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                                                                    EXHIBIT 4.2

                        INTERSTATE HOTELS & RESORTS, INC.
                                 EXECUTIVE FUND

                         Effective as of January 1, 2004

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                        INTERSTATE HOTELS & RESORTS, INC.
                                 EXECUTIVE FUND

                         Effective as of January 1, 2004

                                TABLE OF CONTENTS

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<S>                                                                                                          <C>
                                                   ARTICLE I
                                                  DEFINITIONS

1.1      ACCOUNT........................................................................................     1
1.2      ADJUSTED ALLOCABLE SHARE.......................................................................     1
1.3      AGGREGATE CONTRIBUTION CREDITS.................................................................     1
1.4      ALLOCABLE SHARE................................................................................     1
1.5      AVAILABLE CONTRIBUTION CREDITS.................................................................     2
1.6      BENEFICIARY....................................................................................     2
1.7      BOARD..........................................................................................     2
1.8      CHANGE IN CONTROL..............................................................................     2
1.9      CHIEF EXECUTIVE OFFICER........................................................................     2
1.10     CODE...........................................................................................     2
1.11     COMPENSATION...................................................................................     2
1.12     COMPENSATION DEFERRAL ACCOUNT..................................................................     3
1.13     COMPENSATION DEFERRAL MAXIMUM PERCENTAGE.......................................................     3
1.14     COMPENSATION DEFERRALS.........................................................................     3
1.15     DEEMED INVESTMENT DATE.........................................................................     3
1.16     EFFECTIVE DATE.................................................................................     3
1.17     ELIGIBLE EMPLOYEE..............................................................................     3
1.18     EMPLOYER.......................................................................................     3
1.19     EMPLOYER CONTRIBUTION CREDIT ACCOUNT...........................................................     3
1.20     EMPLOYER CONTRIBUTION CREDITS..................................................................     4
1.21     ENTRY DATE.....................................................................................     4
1.22     ERISA..........................................................................................     4
1.23     INVESTMENT COMMITTEE...........................................................................     4
1.24     NEXT YEAR'S BONUS..............................................................................     4
1.25     NEXT YEAR'S BONUS DEFERRALS....................................................................     4
1.26     OTHER COMPENSATION.............................................................................     5
1.27     PARTICIPANT....................................................................................     5
1.28     PLAN...........................................................................................     5
1.29     PLAN SPONSOR...................................................................................     5
1.30     PLAN YEAR......................................................................................     5
1.31     QUALIFIED INVESTMENTS..........................................................................     5
1.32     QUALIFIED INVESTMENT DOLLAR LIMIT..............................................................     5
1.33     REGULAR BONUS..................................................................................     5
1.34     REGULAR BONUS DEFERRALS........................................................................     5
1.35     TRANSACTIONAL EXPENSES.........................................................................     5
1.36     TRUST..........................................................................................     5
</TABLE>

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<TABLE>
<S>                                                                                                         <C>
1.37     VALUATION DATE.................................................................................     5
1.38     YEAR OF VESTING................................................................................     6

                                                  ARTICLE II
                                        ELIGIBILITY AND PARTICIPATION

2.1      REQUIREMENTS...................................................................................     6
2.2      RE-EMPLOYMENT..................................................................................     6
2.3      CHANGE OF EMPLOYMENT CATEGORY..................................................................     6

                                                 ARTICLE III
                                          CONTRIBUTIONS AND CREDITS

3.1      EMPLOYER CONTRIBUTION CREDITS..................................................................     7
3.2      PARTICIPANT COMPENSATION DEFERRALS.............................................................     7

                                                  ARTICLE IV
                                             ALLOCATION OF FUNDS

4.1      DEEMED INVESTMENTS UNDER THE PLAN..............................................................     9
4.2      VALUATION OF QUALIFIED INVESTMENTS.............................................................    10
4.3      ALLOCATION OF DEEMED INVESTMENTS AND DEEMED EARNINGS OR LOSSES AMONG PLAN ACCOUNTS ............    11
4.4      SEPARATE BOOKKEEPING ACCOUNTS..................................................................    11
4.5      PAYMENT OF EXPENSES............................................................................    12

                                                  ARTICLE V
                                           ENTITLEMENT TO BENEFITS

5.1      NON-LIQUIDATING DISTRIBUTION FROM A QUALIFIED INVESTMENT.......................................    12
5.2      COMPLETE DISPOSITION BY PLAN SPONSOR OF A QUALIFIED INVESTMENT.................................    13
5.3      TERMINATION OF EMPLOYMENT......................................................................    12
5.4      CHANGE IN CONTROL..............................................................................    13
5.5      VESTING........................................................................................    13
5.6      RETURN OF COMPENSATION DEFERRALS AND RELINQUISHMENT OF CORRESPONDING EMPLOYER CONTRIBUTIONS....    13

                                                  ARTICLE VI
                                           DISTRIBUTION OF BENEFITS

6.1      AMOUNT AND METHOD OF PAYMENT...................................................................    14
6.2      TERMINATION BENEFIT............................................................................    14
</TABLE>

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6.3      OTHER BENEFITS.................................................................................    15

                                                 ARTICLE VII
                                       BENEFICIARIES; PARTICIPANT DATA

7.1      DESIGNATION OF BENEFICIARIES...................................................................    15
7.2      INFORMATION TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES;  INABILITY TO LOCATE
         PARTICIPANTS OR BENEFICIARIES..................................................................    16

                                                 ARTICLE VIII
                                       ADMINISTRATION AND RECORDKEEPING

8.1      ADMINISTRATIVE AND RECORDKEEPING AUTHORITY.....................................................    16
8.2      UNIFORMITY OF DISCRETIONARY ACTS...............................................................    17
8.3      LITIGATION.....................................................................................    17
8.4      CLAIMS PROCEDURE...............................................................................    17

                                                  ARTICLE IX
                                                  AMENDMENT

9.1      RIGHT TO AMEND.................................................................................    19
9.2      AMENDMENT TO ENSURE PROPER CHARACTERIZATION OF THE PLAN........................................    18
9.3      CHANGES IN LAW AFFECTING TAXABILITY............................................................    19

                                                  ARTICLE X
                                                 TERMINATION

10.1     PLAN SPONSOR'S RIGHT TO TERMINATE PLAN.........................................................    20
10.2     AUTOMATIC TERMINATION OF PLAN..................................................................    20
10.3     SUCCESSOR TO PLAN SPONSOR......................................................................    20

                                                  ARTICLE XI
                                                MISCELLANEOUS

11.1     LIMITATIONS ON LIABILITY OF PLAN SPONSOR AND EMPLOYER..........................................    20
11.2     CONSTRUCTION...................................................................................    21
11.3     SPENDTHRIFT PROVISION..........................................................................    21

                                                 ARTICLE XII
                                                    TRUST

12.1     ESTABLISHMENT OF TRUST.........................................................................    22
</TABLE>

                                       iii

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                        INTERSTATE HOTELS & RESORTS, INC.
                                 EXECUTIVE FUND

                         Effective as of January 1, 2004

                                    RECITALS

         This Interstate Hotels & Resorts, Inc. Executive Fund (the "Plan") is
adopted by Interstate Hotels & Resorts, Inc. (the "Plan Sponsor") for certain
management employees of Interstate Management Company, LLC (the "Employer"). The
purpose of the Plan is to align the interests of those employees more closely
with the interests of the Plan Sponsor and the Employer, by offering them
incentive compensation benefits taxable under section 451 of the Internal
Revenue Code of 1986, as amended (the "Code"). The Plan is intended to be a
"top-hat plan" (i.e., an unfunded deferred compensation plan maintained for a
select group of management or highly compensated employees) pursuant to sections
201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").

         Accordingly, the following Plan is adopted.

                                    ARTICLE I
                                   DEFINITIONS

         The following terms, as used herein, unless a different meaning is
implied by the context, have the following meaning:

         1.1      ACCOUNT means the balance credited to a notational account
maintained on the books of the Employer with respect to each Participant,
including amounts credited to the Participant's Compensation Deferral Account
and to his or her Employer Contribution Credit Account. Said Account shall be
determined as of the relevant Valuation Date hereunder.

         1.2      ADJUSTED ALLOCABLE SHARE means, with respect to each Qualified
Investment, the Allocable Share of the Plan for that Qualified Investment as
reduced pursuant to Section 4.1(d) and as reduced by any distributions (other
than as provided in Section 5.1) or forfeitures hereunder allocable to that
Qualified Investment.

         1.3      AGGREGATE CONTRIBUTION CREDITS means, for each Plan Year, the
aggregate Compensation Deferrals and Employer Contribution Credits credited
under the Plan for that Plan Year.

         1.4      ALLOCABLE SHARE means, with respect to each Plan Year, that
portion (expressed as a percentage, and as adjusted pursuant to Section 4.1(d))
of the Plan Sponsor's aggregate investment commitment to each Qualified
Investment arising during that Plan Year which the Board determines to be the
appropriate level at which Plan Accounts should be deemed to co-invest with the
Plan Sponsor in such Qualified Investment. The Board may establish for each Plan
Year the

                                        1

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Allocable Share to apply to all Qualified Investments with a Deemed Investment
Date falling within that Plan Year.

         1.5      AVAILABLE CONTRIBUTION CREDITS means, with respect to each
Qualified Investment, the aggregate amount credited to Plan Accounts (including
deemed interest credited pursuant to Section 4.1(a)) that are available for
allocation to that Qualified Investment (i.e., amounts credited to Plan Accounts
that have not yet been deemed invested in other Qualified Investments and that
have not been returned to or relinquished by Participants pursuant to Section
5.5) as of the Deemed Investment Date for that Qualified Investment.

         1.6      BENEFICIARY means any person or persons so designated in
accordance with the provisions of Article VII.

         1.7      BOARD means the Board of Directors of the Plan Sponsor.

         1.8      CHANGE IN CONTROL means a transaction or series of
transactions occurring after the Effective Date, in which (i) any individual,
firm, corporation or other entity, or any group (as defined in Section 13(d)(3)
or the Securities Exchange Act of 1934 (the "Act")), becomes, directly or
indirectly, the beneficial owner (as defined in the general rules and
regulations of the Securities and Exchange Commission with respect to Sections
13(d) and 13(g) of the Act) of more than fifty percent (50%) of the then
outstanding shares of the Plan Sponsor's capital stock entitled to vote
generally in the election of directors of the Plan Sponsor; or (ii) the
stockholders of the Plan Sponsor approve a definitive agreement for (A) the
merger or other business combination of the Plan Sponsor with or into another
corporation pursuant to which the stockholders of the Plan Sponsor do not own,
immediately after the transaction, more than fifty percent (50%) of the voting
power of the corporation that survives and is a publicly owned corporation and
not a subsidiary of another corporation, or (B) the sale, exchange or other
disposition of all or substantially all of the assets of the Plan Sponsor; or
(iii) during any period of two (2) years or less, individuals who at the
beginning of such period constituted the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the stockholders of the Plan Sponsor, of each new director was
approved by a vote of at least seventy-five percent (75%) of the directors then
still in office who were directors at the beginning of the period.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
taken place if beneficial ownership is acquired by, or a tender exchange offer
is commenced by, the Plan Sponsor or any of its subsidiaries, any profit
sharing, employee ownership or other employee benefit plan of the Plan Sponsor
or any subsidiary of any trustee of or fiduciary with respect to any such plan
when acting in such capacity, or any group comprised solely of such entities.

         1.9      CHIEF EXECUTIVE OFFICER means the Chief Executive Officer of
the Plan Sponsor.

         1.10     CODE means the Internal Revenue Code of 1986 and the
regulations thereunder, as amended from time to time.

         1.11     COMPENSATION means the total cash base salary compensation and
the total cash

                                        2

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bonus compensation of the Participant with respect to the Plan Year of
reference, including the Participants Next Year's Bonus.

         1.12     COMPENSATION DEFERRAL ACCOUNT is defined in Section 3.2.

         1.13     COMPENSATION DEFERRAL PERCENTAGE means, for each Plan Year and
each item of Compensation that the Participant is permitted to defer with
respect to that Plan Year, the percentage of the Participant's base salary that
the Plan Sponsor establishes as the deferral percentage for that Plan Year with
respect to that item of Compensation. For each Plan Year, the Plan Sponsor may
establish a different Compensation Deferral Percentage with respect to each item
of Compensation that may be deferred for that Plan Year and with respect to any
Participant or group of Participants, and may increase the Compensation Deferral
Percentage for each such item of deferrable Compensation with respect to
Participants who have elected to defer the Compensation Deferral Percentage
(before such increase) with respect to that item.

         1.14     COMPENSATION DEFERRALS is defined in Section 3.2.

         1.15     DEEMED INVESTMENT DATE means, with respect to each Qualified
Investment, the date on which the Plan Sponsor's investment in that Qualified
Investment is made (as reasonably determined by the Plan Sponsor), as of which a
Participant's Account is deemed to become invested in that Qualified Investment.

         1.16     EFFECTIVE DATE means the effective date of the Plan, which
shall be January 1, 2004.

         1.17     ELIGIBLE EMPLOYEE means any individual employed by the
Employer in a Vice President or more senior position, or any other individual
employed by the Employer who is determined by the Plan Sponsor to be a member of
a select group of management or highly compensated employees of the Employer
(within the meaning of ERISA), who is designated by the Chief Executive Officer
to be an Eligible Employee under the Plan.

                  Generally, by each December 1, the Employer shall notify those
individuals, if any, who will be Eligible Employees for the next Plan Year. If
the Plan Sponsor determines that an individual first becomes an Eligible
Employee during a Plan Year, the Employer shall notify such individual of that
determination and of the date during the Plan Year on which the individual shall
first become an Eligible Employee.

         1.18     EMPLOYER means Interstate Management Company, LLC and its
successors and assigns unless otherwise herein provided, or any other
corporation or business organization which, with the consent of the Plan Sponsor
or its successors or assigns, assumes the Employer's obligations hereunder, or
any other corporation or business organization which agrees, with the consent of
the Plan Sponsor to become a party to the Plan.

         1.19     EMPLOYER CONTRIBUTION CREDIT ACCOUNT is defined in Section
3.1.

                                        3

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         1.20     EMPLOYER CONTRIBUTION CREDITS is defined in Section 3.1.

         1.21     ENTRY DATE means, with respect to any individual, the day,
following the date on which that individual becomes an Eligible Employee, on
which that individual's Regular Bonus is payable (or would be payable, but for a
Regular Bonus Deferral election made by the Participant hereunder). If, pursuant
to Section 3.2, the Plan Sponsor permits deferrals of Participant's Next Year's
Bonus or Other Compensation in addition to Regular Bonus Deferrals, then Entry
Date shall mean, with respect to any individual who has not yet experienced an
Entry Date, the day, following the date on which the individual becomes an
Eligible Employee, that is (i) in the case of base salary deferrals, the first
day of a pay period, (ii) in the case of deferrals of bonuses other than the
Regular Bonus or the Next Year's Bonus, the day on which that bonus is (or would
be) payable, and (iii) in the case of Next Year's Bonus Deferrals, the day on
which those amounts first are deemed invested in a Qualified Investment.

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

         1.23     INVESTMENT COMMITTEE means the Investment Committee of the
Board.

         1.24     NEXT YEAR'S BONUS means the total annual bonus of the
Participant with respect to the Plan Year immediately following the Plan Year of
reference, generally payable in March of that following Plan Year.

         1.25     NEXT YEAR'S BONUS DEFERRALS means, with respect to each Plan
Year, that portion (if any) of a Participant's Next Year's Bonus that the
Participant is offered the opportunity to defer under the Plan, and that he or
she elects to defer pursuant to Section 3.2. A Participant's Next Year's Bonus
Deferrals shall be considered an "advance" by the Employer against the annual
bonus that is not otherwise payable to the Participant for more than a year
after the date of his or her deferral election, with the results that (i) any
Next Year's Bonus Deferrals made by a Participant with respect to a Plan Year
shall be charged against, and shall reduce, his or her Regular Bonus for the
following Plan Year (and for the Plan Year(s) after that, if the immediately
following Plan Year's Regular Bonus is insufficient to "repay" the Next Year's
Bonus Deferral "advance"), and, if any portion of those Next Year's Bonus
Deferrals has been deemed invested in one or more Qualified Investments prior to
the date on which the "advance" is repaid from the Regular Bonus for the
following Plan Year (and for the Plan Year(s) after that, if necessary), then
interest on that portion so deemed invested also shall be charged against, and
shall reduce, the Participant's Regular Bonus for the following Plan Year (and
for the Plan Year(s) after that, if necessary), such interest to be calculated
from the date(s) of the deemed investment in the Qualified Investment(s) through
the date(s) on which the "advance" is repaid, using the interest rate described
in Section 5.5(b), (ii) as provided in Section 4.1, a Participant's Next Year's
Bonus Deferrals will not be credited with any income or earnings until the
earlier of when they are deemed invested in one or more Qualified Investments or
when the "advance" is repaid from the Participant's Regular Bonus for following
Plan Year (and for the Plan Year(s) after that, if necessary), and (iii) a
Participant's Next Year's Bonus Deferrals will not be deemed invested in any
Qualified Investments unless and until his or her

                                        4

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Compensation Deferrals, excluding Next Year's Bonus Deferrals, have been deemed
invested in full in Qualified Investments.

         1.26     OTHER COMPENSATION means the Compensation of the Participant
with respect to the Plan Year of reference, excluding the Participant's Regular
Bonus and Next Year's Bonus.

         1.27     PARTICIPANT means any individual so designated in accordance
with the provisions of Article II, including, where appropriate according to the
context of the Plan, any former Participant who is or may become (or whose
Beneficiary may become) eligible to receive a benefit under the Plan.

         1.28     PLAN means this Interstate Hotels & Resorts, Inc. Executive
Fund, as amended from time to time.

         1.29     PLAN SPONSOR means Interstate Hotels & Resorts, Inc. and its
successors and assigns.

         1.30     PLAN YEAR means the twelve (12) month period ending on the
December 31 of each year during which the Plan is in effect.

         1.31     QUALIFIED INVESTMENTS mean those hotel and corporate housing
properties in which the Plan Sponsor invests subsequent to the Effective Date
(including through whole ownership, joint ventures, sliver investments and
mezzanine loans) and in which the Board determines to have Plan Accounts deemed
co-invested with the Plan Sponsor.

         1.32     QUALIFIED INVESTMENT DOLLAR LIMIT means, for each Plan Year,
twenty five percent (25%) of the Aggregate Contribution Credits for that Plan
Year (unless, with respect to any Plan Year, the Board increases the Qualified
Investment Dollar Limit due to an anticipated insufficiency of Qualified
Investments available for deemed investment during such Plan Year or for any
other reason as determined by the Board).

         1.33     REGULAR BONUS means the annual bonus of the Participant with
respect to the Plan Year of reference, generally payable in March of that Plan
Year.

         1.34     REGULAR BONUS DEFERRALS is defined in Section 3.1.

         1.35     TRANSACTIONAL EXPENSES means, with respect to each Qualified
Investment, the aggregate expenses incurred by the Plan Sponsor and any other
co-investors in the Qualified Investment in connection with the acquisition
transaction involving that Qualified Investment, as reasonably determined by the
Plan Sponsor.

         1.36     TRUST means the trust fund, if any, established pursuant to
the Plan.

         1.37     VALUATION DATE means (i) in the case of deemed interest to be
credited pursuant to Section 4.1(a), such dates as shall be determined by the
Plan Sponsor in its discretion, (ii) in the

                                        5

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case of a benefit entitlement arising out of a non-liquidating distribution from
a Qualified Investment to the Plan Sponsor pursuant to Section 5.1, the date of
the distribution, (iii) in the case of a benefit entitlement arising out of a
complete disposition of a Qualified Investment by the Plan Sponsor pursuant to
Section 5.2, the date of disposition, (iv) in the case of a benefit entitlement
arising out of a Change in Control (unless receipt of that benefit is waived
pursuant to Section 6.3), the date of the Change in Control and (v) in the case
of a benefit entitlement arising out of a termination of employment pursuant to
Section 5.3, the January 1 and July 1 of each Plan Year; and, where relevant in
the case of certain installment distributions made hereunder, a twelve (12)
month anniversary of such Valuation Date.

         1.38     YEAR OF VESTING means, with respect to each Qualified
Investment, the twelve (12) month anniversary of the Deemed Investment Date with
respect to that Qualified Investment, and each twelve (12) month anniversary
thereof until the complete disposition by the Plan Sponsor of that Qualified
Investment; provided that a Participant who experiences an entitlement event in
accordance with Section 5.3(a) shall cease to accrue any further Years of
Vesting following his or her termination of employment with the Employer, and a
Participant who, pursuant to Section 5.3(b), does not experience an entitlement
event in accordance with Section 5.3(a), shall accrue Years of Vesting following
his or her termination of employment solely with respect to his or her
Compensation Deferral Account.



                                   ARTICLE II
                          ELIGIBILITY AND PARTICIPATION

         2.1      REQUIREMENTS. Every Eligible Employee shall be eligible to
become a Participant on the first Entry Date occurring on or after the date on
which he or she becomes an Eligible Employee. No individual shall become a
Participant, however, if he or she is not an Eligible Employee on the date his
or her participation is to begin.

                  Participation in the Compensation Deferral Account portion of
the Plan is voluntary. In order to participate in the Compensation Deferral
Account portion of the Plan, an otherwise Eligible Employee must make written
application in such manner as may be required by Section 3.2 and by the Employer
and must agree to make Compensation Deferrals as provided in Article III.

                  Participation in the Employer Contribution Credit Account
portion of the Plan is automatic for all Participants.

         2.2      RE-EMPLOYMENT. If a Participant whose employment with the
Employer is terminated is subsequently re-employed with the Employer, he or she
shall become a Participant in accordance with the provisions of Section 2.1.

         2.3      CHANGE OF EMPLOYMENT CATEGORY. During any period in which a
Participant remains in the employ of the Employer, but ceases to be an Eligible
Employee, he or she shall not be eligible to make Compensation Deferrals or to
be credited with Employer Contribution Credits hereunder.

                                        6

<PAGE>

                                   ARTICLE III
                            CONTRIBUTIONS AND CREDITS

         3.1      EMPLOYER CONTRIBUTION CREDITS. There shall be established and
maintained a separate Employer Contribution Credit Account in the name of each
Participant. There shall be established the following two (2) sub-accounts under
a Participant's Employer Contribution Credit Account: (a) the Employer Matching
Contribution Sub-Account; and (b) the Employer Discretionary Contribution
Sub-Account. Each such Sub-Account shall be credited or debited, as applicable,
with (a) amounts equal to the Employer's Contribution Credits credited to that
Sub-Account; and (b) amounts equal to any deemed earnings and losses (to the
extent realized, based upon deemed fair market value of the Sub-Account's deemed
assets as determined hereunder) allocated to that Sub-Account.

                  Provided a Participant has elected to defer all or a portion
of his or her Regular Bonus pursuant to Section 3.2 (referred to herein as
"Regular Bonus Deferrals") with respect to a Plan Year, Employer Contribution
Credits shall be credited to the Participant's Employer Matching Contribution
Sub-Account for such Plan Year in an amount equal to one hundred fifty percent
(150%) of the Participant's Regular Bonus Deferrals (after adjustment, if
applicable, as provided in the first paragraph of Section 3.2) for such Plan
Year. The Plan Sponsor, by action of its Board, may increase or decrease (down
to zero (0)) this matching percentage with respect to any Plan Year, provided
that any decrease may only be made with respect to Regular Bonus Deferrals for
which Participants have not yet made deferral elections.

                  In addition to Employer Contribution Credits credited to
Participants' Employer Matching Contribution Sub-Accounts each Plan Year, as
provided above, the Plan Sponsor, by action of the Board, may credit Employer
Contribution Credits to Participants' Employer Discretionary Contribution
Sub-Accounts as well with respect to any Plan Year, at such times, in such
manner and to such extent as the Plan Sponsor shall determine in its sole
discretion, including for example, to match Next Year's Bonus Deferrals (if such
deferrals are permitted) and/or to match Other Compensation deferrals (if such
deferrals are permitted) similarly to the manner in which Regular Bonus
Deferrals are matched, as provided above.

                  A Participant shall become vested in amounts credited to his
or her Employer Contribution Credit Account as provided in Section 5.4.

         3.2      PARTICIPANT COMPENSATION DEFERRALS. In accordance with rules
established by the Employer, a Participant may elect to defer each Plan Year a
Regular Bonus which would otherwise be paid to the Participant, in an amount
equal to that Plan Year's Compensation Deferral Percentage for Regular Bonuses.
In addition, the Plan Sponsor, by action of the Board, may permit Participants
to defer Next Year's Bonuses and/or Other Compensation under the Plan with
respect to any Plan Year, at such times, in such manner, and to such extent as
the Plan Sponsor shall determine, in its sole discretion, in an amount equal to
the applicable Compensation Deferral Percentage(s) for that Plan Year. Amounts
deferred pursuant to this Section 3.2 will be considered a Participant's
"Compensation Deferrals."

                                        7

<PAGE>

                  The preceding notwithstanding, the Compensation Deferrals of
all Participants for a Plan Year may not exceed two million dollars ($2,000,000)
in the aggregate (unless, with respect to any Plan Year, the Board increases
this ceiling in its discretion). If all Participants' Compensation Deferral
elections with respect to a Plan Year would result in this limit being exceeded
for that Plan Year, then each Participant's Compensation Deferral election with
respect to that Plan Year shall be reduced on a pro rata basis, with the result
that each Participant's Compensation Deferrals for that Plan Year will be
determined by multiplying two million dollars ($2,000,000) (or such other
ceiling as the Board may establish) by a fraction, the numerator of which is the
Participant's Compensation Deferral election for the Plan Year and the
denominator is all Participants' Compensation Deferral elections for the Plan
Year.

                  Compensation Deferrals shall be made through regular payroll
deductions or through an election by the Participant to defer the payment of a
bonus not yet payable to him or her at the time of the election. Ordinarily, a
Participant shall make Compensation Deferral elections with respect to a coming
twelve (12) month Plan Year during the period beginning on the December 1 and
ending on the December 31 of the prior Plan Year, or during such other period as
is established by the Employer which ends no later than (i) in the case of a
base salary compensation deferral election, the day preceding the beginning of
the regular payroll period to which such election relates, (ii) in the case of a
Regular Bonus Deferral election, the day preceding the date on which the Regular
Bonus is first due to be paid and (iii) in the case of a Next Year's Bonus
Deferral election, the day preceding the date on which any portion of the Next
Year's Bonus is to become deemed invested in a Qualified Investment. The
Participant's Compensation Deferral election with respect to a Plan Year, once
made, is irrevocable for that Plan Year (except if and to the extent that the
Plan Sponsor, in its sole discretion, permits a complete revocation of a
Participant's Compensation Deferral election with respect to the remainder of
the Plan Year).

                  Compensation Deferrals shall be deducted by the Employer from
the pay of a deferring Participant and shall be credited to the Account of the
deferring Participant. There shall be established and maintained by the Employer
a separate Compensation Deferral Account in the name of each Participant, to
which shall be credited or debited, as applicable: (a) amounts equal to the
Participant's Compensation Deferrals; and (b) amounts equal to any deemed
earnings and losses (to the extent realized, based upon deemed fair market value
of the Account's deemed assets as determined hereunder) attributable or
allocable thereto.

                  A Participant shall become vested in amounts credited to his
or her Compensation Deferral Account as provided in Section 5.4.

                  In addition to the foregoing, the Plan Sponsor, by action of
its Board, may permit Participants to defer under the Plan amounts that would
otherwise be distributable to the Participants under the Interstate Hotels &
Resorts, Inc. Supplemental Deferred Compensation Plan. Any such deferrals, which
may be accomplished by the Participant surrendering his or her interest under
the Supplemental Deferred Compensation Plan in exchange for an agreement by the
Employer to credit his or her Compensation Deferral Account hereunder in the
amount so surrendered, shall be permitted solely at such times, in such manner,
to such extent, and subject to such terms and conditions as the Plan Sponsor
shall determine, in its sole discretion.

                                        8

<PAGE>

                                   ARTICLE IV
                               ALLOCATION OF FUNDS

         4.1      DEEMED INVESTMENTS UNDER THE PLAN.

                  (a)      AMOUNTS CREDITED PENDING OR FOLLOWING QUALIFIED
INVESTMENT. Subject to Section 5.3, Participants' Compensation Deferral
Accounts, to the extent they have not yet been deemed invested in a Qualified
Investment as provided below, shall be deemed invested in money market funds or
similar cash equivalent, interest-bearing investments, as selected by the Plan
Sponsor in its discretion. The preceding notwithstanding, Participants' Next
Year's Bonus Deferrals and Employer Contribution Credit Accounts shall not be
credited with any deemed earnings or losses until they have been deemed invested
in a Qualified Investment, or, in the case of Next Year's Bonus Deferrals, until
they have been "repaid" from Regular Bonus(es) as provided in Section 1.25.

                           If any Participant is required to receive payment of
his or her vested Account in two (2) installments pursuant to Section 6.2(b),
his or her Account shall be considered as ceasing to be deemed invested in any
Qualified Investment following his or her receipt of the first (1st) installment
payment under Section 6.2(b), such that the amounts remaining unpaid shall be
deemed to be invested in money market funds or similar cash equivalent,
interest-bearing investments, as selected by the Plan Sponsor in its discretion,
until payment of the second (2nd) installment.

                  (b)      INVESTMENT IN QUALIFIED INVESTMENTS IN GENERAL.
Except as provided in subsection (a), Participants' Accounts shall be deemed to
be invested in Qualified Investments. With respect to each Plan Year's Qualified
Investments, the Board shall determine the Allocable Share, i.e., the level at
which the Plan will be deemed to participate with the Plan Sponsor, on a
pari-passu basis (on the same basis in gains, losses, Transactional Expenses,
cash distributions, etc.), in those Qualified Investments. For the Plan's
initial Plan Year (i.e., the 2004 calendar year), the Board has established as
the Allocable Share five percent (5%), meaning that, for example, if the Plan
Sponsor has committed to invest twenty million dollars ($20,000,000) in a
particular Qualified Investment with a 2004 Deemed Investment Date, one million
dollars ($1,000,000) in Available Contribution Credits should be deemed to be
co-invested by the Plan in that Qualified Investment. Notwithstanding the
preceding, the level at which the Plan may participate with the Plan Sponsor in
any Qualified Investment may not exceed the Qualified Investment Dollar Limit in
effect as of the Deemed Investment Date for that Qualified Investment.

                  (c)      CARRYFORWARDS. If the Available Contribution Credits
with respect to a particular Qualified Investment are greater than either (i)
the Allocable Share as of the Deemed Investment Date for that Qualified
Investment or (ii) the Qualified Investment Dollar Limit then in effect, the
amount by which such Available Contribution Credits exceed the lesser of (i) or
(ii) shall be carried forward for deemed investment in the next available
Qualified Investment, and, if any excess still remains, it shall be carried
forward for deemed investment in the next available Qualified Investment, and so
on. Subject to Section 5.5, if any such carryforwards, together with the
Aggregate Contribution Credits for a given Plan Year (plus any interest earned
thereon, pursuant to subsection (a)), exceed the amount deemed invested in
Qualified Investments during that Plan Year

                                        9

<PAGE>

(such as, for example, because of the absence or insufficiency of Qualified
Investments with respect to that Plan Year), such total shall be carried forward
for deemed investment in Qualifying Investments made during a future Plan Year
(regardless of whether the Participant makes a Compensation Deferral election
with respect to that future Plan Year), in the order in which those Qualified
Investments become available.

                  (d)      ADJUSTMENTS TO ALLOCABLE SHARE. If the Qualified
Investment Dollar Limit in effect as of the Deemed Investment Date for a
particular Qualified Investment is less than the Allocable Share then in effect,
the Allocable Share shall be reduced down to the Qualified Investment Dollar
Limit. If the Available Contribution Credits with respect to that Qualified
Investment are less than the Allocable Share as so reduced, the Allocable Share
shall be further reduced, down to the Available Contribution Credits. For
example, if the Board establishes as the Allocable Share with respect to a
particular Plan Year's Qualified Investments five percent (5%), then the
Allocable Share with respect to a Qualified Investment falling within that Plan
Year to which the Plan Sponsor has a twenty million dollar ($20,000,000)
investment commitment is one million dollars ($1,000,000) (that is, five percent
(5%) of twenty million dollars ($20,000,000)). However, if the Qualified
Investment Dollar Limit is then seven hundred fifty thousand dollars ($750,000),
the Allocable Share will be reduced to seven hundred fifty thousand dollars
($750,000). Further, if the Available Contribution Credits are then only five
hundred thousand dollars ($500,000) (for example, because all but five hundred
thousand dollars ($500,000) of that Plan Year's Aggregate Contribution Credits,
and all prior Plan Years' Aggregate Contribution Credits, have already been
deemed invested in other Qualified Investments or have been returned to or
relinquished by Participants pursuant to Section 5.5), the Allocable Share will
be further reduced to five hundred thousand dollars ($500,000), with the result
that the Plan (i.e., Participants' Accounts in the aggregate) will be deemed to
invest five hundred thousand dollars ($500,000) in the subject Qualified
Investment.

         4.2      VALUATION OF QUALIFIED INVESTMENTS. As of the appropriate
Valuation Date, the value of the deemed investment of all Plan Accounts in each
Qualified Investment shall be determined as follows:

                  (a)      For each hotel Qualified Investment, such value shall
be the product of (1) multiplied by (2), where:

                           (1)      equals (a) the trailing twelve (12) months
net operating income of the Qualified Investment as of the relevant Valuation
Date divided by the projected year five (5) capitalization rate established by
the Plan Sponsor with respect to the Qualified Investment (which rate shall be
set forth in the Investment Committee Memorandum for the Qualified Investment,
or substantially similar document, approved by the Investment Committee), minus
(b) two percent (2%) of (a) (representing assumed selling costs) plus the debt
and preferred equity of the Qualified Investment; and

                           (2)      equals a fraction, the numerator of which is
the Adjusted Allocable Share of the Qualified Investment as of the relevant
Valuation Date and the denominator of which is the aggregate investments made by
all parties in the Qualified Investment.

                                       10

<PAGE>

                           The preceding notwithstanding, (i) in the case of the
complete disposition of a hotel Qualified Investment by the Plan Sponsor, such
Qualified Investment shall instead be valued by reference to the actual net
proceeds of the disposition, and (ii) in any event in which the Plan Sponsor
determines in its sole and absolute discretion that the above formula does not
reflect fair market value of any Qualified Investment as of any Valuation Date,
the Plan Sponsor shall have the right to commission an independent valuation
firm selected and paid by the Plan Sponsor to value that Qualified Investment,
and to utilize such valuation in lieu of the above formula for making
distributions in respect of such Valuation Date.

                  (b)      Each non-hotel Qualified Investment shall be valued
solely by reference to a valuation prepared by an independent valuation firm
selected and paid by the Plan Sponsor.

         4.3      ALLOCATION OF DEEMED INVESTMENTS AND DEEMED EARNINGS OR LOSSES
AMONG PLAN ACCOUNTS. Subject to Section 5.3, as of each Valuation Date, the
portion of each Participant's Compensation Deferral Account that has not yet
been deemed to be invested in a Qualified Investment (except for the portion, if
any, representing the Participant's Next Year's Bonus Deferrals that have not
yet been repaid as provided in Section 1.25), and the portion (if any) of each
Participant's vested Account that has ceased to be deemed invested in a
Qualified Investment but is not yet distributable hereunder, shall be credited
with deemed interest in accordance with Section 4.1(a).

                  As of each Valuation Date, the portion of each Participant's
Account that is deemed to be invested in one or more Qualified Investments will
be debited or credited to reflect the value of the Participant's portion of the
aggregate deemed investments under the Plan in such Qualified Investment(s). The
portion of each Participant's Plan Account that is deemed to be invested in a
particular Qualified Investment shall be determined by multiplying the Allocable
Share with respect to that Qualified Investment (as reduced pursuant to Section
4.1(d)) by a fraction, the numerator of which is that Participant's Available
Contribution Credits as of the Deemed Investment Date for that Qualified
Investment and the denominator of which is all Participants' Available
Contribution Credits as of such Deemed Investment Date. As of the relevant
Valuation Date, the value of each Participant's Plan Account attributable to a
particular Qualified Investment shall be determined by multiplying the aggregate
value of the Plan's investment in such Qualified Investment as determined
pursuant to Section 4.2 by a fraction, the numerator of which is the portion of
such Participants' Account that is deemed to be invested in that Qualified
Investment (determined pursuant to the previous sentence) and the denominator of
which is the Adjusted Allocable Share with respect to that Qualified Investment
as of such Valuation Date.

                  Distributions under the Plan shall be valued as of the
Valuation Date occurring on or next following the event giving rise to the
distribution. As provided in Section 1.37, the Valuation Date in the case of a
distribution resulting from a complete disposition of a Qualified Property shall
be the date of such disposition.

         4.4      SEPARATE BOOKKEEPING ACCOUNTS. A separate bookkeeping account
under the Plan shall be established and maintained by the Employer to reflect
the Account for each

                                       11

<PAGE>

Participant, with bookkeeping sub-accounts to show separately the Participant's
Compensation Deferral Account and the Participant's Employer Contribution Credit
Account. Each sub-account will separately account for the credits and debits
described in Article III. For all purposes under the Plan, Compensation
Deferrals and Employer Contribution Credits shall be deemed invested in each
Qualified Investment in the ratio of Compensation Deferrals to Employer
Contribution Credits for the Plan Year in which falls the Deemed Investment Date
for that Qualified Investment (e.g., in a one (1) to one and one-half (1 1/2)
ratio with respect to the Plan's initial Plan Year).

         4.5      PAYMENT OF EXPENSES. Expenses associated with the
administration or operation of the Plan shall be paid by the Employer. For these
purposes, Transactional Expenses will not be considered to be an expense of
Plan administration or operation, but rather will be considered to be among the
costs of the Qualified Investments.

                                    ARTICLE V
                             ENTITLEMENT TO BENEFITS

         5.1      NON-LIQUIDATING DISTRIBUTION FROM A QUALIFIED INVESTMENT. Upon
a non-liquidating distribution (for example, a dividend) from a Qualified
Investment to the Plan Sponsor occurring prior to an entitlement event described
in Section 5.2 or 5.3, a Participant whose Account is deemed invested in
that Qualified Investment shall have his or her Account credited with its
allocable portion of such non-liquidating distribution. Such portion shall be
determined in accordance with the methodology set forth in Section 4.3, and
shall result in a cash distribution to the Participant in such amount in
accordance with Article VI, regardless of the Participant's Years of Vesting as
of the date of such distribution, whereupon the Participant's Account shall be
debited in the amount of such distribution.

         5.2      COMPLETE DISPOSITION BY PLAN SPONSOR OF A QUALIFIED
INVESTMENT. Upon a disposition by the Plan Sponsor of its entire interest in a
Qualified Investment, a Participant whose Account is then deemed invested in
that Qualified Investment (i.e., either because he or she remains an employee of
the Employer as of such disposition, or because, pursuant to Section 5.3(b), he
or she did not experience an entitlement event upon his or her termination of
employment with the Employer) shall become entitled to receive the vested
portion of his or her Account deemed invested in that Qualified Investment. Such
portion shall be determined and valued in accordance with the methodology set
forth in Section 4.3, and shall be distributed in accordance with Article VI.
The Participant shall also become entitled to receive the lesser of (i) the
unvested portion of his or her Compensation Deferral Account deemed invested in
that Qualified Investment, such portion to be determined and valued in
accordance with the methodology set forth in Section 4.3, or (ii) a return of
his or her Compensation Deferrals attributable to the unvested portion of his or
her Compensation Deferral Account deemed invested in that Qualified Investment,
with no deemed gains, earnings, interest or losses credited or debited thereto;
such amount to be distributed in accordance with Article VI.

         5.3      TERMINATION OF EMPLOYMENT.

                  (a) Involuntary Termination. Upon a Participant's termination
of employment with the Employer by reason of death, retirement (i.e.,
termination upon or after reaching age sixty-five (65)), disability (i.e.,
qualifying for long term disability benefits under the Employer's long-term
disability plan), or involuntary termination by the Employer other than for
cause (as reasonably determined by the Plan Sponsor), the Participant (or his or
her Beneficiary) shall become entitled to receive the vested portion of his or
her Account, such portion to be determined and valued in accordance with the
methodology set forth in Section 4.3, and to be distributed in accordance with
Article VI. The Participant shall also become entitled to receive the lesser of
(i) the unvested portion of his or her Compensation Deferral Account, such
portion to be determined and valued in accordance with the methodology set forth
in Section 4.3, or (ii) a return of his or her Compensation Deferrals
attributable to the unvested portion of his or her Compensation Deferral
Account, with no deemed gains, earnings, interest or losses credited or debited
thereto; such amount to be distributed in accordance with Article VI.

                  (b) Other Terminations. Upon a Participant's termination of
employment with the Employer for any reason other than those described in
Section 5.3(a), the Plan Sponsor, in its discretion, may determine that the
Participant shall nevertheless become entitled to receive the vested portion of
his or her Account in accordance with Section 5.3(a) (i.e., as if the
Participant's employment was involuntarily terminated without cause), or it may
determine that the Participant shall not become entitled to receive the vested
portion of his or her Account until the complete disposition(s) by the Plan
Sponsor of the Qualified Investment(s) in which the Participant's Account is
deemed invested as of his or her termination of employment, in accordance with
Section 5.2. The Plan Sponsor shall make this determination on a
Participant-by-Participant basis

                                       12

<PAGE>
         5.4      VESTING. Subject to Section 5.1 and Section 5.5, with respect
to amounts credited to a Participant's Account, such amounts shall vest with
respect to each Qualified Investment in which the Participant's Account is
deemed invested according to the following schedule:

<TABLE>
<CAPTION>
 YEARS OF VESTING                      VESTED PERCENTAGE
 ----------------                      -----------------
<S>                                    <C>
   Less than 1                                 0%
1 but less than 2                             20%
2 but less than 3                             40%
3 but less than 4                             60%
4 but less than 5                             80%
    5 or more                                100%
</TABLE>

                  Notwithstanding the foregoing, upon complete disposition by
the Plan Sponsor of a Qualified Investment, a Participant shall become one
hundred percent (100%) vested in that portion of his or her Account deemed
invested in that Qualified Investment. If a Participant terminates employment
for any reason prior to such disposition he or she shall become vested in his or
her Account, if at all, under the vesting schedule set forth above.

         5.5      RETURN OF COMPENSATION DEFERRALS AND RELINQUISHMENT OF
         CORRESPONDING EMPLOYER CONTRIBUTIONS. Notwithstanding anything in
         Section 5.4 or elsewhere in the Plan that may suggest otherwise:

                  (a)      RETURN OF CARRYFORWARDS. If any portion of the
Aggregate Contribution Credits credited to a Participant's Account with respect
to a particular Plan Year is carried forward to the following Plan Year pursuant
to Section 4.1 but is not deemed invested or committed to deemed investment (as
reasonably determined by the Plan Sponsor) in any Qualified Investment by the
end of that following Plan Year, then, as soon as practicable after the end of
that following Plan Year, the portion of such unused carryover amount that
represents Compensation Deferrals (and interest deemed credited thereon) shall
be distributed to the Participant, and the portion representing Employer
Contribution Credits shall be relinquished by, and shall no longer be available
to, the Participant.

                  (b)      RETURN OF NEXT YEAR'S BONUS DEFERRALS. With respect
to any Participant who has made a Next Year's Bonus Deferral election with
respect to a Plan Year and whose employment with the Employer is terminated for
any reason prior to the date on which the following Plan Year's Regular Bonus
would have been payable (or prior to the Regular Bonus payment date for the Plan
Year(s) after that, if the immediately following Plan Year's Regular Bonus is
insufficient to "repay" the Next Year's Bonus Deferral "advance"), such deferral
election, shall, upon such termination of

                                       13

<PAGE>

employment, become null and void to the extent the "advance" has not yet been
repaid from Regular Bonus(es), and any Employer Contribution Credits
representing matching contributions thereon shall be relinquished by, and shall
no longer be available to, the Participant. Such amounts shall be charged
against, and shall reduce, the Participant's Account. Further, if such
termination of employment occurs after any portion of the Participant's Next
Year's Bonus Deferral which has not yet been repaid from Regular Bonus(es) has
been deemed invested in one or more Qualified Investments and has become vested
as provided in Section 5.4, then, in addition, interest on such portion also
shall be charged against, and shall reduce, the Participant's Plan Account (such
interest to be calculated from the date(s) of vesting through the date of the
Participant's termination of employment, using an interest rate that shall be
established by the Plan Sponsor with respect to each Plan Year by the date on
which Participants make their Compensation Deferral elections for that Plan
Year). As a result of this charging of certain Participants' Accounts by their
Next Year's Bonus Deferrals and certain other items, as described in this
Section 5.5(b), each such Participant's interest in each Qualified Investment in
which his or her Next Year's Bonus Deferral has been deemed to be invested shall
be reduced using the allocation methodology set forth in Section 4.3, and, if
this still does not adequately reduce the Participant's Account as provided
herein, the Employer shall reduce the Participant's interests to the extent of
such shortfall in any other Qualified Investment in which the Participant has an
interest, in such reasonable manner as the Employer shall determine.

                                   ARTICLE VI
                            DISTRIBUTION OF BENEFITS

         6.1      AMOUNT AND METHOD OF PAYMENT. A Participant (or his or her
Beneficiary) shall become entitled to receive, on or about the Valuation Date
applicable to the Participant's entitlement event as provided in Article V, a
distribution in an aggregate amount equal to the value of the Participant's
entitlement as provided in the applicable provision of Article V. Any payment
due hereunder will be paid by the Plan Sponsor from its general assets or from
the Trust, if there is one. Payments under the Plan shall be made in cash.

                  Except as provided immediately below or in Section 6.3, upon
the death of a Participant after payments hereunder have begun but before he or
she has received all payments to which he or she is entitled under the Plan, the
remaining benefit payments shall be paid to the person or persons designated in
accordance with Section 7.1, in the manner in which such benefits were payable
to the Participant, unless the Plan Sponsor elects a more rapid form of
distribution.

         6.2      TERMINATION BENEFIT.

                  (a)      ORDINARY DISTRIBUTIONS. In the case of distributions
to a Participant (or his or her Beneficiary) by virtue of an entitlement
pursuant to Section 5.3(a), an aggregate amount equal to the value of the
Participant's entitlement shall be paid to the Participant (or his or her
Beneficiary), as provided by Section 6.1, in a lump sum.

                                       14

<PAGE>
                  (b)      CERTAIN LARGE ACCOUNT DISTRIBUTIONS. Notwithstanding
subsection (a) above, if the amount to which a Participant (or his or her
Beneficiary) becomes entitled pursuant to Section 5.3(a) exceeds fifty thousand
dollars ($50,000) (or such other dollar amount as may be established by the Plan
Sponsor), and if the aggregate amounts to which all similarly situated
Participants (i.e., those who terminate employment immediately prior to the same
Valuation Date as applies to that Participant) or their Beneficiaries become
entitled pursuant to Section 5.3 exceed twenty five percent (25%) of the value
of all Participants' Accounts as of such Valuation Date, then the Plan Sponsor
may require that Participant (or his or her Beneficiary) to be paid the amount
to which he or she becomes entitled pursuant to Section 5.3(a) in up to two (2)
substantially equal annual installments notwithstanding that the Participant had
elected a lump sum distribution. However, this requirement to receive payments
in installments shall not apply with respect to the Account of any Participant
who has been involuntarily terminated from employment by the Employer other than
for cause (as reasonably determined by the Plan Sponsor).

                  As provided in Section 4.1(a), if a Participant is required
hereunder to receive payment in two (2) installments, his or her Account shall,
after payment of the first (1st) installment, no longer be deemed to be invested
in any Qualified Investment, but rather shall be deemed invested in an
interest-bearing investment.

         6.3      OTHER BENEFITS. In the case of distributions to a Participant
(or his or her Beneficiary) by virtue of an entitlement pursuant to Section 5.1
or Section 5.2, an aggregate amount equal to the value of the entitlement shall
be paid to the Participant (or his or her Beneficiary), as provided by Section
6.1, in a lump sum.

                                   ARTICLE VII
                         BENEFICIARIES; PARTICIPANT DATA

         7.1      DESIGNATION OF BENEFICIARIES. Each Participant from time to
time may designate any person or persons (who may be named contingently or
successively) to receive such benefits as may be payable under the Plan upon or
after the Participant's death, and such designation may be changed from time to
time by the Participant by filing a new designation. Each designation will
revoke all prior designations by the same Participant, shall be in the form
prescribed by the

                                       15

<PAGE>

Employer, and will be effective only when filed in writing with the Employer
during the Participant's lifetime.

                  In the absence of a valid Beneficiary designation, or if, at
the time any benefit payment is due to a Beneficiary, there is no living
Beneficiary validly named by the Participant, the Employer shall pay any such
benefit payment to the Participant's spouse, if then living, but otherwise to
the Participant's estate.

         7.2      INFORMATION TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES;
INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES. Any communication, statement
or notice addressed to a Participant or to a Beneficiary at his or her last post
office address as shown on the Employer's records, shall be binding on the
Participant or Beneficiary for all purposes of the Plan. The Employer shall not
be obliged to search for any Participant or Beneficiary beyond the sending of a
registered letter to such last known address. If the Employer notifies any
Participant or Beneficiary that he or she is entitled to an amount under the
Plan and the Participant or Beneficiary fails to claim such amount or make his
or her location known to the Employer within three (3) years thereafter, then,
except as otherwise required by law, if the location of one or more of the next
of kin of the Participant is known to the Employer, the Employer may direct
distribution of such amount to any one or more or all of such next of kin, and
in such proportions as the Employer determines. If the location of none of the
foregoing persons can be determined, the Employer shall have the right to direct
that the amount payable shall be deemed to be a forfeiture and paid to the Plan
Sponsor, except that the dollar amount of the forfeiture, unadjusted for deemed
gains or losses in the interim, shall be paid by the Plan Sponsor if a claim for
the benefit subsequently is made by the Participant or the Beneficiary to whom
it was payable. If a benefit payable to an unlocated Participant or Beneficiary
is subject to escheat pursuant to applicable state law, the Plan Sponsor shall
not be liable to any person for any payment made in accordance with such law.

                                  ARTICLE VIII
                        ADMINISTRATION AND RECORDKEEPING

         8.1      ADMINISTRATIVE AND RECORDKEEPING AUTHORITY. Except as
otherwise specifically provided herein, the Employer shall have the sole
responsibility for and the sole control of the operation, administration and
recordkeeping of the Plan, and shall have the power and authority to take all
action and to make all decisions and interpretations which may be necessary or
appropriate in order to administer and operate the Plan, including, without
limiting the generality of the foregoing, the power, duty and responsibility to:

                  (a)      Resolve and determine all disputes or questions
arising under the Plan, including the power to determine the rights of
Participants and Beneficiaries, and their respective benefits, and to remedy any
ambiguities, inconsistencies or omissions, in the Plan.

                  (b)      Adopt such rules of procedure and regulations as in
its opinion may be necessary for the proper and efficient administration of the
Plan and as are consistent with the Plan.

                                       16

<PAGE>

                  (c)      Implement the Plan in accordance with its terms and
the rules and regulations adopted as above.

                  (d)      Subject to Sections 9.1 and 10.1, make determinations
concerning the crediting and distribution of Participants' benefits.

         8.2      UNIFORMITY OF DISCRETIONARY ACTS. Whenever in the
administration or operation of the Plan discretionary actions by the Employer
are required or permitted, such action shall be consistently and uniformly
applied to all persons similarly situated, and no such action shall be taken
which shall discriminate in favor of any particular person or group of persons.

         8.3      LITIGATION. In any action or judicial proceeding affecting the
Plan, it shall be necessary to join as a party only the Plan Sponsor. Except as
may be otherwise required by law, no Participant or Beneficiary shall be
entitled to any notice or service of process, and any final judgment entered in
such action shall be binding on all persons interested in, or claiming under,
the Plan.

         8.4      CLAIMS PROCEDURE. This Section 8.4 is based on final
regulations issued by the Department of Labor and published in the Federal
Register on November 21, 2000 and codified at section 2560.503-1 of the
Department of Labor Regulations. If any provision of this Section 8.4 conflicts
with the requirements of those regulations, the requirements of those
regulations will prevail.

                  (a)      INITIAL CLAIM. A Participant or Beneficiary
(hereinafter referred to as a "Claimant") who believes he or she is entitled to
any Plan benefit under this Plan may file a claim with the Employer. The
Employer shall review the claim itself or appoint an individual or an entity to
review the claim.

                           The Claimant shall be notified within ninety (90)
days after the claim is filed whether the claim is allowed or denied, unless the
Claimant receives written notice from the Employer or appointee of the Employer
prior to the end of the ninety (90) day period stating that special
circumstances require an extension of the time for decision, such extension not
to extend beyond the day which is one hundred eighty (180) days after the day
the claim is filed.

                           If the Employer denies a claim, it must provide to
the Claimant, in writing or by electronic communication:

                           (i)      The specific reasons for the denial;

                           (ii)     A reference to the Plan provision upon which
the denial is based;

                           (iii)    A description of any additional information
or material that the Claimant must provide in order to perfect the claim;

                           (iv)     An explanation of why such additional
material or information is necessary;

                                       17

<PAGE>

                           (v)      Notice that the Claimant has a right to
request a review of the claim denial and information on the steps to be taken if
the Claimant wishes to request a review of the claim denial; and

                           (vi)     A statement of the Claimant's right to bring
a civil action under ERISA section 502(a) following a denial on review of the
initial denial.

                  (b)      REVIEW PROCEDURES. A request for review of a denied
claim must be made in writing to the Employer within sixty (60) days after
receiving notice of denial. The decision upon review will be made within sixty
(60) days after the Employer's receipt of a request for review, unless special
circumstances require an extension of time for processing, in which case a
decision will be rendered not later than one hundred twenty (120) days after
receipt of a request for review. A notice of such an extension must be provided
to the Claimant within the initial sixty (60) day period and must explain the
special circumstances and provide an expected date of decision.

                           The reviewer shall afford the Claimant an opportunity
to review and receive, without charge, all relevant documents, information and
records and to submit issues and comments in writing to the Employer. The
reviewer shall take into account all comments, documents, records and other
information submitted by the Claimant relating to the claim regardless of
whether the information was submitted or considered in the initial benefit
determination.

                           Upon completion of its review of an adverse initial
claim determination, the Employer will give the Claimant, in writing or by
electronic notification, a notice containing:

                           (i)      its decision;

                           (ii)     the specific reasons for the decision;

                           (iii)    the relevant Plan provisions on which its
decision is based;

                           (iv)     a statement that the Claimant is entitled to
receive, upon request and without charge, reasonable access to, and copies of,
all documents, records and other information in the Plan's files which is
relevant to the Claimant's claim for benefits;

                           (v)      a statement describing the Claimant's right
to bring an action for judicial review under ERISA section 502(a); and

                           (vi)     if an internal rule, guideline, protocol or
other similar criterion was relied upon in making the adverse determination on
review, a statement that a copy of the rule, guideline, protocol or other
similar criterion will be provided without charge to the Claimant upon request.

                  (c)      CALCULATION OF TIME PERIODS. For purposes of the time
periods specified in this Section, the period of time during which a benefit
determination is required to be made begins at

                                       18

<PAGE>

the time a claim is filed in accordance with the Plan procedures without regard
to whether all the information necessary to make a decision accompanies the
claim. If a period of time is extended due to a Claimant's failure to submit all
information necessary, the period for making the determination shall be tolled
from the date the notification is sent to the Claimant until the date the
Claimant responds.

                  (d)      FAILURE OF PLAN TO FOLLOW PROCEDURES. If the Plan
fails to follow the claims procedures required by this Section, a Claimant shall
be deemed to have exhausted the administrative remedies available under the Plan
and shall be entitled to pursue any available remedy under ERISA section 502(a)
on the basis that the Plan has failed to provide a reasonable claims procedure
that would yield a decision on the merits of the claim.

                                   ARTICLE IX
                                    AMENDMENT

         9.1      RIGHT TO AMEND. The Plan Sponsor, by action of the Board,
shall have the right to amend the Plan at any time and with respect to any
provisions hereof, and all parties hereto or claiming any interest hereunder
shall be bound by such amendment; provided, however, that no such amendment
shall deprive any Participant or Beneficiary of a right accrued hereunder prior
to the date of the amendment.

         9.2      AMENDMENT TO ENSURE PROPER CHARACTERIZATION OF THE PLAN.
Notwithstanding the provisions of Section 9.1, the Plan may be amended at any
time, retroactively if required, if found necessary, in the opinion of the Plan
Sponsor, in order to ensure that the Plan is characterized as a
non-tax-qualified "top hat" plan of deferred compensation maintained for a
select group of management or highly compensated employees, as described under
ERISA sections 201(2), 301(a)(3) and 401(a)(1) and to conform the Plan and the
Trust, if there is one, to the provisions and requirements of any applicable law
(including ERISA and the Code).

         9.3      CHANGES IN LAW AFFECTING TAXABILITY. This Section shall become
operative upon the enactment of any change in applicable statutory law or the
promulgation by the Internal Revenue Service of a final regulation or other
pronouncement having the force of law, which statutory law, as changed, or final
regulation or pronouncement, as promulgated, would cause any Participant to
include in his or her federal gross income amounts accrued by the Participant
under the Plan on a date (an "Early Taxation Event") prior to the date on which
such amounts are made available to him or her hereunder.

                  (a)      AFFECTED RIGHT OR FEATURE NULLIFIED. Notwithstanding
any other Section of this Plan to the contrary (but subject to subsection (b),
below), as of an Early Taxation Event, the feature or features of this Plan that
would cause the Early Taxation Event shall be null and void, to the extent, and
only to the extent, required to prevent the Participant from being required to
include in his or her federal gross income amounts accrued by the Participant
under the Plan prior to the date on which such amounts are made available to him
or her hereunder. If only a portion of a Participant's Account is impacted by
the change in the law, then only such portion shall be subject to this Section,
with the remainder of the Account not so affected being subject to such rights
and features as if the

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<PAGE>

law were not changed. If the law only impacts Participants who have a certain
status with respect to the Employer, then only such Participants shall be
subject to this Section.

                  (b)      TAX DISTRIBUTION. If an Early Taxation Event is
earlier than the date on which the statute, regulation or pronouncement giving
rise to the Early Taxation Event is enacted or promulgated, as applicable (i.e.,
if the change in the law is retroactive), the Plan Sponsor shall have the right
to distribute to each Participant, as soon as practicable following such date of
enactment or promulgation, any amount up to the amounts that became taxable on
the Early Taxation Event.

                                    ARTICLE X
                                   TERMINATION

         10.1     PLAN SPONSOR'S RIGHT TO TERMINATE PLAN. The Plan Sponsor
reserves the right, at any time, to terminate the Plan and/or its obligation to
make further credits to Plan Accounts by action of the Board; provided, however,
that no such termination shall deprive any Participant or Beneficiary of a right
accrued hereunder prior to the date of termination and provided that, upon
termination, the full amount of each Participant's vested Plan Account(s) shall
become immediately distributable to him or her.

         10.2     AUTOMATIC TERMINATION OF PLAN. The Plan shall terminate
automatically upon the dissolution of the Plan Sponsor or upon the Plan
Sponsor's merger into or consolidation with any other corporation or business
organization which does not specifically adopt and agree to continue the Plan;
provided, however, that no such termination shall deprive any Participant or
Beneficiary of a right accrued hereunder prior to the date of termination and
provided that, upon termination, the full amount of each Participant's vested
Plan Account shall become immediately distributable to him or her.

         10.3     SUCCESSOR TO PLAN SPONSOR. Any corporation or other business
organization which is a successor to the Plan Sponsor by reason of a
consolidation, merger or purchase of substantially all of the assets of the Plan
Sponsor shall have the right to become a party to the Plan by adopting the same
by resolution of the entity's board of directors or other appropriate governing
body. If, within thirty (30) days from the effective date of such consolidation,
merger or sale of assets, such new entity does not become a party hereto, as
above provided, the Plan shall be terminated automatically, and the provisions
of the foregoing Sections shall become operative.

                                   ARTICLE XI
                                  MISCELLANEOUS

         11.1     LIMITATIONS ON LIABILITY OF PLAN SPONSOR AND EMPLOYER. Neither
the establishment of the Plan nor any modification hereof, nor the creation of
any Account under the Plan, nor the payment of any benefits under the Plan,
shall be construed as giving to any Participant or any other person any legal or
equitable right against the Plan Sponsor or the Employer or any officer or
employee thereof, except as provided by law or by any Plan provision. The Plan
Sponsor and Employer do not in any way guarantee any Participant's Account from
loss or depreciation, whether caused by poor investment performance of a
Qualified Investment or the inability to realize

                                       20

<PAGE>

upon a Qualified Investment due to an insolvency affecting a Qualified
Investment vehicle or any other reason. In no event shall the Plan Sponsor or
the Employer, or any successor, employee, officer, director or stockholder of
the Plan Sponsor or the Employer, be liable to any person on account of any
claim arising by reason of the provisions of the Plan or of any instrument or
instruments implementing its provisions, or for the failure of any Participant,
Beneficiary or other person to be entitled to any particular tax consequences
with respect to the Plan, or any credit or distribution hereunder.

         11.2     CONSTRUCTION. If any provision of the Plan is held to be
illegal or void, such illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if said illegal or invalid provisions had never been
inserted herein. For all purposes of the Plan, where the context permits, the
singular shall include the plural, and the plural shall include the singular.
Headings of Articles and Sections herein are inserted only for convenience of
reference and are not to be considered in the construction of the Plan. The laws
of Delaware shall govern, control and determine all questions of law arising
with respect to the Plan and the interpretation and validity of its respective
provisions, except where those laws are preempted by the laws of the United
States. Participation under the Plan will not give a Participant the right to be
retained in the service of the Employer nor any right or claim to any benefit
under the Plan unless such right or claim has specifically accrued hereunder.

                  The Plan is intended to be and at all times shall be
interpreted and administered so as to qualify as an unfunded plan of deferred
compensation, and no provision of this Plan shall be interpreted so as to give
any individual any right in any assets of the Plan Sponsor which right is
greater than the rights of any general unsecured creditor of the Plan Sponsor.

         11.3     SPENDTHRIFT PROVISION. No amount payable to a Participant or
any Beneficiary under the Plan will, except as otherwise specifically provided
by law, be subject in any manner to anticipation, alienation, attachment,
garnishment, sale, transfer, assignment (either at law or in equity), levy,
execution, pledge, encumbrance, charge or any other legal or equitable process,
and any attempt to do so will be void; nor will any benefit hereunder be in any
manner liable for or subject to the debts, contracts, liabilities, engagements
or torts of the person entitled thereto. Further, (a) the withholding of taxes
from Plan benefit payments, (b) the recovery under the Plan of overpayments of
benefits previously made to a Participant or any Beneficiary, (c) if applicable,
the transfer of benefit rights from the Plan to another plan, or (d) the direct
deposit of Plan benefit payments to an account in a banking institution (if not
actually part of an arrangement constituting an assignment or alienation) shall
not be construed as an assignment or alienation.

                  In the event that a Participant's or any Beneficiary's
benefits hereunder are garnished or attached by order of any court, the Plan
Sponsor may bring an action for a declaratory judgment in a court of competent
jurisdiction to determine the proper recipient of the benefits to be paid under
the Plan. During the pendency of said action, any benefits that become payable
shall be held as credits to a Participant's or Beneficiary's Account or, if the
Plan Sponsor prefers, paid into the court as they become payable, to be
distributed by the court to the recipient as it deems proper at the close of
said action.

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<PAGE>

                                   ARTICLE XII
                                      TRUST

         12.1     ESTABLISHMENT OF TRUST. The Plan Sponsor may, but need not,
establish in contemplation of a Change in Control a Trust with a qualified
institution, to serve as a vehicle through which to satisfy the Plan Sponsor's
benefit obligations under the Plan. It is intended that such Trust, which may
not provide for contributions thereto (except for a minimal contribution upon
establishment of the Trust) unless and until a Change in Control becomes
imminent, would be treated as a "grantor" trust under the Code, and therefore
would neither cause any Participant to realize current income on amounts
contributed thereto nor cause the Plan to be "funded", within the meaning of
ERISA.

         IN WITNESS WHEREOF, the Plan Sponsor has caused this Plan to be
executed and its seal to be affixed hereto, effective as of the 1st day of
January, 2004.

ATTEST/WITNESS:                        INTERSTATE HOTELS & RESORTS, INC.

_________________________________      By: _______________________________(SEAL)

Print Name:______________________      Print Name: _____________________________

                                       Date: ___________________________________

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