Exhibit 10.22

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT is made as of the 15th day of June, 2006 by and between
JAY GANESH, INC., a Virginia corporation, or permitted assigns (“Buyer”), HIREN
PATEL (“Guarantor”), and CAPITOL HOTEL ASSOCIATES, LP, a Virginia Limited
Partnership (“Seller”).

W I T N E S S E T H :

WHEREAS, Buyer desires to purchase and Seller desires to sell the property
described herein;

NOW, THEREFORE, in consideration of Ten Dollars ($10.00) paid by Buyer to
Seller, and the mutual covenants of Seller and Buyer contained herein, Seller
and Buyer hereby agree as follows:

1. Agreement to Purchase and Sell. Seller hereby agrees to sell and convey to
Buyer, and Buyer hereby agrees to purchase from Seller:

A. Certain real property consisting of approximately +/-3.0 acres of land
located in Williamsburg, Virginia, and the hotel improvements located thereon
(“the Property”) consisting of a 137 room hotel trading as the Holiday Inn
Downtown (“the Hotel”) as more fully described on the legal description attached
hereto as Exhibit “A”;

B. To the extent assignable, all of Seller’s rights, title and interest in the
Holiday Inn license agreement dated August 13, 2004; provided, however, that
Buyer acknowledges and agrees that Seller has informed Buyer that Seller does
not believe that the license agreement is assignable;

C. All of the personal property and equipment owned by Seller and located in or
at the Hotel and used in connection therewith, including but not limited to,
cleaning

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equipment, furniture, fixtures, carpets, rugs, draperies, mechanical and
electrical equipment, office equipment, china, glassware, silver, cooking
utensils, flatware, linens, and uniforms (collectively, the “Personal
Property”), as more particularly described on the Inventory attached hereto as
Exhibit “B”; provided, however, that Buyer acknowledges and agrees that the
contents of MHI Hospitality Corporation’s home office are excluded.

D. To the extent owned by seller and relating to or located on or in the Hotel
and transferable by Seller, the telephone number for the Hotel, Hotel directory
listings, surveys, plans and specifications, licenses and permits, contractor
and maintenance files, service manuals, notices of compliance with state and
federal and all governmental agencies and regulations, estoppel certificates or
affidavits, and guaranties and warranties as to Personal Property which pertain
to the Hotel or are used in connection therewith;

E. Inventory at Closing, including without limitation merchandise held for sale
and reserve stocks of operating supplies on hand at Closing (“the Inventory”);

F. The Personal Property to be conveyed hereunder shall be conveyed free and
clear of all liens, claims and encumbrances. If said Personal Property is held
by Seller under the terms of a lease, lease purchase agreement or purchase
contract, same shall be paid from Seller’s proceeds at settlement and conveyed
to Buyer free and clear of all liens, claims and encumbrances. Notwithstanding
the previous sentence, Buyer acknowledges and agrees that Buyer will be
obligated to accept the assignment of three (3) leases from Seller and to assume
the performance of such leases following the sale of the Assets. The three
leases to be assumed by Buyer are described on Exhibit “C” attached hereto. A
schedule of all Personal Property held under lease or purchase agreement or
installment sales contact is attached hereto as Exhibit “C” and a copy of all
such leases and/or purchase contracts are appended to said Exhibit “C”.

 

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G. Except as otherwise provided in this Agreement, all franchise rights,
warranties, and all other contracts and agreements held by Seller relating
exclusively to the Hotel that are assignable by Seller (the property described
in the foregoing subparagraphs A through G is herein collectively call the
“Assets”).

2. Purchase Price. The Purchase Price for the Assets is Four Million Seven
Hundred Fifty Thousand and 00/100 Dollars ($4,750,000.00) (the “Purchase
Price”).

A. At the execution of the Agreement described herein below, the sum of One
Hundred Thousand Dollars ($100,000.00) (the “Deposit”) will be paid by Buyer to
Seller as a good faith deposit, which Deposit shall be applied to the Purchase
Price at Closing.

B. The sum of Four Million Two Hundred Fifty Thousand Dollars ($4,250,000.00)
shall be paid by Buyer to Seller at Closing in cash or by wire transfer of funds
immediately available to Seller.

C. The balance of the Purchase Price of Four Hundred Thousand Dollars
($400,000.00) shall be paid by Buyer to Seller by the execution and delivery of
a negotiable promissory note (“the Note”) made by Buyer payable to the order of
Seller in the original principal amount of Four Hundred Thousand Dollars
($400,000.00), together with interest at an annual rate equal to eight percent
(8.0%). The Note will be in the form of the promissory note attached to this
Agreement as Exhibit “D”, secured by a third lien deed of trust against the
Property and guaranteed by a guaranty executed by Hiren Patel and Champaklal
Patel, each in form and substance acceptable to Seller. During the first four
years of the term of the Note, the maker will make payments of interest only on
the outstanding principal balance of the Note, and beginning in the fifth year
of the term of the Note the Buyer will amortize the outstanding principal
balance of the Note using a 16 year amortization schedule. The Note will mature
on

 

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the twentieth anniversary of the date of the Note and all outstanding principal,
interest, late charges, and other costs and expenses payable under the Note will
be due and payable in full on that date. Within ten (10) days of the date of
this Agreement, Champaklal Patel shall also execute and deliver to Seller a
letter in form and content acceptable to Seller pursuant to which Champaklal
Patel agrees to purchase the Note from Seller on the date that is four (4) years
after the date of execution of the Note together with a personal financial
statement of Champaklal Patel. If Champaklal Patel does not execute and deliver
such letter to Seller within such ten (10) day period so agreeing to purchase
the Note, Seller shall have the right to terminate this Agreement, whereupon the
Deposit shall be refunded to Buyer, and Seller and Buyer shall have no further
obligations to each other except as specifically set forth in this Agreement.

3. Escrow of Deposit. The Deposit shall be held in escrow by Stewart Title
Guaranty Company (“Escrow Agent”) or other title insurance company acceptable to
Buyer and Seller as a good faith deposit. Buyer and Seller will execute Escrow
Agent’s standard escrow agreement in connection with the Deposit.

4. Conditions.

A. Buyer shall have a period (“Inspection Period”) beginning on the date this
Agreement is executed by all parties and expiring forty (40) days thereafter on
July 25, 2006 (assuming that both parties executed this Agreement on June 15,
2006). Buyer shall have until the expiration of such Inspection Period to notify
Seller in writing that Buyer does not wish to close on the purchase of the
Assets, in which event Seller shall terminate this Agreement, and neither party
shall have any further obligation to the other with respect to this Agreement
except as specifically set forth herein and the Deposit shall be promptly
refunded to Buyer. If Buyer elects to proceed forward to closing, the Deposit
will become non-refundable upon the expiration of the Inspection Period and
Closing will occur no later than August 10, 2006.

 

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B. Notwithstanding anything to the contrary in this Agreement, Buyer shall have
affirmative requirements to meet certain deadlines during the Inspection Period
as outlined below. Failure to meet said deadlines during the Inspection Period
shall at Seller’s option, render this Agreement null and void. In the event
Seller elects to terminate this Agreement pursuant to these specific provisions,
the Deposit will be refunded and neither party shall have any further obligation
to the other with respect to this Agreement except as specifically set forth
herein.

C. Requirements:

(i) Buyer will have ten (10) days to make full application with a lender of its
choosing and verify same to Seller.

(ii) Buyer will make a full and complete franchise application with Holiday Inns
on or before June 16, 2006, including application fee, and verify same to
Seller. Buyer acknowledges that Seller has informed Buyer that Holiday Inns will
review Buyer’s application for a franchise for the Hotel on July 10th as long as
Buyer promptly applies for a franchise.

D. Seller agrees:

(i) At any reasonable time and from time to time during the Inspection Period,
Buyer shall have the right to fully inspect the Assets and to satisfy itself
that the Assets, as of the date of such inspection, are in good operating
condition and repair, all guest rooms are fully equipped and suitable for rental
in the ordinary course of business; there are no material defects in the
improvements constituting part of the Hotel; and the roof, all plumbing,
heating, electrical and air conditioning and the water and sewer systems are in
good working order and condition. Seller shall use its best efforts to assure
that Buyer has access to the Assets during

 

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normal business hours, and Seller shall provide all available information
concerning the Assets that Buyer may reasonably request to assist Buyer in
making such determinations. Buyer may only contact Seller’s designated
representative when seeking access to the Hotel. Buyer may not contact any
employee of the Hotel directly to seek access to the Hotel. The subject
transaction is confidential and shall not be communicated to Seller’s employees
other than the designated representative. Buyer agrees to indemnify, defend, and
hold harmless Seller from and against any and all claims, demands, damages,
liability or losses of any kind or nature including, without limitation,
attorney’s fees and expenses arising from any due diligence or inspection
activities conducted on or about the Hotel or the Property by Buyer or its
employees, agents, contractors or consultants, and Buyer expressly agrees that
this indemnity obligation shall survive the closing of the sale of the Property
or the termination of this Agreement. In the event that Buyer does not close on
the purchase of the Property Buyer agrees to repair any damage to the Property
or the Hotel resulting from the due diligence or inspection activities of Buyer
or its agents, employees, contractors or consultants and to restore the Property
and the Hotel to the same condition that each was in before Buyer commenced any
due diligence or inspection activities. Buyer acknowledges and agrees that this
repair and restoration obligation shall survive the termination of this
Agreement.

(ii) At any reasonable time and from time to time during the Inspection Period,
Buyer shall have the right to fully examine all accounting ledgers, audit
materials, bonds, operating reports, files and other materials relating to the
financial condition and the operation of the Hotel as are available to Seller.
Buyer shall bear the cost of all inspections referred to in this Paragraph.
Buyer agrees to keep all such books, records and information strictly
confidential.

 

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(iii) Seller shall furnish to Buyer within ten (10) days of this Agreement being
signed by both parties year-end financial statements and federal tax returns for
2003, 2004, and 2005, plus year-to-date financial statements. Buyer shall bear
the cost of all inspections referred to in this Paragraph. Buyer agrees to keep
all such books, records and financial information strictly confidential.

(iv) Seller shall furnish to Buyer within ten (10) days of this Agreement being
signed by both parties a copy of its title insurance policy, and all surveys,
architectural plans and drawings, engineering reports, elevator reports, and any
and all other reports relating to the roof, structure, mechanical, electrical,
plumbing, heating or air-conditioning systems, and environmental reports. In
this regard, Buyer acknowledges that Seller delivered to Buyer on June 14, 2006,
a notebook containing due diligence and inspection items relating to the
Property, the Hotel, and the Assets. Buyer will inform Seller on or before
June 22, 2006, of any additional due diligence or inspection materials that
Buyer needs from Seller. To the extent that Seller has such materials in its
possession, Seller will promptly furnish such materials to Buyer for its review.
Buyer agrees to keep all such information strictly confidential and to return
all such materials and all copies thereof to Seller if Buyer does not close on
the purchase of the Property.

(v) Seller shall furnish to Buyer copies of all existing contracts (e.g.
cleaning service, waste disposal contracts, outside payroll service, etc.),
employment agreements and personal service contracts relating to the operation
of the Hotel within ten (10) days of this Agreement being signed by both
parties.

(vi) Seller shall furnish to Buyer a copy, of the Holiday Inn License Agreement
and the most recent inspection report. Additionally Seller shall provide Buyer a
copy

 

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of the Ledo franchise agreement. Buyer acknowledges and agrees that Seller has
advised Buyer that such license and franchise agreements are not assignable and
that Buyer will have to apply for new license and franchise agreements. Seller
agrees to cooperate with Buyer in connection with its application for a new
Holiday Inn franchise and its effort to obtain the assignment of the Ledo
franchise agreement or the issuance of a new Ledo franchise agreement.

(vii) Buyer will apply for a new franchise in Buyer’s name on or before June 16,
2006, in order that Buyer can have its application reviewed by Holiday Inns on
July 10, 2006. Buyer will be required to pay the customary application and
transfer fees, and, in the event any Product Improvement Plan expenditures are
required by Holiday Inns in order for it to approve a new license for Buyer,
Seller will be liable to Buyer for up to Two Hundred and Fifty Thousand Dollars
($250,000) in costs associated with such Product Improvement Plan expenditures
required by Holiday Inns.

5. Closing. Closing shall take place within thirty (30) days after the
expiration of the Inspection Period but in no event later than August 10, 2006.
Buyer acknowledges and agrees that time is of the essence of this Agreement. In
the event that Holiday Inns is willing to extend the date, without cost or
expense to Seller, through which it will allow Seller to sell the Assets to a
buyer without the necessity for Product Improvement Plan expenditures by such
buyer, Seller agrees that it will allow Buyer one thirty (30) day extension of
the Closing Date upon the payment by Buyer to Escrow Agent of the additional
amount of One Hundred Thousand Dollars ($100,000) which shall be non-refundable
and shall become part of the Deposit.

6. Title and Conveyances. A. At Closing, Seller shall convey good marketable fee
simple title to the Property to Buyer by special warranty deed, free and clear
of

 

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any and all lien or encumbrances, and subject to all conditions, easements,
rights-of-way, assessments, restrictions and other matters of record affecting
the Property including, without limitation, the following:

(i) General real estate taxes for the year in which Closing occurs and
subsequent tax years;

(ii) All building restrictions and zoning regulations now or hereafter in
effect, to the extent adopted by any municipal or other public authority and
related to all or any portion of the Property.

B. Seller shall convey the Personal Property to Buyer by a bill of sale that
warrants that Seller owns and is conveying to Buyer good and marketable title to
the Personal Property, free and clear of all liens and encumbrances. Seller
shall assign its franchise rights, warranties, and all other contract rights to
the extent that the same are assignable by properly executed assignments.

7. Seller’s Representations and Warranties. Buyer has agreed to purchase the
Assets as a result of Buyer’s review and inspection of the Assets, and not
because of or in reliance upon any representation made by the Seller or any
principal or employee of Seller, or by any agent of the Seller, except as
expressly set forth in this Agreement, and that Buyer has agreed to purchase the
Assets in their present condition, unless otherwise specified herein.

Notwithstanding the foregoing, Seller represents that, to the best of Seller’s
knowledge, Seller is not in possession of any information, and no information
has come to Seller’s attention that would cause Seller to conclude that: the
Hotel, or any related facilities or utilities are not in conformance with
applicable zoning, building codes or other laws and regulations; the Hotel is
not free from faulty materials and constructed according to sound

 

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engineering standards and constructed in a workmanlike manner; or there is any
environmental contamination, hazardous waste, asbestos, or other toxic
substances, in the Hotel or on the land upon which it is situate in any greater
amount or degree than indicated in the environmental studies, if any. Seller
further represents that, to the best of Seller’s knowledge, the roof and
structure of the Hotel are sound and that all appliances, elevators, heating,
air conditioning, plumbing , and other systems are now and will, at the Closing,
be in good working order, ordinary wear and tear excepted. As used herein,
“Seller’s knowledge” is limited to the actual knowledge of Andrew M. Sims and
Scott Kucinski, employees of Seller who are engaged in matters directly related
to the Property. Except to the extent of any title insurance policy or
environmental report or study in the possession of Seller, copies of which
Seller has agreed to provide to Buyer, in accordance with this Agreement, Seller
has not undertaken any independent investigation or verification of the matters
described in this Paragraph.

Seller is selling the Assets and Buyer is purchasing the Assets, “AS-IS,
WHERE-IS” and “WITH ALL FAULTS”.

B. Seller additionally represents and warrants to Buyer that to the best of
Seller’s knowledge:

(i) Seller is duly qualified under the laws of the Commonwealth of Virginia and
has full and absolute power and authority to enter into this Agreement and all
ancillary documents delivered pursuant hereto; to provide the financing
described above, and to perform all of its obligations hereunder. The individual
or individuals executing this Agreement and all other instruments, documents and
agreements to be executed by Seller hereunder are duly authorized to execute
documents on behalf of Seller. The execution and delivery of this Agreement and
the performance by the Seller of its obligations hereunder have been duly

 

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authorized by all requisite action or approval that is required in order to
constitute this Agreement as a binding and enforceable obligation of the Seller,
subject to the limitations and qualifications set forth herein, Seller has the
full right to sell the Assets pursuant to this Agreement, and no further
authorization or consent to this Agreement is necessary for Seller to sell the
Assets to Buyer except as set forth herein.

(ii) There are no judgments, orders, or decrees of any kind against Seller
unpaid or unsatisfied of record, nor, any legal action, suit or other legal
proceeding pending before any court, or any administrative proceeding pending
before any administrative agency relating to the Assets (including any notice of
any proposed, pending or threatened condemnation proceeding) which would
materially adversely affect the Assets and their intended use, nor has Seller
received any actual notice of any such threatened legal action, suit or other
legal or administrative proceeding relating to the Assets.

(iii) Seller has received no notice of any proposed, pending or actual
assessment made or to be made against the Assets by any governmental authority
or instrumentality.

(iv) Seller covenants and represents that it has no personal knowledge of any
handling, transportation, storage, treatment or usage of hazardous or toxic
substances that has occurred in or on the Property during its ownership thereof
in any greater amount or degree than indicated in the environmental studies, if
any, or other than as permitted in connection with the ordinary cleaning,
operation, and maintenance of the Hotel and the Property. Seller further
represents that it has no knowledge of any leak, spill, discharge, emission or
disposal of hazardous or toxic substances which has occurred on the Property,
and to the best of its knowledge the soil, groundwater, soil vapor on or under
the land is free of toxic or hazardous substances as of the date hereof other
than that indicated in the environmental studies, if any.

 

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8. Contingencies. Conditions in favor of Buyer. Notwithstanding anything in this
Agreement to the contrary, Buyer’s obligation to purchase the Property shall be
expressly subject to and contingent upon the satisfaction or waiver in writing
of the following conditions during time periods indicated in each paragraph:

A) Buyer’s inspection and approval, within the Inspection Period, of all
physical, environmental (including, without limitation, hazardous waste),
economic, feasibility, title, and legal matters relating to the Property, and
Buyer’s determination that the Property is suitable in all respects for Buyer’s
intended use.

B) Buyer’s determination, during the Inspection Period, that a national title
insurance company acceptable to Buyer is prepared to issue, upon the sole
condition of the payment of its regularly scheduled premium, its ALTA Owner’s
Policy of title insurance (the “Title Policy”), insuring in the amount of the
Purchase Price that title to the Property is vested of record in Buyer on the
Closing Date, subject only to printed conditions of such policy together with
such additional endorsements as Buyer may reasonably require, at Buyer’s sole
cost;

C) Confirmation, during the Inspection Period, that the Property is a legal
parcel within the meaning of any state and local subdivision laws, the
completion of any further subdivision of the Property necessary for the Buyer’s
intended use, and the completion of any platting or re-platting required by
Buyer;

D) Buyer’s determination, during the Inspection Period, that Buyer has obtained
or will be able to obtain all other governmental and private licenses, permits,

 

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rights, and authorizations (including, without limitation, governmental
approvals, the receipt of public and/or private easements, if any, from third
parties, and all required or desired building permit(s)), all on conditions
reasonably acceptable to Buyer, as necessary for construction and operation of
the Buyer’s business on Property;

E) Buyer’s review and approval, during the Inspection Period, of (i) any
environmental assessment of the Property desired by Buyer, and (ii) any other
soils test reports, (including, but not limited to, soils boring and testing for
stability, subsidence, topography, hazardous wastes, and other toxic
substances), procured and paid for by Buyer;

F) Verification, during the Inspection Period, that the Property does not lie
within a 100-year flood plain, as established by the U.S. Army Corps of
Engineers, or within any area subject to flooding or within any area designated
as wetlands or wetlands buffer;

G) Determination, during the Inspection Period, that no portion of the Property
has been taken by, or is the subject of, any condemnation proceeding, which
would adversely affect the Buyer’s intended use;

H) Verification, during the Inspection Period, that no federal, state, or local
governmental restrictions, or requirements exist which would preclude
construction and operation of the intended use on the Property;

I) Determination, during the Inspection Period, of the availability of public
water (including any mains or other equipment required by any fire marshal or
other public official), telephone, electric power, natural gas, and gravity flow
sewers and storm drainage, all sufficient to handle the requirements of the
Buyer’s intended use, and the availability of such utilities at or within the
property lines of the Property, without cost to Buyer;

 

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J) Determination, during the Inspection Period that there are no pending or
threatened referendum, moratorium, or any other public or private actions which
would in any way materially frustrate or adversely affect the Buyer’s intended
use of the Property;

K) As of the Closing Date, there shall have been no material adverse change in
the condition of the Property, or in any document, in any applicable laws and
restrictions, contractual relations, or other circumstances affecting the
Property which have been previously approved by Buyer;

L) As of the Closing Date, the due performance by Seller of each and every
covenant, undertaking and agreement to be performed by Seller pursuant to this
Agreement, the truth in all material respects, of each representation and
warranty made in this Agreement by Seller at the time made and on the Closing
Date, and the delivery to Buyer by Seller on the Closing Date of a certificate
certifying that each representation and warranty made in this Agreement by
Seller is true as of the Closing Date (“Sellers Certificate”), in the form
attached hereto as Exhibit “E”; and

M) During, the Inspection Period, Buyer’s review and approval, in Buyer’s sole
discretion, of the ALTA Survey and Title Commitment.

9. Failure or Waiver of Conditions Precedent.

A) At any time or times on or before the Closing Date, Buyer may (in its sole
and absolute discretion) waive any of the conditions in Section 8 hereinabove by
written notice to Seller, or elect to cure the failure of such condition. No
such waiver shall reduce the rights or remedies of Buyer arising from any breach
of any undertaking, agreement, covenant, warranty, or representation of Seller
under this Agreement.

 

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B) In the event any of the conditions to this Agreement which are for the
benefit of Buyer are neither fulfilled, nor waived or cured pursuant to
Paragraph 8 above, this Agreement shall terminate and Buyer shall be released
from all obligations under this Agreement except for those obligations that
specifically survive termination of this Agreement. In the event of such
termination, the Deposit and all funds deposited with the Escrow Agent by Buyer
or paid by Buyer to Seller (together with all interest accrued on such funds)
shall be returned immediately to Buyer, and all documents deposited with the
Escrow Agent by Buyer or Seller shall be returned to the depositing party.

10. Fire or Casualty. Seller shall keep the Hotel insured against loss by fire
or casualty in any amount not less than full replacement cost. If, prior to
Closing, the Hotel is damaged and the cost of restoring such damage exceeds One
Million Dollars ($1,000,000.00), or if the Hotel is destroyed by casualty, then
Buyer may, by written notice to Seller given within ten (10) days after such
loss, terminate this Agreement and receive a refund of the Deposit. Upon such
termination, neither party shall have any further liability to the other party
hereunder except as specifically set forth herein. Any other loss or damage to
the Property shall not be in any way void or impair the obligations of the
parties hereunder. If this Agreement is not terminated, insurance proceeds
payable with respect to such damage shall be assigned to Buyer at Closing, the
full Purchase Price shall be paid, and the Property shall be delivered to Buyer
at closing subject to damage.

 

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11. Adjustments.

A. Real estate taxes, personal property taxes, utilities, water and sewer,
rents, and other governmental assessments on the Property shall be prorated
between Buyer and Seller on a calendar or fiscal year basis, using the fiscal
year of the applicable taxing authority or the billing period for any utility
service as the basis for accrual thereof, as of the date of the settlement or
Closing. Seller shall pay all expenses of deed preparation, the grantor’s tax on
said deed, and the cost, if any, for removal of title defects, if Seller agrees
to remove any title defects. Buyer agrees to pay in cash at closing all clerk’s
fees, recording fees, recording taxes, and other costs and expenses of recording
all documents, including the deed, the deed of trust, assignments, financing
statements, and other collateral documents. Each party shall pay its respective
attorney’s fees.

B. Seller shall receive at Closing either in cash or as a credit towards the
Purchase Price an amount equal to all monies in house banks and cash registers.
Such house banks and cash drawers will be counted jointly by representatives of
Seller and Buyer at 6:00 a.m. on the date of Closing.

C. Seller shall receive from Buyer at Closing either in cash or as a credit
towards the Purchase Price an amount equal to the transient guest ledger balance
for all occupied rooms as of 6:00 a.m. on the date of Closing.

D. Travel agent commissions liability incurred prior to the date of Closing
shall be paid by Seller.

E. All prepaid unapplied room rentals, and all deposits for advance reservations
for banquets, and future services shall be delivered to Buyer. Copies of all
agreements relating to banquets and future service shall be jointly compiled by
representatives of Buyer and Seller prior to Closing. Buyer shall expressly
assume the obligation to perform the

 

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agreements in accordance with the terms and honor the advanced deposits received
by written instrument delivered at Closing in which Buyer shall agree to defend
and indemnify Seller from all claims arising with respect to Buyer’s failure to
perform in accordance with the Agreement.

F. Seller shall be entitled to all accounts receivable balances originating
prior to the date of Closing and due from tenants, guests, and patrons of the
Hotel for rents and other customary hotel direct bill charges. Seller shall have
the exclusive right to institute any proceedings and to take any steps to effect
collection thereof. Buyer agrees that if any such accounts receivable payments
are received by Buyer, they shall be received in trust for Seller and shall be
promptly remitted to Seller.

G. Seller shall receive credit for an amount equal to all prepaid expenses paid
by Seller that inure to the benefit of Buyer.

12. Notices. All notices hereunder shall be in writing and sent by depositing it
with a nationally recognized overnight courier services that obtains receipts,
addressed to the appropriate party (and marked to a particular individual’s
attention if so indicated) as hereinafter provided. Each notice shall be
effective upon being so deposited. Rejection or other refusal by the addressee
to accept or the inability to deliver because of a changed address of which no
notice was given shall be deemed to be the receipt of the notice sent. Any party
shall have the right from time to time to change the address or individual’s
attention to which notice to it or them shall be sent by giving the other party
at least ten (10) days’ prior notice thereof. The notice address of the parties
shall be as follows:

 

If to Seller:    Mr. Andrew M. Sims    MHI Hospitality Corporation    814
Capitol Landing Road    Williamsburg, VA 23185

 

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With a copy to:    Thomas J. Egan, Esquire    Baker & McKenzie    815
Connecticut Avenue, NW    Washington, DC 20006 if to Buyer:    Hiren Patel   
a/k/a Aaron Patel    4688 Church Point Place    Virginia Beach, VA 23455 With a
copy to:    John W. Richardson, Attorney at Law    Kaufman & Canoles, P.C.   
2101 Parks Avenue, Suite 700    Virginia Beach, VA 23451 if to Guarantor:   
Hiren Patel    a/k/a Aaron Patel    4688 Church Point Place    Virginia Beach,
VA 23455

Notwithstanding anything in this paragraph to the contrary, any notice received
in fact shall be deemed given in accordance with this paragraph.

13. Commission and Other Fees. There are no brokerage fees or commissions
incurred as a result of the consummation of this Agreement other than those
payable by Seller to Jones, Lang & LaSalle Hotels. Each party agrees to
indemnify, protect, defend and hold harmless the other party from any and all
claims for such fees or real estate commissions. The provisions of this
Paragraph shall survive Closing.

14. Default.

A. If Buyer does not terminate this Agreement during the Inspection Period, and
Buyer fails to complete Closing for the purchase of the Property within the time
period specified in Paragraph 4 hereof, Buyer shall be in default hereunder, and
Seller shall retain the Deposit as liquidated damages; provided, however, if
Buyer’s failure to close on the purchase

 

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described herein is caused by Seller’s inability to deliver good title to the
Assets, if demanded by Buyer, Seller shall return the Deposit, and neither party
shall have any further obligation to the other with respect to this Agreement.

B. If Seller fails to complete Closing in accordance with this Agreement through
no fault of Buyer, Buyer shall be entitled to obtain the return of the Deposit
or to seek and obtain specific performance of this Agreement.

15. Entire Agreement and Modifications. This Agreement embodies and constitutes
the final and entire agreement between the parties hereto and they shall not be
bound by any terms, covenants, conditions, representations, or warranties not
expressly contained herein. This Agreement may not be altered, changed, or
amended by an instrument in writing, executed by both parties hereto.

16. Applicable Law. This Agreement is an instrument under seal and shall be
governed, construed, and enforced according to the laws of the Commonwealth of
Virginia.

17. Headings. Descriptive headings are for convenience only and shall not
control or affect the meanings or construction of any provision of this
Agreement.

18. Interpretation. Whenever the context hereof shall so require, the singular
shall include the plural, the plural the singular, and the use of any gender
shall be applicable to all genders.

19. Severability. If any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein.

 

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20. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns. The
rights of Buyer under this Agreement may be assigned to any entity comprised of
Buyer and another investor without the prior written consent of Seller.

21. Seller’s Right to Like-Kind Exchange. Buyer agrees that, in lieu of the
payment of the Purchase Price in cash, Seller shall have the right to transfer
and convey the Assets in exchange for other real property of a like-kind (the
“Exchange Property”) to be designated by Seller at or after the Closing Date
such that the exchange will qualify for non-recognition of gain or loss under
Section 1031 of the Internal Revenue Code of 1986, as amended. If Seller elects
to make a like-kind exchange, Seller shall deliver written notice of such
election to Buyer prior to the Closing Date. In this event, Buyer agrees to
cooperate in all reasonable respects in effecting the exchange, so long as Buyer
does not assume any additional liability as a result of such cooperation. The
exchange shall be completed through the use of a °qualified intermediary” or an
escrow agent pursuant to Section 1031.

Buyer acknowledges that if Seller elects to effect a like-kind exchange of the
subject real estate, Seller shall assign all of its right, title and interest
under this Agreement to the qualified intermediary, and Buyer will pay the
Purchase Price directly to the qualified intermediary. The Buyer and the
qualified intermediary may then complete the like-kind exchange in the manner
they agree upon. Buyer agrees to execute any additional documents as may be
reasonably requested by Seller to carry out the like-kind exchange. Buyer’s
agreement to participate shall not result in additional liability to the Buyer.

 

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22. Contract and Note Guarantee. Hiren Patel will fully guarantee the
performance of this Agreement and the repayment of the Note. Yogesh Patel will
also fully guarantee, jointly and severally, with Hiren Patel the repayment of
the Note.

23. Counterpart Signature Pages. This Agreement may be executed in one or more
counterparts, and each counterpart shall constitute an original of this
Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives on the date set forth below.

[signatures appear on following page]

 

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     SELLER:      Capitol Hotel Associates, LP June 20, 2006      By  

/s/ Andrew M. Sims

Date        Andrew M. Sims      BUYER:      Jay Ganesh, Inc. or Permitted
Assigns June 20, 2006      By  

/s/ Hiren Patel, President

Date        Hiren Patel, President      GUARANTOR: June 20, 2006      By  

/s/ Hiren Patel

Date        Hiren Patel

 

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EXHIBIT “A”

LEGAL DESCRIPTION

 

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EXHIBIT “B”

PERSONAL PROPERTY INVENTORY

 

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EXHIBIT “C”

SCHEDULE OF LEASES AS TO PERSONAL PROPERTY

Leases to be Assumed by Buyer:

Lease with Vend Lease for cash register/business data equipment used in
connection with the operation of the Hotel

Lease with GE Capital Corporation for a photocopier

Lease of Holiday Inn Opera software used in connection with the operation of the
Hotel

 

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EXHIBIT “D”

PROPOSED PROMISSORY NOTE

 

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EXHIBIT E

SELLER’S CERTIFICATE

OF

REPRESENTATIONS AND WARRANTIES

This Certificate of Representations and Warranties is given pursuant to that
certain Purchase Agreement by and between Capitol Hotel Associates, LP as
Seller,                                     , as Buyer.

Seller hereby certifies to Buyer that each representation and warranty made by
Seller in the Agreement is true as of the date set forth below.

 

Date:  

June 20, 2006

Capitol Hotel Associates, LP BY:  

/s/ Andrew M. Sims

  Andrew M. Sims

 

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