred payment of the Option Price from the proceeds
of sale through a broker of some or all of the Common Shares to which the
exercise relates.

(f) Any grant may provide for the automatic grant to the Optionee of
Reload Option Rights upon the exercise of Option Rights, including Reload
Option Rights, for Common Shares or any other noncash consideration
authorized under Sections 4(c) and (d) above; provided, however, that the
term of any Reload Option Right shall not extend beyond the term of the
Option Right originally exercised.

(g) Successive grants may be made to the same Optionee regardless of
whether any Option Rights previously granted to the Optionee remain
unexercised.

(h) Each grant shall specify the period or periods of continuous
employment, or continuous engagement of the consulting services, of the
Optionee by the Corporation or any Subsidiary and/or the Management
Objectives to be achieved before the Option Rights or installments thereof
shall become exercisable, and any grant may provide for the earlier
exercise of the Option Rights in the event of a change in control of the
Corporation or other similar transaction or event.

(i) Option Rights granted pursuant to this Section 4 may be
Nonqualified Options or Tax-qualified Options or combinations thereof.

(j) Any grant of an Option Right (other than Incentive Stock Options)
may provide for the payment to the Optionee of dividend equivalents thereon
in cash or Common Shares on a current, deferred or contingent basis, or the
Committee may provide that any dividend equivalents shall be credited
against the Option Price.

(k) No Option Right granted pursuant to this Section 4 may be
exercised more than 10 years from the Date of Grant.

(l) Each grant shall be evidenced by an agreement, which shall be
executed on behalf of the Corporation by any of the Chairman, the
President, a Vice President or a Secretary thereof and delivered to and
accepted by the Optionee and shall contain such terms and provisions as the
Committee may determine consistent with this Plan.

5. APPRECIATION RIGHTS. The Committee may also authorize grants to
Participants of Appreciation Rights. An Appreciation Right shall be a right of
the Participant to receive from the Corporation an amount, which shall be
determined by the Committee and shall be expressed as a percentage (not
exceeding 100%) of the Spread at the time of the exercise of an Appreciation
Right. Any grant of Appreciation Rights under this

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<PAGE> 217

Plan shall be upon such terms and conditions as the Committee may determine in
accordance with the following provisions:

(a) Any grant may specify that the amount payable upon the exercise of
an Appreciation Right may be paid by the Corporation in cash, Common Shares
or any combination thereof and may (i) either grant to the Participant or
reserve to the Committee the right to elect among those alternatives or
(ii) preclude the right of the Participant to receive and the Corporation
to issue Common Shares or other equity securities in lieu of cash.

(b) Any grant may specify that the amount payable upon the exercise of
an Appreciation Right shall not exceed a maximum specified by the Committee
on the Date of Grant.

(c) Any grant may specify (i) a waiting period or periods before
Appreciation Rights shall become exercisable, (ii) permissible dates or
periods on or during which Appreciation Rights shall be exercisable, and
(iii) the Management Objectives to be achieved before the Appreciation
Right or installments thereof will become exercisable.

(d) Any grant may specify that an Appreciation Right may be exercised
only in the event of a change in control of the Corporation or other
similar transaction or event.

(e) Any grant may provide for the payment to the Participant of
dividend equivalents thereon in cash or Common Shares on a current,
deferred or contingent basis.

(f) Each grant shall be evidenced by an agreement, which shall be
executed on behalf of the Corporation by any of the Chairman, the
President, a Vice President or a Secretary thereof and delivered to and
accepted by the Optionee and shall describe the subject Appreciation
Rights, identify any related Option Rights, state that the Appreciation
Rights are subject to all of the terms and conditions of this Plan and
contain such other terms and provisions as the Committee may determine
consistent with this Plan.

(g) Regarding Tandem Appreciation Rights only: Each grant shall
provide that a Tandem Appreciation Right may be exercised only (i) at a
time when the related Option Right (or any similar right granted under any
other plan of the Corporation) is also exercisable and the Spread is
positive and (ii) by surrender of the related Option Right (or such other
right) for cancellation.

(h) Regarding Free-standing Appreciation Rights only:

(i) Each grant shall specify in respect of each Free-standing
Appreciation Right a Base Price per Common Share, which shall be equal
to or greater than the Market Value per Share on the Date of Grant;

(ii) Successive grants may be made to the same Participant
regardless of whether any Free-standing Appreciation Rights previously
granted to the Participant remain unexercised;

(iii) Each grant shall specify the period or periods of continuous
employment, or continuous engagement of the consulting services, of the
Participant by the Corporation or any Subsidiary that are necessary
before the Free-standing Appreciation Rights or installments thereof
shall become exercisable; and any grant may provide for the earlier
exercise of the Free-standing Appreciation Rights in the event of a
change in control of the Corporation or other similar transaction or
event; and

(iv) No Free-standing Appreciation Right granted under this Plan
may be exercised more than 10 years from the Date of Grant.

6. RESTRICTED SHARES. The Committee may also authorize grants or sales to
Participants of Restricted Shares upon such terms and conditions as the
Committee may determine in accordance with the following provisions:

(a) Each grant or sale shall constitute an immediate transfer of the
ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to dividend,

5
<PAGE> 218

voting and other ownership rights, subject to the substantial risk of
forfeiture and restrictions on transfer hereinafter referred to.

(b) Each grant or sale may be made without additional consideration
from the Participant or in consideration of a payment by the Participant
that is less than the Market Value per Share on the Date of Grant.

(c) Each grant or sale shall provide that the Restricted Shares
covered thereby shall be subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code for a period to be determined
by the Committee on the Date of Grant, and any grant or sale may provide
for the earlier termination of such period in the event of a change in
control of the Corporation or other similar transaction or event.

(d) Each grant or sale shall provide that, during the period for which
such substantial risk of forfeiture is to continue, the transferability of
the Restricted Shares shall be prohibited or restricted in the manner and
to the extent prescribed by the Committee on the Date of Grant. Such
restrictions may include without limitation rights of repurchase or first
refusal in the Corporation or provisions subjecting the Restricted Shares
to a continuing substantial risk of forfeiture in the hands of any
transferee.

(e) Any grant of Restricted Shares may specify Management Objectives
that, if achieved, will result in termination or early termination of the
restrictions applicable to such shares. Each grant may specify in respect
of such Management Objectives a minimum acceptable level of achievement and
may set forth a formula for determining the number of Restricted Shares on
which restrictions will terminate if performance is at or above the minimum
level, but falls short of full achievement of the specified Management
Objectives.

(f) Any grant or sale may require that any or all dividends or other
distributions paid on the Restricted Shares during the period of such
restrictions be automatically sequestered and reinvested on an immediate or
deferred basis in additional Common Shares, which may be subject to the
same restrictions as the underlying award or such other restrictions as the
Committee may determine.

(g) Each grant or sale shall be evidenced by an agreement, which shall
be executed on behalf of the Corporation by an officer thereof and
delivered to and accepted by the Participant and shall contain such terms
and provisions as the Committee may determine consistent with this Plan.
Unless otherwise directed by the Committee, all certificates representing
Restricted Shares, together with a stock power that shall be endorsed in
blank by the Participant with respect to the Restricted Shares, shall be
held in custody by the Corporation until all restrictions thereon lapse.

7. DEFERRED SHARES. The Committee may also authorize grants or sales of
Deferred Shares to Participants upon such terms and conditions as the Committee
may determine in accordance with the following provisions:

(a) Each grant or sale shall constitute the agreement by the
Corporation to issue or transfer Common Shares to the Participant in the
future in consideration of the performance of services, subject to the
fulfillment during the Deferral Period of such conditions as the Committee
may specify.

(c) Each grant or sale shall provide that the Deferred Shares covered
thereby shall be subject to a Deferral Period, which shall be fixed by the
Committee on the Date of Grant, and any grant or sale may provide for the
earlier termination of the Deferral Period in the event of a change in
control of the Corporation or other similar transaction or event.

(d) During the Deferral Period, the Participant shall not have any
right to transfer any rights under the subject award, shall not have any
rights of ownership in the Deferred Shares and shall not have any right to
vote the Deferred Shares, but the Committee may on or after the Date of
Grant authorize the
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<PAGE> 219

payment of dividend equivalents on the Deferred Shares in cash or
additional Common Shares on a current, deferred or contingent basis.

(e) Each grant or sale shall be evidenced by an agreement, which shall
be executed on behalf of the Corporation by any officer thereof and
delivered to and accepted by the Participant and shall contain such terms
and provisions as the Committee may determine consistent with this Plan.

8. PERFORMANCE SHARES AND PERFORMANCE UNITS. The Committee may also
authorize grants of Performance Shares and Performance Units, which shall become
payable to the Participant upon the achievement of specified Management
Objectives, upon such terms and conditions as the Committee may determine in
accordance with the following provisions:

(a) Each grant shall specify the number of Performance Shares or
Performance Units to which it pertains, which may be subject to adjustment
to reflect changes in compensation or other factors.

(b) The Performance Period with respect to each Performance Share or
Performance Unit shall be determined by the Committee on the Date of Grant
and may be subject to earlier termination in the event of a change in
control of the Corporation or other similar transaction or event.

(c) Any grant of Performance Shares or Performance Units shall specify
Management Objectives that, if achieved, will result in payment or early
payment of the award, and each grant may specify in respect of such
Management Objectives a minimum acceptable level of achievement and may set
forth a formula for determining the number of Performance Shares or
Performance Units that will be earned if performance is at or above the
minimum level, but falls short of full achievement of the specified
Management Objectives. The grant of Performance shares or Performance Units
shall specify that, before the Performance Shares or Performance Units
shall be earned and paid, the Committee must certify that the Management
Objectives have been satisfied.

(d) Each grant shall specify in respect of the specified Management
Objectives a minimum acceptable level of achievement below which no payment
will be made and shall set forth a formula for determining the amount of
any payment to be made if performance is at or above the minimum acceptable
level but falls short of full achievement of the specified Management
Objectives.

(e) Each grant shall specify the time and manner of payment of
Performance Shares or Performance Units that shall have been earned, and
any grant may specify that any such amount may be paid by the Corporation
in cash, Common Shares or any combination thereof and may either grant to
the Participant or reserve to the Committee the right to elect among those
alternatives.

(f) Any grant of Performance Shares may specify that the amount
payable with respect thereto may not exceed a maximum specified by the
Committee on the Date of Grant. Any grant of Performance Units may specify
that the amount payable, or the number of Common Shares issued, with
respect thereto may not exceed maximums specified by the Committee on the
Date of Grant.

(g) On or after the Date of Grant of Performance Shares, the Committee
may provide for the payment to the Participant of dividend equivalents
thereon in cash or additional Common Shares on a current, deferred or
contingent basis.

(h) The Committee may adjust Management Objectives and the related
minimum acceptable level of achievement if, in the sole judgment of the
Committee, events or transactions have occurred after the Date of Grant
that are unrelated to the performance of the Participant and result in
distortion of the Management Objectives or the related minimum acceptable
level of achievement.

(i) Each grant shall be evidence by an agreement, which shall be
executed on behalf of the Corporation by any officer thereof and delivered
to and accepted by the Participant and shall contain such terms and
provisions as the Committee may determine consistent with this Plan.

9. TRANSFERABILITY. (a) Except as otherwise determined by the Committee,
(i) no Option Right, Appreciation Right or other derivative security (as that
term is used in Rule 16b-3) granted under this Plan
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<PAGE> 220

may be transferred by a Participant except by will or the laws of descent and
distribution, and (ii) Option Rights and Appreciation Rights granted under this
Plan may not be exercised during a Participant's lifetime except by the
Participant or by his or her guardian or legal representative.

(b) Any grant made under this Plan may provide that all or any part of the
Common Shares that are to be issued or transferred by the Corporation upon the
exercise of Option Rights or Appreciation Rights or upon the termination of the
Deferral Period applicable to Deferred Shares or in payment of Performance
Shares or Performance Units, or are no longer subject to the substantial risk of
forfeiture and restrictions on transfer referred to in Section 6 of this Plan,
shall be subject to further restrictions upon transfer.

10. ADJUSTMENTS. (a) The Committee may make or provide for such adjustments
in the number of Common Shares covered by outstanding Option Rights,
Appreciation Rights, Deferred Shares and Performance Shares granted hereunder,
the Option Prices per Common Share or Base Prices per Common Share applicable to
any such Option Rights and Appreciation Rights, and the kind of shares
(including shares of another issuer) covered thereby, as the Committee may in
good faith determine to be equitably required in order to prevent dilution or
expansion of the rights of Participants that otherwise would result from (i) any
stock dividend, stock split, combination of shares, recapitalization or similar
change in the capital structure of the Corporation or (ii) any merger,
consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of warrants or
other rights to purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing. In the event of any such
transaction or event, the Committee may provide in substitution for any or all
outstanding awards under this Plan such alternative consideration as it may in
good faith determine to be equitable under the circumstances and may require in
connection therewith the surrender of all awards so replaced. Moreover, the
Committee may on or after the Date of Grant provide in the agreement evidencing
any award under this Plan that the holder of the award may elect to receive an
equivalent award in respect of securities of the surviving entity of any merger,
consolidation or other transaction or event having a similar effect, or the
Committee may provide that the holder will automatically be entitled to receive
such an equivalent award. The Committee may also make or provide for such
adjustments in the maximum numbers of Common Shares specified in Section 3 of
this Plan as the Committee may in good faith determine to be appropriate in
order to reflect any transaction or event described in this Section 10.

(b) If another corporation is merged into the Corporation or the
Corporation otherwise acquires another corporation, the Committee may elect to
assume under this Plan any or all outstanding stock options or other awards
granted by such corporation under any stock option or other plan adopted by it
prior to such acquisition. Such assumptions shall be on such terms and
conditions as the Committee may determine; provided, however, that the awards as
so assumed do not contain any terms, conditions or rights that are inconsistent
with the terms of this Plan. Unless otherwise determined by the Committee, such
awards shall not be taken into account for purposes of the limitations contained
in Section 3 of this Plan.

11. FRACTIONAL SHARES. The Corporation shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Committee may provide for
the elimination of fractions or for the settlement thereof in cash.

12. WITHHOLDING TAXES. To the extent that the Corporation is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Corporation for the withholding are insufficient,
it shall be a condition to the receipt of any such payment or the realization of
any such benefit that the Participant or such other person make arrangements
satisfactory to the Corporation for payment of the balance of any taxes required
to be withheld. At the discretion of the Committee, any such arrangements may
without limitation include voluntary or mandatory relinquishment of a portion of
any such payment or benefit or the surrender of outstanding Common Shares. The
Corporation and any Participant or such other person may also make similar
arrangements with respect to the payment of any taxes with respect to which
withholding is not required.

13. CERTAIN TERMINATIONS OF EMPLOYMENT OR CONSULTING SERVICES, HARDSHIP,
AND APPROVED LEAVES OF ABSENCE. Notwithstanding any other provision of this Plan
to the contrary, in the event of termination of
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<PAGE> 221

employment or consulting services by reason of death, disability, normal
retirement, early retirement with the consent of the Corporation, termination of
employment or consulting services to enter public or military service with the
consent of the Corporation or leave of absence approved by the Corporation, or
in the event of hardship or other special circumstances, of a Participant who
holds an Option Right or Appreciation Right that is not immediately and fully
exercisable, any Restricted Shares as to which the substantial risk of
forfeiture or the prohibition or restriction on transfer has not lapsed, any
Deferred Shares as to which the Deferral Period is not complete, any Performance
Shares or Performance Units that have not been fully earned, or any Common
Shares that are subject to any transfer restriction pursuant to Section 9(b) of
this Plan, the Committee may take any action that it deems to be equitable under
the circumstances or in the best interests of the Corporation, including without
limitation waiving or modifying any limitation or requirement with respect to
any award under this Plan.

14. ADMINISTRATION OF THE PLAN. (a) Unless the administration of the Plan
has been expressly assumed by the Board pursuant to a resolution of the Board,
this Plan shall be administered by the Compensation Committee of the Board (or a
subcommittee thereof), which shall be composed of not less than two members of
the Board. All of the members of the Committee (or a subcommittee thereof) are
intended at all times to qualify as "outside directors" within the meaning of
Section 162(m) of the Code, and as "non-employee directors" within the meaning
of Rule 16b-3, but the failure of a member of such Committee or subcommittee to
so qualify shall not be deemed to invalidate any award granted by such Committee
or subcommittee. A majority of the Committee (or subcommittee) shall constitute
a quorum, and the acts of the members of the Committee (or subcommittee) who are
present at any meeting thereof at which a quorum is present, or acts unanimously
approved in writing, shall be the acts of the Committee.

(b) The Committee has the full authority and discretion to administer the
Plan and to take any action that is necessary or advisable in connection with
the administration of the Plan, including without limitation the authority and
discretion to interpret and construe any provision of the Plan or of any
agreement, notification or document evidencing the grant of an award under the
Plan. The interpretation and construction by the Committee of any provision of
this Plan or any agreement, notification or document evidencing the grant of
Option Rights, Appreciation Rights, Restricted Shares, Deferred Shares,
Performance Shares or Performance Units, and any determination by the Committee
pursuant to any provision of this Plan or any such agreement, notification or
document, shall be final and conclusive. No member of the Committee shall be
liable for any such action taken or determination made in good faith.

15. AMENDMENTS AND OTHER MATTERS. (a) The Board may terminate the Plan at
any time, and may at any time and from time to time amend the Plan in whole or
in part; provided, however, that any amendment which must be approved by the
shareholders of the Company in order to comply with applicable law or the rules
of the New York Stock Exchange or, if the Common Shares are not traded on the
New York Stock Exchange, the principal national securities exchange upon which
the Common Shares are traded or quoted, shall not be effective unless and until
such approval has been obtained. Presentation of this Plan or any amendment
hereof for shareholder approval shall not be construed to limit the Company's
authority to offer similar or dissimilar benefits under other plans without
shareholder approval.

(b) With the concurrence of the affected Participant, the Committee may
cancel any agreement evidencing Option Rights or any other award granted under
this Plan. In the event of any such cancellation, the Committee may authorize
the granting of new Option Rights or other awards hereunder, which may or may
not cover the same number of Common Shares as had been covered by the cancelled
Option Rights or other award, at such Option Price, in such manner and subject
to such other terms, conditions and discretion as would have been permitted
under this Plan had the cancelled Option Rights or other award not been granted.

(c) The Board may permit Participants to elect to defer the issuance of
Common Shares or the settlement of awards in cash under the Plan pursuant to
such rules, procedures or programs as it may establish for purposes of this
Plan. The Board also may provide that deferred issuances and settlements include
the payment or crediting of dividend equivalents or interest on the deferral
amounts.

9
<PAGE> 222

(d) The Committee may condition the grant of any award or combination of
awards authorized under this Plan on the surrender or deferral by the
Participant of his or her right to receive a cash bonus or other compensation
otherwise payable by the Corporation or a Subsidiary to the Participant.

(e) This Plan shall not confer upon any Participant any right with respect
to continuance of employment or other service with the Corporation or any
Subsidiary and shall not interfere in any way with any right that the
Corporation or any Subsidiary would otherwise have to terminate any
Participant's employment or other service at any time.

(f) To the extent that any provision of this Plan would prevent any Option
Right that was intended to qualify as a Tax-qualified Option from so qualifying,
any such provision shall be null and void with respect to any such Option Right;
provided, however, that any such provision shall remain in effect with respect
to other Option Rights, and there shall be no further effect on any provision of
this Plan.

10
<PAGE> 223

ANNEX F

BRISTOL HOTELS & RESORTS, INC.

NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

1. PURPOSES. The purposes of this Plan are to encourage outside directors
of Bristol Hotels & Resorts, Inc. (the "Company") to own shares of the Company's
stock and thereby to align their interests more closely with the interests of
the other stockholders of the Company, to encourage the highest level of
director performance by providing such directors with a direct interest in the
Company's attainment of its financial goals, and to provide financial incentives
that will help attract and retain the most qualified outside directors.

2. DEFINITIONS. As used in this Plan:

"ANNUAL OPTION" means an Option Right granted to an Eligible Director
pursuant to Section 5 of this Plan.

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

"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

"COMMITTEE" means a committee of the Board which shall be composed of not
less than two Directors and which is described in Section 9 of this Plan and, to
the extent the administration of the Plan has been assumed by the Board pursuant
to Section 9, the Board.

"COMMON SHARES" means (i) shares of the Common Stock, $.01 par value, of
the Company and (ii) any security into which Common Shares may be converted by
reason of any transaction or event of the type referred to in Section 7 of this
Plan.

"DATE OF GRANT" means the date on which an Initial Option or an Annual
Option is granted as provided in Sections 4(a) and 5(a), respectively.

"DIRECTOR" means a member of the Board.

"DISABILITY" means the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than 12 months. An Optionee shall
not be considered to be subject to a Disability until he or she furnishes a
certification from a practicing physician in good standing to the effect that
such Optionee meets the criteria described in this definition.

"EFFECTIVE DATE" means the date the spin-off of the Company from its
parent, Bristol Hotel Company, is effective.

"ELIGIBLE DIRECTOR" means a Director who does not beneficially own (within
the meaning of Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) 9% or more of the outstanding Common Shares and who is not an
employee of the Company or any person or entity which beneficially owns 9% or
more of the outstanding Common Shares or an affiliate thereof. For purposes of
this Plan, an employee is an individual whose wages are subject to the
withholding of federal income tax under Sections 3401 and 3402 of the Code.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time.

"FIRST ANNUAL MEETING" means the first annual meeting of stockholders of
the Company following the Date of Grant of an Option Right.

"INITIAL OPTION" means an Option Right granted to an Eligible Director
pursuant to Section 4 of this Plan.

"MARKET VALUE" as of a given date means the greater of (i) the stated par
value of the Common Shares or (ii) the closing sale price of the Common Shares
as reported on the Composite Tape of the New York Stock Exchange (the "NYSE") on
such date. If there are no Common Share transactions on such date, the
<PAGE> 224

Market Value per Share shall be determined as of the immediately preceding date
on which there were Common Share transactions.

"OPTIONEE" means a Director who has been granted an Option Right under the
Plan.

"OPTION PRICE" means the purchase price payable upon the exercise of an
Option Right.

"OPTION RIGHT" means the right to purchase Common Shares from the Company
upon the exercise of an Initial Option or an Annual Option granted pursuant to
this Plan. Option Rights may be evidenced by written agreements, notifications
or other documents containing terms and conditions not inconsistent with this
Plan.

"PLAN" means the Bristol Hotels & Resorts Stock Option Plan for
Non-Employee Directors, as the same may be amended from time to time.

"RULE 16B-3" means Rule 16b-3 or any successor rule to the same effect, as
promulgated and amended from time to time by the Securities and Exchange
Commission under the Exchange Act.

"TERMINATION OF SERVICE" means the time at which the Optionee ceases to
serve as a Director for any reason, with or without cause, which includes
termination by resignation, removal, death or retirement.

3. SHARES AVAILABLE UNDER THE PLAN. (a) Subject to Sections 3(b) and 7 of
this Plan, the number of Common Shares issued upon exercise of Option Rights,
plus the number of Common Shares covered by outstanding Option Rights, shall not
in the aggregate exceed 500,000 Common Shares, which may be Common Shares of
original issuance or Common Shares held in treasury or a combination thereof. In
connection with the issuance of Common Shares pursuant to the Plan, the Company
may repurchase Common Shares in the open market or otherwise.

(b) For the purposes of this Section 3, Common Shares subject to an Option
Right that has been cancelled or terminated prior to exercise shall again be
available for the grant of Option Rights to the extent of such cancellation or
termination.

4. INITIAL OPTIONS. (a) With respect to each person who first becomes an
Eligible Director of the Company after the Effective Date of this Plan, an
option to purchase 25,000 Common Shares shall be automatically granted to such
Eligible Director as of the date such person first becomes an Eligible Director.

(b) (i) Subject to subsection (ii) of this Section 4(b) and Section 13 of
this Plan, each Initial Option, until terminated as provided in Section 6(c),
shall become exercisable to the extent of 34% of the Common Shares subject
thereto after the Optionee has continuously served as a Director through the
date of the First Annual Meeting, and to the extent of an additional 33% of the
Common Shares subject to the Initial Option after the Optionee has continuously
served as a Director through the date of the annual stockholders' meeting
immediately succeeding the First Annual Meeting and to the extent of an
additional 33% of the Common Shares subject to the Initial Option after the
Optionee has continuously served as a Director through the date of the second
annual stockholders' meeting succeeding the First Annual meeting.

(ii) If an Optionee ceases to be a Director by reason of death or
Disability, all Initial Options held by such Optionee that would have otherwise
become exercisable had such Director continuously served as a Director through
the date of the Company's annual meeting of stockholders immediately following
such death or Disability shall, notwithstanding subsection (i) of this Section
4(b), become immediately exercisable in full.

5. ANNUAL OPTIONS. (a) On the date of each annual meeting of the Company's
stockholders (beginning with the annual meeting of stockholders in 1999), an
option to purchase 25,000 Common Shares shall be automatically granted as such
date to each Eligible Director who is elected a Director at such meeting or
whose term of office as a Director continues after such meeting.

(b) (i) Subject to subsection (ii) of this Section 5(b) and Section 13 of
this Plan, each Annual Option, until terminated as provided in Section 6(c),
shall become exercisable to the extent of 100% of the Common Shares subject
thereto after the Optionee has continuously served as a Director until the date
of the First Annual Meeting.

2
<PAGE> 225

(ii) If an Optionee ceases to be a Director by reason of death or
Disability, all Annual Options held by such Optionee shall, notwithstanding
subsection (i) of this Section 5(b), become immediately exercisable in full.

6. TERMS OF OPTION RIGHTS.

(a) The Option Price per share of each Option Right shall be equal to the
Market Value per Common Share on the Date of Grant.

(b) To the extent exercisable, each Option Right shall be exercisable in
whole or in part from time to time by written notice to the Company at its
principal executive office specifying the number of Common Shares with respect
to which the Option Right is being exercised and payment of the Option Price for
such Common Shares in accordance with Section 6(d) of the Plan.

(i) Three months following the effective date of the Optionee's
Termination of Service, if such Termination of Service results other than
from the Optionee's death or Disability;

(ii) One year following the effective date of the Optionee's
Termination of Service, if such Termination of Service results from the
Optionee's death or Disability; or

(iii) Five years from the Date of Grant.

(d) The Option Price shall be payable (a) in cash or by check acceptable to
the Company, (b) by transfer to the Company of Common Shares which have been
owned by the Optionee for more than six months prior to the date of exercise and
which have a Market Value on the date of exercise equal to the Option Price, or
(c) by a combination of such methods of payment. The requirement of payment in
cash shall be deemed satisfied if the Optionee shall have made arrangements
satisfactory to the Company with a broker who is a member of the National
Association of Securities Dealers, Inc. to sell on the exercise date a
sufficient number of Common Shares being purchased so that the net proceeds of
the sale transaction will at least equal the Option Price of the Common Shares
being purchased, and pursuant to which the broker undertakes to deliver the full
Option Price of the Common Shares being purchased to the Company not later than
the date on which the sale transaction will settle in the ordinary course of
business.

(e) No Optionee shall have any rights as a stockholder with respect to
Common Shares subject to an Option Right until a certificate or certificates
representing such Common Shares has been issued.

(f) Except as otherwise determined by the Committee no Option Right shall
be transferable other than by will or the laws of descent and distribution.
Except as otherwise determined by the Committee, during an Optionee's lifetime,
Option Rights held by such Optionee shall be exercisable only by the Optionee
or, in the event of the Optionee's incapacity, including incapacity arising from
a Disability, by the Optionee's guardian or legal representative acting in a
fiduciary capacity. Any transferee shall be subject to the same terms and
conditions hereunder as the Participant.

(g) Option Rights granted pursuant to this Plan shall be options that are
not intended to qualify under any particular provision of the Code.

7. ADJUSTMENTS. The Committee shall make or provide for such adjustments in
the number of Common Shares covered by outstanding Option Rights, the Option
Prices per Common Share applicable to any such Option Rights, and the kind of
shares (including shares of another issuer) covered thereby, as the Committee
shall in good faith determine to be equitably required in order to prevent
dilution or expansion of the rights of Optionees that otherwise would result
from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or (b)
any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of warrants or other rights to purchase securities or any other
corporate transaction or event having an effect similar to any of the foregoing.
The Committee shall also make or provide for such adjustments in the maximum
number of Common Shares specified in Section 3(a) of this Plan and the number of
Common Shares specified in Sections 4(a) and 5(a) of this Plan as the Committee
may in good faith determine to be appropriate in order to reflect any
transaction or event described in this Section 7.

3
<PAGE> 226

8. FRACTIONAL SHARES. The Company shall not be required to issue any
fractional Common Shares pursuant to this Plan. Whenever under the terms of this
Plan a fractional Common Share would otherwise be required to be issued, an
amount in lieu thereof shall be paid in cash based upon the Market Value of such
fractional Common Share.

9. ADMINISTRATION OF THE PLAN. Unless the administration of the Plan has
been expressly assumed by the Board pursuant to a resolution of the Board, the
Plan shall be administered by the Committee. The Committee has the full
authority and discretion to administer the Plan and to take any action that is
necessary or advisable in connection with the administration of the Plan,
including without limitation the authority and discretion to interpret and
construe any provision of the Plan or of any agreement, notification or document
evidencing the grant of an Option Right. The interpretation and construction by
the Committee of any provision of this Plan or any agreement, notification or
document evidencing the grant of Option Rights, and any determination by the
Committee pursuant to any provision of this Plan or any such agreement,
notification or document, shall be final and conclusive. No member of the
Committee shall be liable for any such action taken or determination made in
good faith.

10. AMENDMENTS AND OTHER MATTERS. This Plan may be terminated, and from
time to time amended, by the Board; provided, however, that any amendment which
must be approved by the shareholders of the Company in order to comply with
applicable law or the rules of the New York Stock Exchange or, if the Common
Shares are not traded on the New York Stock Exchange, the principal national
securities exchange upon which the Common Shares are traded or quoted, shall not
be effective unless and until such approval has been obtained. Presentation of
this Plan or any amendment hereof for shareholder approval shall not be
construed to limit the Company's authority to offer similar or dissimilar
benefits under other plans without shareholder approval. No amendment or
termination of the Plan shall adversely affect any outstanding Option Right
without the consent of the Optionee.

11. NO ADDITIONAL RIGHTS. Nothing contained in this Plan or in any award
granted under this Plan shall interfere with or limit in any way the right of
the stockholders of the Company to remove any Director from the Board pursuant
to state law or the Certificate of Incorporation or Bylaws of the Company, nor
confer upon any Director any right to continue in the service of the Company.

12. SECURITIES LAW MATTERS. (a) The Company may require any Optionee, as a
condition of receiving Option Rights, to give written assurances in substance
and form satisfactory to the Company and its counsel to the effect that such
person is acquiring the Common Shares subject to the Option Rights for his own
account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws.

(b) Each award of Option Rights shall be subject to the requirement that,
if at any time counsel to the Company shall determine that the listing,
registration or qualification of the Common Shares subject to such Option Rights
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, is necessary as a condition
of, or in connection with, the issuance of shares thereunder, such grant of
Option Rights may not be accepted or exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to such counsel. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration or qualification.

(c) To the extent necessary for the grant of an Option Right, its exercise
or the sale of Common Shares acquired thereunder to be exempt from Section 16(b)
of the Exchange Act, such Option Right shall be held six months from the Date of
Grant, or at least six months shall elapse from the Date of Grant to the date of
disposition of the Common Shares acquired upon exercise of such Option Right.

13. TERMINATION OF THE PLAN. No further Option Rights shall be granted
under this Plan after the passage of ten years from the Effective Date.

4
<PAGE> 227

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Charter of the Registrant, generally, limits the liability of the
Registrant's directors and officers to the Registrant and the stockholders for
money damages to the fullest extent permitted from time to time by the laws of
the State of Maryland. The Charter also provides, generally, for the
indemnification of directors and officers, among others, against judgments,
settlements, penalties, fines, and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities except in connection with a
proceeding by or in the right of the Registrant in which the director was
adjudged liable to the Registrant or in connection with any other proceeding,
whether or not involving action in his official capacity, in which he was
adjudged liable on the basis that personal benefit was improperly received by
him. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("Securities Act") may be permitted to directors and officers of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable.

The Registrant may purchase director and officer liability insurance for
the purpose of providing a source of funds to pay any indemnification described
above.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.1 -- Agreement and Plan of Merger dated March 23, 1998 between
Bristol Hotel Company and Registrant (included as Annex A
to the Joint Proxy Statement/ Prospectus).
3.1 -- Articles of Amendment and Restatement dated June 22,
1995, amending and restating the Charter of Registrant,
as amended or supplemented by Articles of Merger dated
June 23, 1995, Articles Supplementary dated April 30,
1996, Articles of Amendment dated August 8, 1996,
Articles of Amendment dated June 16, 1997 and Articles of
Amendment dated October 30, 1997 (filed as Exhibit 3.1 to
the Registrant's Form 10-K for the year ended December
31, 1997 (the "1997 Form 10-K") and incorporated herein
by reference).
3.2 -- Bylaws of the Registrant, as amended (filed as Exhibit
3.2 to the Registrant's Registration Statement on Form
S-11 (File No. 33-98332) (the "December 1995 Registration
Statement") and incorporated herein by reference).
4.1 -- Form of Share Certificate for Common Stock (filed as
Exhibit 4.1 to the Registrant's Form 10-Q for the quarter
ended June 30, 1996 (the "1996 Second Quarter 10-Q) and
incorporated herein by reference).
4.2 -- Indenture dated as of April 22, 1996 by and between the
Registrant and Sun Trust Bank, Atlanta, Georgia, as
Trustee (filed as Exhibit 4.2 to the Registrant's Form
8-K dated May 1, 1996 (the "1996 Form 8-K") and
incorporated herein by reference).
</TABLE>

II-1
<PAGE> 228

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.3 -- Indenture dated as of October 1, 1997 by and among FelCor
Suites Limited Partnership, the Registrant, the
Subsidiary Guarantors named therein and Sun Trust Bank,
Atlanta, Georgia, as Trustee (filed as Exhibit 4.1 to the
Registration Statement on Form S-4 (File No. 333-39595)
filed by the Registrant and the other co-registrants
named therein (the "1997 Form S-4") and incorporated
herein by reference).
4.4 -- Form of Share Certificate for $1.95 Series A Cumulative
Convertible Preferred Stock (filed as Exhibit 4.4 to the
1996 Form 8-K and incorporated herein by reference).
*5.1 -- Opinion of Jenkens & Gilchrist, a Professional
Corporation.
*5.2 -- Opinion of Miles & Stockbridge P.C.
*8.1 -- Opinion of Hunton & Williams as to tax matters.
*8.2 -- Opinion of Jenkens & Gilchrist, a Professional
Corporation as to tax matters.
*8.3 -- Opinion of Jones, Day, Reavis & Pogue as to tax matters.
23.1 -- Consent of Jenkens & Gilchrist, a Professional
Corporation (included in Exhibit 5.1).
23.2 -- Consent of Miles & Stockbridge P.C. (included in Exhibit
5.2).
23.3 -- Consent of Hunton & Williams (included in Exhibit 8.1).
23.4 -- Consent of Jones, Day, Reavis & Pogue (included in
Exhibit 8.3).
23.5 -- Consent of Coopers & Lybrand L.L.P.
23.6 -- Consent of Arthur Andersen LLP.
23.7 -- Consent of Price Waterhouse LLP.
23.8 -- Consent of Merrill Lynch.
23.9 -- Consent of BT Wolfensohn.
24.1 -- Power of Attorney (included on signature page).
99.1 -- Form of Proxy Card for FelCor.
99.2 -- Form of Proxy Card for Bristol.
99.3 -- Consent of Donald J. McNamara.
99.4 -- Consent of Richard C. North.
99.5 -- Consent of Robert L. Lutz, Jr.
99.6 -- Consent of Michael D. Rose.
99.7 -- Voting and Cooperation Agreement dated as of March 23,
1998 among Registrant, Bristol Hotel Company, Bass
America Inc., Holiday Corporation and United/Harvey
Holdings, L.P.
*99.8 -- Spin-Off Agreement dated as of March 23, 1998 among
Bristol Hotel Company, Bristol Hotel Management
Corporation and Bristol Hotel & Resorts, Inc., as agreed
to by Registrant.
99.9 -- Form of Stockholders' and Registration Rights Agreement.
*99.10 -- Form of Master Hotel Agreement and Lease Agreement.
</TABLE>

- ---------------

* To be filed by amendment.

II-2
<PAGE> 229

(b) Financial Statement Schedules. None

(c) Report, Opinion or Appraisal: The fairness opinions of Merrill Lynch,
Pierce, Fenner & Smith Incorporated and BT Wolfensohn are included in the Joint
Proxy Statement/Prospectus.

ITEM 22. UNDERTAKINGS

The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, as amended, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, as amended, that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.

The Registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offering therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with

II-3
<PAGE> 230

the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.

The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.

II-4
<PAGE> 231

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on
April 17, 1998.

FELCOR SUITE HOTELS, INC.

By: /s/ THOMAS J. CORCORAN, JR.
-------------------------------------
Thomas J. Corcoran, Jr.
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints, jointly and severally, Lawrence D. Robinson, Jr.
and Randall L. Churchey, or any of them, with full power to act alone, his true
and lawful attorney-in-fact, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the SEC, granting unto said attorneys-in-fact full
power and authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact or
any of them may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

Chairman of the Board and Director April , 1998
- -----------------------------------------------------
Hervey A. Feldman

/s/ THOMAS J. CORCORAN, JR. President and Director (Chief April 17, 1998
- ----------------------------------------------------- Executive Officer)
Thomas J. Corcoran, Jr.

/s/ RANDALL L. CHURCHEY Senior Vice President (Chief April 17, 1998
- ----------------------------------------------------- Financial Officer)
Randall L. Churchey

/s/ LESTER C. JOHNSON Vice President and Controller April 17, 1998
- ----------------------------------------------------- (Principal Accounting Officer)
Lester C. Johnson

/s/ RICHARD S. ELLWOOD Director April 17, 1998
- -----------------------------------------------------
Richard S. Ellwood

/s/ RICHARD O. JACOBSON Director April 17, 1998
- -----------------------------------------------------
Richard O. Jacobson

/s/ CHARLES A. LEDSINGER, JR. Director April 17, 1998
- -----------------------------------------------------
Charles A. Ledsinger, Jr.

/s/ CHARLES N. MATHEWSON Director April 17, 1998
- -----------------------------------------------------
Charles N. Mathewson

/s/ THOMAS A. MCCHRISTY Director April 17, 1998
- -----------------------------------------------------
Thomas A. McChristy
</TABLE>

II-5
<PAGE> 232

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>

2.1 -- Agreement and Plan of Merger dated March 23, 1998 between
Bristol Hotel Company and Registrant (included as Annex A
to the Joint Proxy Statement/ Prospectus).
3.1 -- Articles of Amendment and Restatement dated June 22,
1995, amending and restating the Charter of Registrant,
as amended or supplemented by Articles of Merger dated
June 23, 1995, Articles Supplementary dated April 30,
1996, Articles of Amendment dated August 8, 1996,
Articles of Amendment dated June 16, 1997 and Articles of
Amendment dated October 30, 1997 (filed as Exhibit 3.1 to
the Registrant's Form 10-K for the year ended December
31, 1997 (the "1997 Form 10-K") and incorporated herein
by reference).
3.2 -- Bylaws of the Registrant, as amended (filed as Exhibit
3.2 to the Registrant's Registration Statement on Form
S-11 (File No. 33-98332) (the "December 1995 Registration
Statement") and incorporated herein by reference).
4.1 -- Form of Share Certificate for Common Stock (filed as
Exhibit 4.1 to the Registrant's Form 10-Q for the quarter
ended June 30, 1996 (the "1996 Second Quarter 10-Q) and
incorporated herein by reference).
4.2 -- Indenture dated as of April 22, 1996 by and between the
Registrant and Sun Trust Bank, Atlanta, Georgia, as
Trustee (filed as Exhibit 4.2 to the Registrant's Form
8-K dated May 1, 1996 (the "1996 Form 8-K") and
incorporated herein by reference).
4.3 -- Indenture dated as of October 1, 1997 by and among FelCor
Suites Limited Partnership, the Registrant, the
Subsidiary Guarantors named therein and Sun Trust Bank,
Atlanta, Georgia, as Trustee (filed as Exhibit 4.1 to the
Registration Statement on Form S-4 (File No. 333-39595)
filed by the Registrant and the other co-registrants
named therein (the "1997 Form S-4") and incorporated
herein by reference).
4.4 -- Form of Share Certificate for $1.95 Series A Cumulative
Convertible Preferred Stock (filed as Exhibit 4.4 to the
1996 Form 8-K and incorporated herein by reference).
*5.1 -- Opinion of Jenkens & Gilchrist, a Professional
Corporation.
*5.2 -- Opinion of Miles & Stockbridge P.C.
*8.1 -- Opinion of Hunton & Williams as to tax matters.
*8.2 -- Opinion of Jenkens & Gilchrist, a Professional
Corporation as to tax matters.
*8.3 -- Opinion of Jones, Day, Reavis & Pogue as to tax matters.
23.1 -- Consent of Jenkens & Gilchrist, a Professional
Corporation (included in Exhibit 5.1).
23.2 -- Consent of Miles & Stockbridge P.C. (included in Exhibit
5.2).
23.3 -- Consent of Hunton & Williams (included in Exhibit 8.1).
23.4 -- Consent of Jones, Day, Reavis & Pogue (included in
Exhibit 8.3).
23.5 -- Consent of Coopers & Lybrand L.L.P.
23.6 -- Consent of Arthur Andersen LLP.
23.7 -- Consent of Price Waterhouse LLP.
</TABLE>
<PAGE> 233

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
23.8 -- Consent of Merrill Lynch.
23.9 -- Consent of BT Wolfensohn.
24.1 -- Power of Attorney (included on signature page).
99.1 -- Form of Proxy Card for FelCor.
99.2 -- Form of Proxy Card for Bristol.
99.3 -- Consent of Donald J. McNamara.
99.4 -- Consent of Richard C. North.
99.5 -- Consent of Robert L. Lutz, Jr.
99.6 -- Consent of Michael D. Rose.
99.7 -- Voting and Cooperation Agreement dated as of March 23,
1998 among Registrant, Bristol Hotel Company, Bass
America Inc., Holiday Corporation and United/Harvey
Holdings, L.P.
*99.8 -- Spin-Off Agreement dated as of March 23, 1998 among
Bristol Hotel Company, Bristol Hotel Management
Corporation and Bristol Hotel & Resorts, Inc., as agreed
to by Registrant.
99.9 -- Form of Stockholders' and Registration Rights Agreement.
*99.10 -- Form of Master Hotel Agreement and Lease Agreement.
</TABLE>

- ---------------

* To be filed by amendment.

<PAGE> 1

EXHIBIT 23.5

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement
of FelCor Suite Hotels, Inc. on Form S-4 (File No. ) of our report dated
January 20, 1998, except for Note 14 as to which the date is February 17, 1998,
in our audits of the consolidated financial statements and financial statement
schedule of FelCor Suite Hotels, Inc. as of December 31, 1997 and 1996, and for
the years ended December 31, 1997, 1996, and 1995 and our report dated March 13,
1998, on our audits of the consolidated financial statements of DJONT
Operations, L.L.C. as of December 31, 1997 and 1996, and for the years ended
December 31, 1997, 1996, and 1995 which reports are incorporated by reference
herein.

/s/ COOPERS & LYBRAND L.L.P.
------------------------------------
Coopers & Lybrand L.L.P.

Dallas, TX
April 15, 1998

<PAGE> 1

EXHIBIT 23.6

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report dated February 6, 1998 (except with respect to the matter discussed in
Note 20 as to which the date is March 25, 1998) on the consolidated financial
statements of the Bristol Hotel Company and to the use of our report dated
February 6, 1998, (except with respect to the matter discussed in Note 18 as to
which the date is March 25, 1998) on the consolidated financial statements of
the Bristol Hotel Asset Company (and to all references to our Firm) incorporated
by reference into the Registration Statement on Form S-4 of FelCor Suite Hotels
Inc.

Dallas, Texas,
April 17, 1998

/s/ ARTHUR ANDERSEN, LLP
------------------------------------
Arthur Andersen, LLP

<PAGE> 1

EXHIBIT 23.7

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of FelCor Suite
Hotels, Inc. of our report dated February 23, 1996 appearing on page F-2 of
Bristol Hotel Company's Annual Report on Form 10-K for the year ended December
31, 1997. We also consent to the references to us under the headings "Experts"
and "Selected Historical Combined Financial Data of Harvey Hotel Companies" in
such Prospectus. However, it should be noted that Price Waterhouse LLP has not
prepared or certified such "Selected Historical Combined Financial Data of
Harvey Hotel Companies."

/s/ PRICE WATERHOUSE LLP
- ------------------------------------------------------
PRICE WATERHOUSE LLP

Dallas, Texas
April 15, 1998

<PAGE> 1

EXHIBIT 23.8

CONSENT OF MERRILL LYNCH

We hereby consent to the inclusion in the Registration Statement on Form
S-4 of FelCor Suite Hotels, Inc. of our opinion letter appearing as Annex C to
the Joint Proxy Statement/Prospectus which is part of the Registration
Statement, and to the references to our firm under the headings
"SUMMARY -- Opinions of Financial Advisors," "THE MERGER -- Background of the
Merger" and "THE MERGER -- Opinion of Bristol's Financial Advisor" in the Joint
Proxy Statement/Prospectus. In giving such consent, we do not thereby admit that
we come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.

/s/ MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED

MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED

New York, New York
April 16, 1998

<PAGE> 1
EXHIBIT 23.9

[BT WOLFENSOHN LETTERHEAD]

CONSENT
OF
BT WOLFENSOHN

We hereby consent to (i) the inclusion of our opinion letter, dated March 23,
1998, to the Board of Directors of FelCor Suite Hotels Inc. as Annex B to the
Joint Proxy Statement/Prospectus forming part of this Registration Statement on
Form S-4, and (ii) references made to our firm and such opinion in such Joint
Proxy Statement/Prospectus under the captions entitled "SUMMARY -- Opinions of
Financial Advisors," "THE MERGER -- Background of the Merger," "THE MERGER
- -- FelCor's Reasons for the Merger; Recommendations of the FelCor Board" and
"THE MERGER -- Opinion of FelCor's Financial Advisor". In giving such consent,
we do not admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as Amended, and the
Rules and Regulations Promulgated thereunder, and we do not admit that we are
experts with respect to any part of the Registration Statement within the
meaning of the term "expert" as used in the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.

BT Wolfensohn is engaged in the merger and acquisition and client advisory
business of Bankers Trust and, for legal and regulatory purposes, is a division
of BT Alex. Brown Incorporated, a registered broker-dealer and member of the
New York Stock Exchange.

BT WOLFENSOHN

BY: /s/ MONTE J.M. KOCH
----------------------------
Name: Monte J.M. Koch
--------------------------
Title: Managing Director
-------------------------

April 16, 1998

<PAGE> 1

EXHIBIT 99.1

NO. OF SHARES
-------------
PROXY

FELCOR SUITE HOTELS, INC.
545 E. JOHN CARPENTER FREEWAY, SUITE 1300, IRVING, TEXAS 75062

ANNUAL MEETING OF STOCKHOLDERS
JUNE , 1998

The undersigned hereby appoints Thomas J. Corcoran, Jr. and Lawrence D.
Robinson, or any of them, with full power of substitution in each, proxies
(and if the undersigned is a proxy, substitute proxies) to vote all FelCor
Common Shares of the undersigned in FelCor Suite Hotels, Inc. at the Annual
Meeting of Stockholders to be held at the Embassy Suites (Dallas Love Field)
hotel, 3880 West Northwest Highway, Dallas, Texas, at 9:00 a.m., local time,
on June , 1998, and at any adjournments thereof, as specified below:

1. PROPOSAL TO ADOPT THE AGREEMENT AND PLAN OF MERGER AND THE TRANSACTIONS
CONTEMPLATED THEREBY, AS DESCRIBED IN THE ACCOMPANYING JOINT PROXY
STATEMENT/PROSPECTUS.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

2. ELECTION OF CLASS I DIRECTORS

<TABLE>
<S> <C>
[ ] FOR THE NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
</TABLE>

Nominees: Michael D. Rose Charles N. Mathewson

To vote FOR or WITHHOLD AUTHORITY with respect to all nominees, check the
appropriate box above. To WITHHOLD AUTHORITY with respect to any individual
nominee, check the FOR box and write the name of such nominee in the space
below:

----------------------------------------------------------------------------

3. PROPOSAL TO APPROVE THE 1998 RESTRICTED STOCK AND STOCK OPTION PLAN.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

PLEASE SIGN AND DATE ON REVERSE SIDE OF THIS PROXY.

4. In their discretion, the proxies (and if the undersigned is a proxy, any
substitute proxies) are authorized to vote upon such other business as
may properly come before the meeting.

This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted FOR the adoption of the Agreement and Plan of Merger and
transactions contemplated thereby, FOR the election of the nominees for
Class I director, and FOR approval of the FelCor 1998 Plan.

Dated: __________, 1998

PLEASE SIGN EXACTLY AS NAME
APPEARS IN LEFT. WHEN SHARES
ARE HELD BY JOINT TENANTS, BOTH
SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN
FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME
BY AUTHORIZED PERSON.

-------------------------------
Signature

-------------------------------
Title

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, AND 3.

<PAGE> 1

EXHIBIT 99.2

BRISTOL HOTEL COMPANY

1998 ANNUAL MEETING OF STOCKHOLDERS

THIS PROXY IS SOLICITED ON BEHALF OF THE BRISTOL BOARD

The undersigned holder of shares of common stock of Bristol Hotel
Company hereby appoints Joel M. Eastman, J. Peter Kline and Jeffrey P.
Mayer, and each of them, jointly and severally and with full power of
substitution and resubstitution, as proxies of the undersigned, to represent
and to vote, as designated below and in accordance with their judgment, all
of the Bristol Common Shares held of record by the undersigned on April 28,
1998, at the Annual Meeting of Stockholders of Bristol to be held on June
, 1998, and at any and all postponements and adjournments thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS INDICATED, THIS PROXY WILL
BE VOTED "FOR" THE PROPOSALS TO ADOPT THE MERGER AGREEMENT, TO APPROVE AN
AMENDMENT TO BRISTOL'S 1995 AMENDED AND RESTATED EQUITY INCENTIVE PLAN, TO
APPROVE BRISTOL HOTELS & RESORTS' 1998 EQUITY INCENTIVE PLAN AND 1998
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN, TO ELECT THE NINE LISTED NOMINEES
AS DIRECTORS, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSON OR PERSONS
VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS THAT MAY PROPERLY COME
BEFORE THE MEETING.

1. Adoption of the Agreement and Plan of Merger dated as of March 23, 1998
between Bristol and FelCor Suite Hotels, Inc.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

2. Election of Directors.

<TABLE>
<S> <C>
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary for the nominees listed below
below)
</TABLE>

John A. Beckert Reginald K. Brack, Jr. David A. Dittman Craig H.
Hunt J. Peter Kline
Robert H. Lutz, Jr. Donald J. McNamara Richard C. North Kurt C.
Read

(INSTRUCTION: To withhold authority to vote for any nominee, write that
nominee's name on the space provided below.)

----------------------------------------------------------------------------

(Continued, and to be dated and signed, on the other side)

3. Approval of an amendment to Bristol's 1995 Amended and Restated Equity
Incentive Plan to increase the number of Bristol Common Shares reserved
for issuance from 1,950,000 to 3,130,000.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. Approval of Bristol Hotels & Resorts' 1998 Equity Incentive Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. Approval of Bristol Hotels & Resorts' 1998 Non-Employee Director Stock
Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

6. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the Annual Meeting.

This proxy should be dated,
signed by the stockholder as
his, her or its name appears
below, and returned promptly in
the enclosed envelope. Joint
owners should each sign
personally, and trustees and
others signing in a
representative capacity should
indicate the capacity in which
they sign.

Dated: __________, 1998

-------------------------------
Signature of Stockholder

USING BLUE OR BLACK INK, PLEASE MARK, SIGN AND PROMPTLY RETURN THIS PROXY CARD
IN THE ENVELOPE PROVIDED

<PAGE> 1

EXHIBIT 99.3

April 15, 1998

To The Board of Directors of FelCor Suite Hotels, Inc.:

The undersigned consents to serve as a director of FelCor Suite Hotels,
Inc. if the merger contemplated by the Agreement and Plan of Merger dated as of
March 23, 1998 between FelCor Suite Hotels, Inc. and Bristol Hotel Company is
consummated and to be named as a potential director of FelCor Suite Hotels, Inc.
in the Form S-4 Registration Statement for the merger transaction.

/s/ DONALD J. MCNAMARA
------------------------------------
Donald J. McNamara

<PAGE> 1

EXHIBIT 99.4

April 16, 1998

To The Board of Directors of FelCor Suite Hotels, Inc.:

/s/ RICHARD C. NORTH
------------------------------------
Richard C. North

<PAGE> 1

EXHIBIT 99.5

April 16, 1998

To The Board of Directors of FelCor Suite Hotels, Inc.:

/s/ ROBERT L. LUTZ, JR.
------------------------------------
Robert L. Lutz, Jr.

<PAGE> 1
EXHIBIT 99.6

April ___, 1998

To The Board of Directors of FelCor Suite Hotels, Inc.:

The undersigned consents to serve as a director of FelCor Suite Hotels,
Inc. if elected to that capacity at FelCor's 1998 annual meeting of
stockholders and to be named as a nominee for election as a director of FelCor
Suite Hotels, Inc. in the Joint Proxy Statement/Prospectus for the annual
meeting.

/s/ MICHAEL D. ROSE
-------------------------
Michael D. Rose

<PAGE> 1
EXHIBIT 99.7

================================================================================

VOTING AND COOPERATION AGREEMENT

BY AND AMONG

FELCOR SUITE HOTELS, INC.

BRISTOL HOTEL COMPANY

BASS AMERICA INC.

HOLIDAY CORPORATION

AND

UNITED/HARVEY HOLDINGS, L.P.

DATED MARCH 23, 1998

================================================================================
<PAGE> 2

VOTING AND COOPERATION AGREEMENT

This VOTING AND COOPERATION AGREEMENT (this "Agreement"), is made and
entered into as of March 23, 1998, by and among FelCor Suite Hotels, Inc., a
Maryland corporation ("FelCor"), Bristol Hotel Company, a Delaware corporation
("Bristol"), Bass America Inc., a Delaware corporation ("BAI"), Holiday
Corporation, a Delaware corporation ("HC"), and United/Harvey Holdings, L.P., a
Delaware limited partnership ("Holdings" and, together with BAI, HC and any
transferee that acquires Subject Shares that agrees to be bound by this
Agreement, the "Stockholders").

RECITALS

A. FelCor and Bristol propose to enter into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to which
Bristol will merge with and into FelCor (the "Merger") upon the terms and
subject to the conditions set forth in the Merger Agreement.

B. Prior to the consummation of the Merger, Bristol intends to
distribute to the holders of Bristol Common Shares all of the issued and
outstanding common stock, par value $0.01 per share ("BHR Common Shares"), of
Bristol Hotels and Resorts, Inc., a Delaware corporation ("BHR") (the "Spin-
Off").

C. As of the date hereof, each Stockholder owns of record the number
of Bristol Common Shares set forth opposite the Stockholder's name on Schedule
A hereto (such Bristol Common Shares, together with any other Bristol Common
Shares acquired by, and not including any Bristol Common Shares sold by, such
Stockholder from the date hereof through the Record Date for the Bristol
Stockholders Meeting, are collectively referred to herein as such Stockholder's
"Subject Shares").

D. Bristol, Holdings, HC, BAI and Bass plc entered into a
Stockholders' Agreement, dated as of April 28, 1997 (the "Old Stockholders'
Agreement"), and Bristol, Holdings, HC and BAI entered into a Registration
Rights Agreement, dated as of April 28, 1997 (the "Old Registration Rights
Agreement").

E. The parties hereto desire that the Merger and the Spin-Off occur,
and accordingly have agreed to take certain actions that are necessary in order
to satisfy certain of the conditions precedent to the Spin-Off and the Merger.

F. As a condition and inducement to FelCor's willingness to enter
into the Merger Agreement, FelCor has requested that

2
<PAGE> 3
each Stockholder agree, and each Stockholder has agreed, to enter into this
Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:

1. Agreement to Vote Shares. During the Term, at any meeting of the
stockholders of Bristol called to consider and vote upon the adoption of the
Merger Agreement or approval of the Spin-Off (if such approval is sought) (and
at any and all postponements and adjournments thereof), and in connection with
any action to be taken in respect of the adoption of the Merger Agreement and
approval of the Spin-Off by written consent of the stockholders of Bristol,
each Stockholder will vote or cause to be voted (including by written consent,
if applicable) all of such Stockholder's Subject Shares in favor of the
adoption of the Merger Agreement and approval of the Spin-Off and against any
Adverse Proposal. For purposes of this Agreement, (a) the term "Term" means
the period commencing on the date hereof and ending as of the earlier of (i)
the Effective Time and (ii) FelCor's or Bristol's giving of notice of the
termination of the Merger Agreement, regardless of whether the validity of such
notice or right to exercise termination is being or may thereafter be
contested, and (b) the term "Adverse Proposal" means any (i) Acquisition
Proposal, (ii) any change in the composition of a majority of the Board of
Directors of Bristol, and (iii) any other intentional action which is intended
or could reasonably be expected to hinder, delay or result in the failure of
the Merger to occur. Nothing herein, however, will prohibit or restrict any
Stockholder from pledging or otherwise disposing of (collectively, "Transfer")
any Subject Shares, provided, however, that (i) in connection with any Transfer
of more than 100,000 Subject Shares to a single purchaser effected pursuant to
a privately negotiated transaction or series of transactions, any Stockholder
will be required to obtain the agreement of such purchaser to be bound by the
covenants in this Section 1 and (ii) no Stockholder may Transfer any Subject
Shares if, following such Transfer, the aggregate number of Subject Shares that
is subject to the provisions of this Agreement would be less than a majority of
the issued and outstanding Bristol Common Shares as of the Record Date for the
Bristol Stockholders Meeting.

2. Other Agreements of BAI and HC. (a) On the date the Spin-Off is
effected, BAI and HC will, and will cause Holiday Hospitality Corporation to,
as appropriate:

(i) Enter into the Hotel Properties Agreement in substantially
the form attached hereto as Exhibit A;

3
<PAGE> 4
(ii) Enter into the Confirmation Agreement in substantially the
form attached hereto as Exhibit B;

(iii) Enter into the Stockholders' and Registration Rights
Agreement in substantially the form attached hereto as Exhibit C (the
"FelCor Stockholders' Agreement");

(iv) Enter into the Stockholders' Agreement in substantially
the form attached hereto as Exhibit D (the "BHR Stockholders'
Agreement"); and

(v) Enter into the Registration Rights Agreement in
substantially the form attached hereto as Exhibit E (the "BHR
Registration Rights Agreement").

(b) On or before the date the Spin-Off is effective, BAI and HC will
review and approve the form of lease to be entered into by BHR and FelCor, such
approval not to be unreasonably withheld or delayed.

(c) Immediately after the Spin-Off and prior to the Effective Time,
BAI and HC will Transfer to BHR for redemption that number of BHR Common Shares
equal to the excess of (i) the aggregate number of shares of BHR Common Shares
that such Stockholders may be deemed to own immediately following the Spin-Off
by virtue of the attribution provisions of Section 544 of the Code (as modified
by Section 856(h)(i)(B) of the Code) (assuming that BHR is a REIT for such
purposes) and/or Section 318 of the Code (as modified by Section 856(d)(5) of
the Code) (together, the "Attribution Rules") over (ii) the number of shares
that represent 9.9% of the total number of outstanding BHR Common Shares as of
the Spin-Off Time after giving effect to the redemption herein contemplated
(such shares, the "Excess Shares") in consideration for payment by BHR to BAI
and HC by wire transfer of cash in the aggregate amount of $25,814,200 (the
"Excess Shares Redemption Amount"). Each of BAI and HC will transfer a pro
rata portion of the Excess Shares based on the number of BHR Common Shares held
by it as compared to the aggregate BHR Common Shares held by BAI and HC. Upon
such redemption, BAI and HC will deliver to BHR such stock transfer forms,
stock powers, certificates and other documents evidencing the redemption of the
Excess Shares and confirming BAI's and HC's ownership of BHR Common Shares
immediately prior to the Effective Time and following the Excess Shares
Redemption as BHR may reasonably request.

(d) In the event that BAI, HC or any of their respective Affiliates
decreases the number of Bristol Common Shares held by such Stockholders between
the date hereof and the Spin-Off Time, the Excess Shares Redemption Amount will
be decreased, as appropriate, proportionately by an amount corresponding to the

4
<PAGE> 5
decrease in Excess Shares resulting from a change in such number of Bristol
Common Shares. In the event that BAI, HC or any of their respective Affiliates
increases the number of Bristol Common Shares held by such Stockholders between
the date hereof and the Spin-Off Time so as to result in an increase in the
number of Excess Shares from the number of Excess Shares determined as of the
date hereof, such Excess Shares will also be redeemed pursuant to Section 2(b)
with no corresponding increase in the Excess Shares Redemption Amount. Bristol
will not take any action without the prior written consent of the parties
hereto that would have the effect of increasing or decreasing the number of
Bristol Common Shares held by HC or BAI.

(e) Prior to the Effective Time, BAI and HC will not, and will cause
their Affiliates not to, increase or decrease the number of BHR Common Shares
held by such Stockholders (other than by virtue of a change in the number of
Bristol Common Shares held by such Stockholders between the date hereof and the
Spin-Off Time).

(f) Any Stockholder may transfer any or all of its Subject Shares to
an Affiliate of which such Stockholder owns a majority of the equity or other
ownership interests as long as such Affiliate agrees to be bound by the terms
of this Agreement on the same terms as the transferring Stockholder.

3. Other Agreements of Holdings. (a) Immediately after the
Spin-Off Time and prior to the Effective Time, Holdings will contribute all the
Bristol Common Shares it owns to two limited partnerships to be organized by
Holdings and its partners of which an affiliate of Holdings will be the general
partner (the "Partnerships") in such proportion as Holdings deems appropriate
and as FelCor approves, such approval not to be unreasonably withheld or
delayed. Upon such distribution, Holdings will deliver to BHR such stock
transfer forms, stock powers, certificates and other documents confirming
Holdings' and the Partnerships' ownership of Bristol Common Shares and BHR
Common Shares immediately prior to the Effective Time and following such
distributions.

(b) Prior to the Effective Time, Holdings will cause the Partnerships
to enter into the FelCor Stockholders' Agreement and Holdings will enter into
the BHR Stockholders' Agreement and the BHR Registration Rights Agreement.

4. Termination of Old Stockholders' Agreement and Old Registration
Rights Agreement. Effective as of the Effective Time, each of the parties
acknowledges and agrees that the Old Stockholders' Agreement and the Old
Registration Rights Agreement will, without any further action, terminate and
be of no further force and effect. Effective as of the Effective Time, each of
the parties acknowledges that the Management Stockholders

5
<PAGE> 6
Agreement, dated as of April 28, 1997, will, without any further action
terminate and be of no further force and effect.

5. Certain Representations, Warranties and Covenants of the
Stockholders. Each Stockholder, severally and not jointly, represents,
warrants and covenants to FelCor and Bristol as follows:

(a) Ownership. Except as specified on Schedule A, such Stockholder
is the sole record and beneficial owner of the number of Bristol Common Shares
set forth opposite such Stockholder's name on Schedule A and will have full and
unrestricted power to vote such shares. Such Stockholder does not own any
securities of Bristol on the date of this Agreement other than the Bristol
Common Shares and the options to purchase Bristol Common Shares described on
Schedule A. Except for transfers permitted pursuant to Section 1, at the
Record Date for the Bristol Stockholders Meeting, such Stockholder will be the
sole record and beneficial owner of the number of Bristol Common Shares set
forth opposite such Stockholder's name on Schedule A and will have full and
unrestricted power to vote such shares.

(b) Due Authorization. Such Stockholder has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by such
Stockholder and the consummation by such Stockholder of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of such Stockholder. This Agreement has been duly executed and delivered
by such Stockholder and constitutes a valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
generally and to general principles of equity.

(c) No Conflicts. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement
and compliance with the provisions of this Agreement will not, conflict with,
result in a breach or violation of or default (with or without notice or lapse
of time or both) under, or give rise to a material obligation, a right of
termination, cancellation or acceleration of any obligation or a loss of a
material benefit under, or require notice to or the consent of any person under
any agreement, instrument, undertaking, law, rule, regulation, judgment, order,
injunction, decree, determination or award binding on such Stockholder, other
than any such conflicts, breaches, violations, defaults, rights or losses that,
individually and in the aggregate, would not (a) impair the ability of such
Stockholder to perform such Stockholder's obligations under this Agreement or
(b) prevent or

6
<PAGE> 7
delay the consummation of any of the transactions contemplated by this
Agreement.

(d) Reliance by FelCor. Each Stockholder understands and
acknowledges that FelCor is entering into the Merger Agreement in reliance upon
the Stockholder's execution and delivery of this Agreement.

(e) Non-Interference. Such Stockholder will not, except as permitted
by this Agreement, (i) grant any proxies or powers of attorney with respect to
any of such Stockholder's Subject Shares, (ii) deposit any of such
Stockholder's Subject Shares into a voting trust or enter into a voting
agreement with respect to such Stockholder's Subject Shares, or (iii) take any
action that would make any representation or warranty contained herein untrue
or incorrect or have the effect of preventing such Stockholder from performing
its obligations under this Agreement.

(f) Survival. Each Stockholder's representations and warranties set
forth in this Section 5 will survive the Effective Time for one year after the
date of this Agreement.

6. Release. Effective without further action as of the Effective
Time, each Stockholder hereby releases any and all claims such Stockholder has
or may have against Bristol and Bristol's directors, officers and other
employees for all acts, actions, events or occurrences arising or occurring at
any time prior to and including the Effective Time that would give rise to a
claim for indemnification by such directors, officers or employees under the
Bristol Certificate, the Bristol Bylaws, any indemnification agreement for the
benefit of such persons, or Bristol's directors' and officers' insurance
policy; provided, however the foregoing release will not affect any
Stockholder's rights under any written agreement with Bristol.

7. Indemnification. FelCor hereby agrees to indemnify, defend and
hold harmless each Stockholder to the fullest extent permitted by law against
any and all judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection therewith) and all expenses (including without limitation attorneys'
fees), costs and obligations paid or incurred (a "Loss") in connection with
investigating, defending, participating in or preparing to defend any Claim
relating to, resulting from or arising out of the execution or delivery of this
Agreement or the consummation of the transactions contemplated hereby
(including without limitation the execution and delivery of the agreements
described in Sections 2 and 3 of this Agreement); provided however, the
foregoing indemnity will not include any Loss incurred by a Stockholder as a
result of any breach of a representation, warranty or covenant under this
Agreement. For purposes of this Agreement, "Claim" means any

7
<PAGE> 8
threatened, pending or completed action, suit or proceeding, or any inquiry or
investigation, whether instituted, made or conducted by the Company or any
other party, that any Stockholder determines might lead to the institution of
any such action, suit or proceeding, whether civil, criminal, administrative,
investigative or other.

8. Miscellaneous.

(a) Fees and Expenses. Each party hereto will pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and
the performance of its obligations hereunder.

(b) Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.

(c) Extension; Waiver. Any agreement on the part of a party to waive
any provision of this Agreement, or to extend the time for any performance
hereunder, will be valid against the other parties only if set forth in an
instrument in writing signed on behalf of each such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise will not constitute a waiver of such rights.

(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement, and is not intended to confer upon any person
other than the parties any rights or remedies.

(e) Governing Law. This Agreement will be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable conflict of laws principles
thereof.

(f) Notices. All notices, requests, claims, demands and other
communications under this Agreement must be in writing and will be deemed given
if delivered personally, or sent by overnight courier (providing proof of
delivery), in the case of the Stockholders, to the address set forth on
Schedule A hereto or, in the case of FelCor or Bristol, to the address set
forth below (or, in each case, at such other address as shall be specified by
like notice).

8
<PAGE> 9
(i) If to FelCor, to:

FelCor Suite Hotels, Inc.
545 E. John Carpenter Freeway
Suite 1300
Irving, Texas 75062
Attention: President
Attention: General Counsel
Telecopy: (972) 444-4949

with copy to:

Jenkens & Gilchrist, P.C.
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Attention: Robert W. Dockery
Telecopy: (214) 855-4300

(ii) If to Bristol, to:

Bristol Hotel Company
14295 Midway Road
Dallas, Texas 75244
Attention: General Counsel
Telecopy: (972) 391-1515

with copy to:

Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek
Telecopy: (212) 755-7306

(g) Assignment. Neither this Agreement nor any of the rights,
interest or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise, by any Stockholder without
the prior written consent of FelCor and Bristol, and any such assignment or
delegation that is not consented to will be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.

(h) Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached,
and that such breach would cause the other parties hereto to sustain damages
for which they would not have an adequate remedy at law for money damages. It
is accordingly agreed that each party will be entitled to an

9
<PAGE> 10
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in any Delaware state court,
this being in addition to any other remedy to which it is entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any federal court located in the State of
Delaware or in any Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement and
(b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court. All
rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity will be cumulative and not
alternative, and the exercise of any thereof by any party will not preclude the
simultaneous or later exercise of any other such right, power or remedy by such
party.

(i) Exclusive Remedy. If any Stockholder fails to perform any
covenant to be performed by it under this Agreement, and if, pursuant to
Section 7.2 of the Merger Agreement, the Break-Up Fee is paid to FelCor by
Bristol, such Break-Up Fee will constitute liquidated damages and will be
FelCor's sole and exclusive remedy for any breach by a Stockholder of any of
its representations, warranties or covenants under this Agreement.

(j) Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provisions will be
interpreted to be only so broad as is enforceable.

(k) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR PROCEEDING.

(l) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.

(m) Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each
party and delivered to the other parties.

10
<PAGE> 11
(n) Defined Terms. Capitalized terms used herein that are not
otherwise defined herein have the meanings set forth in the Merger Agreement.

[Signature page follows]

11
<PAGE> 12
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be signed as of the day and year first written above.

STOCKHOLDERS:

UNITED/HARVEY HOLDINGS, L.P.

By: Holdings Genpar, L.P.,
its General Partner

By: H H Genpar Partners,
its General Partner

By: Holdings Associates,
Inc., its Managing
General Partner

By: /s/ Daniel A. Decker
----------------------------
Title: Executive Vice
President

BASS AMERICA INC.

By: /s/ F. Andrew Simpson
----------------------------
Title: President

HOLIDAY CORPORATION

By: /s/ Robert J. Chitty
----------------------------
Title: Vice President/
Treasurer

The undersigned agrees to the
terms of Sections 2 and 4.

BASS PLC

By: /s/ F. S. Wigley
----------------------------
Title: General Counsel
and Secretary

12
<PAGE> 13
FELCOR SUITE HOTELS, INC.

By: /s/ Lawrence D. Robinson
----------------------------
Title: Senior Vice
President

BRISTOL HOTEL COMPANY

By: /s/ Peter Kline
----------------------------
Title: President and
Chief Executive Officer

13
<PAGE> 14

SCHEDULE A

<TABLE>
<CAPTION>
Name and Address Number of Bristol Options to purchase
of Stockholder Common Shares Bristol Common Shares
---------------- ---------------- ---------------------
<S> <C> <C>
Holiday Corporation 3,586,929
Three Ravinia Drive
Suite 2900
Atlanta, Georgia 30346
Attn: Craig H. Hunt

Bass America, Inc. 10,455,033
c/o Holiday Corporation
Three Ravinia Drive
Suite 2900
Atlanta, Georgia 30346
Attn: James L. Kacena

United/Harvey 12,716,986 1,342,791
Holdings, L.P.
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
</TABLE>

<PAGE> 1
EXHIBIT 99.9

EXHIBIT C
TO VOTING AND COOPERATION AGREEMENT

================================================================================

STOCKHOLDERS' AND REGISTRATION
RIGHTS AGREEMENT

BY AND AMONG

FELCOR SUITE HOTELS, INC.

BASS PLC

BASS AMERICA INC.

HOLIDAY CORPORATION

PARTNERSHIP A

AND

PARTNERSHIP B

DATED ___________, 1998

================================================================================

<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II
REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1. Shelf Registration of Resales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2. "Market Stand-Off" Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4. Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.5. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6. Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.7. Underwritten Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.8. Indemnification of Statutory Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE III
CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1. Composition of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE IV
RESTRICTIONS ON TRANSFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1. General Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2. Transfers in Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3. Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4. Unauthorized Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.5. Transfers to Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE V
RIGHT TO PARTICIPATE IN SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1. Right to Participate in Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2. Securities Not Subject to Tag-Along Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE VI
PREEMPTIVE RIGHTS; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1. Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2. Regulatory Restrictions; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE VII
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2. No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5. Owner of Registrable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.8. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.11. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>

i
<PAGE> 3
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
7.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.13. Changes in Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.14. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.15. Acquisition of BHR Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>

ii
<PAGE> 4
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
BAI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bass Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Beneficial ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
BHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
BHR Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Blackout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bristol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Co-Sale Acceptance Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Co-Sale Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Co-Selling Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Election Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Excluded Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Excluded Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FelCor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FelCor Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Form S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
HC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Holdings Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
indemnified party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
indemnifying party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Lock-Up Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Market Stand-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Non-Offering Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Offer Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Offer Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Offered Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Offering Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Ownership Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Partnership A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Partnership B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Pro Rata Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Qualified Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Qualified Offering Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Registrable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
</TABLE>

iii
<PAGE> 5
<TABLE>
<S> <C>
Registration Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Regulatory Objection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Rule 145 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Rule 415 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Special Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Suspension Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Third Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Third Party Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Total Voting Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Unauthorized Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Underwritten Registration or Underwritten Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>

iv
<PAGE> 6
STOCKHOLDERS' AND REGISTRATION RIGHTS AGREEMENT

This STOCKHOLDERS' AND REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), is made and entered into as of ________________, 1998, by and
among FelCor Suite Hotels, Inc., a Maryland corporation ("FelCor"), Bass
America Inc., a Delaware corporation ("BAI"), Holiday Corporation, a Delaware
corporation ("HC"), Bass plc, an English public limited company ("PLC"),
[Partnership A], a Delaware limited partnership ("Partnership A"), and
[Partnership B], a Delaware limited partnership ("Partnership B").

RECITALS

A. On March 23, 1998, FelCor and Bristol Hotel Company, a
Delaware corporation ("Bristol"), entered into an Agreement and Plan of Merger
(the "Merger Agreement") pursuant to which Bristol will merge with and into
FelCor subject to the terms and conditions thereof.

B. Upon consummation of the Merger, each Stockholder will
beneficially own the number of shares of common stock, par value $0.01 per
share, of FelCor ("FelCor Common Stock") set forth on Schedule A hereto.

C. PLC has agreed to be a party to this Agreement solely for the
purposes set forth on the signature pages hereto.

NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1. Definitions. For purposes of this Agreement, the following
terms have the respective meanings set forth below when used herein with
initial capital letters. Capitalized terms used herein and not defined herein
have the meanings set forth in the Merger Agreement.

"Affiliate" means, with respect to any Person, any other Person who is
directly or indirectly Controlling, Controlled by or under the common Control
with such Person; provided that no Stockholder of FelCor shall be deemed an
Affiliate of any other Stockholder of FelCor solely by reason of any investment
in FelCor or by this Agreement.

"Bass Parties" means, collectively, BAI, HC and any of their Permitted
Transferees who are Affiliates of PLC.
<PAGE> 7
"Beneficial ownership", "beneficially own" and "beneficial owner"
shall be determined in accordance with Rules 13d-3 and 13d-5 under the Exchange
Act as in effect on the date hereof.

"Board" means the Board of Directors of FelCor.

"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York or Dallas, Texas are authorized or
obligated to close.

"Control" (including the terms "Controlling", "Controlled by" and
"under common Control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.

"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, as in effect from time to
time.

"Excluded Securities" means (i) options granted to directors, officers
and employees of FelCor to purchase capital stock of FelCor, and the securities
issued pursuant to such options or plans under which options may be granted,
which have been authorized by the Board, (ii) capital stock issued or sold upon
exercise of warrants, options or rights, or upon conversion of convertible
securities, which warrants, options, rights or convertible securities are
outstanding on the date hereof or were the subject of the preemptive rights
under Article VI or (iii) any securities which are issued to all stockholders
by means of a distribution, stock dividend or stock split or reclassification.

"Fair Market Value" means the price agreed upon by a willing buyer and
a willing seller both in possession of reasonable knowledge of all relevant
facts, with neither party being under any compulsion to act or not act.

"Holdings Parties" means, collectively, Partnership A and Partnership
B and any of their Permitted Transferees who are Affiliates of The Hampstead
Group, LLC.

"Initial Ownership" means, with respect to each Stockholder, the total
number of shares (equitably adjusted to reflect any stock split, dividend,
reclassification or any similar event) of FelCor Common Stock beneficially
owned by such Stockholder as of the Effective Time.

"Ownership Percentage" means with respect to each Stockholder at any
time, the percentage derived by dividing (i) the aggregate number of shares of
FelCor Common Stock beneficially owned by such Stockholder as of such time, by
(ii) the total number of shares of FelCor Common Stock outstanding as of such
time.

2
<PAGE> 8
"Permitted Transferee" means with respect to each Stockholder, (i) any
Affiliate of such Stockholder, (ii) in the case of Partnership A or Partnership
B, any direct or indirect constituent partner of such partnership (as to its
pro rata interest in the partnership), and (iii) any transferee approved in
writing by FelCor; provided that, in each case, such transferee has executed a
copy of this Agreement and agreed to be bound by the provisions herein as a
Stockholder.

"Person" means an individual, corporation, partnership, association,
trust, limited liability company, joint venture or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.

"Prospectus" means the prospectus included in any Registration
Statement (including without limitation a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

"Public Offering" means an underwritten public offering of Securities
of FelCor pursuant to an effective registration statement under the Securities
Act.

"Registrable Securities" means (i) all shares of FelCor Common Stock
received by a Registration Stockholder pursuant to the Merger, (ii) all shares
of FelCor Common Stock which a Registration Stockholder has an option to
purchase at the Effective Time (including shares of FelCor Common Stock subject
to the Amended and Restated Put/Call Option Agreement, dated as of November 16,
1995, by and between Harvey Hotel Holdings, Inc., H.K. Huie, Jr. and the other
parties thereto, as amended from time to time), and (iii) all other shares of
FelCor Common Stock and shares issued upon exercise of preemptive rights or
upon purchase from another Stockholder, until, in the case of any such
security, (a) such security is disposed of in accordance with a Registration
Statement, (b) such security is saleable by the holder thereof pursuant to Rule
144(k), (c) such security is saleable by the holder thereof pursuant to Rule
144 without regard to any volume limitations, or (d) such security is
distributed to the public pursuant to Rule 144.

"Registration Statement" means any registration statement of FelCor
under the Securities Act that covers the Registrable Securities pursuant to the
provisions of Article II of this Agreement, including the related Prospectus,
all amendments and supplements to such registration statement (including
post-effective amendments), all exhibits and all materials

3
<PAGE> 9
incorporated by reference or deemed to be incorporated by reference in such
registration statement.

"Registration Stockholder" means each of (i) the Bass Parties and (ii)
the Holdings Parties, in each case, including any of their Permitted
Transferees.

"Rule 144", "Rule 145" or "Rule 415", as applicable, means Rule 144,
Rule 145, or Rule 415 under the Securities Act, as each such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.

"SEC" means the Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder, as in effect from time to time.

"Stockholder" means each of (i) the Bass Parties, as a group, (ii)
Partnership A, and (iii) Partnership B.

"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.

"Third Party" means a prospective purchaser of Securities in an
arm's-length transaction from a Stockholder where such purchaser is not a
Permitted Transferee of such Stockholder.

"Total Voting Power" means the aggregate number of votes which may be
cast by holders of outstanding Voting Securities.

"Underwritten Registration" or "Underwritten Offering" means a
registration under the Securities Act in which securities of FelCor are sold to
an underwriter or group of underwriters for reoffering to the public.

"Voting Securities" means all securities of FelCor entitled, in the
ordinary course, to vote in the election of directors of FelCor.

ARTICLE II

REGISTRATION RIGHTS

2.1. Shelf Registration of Resales. (a) Registration of
Resales. Subject to Section 2.1(b), FelCor will file with the SEC a
Registration Statement under Rule 415 with respect to all Registrable
Securities and use its reasonable best efforts to cause such Registration
Statement to become effective no later than the expiration of the Lock-Up
Period. Subject to Section 2.1(b), FelCor will file with the SEC, if
necessary, a Registration Statement under Rule 415 with respect to all shares

4
<PAGE> 10
of FelCor Common Stock issued in the Merger and held by officers and directors
of Bristol Hotels & Resorts, Inc., a Delaware corporation ("BHR"), who may be
deemed to be "affiliates" under Rule 145 at the Effective Time and use its
reasonable best efforts to cause such Registration Statement to be effective as
of the Effective Time.

(b) Conversion of Form S-4. Subject to the other provisions of
this Agreement (including the covenant contained in Section 2.3 with respect to
the absence of Suspension Notices), FelCor may, in its sole discretion, convert
the Form S-4 Registration Statement filed by FelCor in connection with its
issuance of shares of FelCor Common Stock pursuant to the Merger (the "Form
S-4") to a Registration Statement on another form permitted to be used by
FelCor for the registration under the Securities Act of the Registration
Stockholders' offering and resale of Registrable Securities (in accordance with
the intended methods of distribution). References herein to the "Form S-4"
will be deemed to include the Registration Statement into which it may be
converted, and the Form S-4 will be deemed to be a "Registration Statement" for
all purposes of this Agreement.

(c) Maintenance of Effectiveness. FelCor will keep the
Registration Statement filed pursuant to this Section 2.1 effective so long as
the Registration Stockholders hold Registrable Securities.

2.2. "Market Stand-Off" Agreement. The Bass Parties and the
Holdings Parties will not, to the extent requested (by timely written notice)
by the managing underwriter or underwriters for any Underwritten Offering of
FelCor's capital stock (or any securities issued by FelCor that are exercisable
to purchase, convertible into or exchangeable for shares of capital stock of
FelCor) for FelCor's account in which the expected gross proceeds of such
Offering equal or exceed $100 million, sell, make any short sale of, lend,
grant any option for the purchase of or otherwise Transfer any Registrable
Securities (except to the extent permitted in the Underwritten Offering)
without the prior written consent of FelCor and/or the managing underwriter or
underwriters on the same terms and for the same period of time from the
effective date of the Registration Statement relating to the Underwritten
Offering as the officers and directors of FelCor agree to refrain from taking
such actions; provided, however, such period of time shall not exceed 90
calendar days during any 12 month period. FelCor may impose stop-transfer
instructions with respect to the Registrable Securities of each Stockholder
until the end of such period (not to exceed 90 calendar days during any 12
month period) in order to enforce these restrictions. In no event, however,
will the foregoing parties be required to enter into more than two such
agreements in any 12 month period.

2.3. Registration Procedures. In connection with FelCor's
registration obligations pursuant to this Article II, FelCor will use its
reasonable best efforts to effect such registration to

5
<PAGE> 11
permit the sale of the Registrable Securities in accordance with the
Registration Stockholders' intended method or methods of distribution of those
Registrable Securities, and pursuant thereto FelCor will as expeditiously as
possible:

(a) Prepare and file with the SEC a Registration
Statement on any appropriate form under the Securities Act available
for the sale of the Registrable Securities by the Registration
Stockholders in accordance with the Registration Stockholders'
intended method or methods of distribution thereof, and use its
reasonable best efforts to cause the Registration Statement to become
effective and remain effective as provided herein; provided, however,
that not less than three Business Days before filing a Registration
Statement or Prospectus or any amendments or supplements thereto
(excluding documents that would be incorporated or deemed to be
incorporated therein by reference) FelCor will furnish to the
Registration Stockholders whose Registrable Securities are covered by
that Registration Statement, counsel for such Registration
Stockholders with respect to such registration ("Special Counsel") and
the managing underwriter, if any, copies of all documents proposed to
be filed, which documents will be subject to the review of the
Registration Stockholders, the Special Counsel and the managing
underwriters, if any, and FelCor will not file a Registration
Statement or any amendment thereto or any Prospectus or any supplement
thereto (excluding any documents which, upon filing, would be
incorporated or deemed to be incorporated by reference therein) to
which the Registration Stockholders whose Registrable Securities are
covered by that Registration Statement, the Special Counsel or the
managing underwriter, if any, may reasonably object on a timely basis;

(b) Prepare and file with the SEC any amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective
for the period herein specified; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and comply with
the provisions of the Securities Act with respect to the distribution
of all securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in the Registration
Statement as so amended or to the Prospectus as so supplemented;

(c) Notify the Registration Stockholders selling
Registrable Securities, the Special Counsel and the managing
underwriters, if any, promptly, and (if requested by any of those
Persons) confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to a

6
<PAGE> 12
Registration Statement or any post-effective amendment, when the
Registration Statement or amendment has become effective, (ii) of any
request by the SEC or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or
related Prospectus or for additional information, (iii) of the
issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if at any time the representations and warranties of
FelCor contained in any agreement contemplated by Section 2.3(l)
(including any underwriting agreement) cease to be true and correct,
(v) of the receipt by FelCor of any notification with respect to the
suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (vi) of
the occurrence of any event which makes any statement made in the
Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in
a Registration Statement, Prospectus or document so that, in the case
of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and, in the case of the Prospectus, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated or that is necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, and (vii) of FelCor's reasonable
determination that a post-effective amendment to a Registration
Statement would be appropriate;

(d) Use every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement,
or the lifting of any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest possible moment;

(e) If requested by the managing underwriters, if any, or
Registration Stockholders whose Registrable Securities are being
registered, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters,
if any, and those Registration Stockholders agree should be included
therein to comply with applicable law and (ii) make all required
filings of the Prospectus supplement or such post-effective amendment
as soon as practicable after FelCor has received notification of the
matters to be incorporated in the Prospectus supplement or
post-effective amendment; provided, however, that FelCor will not be
required to take any actions under this Section 2.3(e) that are not, in
the

7
<PAGE> 13
reasonable opinion of counsel for FelCor, in compliance with
applicable law;

(f) Furnish to each Registration Stockholder whose
Registrable Securities are being registered, the Special Counsel and
each managing underwriter, if any, without charge, conformed copies of
the Registration Statement and each post-effective amendment or
supplement thereto, including financial statements (including
schedules, all documents incorporated or deemed incorporated therein
by reference and all exhibits) as such Registration Stockholders may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by each such Registration Stockholder;

(g) Deliver to each Registration Stockholder whose
Registrable Securities are being registered, the Special Counsel and
the underwriters, if any, without charge, copies of the Prospectus or
Prospectuses relating to the Registrable Securities (including each
preliminary prospectus) and any amendment or supplement thereto as
those Persons may reasonably request; and FelCor hereby consents to the
use of that Prospectus or each amendment or supplement thereto by each
of the Registration Stockholders whose Registrable Securities are being
registered, and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by that
Prospectus or any amendment or supplement thereto;

(h) Cooperate with the Registration Stockholders that are
selling Registrable Securities and the managing underwriters, if any,
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates
will not bear any restrictive legends; and enable the Registrable
Securities to be in such denominations and registered in such names as
the managing underwriters, if any, may request at least two Business
Days prior to any sale of Registrable Securities to the underwriters;

(i) Use reasonable efforts to cause the sale of
Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities within the United States, except as may be required solely
as a consequence of the nature of a Registration Stockholder's
business, in which case FelCor will cooperate in all reasonable
respects with the filing of the Registration Statement and the
granting of such approvals as may be necessary to enable such
Registration Stockholder or the underwriters, if any, to consummate
the disposition of such Registrable Securities;

(j) Upon the occurrence of any event contemplated by
Section 2.3(c)(vi) or 2.3(c)(vii) hereof, promptly prepare a
supplement or post-effective amendment to the Registration

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<PAGE> 14
Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;

(k) Use its best efforts to cause all Registrable
Securities covered by the Registration Statement to be (i) listed on
each securities exchange, if any, on which similar securities issued
by FelCor are then listed or, if no similar securities issued by
FelCor are then so listed, on the New York Stock Exchange or another
national securities exchange if the securities qualify to be so listed
or (ii) authorized to be quoted on the Nasdaq National Market System
or the Nasdaq SmallCap Market if the securities qualify to be so
quoted; in each case, if requested by the holders of a majority of the
Registrable Securities covered by the Registration Statement or the
managing underwriters, if any;

(l) Enter into such agreements (including, in the event
of an Underwritten Offering, an underwriting agreement in form, scope
and substance as is customary in underwritten offerings) and take all
such other actions as may be reasonably requested by the managing
underwriters or the placement agent or other counterparty to the
transaction in order to expedite or facilitate the disposition of the
Registrable Securities, and in such connection, whether or not an
underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, (i) make such
representations and warranties as may be reasonably requested by the
Registration Stockholders whose Registrable Securities are being
registered and the underwriters, if any, with respect to the business
of FelCor and its Subsidiaries, the Registration Statement, Prospectus
and documents incorporated by reference or deemed incorporated by
reference, if any, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in Underwritten Offerings
and confirm those representations and warranties if and when
requested; (ii) obtain opinions of counsel to FelCor and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters,
addressed to each of the underwriters and covering the matters
customarily covered in opinions requested in Underwritten Offerings
and such other matters as may be reasonably requested by the
underwriters); (iii) use its best efforts to obtain "comfort" letters
and updates thereof from the independent certified public accountants
of FelCor (and, if necessary, any other certified public accountants
of any subsidiary of FelCor or

9
<PAGE> 15
of any business acquired by FelCor for which financial statements and
financial data is, or is required to be, included in the Registration
Statement), addressed to each Registration Stockholder whose
Registrable Securities are being registered and each of the
underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "comfort" letters
in connection with Underwritten Offerings; (iv) deliver such documents
and certificates as may be requested by any Registration Stockholder
whose Registrable Securities are being registered, the Special Counsel
and the managing underwriters, if any, to evidence the continued
validity of the representations and warranties of FelCor and its
Subsidiaries made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in the underwriting
agreement or similar agreement entered into by FelCor; (v) promptly
incorporate in a Prospectus supplement or post-effective amendment to
the Registration Statement such information as the managing
underwriter or underwriters, if any, and such Registration
Stockholders agree should be included therein as may be required by
applicable law; and (vi) make all required filings of such Prospectus
supplement or such post-effective amendment (or other Registration
Statement) as soon as practicable after FelCor has received
notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment (or other Registration
Statement); provided, however, that FelCor will not be required to
take any actions under clauses (v) and (vi) that are not, in the
opinion of counsel for FelCor, in compliance with applicable law. The
foregoing actions will be taken in connection with each closing under
such underwriting or similar agreement as and to the extent required
thereunder;

(m) Make available for inspection by a representative of
the Registration Stockholders whose Registrable Securities are being
registered, any underwriter participating in any disposition of
Registrable Securities and any attorney or accountant retained by such
Registration Stockholders or underwriter, all financial and other
records, pertinent corporate documents and properties of FelCor and
its Subsidiaries, and cause the officers, directors and employees of
FelCor and its Subsidiaries to supply all information reasonably
requested by any such representative, underwriter, attorney or
accountant in connection with the Registration Statement; provided,
however, that any records, information or documents that are
designated by FelCor in writing as confidential at the time of
delivery of such records, information or documents will be kept
confidential by those Persons unless (i) those records, information or
documents are in the public domain or otherwise publicly available,
(ii) disclosure of those records, information or documents is required
by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, or (iii) disclosure of those

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<PAGE> 16
records, information or documents, in the opinion of counsel to such
Person, is otherwise required by law (including, without limitation,
pursuant to the requirements of the Securities Act);

(n) Comply with all applicable rules and regulations of
the SEC and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 calendar days
after the end of any 12-month period (or 90 calendar days after the
end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best
efforts Underwritten Offering, and (ii) if not sold to underwriters in
such an offering, commencing on the first day of the first fiscal
quarter of FelCor, after the effective date of a Registration
Statement, which statements shall cover that 12-month period;

(o) Cause its directors, officers and other appropriate
employees to participate in any presentations regarding any
Underwritten Offering reasonably requested by the Registration
Stockholders or the managing underwriter or underwriters participating
in the disposition of those Registrable Securities, provided that so
doing does not unreasonably interfere with the business of FelCor and
the out-of-pocket costs thereof are reimbursed to FelCor;

(p) Use all reasonable efforts to facilitate the
Stockholders' purchase or sale of puts, calls and forward contracts,
short sales and other hedging transactions involving Registrable
Securities; and

(q) Use all reasonable efforts to take all of the steps
necessary or advisable to effect the registration of the Registrable
Securities pursuant to the Registration Statement.

FelCor may require each Registration Stockholder whose Registrable
Securities are being registered to furnish to FelCor such information regarding
the distribution of its Registrable Securities as FelCor may, from time to
time, reasonably request in writing and FelCor may exclude from such
registration the Registrable Securities of any Registration Stockholder that
unreasonably fails to furnish such information within a reasonable time after
receiving such request.

Each Registration Stockholder will be deemed to have agreed by virtue
of its acquisition of Registrable Securities that, upon receipt of any notice
from FelCor of the occurrence of any event of the kind described in Section
2.3(c)(ii), 2.3(c)(iii), 2.3(c)(v), 2.3(c)(vi) or 2.3(c)(vii) (each, a
"Suspension Notice"), the Registration Stockholder will forthwith discontinue

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disposition of its Registrable Securities covered by the Registration Statement
or Prospectus (a "Blackout") until the Registration Stockholder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
2.3(j), or until it is advised in writing by FelCor that the use of the
applicable Prospectus may be resumed, and has received copies of any additional
or supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus. FelCor will not give a Suspension Notice at any
time prior to the date which is 60 calendar days after the effective date of
the Registration Statement (or after expiration of the Lock-Up Period if the
Form S-4 is converted under Section 2.1(b)) and in no event will the aggregate
number of days the Registration Stockholders are subject to Blackout during any
period of 12 consecutive months exceed 180 days.

2.4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by FelCor will be borne by
FelCor. Those fees and expenses will include, without limitation, (i) all
registration and filing fees (including without limitation fees and expenses
with respect to filings required to be made with the National Association of
Securities Dealers, Inc.), (ii) printing expenses (including without limitation
expenses of printing certificates for Registrable Securities in a form eligible
for deposit with The Depository Trust Company and of printing or photocopying
prospectuses), (iii) messenger, telephone and delivery expenses, (iv)
reasonable fees and disbursements of counsel for FelCor and the Special Counsel
(provided however, that FelCor will reimburse the Registration Stockholders for
the reasonable fees and disbursements of not more than one Special Counsel
chosen by the Registration Stockholders), (v) fees and disbursements of all
independent certified public accountants referred to in Section 2.3(l)(iii)
(including the expenses of any special audit and "comfort" letters required by
or incident to such performance), (vi) Securities Act liability insurance if
FelCor so desires that insurance, and (vii) fees and expenses of all other
Persons retained by FelCor; but excluding underwriting discounts and
commissions and transfer Taxes, if any, relating to the sale or disposition of
Registrable Securities, which shall be borne by the Registration Stockholders.
In addition, FelCor will pay its internal expenses (including without
limitation all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange on which similar securities issued by
FelCor are then listed and the fees and expenses of any Person, including
special experts, retained by FelCor.

2.5. Indemnification. (a) Indemnification by FelCor. FelCor
will, without limitation as to time, indemnify and hold harmless, to the
fullest extent permitted by law, each Registration Stockholder holding
Registrable Securities registered pursuant to this Agreement, the officers,
directors,

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partners, stockholders, agents and employees of each of them, each Person who
Controls (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) a Registration Stockholder and the officers, directors,
partners, stockholders, agents and employees of any such Controlling Person,
from and against all losses, claims, damages, liabilities, costs (including
without limitation the costs of investigation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or form of Prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are based solely upon information furnished in
writing to FelCor by such Registration Stockholder expressly for use therein;
provided, however, that FelCor will not be liable to any Registration
Stockholder to the extent that any such Losses arise out of or are based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if either (i)(A) that Registration
Stockholder failed to send or deliver a copy of the Prospectus with or prior to
the delivery of written confirmation of the sale by that Registration
Stockholder of a Registrable Security to the Person asserting the claim from
which such Losses arise and (B) the Prospectus would have completely corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission; (ii) such untrue statement or alleged untrue statement, omission or
alleged omission is completely corrected in an amendment or supplement to the
Prospectus previously furnished by or on behalf of FelCor with copies of the
Prospectus as so amended or supplemented, and that Registration Stockholder
thereafter fails to deliver such Prospectus as so amended or supplemented prior
to or concurrently with the sale of a Registrable Security to the Person
asserting the claim from which such Losses arise; or (iii) such untrue
statement or alleged untrue statement, omission or alleged omission was
contained in any information so furnished in writing by that Stockholder to
FelCor expressly for use in the Registration Statement or Prospectus and was
relied upon by FelCor in the preparation of the Registration Statement,
Prospectus or preliminary prospectus.

(b) Indemnification by Holders of Registrable Securities. In
connection with the Registration Statement, the Registration Stockholders
selling Registrable Securities will furnish to FelCor in writing such
information as FelCor reasonably requests for use in connection with the
Registration Statement or Prospectus and will severally, but not jointly,
indemnify, to the fullest extent permitted by law, FelCor, its directors and
officers, agents and employees, each Person who Controls (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act) FelCor,
and the directors, officers, agents or employees of such Controlling Persons,
from and against all Losses arising out of or based upon any untrue statement
of a

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material fact contained in any Registration Statement, Prospectus or
preliminary prospectus or arising out of or based upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent, that such untrue statement or
omission is contained in any information so furnished in writing by that
Registration Stockholder to FelCor expressly for use in the Registration
Statement or Prospectus and was relied upon by FelCor in the preparation of the
Registration Statement, Prospectus or preliminary prospectus. In no event will
the liability of any Registration Stockholder under this Section 2.5(b) be
greater in amount than the dollar amount of the proceeds (net of payment of all
expenses) received by that Registration Stockholder upon the sale of the
Registrable Securities giving rise to the indemnification obligation.

(c) Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
this Section 2.5, such Person (the "indemnified party") will promptly notify
the Person against whom such indemnity may be sought (the "indemnifying party")
in writing and the indemnifying party, upon request of the indemnified party,
will retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and will pay the fees and disbursements of such
counsel related to such proceeding; provided that the failure of any
indemnified party so to notify the indemnifying party will not relieve the
indemnifying party of its obligations hereunder except to the extent that the
indemnifying party is actually prejudiced by such failure to notify. In any
such proceeding, any indemnified party will have the right to retain its own
counsel, but the fees and expenses of such counsel will be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party will not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all indemnified parties
and that all such fees and expenses will be reimbursed as they are incurred.
The indemnifying party will not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any Loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to

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reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it will be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party will, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.

(d) Contribution. If the indemnification provided for in this
Section 2.5 is unavailable to an indemnified party under Section 2.5(a) or
2.5(b) in respect of any Losses or is insufficient to hold the indemnified
party harmless (other than giving effect to the last sentence of Section
2.5(b)), then each applicable indemnifying party, in lieu of indemnifying the
indemnified party, will, jointly and severally, contribute to the amount paid
or payable by the indemnified party as a result of the Losses, in the
proportion as is appropriate to reflect the relative fault of the indemnifying
party or indemnifying parties, on the one hand, and the indemnified party, on
the other hand, in connection with the actions, statement or omissions that
resulted in the Losses as well as any other relevant equitable considerations.
The relative fault of the indemnifying party or indemnifying parties, on the
one hand, and the indemnified party, on the other hand, will be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been taken or made by, or related to
information supplied by, the indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses will be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
action or proceeding. In no event will the obligation of a Registration
Stockholder under this Section 2.5(d) be greater in amount than the dollar
amount of the proceeds (net of payment of all expenses) received by that
Registration Stockholder upon the sale of the Registrable Securities giving
rise to the contribution obligation.

The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this

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Section 2.5(d), an indemnifying party that is a Registration Stockholder will
not be required to contribute any amount in excess of the dollar amount of the
proceeds (net of payment of all expenses) received by that Registration
Stockholder upon the sale of the Registrable Securities giving rise to the
contribution obligation over the amount of any damages which that Registration
Stockholder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

The indemnity, contribution and expense reimbursement obligations of
FelCor hereunder will be in addition to any liability FelCor may otherwise have
under this Agreement. The provisions of this Section 2.5 will survive so long
as Registrable Securities remain outstanding, notwithstanding any transfer of
the Registrable Securities by any holder thereof or any termination of this
Agreement.

2.6. Rule 144. FelCor will file the reports required to be filed
by it under the Securities Act and the Exchange Act, and will cooperate with
any Registration Stockholder (including without limitation by making any
representations as any Registration Stockholder may reasonably request), all to
the extent required from time to time to enable the Registration Stockholder to
sell Registrable Securities without registration under the Securities Act
within the limitations of the exemptions provided by Rule 144. Upon the
request of any Registration Stockholder, FelCor will deliver to such
Registration Stockholder a written statement as to whether it has complied with
such filing requirements. Notwithstanding the foregoing, nothing in this
Section 2.6 will be deemed to require FelCor to register any of its securities
under any section of the Exchange Act.

2.7. Underwritten Registrations. If any of the Registrable
Securities are to be sold in an Underwritten Offering (other than an
Underwritten Offering with respect to Securities that are sold primarily on
behalf of FelCor), the underwriter or underwriters and the managing underwriter
or managing underwriters will be selected by the Registration Stockholders
holding a majority of such Registration Securities; provided, that such
underwriter or managing underwriter shall be reasonably satisfactory to FelCor.
Each party hereby agrees that, in connection with any Underwritten Offering
hereunder in which it participates, it will undertake to offer customary
indemnification to the participatory underwriters.

2.8. Indemnification of Statutory Underwriters. Any institutional
buyer, placement agent or counterparty who is deemed to be an underwriter
pursuant to Section 2(11) of the Securities Act in connection with the sale of
Registrable Securities by a Registration Stockholder to such Person will be
entitled to the indemnity set forth in Section 2.5(a).

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ARTICLE III

CORPORATE GOVERNANCE

3.1. Composition of the Board. Each of the Bass Parties as a group
and the Holdings Parties as a group have designated on Schedule 1.7 to the
Merger Agreement one Person to serve as a director of FelCor effective upon the
Merger. FelCor will take all necessary action in order to ensure that the
Persons designated pursuant to this Section 3.1 are appointed to the Board
promptly following or upon the effectiveness of the Merger to serve in the
class of directors specified thereon and, in the case of Donald J. McNamara, to
serve as the Chairman of the Board and of its Executive Committee.

3.2. Voting. Until either the Holdings Parties or the Bass Parties
owns less than 25% of its Initial Ownership, each of the Bass Parties and the
Holdings Parties will vote its Voting Securities, or execute written consents,
as the case may be, and each of the Bass Parties and the Holdings Parties will
take all other necessary action (including causing FelCor to call a special
meeting of stockholders), in order to ensure that the Person designated by the
Bass Parties and the Person designated by the Holdings Parties are elected to
the Board, and none of the Bass Parties or the Holdings Parties will vote any
of their Voting Securities in favor of the removal of any director who shall
have been so designated, unless such removal shall be for cause or the Person
entitled to designate such director shall have consented to such removal in
writing. When either the Holdings Parties or the Bass Parties, as applicable,
no longer own at least 25% of their Initial Ownership, each Stockholder's
obligations to take or refrain from taking certain actions pursuant to this
Section 3.2 will terminate without further action. For the avoidance of doubt,
this Article III will not apply to any Voting Securities held or received by
the direct or indirect constituent partners of any of the Holdings Parties.

ARTICLE IV

RESTRICTIONS ON TRANSFER

4.1. General Restriction. Until the six month anniversary of the
Effective Time (such period, the "Lock-Up Period"), no Stockholder may,
directly or indirectly, sell, assign, transfer, grant a participation in,
pledge or otherwise dispose of ("Transfer") any shares of FelCor Common Stock
or any securities convertible into, or exchangeable for shares of FelCor Common
Stock or rights to purchase shares of FelCor Common Stock ("Derivatives" and
collectively with the shares of FelCor Common Stock referred to herein as
"Securities") except (a) to a Permitted Transferee, (b) in compliance with the
limitations of Rule 145, (c) pursuant to a tender offer or other transaction
that has been approved by the Board and is made to all holders of Securities
that are the subject of the tender offer or other

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transaction, (d) any pledge of Securities by a Stockholder made in connection
with a bona fide loan to such Stockholder, (e) any involuntary Transfer
resulting from a lender foreclosing on any pledge of any Securities which
pledge existed on the date hereof or was made in accordance with this Section
4.1, or (f) any Transfer made with the prior written consent of FelCor.

4.2. Transfers in Compliance with Law. No Stockholder may Transfer
any Securities at any time to any Person except in compliance with applicable
federal, state and foreign securities laws.

4.3. Legends. Each Stockholder understands and agrees that stop
transfer instructions will be given to FelCor's transfer agent with respect to
certificates evidencing the FelCor Common Stock such Stockholder may acquire
pursuant to the Merger and that there will be placed on the certificate
evidencing the FelCor Common Stock such Stockholder may acquire pursuant to the
Merger a legend stating in substance:

"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE OFFERED, SOLD, PLEDGED, EXCHANGED, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE WITH THE REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE OTHER CONDITIONS
SPECIFIED IN THAT CERTAIN STOCKHOLDERS' AND REGISTRATION RIGHTS
AGREEMENT DATED __________, 1998 AMONG FELCOR AND THE STOCKHOLDERS
NAMED THEREIN, A COPY OF WHICH WILL BE MAILED TO THE HOLDER HEREOF
WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF WRITTEN REQUEST
THEREFOR."

FelCor agrees to notify the transfer agent of the removal of such stop transfer
instructions and legend upon (i) the transfer of the FelCor Common Stock
represented by such certificate pursuant to a Registration Statement under the
Securities Act or in accordance with the applicable provisions of Rule 145
(including without limitation paragraph (d) thereof), (ii) the expiration of
the restrictive period set forth in Rule 145(d), or (iii) the delivery by the
Stockholder to FelCor of a copy of a letter from the staff of the SEC, or an
opinion of counsel in form and substance reasonably satisfactory to FelCor, to
the effect that the shares subject thereto may be offered and sold without
registration under the Securities Act.

4.4. Unauthorized Transfers. Any purported Transfer of any
Securities in violation of the provisions of this Article IV (an "Unauthorized
Transfer") will be null and void. FelCor will not register, recognize or give
effect to any Unauthorized Transfer and the purported transferee of any
Securities pursuant to an Unauthorized Transfer will not thereby acquire any
rights in those Securities. FelCor will, immediately upon becoming aware of an
actual or attempted Unauthorized Transfer, instruct the

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transfer agent or registrar for the Securities to issue an appropriate
stop-transfer order with regard to the Unauthorized Transfer or attempted
Unauthorized Transfer.

4.5. Transfers to Affiliates. No Stockholder will Transfer any of
its shares of FelCor Common Stock to an Affiliate unless such Affiliate
executes a copy of this Agreement and agrees to be bound by all the provisions
herein, whereupon references in this Agreement to a Stockholder will be deemed
to include any such Affiliates; provided, however, this Section 4.5 will not
apply to any distribution by Partnership A or Partnership B to their respective
direct or indirect constituent partners.

ARTICLE V

RIGHT TO PARTICIPATE IN SALES

5.1. Right to Participate in Sales. (a) If a Stockholder (the
"Offering Stockholder") proposes to sell any or all of the Securities owned by
the Offering Stockholder (the "Offered Securities") to a Third Party in a bona
fide transaction not involving an Excluded Transaction (a "Third Party Sale"),
the Offering Stockholder will, prior to effecting any Third Party Sale, deliver
to the other Stockholders (the "Non-Offering Stockholders") a written notice
(an "Offer Notice") specifying (i) the aggregate amount of cash consideration,
the amount of any promissory note or other debt instrument and the Fair Market
Value of any other non-cash consideration (the "Offer Price") for which the
Offering Stockholder proposes to sell the Offered Securities in the proposed
Third Party Sale, (ii) the identity of the purchaser in the proposed Third
Party Sale, (iii) the date the proposed Third Party Sale is scheduled to close,
and (iv) all other material terms of the proposed Third Party Sale, including
without limitation any other contract or transaction entered into or proposed
to be entered into in connection with the Third Party Sale. If a Non-Offering
Stockholder so requests in a written notice (a "Co-Sale Notice") delivered to
the Offering Stockholder within 20 calendar days following the delivery of the
Offer Notice (the "Co-Sale Acceptance Period"), such Non-Offering Stockholder
(a "Co-Selling Stockholder") will be permitted to sell in that Third Party
Sale, on the same terms as the Offering Stockholder, up to the number of
Securities held by such Co-Selling Stockholder as is specified in the Co-Sale
Notice; provided that the number of Securities to be sold by such Co-Selling
Stockholder participating in such Third Party Sale will in no event exceed the
Portion corresponding to such Co-Selling Stockholder. As used herein,
"Portion" means, with respect to a Co-Selling Stockholder, the number of
Securities beneficially owned by such Co-Selling Stockholder multiplied by a
fraction the numerator of which is the number of Securities to be sold by the
Offering Stockholder and its Permitted Transferees in such Third Party Sale and
the denominator of which is the aggregate number of Securities beneficially
owned by the Offering Stockholder and its Permitted Transferees, without
duplication, immediately prior

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to such Third Party Sale. If a Co-Selling Stockholder requests to include more
Securities than provided under the preceding sentences, the Offering
Stockholder will attempt to cause the Third Party purchaser to acquire those
additional Securities, but will have no liability for the Third Party
purchaser's refusal to purchase those additional Securities. To the extent
that the Third Party purchaser is unwilling to purchase all of the Securities
proposed to be sold by the Offering Stockholder and the Co-Selling
Stockholders, the number of Securities to be sold by each of the Offering
Stockholder and the Co-Selling Stockholders will be reduced to their respective
Pro Rata Number of Securities. "Pro Rata Number" means, with respect to the
participation of the Offering Stockholder and each Co-Selling Stockholder in a
Third Party Sale, the product of (i) the total number of Securities proposed to
be sold by such Stockholder (not to exceed, with respect to any Co-Selling
Stockholder, such Co-Selling Stockholder's Portion) and (ii) a fraction, the
numerator of which is the total number of Securities proposed to be purchased
by the Third Party purchaser, and the denominator of which is the total number
of Securities proposed to be sold by both the Offering Stockholder and all of
the Co-Selling Stockholders (not to exceed, with respect to any Co-Selling
Stockholder, such Co-Selling Stockholder's Portion). For purposes of this
Section 5.1, an "Excluded Transaction" will mean any Transfer (i) pursuant to
or as a result of (A) a public offering or (B) a hedging transaction with a
broker-dealer, bank or other financial institution, (ii) in an open-market
transaction effected on a national securities exchange or national quotation
system or a transaction involving as a counterparty an underwriter,
broker-dealer or other similar Person effecting a transaction in or consistent
with the ordinary course of its business, (iii) to one or more financial
institutions, investment companies, pension or other employee benefit plans,
trusts, mutual or similar funds or "qualified institutional buyers" within the
meaning of Rule 144A under the Securities Act, (iv) pursuant to a tender offer
or other transaction that has been approved by the Board, or (v) resulting from
any pledge of Securities by Holdings made in connection with a bona fide loan
to Holdings, including any Transfer resulting from a lender foreclosing on any
pledge of any Security or exercising its other rights in respect thereof.

(b) Notwithstanding anything to the contrary herein contained, the
Offering Stockholder (i) will have the right to elect not to consummate any
Third Party Sale (without liability to the Non-Offering Stockholders) if it is
unable to sell all of the Offered Securities as initially set forth in the
Offer Notice and (ii) may increase the number of Securities included in the
Offered Securities to accommodate any Securities proposed to be sold by a
Non-Offering Stockholder.

(c) If a Co-Selling Stockholder properly elects to participate in
a Third-Party Sale, the Offering Stockholder will represent such Co-Selling
Stockholder in the sale but will not assume any fiduciary duty to the
Co-Selling Stockholder under

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this Agreement. The Co-Selling Stockholder will execute and deliver the
documentation providing for the Third Party Sale as negotiated by the Offering
Stockholder; provided that, at any time prior to such execution and delivery,
the Co-Selling Stockholder may decline to participate in the Third Party Sale
if the documentation is not reasonably acceptable to it. If the Co-Selling
Stockholder fails to execute and deliver the documentation or timely to perform
its obligations thereunder, the Offering Stockholder may complete the Third
Party Sale without the participation of the Co-Selling Stockholder. The
Offering Stockholder will have no responsibility to the Co-Selling Stockholder
if it fails to consummate a Third Party Sale, and the Offering Stockholder will
in all events be free to abandon any Third Party Sale at any time prior to its
consummation without any liability to the Non-Offering Stockholders.

If the Holdings Parties so request, the Bass Parties will deliver to
Holdings such documents as Holdings may reasonably request consistent with this
Section 5.1 confirming the terms hereof for the benefit of any Third Party,
including without limitation execution of a written acknowledgment prepared by
Holdings within a reasonable period of time, not to exceed two Business Days,
confirming that, with respect to a particular Excluded Transaction, the
provisions of this Section 5.1 do not apply to a sale of any Securities owned
by Holdings in such Excluded Transaction.

5.2. Securities Not Subject to Tag-Along Right. For the avoidance
of doubt, this Article V will not apply to (i) the Transfer of Securities by
either of the Holdings Parties to any of their direct or indirect constituent
partners or (ii) Securities held or received by such direct or indirect
partners. Nothing in this Article V or VI will constitute a waiver,
modification or amendment of any restriction on transfer or ownership arising
under FelCor's charter or Section 4.1 hereof.

5.3. Termination. This Article V will terminate on the date either
the Bass Parties or the Holdings Parties beneficially own less than 25% of
their Initial Ownership.

ARTICLE VI

PREEMPTIVE RIGHTS; WAIVER

6.1. Preemptive Rights. Except for the issuance of Excluded
Securities, FelCor will provide the Bass Parties and the Holdings Parties with
written notice of any sale by it for cash of any Securities of FelCor in which
the gross proceeds of such sale to FelCor and its Subsidiaries equals or
exceeds $100 million (such offering, a "Qualified Offering") no later than the
closing date of the Qualified Offering (such notice, the "Qualified Offering
Notice"). The Qualified Offering Notice will specify the

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Securities issued, the purchase price (which, in the case of a public offering,
will be the initial offering price to the public, and in all other cases, the
price to the purchasers of the Securities without regard to underwriting
discounts or commissions), the issuance date and all other material terms of
such issuance. No later than five calendar days after receipt of the Qualified
Offering Notice, each Stockholder must deliver to FelCor a written notice
stating whether such Stockholder desires to acquire the same type of Securities
that were issued and the number of Securities it intends to purchase (the
"Election Notice"). The Election Notice will constitute a binding contract by
the Stockholder to acquire,on the terms set forth in the Qualified Offering
Notice,up to that number of Securities such that, after giving effect to the
consummation of the Qualified Offering and the issuance to the Stockholder
pursuant to this Section 6.1, the Stockholder would hold that Ownership
Percentage equal to such Stockholder's Ownership Percentage immediately prior
to the Qualified Offering, to be completed five days after the Qualified
Offering or on such other date to which FelCor and the relevant Stockholder
agree. Payment will be made in immediately available funds on such completion
date.

6.2. Regulatory Restrictions; Termination. (a) FelCor may modify
this Article VI in whole or in part to the extent necessary to address any
objections raised by the NYSE or any other securities exchange or quotation
system on which the FelCor Common Stock is listed (a "Regulatory Objection").
FelCor will use all reasonable efforts to address any Regulatory Objection so
as to preserve to the greatest extent practicable the parties' rights
hereunder.

(b) This Article VI will terminate (i) with respect to any
Stockholder that fails three times to deliver an Election Notice with respect
to the full number of Securities purchasable under Section 6.1 and (ii) as to
the Bass Parties or the Holdings Parties, as applicable, on the date the Bass
Parties or the Holdings Parties, respectively, beneficially own less than 50%
of their Initial Ownership.

ARTICLE VII

MISCELLANEOUS

7.1. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in any Delaware State court, this being in
addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit itself (without
making such

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<PAGE> 28
submission exclusive) to the personal jurisdiction of any federal court located
in the State of Delaware or any Delaware State court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement and (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court.
Process in any action, suit or proceeding hereunder may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 7.4 will be deemed effective
service of process or such party. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity will be cumulative and not alternative, and the exercise of any thereof
by any party will not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.

7.2. No Inconsistent Agreements. FelCor has not, as of the date
hereof, and will not, on or after the date hereof, enter into any agreement
with respect to the Securities which is inconsistent with the rights granted to
the holders of Securities in this Agreement or otherwise conflicts with the
provisions hereof.

7.3. Amendments and Waivers. Except as set forth in Section
6.2(a), no provision of this Agreement may be waived except by an instrument in
writing executed by the party against whom the waiver is to be effective. The
provisions of this Agreement may not be amended, modified or supplemented
without the prior written consent of FelCor and the Stockholders.
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions of this Agreement with respect to a matter that relates exclusively
to the rights of a particular Stockholder and that does not directly or
indirectly affect the rights of the other Stockholders may be given only by
affected Stockholders; provided, however, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.

7.4. Notices. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) if to
FelCor, at the address or telecopy number below and if to a Stockholder, at the
address or telecopy number set forth on Schedule A (or at such other address or
telecopy number for a party as will be specified by like notice):

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<PAGE> 29
if to FelCor:

FelCor Suite Hotels, Inc.
545 E. John Carpenter Freeway
Suite 1300
Irving, Texas 75062
Attention: President
Attention: General Counsel
Telecopy No.: (972) 444-4949

with a copy to:

Jenkens & Gilchrist, P.C.
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Attention: Robert W. Dockery
Telecopy No.: (214) 855-4300

All notices will be deemed to be given only when actually received.

7.5. Owner of Registrable Securities. FelCor will maintain, or
will cause its registrar and transfer agent to maintain, a stock book with
respect to FelCor Common Stock, in which all transfers of Registrable
Securities of which FelCor has received notice will be recorded. FelCor may
deem and treat the person in whose name Registrable Securities are registered
in the stock book of FelCor as the owner thereof for all purposes, including
without limitation the giving of notices under this Agreement.

7.6. Successors and Assigns. Except as provided elsewhere herein,
no party may assign its rights or delegate its obligations under this
Agreement. Notwithstanding the foregoing, Permitted Transferees will succeed
to the rights granted under Article II and Article III (to the extent provided
therein), and to the extent applicable thereto, Articles I and VII, of this
Agreement.

7.7. Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties hereto.

7.8. Headings. Article and Section headings in this Agreement are
included herein for convenience of reference only and will not constitute a
part of this Agreement for any other purpose.

7.9. Governing Law. This Agreement will be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable conflict of laws
principles thereof.

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<PAGE> 30
7.10. Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and undertakings, both written
and oral, including without limitation, the Stockholders' Agreement, dated as
of April 28, 1997, among Holdings, HC, BAI, PLC and Bristol and the
Registration Rights Agreement, dated as of April 28, 1997, among Holdings, HC,
BAI and Bristol, with respect to the subject matter of this Agreement.

7.11. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the
court, will be entitled to recover reasonable attorneys' fees and related
disbursements and expenses in addition to any other available remedy.

7.12. Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction will, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision will be
interpreted to be only so broad as is enforceable.

7.13. Changes in Outstanding Securities. The provisions of this
Agreement regarding Registrable Securities, FelCor Common Stock and other
securities of FelCor will apply to securities of FelCor or any successor or
assign of FelCor (whether by merger, consolidation, sale of assets or
otherwise) that may be issued in respect of, or by reason of any stock
dividend, stock split, stock issuance, reverse stock split, combination,
recapitalization, reclassification, merger, consolidation or otherwise. Upon
the occurrence of any such event, the definitions of FelCor Common Stock and
Registrable Securities will be appropriately modified by the board of directors
of FelCor.

7.14. Termination. Except as otherwise provided herein, this entire
Agreement will terminate on the earlier of (i) the voluntary or involuntary
dissolution or liquidation of FelCor, and (ii) the mutual agreement of the
parties hereto.

7.15. Acquisition of BHR Shares. The Bass Parties will not, and
will not permit their Affiliates to, purchase or otherwise acquire, or agree or
offer to purchase or otherwise acquire, beneficial ownership of any shares
("BHR Common Shares") of the common stock, par value $0.01 per share, of BHR if
after giving effect thereto the Bass Parties would be deemed to own, by virtue
of the attribution provisions of Section 544 of the Code (as modified by
Section 856 (h)(i)(B) of the Code) (assuming that BHR is a REIT for such
purposes) and/or Section 318 of the Code

25
<PAGE> 31
(as modified by Section 856(d)(5) of the Code), BHR Common Shares representing
more than 9.9% of the total number of outstanding BHR Common Shares, without
the prior written consent of FelCor.

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<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

FELCOR SUITE HOTELS, INC.

By:
------------------------------------
Name:
Title:

BASS AMERICA INC.

By:
------------------------------------
Name:
Title:

HOLIDAY CORPORATION

By:
------------------------------------
Name:
Title:

[PARTNERSHIP A]

By:
-------------------------------, its
general partner

By:
----------------------------
Name:
Title:

[PARTNERSHIP B]

By:
-------------------------------, its
general partner

By:
----------------------------
Name:
Title:

27
<PAGE> 33
The undersigned agrees to the terms of
Article IV and Section 7.15.

BASS PLC

By:
------------------------------------
Name:
Title:

28
<PAGE> 34
SCHEDULE A

Name and Address Number of Shares of
of Stockholder FelCor Common Stock
----------------- -------------------
<S> <C>

</TABLE>