Document:

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                                                                    Exhibit 10.5

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

         THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"), dated as
of August 31, 2000 and effective as of the Closing Date (as defined below), is
made and entered into by and between Interstate Hotels Corporation, a Maryland
corporation (the "Company"), and Kevin P. Kilkeary (the "Executive") hereby
amends and restates the employment agreement between the Company and the
Executive dated as of June 18, 1999 (the "Old Agreement").

                                    RECITALS

         WHEREAS, the Executive is currently serving as a senior executive of
the Company pursuant to the Old Agreement;

         WHEREAS, following the transactions (the "Transactions") contemplated
by the Securities Purchase Agreement by and among the Company, CGLH Partners I
LP, a Delaware limited partnership ("CGLH I") and CGLH Partners II LP, a
Delaware limited Partnership ("CGLH II") dated as of the date hereof (the
"Purchase Agreement"), the Company and the Executive desire to continue their
employment relationship; and

         WHEREAS, the Company and the Executive desire to amend and restate the
Old Agreement, effective as of the Closing Date (as defined in the Purchase
Agreement) of the Transactions, as provided herein.

         NOW, THEREFORE, the parties agree as follows:

         1. DEFINITIONS. in addition to terms defined elsewhere herein, the
following terms have the following meanings when used in this Agreement with
initial capital letters:

                  (a) "BASE PAY" means the salary provided for in Section 5(a),
as such amount may be adjusted hereunder.

                  (b) "BOARD" means the Board of Directors of the Company or an
authorized committee thereof.

                  (c) "CAUSE" means that the Executive shall have committed:

                           (i)    an intentional act of fraud, embezzlement or
                  theft in connection with his duties or in the course of his
                  employment with the Company or any Subsidiary;

                           (ii)   intentional wrongful damage to property of
                  the Company or any Subsidiary;

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                           (iii)  intentional Unauthorized Disclosure, Use or
                  Solicitation, or

                           (iv)   intentional wrongful engagement in any
                  Competitive Activity; and any such act shall have been
                  materially harmful to the Company. For purposes of this
                  Agreement, no act or failure to act on the part of the
                  Executive will be deemed "intentional" if it was due primarily
                  to an error in judgment or negligence, but will be deemed
                  "intentional" only if done or omitted to be done by the
                  Executive not in good faith and without reasonable belief that
                  his action or omission was in the best interest of the
                  Company. Notwithstanding the foregoing, the Executive will not
                  be deemed to have been terminated for "Cause" hereunder unless
                  and until there shall have been delivered to the Executive a
                  copy of a resolution duly adopted by the affirmative vote of
                  not less than three quarters of the full Board of Directors
                  then in office at a meeting of the Board of Directors called
                  and held for such purpose, after reasonable notice to the
                  Executive and an opportunity for the Executive, together with
                  his counsel (if the Executive chooses to have counsel present
                  at such meeting), to be heard before the Board, finding that,
                  in the good faith opinion of the Board, the Executive had
                  committed an act constituting "Cause" as herein defined and
                  specifying the particulars thereof in detail, provided,
                  however, that nothing herein will limit the right of the
                  Executive or his beneficiaries to contest the validity or
                  propriety of any such determination and such determination,
                  albeit a condition to any termination for "Cause" as
                  aforesaid, will not create any presumption that "Cause" in
                  fact exists.

                  (d) "COMPETITIVE ACTIVITY" means any act by the Executive that
is prohibited under Section 7.

                  (e) "COMMENCEMENT DATE" means the date upon which shareholder
approval of the Transaction is obtained.

                  (f) "DISABILITY" means the Executive's inability, as a result
of mental or physical illness, injury or disease, substantially to perform his
material duties and responsibilities under this Agreement for a period of 180
consecutive calendar days within any 12-month period.

                  (g) "EMPLOYEE BENEFITS" means the perquisites, benefits and
service credit for benefits as provided under any and all employee welfare
benefit policies, plans, programs or arrangements in which Executive is entitled
to participate, including without limitation any group or other life, health,
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), disability, salary continuation, expense
reimbursement and other employee benefit policies, plans, programs or
arrangements that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company.

                  (h) "GOOD REASON" means that the Executive has complied with
the "Good Reason Process " (hereinafter defined) following the occurrence of a
substantial diminution or other adverse change, not consented to by the
Executive in advance and in writing, in the nature or scope of Executive's
responsibilities, authorities, powers, functions, duties or reporting

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relationships, as in effect on the Closing Date after giving effect to the
Transactions. "Good Reason Process" shall mean that (A) the Executive reasonably
determines in good faith that a "Good Reason" event has occurred; (B) the
Executive notifies the Company in writing of the occurrence of the Good Reason
event; and (C) the Company does not cure Executive's objections within a
reasonable time not to exceed 60 days.

                  (i) "SUBSIDIARY" means an entity in which the Company directly
or indirectly beneficially owns 50% or more of the outstanding Voting Stock or,
if a partnership, limited liability company or similar entity, at least 50% of
the equity capital interests thereof.

                  (j) "TERM OF EMPLOYMENT" means the period specified in Section
2.

                  (k) "UNAUTHORIZED DISCLOSURE, USE OR SOLICITATION" means any
violation or breach by the Executive of any provision of Section 8.

         2. TERM OF EMPLOYMENT. The Company hereby employs the Executive and the
Executive hereby accepts such employment, effective as of the Closing Date and
ending at the close of business on the third anniversary of the Closing Date
(the "Term of Employment"); provided, however, that commencing on the second
anniversary of the Closing Date and each anniversary thereafter, the Term of
Employment will automatically be extended for successive one-year periods unless
either party gives written notice to the other, not less than 90 calendar days
prior to the second anniversary or subsequent anniversary thereafter, that it or
he does not want the Term of Employment so to extend.

         3. WAIVER OF RIGHTS. As of the Closing Date, the Old Agreement shall be
of no further force or effect and shall be superseded in its entirety by this
Agreement. For the avoidance of doubt, in the event that the Closing (as defined
in the Purchase Agreement) does not occur, the Old Agreement shall remain in
full force and effect in accordance with the its terms and this Agreement shall
be null and void. In consideration for the compensation, benefits and other
terms provided by this Agreement, the Executive expressly waives any rights to
payments and benefits to which he may have been entitled pursuant the terms of
the Old Agreement, including, without limitation, stock options to purchase
shares of Company Common Stock (as hereinafter defined), cash severance
payments, continuation of Employee Benefits, forgiveness of outstanding loan
balances and/or accelerated vesting of outstanding options and restricted stock
of the Company.

         4. DUTIES, RESPONSIBILITIES AND OFFICE LOCATION. During the Term of
Employment, the Executive will have and perform the duties and responsibilities
set forth in Exhibit A, provided, however, that the Board may from time to time
change those duties and responsibilities (in which event the parties may, but
will not be required to, substitute a new Exhibit A) and no such change will
give rise to any liability on the part of the Company so long as such change
does not result in a change in the primary reporting relationship set forth on
Exhibit A; provided, however, that such change may constitute Good Reason, as
defined in Section 1(h) hereof. The Executive will devote substantially all of
his business time to the business and affairs of the Company and its
Subsidiaries (excluding reasonable amounts of time devoted to charitable

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purposes, passive investments and directorships and periods in which he is
physically or mentally ill, injured or otherwise disabled).

         5. COMPENSATION AND BENEFITS. (a) BASE PAY. During the Term of
Employment, the Executive will receive Base Pay of $300,000 per year subject to
review by the Board for increase (but not decrease) at the end of each fiscal
year during the Term of Employment Such Base Pay will be payable by the Company
in accordance with its regular compensation practices and policies applicable to
senior executives of the Company.

                  (b) ANNUAL PERFORMANCE BONUS. For each fiscal year of the
Company during the Term of Employment, the Executive will be eligible for an
annual performance bonus under the Company's Management Bonus Plan ("Bonus
Plan"), that can vary from a minimum of 0% to a maximum of 175% of the
Executive's base salary. The Bonus will be subject to the rules issued each year
by the Board. During 1999 the Bonus will be based on Hotel Profits and Corporate
Profits and shall be calculated and paid consistent with other Executives of the
Company. In future years these categories may be revised or deleted and new
categories could be added. The Executive must be employed by the Company at the
time the Bonus is scheduled to be paid to be eligible to receive the Bonus.

                  (c) EMPLOYEE BENEFITS. During the Term of Employment, the
Executive will be entitled to (i) participate in all employee benefit plans,
programs, policies and arrangements sponsored, maintained or contributed to by
the Company, subject to and in accordance with the terms and conditions of such
plans, programs, policies and arrangements as they relate to similarly situated
senior executives of the Company, (ii) participate in all equity and long-term
incentive plans sponsored or maintained by the Company at a level commensurate
with his position, subject to and in accordance with the terms and conditions of
such plans as they relate to senior executives of the Company, and (iii) receive
all other benefits and perquisites provided or made available by the Company to
its senior executives, subject to and in accordance with the terms and
conditions of such benefits and perquisites as they relate to senior executives
of the Company.

                  (d) EXPENSES. During the Term of Employment, the Executive
will be entitled to reimbursement of all documented reasonable travel and
entertainment expenses incurred by him on behalf of the Company in the course of
the performance of his duties hereunder, subject to and in accordance with the
terms and conditions of the Company's expense reimbursement policies as they
relate to senior executives of the Company.

                  (e) VACATION. During the Term of Employment, the Executive
will be entitled to not less than four weeks of vacation, in addition to paid
public holidays as observed by the Company from year to year, subject to and in
accordance with the terms and conditions of the Company's regular compensation
practices and policies as they relate to senior executives of the Company.

                  (f) LOANS. (i) The Company has loaned the Executive $300,000,
the repayment of 50% of which shall be forgiven by the Company at the rate of
$50,000 per year on June 17, 2000, June 17, 2001 and June 17, 2002 so long as
the Executive's

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employment is not terminated (i) by the Company for Cause prior to such dates,
or (ii) voluntarily by the Executive without Good Reason prior to the first
anniversary of the Commencement Date.

                           (ii) On the date hereof, the Company shall loan the
         Executive $500,000, the repayment of one-third (1/3) of which shall be
         forgiven by the Company on each of the first through third
         anniversaries of the Commencement Date so long as the Executive's
         employment is not terminated by the Company for Cause or voluntarily by
         the Executive without Good Reason prior to such dates. At the
         Executive's request, the Company will amortize such loan forgiveness on
         terms and conditions mutually agreed upon by the Company and the
         Executive.

                  (g) PREFERRED STOCK. As of the Closing Date, and subject to
the last sentence of this Section 5(g), the Company shall grant to the Executive
50,000 shares of Series B Preferred Stock of the Company (the "Series B
Shares"). Subject to Section 6 hereof, the Series B Shares shall be fully vested
as of the Closing Date. The grant of Series B Shares pursuant to this Section
5(g) shall be subject to the stockholders agreement by and among the Executive,
Thomas F. Hewitt, J. William Richardson, CGLH I and CGLH II to be entered into
on the date hereof which provides for certain rights and restrictions in
connection with the Executive's ownership of the Series B Shares.

                  (h) FUTURE JOINT VENTURE INTERESTS. To the extent that any
joint venture funds or arrangements (similar to the joint venture established
pursuant to the "JV Agreement" (as defined below)) are established or entered
into by the Company and the other parties to the JV Agreement following the
Closing Date, the parties hereto agree to negotiate in good faith to determine
whether the Executive will participate in such joint venture and the terms and
conditions of any such participation. For purposes of this Agreement the "JV
Agreement" shall mean the Agreement of Limited Partnership of CGLH-IHC Fund I,
L.P. by and between CGLH Partners III LP, a Delaware limited partnership,
Interstate Investment Corporation, a Delaware corporation, CGLH Partners IV LP,
a Delaware limited partnership, Interstate Property Partnership, L.P. a Delaware
limited partnership, Thomas F. Hewitt and J. William Richardson, which is
attached as Exhibit E to the Purchase Agreement, to be entered into on the
Closing Date.

         6. TERMINATION OF EMPLOYMENT.  (a) Termination by Notice. Subject to
the provisions of Section 2 and this Section 6, the Executive's employment
hereunder will be for the Term of Employment specified in Section 2.

                  (b) TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION WITHOUT
GOOD REASON. The Company may, with or without notice, terminate the Executive's
employment hereunder for Cause. If the Executive's employment is terminated
during the Term of Employment by the Company for Cause, or by the Executive
without Good Reason, the Executive will not be entitled to any compensation or
benefits provided herein, and nothing herein will limit the Company's rights
against the Executive or the rights and obligations of the parties under
Sections 7 and 8. Notwithstanding anything in this Agreement to the contrary,
(i) if

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the Executive's employment is terminated hereunder prior to the first
anniversary of the Commencement Date, the Series B Shares shall immediately be
forfeited as of such date of termination and the Executive shall have no further
rights with respect to the forfeited Series B Shares; (ii) if the Executive's
employment is terminated hereunder on or after the first anniversary of the
Commencement Date, but prior to the second anniversary of the Commencement Date,
two-thirds (2/3) of the Series B Shares shall immediately be forfeited as of
such date of termination and the Executive shall have no further rights with
respect to the forfeited Series B Shares; and (iii) if the Executive's
employment is terminated hereunder on or after the second anniversary of the
Commencement Date, but prior to the third anniversary of the Commencement Date,
one-third (1/3) of the Series B Shares shall immediately be forfeited as of such
date of termination and the Executive shall have no further rights with respect
to the forfeited Series B Shares.

                  (c) TERMINATION FOR ANY REASON OTHER THAN CAUSE DISABILITY OR
DEATH; AND VOLUNTARY TERMINATION FOR GOOD REASON. If the Executive's employment
is terminated during the Term of Employment by the Company for any reason other
than Cause, Disability or Death, or by the Executive for Good Reason:

                           (i) The Executive will be entitled to receive the
                  greater of (A) the sum of his Base Pay and annual performance
                  bonus for one (1) year immediately preceding the effective
                  date of his termination of employment and (B) his Base Pay (at
                  the rate in effect on the effective date of his termination of
                  employment) and annual performance bonus based upon the
                  highest annual performance bonus received by the Executive
                  during the Term of this Agreement for the remainder of the
                  Term of Employment, in either case payable in accordance with
                  the Company's regular compensation practices and policies
                  applicable to senior executives; and

                           (ii) For one (1) year following the effective date of
                  the Executive's termination of employment or, if longer, the
                  remainder of the Term of Employment (the "Continuation
                  Period"), the Company will arrange to provide the Executive
                  and his eligible dependents with Employee Benefits (excluding
                  retirement, deferred compensation and stock option, stock
                  purchase, stock appreciation or similar compensatory benefits)
                  that are substantially similar to those that the Executive and
                  such dependents were receiving or entitled to receive
                  immediately prior to the effective date of the Executive's
                  termination of employment, except that the level of any such
                  Employee Benefits to be provided to the Executive and such
                  dependents may be reduced in the event of a corresponding
                  reduction generally applicable to all senior executives. If
                  and to the extent that any benefit described in this Section
                  6(c)(ii) is not or cannot be paid or provided under any
                  policy, plan, program or arrangement of the Company or any
                  Subsidiary, as the case may be, then the Company will itself
                  pay or provide for the payment of such Employee Benefits to
                  the Executive, his dependents and his beneficiaries. Employee
                  Benefits otherwise receivable by the Executive pursuant to
                  this Section 6(c)(ii) will be reduced to the extent comparable
                  welfare

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                  benefits are actually received by the Executive from another
                  employer during the Continuation Period following the
                  effective date of the Executive's termination of employment,
                  and any such benefits actually received by the Executive must
                  be reported by the Executive to the Company.

                           (iii) Any portion of the Series B Shares held by the
                  Executive which is unvested or subject to restrictions as of
                  the date of such termination of employment shall vest and
                  become immediately nonforfeitable and unrestricted.

                  (d) DEATH OR DISABILITY. If the Executive's employment is
terminated effective during the Term of Employment as a result of his death or
by the Company as a result of his Disability, the Executive (or, in the event of
his death, his designated beneficiary) will be entitled to receive his Base Pay
(at the rate in effect on the effective date of his termination of employment)
for a period of 12 months following such effective date, payable in accordance
with the Company's regular compensation practices and policies applicable to
senior executives but less any amounts paid to the Executive under any long-term
disability plan, program, policy or arrangement of the Company or any
Subsidiary. Any portion of the Series B Shares held by the Executive which is
unvested or subject to restrictions as of the date of such termination of
employment shall vest and become immediately nonforfeitable and unrestricted.

                  (e) EXCISE TAXES.

                           (i) If Executive incurs the tax (the "Excise Tax")
                  imposed by Section 4999 of the Internal Revenue Code of 1986
                  (the "Code") on "excess parachute payments' within the meaning
                  of Section 280G(b)(l) of the Code, the Company will pay to
                  Executive an amount (the "Gross Up Payment") such that the net
                  amount retained by Executive, after deduction of any Excise
                  Tax on the excess parachute payment and any federal, state and
                  local taxes (together with penalties and interest) and Excise
                  Tax upon the payment provided for by this Section 6(e)(i) and
                  any federal, state and local taxes (together with penalties
                  and interest thereon), will be equal to the payments made to
                  the Executive that constitute a parachute payment pursuant to
                  Prop. Treas. Reg. Section 1.280G-1 (including any such
                  payments made pursuant to this Section 6(e)(i)) minus the
                  Gross Up Payment.

                           (ii) For purposes of determining the amount of the
                  Gross Up Payment, Executive will be deemed to pay federal
                  income taxes at the highest marginal rate of federal taxation
                  in the calendar year in which the Gross Up Payment is to be
                  made and state and local income taxes at the highest marginal
                  rates of taxation in the state and locality of Executive's
                  residence on the date of Executive's termination, net of the
                  maximum reduction in federal income taxes that could be
                  obtained from deduction of such state and local taxes. The
                  determination of whether the Excise Tax is payable and the
                  amount thereof will be determined by a firm of independent
                  certified public accountants jointly selected by the Company
                  and the Executive.

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                           (iii) The Company will pay the estimated amount of
                  the Gross Up Payment to the Federal tax authorities as
                  withholding taxes. The Executive and the Company agree to
                  reasonably cooperate in the determination of the actual amount
                  of the Gross Up Payment Further, Executive and the Company
                  agree to make such adjustments to the estimated amount of the
                  Gross Up Payment as may be necessary to equal the actual
                  amount of the Gross Up Payment, which in the case of Executive
                  will refer to refunds of prior overpayments and in the case of
                  the Company will refer to makeup of prior underpayments.

                  (f) COMPENSATION AND BENEFITS ON TERMINATION. Except as
otherwise provided in Section 6(b), (c) or (d):

                           (i) All compensation and benefits payable to the
                  Executive pursuant to Section 5 (other than compensation and
                  benefits previously earned and, if applicable, vested under
                  the terms of this Agreement or any other applicable employee
                  benefit plan, program, policy, arrangement or agreement) will
                  terminate as of the effective date of the Executive's
                  termination of employment; and

                           (ii) The Executive will not be entitled to, and
                  hereby waives, any claims for compensation or benefits (other
                  than compensation and benefits previously earned and, if
                  applicable, vested under the terms of this Agreement or any
                  other applicable employee benefit plan, program, policy,
                  arrangement or agreement) payable after such effective date
                  and for damages arising in connection with his termination of
                  employment pursuant to this Agreement.

                           (iii) Any portion of the Series B Shares held by the
                  Executive which is unvested or subject to restrictions as of
                  the date of such termination of employment shall vest and
                  become immediately nonforfeitable and unrestricted.

                  (g) NO MITIGATION OBLIGATION. The Company hereby acknowledges
that it will be difficult and may be impossible for the Executive to find
reasonably comparable employment following the Termination Date and that the
non-competition covenant contained in Section 7 will further limit the
employment opportunities for the Executive. Accordingly, the payment of the
compensation by the Company to the Executive in accordance with the terms of
this Agreement is hereby acknowledged by the Company to be reasonable, and the
Executive will not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create
any mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise, except as expressly provided in the last
sentence of Section 6(c)(ii).

                  (h) PURCHASE OF SERIES B SHARES UPON TERMINATION OF
                  EMPLOYMENT. (i) At any time after the termination of the
                  Executive's employment with the Company, the Company shall
                  have the right (but not the obligation) to acquire all of the
                  Executive's Series B Shares (the "Purchase Interest"), for an
                  amount equal to the fair market value of such Purchase
                  Interest as of the Purchase Interest Closing

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                  Date (as defined below). The following procedure shall apply
                  to such proposed acquisition:

                           (ii) The company shall give notice (the "Purchase
                  Notice") to the Executive specifying the fair market value for
                  the Executive's Purchase Interest as of the date of such
                  Purchase Notice, determined by the Company in good faith. For
                  a period of 10 days after the Purchase Notice has been given,
                  the Company and the Executive shall negotiate in good faith to
                  mutually agree on such fair market value (the "Purchase
                  Price").

                           (iii) On a date mutually agreed by the Company and
                  the Executive, but in no event later than 20 days after the
                  Purchase Notice has been given (such date, the "Purchase
                  Closing Date"), the Company shall pay to the Executive the
                  Purchase Price against the delivery of certificates or other
                  instruments evidencing such Series B Shares duly endorsed for
                  transfer.

                           (iv) And dispute as to the fair market value of the
                  Purchase Interest shall be submitted for final determination
                  to a mutually acceptable investment banking firm of national
                  reputation familiar with the valuation of companies in the
                  hospitality and lodging industry (an "Investment Banking
                  Firm"). In the event that the Company and the Executive cannot
                  agree on a mutually acceptable Investment Banking Firm within
                  10 business days, the Company, on the one hand, and the
                  Executive, on the other hand, shall each select one Investment
                  Banking Firm, which two Investment Banking Firms shall jointly
                  make such determination within 20 business days after the date
                  of the purchase Notice, or, if such two Investment Banking
                  Firms are unable to agree on such determination, the two
                  Investment Banking Firms shall, by the end of the 20th
                  business day after the date of the Purchase Notice, select a
                  third Investment Banking Firm and notify such third Investment
                  Banking Firm in writing (with a copy to the Company and the
                  Executive) of their respective determinations of the fair
                  market value of the Purchase Interest following which such
                  third Investment Banking Firm shall, within 15 business days
                  after the date of its selection, notify the Company and the
                  Executive in writing of its selection of one or the other of
                  the two original determinations of the fair market value of
                  the Purchase Interest, which determination shall be final and
                  binding on the Company and the Executive.

                           (v)  The costs of the Investment Banking Firms shall
be borne by the Company.

         7.       COMPETITIVE ACTIVITY. During the Term of Employment and the
period ending one year following the effective date of the Executive's
termination of employment, the Executive will not:

         (a)      enter into or engage in any business which competes with the
                  Company's business or promote or assist, financially or
                  otherwise, any firm, person, association, partnership,
                  corporation or other entity engaged in any business

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                  which competes with the Company's business; provided that this
                  clause (a) shall cease to apply after the Executive's
                  termination of employment, and provided, further, that the
                  Company acknowledges that the Executive is currently party to
                  agreements with Milton Fine and/or his immediate family
                  members, trusts for their benefit or affiliates, and agrees
                  that neither the Executive's entering into such agreements nor
                  his performance of any obligations under such agreements shall
                  violate this Section 7(a), so long as the Executive has no
                  investment interest in any hotels as a result of, or pursuant
                  to, such agreement which are not managed by the Company.

         (b)      solicit or endeavor, directly or indirectly (including through
                  third parties), to cause any employee of the Company or any
                  Subsidiary to leave his employment or induce or attempt to
                  induce any such employee to breach any employment agreement
                  with the Company or any Subsidiary or otherwise interfere with
                  the employment of any such employee; or

         (c)      solicit, endeavor to cause, induce or attempt to induce any
                  agent who engages in the business of marketing the services of
                  the Company or any Subsidiary to terminate, reduce or modify
                  its agency relationship with the Company or any Subsidiary.

         8. UNAUTHORIZED DISCLOSURE, USE OR SOLICITATION. (a) Executive will
keep in strict confidence, and will not, directly or indirectly, at any time
during or after his employment with the Company, disclose, furnish, disseminate,
make available or, except in the course of performing his duties of employment
hereunder, use any trade secrets or confidential business and technical
information of the Company or its customers, vendors or property owners or
managers, without limitation as to when or how Executive may have acquired such
information. Such confidential information will include, without limitation, the
Company's unique selling methods and trade techniques, management, training,
marketing and selling manuals, promotional materials, training courses and other
training and instructional materials, vendor, owner, manager and product
information, customer lists, other customer information and other trade
information. Executive specifically acknowledges that all such confidential
information including, without limitation, customer lists, other customer
information and other trade information, whether reduced to writing, maintained
on any form of electronic media, or maintained in the mind or memory of
Executive and whether compiled by the Company, and/or Executive, derives
independent economic value from not being readily known to or ascertainable by
proper means by others who can obtain economic value from its disclosure or use,
that reasonable efforts have been made by the Company to maintain the secrecy of
such information, that such information is the sole property of the Company and
that any retention and use of such information by Executive during his
employment with the Company (except in the course of performing his duties and
obligations hereunder) or after the termination of his employment will
constitute a misappropriation of the Company's trade secrets.

                  (b) Executive agrees that upon termination of Executive's
employment with the Company, for any reason, Executive will return to the
Company, in good condition, all

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property of the Company, including without limitation, the originals and all
copies of all management, training, marketing and selling manuals, promotional
materials, other training and instructional materials, vendor, owner, manager
and product information, customer lists, other customer information and all
other selling, service and trade information and equipment. In the event that
such items are not so returned, the Company will have the right to charge
Executive for all reasonable damages, costs, attorneys' fees and other expenses
incurred in searching for, taking, removing and/or recovering such property.

                  (c) Executive acknowledges that to the extent permitted by
law, all work papers, reports, documentation, drawing, photographs, negatives,
tapes and masters therefor, prototypes and other materials (hereinafter,
"items"), including, without limitation, any and all such items generated and
maintained on any form of electronic media, generated by Executive during his
employment with the Company will be considered a "work made for hire" and that
ownership of any and all copyrights in any and all such items will belong to the
Company. The item will recognize the Company as the copyright owner, will
contain all proper copyright notices, e.g., "(year of creation" Interstate
Hotels Corporation. All rights reserved," and will be in condition to be
registered or otherwise placed in compliance with registration or other
statutory requirements throughout the world.

                  (d) Executive hereby assigns and agrees to assign to the
Company, its successors, assigns or nominees, all of his rights to any
discoveries, inventions and improvements, whether patentable or note, made,
conceived or suggested, either solely or jointly with others, by Executive while
in the Company's employ, whether in the course of his employment with the use of
the Company's time, materials or facilities or in any way within or related to
the existing or contemplated scope of the Company's business. Any discovery,
invention or improvement relating to any subject matter with which the Company
was concerned during Executive's employment and made, conceived or suggested by
Executive, either solely or jointly with others, within one year following
termination of Executive's employment under this Agreement or any successor
agreements will be irrebuttably presumed to have been so made, conceived or
suggested in the course of such employment with the use of the Company's time,
materials or facilities. Upon request by the Company with respect to any such
discoveries, inventions or improvements, Executive will execute and deliver to
the Company, at any time during or after his employment, all appropriate
documents for use in applying for, obtaining and maintaining such domestic and
foreign patents as the Company may desire, and all proper assignments therefor,
when so requested, at the expense of the Company, but without further or
additional consideration.

                  (e) Executive may use the Company's trade names, trademarks
and/or service marks in connection with the sale of the Company's products and
services, but only in such manner and for such purposes as may be authorized by
the Company. Upon any termination of this Agreement, Executive immediately will
cease the use of such trade names, trademarks and/or service marks and eliminate
them wherever they have been used or incorporated by Executive.

                                      -11-
<PAGE>   12

                  (f) The Executive will not directly or indirectly (i) solicit
or endeavor to cause any employee of the Company or any Subsidiary to leave his
employment or induce or attempt to induce any such employee to breach any
employment agreement with the Company or any Subsidiary or otherwise interfere
with the employment of any such employee or (ii) solicit, endeavor to cause,
induce or attempt to induce any agent who engages in the business of marketing
the services of the Company or any Subsidiary to terminate, reduce or modify its
agency relationship with the Company or any Subsidiary.

         9. SUCCESSORS AND BINDING AGREEMENT. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement will
be binding upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any persons acquiring directly or
indirectly all or substantially all of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor will thereafter be deemed the "Company" for the purposes of this
Agreement), but will not otherwise be assignable, transferable or delegable by
the Company.

                  (b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.

                  (c) This Agreement is personal in nature and neither of the
parties hereto will, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 9(a) and (b). Without limiting the generality or
effect of the foregoing, the Executives right to receive payments hereunder will
not be assignable, transferable or delegable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by Executive's will or
by the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 8(c), the Company will have no
liability to pay any amount so attempted to be assigned, transferred or
delegated.

         10. LEGAL FEES AND EXPENSES. It is the intent of the Company that the
Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's rights
under this Agreement by litigation or otherwise because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if it should appear to the Executive that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation, arbitration or other action or proceeding designed to
deny, or to recover from, the Executive the benefits provided or intended to be
provided to the Executive hereunder, the Company will pay for reasonable and
necessary legal expenses incurred by the Executive in connection with legal
advice or representation

                                      -12-
<PAGE>   13

regarding any such interpretation, enforcement or defense, including without
limitation the initiation or defense of any litigation, arbitration or other
legal action, whether by or against the Company or any Director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company consents to the Executive's entering into
an attorney-client relationship with such counsel, and in that connection the
Company and the Executive agree that a confidential relationship shall exist
between the Executive and such counsel. Without respect to whether the Executive
prevails, in whole or in part, in connection with any of the foregoing, the
Company will pay and be solely financially responsible for any and all
attorneys' and related fees and expenses incurred by the Executive in connection
with any of the foregoing.

         11. ADDITIONAL REMEDIES. (a) Notwithstanding any other remedy herein
provided for or available, if the Executive should be in breach of any of the
provisions of Section 7 or 8, the Executive expressly acknowledges and agrees
that the Company will be entitled to injunctive relief or specific performance,
without the necessity of proving damages, in addition to any other remedies it
may have.

                  (b) Notwithstanding any of the foregoing, in the event of any
disputes regarding the interpretation or application of any provision of this
Agreement, either the Executive or the Company, or both parties, may request in
writing that such dispute be resolved through final and binding arbitration. The
parties will jointly select the arbitrator who will hear such dispute. If the
parties cannot agree on the selection of an arbitrator, the parties will request
that one be appointed by the American Arbitration Association. The arbitration
will be conducted in Pittsburgh, Pennsylvania (or in any other location mutually
agreed upon by the parties) in accordance with the rules of the American
Arbitration Association. The parties acknowledge and agree that time will be of
the essence throughout such procedure. The decision of the arbitrator may be
entered in any court having subject matter and personal jurisdiction over the
dispute and the Executive. The Company will pay any costs and expenses in
connection with any such dispute or procedure.

         12. REPRESENTATION. Each party represents and warrants that it is
fully authorized and empowered to enter into this Agreement and that the
performance of its obligations under this Agreement will not violate any
agreement between it and any other person or entity.

         13. SEVERABILITY. In the event that any provision or portion of this
Agreement is determined to be invalid or unenforceable for any reason, in whole
or in part, the remaining provisions of this Agreement will be unaffected
thereby and will remain in full force and effect to the fullest extent permitted
by law.

         14. LITIGATION AND REGULATORY COOPERATION. During and after Executive's
employment, Executive shall reasonably cooperate with the Company in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company which relate to events or
occurrences that transpired while Executive was employed by the Company;
provided, however, that such cooperation shall not

                                      -13-
<PAGE>   14

materially and adversely affect Executive or expose Executive to an increased
probability of civil or criminal litigation. Executive's cooperation in
connection with such claims or actions shall include, but not be limited to,
being available to meet with counsel to prepare for discovery or trial and to
act as a witness on behalf of the Company at mutually convenient times. During
and after Executive's employment, Executive also shall cooperate fully with the
Company in connection with any investigation or review of any federal, state or
local regulatory authority as any such investigation or review relates to events
or occurrences that transpired while Executive was employed by the Company. The
Company shall also provide Executive with compensation on an hourly basis
calculated as his final Base Pay for requested litigation and regulatory
cooperation that occurs after his termination of employment, and reimburse
Executive for all costs and expenses incurred in connection with his performance
under this Section 14; including, but not limited to, reasonable attorney" fees
and costs.

         15. INDEMNIFICATION. The Executive shall receive maximum
indemnification from the Company as permitted by the Company's by-laws in effect
at any time during the Term of this Agreement and applicable law. This Section
shall survive the termination of this Agreement.

         16. NOTICES. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been
sent by a nationally recognized overnight courier service such as Federal
Express or UPS, addressed to the Company (to the attention of the Secretary of
the Company) AT its principal executive office and to the Executive at his
principal residence (with a copy to any counsel designated by the Executive), or
to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of changes of address will be
effective only upon receipt

         17. DISCLOSURE. During the Term of Employment and for one year
thereafter, Executive will communicate the contents of this Agreement to any
person, firm, association, partnership, corporation or other entity which he or
she intends to be employed by, associated with, or represent and which is
engaged in a business that is competitive to the business of the Company.

         18. MODIFICATIONS AND WAIVERS. No provision of this Agreement may be
modified or discharged unless such modification or discharge is authorized by
the Board and is agreed to in writing, signed by the Executive and by an officer
of the Company duly authorized by the Board. No waiver by either party hereto of
any breach by the other party hereto of any condition or provision of this
Agreement to be performed by such other party will be deemed a waiver of similar
or dissimilar provisions or conditions AT the time or at any prior or subsequent
time.

         19. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties hereto with respect to its subject matter, except
as such parties may otherwise agree in a

                                      -14-
<PAGE>   15

writing which specifies that it is an exception to the foregoing. Without
limiting the generality of the foregoing sentence, as of the Commencement Date,
the Old Agreement shall cease to be of any force or effect. This Agreement
supersedes all prior agreements between the parties hereto with respect to its
subject matter and, notwithstanding any other provision hereof, will become
effective upon the execution of this Agreement by the parties.

         20. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the Commonwealth of Pennsylvania, without giving
effect to the principles of conflict of laws of such Commonwealth.

         21. COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which will be deemed to be an original but all of
which together will constitute one and the same instrument.

         22. HEADINGS, ETC. The section headings contained in this Agreement are
for convenience of reference only and will not be deemed to control or affect
the meaning or construction of any provision of this Agreement References to
Sections are to Sections in this Agreement.

                                      -15-
<PAGE>   16

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

                                      INTERSTATE HOTELS CORPORATION

                                      By: /s/ Timothy Q. Hudak
                                         ---------------------------------------
                                      Title: Senior Vice President

                                      /s/ Kevin P. Kilkeary
                                      ------------------------------------------
                                      Kevin P. Kilkeary<PAGE>   1
                                                                    Exhibit 10.6

                                                                  EXECUTION COPY

                             STOCKHOLDERS AGREEMENT

         THIS STOCKHOLDERS AGREEMENT (the "AGREEMENT"), dated as of August 31,
2000, by and among Thomas F. Hewitt, J. William Richardson and Kevin P. Kilkeary
(each a "STOCKHOLDER" and together the "STOCKHOLDERS") and CGLH Partners I LP
and CGLH Partners II LP, each a Delaware limited partnership (together the
"INVESTOR").

                                   WITNESSETH

         WHEREAS, contemporaneously with the execution hereof, Interstate Hotels
Corporation, a Maryland corporation (the "COMPANY"), is entering into an amended
and restated employment agreement with each of the Stockholders pursuant to
which each Stockholder shall become, upon the closing of the transactions
contemplated by the Securities Purchase Agreement to be entered into between the
Company and the Investor (the "PURCHASE AGREEMENT"), the record holder of the
number of shares of Series B Convertible Preferred Stock, par value $.01 per
share (the "SERIES B PREFERRED STOCK") set forth beside such Stockholder's name
below, and which Series B Preferred Stock shall vest over time; and

         WHEREAS the Stockholders and the Investors desire to enter into certain
agreements with each of the Stockholders with respect to the Series B Preferred
Stock to be granted to the Stockholders.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and obligations herein set forth, the parties agree as follows:

         Section 1. Irrevocable Proxy. Each Stockholder as the record holder and
beneficial owner of the below indicated shares of Series B Preferred Stock,
hereby revokes all previous proxies and appoints CGLH Partners III LP, a
Delaware limited partnership, as representative of the Investor, as the true and
lawful proxy and attorney-in-fact for the undersigned to vote on any and all
matters at any annual or special meeting of the holders of Series B Preferred
Stock and to exercise any and all rights to execute written consent or approval
and any similar right granted to all of the below indicated shares of Series B
Preferred Stock of such Stockholder and all of the shares of Series B Preferred
Stock hereafter acquired by such Stockholder pursuant to Section 2(a) of the
Articles Supplementary to the Charter of the Company designating the Series B
Preferred Stock (together such "STOCKHOLDER'S SHARES").

         Each Stockholder authorizes and directs the proxy holder to file this
proxy with the Secretary of the Company and authorizes the proxy holder, and any
subsequent proxy holder, to substitute another person as proxy holder and to
file the substitution instrument with the Secretary of the Company.

         This proxy is irrevocable and is coupled with an interest in that it is
given in consideration of the agreements herein between each Stockholder and the
Investor, and is being delivered as an inducement for the Investor to allow such
Stockholder to participate with the

<PAGE>   2

Company and affiliates of the Investor in an investment partnership. As such
this proxy may not be revoked without the written consent of the Investor. Each
Stockholder agrees not to attempt to vote such Stockholder's Shares, execute
consents in respect thereof or grant proxies or assign rights to vote with
respect to such Stockholder's Shares to any other party

         Section 2. Tag-Along Rights. (a) Subject to Section 2(d) below in the
event that the Investor proposes to Sell (a "DISPOSITION") any Series B
Preferred Stock to a person other than an affiliate or associate of the Investor
or a Related Transferee (as such term is defined in the Investor Agreement,
which appears as Exhibit C to the Securities Purchase Agreement) and other than
to the Stockholders (a "PURCHASER"), in any private sale or any registered
public offering, then the Investor shall provide notice (a "PROPOSAL NOTICE") of
such proposed Disposition to each of the Stockholders no later than five (5)
days prior to the proposed closing of such Disposition. Each Proposal Notice
shall describe in reasonable detail the terms of the proposed Disposition,
including, without limitation, (i) the identity and address of the Purchaser,
(ii) the number of shares of Series B Preferred Stock proposed to be Sold by the
Investor (the "SALE STOCK"), (iii) the proposed amount and form of consideration
to be paid by the Purchaser to the Investor and (iv) any other material terms or
conditions of such proposed Disposition, and shall include a statement to the
effect that the Purchaser has been informed of the Tag-Along Rights (as defined
herein) and an acknowledgment by the Purchaser indicating that it has been so
informed and agrees to such terms. A copy of the Proposal Notice shall promptly
be sent to the Company.

                  (b) Subject to Sections 2(c) and 2(d) below, with respect to
each proposed Disposition each Stockholder shall have the right (the "TAG-ALONG
RIGHT") to require the Purchaser to purchase from such Stockholder and at the
Price Per Share (as defined below) all or a portion of the number of shares of
Series B Preferred Stock which represents the number of shares of Series B
Preferred Stock obtained by multiplying (A) a fraction, the numerator of which
is the number of shares of Sale Stock and the denominator of which is the number
of shares of Series B Preferred Stock Beneficially Owned by the Investor and any
Group of which it is a member as of the date of the Proposal Notice, times (B)
the number of shares of Series B Preferred Stock Beneficially Owned by such
Stockholder as of the date of the Proposal Notice.

                  (c) If the Purchaser declines to purchase all of the shares of
Series B Preferred Stock of the Investor and the Stockholders to be sold
pursuant to Section 2(b) hereof, each Stockholder shall have the right to
require the Purchaser to purchase from such Stockholder and at the Price Per
Share all or a portion of the number of shares of Series B Preferred Stock equal
to the number obtained by multiplying (A) a fraction, the numerator of which is
the number of shares of Series B Preferred Stock represented by the Sale Stock
and the denominator of which is the number of shares of Series B Preferred Stock
Beneficially Owned by the Investor and any Group of which it is a member and the
Stockholders as of the date of the Proposal Notice, times (B) the number of
shares of Series B Preferred Stock Beneficially Owned by the Stockholder as of
the date of the Proposal Notice. The number of shares sold by the Investor shall
be reduced to the extent any of the Stockholders choose to exercise their rights
under this Section 2(c).

                                      -2-
<PAGE>   3

                  (d) To exercise his Tag-Along Right such Stockholder shall
provide to the Investor written notice of his election to exercise such right
(an "ACCEPTANCE") no later than three (3) days after his receipt of a Proposal
Notice (such three day period, the "ACCEPTANCE PERIOD"). After the lapse of the
Acceptance Period within which the Investor shall not have received an
Acceptance from the Stockholder, the Investor may consummate, without the
participation of the Stockholder, a Sale to one or more purchasers, for
consideration equal to or less than the purchase price specified in the Proposal
Notice and on terms no more favorable to the Investor than those specified in
the Proposal Notice.

                  (e) All Sales of shares of Series B Preferred Stock to the
Purchaser by any Stockholder shall be on the same terms, including
representations, warranties and covenants, as apply to the Investor in respect
of the Sale of the Sale Stock.

                  (f) For purposes of this Agreement:

                  (i) "PER SHARE PRICE" means an amount equal to the quotient
obtained by dividing (A) the aggregate purchase price to be paid by the
Purchaser in respect of the Sale Stock by (B) the number of shares of Sale
Stock;

                  (ii) "SELL" means to sell, or in any other way directly or
indirectly transfer, assign, distribute, pledge, encumber or otherwise dispose
of, either voluntarily or involuntarily, and the terms "SALE," "SELLING" and
"SOLD" shall have meanings correlative to the foregoing; and

                  (iii) "GROUP" has the meaning as such term is used in Rule
13(d) of the Rules under the Securities Exchange Act of 1934.

         Section 3. Drag-Along Rights. (a) If the Investor proposes to Sell to
any person or group of persons (other than an affiliate of the Investor or a
Related Transferee and other than the Stockholders) (collectively, a "BUYER"),
in a bona fide arm's-length transaction or series of transactions, including by
way of a purchase agreement, tender offer, merger or other business combination
transaction or otherwise, 10% or more (such percentage the "SALE PERCENTAGE") of
the shares of Series B Preferred Stock beneficially owned by the Investor and
any Group of which it is a member (any such transaction being referred to herein
as a "MAJOR Sale"), then the Investor may elect to require each Stockholder to
Sell the Sale Percentage of shares of Series B Preferred Stock beneficially
owned by such Stockholder concurrently with such Major Sale to such Buyer at the
purchase price per share, and upon the terms and conditions of, and with the
same representations, warranties and covenants as apply to the Investor in, the
Major Sale.

                  (b) The rights set forth in this Section 3(a) shall be
exercised by giving notice (the "SECTION 3 NOTICE") to each Stockholder setting
forth in detail the terms of the proposed Sale, including without limitation,
(i) the identity and address of the Buyer, (ii) the number of shares of Series B
Preferred Stock proposed to be Sold by the Investor (the "SALE STOCK"), (iii)
the proposed amount and form of consideration to be paid by the Buyer to the
Investor and (iv) any other material terms or conditions of such proposed
Disposition, and shall include a

                                      -3-
<PAGE>   4

statement to the effect that the Buyer has been informed of the Drag-Along
Rights (as defined herein) and an acknowledgment by the Buyer indicating that it
has been so informed and agrees to such terms, and (vi) the proposed closing
date of the Major Sale, which proposed date (the "SECTION 3 CLOSING DATE") shall
be the later of (A) a business day not less than 15 or more than 60 days after
such Section 3 Notice is delivered to the Stockholders or (B) the fifth business
day following the receipt of all regulatory or third party consents and
approvals, if any, applicable to such Sale.

                  (c) Each Stockholder will (i) take all such actions as may be
requested by Investor to carry out the purposes of this Section 3, and (ii)
execute all documents containing such terms and conditions, including, without
limitation, representations and warranties with respect to (x) matters of title
to such Stockholder's securities and (y) the due authorization (or capacity) and
due and valid execution and delivery by such Stockholder of documentation in
respect of the Major Sale, as those executed by the Investor, and shall execute
and deliver such other instruments and agreements as may be requested by the
Investor. Each Stockholder shall be severally obligated to join on a pro-rata
basis (based on such Shareholder's share of the aggregate proceeds paid in such
Major Sale) in any indemnification that is to be provided in connection with
such Major Sale, other than any such indemnification that relates specifically
to a particular Stockholder, such as indemnification with respect to
representations and warranties given by an Stockholder regarding such
Stockholder's title to and ownership of shares of Series B Preferred Stock or
valid authorization by such Stockholder with respect to such Major Sale.

                  Section 4. Purchase upon Termination.At any time after the
termination of any Stockholder's employment with the Company the Investor shall
have the right (but not the obligation) to acquire all of such Stockholder's
Shares (the "PURCHASE INTEREST"), for an amount equal to the fair market value
of such Purchase Interest as of the Purchase Interest Closing Date. The
following procedure shall apply to such proposed acquisition:

                  (a) The Investor shall give notice (the "PURCHASE NOTICE") to
such Stockholder specifying the fair market value for such Stockholder's
Purchase Interest as of the date of such Purchase Notice, determined by the
Investor in good faith. For a period of 10 days after the Purchase Notice has
been given, the Investor and such Stockholder shall negotiate in good faith to
mutually agree on such fair market value (the "PURCHASE PRICE").

                  (b) On a date mutually agreed by the Investor and the
Stockholder, but in no event later than 20 days after the Purchase Notice has
been given (such date, the "PURCHASE CLOSING DATE"), the Investor shall pay to
the Stockholder the Purchase Price against the delivery of certificates or other
instruments evidencing such shares of Series B Preferred Stock duly endorsed for
transfer.

                  (c) Any dispute as to the fair market value of the Purchase
Interest shall be submitted for final determination to a mutually acceptable
investment banking firm of national reputation familiar with the valuation of
companies in the hospitality and lodging industry (an

                                      -4-
<PAGE>   5

"INVESTMENT BANKING FIRM"). In the event that the Investor and the Stockholder
cannot agree on a mutually acceptable Investment Banking Firm within 10 business
days, the Investor, on the one hand, and the Stockholder, on the other hand,
shall each select one Investment Banking Firm, which two Investment Banking
Firms shall jointly make such determination within 20 business days after the
date of the Purchase Notice, or, if such two Investment Banking Firms are unable
to agree on such determination, the two Investment Banking Firms shall, by the
end of the 20th business day after the date of the Purchase Notice, select a
third Investment Banking Firm and notify such third Investment Banking Firm in
writing (with a copy to the Investor and the Stockholder) of their respective
determinations of the fair market value of the Purchase Interest following which
such third Investment Banking Firm shall, within 15 business days after the date
of its selection, notify the Investor and the Stockholder in writing of its
selection of one or the other of the two original determinations of the fair
market value of the Purchase Interest, which determination shall be final and
binding on the Investor and the Stockholder. The costs of the Investment Banking
Firms shall be borne by the Investor.

                  Section 5. Notices.Any notice required or permitted to be
given or made to a person under this Agreement shall be in writing and shall be
deemed given or made: (i) when delivered in person, by overnight mail using a
nationally recognized courier service at his address as shown below or by
facsimile transmission (with call-back confirmation) at the facsimile number for
such person shown below or (ii) three days after being placed in a United States
Postal Service mailbox when sent by United States registered or certified mail
to such person at his address as shown below.

                  (a)      if to Thomas F. Hewitt, to

                                    Thomas F. Hewitt
                                    Interstate Hotels Corporation
                                    680 Andersen Drive, Foster Plaza Ten
                                    Pittsburgh, Pennsylvania  15220
                                    Facsimile: (412) 937-8051

                  (b)      if to J. William Richardson, to

                                    J. William Richardson
                                    Interstate Hotels Corporation
                                    680 Andersen Drive, Foster Plaza Ten
                                    Pittsburgh, Pennsylvania  15220
                                    Facsimile: (412) 937-8051

                  (c)      if to Kevin P. Kilkeary, to

                                    Kevin P. Kilkeary
                                    Interstate Hotels Corporation
                                    680 Andersen Drive, Foster Plaza Ten
                                    Pittsburgh, Pennsylvania  15220
                                    Facsimile: (412) 937-8051

                                      -5-
<PAGE>   6

                  (d)      if to the Investor, to

                                    CGLH Partners I LP and CGLH Partners II LP
                                    c/o Lehman Brothers Holdings Inc.
                                    200 Vesey Street
                                    12th Floor
                                    New York, New York  10285
                                    Facsimile: (212) 526-7006
                                    Attention: Joseph Flannery

                           with a copy to:

                                    Continental Gencom Holdings
                                    3250 Mary Street
                                    Suite 500
                                    Miami, Florida  33133
                                    Facsimile: (305) 445-4255
                                    Attention: Mr. K. Alibhai and Mr. S. Weiser

                           with a copy to:

                                    Stearns Weaver Miller Weissler Alhadeff &
                                    Sitterson, P.A.
                                    150 West Flagler Street, Suite 2200
                                    Miami, Florida  33130
                                    Facsimile: (305) 789-3395
                                    Attention: Richard E. Schatz, Esq.

                           with a copy to:

                                    Fried, Frank, Harris, Shriver & Jacobson
                                    1 New York Plaza
                                    New York, New York  10004
                                    Facsimile: (212) 859-8582
                                    Attention: Jonathan Mechanic, Esq.

                  (e)      if to the Company, to:

                                    Interstate Hotels Corporation
                                    680 Andersen Drive, Foster Plaza Ten
                                    Pittsburgh, Pennsylvania  15220
                                    Facsimile: (412) 920-5733
                                    Attention:  General Counsel

                                      -6-
<PAGE>   7

                           with a copy to:

                                    Jones, Day, Reavis & Pogue
                                    North Point,
                                    901 Lakeside Avenue
                                    Cleveland, Ohio 44114-1190
                                    Facsimile:  (216) 759-0212
                                    Attention:  Zachary Paris, Esq.

Any such address for notice may be amended by such person by giving notice to
all such other persons, in accordance with this Section.

                                      -7-
<PAGE>   8

                                        SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT

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

                                                   /s/ Thomas F. Hewitt
Number of Shares of                                -----------------------------
Series B Preferred Stock: 100,000                  Thomas F. Hewitt

                                                   /s/ J. William Richardson
Number of Shares of                                -----------------------------
Series B Preferred Stock: 75,000                   J. William Richardson

                                                   /s/ Kevin P. Kilkeary
Number of Shares of                                -----------------------------
Series B Preferred Stock: 50,000                   Kevin P. Kilkeary

<PAGE>   9

                                        SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT

         CGLH PARTNERS I LP

By:      MK/CG-GP LLC
         General Partner

         By:      CG Interstate Associates, LLC
                  a Managing Member

                           By:      Continental Gencom Holdings, LLC
                                    its Sole Member

                                    By: /s/ Sherwood Weiser
                                       ---------------------------------
                                            Name: Sherwood Weiser
                                            Title: Authorized Signatory

By:      LB INTERSTATE GP LLC
         General Partner

         By:      PAMI LLC
                  its Sole Member

                           By: /s/ Joseph J. Flannery
                              ----------------------------------
                                    Name: Joseph J. Flannery
                                    Title: Authorized Signatory

CGLH PARTNERS II LP

By:      MK/CG-GP LLC
         General Partner

         By:      CG Interstate Associates, LLC
                  a Managing Member

                           By:      Continental Gencom Holdings, LLC
                                    its Sole Member

                                    By: /s/ Sherwood Weiser
                                       ---------------------------------
                                            Name: Sherwood Weiser
                                            Title: Authorized Signatory

By:      LB INTERSTATE GP LLC
         General Partner

         By:      PAMI LLC
                  its Sole Member

                           By: /s/ Joseph J. Flannery
                              ---------------------------------
                                    Name: Joseph J. Flannery
                                    Title: Authorized Signatory

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00014-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00014-of-00352.parquet"}]]