Exhibit 10.21C

Execution Version

THIRD AMENDMENT TO CREDIT AGREEMENT

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of the
18th day of February, 2009, by and among MHI HOSPITALITY CORPORATION, MHI
HOSPITALITY, L.P., MHI HOSPITALITY TRS HOLDING, INC., MHI HOSPITALITY TRS, LLC,
MHI GP LLC, PHILADELPHIA HOTEL ASSOCIATES LP, BROWNESTONE PARTNERS, LLC,
LOUISVILLE HOTEL ASSOCIATES, LLC, TAMPA HOTEL ASSOCIATES LLC and BRANCH BANKING
AND TRUST COMPANY, as Administrative Agent, as Issuing Bank and as a Lender,
KEYBANK NATIONAL ASSOCIATION and MANUFACTURERS AND TRADERS TRUST COMPANY
(collectively referred to herein as the “Lenders”).

R E C I T A L S:

The Borrowers, the Guarantors, the Administrative Agent and the Lenders have
entered into a certain Credit Agreement dated as of May 8, 2006, as amended by a
certain First Amendment to Credit Agreement dated August 1, 2007, a certain
Second Amendment to Credit Agreement dated April 15, 2008, and a certain
Amendment to Second Amendment to Credit Agreement dated August 15, 2008
(referred to herein, as so amended, as the “Credit Agreement”). Capitalized
terms used in this Amendment which are not otherwise defined in this Amendment
shall have the respective meanings assigned to them in the Credit Agreement.

Among other things, the Borrowers and Guarantors have requested the
Administrative Agent and the Lenders to amend the Credit Agreement to (i) change
the definition of “Asset Value”, “Base Rate”, “Eligible Property Value”, “NOI”,
“Stabilization Period” and “Total Value”, (ii) add the definition of “Debt
Yield”, “Liquidity”, “Renovation Stabilized Eligible Property”, “Renovation
Stabilized Hotel Property”, “Renovation Stabilization Period” and “Savannah
Property”, and (iii) amend Sections 2.06(a), 5.01, 5.06(a), 5.07 and 5.28 of the
Credit Agreement as set forth herein.

The Lenders, the Administrative Agent, the Guarantors and the Borrowers desire
to amend the Credit Agreement upon the terms and conditions hereinafter set
forth.

NOW, THEREFORE, in consideration of the Recitals and the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers, the Guarantors, the
Administrative Agent and the Lenders, intending to be legally bound hereby,
agree as follows:

SECTION 1. Recitals. The Recitals are incorporated herein by reference and shall
be deemed to be a part of this Amendment.

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SECTION 2. Calculation of Total Liabilities. The Borrowers and the Guarantors
expressly agree that, for the purposes of the calculation of “Total
Liabilities,” the term “trade accounts payable less than 90 days past due”
within subsection (2) of the definition of Total Liabilities shall in no event
include all cash dividends payable by the Company or the Operating Partnership,
including without limitation any cash distributions payable to the shareholders
or other equity owners of the Company or the Operating Partnership (as a result,
all such cash dividends payable shall be included within the term Total
Liabilities).

SECTION 3. Amendments. The Credit Agreement is hereby amended as set forth in
this Section 3.

SECTION 3.01. Amendment to Section 1.01. The definition of “Asset Value” set
forth in Section 1.01 of the Credit Agreement is amended and restated to read in
its entirety in appropriate order as follows:

“Asset Value” shall be determined as of the end of each Fiscal Quarter and shall
mean with respect to: (I) any Eligible Property other than the Savannah
Property: (A) a Stabilized Eligible Property or Stabilized Hotel Property,
(1) the NOI of such Property for the Fiscal Quarter then ending and the
immediately preceding three Fiscal Quarters divided by (2) 8.5%; (B) a Newly
Acquired Hotel Property, the Net Book Value of such Newly Acquired Hotel
Property, plus accumulated depreciation; and (C) a Renovation Stabilized
Eligible Property, the lesser of (1) the NOI of such property for the four
Fiscal Quarters ending immediately prior to the commencement date of renovations
with respect to such property divided by 8.5% or (2) the Appraised Value of such
Renovation Stabilized Eligible Property (determined prior to the commencement of
the renovation of such Eligible Property); and (II) the Savannah Property during
the Renovation Stabilization Period, $33,500,000.

SECTION 3.02. Amendment to Section 1.01. The definition of “Base Rate” set forth
in Section 1.01 of the Credit Agreement is amended and restated to read in its
entirety in appropriate order as follows:

“Base Rate” means for any Base Rate Advance for any day, the rate per annum
equal to the greater of (i) the Prime Rate, (ii) the Federal Funds Rate, plus
 1/2 of 1%; and (iii) the LIBOR Rate, plus 1%. For the purposes of determining
the Base Rate, “LIBOR Rate” means the rate per annum equal to the London
interbank offered rate for deposits in U.S. dollars for a one-month period,
which appears on the display designated as Reuters Screen LIBOR01 Page (or such
other successor page as may replace Reuters Screen LIBOR01 Page or such other
service or services as may be nominated by the British Banker’s Association for
the purpose of displaying London InterBank Offered Rates for U.S. dollar
deposits) determined as of 11:00 a.m. London, England time. For the purposes of
determining the Base Rate for any day, changes in the Prime Rate, the Federal
Funds Rate and the LIBOR Rate shall be effective on the date of each such
change.

 

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SECTION 3.03. Amendment to Section 1.01. The definition of “Borrowing Base
Certification Report” set forth in Section 1.01 of the Credit Agreement is
amended and restated to read in its entirety in appropriate order as follows:

“Borrowing Base Certification Report” means a report in the form attached hereto
as Exhibit N, and otherwise satisfactory to the Administrative Agent, certified
by the chief financial officer or other authorized officer of the Borrowers
setting forth the calculations required to establish the Eligible Property Value
for each Borrowing Base Asset and the Eligible Property Value for all Borrowing
Base Assets as of a specified date, all in form and detail satisfactory to the
Administrative Agent. The Borrowing Base Certification Report shall include
calculations of (i) NOI for each Eligible Property, (ii) any changes to the Net
Book Value of each Newly Acquired Hotel Property or Renovation Stabilized
Eligible Property from the preceding month and (iii) the amount of Total Unused
Revolver Commitments.

SECTION 3.04. Amendment to Section 1.01. The definition of “Debt Yield” shall be
added to Section 1.01 of the Credit Agreement in appropriate alphabetical order
as follows:

“Debt Yield” means at any time the ratio of (i) Consolidated EBITDA to
(ii) Total Liabilities.

SECTION 3.05. Amendment to Section 1.01. The definition of “Eligible Property
Value” set forth in Section 1.01 of the Credit Agreement is amended and restated
to read in its entirety in appropriate order as follows:

“Eligible Property Value” means, with respect to any Eligible Property included
in the Borrowing Base for any date of determination an amount equal to:
(A) prior to April 1, 2010, .70, and on and after April 1, 2010, .65, multiplied
by (B): (1) in the case of a Stabilized Eligible Property or a Renovation
Stabilized Eligible Property, the Asset Value of such Stabilized Eligible
Property or Renovation Stabilized Eligible Property; and (2) in the case of a
Newly Acquired Eligible Property, an amount equal to the lesser of (a) the
Borrowing Base Acquisition Cost of such Eligible Property; or (b) 80% of the
Appraised Value of such Eligible Property (determined at the time such Eligible
Property is acquired by the Eligible Property Owner or such subsequent time as
the Administrative Agent or the Required Lenders may reasonably request).
Notwithstanding anything to the contrary in the Credit Agreement, the Eligible
Property Value for any Eligible Property shall in no event be greater than the
amount secured by the Mortgage applicable to such Eligible Property.

 

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SECTION 3.06. Amendment to Section 1.01. The definition of “Liquidity” shall be
added to Section 1.01 of the Credit Agreement in appropriate alphabetical order
as follows:

“Liquidity” means at any time the sum of: (a) the amount of Unrestricted Cash of
the Borrowers, plus (b) the amount by which the Borrowing Base exceeds the Total
Unused Revolver Commitments up to a maximum of Five Million Dollars
($5,000,000).

SECTION 3.07. Amendment to Section 1.01. The definition of “NOI” set forth in
Section 1.01 of the Credit Agreement is amended and restated to read in its
entirety in appropriate order as follows:

“NOI” shall be determined as of the end of each Fiscal Quarter and shall mean,
as to any Stabilized Eligible Property, Non-Core Investment, Stabilized Hotel
Property or Renovation Stabilized Eligible Property, as the case may be, the
consolidated net operating income with respect to such Stabilized Eligible
Property, Non-Core Investment or Stabilized Hotel Property, as the case may be,
for the Fiscal Quarter then ending and the immediately preceding three Fiscal
Quarters, and, with respect to a Renovation Stabilized Eligible Property, for
the four Fiscal Quarters ending immediately prior to the commencement of
renovations with respect to such Renovation Stabilized Eligible Property, in
each case as determined in accordance with GAAP, except that (i) for purposes of
determining expenses for management fees, there shall be included the greater
of: (A) the actual management expenses incurred or (B) a minimum management fee
equal to three percent (3%) of gross room rental revenues, and (ii) for purposes
of determining capital improvements expense, there shall be included four
percent (4%) of gross room rental revenue.

SECTION 3.08. Amendment to Section 1.01. The definition of “Renovation
Stabilized Eligible Property” shall be added to Section 1.01 of the Credit
Agreement in appropriate alphabetical order as follows:

“Renovation Stabilized Eligible Property” means an Eligible Property during the
Renovation Stabilization Period for such Eligible Property. Only one
(1) Renovation Stabilized Eligible Property may exist at any time. The initial
Renovation Stabilized Eligible Property is the Savannah Property.

SECTION 3.09. Amendment to Section 1.01. The definition of “Renovation
Stabilized Hotel Property” shall be added to Section 1.01 of the Credit
Agreement in appropriate alphabetical order as follows:

“Renovation Stabilized Hotel Property” means a Hotel Property during the
Renovation Stabilization Period for such Hotel Property. Only one (1) Renovation
Stabilized Hotel Property may exist at any time. The initial Renovation
Stabilized Hotel Property is the Savannah Property.

 

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SECTION 3.10. Amendment to Section 1.01. The definition of “Renovation
Stabilization Period” shall be added to Section 1.01 of the Credit Agreement in
appropriate alphabetical order as follows:

“Renovation Stabilization Period” means for the Savannah Property or the Hotel
Property owned by Brownestone Partners LLC located in Raleigh, North Carolina,
as the case may be, the period of time commencing on the date upon which the
renovation of such Hotel Property commences and ending on the date twelve
(12) months after the date the renovation of such Hotel Property is
substantially complete. Notwithstanding the foregoing, the Renovation
Stabilization Period for the Savannah Property shall conclude no later than
April 1, 2010.

SECTION 3.11. Amendment to Section 1.01. The definition of “Savannah Property”
shall be added to Section 1.01 of the Credit Agreement in appropriate
alphabetical order as follows:

“Savannah Property” means the Hotel Property owned by Savannah Hotel Associates,
L.L.C. located in Savannah, Georgia.

SECTION 3.12. Amendment to Section 1.01. The definition of “Stabilization
Period” set forth in Section 1.01 of the Credit Agreement is amended and
restated to read in its entirety in appropriate order as follows:

“Stabilization Period” means for each Eligible Property or Hotel Property, as
the case may be, the period of time commencing on the date such Eligible
Property or Hotel Property, as the case may be, is acquired by a Loan Party or
Affiliate of a Loan Party and ending on the later of: (1) April 1, 2010 or
(2) the earlier of the date (a) twelve (12) months after the date the renovation
of such Eligible Property or Hotel Property, as the case may be, is
substantially complete, or (b) thirty (30) months after the date such Eligible
Property or Hotel Property, as the case may be, is acquired by a Loan Party or
an Affiliate of a Loan Party.

SECTION 3.13. Amendment to Section 1.01. The definition of “Total Value” set
forth in Section 1.01 of the Credit Agreement is amended and restated to read in
its entirety in appropriate order as follows:

“Total Value” shall be determined as of the end of each Fiscal Quarter and shall
mean the sum of (a) cash and cash equivalents (including funds restricted for
property capital improvements) of the Borrowers and their

 

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Subsidiaries, determined on a consolidated basis, (b) the Asset Values of the
Stabilized Hotel Properties; (c) the Asset Values of Newly Acquired Hotel
Properties; (d) the Asset Values of Renovation Stabilized Hotel Properties; and
(e) the Non-Core Investment Value.

SECTION 3.14. Amendment to Section 1.01. The definition of “Unrestricted Cash”
shall be added to Section 1.01 of the Credit Agreement in appropriate
alphabetical order as follows:

“Unrestricted Cash” shall mean, as of any date of determination, the sum of the
aggregate amount of cash not subject to or encumbered by any escrow, reserve,
Lien or claim of any kind in favor of any Person.

SECTION 3.15. Amendment to Section 2.06(a). Section 2.06(a) of the Credit
Agreement is amended and restated to read in its entirety as follows:

(a) “Applicable Margin” shall be determined quarterly based upon the Total
Leverage Ratio (calculated as of the last day of each Fiscal Quarter), as
follows:

 

Total Leverage Ratio

   Euro-Dollar Advances
and Letters of Credit     Base
Rate Advances  

Greater than 0.45

   3.25 %   1.0 %

Less than or equal to .45

   2.75 %   1.0 %

The Applicable Margin shall be determined effective as of the date (herein, the
“Rate Determination Date”) which is 50 days after the last day of the Fiscal
Quarter as of the end of which the foregoing ratio is being determined, based on
the quarterly financial statements for such Fiscal Quarter, and the Applicable
Margin so determined shall remain effective from such Rate Determination Date
until the date which is 50 days after the last day of the Fiscal Quarter in
which such Rate Determination Date falls (which latter date shall be a new Rate
Determination Date); provided that (i) for the period from and including
August 1, 2007, to but excluding the Rate Determination Date next following
August 1, 2007, the Applicable Margin shall be (A) 0% for Base Rate Advances,
and (B) 2.125% for Euro-Dollar Advances and Letter of Credit Advances, (ii) in
the case of any Applicable Margin determined for the fourth and final Fiscal
Quarter of a Fiscal Year, the Rate Determination Date shall be the date which is
95 days after the last day of such final Fiscal Quarter and such Applicable
Margin shall be determined based upon the annual audited financial statements
for the Fiscal Year ended on the last day of such final Fiscal Quarter, and
(iii) if on any Rate Determination Date the

 

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Borrower shall have failed to deliver to the Lenders the financial statements
required to be delivered pursuant to Section 5.01(a) or Section 5.01(b) with
respect to the Fiscal Year or Fiscal Quarter, as the case may be, most recently
ended prior to such Rate Determination Date, then for the period beginning on
such Rate Determination Date and ending on the earlier of (A) the date on which
the Borrowers shall deliver to the Lenders the financial statements to be
delivered pursuant to Section 5.01(b) with respect to such Fiscal Quarter or any
subsequent Fiscal Quarter, or (B) the date on which the Borrowers shall deliver
to the Lenders annual financial statements required to be delivered pursuant to
Section 5.01(a) with respect to the Fiscal Year which includes such Fiscal
Quarter or any subsequent Fiscal Year, the Applicable Margin shall be determined
as if the Total Leverage Ratio was more than 0.45 at all times during such
period; provided that at the election of the Required Lenders, the principal
amount of the Advances shall bear interest at the Default Rate. Any change in
the Applicable Margin on any Rate Determination Date shall result in a
corresponding change, effective on and as of such Rate Determination Date, in
the interest rate applicable to each Advance and in the fees applicable to each
Letter of Credit on such Rate Determination Date; provided, that no Applicable
Margin shall be decreased pursuant to this Section 2.06 if a Default is in
existence on the Rate Determination Date.

SECTION 3.16. Amendment to Section 5.01(c). Section 5.01(c) of the Credit
Agreement is amended and restated to read in its entirety as follows:

(c) simultaneously with the delivery of each set of financial statements
referred to in clauses (a) and (b) above, a certificate, substantially in the
form of Exhibit M and with compliance calculations in form and content
satisfactory to the Administrative Agent (a “Compliance Certificate”), of the
chief financial officer of the Company (i) setting forth in reasonable detail on
attached backup schedules the calculations required to establish whether the
Loan Parties were in compliance with the requirements of Sections 5.03 through
5.11, inclusive, 5.14, 5.15, 5.19(a), 5.28, 5.35, 5.37 and 5.40 on the date of
such financial statements, (ii) setting forth the identities of the respective
Eligible Property Owners and Subsidiaries on the date of such financial
statements, and (iii) stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details thereof
and the action which the Loan Parties are taking or propose to take with respect
thereto;

SECTION 3.17. Amendment to Section 5.01. The following subsection is hereby
added to Section 5.01 in appropriate order as follows:

(n) as soon as available and in any event within ten (10) days of the end of
each month, the monthly calculation of the following for each

 

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Hotel Property (including a comparison with the same month from the prior year):
(i) room occupancy rates, (ii) average daily revenue per occupied room (as
generally recognized in the hotel industry as “ADR”), (iii) revenue per
available room and (iv) NOI;

SECTION 3.18. Amendment to Section 5.06(a). Section 5.06(a) of the Credit
Agreement is amended and restated to read in its entirety as follows:

SECTION 5.06. Restricted Payments. The Borrowers will not declare or make any
Restricted Payment during any Fiscal Year, except that:

(a) the Company and the Operating Partnership may declare and make cash
distributions to its shareholders and other equity owners, provided that
(i) with regard to the first three Fiscal Quarters of any Fiscal Year of the
Company, such cash distributions made by the Company per Fiscal Quarter shall
not exceed the value of $.01 per share of Company voting common stock and such
cash distributions made by the Operating Partnership per such Fiscal Quarter
shall not exceed the value of $.01 per Operating Partnership unit; (ii) with
respect to the final Fiscal Quarter of any Fiscal Year of the Company, such cash
distributions made by the Company, when combined with all distributions for the
first three Fiscal Quarters of such Fiscal Year, shall not exceed the minimum
amount required to be distributed for the Company to remain in compliance with
Section 5.38 and the Operating Partnership shall make no more than an equivalent
per-unit distribution in cash to its equity owners; (iii) no Default or Event of
Default shall exist at the time of such cash distributions or arise after giving
effect to such cash distributions, (iv) such cash distributions are made without
the creation of new Debt and without any amount of a Revolver Advance, and
(v) with respect to the first three Fiscal Quarters of any Fiscal Year only,
such cash distributions in the aggregate do not exceed the lesser of (y) the
amount of $110,000 per Fiscal Quarter or (z) the amount of the Company’s gross
income for the immediately preceding Fiscal Quarter. If the Company issues
common stock or the Operating Partnership issues limited partnership units, such
$110,000 limitation shall be increased by an amount of money equal to the number
of shares of common stock issued or the number of limited partnership units
issued, as the case may be, divided by the aggregate number of then issued and
outstanding shares of Company common stock plus the number of issued and
outstanding Operating Partnership limited partnership units times $110,000.
However, if at any time no Default or Event of Default exists and the Company
maintains (i) Liquidity of at least Ten Million Dollars ($10,000,000) and (ii) a
minimum Debt Yield of 0.10, then notwithstanding the limitations in (i) through
(v) above, the Company may declare and make an additional cash distribution to
its shareholders or other equity owners, so long as the aggregate distributions

 

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made for the current Fiscal Quarter and the immediately preceding three Fiscal
Quarters do not exceed 90% of Funds From Operations of the Company on a
consolidated basis for any period of four consecutive Fiscal Quarters, provided
that (x) the Company shall maintain Liquidity of at least Ten Million Dollars
($10,000,000) and a Debt Yield of 0.10 after giving effect to such cash
distributions, and (y) no Default or Event of Default shall exist after giving
effect to such cash distributions;

SECTION 3.19. Amendment to Section 5.07. Section 5.07 of the Credit Agreement is
amended and restated to read in its entirety as follows:

SECTION 5.07. Maximum Total Leverage Ratio. The Total Leverage Ratio will not at
any time exceed Sixty Two and One Half Hundredths (.625) for the period from
January 1, 2009 to the Termination Date.

SECTION 3.20. Amendment to Section 5.28. Section 5.28 of the Credit Agreement is
amended and restated to read in its entirety as follows:

SECTION 5.28. Additional Debt. No Loan Party or Subsidiary of a Loan Party shall
directly or indirectly issue, assume, create, incur or suffer to exist any Debt
or the equivalent (including obligations under capital leases) without the
consent of the Administrative Agent and the Required Lenders, except for:
(a) the Debt owed to the Lenders under the Loan Documents; (b) the Debt existing
and outstanding on the Third Amendment Effective Date not in violation of the
Loan Documents; (c) Long Term Limited Recourse Mortgage Loans; (d) Debt to
refinance any of the foregoing, provided the amount of such Debt being
refinanced is not being increased; and (e) Debt required to be incurred pursuant
to Section 5.35.

SECTION 4. Equity Pledge Agreement. MHI Hospitality, L.P. shall pledge 100% of
its membership interests in Laurel Hotel Associates LLC by the execution of an
equity pledge agreement in a form substantially similar to Exhibit A attached
hereto and incorporated by reference herein (“Laurel Equity Pledge Agreement”).

SECTION 5. Additional Borrowing Base Asset. The Borrowers request the addition
of the Hotel Property located in Laurel, Maryland (“Laurel Property”) as a
Borrowing Base Asset. The Laurel Property shall be included in the calculations
of the Borrowing Base if: (a) the Borrowers comply with the procedures
established in the Credit Agreement, including without limitation the submittal
of the Mortgaged Property Diligence Package and the Mortgaged Property Support
Documents with respect to the Laurel Property pursuant to Section 2.14 of the
Credit Agreement; and (b) upon the acceptance of the Laurel Property as a
Borrowing Base Asset by the Administrative Agent and the Lenders (as determined
in their reasonable discretion pursuant to the Credit Agreement), the Borrowers
cause Laurel Hotel Associates LLC to execute and deliver all documents required
by the Credit Agreement, including without limitation, a

 

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Joinder Agreement and the Collateral Documents as required by Section 5.25 of
the Credit Agreement (including Mortgaged Property Security Documents securing
at least Nine Million Dollars ($9,000,000)), in each case satisfactory to the
Administrative Agent and the Lenders in all respects.

SECTION 6. Conditions to Effectiveness. The effectiveness of this Amendment and
the obligations of the Lenders hereunder are subject to the following
conditions, unless the Required Lenders waive such conditions:

(a) receipt by the Administrative Agent from each of the parties hereto of a
duly executed counterpart of this Amendment signed by such party;

(b) receipt by the Administrative Agent from MHI Hospitality, L.P. of a duly
executed Laurel Equity Pledge Agreement;

(c) receipt by the Administrative Agent of such amendments to the Loan Documents
in form and content satisfactory to the Administrative Agent, and other
documents and information, all as the Administrative Agent shall reasonably
request;

(d) receipt by the Administrative Agent of all documents which the
Administrative Agent may reasonably request relating to the existence of each
Loan Party, the authority for and the validity of this Amendment and the other
Loan Documents, and any other matters relevant hereto, all in form and substance
satisfactory to the Administrative Agent, including without limitation an
Officer’s Certificate, signed by the Secretary, an Assistant Secretary, a
member, manager, partner, trustee or other authorized representative of the
respective Loan Party, certifying as to the names, true signatures and
incumbency of the officer or officers of the respective Loan Party, authorized
to execute and deliver the Amendment and other Loan Documents, and certifying
whether or not any changes to the entity’s Organizational Documents have taken
place since April 15, 2008, and certified copies of, if applicable, a
certificate of the Secretary of State of such Loan Party’s state of organization
as to the good standing or existence of such Loan Party; and a copy of the
Organizational Action taken by the board of directors of the Loan Party or the
members, managers, trustees, partners or other applicable Persons authorizing
the Loan Party’s execution, delivery and performance of this Amendment;

(e) receipt by the Administrative Agent of an opinion of Baker & McKenzie, LLP
and such other local counsel as the Borrowers may engage, as special counsel to
the Loan Parties, dated as of the Third Amendment Effective Date, covering the
execution of this Amendment by the Loan Parties and such additional matters as
the Administrative Agent may reasonably request;

(f) the fact that the representations and warranties of the Borrowers and
Guarantors contained in Section 8 of this Amendment shall be true on and as of
the date hereof except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties were true on and as of such earlier date; and

 

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(g) All other documents and legal matters in connection with the transactions
contemplated by this Amendment shall be reasonably satisfactory in form and
substance to the Administrative Agent and its counsel.

SECTION 7. No Other Amendment. Except for the amendments set forth above and
those contained in the First Amendment to Credit Agreement dated August 1, 2007
(“First Amendment”), the Second Amendment to Credit Agreement dated April 15,
2008 (“Second Amendment”) and the Amendment to Second Amendment to Credit
Agreement dated August 15, 2008 (“Amendment to Second Amendment”) the text of
the Credit Agreement shall remain unchanged and in full force and effect. On and
after the Third Amendment Effective Date, all references to the Credit Agreement
in each of the Loan Documents shall hereafter mean the Credit Agreement as
amended by the First Amendment, the Second Amendment, the Amendment to Second
Amendment and this Amendment. This Amendment is not intended to effect, nor
shall it be construed as, a novation. The Credit Agreement, the First Amendment,
the Second Amendment, the Amendment to Second Amendment and this Amendment shall
be construed together as a single agreement. This Amendment shall constitute a
Loan Document under the terms of the Credit Agreement. Nothing herein contained
shall waive, annul, vary or affect any provision, condition, covenant or
agreement contained in the Credit Agreement, except as herein amended, nor
affect nor impair any rights, powers or remedies under the Credit Agreement as
hereby amended. The Lenders and the Administrative Agent do hereby reserve all
of their rights and remedies against all parties who may be or may hereafter
become secondarily liable for the repayment of the Notes. The Borrowers and
Guarantors promise and agree to perform all of the requirements, conditions,
agreements and obligations under the terms of the Credit Agreement, as
heretofore and hereby amended, the Credit Agreement, as amended, and the other
Loan Documents being hereby ratified and affirmed. The Borrowers and Guarantors
hereby expressly agree that the Credit Agreement, as amended, and the other Loan
Documents are in full force and effect.

SECTION 8. Representations and Warranties. The Borrowers and Guarantors hereby
represent and warrant to each of the Lenders as follows:

(a) No Default or Event of Default under the Credit Agreement or any other Loan
Document has occurred and is continuing unwaived by the Lenders on the date
hereof.

(b) The Borrowers and Guarantors have the power and authority to enter into this
Amendment and to do all acts and things as are required or contemplated
hereunder to be done, observed and performed by them.

(c) This Amendment has been duly authorized, validly executed and delivered by
one or more authorized officers of the Borrowers and Guarantors and constitutes
the legal, valid and binding obligations of the Borrowers and Guarantors
enforceable against them in accordance with its terms, provided that such
enforceability is subject to general principles of equity.

 

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(d) The execution and delivery of this Amendment and the performance by the
Borrowers and Guarantors hereunder does not and will not, as a condition to such
execution, delivery and performance, require the consent or approval of any
regulatory authority or governmental authority or agency having jurisdiction
over the Borrowers, or any Guarantor, nor be in contravention of or in conflict
with the articles of incorporation, bylaws or other Organizational Documents of
the Borrowers, or any Guarantor or the provision of any statute, or any
judgment, order or indenture, instrument, agreement or undertaking, to which any
Borrower, or any Guarantor is party or by which the assets or properties of the
Borrowers, and Guarantors are or may become bound.

(e) The Collateral Documents continue to create a valid security interest in,
and Lien upon, the Collateral, in favor of the Administrative Agent, for the
benefit of the Secured Parties, which security interests and Liens are perfected
in accordance with the terms of the Collateral Documents and prior to all Liens
other than Permitted Liens.

(f) The Laurel Property satisfies all of the requirements of the definition of
Eligible Property under the Credit Agreement.

SECTION 9. MHI- Carlyle Joint Venture. The Administrative Agent and the Lenders
are aware that Subsidiaries of the Company have entered into a joint venture
qualifying as a Non-Core Investment with subsidiaries or affiliates of The
Carlyle Group. The Borrowers and the Guarantors have provided a promissory note,
guaranty and letter of instruction all dated February 9, 2009 (“Carlyle
Documents”) to the Administrative Agent and the Lenders in connection with the
joint venture and the financing thereof, including, without limitation, a loan
from an affiliate of The Carlyle Group to a Subsidiary of the Company which loan
is guaranteed by the Company, and the Administrative Agent and the Lenders
hereby acknowledge the existence of the Carlyle Documents and consent to same.

SECTION 10. Post Third Amendment Effective Date Covenants. Within ten (10) days
after the Third Amendment Effective Date (or such extended period of time as
agreed to by the Administrative Agent), the Administrative Agent shall have
received from the Loan Parties, in form and substance satisfactory to the
Administrative Agent, opinions of legal counsel to the Loan Parties for each
jurisdiction in which the Mortgaged Properties are located confirming that no
amendment is required to any Mortgage as a result of this Amendment in order to
continue the legal effect and enforceability of each of the Mortgages
encumbering the Mortgaged Properties.

SECTION 11. Counterparts; Governing Law. This Amendment may be executed in
multiple counterparts, each of which shall be deemed to be an original and all
of which, taken together, shall constitute one and the same agreement. This
Amendment shall be construed in accordance with and governed by the laws of the
State of North Carolina.

SECTION 12. Effective Date. This Amendment shall be effective as of February 18,
2009 (the “Third Amendment Effective Date”). Notwithstanding the foregoing, the
amendments to Part (A) of the definition of Eligible Property Value set forth in
Section 3.05 of

 

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this Amendment shall take effect as of the earlier of: (i) the time a mortgage
on the Laurel Property is recorded as contemplated by Section 5 of this
Amendment, and (ii) thirty (30) days after the Third Amendment Effective Date.
It shall be an Event of Default if the following materials related to the Laurel
Property are not delivered to the Lenders within thirty (30) days of the Third
Amendment Effective Date: (a) the Mortgaged Property Diligence Package, (b) the
Mortgage Property Support Documents, (c) the Mortgaged Property Security
Documents, including a recorded mortgage contemplated by Section 5 of this
Amendment and (d) the execution and delivery by Laurel Hotel Associates LLC of
all documents required by Section 5.25 of the Credit Agreement, including
without limitation a Joinder Agreement and the Collateral Documents.

SECTION 13. Expenses. The Borrowers and Guarantors agree to pay all reasonable
costs and expenses of the Administrative Agent in connection with the
preparation, execution and delivery of this Amendment, including without
limitation the reasonable fees and expenses of the Administrative Agent’s legal
counsel.

SECTION 14. Further Assurances. The Loan Parties agree to promptly take such
action, upon the request of the Administrative Agent, as is necessary to carry
out the intent of this Amendment.

SECTION 15. Consent by Guarantors. The Guarantors consent to the foregoing
amendments. The Guarantors promise and agree to perform all of the requirements,
conditions, agreements and obligations under the terms of the Credit Agreement
as hereby amended, said Credit Agreement, as hereby amended, being hereby
ratified and affirmed. In furtherance and not in limitation of the foregoing,
the Guarantors acknowledge and agree that the “Guaranteed Obligations” (as
defined in the Credit Agreement) include, without limitation, the indebtedness,
liabilities and obligations evidenced by the Notes and the Loans made and
Letters of Credit issued under the Credit Agreement as hereby amended. The
Guarantors hereby expressly agree that the Credit Agreement, as hereby amended,
is in full force and effect.

SECTION 16. Amendment Fee. On the date hereof, the Borrowers and Guarantors
shall pay to the Administrative Agent for the ratable account of each approving
Lender an amendment fee in an amount equal to the product of: (i) the amount of
such Lender’s Revolver Commitment, times (ii) 0.25%.

SECTION 17. Waiver and Release. The Borrowers have delivered to the Lenders
preliminary financial information related to the Company’s Fiscal Year ending
December 31, 2008 and Compliance Certificates for the Company’s Fiscal Quarters
ending September 30, 2008 and December 31, 2008. Based upon such information,
the Lenders hereby waive compliance by the Borrowers, and waive any Default or
Event of Default that may have arisen, in connection with the following: (i) the
covenant contained within Section 5.07 of the Credit Agreement for the Company’s
Fiscal Quarters ending September 30, 2008 and December 31, 2008, and (ii) the
covenants contained within Section 5.06(a) of the Credit Agreement for the
Company’s Fiscal Year ending December 31, 2008. This waiver does not operate as
a waiver of any Credit Agreement provision other than as set forth above with
respect to Section 5.07 and Section 5.06(a) and does not operate with regard to
any other prior or future Fiscal Quarter or Fiscal Year of the Company.

 

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Each Lender has been informed by the Administrative Agent or by the Borrower of
the waiver set forth in this Section 17 and has been afforded an opportunity to
consider the same. Each Lender has been supplied by the Borrowers or the
Administrative Agent, to the extent requested, with sufficient information to
enable such Lender to make an informed decision with respect to the waiver set
forth in this Section 17.

The Borrowers and the Guarantors acknowledge that, except as waived in this
Section 17, all of the rights, powers and remedies vested in the Lenders under
the Credit Agreement continue to exist, and that the Lenders remain free to
exercise any of the their rights, powers and remedies under the Credit Agreement
at any time subject only to the terms, conditions and limitations set forth in
the Credit Agreement and under applicable Law.

The waiver set forth in this Section 17 is limited to the matters set forth
herein. Except as set forth in this Section 17, no past, present or future
failure of the Lenders to exercise any rights, powers or remedies under the
Credit Agreement or any other Loan Document shall operate as or be construed to
be a waiver of (i) any right, power or remedy of the Lenders or (ii) any term,
provision, representation, warranty or covenant contained in the Credit
Agreement or any other Loan Document. The Lenders may, subject to the waiver set
forth in this Section 17 and any limitations contained in the Credit Agreement
and the other Loan Documents and applicable Law, exercise any such right, power
or remedy at any time. Furthermore, nothing in this Section 17 shall be deemed
to limit, estop or otherwise restrict or prohibit the Lenders from exercising
any of their rights or remedies under the Credit Agreement, any other Loan
Document, or under applicable Laws or principles of equity with respect to the
occurrence of any Default or Event of Default other than those expressly waived
in this Section 17, all of which rights and remedies are specifically hereby
reserved. The waiver set forth in this Section 17 shall not constitute a course
of dealing or a waiver of the Lenders’ right to withhold their consent for any
similar request in the future.

Each of the Borrowers and the Guarantors acknowledge, represent and agree that
none of the Borrowers or the Guarantors have any defenses, setoffs, claims,
counterclaims or causes of action of any kind or nature whatsoever with respect
to the Loan Documents, the administration or funding of the Advances or with
respect to any acts or omissions of the Administrative Agent or any Lender, or
any past or present officers, agents or employees of the Administrative Agent or
any Lender, and each of the Borrowers and the Guarantors does hereby expressly
waive, release and relinquish any and all such defenses, setoffs, claims,
counterclaims and causes of action, if any.

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IN WITNESS WHEREOF, the parties hereto have executed and delivered, or have
caused their respective duly authorized officers or representatives to execute
and deliver, this Amendment as of the day and year first above written.

 

MHI HOSPITALITY CORPORATION By:  

/s/ David R. Folsom

  (SEAL) Name:   David R. Folsom   Title:   Chief Operating Officer   MHI
HOSPITALITY, L.P. By:   MHI Hospitality Corporation, General Partner By:  

/s/ David R. Folsom

  (SEAL) Name:   David R. Folsom   Title:   Chief Operating Officer   MHI
HOSPITALITY TRS HOLDING, INC. By:  

/s/ David R. Folsom

  (SEAL) Name:   David R. Folsom   Title:   Chief Operating Officer  

MHI HOSPITALITY TRS, LLC

a Delaware limited liability company

By:   MHI Hospitality TRS Holding, Inc.,   A Maryland Corporation, its sole
member By:  

/s/ David R. Folsom

  (SEAL) Name:   David R. Folsom   Title:   Chief Operating Officer  

 

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MHI GP LLC By:   MHI Hospitality, LP, its sole member By:   MHI Hospitality
Corporation, General Partner By:  

/s/ David R. Folsom

  (SEAL) Name:   David R. Folsom   Title:   Chief Operating Officer  
PHILADELPHIA HOTEL ASSOCIATES LP By:   MHI GP LLC, General Partner By:   MHI
Hospitality, LP, its sole member By:   MHI Hospitality Corporation, General
Partner By:  

/s/ David R. Folsom

  (SEAL) Name:   David R. Folsom   Title:   Chief Operating Officer  
BROWNESTONE PARTNERS, LLC By:   MHI Hospitality, LP, its sole member By:   MHI
Hospitality Corporation, General Partner By:  

/s/ David R. Folsom

  (SEAL) Name:   David R. Folsom   Title:   Chief Operating Officer   LOUISVILLE
HOTEL ASSOCIATES, LLC By:  

/s/ David R. Folsom

  (SEAL) Name:   David R. Folsom   Title:   Manager   TAMPA HOTEL ASSOCIATES LLC
By:  

/s/ David R. Folsom

  (SEAL) Name:   David R. Folsom   Title:   Manager  

 

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BRANCH BANKING AND TRUST COMPANY,

as Administrative Agent, as Issuing Bank and as a Lender

By:  

/s/ Michael F. Skorich

  (SEAL) Name:   Michael F. Skorich   Title:   Senior Vice President  

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KEYBANK NATIONAL ASSOCIATION By:  

/s/ Andrew K. McKown

  (SEAL) Name:   Andrew K. McKown   Title:   Vice President  

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MANUFACTURERS AND TRADERS TRUST COMPANY By:  

/s/ Jeffrey Prather

  (SEAL) Name:   Jeffrey Prather   Title:  

 

 

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