exv10w11



 






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.



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          “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.



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               (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



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(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.



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               (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



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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



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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.



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               (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.



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               (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.



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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



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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




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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.



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          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



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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;




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	(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






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	 	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.



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          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.



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     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:	 	 
	

	 	 	 	 	 	 






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	 	 	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






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	 	 	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






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	 	 	 	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-