Exhibit 10.11

EXECUTION COPY

AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

          This Amended and Restated Registration Rights Agreement, dated as of
August 17, 2004 (this “Agreement”), by and between INTERSTATE HOTELS & RESORTS,
INC., a Delaware corporation (the “Company”), on the one hand, and LB INTERSTATE
GP LLC, a Delaware limited liability company, LB INTERSTATE LP LLC, a Delaware
limited liability company (“LB LP”), and KFP/LB IHR II, LP, a Delaware limited
partnership; KA/LB IHR II, LP, a Delaware limited partnership; CG Ventures/LB
IHR II, LP, a Delaware limited partnership; SMW/LB IHR II, LP, a Delaware
limited partnership; DEL/LB IHR II, LP, a Delaware limited partnership; and
PS/LB IHR II, LP, a Delaware limited partnership, (each a “Shareholder” and
collectively the “Shareholders”), on the other hand.

W I T N E S S E T H:

          WHEREAS, pursuant to a Distribution and Contribution Agreement dated
as of August 17, 2004 (the “Distribution Agreement”) between LB LP, LB
Interstate GP LLC, MK/CG-GP LLC and MK/CG-LP LLC and KFP/LB IHR II, LP, a
Delaware limited partnership; KA/LB IHR II, LP, a Delaware limited partnership;
CG Ventures/LB IHR II, LP, a Delaware limited partnership; SMW/LB IHR II, LP, a
Delaware limited partnership; DEL/LB IHR II, LP, a Delaware limited partnership;
and PS/LB IHR II, LP, a Delaware limited partnership      , all of the shares of
common stock of the Company held by CGLH Partners I LP and CGLH Partners II LP
were distributed to the Shareholders (the “Distribution”);

          WHEREAS, in connection with the Distribution the parties have agreed
to enter into this Agreement, which amends and restates the registration rights
agreement subsisting between CGLH Partners I LP and CGLH Partners II LP and the
Company;

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained in this Agreement, the Distribution Agreement
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows, effective at the
Effective Time:

ARTICLE I

Definitions

          1.1. Certain Definitions. In this Agreement:

          “Agreement” has the meaning given to it in the preamble.

          “Business Day” means any day that is not a Saturday, Sunday or day on
which banks located in New York City are authorized or required to be closed.

 

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

 

          “Common Stock” means the shares of common stock of the Company issued
and outstanding from time to time.

          “Demand Securities” has the meaning given to it in Section 2.2(a) of
this Agreement.

          “Designated Jurisdictions” has the meaning given to it in
Section 2.2(a) of this Agreement.

          “Distribution Agreement” has the meaning given to it in the recitals
of this Agreement.

          “Elected Jurisdictions” has the meaning given to it in Section 2.1(a)
of this Agreement.

          “Electing Shareholder” has the meaning given to it in Section 2.1(a)
of this Agreement

          “Exchange Act” means the United States Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC promulgated under
such Act.

          “Exercising Shareholder” has the meaning given to it in Section 2.2(a)
of this Agreement

          “Inspectors” has the meaning given to it in Section 2.4(h) of this
Agreement.

          “Other Securities” has the meaning given to it in Section 2.2(b) of
this Agreement.

          “Registrable Securities” means the shares of Common Stock held by the
Shareholders immediately following the consummation of the transactions
contemplated by the Distribution Agreement, and any additional shares of Common
Stock thereafter acquired by a Shareholder whether in connection with any stock
dividend on, or any stock split, reclassification or reorganization of any of
such shares or such additional shares, or otherwise, in each case, until such
Common Stock may be sold by such Shareholder without restriction under Rule
144(k) under the Securities Act.

          “SEC” means the United States Securities and Exchange Commission or
any successor agency.

          “Securities Act” means the United States Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated under such Act.

          “Selling Shareholder” has the meaning given to it in Section 2.4 of
this Agreement

          “Shareholder” has the meaning given to it in the preamble of this
Agreement.

-2-

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

 

          “Specified Securities” has the meaning given to it in Section 2.1(a)
of this Agreement.

          “Subject Securities” means shares of Common Stock or other debt or
equity securities of the Company convertible into or exchangeable for shares of
Common Stock.

ARTICLE II

REGISTRATION RIGHTS

          2.1. Incidental Rights.

               (a) If at any time or from time to time the Company proposes to
file with the SEC a registration statement (whether on Form S-1, S-2, or S-3, or
any equivalent form then in effect) for the registration under the Securities
Act of any Subject Securities for sale, for cash consideration, to the public by
the Company or on behalf of one or more securityholders of the Company
(including in connection with a demand registration exercised pursuant to
Section 2.2 but excluding any sale of securities upon conversion into or
exchange or exercise for shares of Common Stock, and any shares of Common Stock
issuable by the Company upon the exercise of employee stock options, or to any
employee stock ownership plan, or in connection with any acquisition made by the
Company, any securities exchange offer, any registration of securities
originally placed pursuant to Rule 144A under the Securities Act, dividend
reinvestment plan, employee benefit plan, corporate reorganization, or in
connection with any amalgamation, merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with one or more other corporations
if the Company is the surviving corporation), the Company shall give each
Shareholder (other than an Exercising Shareholder in the event of a registration
pursuant to Section 2.2) at least 20 days’ prior written notice of the proposed
filing (or if 20 days’ notice is not practicable, a reasonable shorter period to
be not less than 7 days), which notice shall outline the nature of the proposed
distribution and the jurisdictions in the United States in which the Company
proposes to qualify and offer such securities (the “Elected Jurisdictions”). On
the written request of a Shareholder (an “Electing Shareholder”) received by the
Company within 15 days after the date of the Company’s delivery to such
Shareholder of the notice of intended registration (which request shall specify
the Registrable Securities sought to be disposed by such Electing Shareholder
and the intended method or methods by which dispositions are intended to be
made), the Company shall, under the terms and subject to the conditions of this
Article II, at its own expense as provided in Section 4.2, include in the
coverage of such registration statement (or in a separate registration statement
concurrently filed) and qualify for sale under the blue sky or securities laws
of the various states in the Elected Jurisdictions the number of Registrable
Securities of the kind being registered (the “Specified Securities”) held by
each such Electing Shareholder or into which such Registrable Securities are
convertible, as the case may be, and which each such Electing Shareholder has so
requested to be registered or qualified for distribution, to the extent required
to permit the distribution (in accordance with the intended method or methods
thereof as aforesaid) in the Elected Jurisdictions requested by each such
Electing Shareholder of such Registrable Securities.

-3-

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

 

               (b) If the distribution proposed to be effected by the Company
involves an underwritten offering of the securities being so distributed by or
through one or more underwriters, and if the managing underwriter of such
underwritten offering indicates in writing its opinion that including all or
part of the Specified Securities in the coverage of such registration statement
or in the distribution to be effected by such prospectus will materially and
adversely affect the sale of securities proposed to be sold (which opinion of
the managing underwriter shall also state the maximum number of shares, if any,
which can be sold by the Electing Shareholders under this Section 2.1 without
materially adversely affecting the sale of the securities proposed to be sold),
then the number of Specified Securities which the Electing Shareholders shall
have the right to include in such registration statement shall be reduced on a
pro rata basis among the Electing Shareholders (based on the aggregate number of
Registrable Securities then held by them or on such other basis as they shall
agree) to the maximum number of shares or principal amount, in the case of debt,
specified by the managing underwriter. First priority, after the absolute
priority afforded to the Company, shall be afforded to the Specified Securities
held by the Electing Shareholders and no securities proposed to be sold by the
Electing Shareholders shall be so reduced until all securities proposed to be
sold by all other parties (other than the Company) have been entirely
eliminated.

               (c) The Company shall have the sole right to select any
underwriters, including the managing underwriter, of any public offering of
securities made other than as a result of the rights granted in Section 2.2.
Nothing in this Section 2.1 shall create any liability on the part of the
Company to any Shareholder if the Company for any reason decides not to file or
to delay or withdraw a registration statement (which the Company may do in its
sole discretion).

               (d) Each Electing Shareholder shall have the right to withdraw
its request for inclusion of its Specified Securities in any registration
statement pursuant to this Section 2.1 by giving written notice to the Company
of its request to withdraw; provided, however, that (i) such request must be
made in writing prior to the execution of the underwriting agreement (or such
other similar agreement) with respect to such registration and (ii) such
withdrawal shall be irrevocable and, after making such withdrawal, such Electing
Shareholder shall no longer have any right to include any of its Registrable
Securities in the registration as to which such withdrawal was made.

               (e) Each Shareholder may request to have all or any portion of
its Registrable Securities included in an unlimited number of registrations
under this Section 2.1.

          2.2. Demand Rights.

               (a) Upon written request of a Shareholder (an “Exercising
Shareholder”) made at any time, the Company shall, under the terms and subject
to the conditions set forth in this Section 2.2, and Sections 2.3 and 2.4, file
(and use its reasonable efforts to cause to become effective) a registration
statement covering, and use its reasonable efforts to qualify for sale under the
blue sky or securities laws of the various states of the United States as may be
requested by such Exercising Shareholder

-4-

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

 

(except any such state in which, in the opinion of the managing underwriter of
the offering, the failure to so qualify would not materially and adversely
affect the proposed offering or in which the Company would be required to submit
to general jurisdiction to effect such registration), in accordance with the
intended method or methods of disposition set forth in that notice, such number
of Registrable Securities as may be designated by such Exercising Shareholder in
its request (the “Demand Securities”), or that portion thereof designated in
said request for registration in each of the Designated Jurisdictions (as
defined below). A request for registration under this Section 2.2 shall specify
the number of Demand Securities to be registered, the jurisdictions in the
United States in which such registration is to be effected (the “Designated
Jurisdictions”) and the proposed manner of sale, including the name and address
of any proposed underwriter. The principal underwriter or underwriters for any
such offering shall be selected by the Exercising Shareholder, subject to the
Company’s approval, which may not be unreasonably withheld or delayed.
Notwithstanding any other provision in this Section, an Exercising Shareholder
shall not be permitted to make a demand for registration pursuant to this
Section unless the number of Demand Securities covered by such demand (together
with the aggregate number of Specified Securities to be included in such
registration pursuant to Section 2.1 hereof) is at least 12,500,000 shares of
Common Stock (or securities convertible into such number of shares of Common
Stock) (as such number may be appropriately adjusted to reflect stock splits,
reverse stock splits, dividends and any other recapitalization or reorganization
of the Company) or such lesser number of shares as would yield gross proceeds of
not less than $2 million based on the average closing price of the Common Stock
over the ten trading day period immediately preceding the date of the written
request hereunder.

               (b) If the distribution proposed to be effected pursuant to this
Section 2.2 involves an underwritten offering that includes securities of the
Company in addition to the Demand Securities (“Other Securities”), and if the
managing underwriter of such underwritten offering indicates in writing its
opinion that including all or part of such securities in the coverage of such
registration statement will materially and adversely affect the sale of the
Demand Securities proposed to be sold, then the number of Other Securities
proposed to be sold shall be reduced to the maximum number of securities (or
principal amount) specified by the managing underwriter.

               (c) The Company may delay the filing of any registration
statement requested under this Section 2.2, or delay its effectiveness, for a
reasonable period (but not longer than 90 days) if, in the sole judgment of the
Company’s Board of Directors, (i) a delay is necessary in light of pending
financing transactions, corporate reorganizations or other major events
involving the Company, or (ii) filing at the time requested would materially and
adversely affect the business or prospects of the Company in view of disclosures
that may be thereby required. Once the cause of the delay is eliminated, the
Company shall promptly notify the Exercising Shareholder and, promptly after the
Exercising Shareholder notifies the Company to proceed, the Company shall file a
registration statement and begin performance of its remaining obligations under
this Section 2.2.

-5-

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

 

               (d) Provided that in each case the filing of a registration
statement in more than one Designated Jurisdiction in connection with a
concurrent or substantially concurrent distribution shall be deemed for the
purposes of this Agreement to be a single registration:

                    (i) LB LP shall be entitled to request not more than three
registrations under this Section 2.2;

                    (ii) KFP/LB IHR II, LP shall be entitled to request not more
than one registration under this Section 2.2;

                    (iii) KA/LB IHR II, LP and CG Ventures/LB IHR II, LP shall
collectively be entitled to request not more than one registration under this
Section 2.2, but such request may only be made upon their mutual agreement;

                    (iv) SMW/LB IHR II, LP and DEL/LB IHR II, LP shall
collectively be entitled to request not more than one registration under this
Section 2.2, but such request may only be made upon their mutual agreement; and

                    (v) KFP/LB IHR II, LP, KA/LB IHR II, LP, CG Ventures/LB IHR
II, LP, SMW/LB IHR II, LP, DEL/LB IHR II, LP and PS/LB IHR II, LP shall
collectively be entitled to request not more than one additional registration
under this Section 2.2, which registration may be requested by any one of them,
but only upon the mutual agreement of Sherwood M. Weiser, Donald E. Lefton,
Karim Alibhai and Mahmood Khimji;

provided, that if a Shareholder requests a registration under this Section 2.2
but no registration statement becomes effective with respect to such
Shareholder’s Registrable Securities covered by such request, or any
registration statement is withdrawn or prematurely terminated (whether pursuant
to this Section 2.2 or as a result of any stop order, injunction or other order
or requirement of the SEC or any other governmental agency or court), then such
request shall not count as a request for purposes of determining the number of
requests for registration such Shareholder may make under this Section 2.2.

               (e) If there is an effective registration statement requested by
a Shareholder pursuant to this Section 2.2, such Shareholder may require the
Company to delay the filing of any registration statement relating to
convertible securities or shares of Common Stock or delay its effectiveness, for
a reasonable period (but not longer than 90 days) if, in the sole judgment of
such Shareholder, a delay is necessary in order to avoid materially and
adversely affecting the disposition of the Demand Securities pursuant to the
offering by such Shareholder; provided that the foregoing shall not limit the
Company’s right to file and have declared effective registration statements for
any other offering.

          2.3. Registration Conditions. Notwithstanding any other provision of
this Agreement, the Company shall not be required to effect a registration of
any Registrable

-6-

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

 

Securities held by a Shareholder under this Article II, or file any
post-effective amendment to such a registration statement relating to such a
qualification:

               (a) unless, in the case of a request to participate in a
registration under Section 2.1, such Shareholder agrees to sell and distribute a
portion or all of its Registrable Securities in accordance with the plan or
plans of distribution adopted by and through underwriters, if any, acting for
the Company or any such other sellers of Common Stock;

               (b) unless such Shareholder agrees to bear a pro rata share of
underwriter’s discounts and commissions;

               (c) if, in the case of a request for registration under
Section 2.2, the Company has given prior notice under Section 2.1 of its
intention to file a registration statement under the Securities Act and has not
completed or abandoned the proposed offering (for so long as the Company
continues in good faith to pursue the proposed offering); and

               (d) unless the Company has received from such Shareholder all
information the Company has reasonably requested concerning such Shareholder and
its method of distribution of its respective Registrable Securities, so as to
enable the Company to include in the registration statement all facts required
to be disclosed in it.

          2.4. Covenants and Procedures. If the Company becomes obligated under
this Article II to effect a registration of Registrable Securities on behalf of
one or more Shareholders (each a “Selling Shareholder”), then (as applicable to
the jurisdictions for which such registration is to be made):

               (a) The Company, at its expense as provided in Section 4.2, shall
prepare and file with the SEC a registration statement covering such securities
and such other related documents as may be necessary or appropriate relating to
the proposed distribution, and shall use reasonable efforts to cause the
registration statement to become effective. The Company will also, with respect
to any registration statement, file such post-effective amendments to the
registration statement (and use reasonable efforts to cause them to become
effective) and such supplements as are necessary so that current prospectuses
are at all times available for a period of at least 180 days after the effective
date of the registration statement or for such longer period, not to exceed
360 days, as may be required under the plan or plans of distribution set forth
in the registration statement. Each Selling Shareholder shall promptly provide
the Company with such information with respect to such Selling Shareholder’s
Registrable Securities to be so registered and, if applicable, the proposed
terms of their offering, as is required for the registration. If the Registrable
Securities to be covered by the registration statement are not to be sold to or
through underwriters acting for the Company, the Company shall:

                    (i) deliver to each Selling Shareholder, as promptly as
practicable, as many copies of preliminary prospectuses as such Selling
Shareholder may reasonably request (in which case such Selling Shareholder shall

-7-

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

 

keep a written record of the distribution of the preliminary prospectuses and
shall refrain from delivery of the preliminary prospectuses in any manner or
under any circumstances which would violate the Securities Act or the securities
laws of any other jurisdiction, including the various states of the United
States);

                    (ii) deliver to each Selling Shareholder, as soon as
practicable after the effective date of the registration statement, and from
time to time thereafter during the applicable period described in Section 2.4,
as many copies of the relevant prospectus as each such Selling Shareholder may
reasonably request; and

                    (iii) in case of the happening, after the effective date of
the registration statement and during the applicable 180 or 360-day period
described in the second sentence of Section 2.4(a), of any event or occurrence
as a result of which the prospectus, as then in effect, would include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make any statement therein not misleading in the
light of the circumstances in which it was made, give each Selling Shareholder
written notice of the event or occurrence and prepare and furnish to each
Selling Shareholder, in such quantities as it may reasonably request, copies of
an amendment of or a supplement to such prospectus as may be necessary so that
the prospectus, as so amended or supplemented and thereafter delivered to
purchasers of the Registrable Securities covered by such prospectus, 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,
in the light of the circumstances under which it was made, not misleading.

               (b) The Company will notify each Selling Shareholder of any
action by the SEC or any Commission to suspend the effectiveness of any
registration statement filed pursuant hereto or the initiation or threatened
initiation of any proceeding for such purpose or the receipt by the Company of
any notification with respect to the suspension of the qualification of the
securities for sale in any jurisdiction. Immediately upon receipt of any such
notice, each Selling Shareholder shall cease to offer or sell any Registrable
Securities pursuant to the registration statement or prospectus in the
jurisdiction to which such order or suspension relates. The Company will also
notify each Selling Shareholder promptly of the occurrence of any event or the
existence of any state of facts that, in the judgment of the Company, should be
set forth in such registration statement or prospectus. Immediately upon receipt
of such notice, each Selling Shareholder shall cease to offer or sell any
Registrable Securities pursuant to such registration statement or prospectus,
cease to deliver or use such registration statement or prospectus and, if so
requested by the Company, return to the Company at the Company’s expense all
copies of such registration statement or prospectus. The Company will as
promptly as practicable take such action as may be necessary to amend or
supplement such registration statement or prospectus in order to set forth or
reflect such event or state of facts and provide copies of such proposed
amendment or supplement to each Selling Shareholder.

-8-

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

 

               (c) On or before the date on which the registration statement is
declared effective, the Company shall use its reasonable efforts to:

                    (i) register or qualify (and cooperate with each Selling
Shareholder, the underwriter or underwriters, if any, and their counsel, in
connection with the registration or qualification of) the securities covered by
the registration statement for offer and sale under the securities or blue sky
laws of each state and other jurisdiction as any Selling Shareholder or any
underwriter reasonably requests;

                    (ii) keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the period the
registration statement or prospectus is required to be kept effective; and

                    (iii) do any and all other acts or things necessary or
advisable to enable the disposition in all such jurisdictions of the Registrable
Securities covered by the applicable registration statement, provided that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified.

               (d) The Company shall use its reasonable efforts to cause all
Registrable Securities of each Selling Shareholder included in the registration
statement to be listed, by the date of the first sale of such shares pursuant to
such registration statement, on the New York Stock Exchange or such other
securities exchange or exchanges on which the Common Stock is then listed or
proposed to be listed, if any, as directed by any Selling Shareholder (subject
to the Company’s consent, which consent shall not be unreasonably withheld or
delayed).

               (e) The Company shall make available to each Selling Shareholder
and any underwriter participating in the offering conducted pursuant to the
registration statement an earnings statement satisfying Section 11(a) of the
Securities Act no later than 45 days after the end of the 12-month period
beginning with the first day of the Company’s first fiscal quarter commencing
after the effective date of the registration statement. The earnings statement
shall cover such 12-month period. This requirement will be deemed to be
satisfied if the Company timely files complete and accurate information on Forms
10-Q, 10-K, and 8-K under the Exchange Act, and otherwise complies with Rule 158
under the Securities Act as soon as feasible.

               (f) The Company shall cooperate with each Selling Shareholder and
the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be sold under the registration statement,
and to enable such securities to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or any Selling
Shareholder, may request, subject to the underwriters’ obligation to return any
certificates representing unsold securities.

-9-

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

 

               (g) The Company shall use its reasonable efforts to cause
Registrable Securities covered by the registration statement to be registered
with or approved by such other governmental agencies or authorities in the
United States (including the registration of Registrable Securities under the
Exchange Act) as may be necessary to enable each Selling Shareholder or the
underwriter or underwriters, if any, to consummate the disposition of such
securities.

               (h) The Company shall, during normal business hours and upon
reasonable notice, make available for inspection by any Selling Shareholder, any
underwriter participating in any offering pursuant to the registration
statement, and any attorney, accountant or other agent retained by any Selling
Shareholder or any such underwriter (collectively, the “Inspectors”), all
financial and other records, pertinent corporate documents, and properties of
the Company (including non-public information), as shall be reasonably necessary
to enable the Inspectors to exercise their due diligence responsibilities;
provided that any Inspector receiving non-public information shall have
previously entered into an appropriate confidentiality agreement in mutually
satisfactory form and substance. The Company shall also cause its officers,
directors, and employees to supply all information reasonably requested by any
Inspector in connection with the registration statement.

               (i) The Company shall use its reasonable efforts to obtain a
“cold comfort” letter and, as applicable, a “long-form comfort letter” from the
Company’s independent public accountants, and an opinion of counsel for the
Company, each in customary form and covering such matters of the type
customarily covered by cold comfort letters and long form comfort letters and
legal opinions in connection with public offerings of securities, as any Selling
Shareholder reasonably request.

               (j) The Company shall enter into such customary agreements
(including an underwriting agreement containing such representations and
warranties by the Company and such other terms and provisions, as are
customarily contained in underwriting agreements for comparable offerings and
are reasonably satisfactory to the Company) and take all such other actions as
any Selling Shareholder or underwriter participating in such offering and sale
may reasonably request in order to expedite or facilitate such offering and sale
(other than such actions which are disruptive to the Company or require
significant management availability), including providing reasonable
availability of appropriate members of senior management of the Company to
provide customary due diligence assistance in connection with any offering and
to participate in customary “road show” presentations in connection with any
underwritten offerings in substantially the same manner as they would in an
underwritten primary registered public offering by the Company of its Common
Stock, after taking into account the reasonable business requirements of the
Company in determining the scheduling and duration of any road show.

-10-

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

 

ARTICLE III

INDEMNIFICATION

          3.1. Indemnification by the Company. In the event of any registration
under the Securities Act by any registration statement pursuant to rights
granted in this Agreement of Registrable Securities held by any Shareholder, the
Company will hold harmless each such Shareholder and each underwriter of such
securities and each other person, if any, who controls any such Shareholder or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages, or liabilities (including legal fees and costs of court), joint
or several, to which any such Shareholder, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, or liabilities (or any actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact (i) contained, on its effective date, in any registration
statement under which such securities were registered under the Securities Act
or any amendment or supplement to any of the foregoing, or which arise out of or
are based upon the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (ii) contained in any preliminary prospectus, if used prior to the
effective date of such registration statement, or in the final prospectus (as
amended or supplemented if the Company shall have filed with the SEC any
amendment or supplement to the final prospectus) if used within the period which
the Company is required to keep the registration to which such registration
statement or prospectus relates current under Section 2.4, or which arise out of
or are based upon the omission or alleged omission (if so used) to state a
material fact required to be stated in such prospectus or necessary to make the
statements in such prospectus not misleading; and will reimburse each such
Shareholder and underwriter and each such controlling person, if any, for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, or liability; provided,
however, that the Company shall not be liable to any Shareholder or its
underwriters or controlling persons in any such case to the extent that any such
loss, claim, damage, or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement or such amendment or supplement, in reliance upon
and in conformity with information furnished to the Company through a written
instrument duly executed by such Shareholder or underwriter specifically for use
in the preparation thereof; provided further that the Company shall not be
liable to any Shareholder or its underwriters or controlling persons in any such
case with respect to losses, claims, damages or liabilities (including legal
fees and costs of court) that arise out of or are based on an untrue statement
or alleged untrue statement or omission or alleged omission made in any
prospectus used in connection with any request for registration under
Section 2.2, to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission is corrected in any amendment or
supplement to such prospectus if both (y) the person asserting such loss, claim,
damage or liability purchased securities in reliance on such prospectus but was
not given such amendment or supplement thereto on or prior to the confirmation
of the sale of such securities and such amendment or supplement was required by
law to be delivered on or prior to the confirmation of such sale and (z) the
Company had delivered to such Shareholder or its underwriters such amendment or
supplement thereto pursuant to Section 2.4(a)(iii) in the

-11-

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

 

requisite quantity and on a timely basis to permit proper delivery to such
person on or prior to the date of confirmation of the sale of such securities.

          3.2. Indemnification by Selling Shareholders. It shall be a condition
precedent to the obligation of the Company to include in any registration
statement any Registrable Securities of any Selling Shareholder that the Company
shall have received from such Selling Shareholder an undertaking, reasonably
satisfactory to the Company and its counsel, to indemnify and hold harmless, on
a several but not joint basis, (in the same manner and to the same extent as set
forth in Section 3.1) the Company, each director of the Company, each officer of
the Company who shall sign the registration statement, any person who controls
the Company within the meaning of the Securities Act, and each other Selling
Shareholder (i) with respect to any statement or omission from such registration
statement, or any amendment or supplement to it, if such statement or omission
was made in reliance upon and in conformity with information furnished to the
Company through a written instrument duly executed by such Selling Shareholder
specifically for use in the preparation of such registration statement or
amendment or supplement, and (ii) with respect to compliance by such Selling
Shareholder with applicable laws in effecting the sale or other disposition of
the securities covered by such registration statement.

          3.3 Indemnification Procedures. Promptly after receipt by an
indemnified party of notice of the commencement of any action involving a claim
referred to in the preceding Sections of this Article III, the indemnified party
will, if a resulting claim is to be made or may be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of the
action. If any such action is brought against an indemnified party, the
indemnifying party will be entitled to participate in and to assume the defense
of the action with counsel reasonably satisfactory to the indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume defense of the action, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses incurred by the
latter in connection with the action’s defense. An indemnified party shall have
the right to employ separate counsel in any action or proceeding and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
such indemnified party’s expense unless (a) the employment of such counsel has
been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party has not assumed the defense and employed counsel reasonably
satisfactory to the indemnified party within 30 days after notice of any such
action or proceeding, or (iii) the named parties to any such action or
proceeding (including any impleaded parties) include the indemnified party and
the indemnifying party and the indemnified party shall have been advised by such
counsel that there may be one or more legal defenses available to the
indemnified party that are different from or additional to those available to
the indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action or proceeding on behalf of the
indemnified party), it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to all local
counsel which is necessary, in the good faith opinion of both counsel for the
indemnifying party and counsel for the indemnified party in order to adequately
represent the indemnified parties) for the indemnified party and that all such
fees

-12-

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

 

and expenses shall be reimbursed as they are incurred upon written request and
presentation of invoices. Whether or not a defense is assumed by the
indemnifying party, the indemnifying party will not be subject to any liability
for any settlement made without its consent. No indemnifying party will consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term the giving by the claimant or plaintiff, to the
indemnified party, of a release from all liability in respect of such claim or
litigation.

          3.4. Contribution. If the indemnification required by this Article III
from the indemnifying party is unavailable to or insufficient to hold harmless
an indemnified party in respect of any indemnifiable losses, claims, damages,
liabilities, or expenses, then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities, or expenses in such proportion as is appropriate
to reflect (i) the relative benefit of the indemnifying and indemnified parties
and (ii) if the allocation in clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect the relative benefit referred to in
clause (i) and also the relative fault of the indemnified and indemnifying
parties, in connection with the actions which resulted in such losses, claims,
damages, liabilities, or expenses, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact, has been made by, or relates to information supplied by, such
indemnifying party or parties, and the parties’ relative intent, knowledge,
access to information, and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims, damage,
liabilities, and expenses referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding. The Company and each Shareholder agree that it
would not be just and equitable if contribution pursuant to this Section 3.4
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
prior provisions of this Section 3.4.

          Notwithstanding the provisions of this Section 3.4, no indemnifying
party shall be required to contribute any amount in excess of the amount by
which the total price at which the securities were offered to the public by the
indemnifying party exceeds the amount of any damages which the indemnifying
party has otherwise been required to pay by reason of an untrue statement or
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such a fraudulent misrepresentation.

ARTICLE IV

OTHER AGREEMENTS

          4.1. Other Registration Rights. The Company agrees that it will not
grant to any party registration rights which would allow such party to limit a
Shareholder’s priority for the sale or distribution of Registrable Securities
upon the exercise of a demand registration right pursuant to Section 2.2 or
incidental registration rights pursuant to Section 2.1.

-13-

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

 

          4.2. Expenses. All expenses incurred by the Company in connection with
any registration statement covering Registrable Securities offered by a Selling
Shareholder, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the New York Stock Exchange),
printing expenses, reasonable fees and disbursements of counsel (except for the
fees and disbursements of counsel for the Selling Shareholders) and of the
independent certified public accountants, underwriter’s reasonable legal,
accounting and out-of-pocket expenses, and the expense of qualifying such
securities under state blue sky laws, shall be borne by the Company, including
such expenses of any registration delayed by the Company under the fourth
paragraph of Section 2.2; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 2.2 if the registration request is subsequently withdrawn at the
request of the Exercising Shareholder (in which case the Exercising Shareholder
shall bear its pro rata share of the expenses based on the number of Registrable
Securities such Shareholder intended to include in such registration compared to
the total number of Subject Securities intended to include in such
registration), unless such Exercising Shareholder agrees to forfeit its right to
one demand registration under Section 2.2; provided further, however, that if at
the time of such withdrawal such Exercising Shareholder has learned of a
material adverse change in the condition, business, or prospects of the Company
that was not known to it at the time of its request, then such Exercising
Shareholder shall not be required to pay any of such expenses and shall retain
their rights pursuant to Section 2.2. The Company’s obligations under this
Section 4.2 shall apply to each registration under the Securities Act or state
blue sky legislation pursuant to Section 2.2. The foregoing notwithstanding, all
underwriter’s discounts and commissions covering Registrable Securities offered
by a Shareholder shall be borne by such Shareholder.

          4.3. Dispositions During Registration. Each Shareholder agrees that,
without the consent of the managing underwriter(s) in an underwritten offering
in respect of Common Stock or other Subject Securities, it will not effect any
sale or distribution of Common Stock or other Subject Securities (other than
Registrable Securities included in such offering), during the ten (10) day
period prior to, and during the ninety (90) day period beginning on, the
effective date of the registration statement filed by the Company in respect of
such underwritten offering, or any shorter period as may apply to the Company
and its affiliates.

          4.4. Transfer of Rights. All rights of each Shareholder under this
Agreement shall be transferable by such Shareholder to any party who acquires
Registrable Securities from such Shareholder and who executes an instrument in
form and substance satisfactory to the Company in which it agrees to be bound by
the terms of this Agreement as if an original signatory hereto, in which case
such transferee shall thereafter be a “Shareholder” for all purposes of this
Agreement. In the case of any assignment, the party or parties who have the
rights and benefits of the assigning Shareholder under this Agreement shall
become parties to and be subject to this Agreement, and shall not, as a group,
have the right to request any greater number of registrations than such
Shareholder would have had if no assignment had occurred. Upon any transfer of
the registration rights or benefits of this Agreement, such assigning
Shareholder shall give the Company written notice prior to or promptly following
such transfer stating the name and address of the transferee and identifying the
securities with respect to which such rights are being assigned. Such notice
shall include or be accompanied by a written undertaking by the transferee to
comply with the obligations imposed hereunder. Unless

-14-

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

 

otherwise agreed by the assigning Shareholder and the parties to whom
registration rights have been transferred, in the event any registration rights
are transferred in accordance with the terms of this Agreement, any actions
required to be taken by such assigning Shareholder will be taken with the
approval of the holders of such registration rights who hold a majority of the
Registrable Securities, whose actions shall bind all such holders of such
registration rights.

          4.5. Best Registration Rights. If the Company grants to any Person
with respect to any security issued by the Company or any of its Affiliates
registration rights (other than as to the number of demand registrations) that
provide for terms that are in any manner more favorable to the holder of such
registration rights than the terms granted to any Shareholder (or if the Company
amends or waives any provision of any agreement providing registration rights of
others or takes any other action whatsoever to provide for terms that are more
favorable to other holders than the terms provided to any Shareholder other than
the number of demand registrations or the minimum amount of shares required to
exercise demand registration rights), then this Agreement shall immediately be
deemed amended to provide each Shareholder with any (or all) of such more
favorable terms as any Shareholder shall elect to include herein. The Company
shall promptly give notice to each Shareholder of the granting of any such
registration rights to another Person.

ARTICLE V

MISCELLANEOUS

          5.1. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telecopier, or air courier guaranteeing delivery:

     
       (a)
  If to the Company, to:
 
   

  Interstate Hotels & Resorts, Inc.

  1010 Wisconsin Avenue

  Suite 500

  Washington, D.C. 20007

  Attention: Christopher L. Bennett, Esq.

  Telecopy: (207) 295-1026
 
   

  with a copy to:
 
   

  Paul, Weiss, Rifkind, Wharton & Garrison

  1285 Avenue of the Americas

  New York, New York 10019-6064

  Attention: Richard S. Borisoff, Esq.

  Facsimile: (212) 757-3990

or to such other person or address as the Company shall furnish to each
Shareholder in writing;

-15-

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

 

     
(b)
  If to LB LP, to:
 
   

  LB Interstate LP LLC

  c/o Lehman Brothers Holdings Inc.

  1284 Avenue of the Americas,

  13th Floor

  New York, New York 10019

  Attention: Joseph Flannery

  Fax: (646) 758-1938
 
   

  with a copy to:
 
   

  Fried, Frank, Harris, Shriver & Jacobson

  1 New York Plaza

  New York, New York 10004

  Attn: Jonathan Mechanic, Esq.

  Fax: (212) 859-8582
 
   
(c)
  If to KFB/LB IHR II, LP, to:
 
   

  545 E. John Carpenter Freeway

  Suite 1400

  Irving, TX 75062
 
   
(d)
  If to KA/LB IHR II, LP, to:
 
   

  1221 Brickell Avenue

  Suite 900

  Miami, FL 33131
 
   
(e)
  If to CG Ventures/LB IHR II, to:
 
   

  1221 Brickell Avenue

  Suite 900

  Miami, FL 33131
 
   
(f)
  If to SMW/LB IHR II, LP, to:
 
   

  3250 Mary Street

  5th Floor

  Miami, FL 33133
 
   
(g)
  If to DEL/LB IHR II, to:
 
   

  3250 Mary Street

-16-

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

 

     

  5th Floor

  Miami, FL 33133
 
   
       (h)
  If to PS/LB IHR II, LP, to:
 
   

  3250 Mary Street

  5th Floor

  Miami, FL 33133

or to such other person or address as a Shareholder shall furnish to the Company
and each other Shareholder in writing.

          All such notices, requests, demands and other communications shall be
deemed to have been duly given: at the time of delivery by hand, if personally
delivered; five (5) Business Days after being deposited in the mail, postage
prepaid, if mailed domestically in the United States (and seven (7) Business
Days if mailed internationally); when receipt acknowledged, if telecopied; and
on the Business Day for which delivery is guaranteed, if timely delivered to an
air courier guaranteeing such delivery.

          5.2. Section Headings. The article and section headings in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. References in this Agreement to a designated
“Article” or “Section” refer to an Article or Section of this Agreement unless
otherwise specifically indicated.

          5.3. Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the law of New York, without regard to its
conflict of laws principles that would indicate the applicability of the laws of
any other jurisdiction.

          5.4. Consent to Jurisdiction and Service of Process. Any legal action
or proceeding with respect to this Agreement or any matters arising out of or in
connection with this Agreement and any action for enforcement of any judgment in
respect thereof shall be brought exclusively in the state or federal courts
located in the State of New York, and, by execution and delivery of this
Agreement, the Company and each of the Shareholders each hereby irrevocably
consents to service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, or by recognized international express carrier
or delivery service to such party at its respective address referred to in this
Agreement. The Company and each of the Shareholders each hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement brought in the courts referred to above and each hereby
further irrevocably waives and agrees, to the extent permitted by applicable
law, not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. Nothing in
this Agreement shall affect the right of any party hereto to serve process in
any other manner permitted by law.

          5.5. Amendments. This Agreement may be amended only by an instrument
in writing executed by all of its parties.

-17-

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

 

          5.6. Entire Agreement. This Agreement and the Distribution Agreement
constitute the entire agreement and understanding of the parties with respect to
the transactions contemplated hereby and thereby. This Agreement may be amended
only by a written instrument duly executed by the parties or their respective
successors or assigns; provided, however, that any amendment or waiver by the
Company shall be made only with the prior approval of a majority of the entire
Board of Directors of the Company.

          5.7. Severability. The invalidity or unenforceability of any specific
provision of this Agreement shall not invalidate or render unenforceable any of
its other provisions. Any provision of this Agreement held invalid or
unenforceable shall be deemed reformed, if practicable, to the extent necessary
to render it valid and enforceable and to the extent permitted by law and
consistent with the intent of the parties to this Agreement.

          5.8. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.

-18-

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

 

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

                  THE SHAREHOLDERS:
 
                LB INTERSTATE GP LLC
 
                By:   PAMI LLC,
 
                    its Sole Member
 
           

      By:    

           
 
           

      Name:    

           
 
           

      Title:    

           
 
                LB INTERSTATE LP LLC
 
                By:   PAMI LLC,
 
                    its Sole Member
 
           

      By:    

           
 
           

      Name:    

           
 
           

      Title:    

           

-19-

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

 

                  KFP/LB IHR II, LP
 
                By:   KFP/LB IHR GP, LLC,
 
                    its General Partner
 
           

      By:   /s/ Mahmood Khimji

           
 
           

      Name:   Mahmood Khimji
 
           

      Title:   President
 
                KA/LB IHR II, LP
 
                By:   KA/LB IHR GP, LLC,
 
                    its General Partner
 
                By:   /s/ Karim Alibhai

       
 
           

      Name:   Karim Alibhai
 
           

      Title:   Managing Member

-20-

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

 

                  CG Ventures/LB IHR II, LP
 
                By:   CG Ventures/LB IHR GP, LLC,
 
                    its General Partner
 
                By:   /s/ Haider Alibhai Ukani

       
 
           

      Name:   Haider Alibhai Ukani
 
           

      Title:   Vice President
 
                SMW/LB IHR II, LP
 
           
 
                By:   SMW/LB IHR GP, LLC,
 
                    its General Partner
 
           

  By:   /s/ Sherwood M. Weiser

       
 
           

      Name:   Sherwood M. Weiser
 
           

      Title:   Managing Member
 
                DEL/LB IHR II, LP
 
                By:   DEL/LB IHR GP, Inc.,
 
                    its General Partner

-21-

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

 

             

      By:   /s/ Donald E. Lefton

           
 
           

      Name: Donald E. Lefton
 
           

      Title: President
 
                PS/LB IHR II, LP
 
                By:   PS/LB IHR GP, Inc.,
 
                    its General Partner
 
           

      By:   /s/ Peter Sibley

           
 
           

      Name: Peter Sibley
 
           

      Title: President

-22-

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

 

                  THE COMPANY:
 
                INTERSTATE HOTELS & RESORTS, INC.
 
           

  By:                  
 
           

  Name:                  
 
           

  Title:                  

-23-