Document:

Exhibit 10.26(b)

 Exhibit 10.26(b) 
 LIMITED LIABILITY COMPANY AGREEMENT 
 OF 
 MHI/CARLYLE HOTEL LESSEE PROGRAM I, L.L.C. 
 Dated as of April 26, 2007 

 LIMITED LIABILITY COMPANY AGREEMENT OF 
 MHI/CARLYLE HOTEL LESSEE PROGRAM I, L.L.C. 
 This Limited Liability Company
Agreement is entered into as of April 26, 2007 (the “Effective Date”), by and between CRP/MHI HOLDINGS, L.L.C., a Delaware limited liability company, as a Member (the “Carlyle Member”) and MHI HOSPITALITY TRS II, LLC, a
Delaware limited liability company, as a Member and the initial Managing Member, subject to the terms below (the “MHI Member”). In consideration of the mutual promises and agreements herein made and intending to be legally bound
hereby, the parties hereto hereby agree as follows: 
 ARTICLE 1 
 DEFINITIONS 
 Section 1.1 Definitions. As used in this Agreement,
the following terms shall have the following meanings: 
 “Act” means the Delaware Limited Liability Company Act (6 Del. C.
§ 18-101 et seq.), as it may be amended from time to time. 
 “Additional Capital Contributions” has the meaning
ascribed to it in Section 6.2. 
 “Additional Return” has the meaning for such term set forth in Section 7.4(a).

 “Adjusted Capital Account” means, with respect to a Member and for each Series, such Member’s Capital Account as of
the end of each fiscal year, as the same is specially computed to reflect the adjustments required or permitted to be taken into account in applying Regulations Section 1.704-1(b)(2)(ii)(d) (including adjustments for Partnership Minimum Gain
and Partner Nonrecourse Debt Minimum Gain). 
 “Adjusted Capital Account Deficit” means, for each Member and for each
Series, the deficit balance, if any, in that Member’s Adjusted Capital Account for that particular Series. 
 “Affiliate” means, with respect to any Person, another Person directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Person in question; provided, however,
in no event shall the Company be an Affiliate of any Person for purposes of this Agreement. The term “control” as used in the preceding sentence means, with respect to a Person that is a corporation, the right to exercise, directly or
indirectly, more than 25% of the voting rights attributable to the shares of the controlled corporation, and, with respect to a Person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction
of the management or policies of the controlled Person. For the purposes of this Agreement, (i) in addition to each Person who would qualify as an Affiliate of the MHI Member under the above definition, each of the MHI Principals and each
Person, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with each Person who is within the MHI Principals shall be deemed to be an Affiliate of the MHI Member and (ii) in addition
to each Person who would qualify as an 

  

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Affiliate of the Carlyle Member under the above definition, each Carlyle Realty Affiliate, and each Person, directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control with a Carlyle Realty Affiliate shall be deemed to be an Affiliate of the Carlyle Member. For purposes of this Agreement and the Program Agreement, MHI Hotels Services LLC shall be
deemed not to be an Affiliate of the MHI Member. 
 “Agreement” means this Limited Liability Company Agreement, including
any amendment, modification or clarification hereto made in accordance with the terms of this Agreement from and after the effective date of such amendment, modification or clarification. 
 “Annual Expense Cap” has the meaning for such term set forth in Section 4.5. 
 “Anticipated Shortfall Funding Notice” has the meaning for such term set forth in Section 6.3(a). 
 “Asset Management Agreement” has the meaning ascribed to it in Section 3.4 of the Program Agreement. 
 “Auditor” means Witt Mares of Newport News, Virginia, or another nationally recognized independent firm of certified public accountants
selected by the Carlyle Member. 
 “Authorized Representative” has the meaning ascribed to it in Section 4.15.

 “Bankruptcy” means, with respect to a Person, the occurrence of (1) an assignment by the Person for the benefit of
creditors; (2) the filing by the Person of a voluntary petition in bankruptcy; (3) the entry of a judgment by any court that the Person is bankrupt or insolvent, or the entry against the Person of an order for relief in a bankruptcy or
insolvency proceeding; (4) the filing of a petition or answer by the Person seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation;
(5) the filing by the Person of an answer or other pleading, admitting or failing to contest the material allegations of a petition filed against it in any proceeding for reorganization or of a similar nature; (6) the consent or
acquiescence of the Person to the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties; or (7) any other event which would cause the Person to cease to be a member of a limited
liability company under Section 18-304 of the Act. 
 “Borrower Series” has the meaning for such term set forth in
Section 7.1. 
 “Business Day” means any day other than Saturday, Sunday, or a public or banking holiday in either the
District of Columbia or the Commonwealth of Virginia. 
 “Business Plan” means the final business plan for each Project
prepared pursuant to the Program Agreement and as approved by the Carlyle Member. 
 “Capital Account” shall have the
meaning set forth in Section 8.1. 
 “Capital Contribution” means, except as otherwise provided in this Agreement, with
respect to each Member the amount of cash (including any Initial Capital Contributions, 

  

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Additional Capital Contributions and Operating Shortfall Contributions) and the initial Gross Asset Value of any property (net of liabilities assumed by the
Company resulting from such contribution and liabilities to which such property is subject) contributed to the Company by that Member but expressly excluding any Special Capital Contribution made by any Member. 
 “Capital Contribution Ratio” means, with respect to each Member, a percentage equal to the sum of such Member’s Capital
Contributions made to the Company or any Series, divided by the sum of all the Members’ Capital Contributions made to the Company or any Series, where the sum of all the Capital Contribution Ratios equals one hundred percent (100%). 

“Capital Proceeds” means with respect to each Project, funds of the Series or Venture related to such Project arising from a Capital
Transaction, less any cash which is applied to (i) the payment of transaction costs and expenses relating to such Capital Transaction, (ii) the repayment of debt of such Venture or the Company which is required under the terms of any
indebtedness of such Venture or the Company, (iii) the repair, restoration or other improvement of assets of such Venture which is required under any contractual obligation of such Venture, and (iv) the establishment of reserves as
reasonably determined by the Carlyle Member. “Capital Proceeds” shall also mean any of the foregoing which are received by a partnership or other Person in which such Venture is a partner or investor or in which such Venture
otherwise has an interest, to the extent received by such Venture as dividends or distributions. 
 “Capital Sharing Ratios”
of a Member with respect to each Series means the ratio (expressed as a percentage) of (a) the Capital Contributions of such Member of such Series to (b) the aggregate Capital Contributions of all of the Members of such Series. Except as
otherwise agreed to by the Members (at their sole discretion) at the time of creation of a Series and the funding of the Initial Capital Contributions for such Series, the initial Capital Sharing Ratio for each Series shall be (i) ninety
percent (90%) for the Carlyle Member and (ii) ten percent (10%) for the MHI Member; provided, however, that, notwithstanding the foregoing, the MHI Member may elect at the time of creation of each Series, in its sole and absolute
discretion and without the Consent of the Carlyle Member, to increase the Capital Sharing Ratio for the MHI Member with respect to such Series to an amount of up to twenty five percent (25%). 
 “Capital Transaction” means the sale, financing, refinancing or similar transaction of or involving a Project, and any condemnation
awards, payment of title insurance proceeds or payment of casualty loss insurance proceeds (other than business interruption or rental loss insurance proceeds) received by the Venture leasing such Project or the Company to the extent not used for
reconstruction of all or any portion of such Project. 
 “Carlyle Base Return” has the meaning for such term set forth in
Section 7.5. 
 “Carlyle Major Decisions” has the meaning for such term set forth in Section 4.1(c). 

“Carlyle Makeup Distribution” has the meaning for such term set forth in Section 7.5. 
 “Carlyle Member” means the entity defined as such in the first paragraph of this Agreement and any permitted assignee or successor to
any of the Membership Interests currently held by any such defined entity, for so long as such Person is a Member. 
  

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 “Carlyle Realty Affiliate” means any Affiliate of Carlyle Realty V, L.P., a Delaware
limited partnership, or of any of its successors as the primary control party in Carlyle Realty Fund V, other than the Company and any Venture. 
 “Certificate” has the meaning ascribed to it in Section 2.1. 
 “Code” means the Internal
Revenue Code of 1986, as amended from time to time, and any corresponding provisions of succeeding law. 
 “Company” means
MHI/Carlyle Hotel Lessee Program I, L.L.C., a Delaware limited liability company. 
 “Company IRR” means the discount rate,
using cumulative monthly compounding in a manner consistently applied by the Company, at which the net present value of all of the Members’ Capital Contributions and Special Capital Contributions to and Distributions from (including all cash
and other property of the Company which is available for distribution to the Members, but is part of a pending Distribution, which shall be deemed received for purposes hereof as of the date of intended Distribution thereof) the Company equals zero,
calculated for each such Capital Contribution or Special Capital Contribution from the date such Capital Contribution or Special Capital Contribution, as applicable, was made and with respect to each Distribution from the date such Distribution is
received or deemed received under the terms of this Agreement. Notwithstanding anything to the contrary set forth in this Agreement, all Owner Capital Contributions, Owner Construction Cost Overrun Contributions, Owner Special Capital Contributions
and Owner Distributions shall be aggregated with all Capital Contributions and Special Capital Contributions to, and Distributions by, the Company for purposes of calculating the Company IRR in this Agreement. The Company IRR shall be calculated on
the basis of the actual number of days elapsed over a 365 or 366-day year, as the case may be, using cumulative monthly compounding. Each Company IRR calculation shall be determined using a Microsoft XIRR (Microsoft Office Excel 2003 edition or
later) calculation and shall include a return of, as well as a return on, the relevant capital. 
 “Company Net Cash Flow”
means the aggregate Net Cash Flow of the Company from any Ventures then owned by the Company. 
 “Contributing Members” has
the meaning for such term set forth in Section 6.5(b). 
 “Credit Support” means (a) an environmental indemnity,
and (b) a guaranty for standard non-recourse carve-outs, each on terms customarily required by the lender for any Financing which is otherwise acceptable to the Carlyle Member. 
 “Creditor Series” has the meaning for such term set forth in Section 7.1. 
 “Default Trigger Event” has the meaning ascribed to it in Section 4.4. 
 “Depreciation” means, for each taxable year or other period, an amount equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for the year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of the year or other period, Depreciation

  

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will be an amount which bears the same ratio to the beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery
deduction for the year or other period bears to the beginning adjusted tax basis, provided that if the federal income tax depreciation, amortization, or other cost recovery deduction for the year or other period is zero, Depreciation will be
determined with reference to the beginning Gross Asset Value using any reasonable method selected by the Carlyle Member. 
 “Development Permit Approvals” means building permit and all other approvals, licenses, permits, applications, authorizations currently existing or required to be obtained by the Company or a Venture from the appropriate
governmental authorities and agencies in order to effectuate the overall contemplated leasing and operation of a Project, and including, all conditions, limitations, and requirements contained in any such governmental permit or authorization that
has been obtained. 
 “Developer Affiliate Agreement” means any agreement between the Company or a Venture and the MHI
Member or any of its Affiliates. 
 “Distributions” means, with respect to a Member, all distributions of cash or other
property or assets of the Company (based on the fair market value thereof as of the date of such distribution) made by the Company to or for the benefit of such Member pursuant to Article 7 or Section 10.2(c)(2), without double counting.

 “Encumbrance” has the meaning ascribed to it in Section 9.1. 
 “Environmental Claim” has the meaning for such term set forth in Section 11.2. 
 “Final Material CP” has the meaning for such term in Section 7.5. 
 “Financing” means (i) any secured or unsecured debt financing obtained by the Company in order to provide financing of acquisitions
and operations and construction financing for one or more Projects which may be secured in part by such Projects or the Company’s ownership interest in the Ventures leasing such Projects, (ii) any Project Loan, and (iii) any
refinancing, renewal, extension or modification of the foregoing. 
 “Financing Costs” means, with respect to any given
Project, any and all third-party costs, expenses and fees (including, reasonable attorneys fees), reasonably incurred by the Company directly or through a Venture, any of the Members of the related Series or any Affiliate of such Member in
connection with a Financing or portion thereof which relates to such Project, including, without limitation, (i) the preparation, review, negotiation, and entering into of an application or commitment for the Financing, (ii) the Financing
lender’s due diligence for the Financing, including the cost of all third-party reports, lien searches, title commitments, surveys, appraisals, audits, statements, opinions and certifications required to be obtained as part of such due
diligence or as a condition to obtaining the Financing, (iii) the formation of any special purpose entities, the engagement of any independent directors, and the preparation, review, negotiation, and entering into of any amendments to this
Agreement or any Venture Document and the other organizational and authorization documents for the Company or the related Venture that are required to obtain the Financing, (v) the preparation, review, negotiation, and 

  

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entering into of Financing Documents, (vi) all underwriting, commitment, origination and funding fees and closing costs (including reasonable
attorneys’ fees) required to obtain the Financing, and (vi) all accrued interest and other debt service charges (other than the repayment of principal) due under the Financing. 
 “Gross Asset Value” has the meaning ascribed to it in Section 8.2. 
 “Initial Capital Contributions” has the meaning ascribed to it in Section 6.1. 
 “Internal Rate of Return” means the discount rate, using cumulative monthly compounding in a manner consistently applied by the Company,
at which the net present value of a Member’s or group of Members’ Capital Contributions to and Distributions from the Company (or when calculating the Internal Rate of Return with respect to a particular Project, Capital Contributions and
Distributions relating to such Project) equals zero, calculated for each such Capital Contribution from the date such Capital Contribution was made by such Member or group of Members and with respect to each Distribution from the date such
Distribution is received by such Member or group of Members under the terms of this Agreement. Notwithstanding anything to the contrary set forth in this Agreement, all Owner Capital Contributions and Owner Distributions shall be aggregated with all
Capital Contributions to, and Distributions by, the Company for purposes of calculating the Internal Rate of Return in this Agreement. For example, the Carlyle Member shall have received a fifteen percent (15%) annual Internal Rate of Return
upon its receipt of a cumulative amount of Distributions that cause (a) the net present value of the aggregate of all Distributions (including any Owner Distributions to the Carlyle Member) to the Carlyle Member, discounted at an annual rate of
fifteen percent (15%) from the date each such Distribution was received by the Carlyle Member using cumulative monthly compounding back to the date of the Capital Contribution(s) (including any Owner Capital Contributions by the Carlyle Member)
by such Carlyle Member for which such Distribution is made, reduced by (b) the net present value of such Capital Contribution(s) discounted at an annual rate of fifteen percent (15%) using cumulative monthly compounding from the date such
Capital Contribution was made under the terms of this Agreement, to equal zero. The Internal Rate of Return shall be calculated on the basis of the actual number of days elapsed over a 365 or 366-day year, as the case may be, using cumulative
monthly compounding. Each Internal Rate of Return calculation shall be determined using a Microsoft Excel IRR (Microsoft Office Excel 2003 edition or later) calculation and shall include a return of, as well as a return on, the relevant capital.
Notwithstanding the foregoing or any other provision of this Agreement, for purposes of determining the Internal Rate of Return on Capital Contributions, all Distributions received by a Member for or in relation to items excluded from Capital
Contributions (i.e. Special Capital Contributions) shall be excluded, including, without limitation all Distributions received under Sections 7.2(a), 7.2(b), 7.2(d) and 7.4. 
 “Investment Date” with respect to each Project and Series means the date that the Company leases the Project. 
 “Lease Agreement” shall mean that certain Lease Agreement by and between the applicable Owner Venture, as lessor, and the applicable
Venture, as lessee, entered into on the applicable Closing Date (as defined in the Program Agreement). 
  

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 “Lookback Adjustment” has the meaning ascribed to it in Section 7.4. 
 “Managing Member” means the designated managing member of the Company. The initial Managing Member shall be the MHI Member. 

“Material Business Agreements” means, individually and collectively, with respect to the Company and any given Venture, the loan
documents relating to any Financings, each Property Management Agreement, any Lease Agreement any Development Permit Agreements and each other contract, agreement, understanding or obligation of the Company or such Venture that is material to the
operation of a Project or the breach of which by the Company or Venture would or is reasonably likely to have a material adverse effect on the business, operations or financial condition of the Company or a Venture or Project. For the purposes of
this definition, (x) a contract, agreement, understanding or obligation which is “material to the development and operation of the applicable Project” is one that has a value or effect on the Company or Venture in excess of Fifty
Thousand and No/100 Dollars ($50,000) or has a term in excess of one year that cannot be earlier terminated without a penalty of in excess of five percent (5%) of the contract amount being incurred, and (y) a “material adverse
effect” is one that results or is likely to result in a loss, damage or liability of the Venture, the Company or the applicable Series of the Company in excess of two Hundred Fifty Thousand and No/100 Dollars ($250,000) or otherwise would
result in a line item on the Project Operating Budget for a Project being exceeded. In addition, for purposes of this definition, a series of related contracts with the same vendor shall be treated as one contract in determining whether the monetary
threshold has been exceeded. 
 “Member” means each of the Carlyle Member and the MHI Member, and each Person hereafter
admitted as a Member in accordance with this Agreement, until such Person ceases to be a Member of the Company, and in the collective, “Members”. 
 “Membership Interests” means all the rights and interests of the Members in the Company, including the right to participate in management to the extent herein expressly provided, to receive
Distributions, and to receive allocations of income, gain, loss, deduction, and credit. 
 “MHI Member” has the meaning
ascribed to it in the introductory paragraph. 
 “MHI Permitted Transferee” means any Affiliate of MHI Member so long as MHI
Hospitality Corporation maintains management and voting control of such transferee and at least a fifty-one percent (51%) direct or indirect ownership interest in such transferee. 
 “MHI Principals” means Andrew Sims and David Folsom. 
 “MHI Property Manager” has the meaning ascribed to it in the Program Agreement. 
 “Net Cash Flow” means with respect to any Project, the Net Operating Income less debt service on loans to the related Venture. 
 “Net Financing Proceeds” means funds of the Company arising from a Financing, less any cash which is applied to (i) the payment of the transactions costs and expenses relating to such Financing
(including, without limitation, the payment of any prior Financing) and (ii) the 

  

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establishment of reserves required for such Financing and as otherwise determined by the Carlyle Member. 
 “Net Operating Income” means, with respect to any period and any Project, the amount by which Operating Revenues exceed Operating
Expenses for such period as determined by the Uniform System. 
 “Operating Expenses” means, for any period, the current
obligations of a Venture with respect to a particular Project and of the Company with respect to such Project for such period, determined in accordance with sound accounting principles and applicable to hotels, consistently applied, for operating
expenses of the Project (including without limitation any fees paid to the Property Manager), and for working capital and reserves established, to the extent required by the Carlyle Member, and actually funded. Operating Expenses shall not include
debt service on any Financing or any non-cash expenses such as Depreciation or amortization as determined by the Uniform System. Operating Expenses not attributable to any particular Project shall be allocated among the Series pro rata, based on the
aggregate Capital Contributions made with respect to each Series as of the date of such allocation, unless the Carlyle Member reasonably determines another method of allocation which is permissible under Section 18-215 of the Act. 

“Operating Revenues” means, for any period, the gross cash receipts of a Venture arising from the operation of a particular Project
and the Company with respect to such Project arising during such period, including, without limitation, proceeds from rents from the leasing of retail space, parking receipts, hotel receivables, interest and dividends earned on deposit accounts and
other approved investments of the Venture, proceeds of any business interruption or rental loss insurance maintained by the Company, and amounts released by the Company from reserves (including, without limitation, those funds released to pay
Operating Expenses) with the consent of the Carlyle Member, but specifically excluding (i) Net Financing Proceeds, and (ii) any Capital Contributions and Special Capital Contribution made by any of the Members. 
 “Operating Shortfall Contributions” means, with respect to such Series, the Capital Contributions used to pay for Operating Shortfalls.

 “Operating Shortfall Sharing Ratios” means with respect to a given Series, the Capital Sharing Ratios for such Series.

 “Operating Shortfalls” means with respect to a given Project, any working capital shortfalls at a Project which are the
result of any negative Net Operating Income generated by such Project to the extent in excess of any negative Net Operating Income that is set forth in the Project Operating Budget approved by the Carlyle Member and except to the extent of any
applicable reserves set forth in such Project Operating Budget which may be used to cover such shortfall and are permitted to be used pursuant to the extent permitted under this Agreement and any Financing loan documents or other applicable Venture
Documents. 
 “Other Costs” means, with respect to any given Project, any and all expenditures (including but not limited to
any commissions) of the Company, either directly or through the applicable Venture, reasonably required for the leasing, operation and Financing of the Project. 
  

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 “Owner” means MHI/Carlyle Hotel Investment Program I, L.L.C., a Delaware limited
liability company. 
 “Owner Capital Contributions” means all “Capital Contributions” (as such term is defined in
the Owner Operating Agreement) to the Owner. 
 “Owner Construction Cost Overrun Contributions” means all “Construction
Cost Overrun Contributions” (as such term is defined in the Owner Operating Agreement) to the Owner. 
 “Owner
Distributions” means all “Distributions” (as such term is defined in the Owner Operating Agreement) by the Owner. 
 “Owner Operating Agreement” means that certain Limited Liability Company Operating Agreement of MHI/Carlyle Hotel Investment Program I, L.L.C dated as of even date herewith between the Carlyle Member and MHI Hotel
Investments Holdings LLC, a Delaware limited liability company. 
 “Owner Special Capital Contributions” means all
“Special Capital Contributions” (as such term is defined in the Owner Operating Agreement) to the Owner. 
 “Owner
Venture” shall mean each separate limited liability company formed by the Owner, for the purpose of owning each Project and leasing it to a Venture. 
 “Partner Nonrecourse Debt” has the meaning ascribed to it in Regulations Sections 1.704-2(b)(4) and 1.752-2. 
 “Partner Nonrecourse Debt Minimum Gain” has the meaning ascribed to it in Regulations Section 1.704-2(i)(3). 
 “Partner Nonrecourse Deductions” has the meaning ascribed to it in Regulations Section 1.704-2(i)(2). 
 “Partnership Minimum Gain” has the meaning ascribed to it in Regulations Section 1.704-2(d). 
 “Person” means an individual or entity. 
 “Proceeding” has the meaning ascribed to it in
Section 4.11. 
 “Profits” and “Losses” mean, for each taxable year or other period and computed
separately for each Series and for the Company as a whole, an amount equal to the taxable income or loss for the year or other period, determined in accordance with Section 703(a) of the Code (including all items of income, gain, loss or
deduction required to be stated separately under Section 703(a)(1) of the Code), with the following adjustments: 
 (1)
any income that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses will be added to taxable income or 

  

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loss; 
 (2) any expenditures
described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) expenditures under Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses, will be
subtracted from taxable income or loss; 
 (3) gain or loss resulting from any disposition of property with respect to which
gain or loss is recognized for federal income tax purposes will be computed by reference to the Gross Asset Value of the property, notwithstanding that the adjusted tax basis of the property differs from its Gross Asset Value; 
 (4) in lieu of depreciation, amortization and other cost recovery deductions taken into account in computing taxable income or loss, there
will be taken into account Depreciation for the taxable year or other period; 
 (5) any items which are specially allocated
under Section 8.3(b) will not affect calculations of Profits or Losses; and 
 (6) if the Gross Asset Value of any asset
is adjusted under Section 8.2(b) or 8.2(c), the adjustment will be taken into account as gain or loss from disposition of the asset for purposes of computing Profits or Losses. 
 “Program Agreement” means the Program Agreement among the Carlyle Member, the MHI Member and the Company of even date herewith, as it
may be amended from time to time in accordance with its terms. 
 “Project” means any hotel project leased to a Venture.

 “Project Loan” means any secured or unsecured loan to be made to a Venture to finance, in part, the leasing of a Project,
and any modification or amendment thereof. 
 “Project Operating Budget” means the budget for each Project owned by a
Venture, setting forth the estimated capital and operating expenses and revenue of the Venture which owns such Project for the then current calendar year and the immediately succeeding calendar year, or the immediately succeeding two calendar years,
as the context requires, and for each month and each calendar quarter of said calendar years. 
 “Project Team” shall mean
with respect to any given Project, the Property Manager and the general manager of the hotel (or equivalent). 
 “Promote
Distributions” means any and all Distributions made to the MHI Member pursuant to Section 7.2(e)(1) based on the MHI Promote Percentage. 
 “Property Management Agreement” has the meaning ascribed to it in the Program Agreement. 
 “Property Manager” has the meaning ascribed to it in the Program Agreement. 
  

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 “Regulations” means the regulations promulgated by the United States Department of the
Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Regulations shall include any corresponding provisions of succeeding, similar substitute proposed or final Regulations. 
 “Required CP Amount” has the meaning for such term set forth in Section 7.5. 
 “RevPAR” means, for any period, the average daily room occupancy rate (expressed as a dollar amount) determined by dividing (i) the
total over-night room revenues for such period earned and collected by the applicable Venture, by (ii) the product of (A) total number of calendar days in such period, times (B) the total number of available hotel rooms in the
applicable Project. 
 “Scope Changes” means any volitional modification to a Project in the nature of an upgrade or other
enhancement in the quality of, or in the nature of a downgrade in the quality of, such Project as shown in the drawings and specifications included in the Business Plan for such Project, for aesthetic, marketing, cost-saving or other reasons.

 “Secured Obligations” has the meaning for such term set forth in Section 6.5(c). 
 “Secured Party” has the meaning for such term set forth in Section 6.5(c). 
 “Securitization” has the meaning for such term set forth in Section 11.5. 
 “Series” has the meaning for such term set forth in Section 2.7. 
 “Series Capital Account” has the meaning ascribed to such term in Section 8.1. 
 “Sims Family” means any brother of Andrew Sims. 
 “Special Capital Contribution” has the meaning for such term set forth in Section 6.5(b). 
 “Special Return” means an amount of money sufficient for the Contributing Members to achieve, to the date of payment thereof to the Contributing Members, an Internal Rate of Return on the Special Capital Contributions made
by such Contributing Members (as if the Special Capital Contributions were the only applicable “Capital Contributions” and the amounts paid to the Contributing Members pursuant to Section 7.2(a), 7.2(b) and 7.4 are the only applicable
“Distributions” used in such Internal Rate of Return) equal to the greater of (i) the Company IRR or (ii) twenty-five percent (25%). 
 “Termination Event” has the meaning ascribed to it in the Program Agreement. 
 “Third-Party Property Manager” has the meaning ascribed to it in the Program Agreement. 
 “Transfer” has the meaning ascribed to it in Section 9.1. 
 “Uniform System” means the
Uniform System of Accounts for the Lodging Industry, 

  

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Ninth Revised Edition, 1996, as adopted by the American Hotel and Lodging Association and all future amendments and supplements thereto approved by the
Carlyle Member. 
 “Venture” means each of the Delaware limited liability companies formed by the Company for the leasing of
a Project and which shall be governed by the Venture Agreements. “Ventures” refers to every Venture which has been established. The sole member of each Venture shall be the Company or, as may be required in connection with any
Financing with respect to a Venture, a newly formed single purpose Delaware limited liability company which shall be a wholly owned subsidiary of the Company and which shall be governed by the Venture Agreements. 
 “Venture Agreements” shall have the meaning ascribed to such term in the Program Agreement. 
 “Venture Documents” shall have the meaning ascribed to such term in the Program Agreement. 
 “Venture Lease” means a lease of a Project from an Owner Venture to a Venture. 
 ARTICLE 2 
 ORGANIZATIONAL MATTERS; PURPOSE; TERM 
 Section 2.1 Formation of Company. The Company was organized as a Delaware limited liability company on
                    , 2007 by the filing of a certificate of formation for the Company under the Act (as may be modified from time to time as
herein provided, the “Certificate”), which Certificate was executed and delivered by Stacy M. Rosenthal as an “authorized person” within the meaning of the Act. 
 Section 2.2 Name. The name of the Company is “MHI/Carlyle Hotel Investment Program I, L.L.C.” and all Company business shall be
conducted in that name or such other name as the Carlyle Member and the Managing Member approve. 
 Section 2.3 Registered Office;
Registered Agent; Principal Office. The registered office and the registered agent of the Company in the State of Delaware shall be as specified in the Certificate or as hereinafter designated by the Carlyle Member and reflected in an amendment
to the Certificate. The principal office of the Company and the principal place of business shall be at c/o MHI Hospitality Corporation, 4801 Courthouse Street, Suite 201, Williamsburg, Virginia 23188 or such other location proposed by the Managing
Member and approved by the Carlyle Member. 
 Section 2.4 Foreign Qualification. Before the Company conducts business in any
jurisdiction other than Delaware, the Managing Member shall cause the Company to comply with all requirements necessary to qualify the Company as a foreign limited liability company in that jurisdiction. At the request of the Managing Member, with
the approval of the Carlyle Member, each Member shall execute, acknowledge, swear to and deliver all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, continue, or terminate the Company
as a foreign limited liability company in all jurisdictions in which the Company may conduct business. 
  

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 Section 2.5 Purpose and Scope. The purpose and scope of the Company’s activities are strictly
limited to the leasing and operating of the Projects from the Owner Ventures and operating the Projects, financing the foregoing activities; and performing all other activities reasonably necessary or incidental to the furtherance of such purposes.

 Section 2.6 Term. The Company shall commence on the effective date of the Certificate and shall have perpetual existence unless
sooner dissolved and terminated as herein provided. 
 Section 2.7 Series. The Members intend hereby to establish separate series of
interests in the Company pursuant to Section 18-215 of the Act (each, a “Series”). Each such Series shall represent the assets and liabilities of the Company related to a particular Venture and the Project owned by such
Venture. Each Member shall be a Member of each Series; the Members, and their respective Capital Sharing Ratios, of each Series is more particularly shown on Schedule 1 attached hereto, which will be updated from time to time by the Managing
Member each time a new Series is added to the Company by its formation of a Venture and acquisition of a Project or there is a change in the Capital Sharing Ratios of any Series or the Members making up such Series, and a copy of such updated
Schedule 1 shall be delivered by the Managing Member to the Carlyle Member. The Members agree that the debts, liabilities and obligations incurred, contracted for or otherwise existing with respect to a particular Series shall be enforceable
only against the assets of such Series, and not against the assets of the Company generally or the assets of any other Series. Notwithstanding any other provision hereof, separate and distinct records shall be maintained with respect to each Series,
and the assets associated with each Series shall be held and accounted for separately from the other assets of the Company or any other Series thereof. If there is any Capital Contribution, property or other asset of the Company, or any income,
earnings, profits, proceeds, funds, payments, liabilities, expenses, costs, charges or reserves of the Company which are not readily identifiable as belonging to any particular Series, the Carlyle Member shall allocate them among the Series pro rata
based upon the aggregate Capital Contributions contributed in respect of each Series and anything so allocated to a particular Series thereafter shall be held by the Company solely with respect to such Series. 
 Section 2.8 Ventures. The Members acknowledge and agree that each Project will be directly leased by a separate Venture rather than directly by
the Company. Notwithstanding anything in this Agreement to the contrary, the Member or Members who have the power to control any action, decision or other matter on behalf of the Company pursuant to the terms and conditions of this Agreement, shall
have the same power and control rights with respect to any such action, decision or other matter on behalf of any Venture of the Company, including, without limitation, the formation, terms of ownership and disposition of such Venture; provided that
no ownership interest in any Venture shall be held by any Person other than as described in the definition of “Venture” without the prior written consent of the MHI Member and the Carlyle Member. 
 Section 2.9 Members. The initial Members of the Company are the Carlyle Member and the MHI Member, each of which is admitted to the Company as a
Member as of the date hereof. 
 ARTICLE 3 
  

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 RIGHTS OF MEMBERS 
 Section 3.1 Information. In addition to the other rights specifically set forth in this Agreement, each Member is entitled to the following
information as to the Company and each Venture: (a) true and full information regarding the status of the business and financial condition of the Company; (b) promptly after becoming available, a copy of the Company’s federal, state
and local income tax returns for each year; (c) a current list of the name and last known business, residence or mailing address of each Member; (d) a copy of this Agreement, the Certificate, and all amendments to such documents;
(e) true and full information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each Member and which each Member has agreed to contribute in the future, and the
date on which each became a Member; and (f) other information regarding the affairs of the Company to which that Member is entitled under the Act (including, without limitation, all Company books and records). Under no circumstances shall any
information regarding the Company or its business be kept confidential from any Member. 
 Section 3.2 Liability to Third Parties. No
Member shall be liable for the debts, obligations or liabilities of the Company, except to the extent required by law or as otherwise expressly provided herein. 
 Section 3.3 Withdrawal. No Member may withdraw from the Company except in connection with a permitted assignment of its Membership Interest or with the consent of all of the other Members. 
 ARTICLE 4 
 MANAGEMENT OF COMPANY

 Section 4.1 Management. 
 (a) In General. 
 (1) Subject to the provisions of this Agreement, including Sections
4.1(a)(6), 4.1(a)(7) and 4.1(b) below, the management and control of the Company, including, without limitation, sole authority to take all actions of the Company under this Agreement or any agreement with the Managing Member or its Affiliates,
including enforcement on behalf of the Company of this Agreement or any agreement with the Managing Member or its Affiliates, shall be vested exclusively in the Carlyle Member. Without limiting the generality of the foregoing, and subject to the
provisions of this Agreement, the Carlyle Member shall have the authority to execute any and all documents on behalf of the Company and any party dealing with the Company shall be entitled to rely on such authority. 
 (2) Except as otherwise provided herein, no Member shall have the right to, and no Member shall, take part in the management or affairs of
the Company or have the power to act for, or bind, the Company in any way. 
 (3) Each Member agrees that, except as otherwise
expressly provided herein and to the fullest extent permitted by applicable law, the approval of any proposed action of or relating to the Company by the Carlyle Member or the Managing Member as provided 

  

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herein shall bind the Company and shall have the same legal effect as the approval of each Member of such Company action. 
 (4) Except as otherwise expressly provided herein, neither the Carlyle Member nor the MHI Member shall be liable, responsible or
accountable in damages or otherwise to the Company or to any other Member for (a) any act performed within the scope of the authority conferred on such Member by this Agreement except for the fraud, breach of this Agreement, gross negligence or
willful misconduct of such Member in carrying out its obligations hereunder, (b) such Member’s failure or refusal to perform any act, except those expressly required by or pursuant to the terms of this Agreement, (c) such
Member’s performance of, or failure to perform, any act on the reasonable reliance on advice of legal counsel to the Company, or (d) the negligence, dishonesty or bad faith of any agent, consultant or broker of the Company or any Venture
selected, engaged or retained by such Member in good faith. 
 (5) The final Business Plan for the Company and any Project,
and the selection of the Project Team, as well as the removal or replacement of any member thereof, shall require the consent of the Carlyle Member and, for so long as there has not been a Default Trigger Event, the Managing Member. 
 (6) Notwithstanding the applicable Business Plan or termination or assignment of any Venture Lease by the Venture in connection with the
sale or disposition of the Property by the Owner Venture, decision making authority with respect to the sale or disposition of any Project by any Venture shall be vested solely in the Carlyle Member; subject, however, to the MHI Member’s right
of first offer with respect to the Project on the terms and conditions set forth in the Owner Operating Agreement. 
 (7)
Notwithstanding the applicable Business Plan, decision making authority with respect to the financing of any Project by any Venture or of the Company itself shall be solely vested in the Carlyle Member; provided that no Project Loan shall be
provided by the Carlyle Member or an Affiliate without the prior approval of the MHI Member unless a Default Trigger Event has occurred in which case no such approval shall be required. 
 (b) Managing Member. The Members hereby appoint the MHI Member as the initial Managing Member. The Managing Member shall have the
responsibility and authority for the management of the day to day affairs of the Company and the Ventures and for the acquisition, redevelopment, renovation, repositioning, leasing and operation of the Projects, in each case subject to and in
compliance with the applicable Business Plans and Project Operating Budgets, except where (1) the Carlyle Member’s approval is required under this Agreement, (2) the approval of all Members is required under this Agreement,
(3) the approval of any of the Members is expressly required by a non-waivable provision of applicable law, or (4) otherwise provided under this Agreement. The duties of the Managing Member shall include but shall not be limited to:

 (1) Asset managing each Project, enforcing on behalf of the applicable Venture any and all agreements entered into by the
Company or the Ventures, and assisting the Property Manager for each Project in managing the Project and ensuring the compliance of the 

  

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Project with applicable law; 
 (2) Causing the Company to maintain all required or appropriate insurance coverage for or in connection with the operation of each Project; 
 (3) Preparing and maintaining financial records with respect to the Company and each Project, as required by this Agreement and any applicable Financing; 
 (4) Complying with, and causing the Company and each Venture to comply with, all of the terms and provisions of any Financing, subject to
coordination with the Carlyle Member for loan compliance issues requiring the consent of the Carlyle Member hereunder; and 
 (5) Implementing, and causing each Project to be operated in accordance with the applicable Business Plan and Project Operating Budget, as required by this Agreement, and signing on behalf of the Company all documents required in connection
with the foregoing to the extent authorized to do so under the terms of this Agreement. 
 (c) Carlyle Major Decisions.
Except as otherwise specifically provided herein, in discharging the limited duties and authority delegated to the Managing Member pursuant to Section 4.1(b), no action shall be taken, sum expended, or obligation incurred by the Managing Member
or the Company regarding the matters described below (the “Carlyle Major Decisions”) unless it has been proposed or approved by the Carlyle Member: 
 (1) regarding entry into any Venture Lease, any Project Loan or other Financing, any lease of any portion of any Project that does not
meet the leasing parameters of the Business Plan or modification of any lease of any Project (except to the extent such modification is contemplated by or does not conflict with the lease parameters specified in the Business Plan for the Project
approved by the Carlyle Member); provided, however, in the event any Financing is inconsistent with the terms described on Schedule 11.1 attached hereto, such Financing shall also require the approval of the MHI Member unless a Default
Trigger Event has occurred in which case no such approval shall be required; 
 (2) making of any expenditure or incurrence of
any obligation by or for the Company or any Venture which is not provided for in a Project Operating Budget or otherwise permitted to be incurred under the applicable Property Management Agreement other than (x) increased insurance costs,
taxes, utility costs and debt service payments, or (y) with respect to any Venture, that when added to all other expenditures for that Venture in any Fiscal Year, would not result in either (i) any one line item in the applicable approved
Project Operating Budget being exceeded by the greater of (A) $5,000 or (B) ten percent (10%) of that particular one line item, or (ii) the aggregate Operating Expenses for the Project being exceeded by five percent (5%) or
more of the aggregate Operating Expenses for the Project set forth in the approved Project Operating Budget; however, if emergency repairs to any Project are necessary to avoid imminent danger of injury, or immediate loss of business, or material
damage to such Project or to an individual, the Managing Member may make such expenditures as may be necessary to alleviate such situation even if such expenditures are not provided for, or exceed the amount provided for, in a Project Operating
Budget, and shall promptly notify the Carlyle 

  

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Member of the event giving rise to such repairs and the actions taken with respect thereto; 
 (3) the taking and making of any and all decisions, determinations, elections, consents and other actions or inactions to be made by the
Company or any Venture under this Agreement or otherwise, with respect to any Developer Affiliate Agreement, including, without limitation, any such action or inaction with respect to the extension, renewal, amendment, modification, termination or
enforcement of any Developer Affiliate Agreement, except as otherwise expressly provided in such Developer Affiliate Agreement that has been entered into by the Carlyle Member acting on behalf of the Company or any Venture. In furtherance of the
foregoing, (i) any party to any Developer Affiliate Agreement other than the Company shall not be authorized or permitted to rely on any action, directive or inaction of the Managing Member as authorization, consent or approval on the part of
the Company or any Venture with respect to any action of the Company under such Developer Affiliate Agreement, notwithstanding that the Managing Member otherwise may be authorized to take such action on the Company’s or Venture’s behalf
under the terms of this Agreement or any other agreement or document signed by the Company, any Venture or any Carlyle Realty Affiliate, (ii) except with respect to the Property Management Agreement with MHI Hotels Services, LLC, if the MHI
Member is the Non-Funding Party under Section 6.5 hereof, notwithstanding the terms of any Developer Affiliate Agreement to the contrary, any payments required to be made by the Company or any Venture to the MHI Member or any of its Affiliates
under such Developer Affiliate Agreement shall instead be applied to the repayment of any outstanding Special Return, and such application shall not constitute a default by the Company under such Developer Affiliate Agreement and, for all purposes
of such Developer Affiliate Agreement, shall be deemed received by the MHI Member and/or its Affiliate thereunder otherwise entitled to such payment, and (iii) if the MHI Member is in default under this Agreement after any applicable notice and
cure (if any), then the Company or applicable Venture may terminate, without incurring any penalty, fee or other liability whatsoever, any or all service agreements with the MHI Member’s Affiliates, and all such Developer Affiliate Agreements
must contain such a provision); 
 (4) the establishment of any operating reserves necessary or advisable for the Company or
any Venture, and the timing and amount of any Distributions by the Company; 
 (5) the determination and approval of the terms
and conditions of all Company and Venture borrowings and other Financings (including, without limitation, any Project Loan) and the identity of the lender thereof, any amendment to any approved loan documents, and any guaranties or indemnities made
by the Company or any Venture in connection therewith; provided, however, in the event any Financing is inconsistent with the terms described on Schedule 11.1 attached hereto, such Financing shall also require the approval of the MHI
Member unless a Default Trigger Event has occurred in which case no such approval shall be required; 
 (6) the execution,
material amendment, material modification or clarification or termination of any Material Business Agreement; 
 (7) regarding
the operations of a Project, approval of: material third 

  

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party agreements, construction contracts, and brokerage agreements, including, specifically, approval of all Affiliates of the MHI Member as contractors,
subcontractors or service providers; zoning changes; any ground lease or master lease, easement, restrictive covenants, reciprocal operating agreement, cross-easement agreement, similar agreements or any amendments thereto, or any matters relating
to material casualties affecting the Project; any material condemnation or eminent domain proceeding affecting the Project; and all matters relating to the Project’s compliance with environmental, health, access and other applicable laws which
in respect of any of the foregoing requires action by the Company or Venture; 
 (8) regarding all leases and licenses of any
space in a Project, approval of the form of lease or license agreements, minimum and maximum length of lease terms, brokerage commissions, credit standing of tenants, the form of tenant estoppel certificates, the form of subordination,
nondisturbance and attornment agreements, the approval, amendment or extension of each lease (including tenant improvements and leasing commissions) that does not conform to approved leasing guidelines, and the approval, amendment or extension of
any lease or the acceptance, cancellation or surrender of any lease or the forgiveness or release of any lease covenant or requirement; 
 (9) the approval of any Scope Changes or any other amendment or modification of the Business Plan with respect to a Project; 
 (10) in the event that a Property Manager is terminated for cause or as otherwise permitted by the terms of this Agreement, the hiring of
any replacement Property Manager and the determination of the terms and conditions of the Property Management Agreement between the Company and such replacement Property Manager, with compensation to be at reasonable market rates or the same as
provided under the prior Property Management Agreement; 
 (11) taking of any material legal action and any determination or
act to settle any such material legal action and selecting legal counsel; 
 (12) entering into, or amending, modifying or
waiving any provision of, any agreement with the Managing Member or any Affiliate thereof; 
 (13) regarding any environmental
matter relating to any Project, including selection of environmental consultants and adoption or implementation of any operation and maintenance program or any other program to remove or otherwise remediate hazardous materials; 
 (14) any other action or inaction which, considered before the taking thereof, could be reasonably expected to have a material adverse
effect on the Company business or assets. 
 The Carlyle Member acknowledges and agrees that it will at all times discuss and collaborate
with the Managing Member in connection with all Carlyle Major Decisions; provided, however, that in the event of any disagreement between the Carlyle Member and the Managing Member on how to proceed with respect to any of the Carlyle Major
Decisions, the 

  

 18 

 
Carlyle Member’s decision shall control. The Carlyle Member shall, within a reasonable period of time, inform the MHI Member of any Carlyle Major
Decision and the Carlyle Member shall use commercially reasonable efforts to discuss and collaborate with the MHI Member in connection with any proposal by the MHI Member relating to a Carlyle Major Decision within ten (10) business days of
such matter being submitted in writing to the Carlyle Member. Notwithstanding the foregoing, the Carlyle Member shall not be obligated to make a final determination with respect to any Carlyle Major Decision within such ten (10) business day
period and any such determination shall be made by the Carlyle Member in accordance with the procedures set forth herein or in the Program Agreement with respect thereto. 
 (d) Performance by the Managing Member. The Managing Member shall discharge its duties in a good and proper manner as provided for
in this Agreement. Without limiting the generality of the foregoing, the Managing Member, on behalf of the Company, shall (i) in good faith use commercially reasonable efforts to implement all directives and decisions of the Carlyle Member
consistent with this Agreement and the Program Agreement, (ii) in good faith use commercially reasonable efforts to conduct the aspects of the business and affairs of the Company and the Ventures delegated to it pursuant to Section 4.1(b)
in accordance with good industry practice and this Agreement, subject to Section 4.1(c), and (iii) promptly provide the Carlyle Member with copies of all material correspondence and other communications, including without limitation,
(a) any material governmental notices or other correspondence sent or received with respect to the Company, any Venture or any Project, and any reports, default notices or other material communications sent or received relating to a Material
Business Agreement, and (b) any material correspondence or communications delivered to or received from the lender under any Financing, the franchisor under any franchise or license agreement, the property manager or the hotel operator under
any property management or hotel management agreement, or any general contractor, architect, engineer or attorney in connection with the work being performed by such person on behalf of any given Project or Venture or the Company as a whole as and
when the same are delivered or received (and the Carlyle Member will provide the Managing Member with copies of such material correspondence received by the Carlyle Member), and (iv) keep the Carlyle Member informed of all proposed or
contemplated decisions or actions of the Company that may require the approval of the Carlyle Member pursuant to the terms of this Agreement. Promptly following any request therefor by the Carlyle Member, the Managing Member shall deliver to the
Carlyle Member a counterpart copy of any agreement, certificate or other document executed and delivered by the Managing Member in the name of or on behalf the Company, pursuant to a right to do so granted in this Agreement, and shall otherwise make
available to the Carlyle Member for copying and inspection all of the books and records of the Company that are in the possession or control of the Managing Member. The Managing Member shall devote sufficient time to perform its duties hereunder in
accordance with industry practice for similar hotel and hospitality related projects and this Agreement. In addition to and without limiting the generality of the foregoing: 
 (1) For so long as the MHI Member is the Managing Member, each of Andrew Sims and David Folsom shall devote a sufficient portion of his
professional time and efforts to the Company and each of the Ventures to discharge the responsibilities of the Managing Member in a manner consistent with good industry practice and this Agreement and the Program Agreement and at all times
sufficient to carry out the approved Business Plan for each Project, and shall be available if requested by the Carlyle Member to attend any regular or 

  

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special meetings of the Members convened pursuant to Section 4.3 hereof. It is contemplated that the MHI Member shall retain additional staff on an
“as needed” basis. 
 (2) If either of Andrew Sims or David Folsom (but not both) ceases to be employed by or a
principal of the MHI Member and its Affiliates for any reason, the MHI Member shall engage a suitable, experienced and well qualified replacement therefor (either as an employee or independent contractor) subject to the Carlyle Member’s prior
written approval. 
 (3) The Managing Member shall not delegate any of its rights or powers to conduct the aspects of the
business and affairs of the Company delegated to it pursuant to Section 4.1(b) without the prior written consent of the Carlyle Member. 
 Section 4.2 Budgets. 
 (a) Operating Budgets. Not less than thirty (30) days prior to the
acquisition of any Project, the Managing Member shall prepare an initial Project Operating Budget (which shall be submitted to the Carlyle Member for approval) for the period beginning with the anticipated acquisition of such Project and ending on
December 31 of the year in which the anticipated acquisition of such Project is to occur unless such anticipated occupancy falls within 60 days prior to December 31, in which case such Project Operating Budget shall cover the next
succeeding calendar year. Such initial Project Operating Budget may be refined (based on information then available) as of the acquisition of a Project. If a Project Operating Budget (as may be refined) is not approved by the Carlyle Member by the
acquisition of such Project, the Managing Member may incur commercially reasonable expenses to operate such Project; however, no expenditures shall be made for capital items, to any Affiliate of the Managing Member (other than the management fee
provided for in the approved Property Management Agreement) or in connection with a Material Business Agreement which has not been previously approved by the Carlyle Member, without the approval of the Carlyle Member. Thereafter, the Managing Member
shall deliver, by a date to be reasonably determined by the Carlyle Member but not later than November 1 of the preceding calendar year, to the Carlyle Member for approval (a) a proposed Project Operating Budget for each Project for the
ensuing calendar year, and (b) a consolidated operating budget for all of the Projects for the ensuing calendar year, which budgets may be revised from time to time. The Managing Member may modify or amend a previously approved Project
Operating Budget only upon the prior written consent of the Carlyle Member which consent may be withheld, conditioned or denied in the Carlyle Member’s sole discretion; provided, however, that any operating shortfalls shown in any of the
revised budgets and not otherwise reserved for in the previous budget shall constitute an Operating Shortfall. 
 (1) If the
initial Project Operating Budget for any calendar year has not been approved prior to the leasing and occupancy of the Project, the Company shall continue to operate under the most recent pro forma Project Operating Budget approved by the Carlyle
Member pursuant to the Program Agreement, with such adjustments as may be necessary to reflect changes in insurance costs, taxes, utility costs and debt service payments; however, no payments or reimbursements to the Managing Member or any of its
Affiliates (other than the management fee provided for in the approved Property Management Agreement) shall be made for the period covered by the initial Project Operating Budget until a Project Operating Budget 

  

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for such period is approved, unless the Carlyle Member specifically consents thereto in writing. 
 (2) If a Project Operating Budget for any subsequent calendar year has not been approved by January 1 of that year, the Company shall
continue to operate under the respective Project Operating Budget for the previous year with such adjustments as may be necessary to reflect deletion of non-recurring expense items set forth on the previous Project Operating Budget and increased
insurance costs, taxes, utility costs, and debt service payments; however, no payments or reimbursements to the Managing Member or any of its Affiliates (other than the management fee provided for in the approved Property Management Agreement) shall
be made for that year until a Project Operating Budget for such year is approved, unless the Carlyle Member specifically consents thereto in writing. The absence of approval for a Project Operating Budget shall not affect operations or payments to
be made with respect to any other Project. 
 Section 4.3 Intentionally omitted. 
 Section 4.4 Default by the MHI Member. 
 (a) Each of the following events shall be deemed a material breach of this Agreement by the MHI Member: 
 (1) if the MHI Member or any Affiliate of the MHI Member who has a material relationship to a Project or Venture or the Company: (A) commits a felony, or (B) commits fraud, intentional misrepresentation,
recklessness or willful misconduct with regard to the Company or a Venture or Project; 
 (2) the affairs and decisions of
(x) the MHI Member, (y) the Property Manager (if the Property Manager is an Affiliate of the MHI Member), or (z) any other Affiliate of the MHI Member who is a party to any Developer Affiliate Agreement, ceases to be managed, on a day
to day basis, for any period of time, by one or more of the MHI Principals, or any other Person approved by the Carlyle Member in its sole and absolute discretion; unless, with respect to clause (z) only, each of the following is true:
(1) concurrently with the change in management of the Affiliate of the MHI Member each Developer Affiliate Agreement with such Affiliate thereafter becomes terminable by the Company (at the sole discretion of the Carlyle Member) without
penalty, premium or payment of any kind, and (2) the Carlyle Member has been given prior written notice of such change in management and information regarding the Persons thereafter managing such Affiliate of the MHI Member; 
 (3) (A) the occurrence of any Transfer by the MHI Member in violation of Section 9.1; or (B) the exercise of any default right
or remedy by any beneficiary of an Encumbrance on any Membership Interest of the MHI Member; 
 (4) if the MHI Member or any
Affiliate of the MHI Member who has a material relationship to a Project or Venture or the Company: (A) misapplies any funds derived from a Project or Venture or the Company (including security deposits, insurance proceeds and condemnation
awards), unless the misapplication is not intentional, the amount involved is not material and the MHI Member (or its Affiliate) promptly provides restitution thereof; or (B) fails 

  

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to maintain insurance as required by this Agreement or to pay any taxes or assessments affecting the Project or Venture or the Company when due (unless the
Company or Venture has no funds to pay such insurance premiums, taxes or assessments when due and the MHI Member has previously requested an Operating Shortfall Contribution from the Members pursuant to an Anticipated Shortfall Funding Notice for
the noted purpose of paying such taxes or assessments when due and the Carlyle Member has failed to approve and fund its portion of such Operating Shortfall Contribution or with respect to the payment of any taxes or assessments, the Carlyle Member
determines to dispute same and to set aside a reserve in the amount of such taxes or assessments in accordance with applicable law); 
 (5) the Bankruptcy, liquidation or dissolution of (A) the Company (unless consented to or caused by the Carlyle Member), or (B) the MHI Member; 
 (6) the failure by the MHI Member to make any Capital Contribution required to be made by it under this Agreement or the failure by the
MHI Member to make any other material payment required to be made by it under this Agreement (including, without limitation, any payment to be made by the MHI Member under Sections 7.4, 7.5 and 7.7 below); 
 (7) any default or breach by the Company or a Venture under any Material Business Agreement which gives a party to such agreement the
right to exercise remedies against the Company, the Venture or Project or the Company’s other assets, other than (A) a default that arose materially from, directly or indirectly, an affirmative act of or a refusal or failure to act (and
such action was expressly required or approved pursuant to the terms of this Agreement) by the Carlyle Member or any other Carlyle Realty Affiliate, and (B) a default which could not have been avoided or cured by the Company within the required
period even if the MHI Member had used its best efforts for the benefit of the Company; 
 (8) the Company is in default or is
unable to draw funds or receive advances under any of the loan documents relating to a Financing (other than a default or inability to draw funds or receive advances that arose materially from an affirmative act of the Carlyle Member or any other
Carlyle Realty Affiliate), and a Financing lender has the right due to such default or non-funding event to, and does in fact, exercise remedies against the Company, Venture or a Project or the Company’s other assets or against any Carlyle
Realty Affiliate who is an obligor for any of the Financing, refuse to make any further advances of funds under the Financing, and/or require the Company, Venture or any Carlyle Realty Affiliate to provide additional collateral for the Financing;
unless and until either (A) the Financing lender has waived such default or other non-funding event and has commenced funding the Financing to or on behalf of the Company or Venture without exercising or retaining any other remedies against the
Company, Venture or any of the Company’s other assets or against any Carlyle Realty Affiliate who is an obligor for any of the Financing (including requiring the Company or any Carlyle Realty Affiliate to provide additional collateral for the
Financing), or (B) (1) the MHI Member has a reasonable basis for disputing the Financing lender’s determination that the Company is in default or that a non-funding event has occurred and is diligently pursuing such dispute with the
Financing lender, (2) the Financing lender has ceased exercising any rights or remedies against the Company, the Property or any of the Company’s other assets or against any of Carlyle Realty Affiliate who is an obligor for any of the
Financing for such default or non-funding event other than a continued failure by the Financing lender to fund the Financing, and 

  

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(3) less than sixty (60) days have passed since the MHI Member first acquired notice of such default or non-funding event under the Financing and of the
Financing lender’s election or threat to exercise remedies with respect thereto; 
 (9) any person providing Credit
Support who is not a Carlyle Realty Affiliate causes the Company to be in default under any of the loan documents for a Financing and the Financing lender has the right due to such default to, and does in fact, make demand or exercise remedies
against the Company, a Venture or the Company’s other assets or against any Carlyle Realty Affiliate who is an obligor for any of the Financing; 
 (10) any material or repetitive default by an Affiliate of the MHI Member under any Developer Affiliate Agreement (and the continuation of such default beyond the period for cure thereof, if any), other than
(A) a default that arose directly or indirectly from an affirmative act of or failure or refusal to act (and such action was expressly required or approved pursuant to the terms of this Agreement) by the Carlyle Member or any other Carlyle
Realty Affiliate or (B) a default under any Developer Affiliate Agreement for which the Developer Affiliate Agreement can be terminated by the Company without any penalty or premium; 
 (11) any breach by MHI Member of a representation or warranty set forth in the Program Agreement or made by the MHI Member or one of its
Affiliates in connection with a specific Project; and 
 (12) the occurrence of any other material breach or default by the
MHI Member under the terms of this Agreement (i.e., a breach or default not specifically identified and provided for in this Section 4.4(a)) or a Venture Lease (A) that has a material adverse effect on the Company, a Venture or a Project
and (B) remedies for the breach of which are not otherwise specified and limited to such specified remedies under the express terms of this Agreement. 
 (b) Upon the occurrence of any of the events set forth in Section 4.4(a) above, the Carlyle Member shall send the MHI Member notice of the occurrence of such event, stating the specific bad act or breach that has
occurred and the Carlyle Member’s required cure of such event (to the extent same is susceptible of being cured). Upon receiving any such notice from the Carlyle Member, the MHI Member shall have five (5) Business Days to cure or cause the
Company to cure any applicable breach that can be cured by the payment of money and ten (10) Business Days to cure any other applicable breach which is capable of being cured, provided that if such non-monetary breach is not reasonably
susceptible of being cured within said ten (10) Business Day period, but MHI Member commences such cure within ten (10) Business Days of its receipt of notice of such breach from the Carlyle Member and thereafter diligently pursues the
same using commercially reasonable efforts to do so, then said ten (10) Business Day cure period shall be extended for such period as may be reasonably necessary in order to allow a cure, up to, but not in excess of, ninety (90) days from
the date of the MHI Member’s receipt of notice of such breach from the Carlyle Member. Notwithstanding the foregoing, the MHI Member acknowledges and agrees that (A) a breach of Subsections 4.4(a)(i), (ii), (iii)(A), (v)(A), (v)(B) and
(x) shall not be capable of being cured and no cure period shall be applicable thereto; (B) a breach of Subsection 4.4(a)(iv) shall not be capable of being cured after the expiration of the 

  

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applicable initial (5) Business Day or ten (10) Business Day cure period applicable thereto even if it is a non-monetary breach that is not
reasonably susceptible of being cured within said ten (10) Business Day period; (C) a breach of Subsections 4.4(a)(viii) and (ix) shall not be capable of being cured and no cure period shall be applicable thereto from and after the
time that a written notice of default is received by the Company or Venture from the Financing lender or its agent, and any uncompleted cure period for a breach of Subsections 4.4(a)(viii) and (ix) shall end automatically at the time when a
written notice of default is received by the Company or a Venture from the Financing lender or its agent; and (D) any such cure period shall be available only (x) to the extent that such event is susceptible of being cured, (y) for so
long as such cure period does not exceed the corresponding cure period, if any, applicable to such event which is contained in any of the then-applicable loan documents for a Financing, and (z) on a one time basis only with respect to any
specific event. If the MHI Member fails to cure such event within the cure period provided above, if any, or upon the occurrence of any such event described above if a cure period is not applicable thereto, then a “Default Trigger
Event” shall be deemed to have occurred, and the Carlyle Member shall send a notice to the MHI Member notifying the MHI Member that such Default Trigger Event has occurred. Thereafter, the change in Distributions pursuant to
Section 7.2(e)(2) shall take effect, and the Carlyle Member shall have the absolute right (but not the obligation) to take one or more of the following actions: (1) (x) remove the MHI Member as the Managing Member of the Company (in
which case the MHI Member will no longer have any right to take part in the management or affairs of the Company) or (y) remove the MHI Member’s authority with respect to a particular Venture and related Project, (2) terminate any one
or more of the Developer Affiliate Agreements, and/or (3) exercise any remedies available at law or equity against the MHI Member, in its capacity as a Member and/or the Managing Member, or as otherwise provided in this Agreement with respect
to such Default Trigger Event. 
 (c) In addition to the other rights and remedies available to the Carlyle Member and the
Company for any default or breach of this Agreement by the MHI Member, the Company (acting at the sole direction of the Carlyle Member) shall have the right to withhold and escrow all payments owed by the Company to the Managing Member or its
Affiliates under any Developer Affiliate Agreement at any time from or after the termination of such agreement pursuant to Section 4.4(b), and to apply such escrow amounts against the damages owed by the MHI Member to the Company or any of the
other Members as a result of such breach or default by the MHI Member. All unapplied amounts shall continue to be held in escrow until such breach or default of the MHI Member has been fully cured by the MHI Member or by the application of such
amounts, or upon the dissolution and wrapping up of Company affairs. 
 Section 4.5 Reimbursement of Member Expenses. The Carlyle
Member shall be reimbursed by the Company for all expenses actually incurred by it directly in conjunction with the business and affairs of the Company (including travel and entertainment expenses, telephone costs, and the like but excluding office
overhead, salaries, wages, benefits and the like incurred by the Carlyle Member) up to a maximum amount of One Hundred Thousand Dollars ($100,000) per annum (the “Annual Expense Cap”); provided, however, that such Annual Expense Cap
shall be reduced by the amount of funds reimbursed to the Carlyle Member by the Owner during the corresponding time period for expenses incurred by the Carlyle Member in conjunction with the business and affairs of the Owner under the terms of the
Owner Operating Agreement. Notwithstanding the reimbursement restrictions set forth above in this Section 4.5, any costs and 

  

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expenses incurred by the Carlyle Member in connection with (a) the formation of and conducting its due diligence with regard to the Company or a
particular Venture or Project or (b) the business and affairs of the Company or each Venture, to the extent not reimbursed under this Section 4.5 will be treated as Initial Capital Contributions made by the Carlyle Member to the Company in
accordance with Section 6.1 below. The MHI Member shall be reimbursed by the Company for all reasonable out-of-pocket expenses actually incurred by it directly in conjunction with the business and affairs of the Company (including travel and
entertainment expenses, telephone costs, and the like) so long as such expenses are provided for in the applicable Business Plan, Project Operating Budget or otherwise approved by the Carlyle Member and so long as the MHI Member is the Managing
Member. 
 Section 4.6 Compensation of the Members. Except as otherwise specifically provided herein or in the Program Agreement, no
compensatory payment shall be made by the Company to any Member for the services to the Company of such Member or any member or employee of such Member. Without limiting the generality of the foregoing, (i) any and all brokerage or sales
commissions, finders fees or similar compensation paid to the MHI Member or any Affiliate of the MHI Member, in connection with the acquisition of any Project(s) shall inure solely to the benefit of the Company, shall be promptly remitted to the
Company by the MHI Member or the applicable Affiliate, and shall not be deemed to be a Capital Contribution of the MHI Member to the Company; and (ii) any and all fees or compensation paid to the Carlyle Member or any Affiliate of the Carlyle
Member, in connection with the financing or acquisition of any Projects shall inure solely to the benefits of the Company, shall be promptly remitted to the Company by the Carlyle Member of the applicable Affiliate, and shall not be deemed to be a
capital contribution of the Carlyle Member to the Company. 
 Section 4.7 Intentionally omitted. 
 Section 4.8 Property Management Agreement. Each Venture that leases a Project shall enter into a Property Management Agreement with a Property
Manager pursuant to the Program Agreement in the form attached to the Program Agreement if the Property Manager is a MHI Property Manager or with respect to any Third-Party Property Manager in form and substance acceptable to the Carlyle Member.

 Section 4.9 Intentionally omitted. 
 Section 4.10 Subordination of Management Fees. The management fees to be paid to the MHI Property Manager pursuant to the Property Management Agreement for any Project, shall at all times be subordinate to, and
the payment thereof deferred until payment in full of all debt service obligations with respect to the Project Loan and any other loan or other indebtedness incurred with respect to the applicable Project or Venture or the Company but only to the
extent required by the lender making such Project Loan. Without limiting the generality of the foregoing, no management fees for any Project or the Company shall be paid unless and until the payment thereof is permitted pursuant to the Financing
relating to that Project. 
 Section 4.11 Indemnification of Members by the Company. To the fullest extent permitted by the Act:
(1) the Company shall indemnify, defend and hold harmless each Member who was, is or is threatened to be made a party to any threatened, pending or completed action, 

  

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suit or proceeding (“Proceeding”), any appeal therein, or any inquiry or investigation preliminary thereto by reason of the fact that it is
or was a Managing Member or a Member; (2) the Company shall pay or reimburse each Member for expenses incurred by it (A) in advance of the final disposition of a Proceeding to which the Member was, is or is threatened to be made a party,
and (B) in connection with its or any of its agents’ appearance as a witness or other participation in any Proceeding. The Company, by adoption of a resolution of all of the Members (or as otherwise agreed in writing), may indemnify and
advance expenses to an officer, employee or agent of the Company to the same extent and subject to the same conditions under which it may indemnify and advance expenses to the Members under the preceding sentence. The provisions of this
Section 4.11 shall not be exclusive of any other right under any law, provision of this Agreement, or otherwise. Notwithstanding the foregoing, this indemnity shall not apply to actions constituting simple negligence (except as provided in the
succeeding sentence), gross negligence, willful misconduct or bad faith, or involving a breach of this Agreement or the Program Agreement. This Indemnity shall apply to actions constituting simple negligence only to the extent that the Company
actually receives payment of the proceeds of insurance covering the liability of the Company for such negligence. The Company may purchase and maintain insurance to protect itself, the Members, and any officer, employee or agent of the Company,
whether or not the Company would have the power to indemnify such Person under this Section 4.11. This indemnification obligation shall be limited to the assets of the Company and no Member shall be required to make a Capital Contribution in
respect thereof, except as determined by the Carlyle Member in its sole discretion. In addition to the foregoing, but subject to Article 11 below with respect to allocations of costs and liabilities incurred in connection with any Credit Support
being provided by the Members and/or their Affiliates in connection with any Financing, the Company shall indemnify each of the Members and their Affiliates (including each of the MHI Principals) with respect to any Credit Support or any other
guaranty or indemnity which is given in connection with any Financing to the extent payment of any payments required to be made by such Member or its Affiliate thereunder; provided, however, that this indemnity shall not apply to actions
constituting gross negligence, willful misconduct or bad faith, or involving a breach of this Agreement or the Program Agreement. For purposes of the preceding sentence any “breach of this Agreement” excludes the payment obligations of the
MHI Member with respect to any Additional Capital Contributions or Special Capital Contribution to the extent such Operating Shortfall Overruns have been funded by Special Contributions. 
 Section 4.12 Indemnification by the Members. Each Member agrees to indemnify, defend and hold harmless the Company and the other Members from any
loss, claim, damage or liability resulting from actions of such Member constituting gross negligence, willful misconduct or bad faith, any breach of this Agreement or the Program Agreement, or actions of such Member or its Affiliates taken outside
the scope of authority provided under this Agreement. 
 Section 4.13 Conflicts of Interest; Competition. 
 (a) Subject to provisions of this Section 4.13, the other express provisions of this Agreement and the Program Agreement, each Member
or Affiliate thereof may engage in and possess interests in other business ventures of any and every type and description, 

  

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independently or with others, including ventures in competition with the Company, with no obligation to offer to the Company or any other Member the right to
participate therein or to account therefor. No Member may engage in any form of self-dealing, it being understood that any contractual arrangements entered into by and between the Company and any Member or one of its Affiliates shall require the
prior written approval of the “non-interested” Member. 
 (b) Neither the MHI Member nor any Affiliate (including,
without limitation, the MHI Principals), any of the Sims Family, nor any of their respective Affiliates, partner, member, or shareholder of the MHI Member, will engage, directly or indirectly, in any capacity of any kind (whether as partner, member,
shareholder, director, employee, agent, consultant, advisor or otherwise, however denominated), in the ownership, operation, leasing or management of any hotel, condominium hotel or time share project (including any mixed-use project involving a
hotel or condominium hotel or timeshare) located within the same geographic market area (determined by Smith Travel Research as the Primary Competitive Set (as defined in the Program Agreement)) of any Project, or in any other hotel fund without in
each case the prior written consent of the Carlyle Member, which consent may be granted or withheld by the Carlyle Member in its sole but reasonable discretion. Notwithstanding the foregoing, the restrictions and limitations of this
Section 4.13(b) shall not apply to (but in each instance excluding any of the MHI Principals or any of the Sims Family or any of their respective Affiliates): (i) holders of partnership interests of MHI Hospitality L.P.; (ii) holders
of common stock of MHI Hospitality Corporation or to the officers or directors of MHI Hospitality Corporation other than the MHI Principals or Sims Family; and (iii) hotels and other lodging assets owned by or subject to a purchase agreement
with MHI Hospitality Corporation or any of its Affiliates prior to the date the Carlyle Member gives Conditional Approval for a given Project pursuant to the Program Agreement and disclosed in the Preliminary Investment Package. 
 Section 4.14 Approval and Consent in Writing. Wherever this Agreement requires the approval or consent of a Member, such approval or consent must
be in writing to be effective. 
 Section 4.15 Member Representatives. Whenever under the provisions of this Agreement the approval of
any Member is required or any Member is required to take some action at the request of another Member, such approval or such request shall be given for the Managing Member by its Authorized Representative and for the Carlyle Member by its Authorized
Representative; and any party to this Agreement shall be authorized to act on any such approval or request. The “Authorized Representative” of the Managing Member shall mean the individual or individuals at the time designated to
act on behalf of the Managing Member, which initially shall be the MHI Principals in all respects and may hereafter be changed at the sole discretion of the Managing Member (subject to any other limitations set forth in this Agreement) to any other
individual or individuals designated by a written notice from the Managing Member to the Carlyle Member specifying such individual or individuals who will thereafter constitute the Authorized Representative of the Managing Member; and the
“Authorized Representative” of the Carlyle Member shall mean the individual or individuals at the time designated to act on behalf of the Carlyle Member, which initially shall be Hayden Jones with respect to all contact and delivery
matters and Gary Block or Hayden Jones with respect to all approvals and consents, and may hereafter be changed at the sole discretion of the Carlyle Member (subject to any other limitations set forth in this Agreement) to any other individual or
individuals designated by written notice thereof from the Carlyle Member to the 

  

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Managing Member specifying such individual or individuals who will thereafter constitute the Authorized Representative of the Carlyle Member. 
 ARTICLE 5 
 ACCOUNTING AND
REPORTING 
 Section 5.1 Fiscal Year; Accounts; Reports. 
 (a) The fiscal year of the Company and each Venture shall be the calendar year. The books of account of the Company and each Venture shall
be kept and maintained by the Managing Member on an accrual basis in accordance with generally accepted accounting principles applied on a consistent basis applicable to hotels using the Uniform System; provided, however, that any annual audited
financial statements and tax returns prepared by the Auditor for the Company and any Subsidiary, including a duly completed K-1 for each Member shall be prepared at the expense of the Company. The Managing Member shall prepare a reconciliation of
such books and records to cash receipts and disbursements. The books of account shall be kept at the principal place of business of the Managing Member, and shall at all times be available for inspection by the Carlyle Member. Further, the Managing
Member, at the Company’s expense, shall prepare or cause to be prepared all required federal and state Company and Venture tax filings, which returns shall be delivered to the Carlyle Member within 90 days of calendar year end and timely filed
with the appropriate government agencies. 
 (b) The MHI Member, at its expense, except as otherwise noted, shall provide, or
cause to be provided, in a written format and on a computer file formatted as a tab delimited Excel file using a layout determined by the Carlyle Member, the following to each Member with respect to the Company and with respect to each Project and
each Venture: 
 (1) at the earliest practicable time, but in any event not later than ten (10) days after the end of
each calendar month the following: 
 (A) a balance sheet containing ending balances as of the current period and the prior
year-end; 
 (B) an income statement containing (i) actual operating performance vs. budgeted operating performance,
(ii) prior year actual operating results, for the current period and the year-to-date, (iii) a narrative discussing major variances between actual vs. budgeted performance, and (iv) occupancy percentage, average daily rate and RevPAR;

 (C) a cash flow statement in Microsoft Excel for the current year (actuals to date and budget/forecast thereafter) that
details net cash flow for the current period and the year-to-date and that reconciles Net Operating Income with net cash flow for each Project; 
 (D) a sources and uses statement of actual and projected cash flows for the current year and subsequent years that are within the applicable Business Plan; and 
  

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 (E) a detail of actual capital expenditures vs. budgeted capital expenditures for the
current period and the year-to-date, with a narrative discussing variances between actual vs. budgeted capital expenditures for the current period and year-to-date; 
 (F) any material governmental notices or other correspondence sent or received with respect to the Company, any Venture or any Project
and any reports, default notices or other material communications sent or received during the prior month relating to a Material Business Agreement if not previously delivered; 
 (G) a copy of all written reports produced by the Property Manager that discuss historical or projected performance of the Property;

 (H) a “STAR” report; and 
 (I) a statement of changes in Members’ equity containing a detail of Capital Contributions, Distributions and income/loss
allocations for each of the Members and in total, for the current period and the year-to-date; 
 (2) at the earliest
practicable time but in no event later than three (3) Business Days prior to the execution thereof by the MHI Member, a copy of each proposed modification of any Material Business Agreement; 
 (3) any such other written reports, records, statements or information provided to the any franchiser or any Lender (or agent or servicer
therefor) and not otherwise furnished to the Carlyle Member under this Section 5.1; and 
 (4) such other written or
electronic reports, records, statements or information that may be reasonably requested by the Carlyle Member from time to time. 
 The Carlyle Member shall
provide to the MHI Member a file layout identifying the required fields for each Excel file. The MHI Member shall match, or shall cause to match, at Company expense, its current system data fields to the appropriate file layout and produce the
applicable Excel files. Notwithstanding anything to the contrary in this Agreement, the Carlyle Member may modify the required fields or report formats from time to time at its sole discretion. 
 (c) At the earliest practicable time but in no event later than ninety (90) days after the end of each Company fiscal year, annual
audited financial statements for the and tax returns for the Company and any Subsidiary, including (A) a duly completed K-1 for each Member, prepared by the Auditor at the expense of the Company, and (B) the reports described in
Section 5.1(c)(1)(A) through (C), audited at the expense of the Company by the Auditor, (C) from time to time, all other information relating to each Venture and the Company and its business and affairs reasonably requested by any Member.

 (d) In addition (x) to the extent that any Project Loan provides for disbursement of loan proceeds following the
acquisition of a Project, the Managing Member shall furnish to the Carlyle Member copies of all draw requests under the Project Loan when submitted to the lender, together with any related documentation, and (y) the Managing Member 

  

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shall furnish to the Carlyle Member an unaudited statement of Cash Flow and an unaudited statement setting forth the Profits and Losses of the Company and
each Venture for such fiscal year. 
 (e) Each Member, at its expense, may at all reasonable times during usual business hours
audit, examine, and make copies of, or extracts from, the books of account, records, files, and bank statements of the Company and each Venture. Such right may be exercised by any Member or by its designated agents or employees. 
 Section 5.2 Bank Accounts. The Members shall open and maintain (in the name of the Company) a special bank account or accounts in a bank or
savings and loan association, the deposits of which are insured, up to the applicable limits, by an agency of the United States government, in which shall be deposited all funds of the Company. The Members shall also open and maintain (in the name
of each Venture) a special bank account or accounts, similarly maintained and insured, in which shall be deposited all funds of each respective Venture. Withdrawals therefrom shall be made upon the signatures of such Persons as the Members shall
designate. Upon the Managing Member’s receipt of written notice of the occurrence of a Default Trigger Event, the Managing Member and its account designee shall no longer have the right or be permitted to access such accounts. 
 ARTICLE 6 
 CAPITAL CONTRIBUTIONS

 Section 6.1 Initial Capital Contributions. Upon the approval of the Carlyle Member to proceed with a Venture as
contemplated by Section 2.5 of the Program Agreement, the Members shall (subject to Sections 2.2(a) and (b) of the Program Agreement) make the Capital Contributions for such Venture and corresponding Series (“Initial Capital
Contributions”) to the Company in accordance with their respective Capital Sharing Ratios as contemplated by the Project Operating Budget for the subject Project and Venture within five (5) Business Days of the receipt of the request
therefor made by the Managing Member accompanied by the information required pursuant to Section 5.2 of the Program Agreement. In addition, upon the execution of this Agreement, the Members shall make an Initial Capital Contribution to the
Company in an amount sufficient to reimburse the Members for their due diligence costs, legal costs and other out-of-pocket expenses incurred to third parties in connection with (a) the formation of the Company (up to an aggregate of $50,000
for each of the Carlyle Member and the MHI Member) and conducting its due diligence with regard to the Company and each Venture and Project and (b) the business and affairs of the Company or each Venture or Project, pursuant to, and subject to
the limitations set forth in, Section 4.5, which may be allocated by the Members among each of the Series. In determining the amount of cash contributed by the Members pursuant to this Section 6.1, each Member who has incurred and paid any
of the foregoing costs and expenses referenced in the previous sentence, and are not being reimbursed by the Company, can credit its qualifying costs and expenses incurred under Section 4.5 hereof (to the extent not reimbursed by the Company in
accordance with Section 4.5 and this Section 6.1) against the amount otherwise owed by such Member under this Section 6.1, which amounts so credited shall be deemed to be an Initial Capital Contribution to the Company made at the same
time as any cash payment made or otherwise required to be made by such Member to the Company under this Section 6.1. Upon request, the Member being credited its costs pursuant to 

  

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this Section 6.1 shall provide reasonable supporting verification to the Managing Member and the Carlyle Member for all costs for which any credit
against its cash Initial Capital Contributions is requested under this Section 6.1. 
 The amount and contribution date of each Initial
Capital Contribution (including, without limitation, the amount and nature of each of the costs and expenses funded by the Members and reimbursed pursuant to Section 6.1 or credited against the amount of cash required to be contributed by such
Members pursuant to Section 6.1) shall be noted by the Managing Member in the books and records of the Company promptly following its receipt by the Company, and a copy of such notation shall be promptly delivered to the Carlyle Member along
with an updated list of all Capital Contributions made to and Distributions made by the Company as of such date. 
 Section 6.2 Additional
Capital Contributions. 
 (a) At any time after the Initial Capital Contributions have been funded to or for the benefit
of the Company with respect to a Series or for the general benefit of the Company, the applicable Member shall make such additional cash contributions to the Company as are determined and requested by the Carlyle Member from time to time, in order
for the Company to discharge its liabilities, to protect its assets or to otherwise conduct its business, including, without limitation, for funding any increase in the Operating Budget for a particular Project approved by the Carlyle Member as part
of a change in a Business Plan (the “Additional Capital Contributions”), and the Managing Member shall have an affirmative duty to promptly notify the Carlyle Member in writing of the need for and the use of any such Additional
Capital Contributions (such a notice being hereinafter referred to as an “Anticipated Capital Funding Notice”). Following the Carlyle Member’s receipt of an Anticipated Capital Funding Notice the Carlyle Member shall make an
independent determination, in its sole discretion, whether or not to call for an Additional Capital Contribution based on such Anticipated Capital Funding Notice, and the Managing Member shall fully cooperate with the Carlyle Member with respect to
such determination (including promptly providing such information as is requested by the Carlyle Member). Once the Carlyle Member determines that an Additional Capital Contribution is required and should be made by the Members of one or more Series
(whether due to an Anticipated Capital Funding Notice or on its own initiative), the Carlyle Member shall send all of the other Members of such Series a written request for such Additional Capital Contributions, which shall include a reasonably
detailed description of the proposed use and purpose of such Additional Capital Contributions, the reason why such funds are not expected to be available from Net Cash Flow generated by such Venture or from Financing proceeds available to such
Venture or Series, and the date on which such Additional Capital Contributions need to be made by the Members of such Series to the Company. All Additional Capital Contributions shall be made, on or before the date therefor specified in such request
of the Carlyle Member, in accordance with each of the Members respective Capital Sharing Ratios for such Series. Such Additional Capital Contributions made by the Members of a Series shall constitute additional Capital Contributions to the Company
with respect to such Series. 
 (b) A failure by any Member of a Series to contribute any of its Additional Capital
Contributions as required by this Section 6.2 within fifteen (15) Business Days after the date provided in the written request to the Members as described in Section 6.2(a), shall constitute a default under this Agreement entitling
the Company and the other Members of such 

  

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Series to exercise any and all rights and remedies that may be available under this Agreement for a default, including, without limitation, those rights
specified in Section 6.5. 
 Section 6.3 Operating Shortfall Contribution. 
 (a) With respect to each Project and Series, each Member of such Series shall make such additional cash contributions to the Company and
Series as are determined and requested by the Carlyle Member from time to time, in order for the Venture corresponding to such Series to pay for any Operating Shortfalls with respect to its Project (the “Operating Shortfall
Contributions”). The Managing Member shall have an affirmative duty to promptly notify the Carlyle Member in writing of the need for and the use of any such Operating Shortfall Contributions (such a notice being hereinafter referred to as
an “Anticipated Shortfall Funding Notice”). Following the Carlyle Member’s receipt of an Anticipated Shortfall Funding Notice, the Carlyle Member shall make an independent determination, in its sole discretion, whether or not
to call for Operating Shortfall Contributions based on such Anticipated Shortfall Funding Notice, and the Managing Member shall fully cooperate with the Carlyle Member with respect to such determination (including promptly providing such information
as is requested by the Carlyle Member). Once the Carlyle Member determines that Operating Shortfall Contributions are required and should be made by the Members of a Series (whether due to an Anticipated Shortfall Funding Notice or otherwise on its
own basis), the Carlyle Member shall so notify the Managing Member and the Managing Member shall promptly thereafter (and in any event no later than ten (10) days thereafter) send to the Carlyle Member a written request for such Operating
Shortfall Contributions, which shall include a reasonably detailed description of the proposed use and purpose of such Operating Shortfall Contributions, the reason why such funds are not expected to be available from Net Cash Flow generated by such
Venture or from Financing proceeds available to such Venture or Series, and the date on which such Operating Shortfall Contributions need to be made by the Members of such Series to the Company. All Operating Shortfall Contributions shall be made,
on or before the date therefor specified in such request of the Managing Member, by and between the MHI Member and the Carlyle Member in proportion to the Operating Shortfall Sharing Ratios for all Operating Shortfalls for such Series. 

(b) A failure by any Member to contribute any of its Operating Shortfall Contributions as required by this Section 6.3 within five
(5) Business Days after the date provided in the written request to the Members as described in Section 6.3(a), shall constitute a default under this Agreement entitling the Company and the other Members to exercise any and all rights and
remedies that may be available under this Agreement for a default, including, without limitation, those rights specified in Section 6.5. 
 Section 6.4 Intentionally omitted. 
 Section 6.5 Failure to Make Contributions. 
 (a) If any Member fails to contribute all or any portion of any required Capital Contribution or Operating Shortfall Contribution when
due, it shall be considered a “Non-Funding Member” and shall be in default under this Agreement and subject to all rights and remedies that the Company may have at law or in equity against such Non-Funding Member, including, without
limitation, the rights and remedies set forth below in this Section 6.5. 
  

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 (b) The Company shall, upon notice to the Non-Funding Member, permit the Carlyle Member
(if the MHI Member is the Non-Funding Member), or the MHI Member (if the Carlyle Member is a Non-Funding Member) (the “Contributing Member”), to advance that portion of the required Capital Contribution or Operating Shortfall
Contribution that the Non-Funding Member has failed to timely contribute or pay, as the case may be, and such amount so advanced by the Contributing Member shall constitute a “Special Capital Contribution” (and a capital
contribution for Capital Account and income tax purposes, but shall not constitute a Capital Contribution) and the Contributing Member shall be entitled to receive all amounts required to be paid with respect thereto under Section 7.2(a) and
7.2(b) of this Agreement, and the Contributing Member shall be entitled to such payments before the Company makes any further payments to the Non-Funding Member under this Agreement or to any Affiliate of the Non-Funding Member which is/are a
service provider to the Company (whether before or after dissolution of the Company) under any Developer Affiliate Agreement. The Members acknowledge and agree that no Special Capital Contribution shall constitute a waiver of a default by the
Non-Funding Member of its obligations hereunder. 
 Section 6.6 Return of Contributions. Except as expressly provided herein, no
Member shall be entitled to (a) the return of any part of its Capital Contributions, Special Capital Contributions or Operating Shortfall Contributions, (b) any interest in respect of any Capital Contributions, Special Capital
Contributions or Operating Shortfall Contributions, or (c) the fair market value of its Membership Interest in connection with a withdrawal from the Company or otherwise. Un-repaid Capital Contributions, Special Capital Contributions and
Operating Shortfall Contributions shall not be a liability of the Company, any Venture, or of any Member; provided, however, that un-repaid Special Capital Contributions shall remain a liability of the Non-Funding Member to the extent not paid by
the Company or otherwise pursuant to the terms of this Agreement. No Member shall be required to contribute or lend any cash or property to the Company to enable the Company to return any Member’s Capital Contributions or Operating Shortfall
Contributions except as provided in Sections 7.4, 7.5, 7.6 and 7.7 below. 
 Section 6.7 Reserves. As required for payment of capital
improvements to Projects and other expenses or other liabilities by Ventures from time to time, or as set forth in the Business Plan for any Project, the Carlyle Member may establish reserves in such amounts as the Carlyle Member may reasonably
determine to be funded out of Capital Contributions, Operating Shortfall Contributions, Operating Revenues or Capital Proceeds. 
 Section
6.8 Member Loans. Subject to the terms and conditions of any Financing, if the Company shall have insufficient cash to discharge its liabilities, to protect its assets or to otherwise conduct its business in accordance with the Business
Plan(s) then in effect, any one or more of the Members, with the mutual approval of the Carlyle Member and the Managing Member, may advance such funds for the Company on such terms and conditions as the lending Member, the Carlyle Member and the
Managing Member may agree upon. Each such advance shall constitute a loan from such Member to the Company on such agreed upon terms and shall not constitute a Capital Contribution. 
 Section 6.9 Balances. The Company’s books and records shall contain entries indicating the aggregate amount of all Capital Contributions,
Special Capital Contributions, Operating Shortfall Contributions and loans made to the Company and the Distributions and 

  

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payments made by the Company thereon. 
 ARTICLE 7 
 DISTRIBUTIONS 
 Section 7.1 Distributions in General. Subject to the terms of Section 4.4(b), the Managing Member shall cause the Company to make distributions to its Members in accordance with the terms and conditions of
this Article 7. Except as expressly consented to by the Carlyle Member, the Managing Member shall distribute, in accordance with Section 7.2, all Net Cash Flow monthly, and all Capital Proceeds within five (5) days after the Company
receives such Capital Proceeds less any reserves which the Carlyle Member requires to be maintained. To the extent that any Series (the “Creditor Series”) satisfies a debt, liability, cost or other obligation on behalf of one or
more other Series (the “Borrower Series”) which may only occur with the consent of, or at the direction of, the Carlyle Member, the Borrower Series shall promptly reimburse the Creditor Series (without interest) for the Borrower
Series’ allocable share (as reasonably determined by the Managing Member and the independent accountants of the Company, with the approval of the Carlyle Member) of such obligation, which reimbursement amount shall be treated as cash and
property received by the Creditor Series instead of the Borrower Series for purposes of Section 7.2. This may occur, for example, (i) if Properties leased by two or more Series are pledged to cross-collateralize their respective
Financings, and the release price for any Property exceeds one hundred percent (100%) of any Series’ allocable portion of such Financing indebtedness, thereby reducing the outstanding Financing amount owed by other Series upon the payment
of the release price for its Property, (ii) if Net Cash Flow from any Property is used to pay the Operating Expenses, Financing Costs or other obligations of any other Property or Series, (iii) if Property leased by a Series is sold for a
price that generates Capital Proceeds, which together with prior Distributions of Net Cash Flow from such Property and other Distributions, including all Owner Distributions related to such Property, provides the Carlyle Member of such Series with
an amount exceeding a fifteen percent (15%) Internal Rate of Return with respect to the Capital Contributions of the Carlyle Member allocable to that Series (including Owner Capital Contributions related to such Property), and thereby causes
other Series to bear a greater share of the total Promote Distributions made to the Managing Member (i.e. such excess share being those Promote Distributions paid to the Managing Member, if any, out of the Net Cash Flow and/or Capital Proceeds of
such other Property and Series, prior to the time that the Carlyle Member of such other Series have received a fifteen percent (15%) Internal Rate of Return with respect to the Capital Contributions of such Carlyle Member allocable to such
Series), (iv) if Members of one or more Series are paid a Special Return out of funds generated by the Property of another Series pursuant to Section 7.2(b), (v) if there is a Carlyle Makeup Distribution that, based upon the relative
performance of the Properties of the respective Series, should be distributed disproportionately among the Series, and (vi) for similar reasons, as reasonably determined by the Carlyle Member. In calculating the Internal Rate of Return for any
Venture or Series, all Owner Capital Contributions and Owner Distributions with respect to the Owner Venture corresponding to such Venture or Series shall be aggregated with all Capital Contributions and Distributions with respect to such Venture or
Series. In addition, to the extent that any Borrower Series is unable to fully reimburse each of its Creditor Series for all amounts owed by such Borrower Series pursuant to this Section 7.1, then the amount that the Borrower Series is able to
reimburse shall be paid on a pro-rata basis to each of its Creditor Series based on the amount owed to each Creditor Series. 
  

 34 

 Section 7.2 General Order of Distributions. Except as otherwise provided in this Article 7, all
cash and other property received by the Company and available for distribution to the Members during any particular period in accordance with the terms of this Agreement, shall be distributed to the Members in the following order of priority:

 (a) first, cash and property received by or allocated to each Series shall be distributed one hundred percent
(100%) to the Contributing Members of such Series, collectively in proportion to their respective outstanding Special Return for such Series, until the Contributing Members of such Series have received, on a collective basis under this
Section 7.2(a) and Sections 7.2(b) and 7.4, an amount equal to their Special Return for such Series; 
 (b) second, cash
and property received by or allocated to any Series shall be distributed one hundred percent (100%) to the Contributing Members of all the Series, collectively in proportion to their respective outstanding Special Return, until all of the
Contributing Members have received, on a collective basis under this Section 7.2(b) and Sections 7.2(a) and 7.4, an amount equal to their Special Return; 
 (c) third, cash and property received by or allocated to each Series shall be distributed one hundred percent (100%) to each of the
Members, on a pro rata basis in accordance with their respective Capital Contribution Ratios, until the Members in all Series (but not necessarily any one Series) have received, on a collective basis under this Section 7.2(c),
Section 7.2(e) and Section 7.5, an Internal Rate of Return of fifteen percent (15%) on all of their Capital Contributions, including any Operating Shortfall Contributions; 
 (d) thereafter, as follows: 
 (1) If no Default Trigger Event shall have occurred and subject to the provisions of Section 7.4 and 7.5 below, a percentage of all then remaining cash and property (the “Remaining Proceeds”)
shall be distributed to the Members in accordance with their Capital Contribution Ratios (the “Members’ Percentage”) and a percentage of the Remaining Proceeds shall be distributed to MHI Member as a profit distribution (the
“MHI Promote Percentage”), with such distributions to be determined as follows: 
  

					
	 For so long as the Members’ resulting Internal Rate of Return from
Distributions of
Remaining Proceeds (after the MHI Promote Percentage) is
	  	The Members’
Percentage will be	 	and the MHI Promote
Percentage will be
	 (i)    first, greater than 15% and up to and including 25%
	  	(i)    77%	 	(i)    23%
	 (ii)    thereafter, greater than 25%
	  	(ii)    56%	 	(ii)    44%

 or 
 (2) If a Default Trigger Event shall have occurred, one hundred percent (100%) shall be distributed to the Members in accordance with
their respective Capital 

  

 35 

 
Contribution Ratios. 
 Section 7.3
Intentionally Omitted. 
 Section 7.4 Lookback with Respect to Special Capital Contributions. Notwithstanding the provisions of
Section 7.2 above, at such time as the Company IRR has been finally determined by the Carlyle Member to be an amount greater than twenty-five (25%), the Contributing Members shall be paid an amount as a Distribution (the “Additional
Return”) which, when combined with the amounts paid to the Contributing Members pursuant to Section 7.2(a) and 7.2(b), and taking into account all Owner Capital Contributions to and Owner Distributions by the Owner, is sufficient to
achieve for the Contributing Members, to the date of payment, an Internal Rate of Return on the Special Capital Contributions (as if the Special Capital Contributions were the only applicable Capital Contributions and the amounts paid to the
Contributing Members pursuant to Sections 7.2(a) and 7.2(b) and this Section 7.4 are the only applicable Distributions) equal to the Company IRR. To the extent that there are insufficient funds in the Company to pay such Additional Return
amount, then the Non-Funding Member shall return, immediately, any Distributions previously made to it by the Company so that the Additional Return will be able to be paid in full to the Contributing Members. No such repayment shall constitute a
Capital Contribution by the Non-Funding Member (but shall constitute a capital contribution for Capital Account and income tax purposes). 
 Section 7.5 Lookback on Excess Promote Distributions. Notwithstanding the provisions of Section 7.2 above, but subject to the terms of Section 7.4 above, from and after the time that any Promote Distributions have been made
to the MHI Member, then each time prior to the distribution of any cash and property of the Company made available for Distributions, and after the establishment of an amount for reasonable reserves for remaining Company obligations, debts and
liabilities as reasonably estimated by the Managing Member and consented to by the Carlyle Member (which consent shall not be unreasonably withheld), the Company shall make a good faith determination of whether or not such cash and other property
available for Distributions and the net liquidation value of any remaining Property or other assets of the Company (the “Final Material CP”), if distributed to the Members as Distributions in accordance with Section 7.2 (after
taking into account the provisions of Section 7.4) would be enough to provide, on a collective basis with all prior Distributions received pursuant to Section 7.2(c), 7.3(d) or 7.2(e) with respect to any and all Series, and taking into
account all Owner Capital Contributions to and Owner Distributions by the Owner, the Carlyle Member an Internal Rate of Return of fifteen percent (15%) on all of its Capital Contributions (the “Carlyle Base Return”). If it is
determined by the Company that such Final Material CP would not be sufficient to provide the Carlyle Member with the Carlyle Base Return if distributed in accordance with Section 7.2 (after taking into account the provisions of
Section 7.4), then notwithstanding the terms of Section 7.2, all amounts then and thereafter available for distribution to the MHI Member as Distributions or otherwise by the Company shall be paid in the following priority:
(i) first to the Carlyle Member as Distributions under this Section 7.5 (the “Carlyle Makeup Distribution”) until either (A) an amount equal to the sum of all Promote Distributions previously received by the
Managing Member has been received by the Carlyle Member as Distributions pursuant to this Section 7.5 or (B) the Carlyle Member has received the Carlyle Base Return, and (ii) thereafter to the Members in accordance with
Section 7.2 as Distributions thereunder subject to the other terms of this Article 7. If the amount of Distributions required to 

  

 36 

 
fully pay the Carlyle Makeup Distribution is greater than the Final Material CP, then the MHI Member shall return, immediately, any and all Promote
Distributions previously made to it by the Company to the extent required to fully pay the Carlyle Makeup Distribution to the Carlyle Member. No such repayment shall constitute a Capital Contribution by the Managing Member (but shall constitute a
capital contribution for Capital Account and income tax purposes). 
 Section 7.6 Intentionally Omitted. 
 Section 7.7 Incorrect Distributions. Any distribution or payment of money by or on behalf of the Company to any Member which is in excess of the
amount required or permitted under the terms of this Agreement shall be held by the recipient of such funds as trust funds for the benefit of the Person who would have been entitled to such funds if all Distributions or payments of money by or on
behalf of the Company to each of the Members had been made strictly in accordance with the terms of this Agreement. No claim can be made under this Section 7.7 after three (3) years from the date of the final liquidation and termination of
the Company. The terms of this Section 7.7 are solely for the benefit of any Member of the Company and not for any other Person, including, without limitation, any creditor of the Company. 
  

 37 

 ARTICLE 8 
 CAPITAL ACCOUNTS, ALLOCATIONS, AND TAX MATTERS 
 Section 8.1 Capital Accounts and Series
Capital Accounts. 
 (a) Establishment and Maintenance. A separate capital account (“Capital
Account”) will be maintained separately for each Member. In addition, a separate capital account (a “Series Capital Account”) will be maintained separately for each Member of each Series. The Capital Account and Series
Capital Account of each Member will be determined and adjusted as follows: 
 (1) Each Member’s Capital Account and
applicable Series Capital Account will be credited with the Member’s Capital Contributions for such Series, the Member’s distributive share of Series Profits, any items in the nature of income or gain that are specially allocated to the
Member under Section 8.3(b) for such Series, and the amount of any Company liabilities that are assumed by the Member or secured by any Company property distributed to the Member with respect to such Series. 
 (2) Each Member’s Capital Account and applicable Series Capital Account will be debited with the amount of cash and the Gross Asset
Value of any Company property distributed to the Member with respect to such Series under any provision of this Agreement, the Member’s distributive share of Series Losses, any items in the nature of deduction or loss that are specially
allocated to the Member under Section 8.3(b) for such Series, and the amount of any liabilities of the Member assumed by the Company or which are secured by any property contributed by the Member to the Company with respect to such Series.

 (3) If any interest in the Company is transferred in accordance with the terms of this Agreement, the transferee will
succeed to the Capital Account and the Series Capital Account of the transferor to the extent it relates to the transferred interest. 
 (b) Modifications by the Carlyle Member. The provisions of this Section 8.1 and the other provisions of this Agreement relating to the maintenance of Capital Accounts have been included in this Agreement
to comply with Section 704(b) of the Code and the Regulations promulgated thereunder and will be interpreted and applied in a manner consistent with those provisions. The Carlyle Member may modify the manner in which the Capital Accounts are
maintained under this Section 8.1 to comply with those provisions, as well as upon the occurrence of events that might otherwise cause this Agreement not to comply with those provisions; however, without the consent of the MHI Member (not to be
unreasonably withheld or delayed), the Carlyle Member may not make any modification to the way Capital Accounts are maintained if such modification would have the effect of changing the amount of distributions to which any Member would be entitled
during the operation, or upon liquidation, of the Company. 
 Section 8.2 Adjustment of Gross Asset Value. Gross Asset Value, with
respect to any asset, is the adjusted basis of that asset for federal income tax purposes, except as follows: 
  

 38 

 (a) The initial Gross Asset Value of any asset contributed (or deemed contributed under
Code Sections 704(b) and 752 and the Regulations promulgated thereunder) by a Member to the Company will be the fair market value of the asset on the date of the contribution, as reasonably determined by the Carlyle Member. 
 (b) The Gross Asset Values of all Company assets will be adjusted, if the Carlyle Member determines that it is necessary or appropriate to
do so, to equal the respective fair market values of the assets, as determined by the Carlyle Member, as of (1) the acquisition of an additional interest in the Company by any new or existing partner for more than a de minimis capital
contribution, (2) the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for an interest in the Company as determined by the Carlyle Member, and (3) the liquidation of the Company
or any Series within the meaning of Regulations Section 1.704-1(b)(2)(iv)(f)(5). 
 (c) The Gross Asset Value of any
Company asset distributed to any Member will be the gross fair market value of the asset on the date of distribution as reasonably determined by the Carlyle Member. 
 (d) The Gross Asset Values of Company assets will be increased or decreased to reflect any adjustment to the adjusted basis of the assets
under Code Section 734(b) or 743(b), but only to the extent that the adjustment is taken into account in determining Capital Accounts under Regulations Section 1.704-1(b)(2)(iv)(m), provided the Gross Asset Values will not be adjusted
under this Section 8.2(d) to the extent that the Carlyle Member determines that an adjustment under Section 8.2(b) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment under this
Section 8.2(d). 
 (e) After the Gross Asset Value of any asset has been determined or adjusted under
Section 8.2(a), 8.2(b) or 8.2(d), Gross Asset Value will be adjusted by the Depreciation taken into account with respect to the asset for purposes of computing Profits of Losses. 
 Section 8.3 Profits, Losses and Distributive Shares of Tax Items. 
 (a) Profits and Losses. Except as otherwise provided in Section 8.3(b), Profits and Losses of each Series for any taxable year
(and any item of income, gain, loss or deduction thereof) shall be calculated separately for each Series and allocated to the Members in a manner such that, as nearly as possible, immediately after such allocation each Member’s balance in its
Series Capital Accounts equals the amount such Member would be entitled to receive if the Company and each such Series were dissolved as of such date, its affairs wound up and its assets distributed to the Members pursuant to Section 7.2 (but
subject to Sections 7.4, 7.5 and 7.7), taking into account the Member’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain for each Series before the hypothetical sale. Immediately prior to such hypothetical dissolution
of the Company and each Series, each asset of the Company and each Series shall be deemed to have a value equal to its Gross Asset Value as of such date. 
 (b) Special Allocations. The following special allocations will be made for each Series in the following order and priority before allocations of Profits and Losses: 
  

 39 

 (1) Partnership Minimum Gain Chargeback. If there is a net decrease in Partnership
Minimum Gain during any taxable year or other period for which allocations are made, before any other allocation under this Agreement, each Member will be specially allocated items of Company income and gain for that period (and, if necessary,
subsequent periods) in proportion to, and to the extent of, an amount equal to such Member’s share of the net decrease in Partnership Minimum Gain during such year determined in accordance with Regulations Section 1.704-2(g)(2). The items
to be allocated will be determined in accordance with Regulations Section 1.704-2(g). This Section 8.3(b)(1) is intended to comply with the Partnership Minimum Gain chargeback requirements of the Regulations, will be interpreted
consistently with the Regulations and will be subject to all exceptions provided therein. 
 (2) Partner Nonrecourse Debt
Minimum Gain Chargeback. Notwithstanding any other provision of this Section 8.3, if there is a net decrease in Partner Nonrecourse Debt Minimum Gain with respect to a Partner Nonrecourse Debt during any taxable year or other period for
which allocations are made, any Member with a share of such Partner Nonrecourse Debt Minimum Gain (determined under regulations Section 1.704-2(i)(5)) as of the beginning of the year will be specially allocated items of Company income and gain
for that period (and, if necessary, subsequent periods) in an amount equal to such Member’s share of the net decrease in the Partner Nonrecourse Debt Minimum Gain during such year determined in accordance with Regulations
Section 1.704-2(i)(4). The items to be allocated will be determined in accordance with Regulations Section 1.704-2(i)(4). This Section 8.3(b)(2) is intended to comply with the Partner Nonrecourse Debt Minimum gain chargeback
requirements of the Regulations, will be interpreted consistently with the Regulations and will be subject to all exceptions provided therein. 
 (3) Qualified Income Offset. A Member who unexpectedly receives any adjustment, allocation or distribution described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6) will be specially allocated
items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of the Member’s Series Capital Account as quickly as possible. 
 (4) Nonrecourse Deductions. Nonrecourse Deductions attributable to a Series for any taxable year or other period for which
allocations are made will be allocated among the Members in proportion to their respective Capital Contribution Ratios with respect to that Series. 
 (5) Partner Nonrecourse Deductions. Notwithstanding anything to the contrary in this Agreement, any Partner Nonrecourse Deductions with respect to any Series for any taxable year or other period for which
allocations are made will be allocated to the Member who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in accordance with Regulations
Section 1.704-2(i). 
 (6) Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Company asset under Code Sections 734(b) or 743(b) is required to be taken in account in determining Capital Accounts with respect to any Series under Regulations Section 1.704-1(b)(2)(iv)(m), the amount of the adjustment to such
Capital Accounts will be 

  

 40 

 
treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis), and such items of gain or
loss will be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts and applicable Series Capital Accounts are required to be adjusted under Regulations Section 1.704-1(b)(2)(iv)(m).

 (7) Curative Allocations. The allocations set forth in this Section 8.3(b) (the “Regulatory
Allocations”) are intended to comply with certain requirements of Regulations Sections 1.704-1(b) and 1.704-2. The Regulatory Allocations with respect to a Series may effect results which would be inconsistent with the manner in which the
Members intend to divide Company distributions. Accordingly, the Carlyle Member is authorized to divide other allocations of Profits, Losses, and other items with respect to such Series among the Members, to the extent that such items exist, so that
the net amount of the Regulatory Allocations and the special allocations to each Member with respect to such Series is zero. The Carlyle Member will have discretion to accomplish this result in any reasonable manner that is consistent with Code
Section 704 and the related Regulations. 
 (c) Tax Allocations, Code Section 704(c). For federal, state and
local income tax purposes, Company income, gain, loss, deduction or expense (or any item thereof) with respect to the Company and each Series for each taxable year shall be allocated to and among the Members to reflect the allocations made pursuant
to the provisions of this Section 8.3 for such taxable year. In accordance with Code Section 704(c) and the related Regulations, income, gain, loss and deduction (as determined for income tax purposes) with respect to any property
contributed to the capital of the Company or any Series will be allocated, solely for income tax purposes, among the Members so as to take account of any variation between the adjusted basis to the Company of the property for federal income tax
purposes and the initial Gross Asset Value of the property (computed in accordance with Section 8.2). If the Gross Asset Value of any Company asset is adjusted under Section 8.2(b), subsequent allocations of income, gain, loss and
deduction with respect to that asset will take account of any variation between the adjusted basis of the asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the related
Regulations. Any elections or other decisions relating to allocations under this Section 8.3(c) will be made in any manner that the Carlyle Member, with the consent of the MHI Member (not to be unreasonably withheld or delayed), determines
reasonably reflects the purpose and intention of this Agreement. Allocations under this Section 8.3(d) are solely for purposes of federal, state and local taxes and will not affect, or in any way be taken into account in computing, any
Member’s Capital Account, Series Capital Account, or share of Profits, Losses or other items or distributions under any provision of this Agreement. 
 (d) Excess Nonrecourse Liabilities. The Company shall allocate all of its “excess nonrecourse liabilities” (within the meaning of Regulations Section 1.752-3(a)(3)) of each Series in proportion
to each Member’s Capital Contribution Ratio for such Series. 
 (e) Members shall be bound by the provisions of this
Section 8.3 in reporting their shares of Company income and loss for income tax purposes. 
 Section 8.4 Tax Filings. If the
Carlyle Member and the MHI Member mutually determine that it is appropriate to do so, a separate federal income tax return shall be prepared 

  

 41 

 
annually for one or more Series with such Series being treated as separate partnerships for tax purposes, and with special allocations of Profits and Losses
and items thereof being made and reported for each Series (and the Members thereof) on its separate tax return. Any Borrower Series shall be charged on its separate return (if any) with the expense of any amounts due any Creditor Series, and the
Creditor Series shall report such payment in the appropriate manner on its separate tax return (if any). No Series shall elect to be taxable as a corporation for federal income tax purposes. The Managing Member shall cause the accountants for the
Company to prepare and file all necessary federal and state income tax returns and other tax filings for the Company and each Series, including making the elections described in Section 8.5; provided, however, that the Managing Member
shall give the Carlyle Member a reasonable period of time to review and approve of any such tax return before it is filed or delinquent. Each Member shall furnish to the Managing Member all pertinent information in its possession relating to Company
operations that is necessary to enable such tax returns to be prepared and filed. 
 Section 8.5 Tax Elections. The following
elections shall be made on the appropriate returns of the Company: 
 (a) to adopt the calendar year as the Company’s
fiscal year; 
 (b) to adopt the accrual method of accounting and to keep the Company’s books and records on the
income-tax method; 
 (c) if there is a distribution of Company property as described in Section 734 of the Code or if
there is a transfer of a Company interest as described in Section 743 of the Code, upon written request of any Member, to elect, pursuant to Section 754 of the Code, to adjust the basis of Company properties; and 
 (d) to elect to amortize the organizational expenses of the Company ratably over the period permitted by Section 709(b) of the Code.

 No election shall be made by the Company or any Member to be excluded from the application of the provisions of subchapter K of chapter 1
of subtitle A of the Code or any similar provisions of applicable state laws. 
 Section 8.6 Tax Matters Partner. The Carlyle Member
shall be the “tax matters partner” of the Company and each Series pursuant to Section 6231(a)(7) of the Code. As tax matters partner, such Member shall take such action as may be necessary to cause each other Member to become a
“notice partner” within the meaning of Section 6223 of the Code. Such Member shall inform each other Member of all significant matters that may come to its attention in its capacity as tax matters partner by giving notice thereof
within ten days after becoming aware thereof and, within such time, shall forward to each other Member copies of all significant written communications it may receive in such capacity. Such Member shall not take any action contemplated by Sections
6222 through 6232 of the Code, other than executing a consent to extend the statute of limitations, without the consent of the Managing Member. This provision is not intended to authorize such Member to take any action left to the determination of
an individual Member under Sections 6222 through 6232 of the Code. 
  

 42 

 Section 8.7 Allocations on Transfer of Interests. All items of income, gain, loss, deduction, and
credit allocable to any interest in the Company that may have been transferred shall be allocated between the transferor and the transferee based upon that portion of the calendar year during which each was recognized as owning such interest,
without regard to the results of Company operations during any particular portion of such calendar year and without regard to whether cash distributions were made to the transferor or the transferee during such calendar year; however, such
allocation shall be made in accordance with a method permissible under Section 706 of the Code and the Regulations thereunder. 
 ARTICLE 9 
 DISPOSITION OF INTERESTS 
 Section 9.1 General Restriction. Except as otherwise permitted in this Agreement, any direct or indirect transfer, assignment or other disposition
(voluntarily, involuntarily or by operation of law) of all or any portion of any direct or indirect Membership Interest, or any pledging, mortgaging, hypothecating, or granting of a security interest in, or other encumbrance (an
“Encumbrance”) on, all or any portion of any direct or indirect Membership Interest (each of the foregoing, a “Transfer”) is prohibited. Any attempted Transfer of all or any portion of a Membership Interest, other
than in strict accordance with Section 9.2 below, shall be void. A Person to whom a Membership Interest is Transferred may be admitted to the Company as a Member only with the consent of all the other Members, which may be given or withheld in
the other Member’s sole discretion. In connection with any Transfer of a Membership Interest or any portion thereof, and any admission of an assignee as a Member, the Member making such Transfer and the assignee shall furnish the other Member
with such documents regarding the Transfer as the other Member may reasonably request (in form and substance reasonably satisfactory to the other Member), including a copy of the Transfer instrument, a ratification by the assignee of this Agreement
(if the assignee is to be admitted as a Member), a legal opinion that the Transfer complies with applicable federal and state securities laws and a good faith determination by the Member making the transfer that the Transfer will not result in the
Company’s termination under Section 708 of the Code. In the event the Transfer would result in the Company’s termination under Section 708 of the code, as determined by the Member making the Transfer, then the consent of the
non-transferring Member is required to effect the Transfer. For purposes hereof, a Transfer shall be deemed to have occurred with respect to a Membership Interest upon any direct or indirect transfer, assignment or other disposition (voluntary,
involuntary, or by operation of law) of any interest in, or on, a Membership Interest. Notwithstanding the provisions of Sections 9.2 and 9.3 below, no Member may Transfer its Membership Interests in violation of any Financing. 
 Section 9.2 Permitted Transfers. 
 (a) Permitted Transfers; Third Parties. A Transfer with respect to all or any portion of the Membership Interest of the Carlyle Member is permitted, so long as a Carlyle Realty Affiliate retains direct or
indirect management authority over such Membership Interest. A Transfer with respect to all or any portion of the Membership Interest of the MHI Member is permitted, so long as such Transfer is to an MHI Permitted Transferee, and after any such
Transfer an Affiliate of the MHI Member retains direct or indirect management authority over such Transferee. 
  

 43 

 Section 9.3 Creation of Additional Membership Interests. Additional Membership Interests may be
created and issued to existing Members or to other Persons, and such other Persons may be admitted to the Company as Members, only (a) with the approval of the Carlyle Member and on such terms and conditions as the Carlyle Member may determine
in its sole discretion at the time of admission, provided that a Default Trigger Event has occurred and provided, further, that (1) all of the existing Membership Interests of all of the existing Members suffer substantially the same economic
effect from such admission (e.g., the terms of this Agreement among the existing Members is not altered), and (2) the Additional Membership Interests are issued to a Person who is not a Carlyle Realty Affiliate and without any commission, fee
or other material payment or compensation being paid to any Carlyle Realty Affiliate, or (b) with the approval of the Carlyle Member and the MHI Member, on such terms and conditions as the Carlyle Member and the MHI Member may determine at the
time of admission. If the Carlyle Member exercises its rights under clause (a) of the prior sentence, the Carlyle Member may reflect the admission of any new Members or the creation of any new class or group of Member in an amendment to this
Agreement which shall be valid if executed only by the Carlyle Member. 
 Section 9.4 Resignation. A Member may not resign or withdraw
from the Company without the consent of all of the other Members. 
 ARTICLE 10 
 WITHDRAWAL, DISSOLUTION, LIQUIDATION, AND TERMINATION 
 Section 10.1
Dissolution, Liquidation, and Termination Generally. The Company and all Series, or the applicable Series, shall be dissolved upon the first to occur of any of the following: 
 (a) the sale or disposition of all of the assets of the Company or such Series and the receipt, in cash, of all consideration therefor;

 (b) the determination of the Carlyle Member and the Managing Member to dissolve the Company or such Series; and 

(c) the occurrence of any event which, as a matter of law, requires that the Company or such Series be dissolved. 
 Section 10.2 Liquidation and Termination. Upon dissolution of the Company or a Series, the Carlyle Member shall act as liquidator or may appoint
one or more other Persons as liquidator. The liquidator shall proceed diligently to wind up the affairs of the Company or such Series and make final distributions as provided herein. The costs of liquidation shall be a Company expense. Until final
distribution, the liquidator shall continue to operate the properties with all of the power and authority of the Managing Member and the Carlyle Member, as applicable, hereunder. The steps to be accomplished by the liquidator are as follows:

 (a) as promptly as possible after dissolution and again after final liquidation, the liquidator shall cause a proper
accounting to be made by a firm of certified public accountants of the Company’s or Series’ assets, liabilities, and operations through the last day of 

  

 44 

 
the calendar month in which the dissolution shall occur or the final liquidation shall be completed, as applicable; 
 (b) the liquidator shall pay all of the debts and liabilities of the Company or Series or otherwise make adequate provision therefor
(including the establishment of a cash escrow fund for contingent liabilities in such amount and for such term as the liquidator may reasonably determine); and 
 (c) all remaining assets of the Company or Series shall be distributed to the Members as follows: 
 (1) the liquidator may sell any or all property of the Company using reasonable efforts to maximize the proceeds realized from any such
sale and the sum of (A) any resulting gain or loss from each sale plus (B) the fair market value of such property that has not been sold shall be determined and all allocations of any resulting income, gain or loss shall be made under
Section 8.3; and 
 (2) such property shall be distributed to the Members as provided in Article 7. 
 Section 10.3 Deficit Capital Accounts. No Member shall be required to pay to the Company, to any other Member or to any third party any deficit
balance which may exist from time to time in the Member’s Capital Account or Series Capital Account. 
 Section 10.4 Cancellation of
Certificate. On completion of the distribution of Company assets, the liquidator (or such other person as the Act may require or permit) shall file a Certificate of Cancellation with the Secretary of State of Delaware, cancel any other filings
made pursuant to Section 2.4 and take such other actions as may be necessary to terminate the existence of the Company. 
 ARTICLE 11

 FINANCING 
 Section 11.1 Financing. Project loans are not anticipated to be entered into by the Company. If Project Loans are needed, one or more Financings will be provided by one or more lenders to the Company or Ventures, as selected by the
Carlyle Member, in accordance with Section 4.1(c) above. The Carlyle Member shall use good faith efforts to seek Project Loans on the terms described on Schedule 11.1 with respect to any given Project and on such other market based terms
as are acceptable to the Carlyle Member, as needed. The Carlyle Member may in its sole discretion obtain a credit line or similar Financing for the Company on terms acceptable to the Carlyle Member; provided, however, that any Project Loan or
Financing that is not consistent with the terms described on Schedule 11.1 shall be entered into by the Company or a Venture only with the prior approval of both the MHI Member and the Carlyle Member. Schedule 11.1 may be modified or
amended only with the written approval of both the Carlyle Member and the MHI Member. The Managing Member shall deliver to the Carlyle Member all material notices, correspondence, and other information which the Managing Member has delivered to or
received from any proposed, selected or actual lender for a Financing, and the Members shall otherwise 

  

 45 

 
cooperate in all respects with the efforts of the Carlyle Member and/or the Managing Member to secure each Financing. 
 Section 11.2 Recourse Liability. To the extent that any Credit Support is required, in order to obtain or enhance (i) any debt, liability or
obligation of the Company or any one or more of its Ventures that has been approved by the Company in accordance with the terms of this Agreement or (ii) any Financing, the Member such Credit Support shall be subject to the approval of the Member
being asked to provide such Credit Support. Neither the Managing Member nor any Affiliate of the Managing Member shall be paid any fee or be entitled to any consideration or payment for providing such Credit Support, nor shall any payment, cost or
liability incurred under any Credit Support be given capital contribution treatment under this Agreement or otherwise by the Company or give rise to a claim against the Company, except to the extent the liability incurred under such Credit Support
is either (i) covered by an indemnity given by the Company or the Carlyle Member or Carlyle Indemnitors under the terms of this Agreement or (ii) incurred with the joint approval of the Members with the stated understanding that such approval would
give rise to such Credit Support liability; provided that all Environmental Claims shall be dealt with as provided below in this Section 11.2. Except as expressly provided above in this Section 11.2, the Company is not authorized to make any payment
or incur any additional costs or expenses in order to obtain or satisfy any Credit Support required as a condition or term of any Financing or of any debt, liability or obligation of the Company, without the express written approval of the Carlyle
Member. Except as contemplated on Schedule 11.1, in no event is the Carlyle Member, the MHI Member or any Affiliate thereof be required to provide any Credit Support or other indemnity or guaranty, or incur any personal liability, for the
benefit of the Company and/or any Venture in connection with the Company’s business and/or any Financing. Notwithstanding anything to the contrary in this Agreement, all matters and all liabilities, costs and expenses related thereto that would
constitute a potential claim under any environmental indemnity that is part of any Credit Support provided by any of the Members or their Affiliates (each an “Environmental Claim”) shall be (i) borne one hundred percent (100%) by
the Managing Member and its Affiliates to the extent such matter arose as a result of the affirmative act or bad-faith or negligent failure to act of the Managing Member or any of its Affiliates, (ii) borne one hundred percent (100%) by the Carlyle
Member and their Affiliates (including the Carlyle Indemnitors) to the extent such matter arose as a result of the affirmative act or, from and after the occurrence of a Default Trigger Event, bad-faith or negligent failure to act of the Carlyle
Member or any of its Affiliates, or (iii) shared fifty percent (50%) by the Carlyle Member and fifty percent (50%) by the Managing Member and its Affiliates with respect to all Environmental Claims not covered by the preceding clause (i) or (ii).

 Section 11.3 Environmental Insurance. The Company may purchase and maintain an environmental liability insurance policy on any
Property for the benefit of the Company if and to the extent approved by the Carlyle Member. 
 Section 11.4 Bad Acts Indemnity.
Notwithstanding the foregoing provisions of this Article 11, the Managing Member and the Carlyle Member shall each be solely responsible for any liabilities that arise under any Credit Support to the extent due to their or any of their
Affiliate’s own gross negligence, recklessness, bad faith or willful misconduct (including any affirmative act taken with the knowledge that it would cause liability under any outstanding 

  

 46 

 
Credit Support), and each of the MHI Member and its Affiliates and the Carlyle Member and its Affiliates shall indemnify, defend and hold harmless the other
from any liabilities arising under any Credit Support given by such Member or any of its Affiliates to the extent due to the gross negligence, recklessness, bad faith or willful misconduct of the indemnifying party or any of its Affiliates.

 Section 11.5 Cooperation; Securitized Debt. Each of the Members acknowledges that a Lender may securitize, sell or otherwise
dispose of all or any portion of the Financing (each a “Securitization”), and each of the Members agrees to cooperate, and to cause its Affiliates to cooperate, in all reasonable respects with such Lender in connection with any such
Securitization and/or structuring of such Financing to accommodate a potential Securitization (provided such changes do not increase or decrease the rights and obligations of any Member and the economic terms of this Agreement), including, without
limitation, (i) executing modifications to the Certificate and this Agreement and the organizational documents of the Managing Member or any Venture so that the Company or such Venture and the Managing Member will qualify as bankruptcy-remote
entities and other documentation changes of a similar nature, (ii) creating such Ventures and special-purpose Affiliates as may be reasonably required to comply with other industry standard requirements in connection with Securitizations, and
(iii) causing the Company and its Ventures to comply with other industry standard requirements in connection with Securitization. 
 ARTICLE 12 
 MISCELLANEOUS PROVISIONS 
 Section 12.1 Notices. All notices provided for or permitted to be given pursuant to this Agreement must be in writing and shall be given or served
by (a) depositing the same in the United States mail addressed to the party to be notified, postpaid and certified with return receipt requested, (b) by delivering such notice in person to such party, or (c) by Federal Express, United
Parcel Service or other nationally recognized overnight courier delivery service. All notices are to be sent to or made at the addresses set forth below: 
 In the case of notices directed to the Carlyle Member: 
 The Carlyle Group 
 1001 Pennsylvania Avenue, N.W. 
 Washington, D.C. 20004-2505 
 Attention: Gary Block and Hayden Jones 
 with a copy to: 
 Katten Muchin Rosenman LLP

 1025 Thomas Jefferson Street, N.W. 
 Suite 700 East Lobby 
 Washington, D.C. 20007 
 Attention: Bruce Kosub and John Muir 
 and in the case of notices directed to the MHI Member: 
  

 47 

 MHI Hospitality Corporation 
 4801 Courthouse Street, Suite 201 
 Williamsburg, Virginia 23188 
 Attention: Mr. Andrew Sims 
 with a copy to: 
 Baker & McKenzie

 815 Connecticut Avenue, N.W. 
 Washington, D.C. 20006 
 Attention: Thomas J. Egan, Jr. 
 All notices given in accordance with this Agreement shall be effective upon delivery at the address of the addressee. By giving written notice thereof,
each Member shall have the right from time to time to change its address pursuant hereto. 
 Section 12.2 Governing Law. This
Agreement and the obligations of the Members hereunder shall be construed and enforced in accordance with the laws of the State of Delaware, excluding any conflicts of law rule or principle which might refer such construction to the laws of another
state or country. Each Member submits to the jurisdiction of the state and federal courts in the State of Delaware. 
 Section 12.3 Entire
Agreement; Amendments. This Agreement, the Program Agreement and their respective exhibits constitute the entire agreement between the Members relative to the formation of the Company. Except as otherwise provided herein, no amendments to this
Agreement shall be binding upon any Member unless set forth in a document duly executed by such Member. 
 Section 12.4 Waiver. No
consent or waiver, express or implied, by any Member of any breach or default by any other Member in the performance by the other Member of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or
default in the performance by such other Member of the same or any other obligation hereunder. Failure on the part of any Member to complain of any act or to declare any other Member in default, irrespective of how long such failure continues, shall
not constitute a waiver of rights hereunder. 
 Section 12.5 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstances shall be invalid or unenforceable to any extent, and such invalidity or unenforceability does not destroy the basis of the bargain between the parties, then the remainder of this Agreement and the application
of such provisions to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. 
 Section 12.6 Ownership of Property and Right of Partition. A Member’s interest in the Company shall be personal property for all purposes. No Member shall have any right to partition the property owned by the Company.

  

 48 

 Section 12.7 Captions; References. Pronouns, wherever used herein, and of whatever gender, shall
include natural persons and corporations and associations of every kind and character, and the singular shall include the plural wherever and as often as may be appropriate. Article and section headings are for convenience of reference and shall not
affect the construction or interpretation of this Agreement. Whenever the terms “hereof”, “hereby”, “herein”, or words of similar import are used in this Agreement they shall be construed as referring to this Agreement
in its entirety rather than to a particular section or provision, unless the context specifically indicates to the contrary. Whenever the word “including” is used herein, it shall be construed to mean including without limitation. Any
reference to a particular “Article” or a “Section” shall be construed as referring to the indicated article or section of this Agreement unless the context indicates to the contrary. 
 Section 12.8 Involvement of Members in Certain Proceedings. Should any Member become involved in legal proceedings unrelated to the Company’s
business in which the Company is required to provide books, records, an accounting, or other information, then such Member shall indemnify the Company from all expenses incurred in conjunction therewith. 
 Section 12.9 Interest. No amount charged as interest on loans hereunder shall exceed the maximum rate from time to time allowed by applicable law.

 Section 12.10 Costs of Enforcement; Jury Trial Waiver. Each party shall bear and shall be responsible for its own legal costs and
expenses in connection with any action or proceeding brought by any party against another under this Agreement. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH MEMBER HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING BROUGHT BY ANY
OTHER MEMBER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
 Section 12.11 Counterparts. This Agreement may be executed in multiple counterparts, with signature pages signed by each party affixed to
constitute a fully executed instrument. 
 Section 12.12 Publicity. Upon the acquisition or disposition of any Project, each Member,
with the approval of the Carlyle Member, may issue press releases, advertisements and other promotional materials describing in general terms or in detail as to its participation in such transaction. All references to any of the Carlyle Members or
their Affiliates in any press release, advertisement or promotional material issued by any Member must be approved in advance of issuance by the Carlyle Member. All references to the MHI Member or its Affiliates in any press release, advertisement
or promotional material issued by the Carlyle Member must be approved in advance of issuance by the MHI Member. Notwithstanding the foregoing, the MHI Member and its Affiliates shall be entitled to make such press releases and filings as may be
required under applicable law, regulation or stock exchange listing requirements (the “Listing Standards”). 
 Section 12.13
Confidentiality. 
 (a) Generally. The terms of this Agreement, its subject matter, the identity of 

  

 49 

 
any Person with whom the Company may be holding discussions with respect to any disposition, acquisition, financing or other transaction, and all other
business, financial or other information relating directly to any Project or Venture or the conduct of the business and affairs of the Company or the relative or absolute rights or interests of any of the Members that has not been publicly disclosed
by any authorized Person (collectively, the “Company Information”) is confidential and proprietary information of the Company the disclosure of which would cause irreparable harm to the Company and the Members. Accordingly, each
Member represents that it has not and agrees that, unless authorized by all Members, it will not and will direct its partners, members, shareholders, agents, advisors and affiliates not to, disclose to any Person any Company Information or confirm
any statement made by third Persons regarding Company Information until the Company has publicly disclosed the Company Information subject to such disclosure requirements as may apply to a Member or its Affiliates under any applicable law,
regulations or Listing Standards. 
 (b) Legal Proceedings. Each Member agrees not to disclose any Company Information
to any Person (other than a Person agreeing to maintain all Company Information in strict confidence, a judge or magistrate) in any action, suit or proceeding relating to or arising out of this Agreement or otherwise, and to keep confidential all
documents (including without limitation responses to discovery requests) containing any Company Information subject to such disclosure requirements as may apply to a Member or its Affiliates under applicable law, regulations or Listing Standards. If
a Member receives a request to disclose any Company Information under the terms of a valid and effective order issued by a court or government agency, the Member may disclose the Company Information to the extent required if the Member as promptly
as practicable (i) notifies the other Member(s) of the existence, terms and conditions of the order, (ii) consults in good faith with the Members on the advisability of taking legally available steps to resist or to narrow the order, and
(iii) if disclosure of the Company Information is required, exercises its best efforts to reliable assurance that confidential treatment will be accorded to the portion of the disclosed Company Information that the Members collectively agree
should be protected. The cost (including without limitation attorneys’ fees and expenses) of obtaining a protective order covering Company Information designated by the Members shall be a cost of the Company. 
 (c) Exceptions. Notwithstanding any other provision of this Section 12.13, a Member may disclose Company Information to its
agents, advisors and affiliates to the extent necessary to conduct its business and in addition, may disclose Company Information required to reflect accurately its interests in the Company to Persons with whom it deals and who have a legitimate
interest in the matter and to Persons with whom it may be in contact in the ordinary course of its business or pursuant to applicable law, regulation or Listing Standards. Each Member may also disclose Company Information to its investors and
potential investors, including investors and potential investors of affiliated or related Persons, by way of written materials, investor conferences, written or oral presentations and the like. In the case of any disclosure of Company Information
pursuant to this Section 12.13(c), the Member disclosing such Company Information shall indicate to the Persons to whom such disclosure is being made the confidential nature of such Company Information. 
 (d) Use of the Carlyle Name. In addition to the foregoing, each Member agrees that, unless authorized in advance by the Carlyle
Member, it will not, and will direct its 

  

 50 

 
partners, members, shareholders, agents, advisors and affiliates not to, make use of the “Carlyle” name (and/or any derivative thereof) in any
press release, any newspaper or other media publication interview, any marketing materials or any other information or materials delivered to or for media publication or use in regard to the Company or any Venture or Project, except as may be
required under applicable law, regulation or Listing Standards. 
 [Signature page follows.] 
  

 51 

 SIGNATURE PAGE OF THE LIMITED LIABILITY COMPANY 
 AGREEMENT OF MHI/CARLYLE HOTEL LESSEE PROGRAM I, L.L.C. 
 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 
  

									
	CARLYLE MEMBER:	 		 	CRP/MHI HOLDINGS, L.L.C.,
		 		 	a Delaware limited liability company
					
		 		 		 	By	 	/s/ Gary E. Block
		 		 		 		 	Gary E. Block, Vice President
			
	MHI MEMBER:	 		 	MHI HOSPITALITY TRS II, LLC,
		 		 	a Delaware limited liability company
					
		 		 		 	By	 	/s/ Andrew M. Sims
		 		 		 	its	 	Managing Member

  

 52 

 Index of Exhibits and Schedules 
  

			
	Joinder	  	Joinder and Guaranty of MHI Obligations
	Exhibit A	  	Right of First Offer Provisions
	Schedule 1	  	Capital Sharing Ratios for Each Series
	Schedule 11.1	  	Agreed Financing Terms

  

 53 

 JOINDER AND GUARANTY OF 
 MHI OBLIGATIONS 
 The undersigned (each a “Guarantor”) joins in execution of
this Agreement solely to guarantee to the Company and to the Carlyle Member the prompt and complete payment and performance of all debts and obligations of the MHI Member under Section 7.4 and/or Section 7.5 of the Agreement. The
obligations of Guarantor under this paragraph shall be (i) subject to all of the terms and provisions of Article 12 of the Agreement as if Guarantor is a Member in addition to the Members, (ii) primary and not secondary and
(iii) irrevocable. The Company and the Carlyle Member shall have no obligation to institute any action or proceeding, or exhaust any remedies and recourses against the MHI Member or any other party as a condition of bringing any action against
the Guarantor under this guaranty. Guarantor hereby waives any and all guarantor and surety defenses to the fullest extent allowed by applicable law. 
  

			
	MHI HOSPITALITY CORPORATION
		
	By:	 	/s/ Andrew M. Sims
	Name:	 	Andrew M. Sims
	Title:	 	Chief Executive Officer

 SCHEDULE 1 
 SCHEDULE OF COST SHARING RATIOS FOR EACH SERIES 
 SERIES 1 – [Name of Project] 
 Capital Sharing Ratios: 
  

					
	Carlyle Member	  	–    	  	        %
			
	MHI Member	  	–    	  	        %

 SCHEDULE 11.1 
 AGREED FINANCING TERMS 
  

			
	Rate:	  	Floating rate (LIBOR based).
		
	Term:	  	A minimum term of sixty (60) months.
		
	Proceeds:	  	Loan-to-value (“LTV”) of between 65% and 76% (anticipated average LTV of 70%).
		
	Recourse:	  	Non-recourse, subject to traditional guarantees/indemnities for “bad boy acts” and environmental matters (i.e. Credit Support).Exhibit 10.26(c)

 Exhibit 10.26(c) 
  

 PROGRAM AGREEMENT 
 FOR 
 MHI/CARLYLE HOTEL INVESTMENT PROGRAM I, L.L.C. 
 AND 
 MHI/CARLYLE HOTEL LESSEE PROGRAM I, L.L.C. 
 Dated as of April 26, 2007 
  

 PROGRAM AGREEMENT 
 THIS PROGRAM AGREEMENT is made and entered into as of April 26, 2007 (the “Effective Date”) by and among CRP/MHI HOLDINGS, L.L.C., a Delaware limited liability company (“Carlyle”),
MHI HOTEL INVESTMENTS HOLDINGS LLC, a Delaware limited liability company (“MHI”), MHI Hospitality TRS II, LLC, a Delaware limited liability company (“MHI TRS”) MHI/CARLYLE HOTEL INVESTMENT PROGRAM I, L.L.C., a
Delaware limited liability company (the “Company”) and MHI/Carlyle Lessee Program I, L.L.C., a Delaware limited liability company (the “Lessee”). 
 W I T N E S S E T H : 
 WHEREAS, MHI and Carlyle desire to jointly acquire, own, develop, redevelop, construct, operate and sell primarily small independent hotel assets or hotel portfolios with value-added potential through the Company and a series of separate
Ventures (defined below) owned directly and indirectly by the Company, MHI and Carlyle and leased to a subsidiary of Lessee, upon and subject to the terms and conditions set forth herein; 
 NOW, THEREFORE, in consideration of the premises and the mutual covenants of the parties hereto, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 
 ARTICLE 1 
 DEFINITIONS AND INTERPRETATION 
 1.1
Definitions. Whenever used in this Agreement, including the Recitals, in addition to the terms defined in the preamble, the following terms have the meanings assigned below: 
 “Affiliate” shall have the meaning ascribed to it in the Operating Agreement. 
 “Agreement” shall mean this Program Agreement, as amended, modified, supplemented or restated from time to time. 
 “Asset Management Agreement” shall have the meaning ascribed to such term in Section 3.4 of this Agreement. 
 “Assignment of Hotel Purchase Contract” shall mean, with respect to a particular Site, an Assignment and Assumption Agreement assigning
the applicable Hotel Purchase Contract from MHI or one of its Affiliates to a Venture in the form and substance of Exhibit G attached hereto. 
 “Business Plan” shall mean, with respect to a particular Site, a business plan for the Project on the Site in substantially the form attached to this Agreement as Exhibit E. The Business Plan
shall include, inter alia, (x) a projected sale price for the Project, (y) the projected Internal Rate of Return to be realized by the Company upon the sale of the Project, and (z) the projected equity multiple to be received
by the Company. Each of (x), (y) and (z) described in the preceding sentence shall be determined based upon a minimum holding period for the Project of no less than one (1) year. 
 “Capital Commitments” shall have the meaning set forth in Section 2.2(b). 
 “Capital Improvement Budget” shall have the meaning set forth in Exhibit F. 

 “Carlyle” shall have the meaning set forth in the Preamble to this Agreement.

 “Carlyle Capital Commitment” shall have the meaning set forth in Section 2.2(b). 
 “Closing” shall mean, with respect to a particular Venture, the formation of such Venture and contribution by MHI and Carlyle of the
capital contributions required for the acquisition of the Selected Site to be developed or redeveloped as a Project by such Venture in accordance with Article 5. 
 “Closing Date” shall have the meaning set forth in Section 5.1. 
 “Company” shall have the meaning set forth in Section 2.1. 
 “Conditional Approval”
shall have the meaning set forth in Section 2.5(a). 
 “Construction Cost Overruns” shall have the meaning
ascribed to it in the Operating Agreement. 
 “Construction Cost Overrun Contributions” shall have the meaning ascribed to
it in the Operating Agreement. 
 “Deposits” shall have the meaning set forth in Section 2.7. 
 “Development Approvals” means, with respect to a particular Site, the Development Permit Approvals and the Other Development Approvals.

 “Development Permit Approvals” means the subdivision plat, site development permit, grading permit, condominium plan,
building permit and all other approvals, development rights, condominium rights, air rights, sewer or wastewater capacity rights, utility tap rights, entitlements, licenses, permits, applications, authorizations, and variances (including all plans,
drawings, specifications, surveys, reports and any and all other materials submitted and approved as a part of same) currently existing or required to be obtained by the Company from the appropriate governmental authorities and agencies in order to
effectuate the overall contemplated development, construction and completion of the applicable Project in accordance with the Plans therefore, and including, all conditions, limitations, and requirements contained in any such governmental permit or
authorization that has been obtained. A true, correct and complete list of the foregoing Development Permit Approvals, with a designation noting either that such Development Permit Approval has been obtained or when it is likely to be obtained, will
be set forth in the Investment Package delivered to Carlyle (which schedule shall be updated by MHI from time to time in order to maintain the accuracy of such schedule, and which schedule will be included in the Business Plan for such Project) for
each proposed Project. 
 “Development Restrictions” means, with respect to a particular Site, all of the Development
Approvals, the Use Restrictions and the Restrictive Covenants. 
 “Effective Date” shall have the meaning set forth in the
Preamble to this Agreement. 
 “Environmental Law” shall mean any law which relates to or otherwise imposes liability or
standards of conduct concerning discharges, emissions, releases or threatened releases of any pollutants, contaminants or hazardous or toxic wastes, substances or materials, whether as matter or energy, into ambient air, water, or land, or otherwise
relating to the manufacture, processing, generation, distribution, use, treatment, storage, disposal, cleanup, transport or handling of pollutants, contaminants, or hazardous or toxic wastes, substances or materials, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the Superfund Amendments and Reauthorization 

  

 2 

 
Act of 1986, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended, the Federal
Water Pollution Control Act Amendments of 1972, the Clean Water Act of 1977, as amended, any so-called “Superfund” or “Superlien” law (including those already referenced in this definition) and any other federal, state or local
law having a similar subject matter. 
 “Environmental Studies” shall have the meaning set forth in Exhibit F.

 “Hazardous Substance” shall mean any material or substance which (i) constitutes a hazardous substance, toxic
substance or pollutant (as such terms are defined pursuant to any applicable Environmental Law) or (ii) is regulated or controlled as a hazardous substance, toxic substance or pollutant pursuant to any applicable Environmental Law. 

“Hotel Purchase Contract” shall mean a purchase and sale agreement between MHI or an Affiliate of MHI, and the owner of a Site
concerning the acquisition of such Site. 
 “Improvements” shall mean, with respect to each Selected Site, all buildings and
other improvements located or to be constructed, installed or improved on the Selected Site and described in the Investment Package with respect to the Selected Site, including, without limitation, all structural and mechanical improvements included
therein, tenant improvements, recreational improvements, interior finishes, fixtures, furniture, equipment and site improvements, landscaping, paved walkways, driveways, access points, and parking lots and garages. 
 “Investment Period” shall mean the period commencing on the date of this Agreement and continuing until the earlier to occur of
(w) thirty-six (36) months after the first day of the calendar month immediately following the execution of this Agreement, (x) the date on which the Second Company has been established, (y) the termination of this Agreement as
set forth below and (z) the date on which the MHI Member is removed as the Managing Member of the Company pursuant to the Operating Agreement. 
 “Investment Package” shall have the meaning set forth in Section 2.5(a). 
 “Lease
Agreement” shall mean that certain Lease Agreement by and between the applicable Venture and the applicable Venture Lessee entered into on the applicable Closing Date. 
 “Lessee” shall have the meaning set forth in the Preamble to this Agreement. 
 “Lessee Operating Agreement” shall have the meaning set forth in Section 2.1. 
 “Material Business Agreements” means, individually and collectively, with respect to the Company, the Lessee or any given Venture, any
Hotel Purchase Contract, any Lease Agreement, any loan documents in connection with a financing entered into by the Company or the applicable Venture, any Property Management Agreement, any Asset Management Agreement, any Development Permit
Agreements, any construction contracts, and each other contract, agreement, understanding or obligation of the Company, the Lessee or such Venture that is material to the development and operation of the applicable Project or the breach of which by
the Company, the Lessee or such Venture would or is reasonably likely to have a material adverse effect on the business, operations or financial condition of the Company, the Lessee or such Venture or Project. For the purposes of this definition,
(x) a contract, agreement, understanding or obligation which is “material to the development and operation of the applicable Project” is one that has a value or effect on the Company, the Lessee or Venture in excess of $50,000 or has
a term in excess of one year that cannot be earlier terminated without a penalty in excess 

  

 3 

 
of 5% of the contract amount being incurred, and (y) a “material adverse effect” is one that results or is likely to result in a loss, damage
or liability of the Venture, the Company or the applicable Series of the Company in excess of $250,000 or otherwise would result in a line item on the Capital Improvements Budget or the Operating Budget for a Project being exceeded. In addition, for
purposes of this definition, a series of related contracts with the same vendor shall be treated as one contract in determining whether the monetary threshold has been exceeded. 
 “MHI” shall have the meaning set forth in the Preamble to this Agreement. 
 “MHI Capital Commitment” shall have the meaning set forth in Section 2.2(a). 
 “MHI Management Fee” means the management fee payable to the MHI Property Manager
under any Property Management Agreement in the amount of (i) with respect to the first (1st) year of the
term of such Property Management Agreement, two percent (2%) of Operating Revenues, (ii) with respect to the second (2nd) year of the term of such Property Management Agreement, two and one-half percent (2.5%) of Operating Revenues and (iii) thereafter, three percent (3%) Operating Revenues. 
 “MHI Property Manager” shall mean MHI Hotels Services, LLC, a Virginia limited liability company, or an Affiliate of MHI approved by
Carlyle in its reasonable discretion, and its successors and assigns as permitted under the applicable Property Management Agreement. 
 “MHI TRS” shall have the meaning set forth in the Preamble to this Agreement. 
 “Operating
Agreement” shall have the meaning set forth in Section 2.1. 
 “Operating Revenues” shall have the
meaning ascribed to it in the Lessee Operating Agreement. 
 “Operating Shortfall Contributions” shall have the meaning set
forth in the Lessee Operating Agreement. 
 “Operating Shortfalls” shall have the meaning set forth in the Lessee Operating
Agreement. 
 “Other Development Approvals” means any and all approvals, consents and authorizations, if any, required to be
obtained by the Company, the Lessee or the applicable Venture under the terms and conditions of any of the Material Business Agreements or Restrictive Covenants in order to effectuate the overall contemplated development, construction and completion
of the applicable Project in accordance with the Plans therefore, and including, all conditions, limitations, and requirements contained in any such approval, consent or authorization that has been obtained. 
 “Permitted Exceptions” shall mean, with respect to a particular Site, (i) real estate taxes that are not yet due and payable,
(ii) easements for utilities serving the applicable Project, and (iii) such other matters as shall be approved by Carlyle in its sole, but reasonable, discretion. 
 “Perseus Realty Capital” shall mean Perseus Realty Capital LLC. 
 “Person” shall mean an individual, partnership, corporation (including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture, governmental authority or other entity. 
 “Plans” shall have the
meaning ascribed to it in the Operating Agreement. 
  

 4 

 “Preliminary Package” shall have the meaning set forth in Section 2.5(a).

 “Primary Competitive Set” shall refer to the comparable hotels and other lodging establishments within the geographic
market of a given Project as determined by Smith Travel Research or if Smith Travel Research no longer publishes information regarding the hospitality industry, a comparable source of market data. 
 “Project” means a hotel asset offered to the Company pursuant to Section 2.3(a) to be acquired, developed, redeveloped, renovated,
repositioned, operated and/or sold by a Venture, and shall include the Selected Site and all Improvements and related personal property comprising such hotel asset. 
 “Project Approval” shall have the meaning set forth in Section 2.5. 
 “Project
Contractor” shall mean, with respect to a particular Selected Site, the general contractor engaged by MHI or an Affiliate of MHI or the Venture with the approval of Carlyle for the construction or reconditioning of the Improvements at the
relevant Selected Site. 
 “Project Loan” shall have the meaning ascribed to it in the Operating Agreement. 
 “Project Operating Budget” shall have the meaning ascribed to such term in the Operating Agreement. 
 “Property Management Agreement” shall mean, with respect to a particular Selected Site, the property management agreement to be executed
by the Lessee and the Property Manager providing for the management and operation of the relevant Project, in substantially the form of Exhibit B if the Property Manager is a MHI Property Manager, or on a form approved by Carlyle and MHI
(subject to Section 4.1 of the Operating Agreement) if the Property Manager is a Third-Party Property Manager. The Property Management Agreement shall provide among other things, that the Property Manager shall receive a property management fee
equal to the MHI Management Fee (which shall be payable on a monthly basis) if the Property Manager is a MHI Property Manager or competitive market rates if a Third-Party Property Manager unless otherwise approved by Carlyle with respect to any
Third-Party Property Manager. 
 “Property Manager” shall mean (i) the MHI Property Manager or (ii) a Third-Party
Property Manager, as the case may be. 
 “Restrictive Covenants” means all covenants, conditions, restrictions on use,
easements, equitable servitudes and other similar nongovernmental encumbrances in existence and binding on or benefiting a particular Project and which impose a burden or otherwise have an impact on the development or use of such Project.

 “ROFO Project” shall mean any Project which meets the parameters set out in Exhibit C attached hereto. 

“Second Company” shall have the meaning set forth in Section 2.3(b). 
 “Selected Site” shall mean any Site for which the parties choose to cause the Company to form a Venture to develop, redevelop, renovate,
reposition or operate a Project. 
 “Site” shall mean a parcel or parcels of real property suitable for development,
redevelopment, renovation or repositioning as a Project. 
  

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 “Survey” shall have the meaning set forth in Exhibit F. 
 “Third-Party Property Manager” shall mean any hotel management company selected by MHI and Carlyle (unless the Third-Party Property
Manager is replacing the MHI Property Manager as a result of a default under the Property Management Agreement or under the Operating Agreement in which case such Third-Party Property Manager shall be selected at the sole discretion of Carlyle).

 “Title Commitment” shall have the meaning set forth in Exhibit F. 
 “Title Company” shall have the meaning set forth in Section 5.2. 
 “Title Policy” shall have the meaning set forth in Section 5.2. 
 “Transaction Documents” shall mean, with respect to a particular Venture, this Agreement, the Venture Documents for such Venture and
such other agreements between the Venture and MHI or its Affiliates as shall be entered into at the Closing for such Venture. 
 “Use
Restrictions” means all zoning, subdivision, building, safety, traffic or similar laws, ordinances, codes or regulations in existence and applicable to a particular Project to the extent not modified by the Development Permit Approvals, and
which impose a burden or otherwise have an impact on the development or use of such Project. 
 “Venture” shall mean a
limited liability company formed by the Company pursuant to this Agreement for the purpose of acquiring, owning, developing, redeveloping, renovating, repositioning and selling a Project, which limited liability company shall be governed by a
Venture Agreement. 
 “Venture Lessee” shall mean a limited liability company formed by Lessee for the purpose of leasing
and operating a Project, which limited liability company shall be governed by a Venture Agreement. 
 “Venture Agreements”
shall mean collectively the certificates of formation and the limited liability company operating agreements for the Venture and the Venture Lessee in the form approved by (i) with respect to each Venture, Carlyle and MHI and (ii) with
respect to each Venture Lessee, Carlyle and MHI TRS. 
 “Venture Documents” shall mean, with respect to a particular
Venture, the Venture Agreements, the Property Management Agreement (if the Property Manager is the MHI Property Manager), the Asset Management Agreement, the Lease Agreement, the loan documents for the Project Loan and all other material agreements
relating to such Venture. 
 “Zoning Evidence” shall have the meaning set forth in Exhibit F. 
 1.2 Interpretation. The headings preceding the text of Articles and Sections included in this Agreement and the headings to the Schedules attached
to this Agreement are for convenience of reference only and shall not be deemed a part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender or the singular or plural form of
words herein shall not limit any provision of this Agreement. The use of the term “including” or “include” shall in all cases herein mean “including, without limitation” or “include, without limitation,”
respectively. References to Articles, Sections, clauses, Exhibits or Schedules shall refer to those portions of this Agreement, and any reference to a clause shall, unless otherwise identified, refer to the appropriate clause within the same Section
in which such reference occurs. The use of the terms “hereunder,” “hereof,” 

  

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“hereto” and words of similar import shall refer to this Agreement as a whole and not to any particular Article, Section or clause of, or Exhibit
or Schedule to, this Agreement. 
 ARTICLE 2 
 FORMATION OF COMPANY AND VENTURES 
 2.1 Formation of the Company and Ventures. Concurrently
with the execution of this Agreement (i) MHI and Carlyle are entering into that certain Limited Liability Company Operating Agreement of MHI/Carlyle Hotel Investment Program I, L.L.C. (the “Operating Agreement”) and the company
formed thereby (the “Company”) may from time to time form separate Ventures with Affiliates of its Members (as defined in the Operating Agreement) for the purposes of acquiring, owning, developing, redeveloping, constructing and
selling a Project at each of the Selected Sites and (ii) MHI TRS and Carlyle are entering into that certain Limited Liability Company Operating Agreement of MHI/Carlyle Hotel Lease Program I, L.L.C. (the “Lessee Operating
Agreement”) and the company formed thereby (the “Lessee”) may from time to time form separate Venture Lessees with Affiliates of its Members (as defined in the Lessee Operating Agreement) for purposes of leasing and
operating Projects from each Venture. MHI, MHI TRS and Carlyle shall be guided by the provisions of this Agreement in causing the Company and Lessee to form any such Ventures and Venture Lessees. It is the parties’ intention that each Venture
be capitalized with 65-75% debt (with an anticipated average of 70% debt across the portfolio of Projects) and at least 25%-35% equity or as otherwise provided in the Capital Improvement Budget proposed by MHI and approved by Carlyle. 
 2.2 Capital Commitments of MHI and Carlyle. 
 (a) MHI Capital Commitment. During the Investment Period and upon the approval of a Selected Site by Carlyle pursuant to Section 2.5(b), MHI and MHI TRS shall be obligated to fund to the Company and the Lessee,
respectively, an amount, which amount shall be determined in its sole discretion, of between ten percent (10%) and twenty-five percent (25%) of the budgeted equity to be contributed by the Company to the Venture and by the Lessee to the
Venture Lessee formed for the Project relating to such Selected Site at such times and in such manner as provided in the Operating Agreement and the Lessee Operating Agreement for the capitalization of such Project (with respect to each Project, the
“MHI Capital Commitment”). In the event MHI is contributing the Selected Site to the applicable Venture within six months of MHI’s acquisition of such Selected Site, such contribution shall be valued at MHI’s cost basis in
such asset and MHI shall provide Carlyle with evidence reasonably satisfactory to Carlyle substantiating such cost basis. In the event MHI is contributing the Selected Site to the applicable Venture and the Selected Site was acquired by MHI more
than six months prior to the date of contribution, the contribution shall be valued at the fair market value of the Selected Site as determined by MHI and Carlyle. 
 (b) Carlyle Capital Commitment. Except as set forth in Section 2.2(c) hereof or as otherwise agreed by MHI, MHI TRS and Carlyle, the aggregate equity funding commitment of Carlyle to the Company and
the Lessee (the “Carlyle Aggregate Capital Commitment”) shall not exceed One Hundred Million Dollars ($100,000,000) in the aggregate; provided, however, that Carlyle may, in its sole election, agree to fund equity to the Company in
excess of the Carlyle Aggregate Capital Commitment. Upon the approval of a Selected Site by Carlyle pursuant to Section 2.5(b), Carlyle shall be obligated to fund to the Company and the Lessee an amount of up to ninety percent
(90%) of the budgeted equity to be contributed by the Company and the Lessee to the Venture, and Venture Lessee formed for the Project relating to such Selected Site at such times and in such manner as provided in the Operating Agreement for
the capitalization of such Project (the “Carlyle Capital Commitment”; and together with the MHI Capital Commitment, the “Capital Commitments”). 
  

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 (c) Cost Overruns. The Capital Commitments of MHI, MHI TRS and Carlyle with respect to each
Venture and Venture Lessee, together with the proceeds of the Project Loan obtained by such Venture and/or Venture Lessee, are intended to cover all costs in connection with acquiring, owning, developing, redeveloping, renovating, repositioning,
operating and selling a particular Project. Notwithstanding the foregoing, if a Venture incurs Construction Cost Overruns, the Construction Cost Overrun Contributions shall be funded and paid by MHI and Carlyle to the Company and applicable Series
in order for the Venture corresponding to such Series to pay for any Construction Cost Overruns with respect to its Project as provided in Section 6.3 of the Operating Agreement and if a Venture Lessee incurs Operating Shortfalls, the Operating
Shortfall Contributions shall be funded and paid by MHI TRS and Carlyle, to the Venture Lessee and applicable Series in order for the Venture Lessee corresponding to such Series to pay for any Operating Cost Shortfalls as provided in
Section 6.3 of the Lessee Operating Agreement. The amount of any such Construction Cost Overrun Contributions and Operating Shortfall Contributions made by Carlyle shall be deemed to be a part of the Carlyle Aggregate Capital Commitment;
provided that, subject to the provisions of Section 6.3 of the Operating Agreement or Lessee Operating Agreement, as applicable, Carlyle and MHI, or MHI TRS, as the case may be, each shall be required to fund its share of Construction Cost
Overruns or Operating Shortfalls even if such funding would exceed the amount of their respective Capital Commitments or, in the case of Carlyle, the Carlyle Aggregate Capital Commitment. 
 2.3 Sourcing Agreement. 
 (a)
Right of First Offer. MHI agrees that, during the Investment Period, it will offer (and will cause each of its Affiliates to offer) to the Company the first right to acquire, own, develop, redevelop, renovate and/or reposition any ROFO
Project in accordance with the procedure set forth in Sections 2.4 and 2.5 hereof. 
 (b) Second Company. Following the Investment
Period and provided that Carlyle has funded the entire Carlyle Aggregate Capital Commitment to the Company and or the Lessee (or the remaining Carlyle Aggregate Capital Commitment is not sufficient to enable the Company and the Lessee to capitalize
the next ROFO Project approved by Carlyle), then Carlyle, MHI and MHI TRS, by mutual election, shall have the option to form a new venture (the “Second Company”) on substantially the same terms and conditions as the Company and the
Lessee. The Second Company shall not be aggregated with the Company and the Lessee for any purposes, including, without limitation, the distribution waterfalls set forth in Article 7 of the Operating Agreement. 
 2.4 [Intentionally Omitted.] 
 2.5 Review
of Documentation by Carlyle. 
 (a) Preliminary Approval. With respect to each proposed Venture relating to a ROFO Project, MHI
will provide to Carlyle (i) a Project description; (ii) historical financial statements, if available, for the Project; (iii) a report from Smith Travel Research comparing occupancy rates and average daily rates for the Primary
Competitive Set; (iv) a Business Plan for the Project and (iv) a preliminary pro forma Project Operating Budget (collectively, the “Preliminary Package”). After review of the Preliminary Package, but in no event later than
ten (10) business days after receipt of a materially complete Preliminary Package, Carlyle shall notify MHI in writing (i) that it conditionally approves the acquisition of the proposed Site described in the Preliminary Package as a
selected Site, subject to Carlyle’s review of a materially complete Investment Package and its approval of the Project pursuant to Section 2.5(b) below (the “Conditional Approval”) or (y) it does not approve the
acquisition of such proposed Site. In the event Carlyle has granted MHI its Conditional Approval of a Site, MHI shall, as soon as such documents that are available to MHI, provide to Carlyle for review the documents scheduled 

  

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in Exhibit F with respect to the proposed Project together with such other information as Carlyle may reasonably request (collectively, the
“Investment Package”). 
 (b) Final Approval of Sites. After review of the Investment Package, but in no event later
than ten (10) business days after receipt of a materially complete Investment Package, Carlyle shall notify MHI in writing that (x) it approves the acquisition of the proposed Site described in the Investment Package as a Selected Site
pursuant to the terms of the Investment Package (“Project Approval”) or (y) it does not approve the acquisition of such proposed Site. In the event that Carlyle has notified MHI that it has granted Project Approval of the
acquisition of a Selected Site, then, subject to Article 4, MHI and Carlyle shall proceed with the Closing of the acquisition of the Selected Site. 
 (c) Acquisition by MHI. If Carlyle declines or fails to approve a proposed Site described in a Preliminary Package or an Investment Package pursuant to Section 2.5(a) or (b) above, then subject to the restrictions set forth
in Section 4.13 of the Operating Agreement and so long as MHI shall be able to comply with Section 4.1(d)(1) of the Operating Agreement, MHI shall be free to pursue the acquisition of such Site and ROFO Project related thereto for its own
account or with a third party; provided, however, that if there is any material change in any material term of such transaction (including without limitation (x) the projected cost of the Project, or (y) the projected income from the
ownership and operation of such Site, or (z) the availability of any required approvals for the Project, then the Project proposed for such Site shall again be deemed to be a ROFO Project, MHI shall again offer the Company the opportunity to
acquire, own, develop, redevelop, renovate, reposition, lease and/or operate such ROFO Project as provided in Sections 2.3, 2.4 and 2.5 hereof. Carlyle’s disapproval of any Site and ROFO Project shall in no event limit or impair the rights and
obligations of the parties under this Agreement with respect to any other Site and ROFO Project, including without limitation Section 2.3 hereof. 
 (d) Investment Period; Term. MHI’s obligation to offer the Company the opportunity to acquire, own, develop, redevelop, renovate, reposition, lease and/or operate new ROFO Projects shall terminate with
respect to the Company upon the expiration of the Investment Period. This Agreement shall terminate upon the liquidation and dissolution of the Company, the Lessee, each of the Ventures in which the Company is a member and each of the Venture
Lessees in which the Lessee is a member. 
 2.6 Brokers. MHI and Carlyle each represents to the other that no broker or finder other
than Perseus Realty Capital acted in connection with the introduction of Carlyle to MHI or any of their respective Affiliates, this Agreement, the Operating Agreement or the contemplated hotel investment program. MHI and Carlyle agree to indemnify,
defend and hold the other harmless from and against any claims for commissions or finder’s fees made by or payments due to any broker, agent or finder other than Perseus Realty Capital with whom such party may have dealt in connection with such
hotel investment program, this Agreement or the Operating Agreement. The provisions of this Section 2.6 shall survive the termination of this Agreement. Perseus Realty Capital shall be paid a commission by the Company pursuant to the terms of
that certain letter agreement between MHI Hospitality Corporation and Perseus Realty Capital dated September 25, 2006. Any broker or finder which MHI desires to engage on behalf of the Company to identify potential Projects shall be subject to
Carlyle’s prior written approval including the terms of any agreement with such broker or finder relating thereto. In the event Carlyle approves the engagement of a broker or finder on behalf of the Company, the Company or associated Venture
will be required to fund any fees or expenses in connection therewith to the extent they become due and payable under the terms of such agreement. 
 2.7 Earnest Money Deposits. 
 (a) Once a Project receives Project Approval (other than Projects which are contributed by MHI
directly to a Venture), MHI and Carlyle will each fund Initial Capital Contributions to the Company 

  

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in the amount of all earnest money deposits (together with all earnings thereon, the “Deposits”) required for such proposed Project based on
MHI’s and Carlyle’s respective percentage share of the total Capital Commitments for such Project (as set forth on the Capital Improvements Budget). 
 (b) Upon Closing on the subject Selected Site, or if Carlyle declines to proceed with that proposed Project (in accordance with Section 2.7(c) below), or the Closing does not occur for any other reason, the
Deposits paid by each of Carlyle and MHI (to the extent not returned to Carlyle and MHI) will continue to be treated as Initial Capital Contributions to the Company. 
 (c) Carlyle may elect at any time on behalf of the Venture not to proceed with the proposed Project for any reason prior to such Deposits becoming non-refundable or at any time thereafter due to an event which gives
the purchaser under the purchase contract for the applicable Site the right to terminate such purchase contract (the exercise of such right is hereinafter referred to as a “Termination Event”). 
 (d) If after a Termination Event, MHI or one of its Affiliates ultimately proceeds with the acquisition of such Site and is permitted to do so under the
terms of this Agreement and the other Transaction Documents, then the Venture shall be entitled to a return of its Deposit money from MHI (if such Deposit money has not been previously returned), which amount will be immediately distributed to each
of Carlyle and MHI in the same proportion as each funded such Deposits. 
 ARTICLE 3 
 COVENANTS OF THE PARTIES 
 3.1
Implementing Agreement. Each of MHI, MHI TRS and Carlyle shall take all commercially reasonable actions required to fulfill their respective obligations to one another hereunder and shall otherwise use their respective commercially reasonable
efforts to facilitate the consummation of the transactions contemplated hereby. 
 3.2 Access to Information and Employees. Upon the
request of Carlyle, MHI shall give Carlyle and its representatives reasonable access to any and all information in its possession relating to each of the proposed Sites and proposed Projects that are the subject matter of this Agreement and shall
make available (by telephone) to Carlyle and its representatives those of its officers, employees and representatives as Carlyle and its representatives shall reasonably request for the purpose of allowing Carlyle to determine whether or not to
participate in the development of a particular Selected Site and Project. 
 3.3 Informational Meetings. MHI agrees to hold weekly
conference calls and regular monthly meetings with Carlyle, and special meetings with Carlyle at reasonable times and upon reasonable notice from Carlyle, to review and discuss the status of Selected Sites and/or proposed Sites for the development
and operation of a Project and such other matters as Carlyle may from time to time request to be included on the agenda of each such meeting or conference call. Such meetings may be held in person at the principal offices of MHI or by telephone
unless the parties otherwise agree, and shall include as participants such representatives of MHI as Carlyle may reasonably request. Carlyle may designate any one or more representatives to attend such meetings. 
 3.4 Asset Management. MHI, MHI TRS and Carlyle agree that each Venture shall enter into an asset management agreement with MHI TRS or an Affiliate
of MHI approved by Carlyle in its reasonable discretion (the “MHI Asset Manager”) in form and substance substantially similar to Exhibit H attached hereto (the “Asset Management Agreement”). In connection
therewith, the MHI Asset Manager shall receive an annual asset management fee in the amount of one and one-half percent (1.5%) of Operating Revenues (as defined in the Lessee Operating Agreement) of each such Venture Lessee, 

  

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payable quarterly in arrears. Notwithstanding, the foregoing, no Asset Management Agreement will be entered into in connection with a Project that is managed
by a Third-Party Manager due to a Default Trigger Event under the Operating Agreement. 
 3.5 Property Management. MHI, MHI TRS and
Carlyle agree that each Venture Lessee shall enter into an Property Management Agreement with the MHI Property Manager unless MHI identifies a Third-Party Property Manager in the Investment Package and Carlyle approves such Third-Party Property
Manager in which case, upon the purchase of the Site, the Company shall enter into a Property Management Agreement with such Third-Party Property Manager. 
 ARTICLE 4 
 CONDITIONS PRECEDENT 
 4.1 Conditions Precedent to the Obligations of Carlyle. Without limiting the scope of all conditions to be satisfied prior to Carlyle consummating
a Closing with respect to a Venture, each of the following conditions shall have been satisfied to the reasonable satisfaction of, or waived by, Carlyle prior thereto: 
 (a)(i) MHI shall have complied in all material respects with all of its obligations and covenants under this Agreement and the Operating Agreement required to be performed by it on or before the applicable Closing
Date and (ii) MHI TRS shall have complied in all material respects with all of its obligations and covenants under this Agreement and the Lessee Operating Agreement required to be performed by it on or before the applicable Closing Date.

 (b) All of the representations and warranties of MHI and MHI TRS hereunder shall be true, correct and complete in all material respects on
and as of the applicable Closing Date as if made on the applicable Closing Date. 
 (c) MHI shall have delivered all of the documents
contemplated to be delivered by it pursuant to Section 5.2, all in form and substance reasonably satisfactory to Carlyle and all of the representations and warranties set forth in the Hotel Purchase Contract and in any of the other
documents referenced therein shall be true and correct and all of the conditions precedent set forth in the Hotel Purchase Contract and in such other documents shall have been satisfied unless waived by Carlyle in its sole discretion. 
 (d) No order of any court or administrative agency shall be in effect that restrains or prohibits any of the transactions contemplated by the applicable
Transaction Documents, and no suit, action, inquiry, investigation or proceeding shall have been instituted by any Person seeking to restrain or prohibit the proposed Project, or change the terms of or obtain other relief in connection with the
applicable Transaction Documents, and no material adverse change in the facts and circumstances surrounding the proposed Project shall have occurred, which in the sole judgment of Carlyle makes it inadvisable to proceed with the consummation of such
transactions. 
 (e) No Hazardous Substance shall exist or be known to exist on under or about the applicable Selected Site except to the
extent such Hazardous Substance was reflected in the Environmental Studies received by Carlyle with respect to such Selected Site and Carlyle did not object to or further investigate such Hazardous Substance. 
 (f) The Project Loan for such Venture shall close and fund on the applicable Closing Date with no less than the amount of debt proceeds required for
Closing pursuant to the Capital Investment Budget. 
  

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 4.2 Conditions Precedent to the Obligations of MHI. Without limiting the scope of all conditions
to be satisfied prior to MHI consummating a Closing with respect to a Venture, each of the following conditions shall have been satisfied to the reasonable satisfaction of, or waived by, MHI prior thereto: 
 (a) Carlyle shall have complied in all material respects with all of its obligations and covenants under this Agreement and the Operating Agreement
required to be performed by it on or before the applicable Closing Date. 
 (b) All of the representations and warranties of Carlyle
hereunder shall be true, correct and complete in all material respects on and as of the applicable Closing Date as if made on the applicable Closing Date. 
 (c) Carlyle shall have delivered all of the documents contemplated to be delivered by it pursuant to Section 5.3 all in form and substance reasonably satisfactory to MHI and all of the representations and
warranties set forth in the Hotel Purchase Contract and in any of the other documents referenced therein shall be true and correct and all of the conditions precedent set forth in the Hotel Purchase Contract and in such other documents shall have
been satisfied unless waived by MHI in its sole discretion. 
 (d) No order of any court or administrative agency shall be in effect that
restrains or prohibits any of the transactions contemplated by the applicable Transaction Documents, and no suit, action, inquiry, investigation or proceeding shall have been instituted by any Person seeking to restrain or prohibit the proposed
Project, or change the terms of or obtain other relief in connection with the applicable Transaction Documents, and no material adverse change in the facts and circumstances surrounding the proposed Project shall have occurred, on the basis of which
MHI has determined in its sole discretion not to proceed with the consummation of such transactions. 
 (e) No Hazardous Substance shall
exist or be known to exist on under or about the applicable Selected Site except to the extent such Hazardous Substance was reflected in the Environmental Studies received by Carlyle with respect to such Selected Site and Carlyle did not object to
or further investigate such Hazardous Substance. 
 (f) The Project Loan for such Venture shall close and fund on the applicable Closing Date
with no less than the amount of debt proceeds required for Closing pursuant to the Capital Investment Budget. 
 ARTICLE 5 

CLOSING 
 5.1 Closing. Each
Closing shall take place at such location and on the date on which the Venture to be formed is required to acquire the Selected Site under the applicable Hotel Purchase Contract, or on such other day or at such other place as MHI and Carlyle shall
agree (each such date being hereinafter referred to as a “Closing Date”). 
 5.2 Deliveries by MHI. Without limiting
the scope of the documents and agreements to be delivered by MHI at or prior to each Closing, MHI will deliver the following at or prior to the Closing: 
 (a) An Assignment of Hotel Purchase Contract to the Venture or the Company, executed by MHI and/or an Affiliate thereof as the correct existing purchaser(s) under the Hotel Purchase Contract and any consent required
from the seller thereunder in connection therewith. 
  

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 (b) A final Survey of the Site, and an Owner’s Policy of Title Insurance or marked-up Title
Commitment (with policy to follow thereafter), including, without limitation, the following endorsements, to the extent available: owner’s comprehensive, survey, zoning 3.1 with parking and loading, access, separate tax lot, subdivision,
non-imputation (if applicable and available) and such other endorsements as Carlyle or MHI may reasonably require (each a “Title Policy”) issued by a title insurer and title agency approved by both Carlyle and MHI (the
“Title Company”) for the full value of the Selected Site in question and all proposed Improvements thereon, insuring the applicable Venture as the owner of the Selected Site, subject only to the Permitted Exceptions. 
 (c) A deed in recordable form transferring fee simple title from the record owner of the applicable Selected Site to the applicable Venture, with no less
than a special warranty of title and subject only to the Permitted Exceptions and otherwise in form and substance customary in the jurisdiction in which the Selected Site is located. 
 (d) A counterpart of the Property Management Agreement for such Project duly executed by or on behalf of the applicable Venture Lessee and the Property
Manager in accordance with the terms hereof and the Lessee Operating Agreement. 
 (e) Evidence of insurance in such amounts as shall be
reasonably required by Carlyle or any lender. 
 (f) A final closing statement (including all prorations and adjustments to the purchase
price) approved by Carlyle in writing and executed by MHI as the Managing Member on behalf of the Venture. 
 (g) A final Business Plan
(including a final site plan for the Project), a final Capital Improvement Budget, and a final pro forma operating budget for the Project, in each case approved by Carlyle. 
 (h) Final loan documents for any Project Loan to be made by a lender in connection with the Project, including, without limitation, all guaranties,
indemnities and other documents for which MHI is responsible under the Operating Agreement in connection with such Project. 
 (i) A fully
executed Asset Management Agreement for such Project in accordance with the terms hereof and the Operating Agreement and the Lease Agreement. 
 (j) A fully executed Lease Agreement for such Project in accordance with the terms hereof, the Operating Agreement and the Lessee Operating Agreement. 
 (k) Any and all additional documents the Title Company, Carlyle or any lender deem reasonably necessary to the proper formation of the Venture and the acquisition and development of a Selected Site by the Venture, or
which are otherwise required by this Agreement. 
 5.3 Deliveries by Carlyle. At or prior to each Closing, Carlyle will execute and
deliver the guaranties, indemnities and other documents for which Carlyle is required to provide under the Operating Agreement and the Lessee Operating Agreement in connection with such Project. 
 5.4 Initial Capital Contributions. At each Closing, each of MHI, MHI TRS and Carlyle shall fund the applicable portion of their respective Capital
Commitments, if any, to the Company and the Lessee as provided in this Agreement, the Operating Agreement and the Lessee Operating Agreement. Except as otherwise agreed by MHI. MHI TRS and Carlyle, the amount of such funding (and the amounts 

  

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shown in the final closing statement described in Section 5.2(f) above) shall be agreed upon by MHI, MHI TRS and Carlyle at least five (5) business
days prior to the applicable Closing Date. 
 ARTICLE 6 
 REPRESENTATIONS, WARRANTIES AND COVENANTS 
 6.1 Representations, Warranties and Covenants of MHI
and MHI TRS. MHI and MHI TRS hereby make the following representations, warranties and covenants to Carlyle, which representations, warranties and covenants shall be deemed remade upon the acquisition of any Project by a Venture: 
 (a) MHI and MHI TRS are limited liability companies duly formed and validly existing under the laws of the State of Delaware, with all requisite power
and authority to carry on their business as now being conducted. MHI and MHI TRS have all requisite power and authority to enter into this Agreement, the Operating Agreement and the other agreements contemplated to be entered into by them in
connection herewith and to carry out the transactions contemplated hereby and thereby. 
 (b) The execution and delivery of this Agreement,
the Operating Agreement and the other agreements to be entered into by MHI and MHI TRS in connection herewith and therewith and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on
the part of MHI and MHI TRS. This Agreement, the Operating Agreement and such other agreements entered into by MHI in connection herewith and therewith have been executed and delivered by a duly authorized officer of MHI and constitute the valid and
binding obligations of MHI enforceable against MHI in accordance with the terms hereof and thereof, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting
creditors’ rights and to general principles of equity. This Agreement, the Lessee Operating Agreement and such other agreements entered into by MHI TRS in connection herewith and therewith have been executed and delivered by a duly authorized
officer of MHI TRS and constitute the valid and binding obligations MHI TRS enforceable against MHI in accordance with the terms hereof and thereof, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors’ rights and to general principles of equity. 
 (c) The execution, delivery and
performance of this Agreement and all other agreements contemplated hereby by MHI and/or MHI TRS do not: (i) violate any decree or judgment of any court or governmental authority that may be applicable to MHI or MHI TRS; (ii) violate any
law (or regulation promulgated under any law); (iii) violate or conflict with, or result in a breach of, or constitute a default (or an event with or without notice or lapse of time or both would constitute a default) under, any contract or
agreement to which MHI or MHI TRS is a party; or (iv) violate or conflict with any provision of the organizational documents of MHI or MHI TRS. Without limiting the generality of the foregoing, neither MHI nor MHI TRS has granted any party
other than Carlyle any continuing right of first refusal or similar right with respect to any ROFO Projects. 
 (d) During the term of this
Agreement neither MHI, MHI TRS, any Affiliate of MHI nor any Affiliate of MHI TRS will enter into any contract, agreement or other arrangement or understanding which conflicts with or is inconsistent in any respect with this Agreement. 

(e) Neither MHI, MHI TRS, any of their Affiliates nor any Persons having a direct or indirect beneficial interest in MHI, MHI TRS or such Affiliates
(i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury (“OFAC”) or the Annex to United States Executive Order
132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States. The monies used to fund 

  

 14 

 
MHI’s investment in the Company or MHI TRS’s investment in the Lessee are not (i) invested for the benefit of, or related in any way to, the
government of, or persons within, any country under a U.S. embargo enforced by OFAC or (ii) derived from or related to any illegal activities, including without limitation, money laundering activities, and the proceeds from MHI’s
investment in the Company shall not be used to finance any illegal activities. 
 (f) With respect to any Selected Site, the following
representations, warranties and covenants shall be made simultaneously with such Selected Site being conveyed to a Venture, as of the Closing of such Selected Site: 
 (i) To the knowledge of MHI, no item prepared or reviewed by MHI or its Affiliate which is included in the Investment Package applicable
to the Project relating to such Selected Site misstates as of the Closing Date for the applicable Project any material fact or circumstance, or omits to state any material fact or circumstance known to MHI or any of its Affiliates as of such date,
regarding the applicable Project. To the knowledge of MHI and its Affiliates no item prepared for MHI or any of its Affiliates by an unrelated third party and included in such Investment Package misstates as of such date any material fact or
circumstance, or omits to state any material fact or circumstance, regarding the applicable Project. There is no agreement, understanding or payment obligation with respect to the applicable Project to which MHI or any of its Affiliates is a party
or beneficiary that has not been fully disclosed to Carlyle in writing or is not otherwise contemplated pursuant to the terms of this Agreement, the Operating Agreement or the Lessee Operating Agreement. 
 (ii) The Hotel Purchase Contract relating to such Selected Site or Selected Sites constitutes the entire written agreement executed by MHI
or its Affiliate and the seller respecting the acquisition of such Selected Sites that are the subject of such Purchase Contract, and there are no other agreements, oral or written, express or implied or proposed, executed or agreed to by MHI or any
of its Affiliates with such seller or any of such seller’s Affiliates with respect to the acquisition of such Selected Sites, except as expressly described in the Hotel Purchase Contract. Neither MHI nor any of its Affiliates is in default
under or with respect to such Hotel Purchase Contract, and to the knowledge of MHI no basis exists for any claim of default by the seller against MHI or any of its Affiliates under such Hotel Purchase Contract. 
 (iii) Neither MHI nor any of its Affiliates has sold, transferred, conveyed, assigned or pledged, or committed or obligated itself in any
manner whatsoever to sell, transfer, convey, assign or pledge, any of its rights, titles or interests under the Hotel Purchase Contract relating to such Selected Sites or in or to all or any portion of any of the Projects relating thereto or any
interests therein, to any party other than the Company or the respective Venture. MHI has the right to transfer all of its and its Affiliates’ rights, titles and interests under such Purchase Contract to the Company without any consents or
approvals that have not been obtained. 
 (iv) MHI or its Affiliate, as applicable, shall assign to the Company, and the
relevant Venture shall assume from the assignor, all of the rights, titles and interests of the buyer/purchaser under the Hotel Purchase Contract relating to such Selected Site or Selected Sites then in existence and any other contracts, licenses,
permits, development rights and agreements that pertain to the Selected Site and are held by MHI or any of its Affiliates on terms acceptable to Carlyle, and evidence of such assignment and assumption shall be delivered by MHI concurrently to
Carlyle and to the seller with respect to such Hotel Purchase Contract. 
 (v) Neither MHI, MHI TRS nor any of their
Affiliates has any interest in, contractual right to or entitlement to any other hotel site and improvements within the Primary Competitive Set of the Selected Site that has not already been, or is being concurrently, transferred or assigned to the
Company 

  

 15 

 
or a Venture, except as previously disclosed in the Investment Package and except for an investment in securities which have an indirect interest therein and
which are a part (but no more than five percent (5%)) of a class of securities of the issuer thereof which are registered with and traded on a public securities exchange. 
 (vi)(a) To the knowledge of MHI, all of the documents and other information with respect to the Selected Site (including, without
limitation, with respect to the seller, Hotel Purchase Contract and other Material Business Agreements, Net Operating Income (as defined in the Operating Agreement), any operating restrictions or encumbrances on the real or personal property of the
Selected Site, Hazardous Substances, and other matters related to such Selected Site), the Company, the relevant Venture, the Project Loan, MHI and its Affiliates and all relevant matters related thereto provided to Carlyle by MHI or any of its
Affiliates or agents) (the “Project Information”) have been provided to Carlyle in true and complete form to the extent they are in the possession or control of MHI or any of its Affiliates; (b) MHI has not failed to disclose
to Carlyle any document or information in its possession that would be material to the decision of Carlyle to provide Project Approval with respect to a Selected Site or take or refrain from taking any act hereunder; and (c) to the knowledge of
MHI, there has been no material change, correction, restatement, modification, supplement or amendment of any of the Project Information for the relevant Venture that has not been provided to Carlyle on or prior to the Closing of the purchase of
such Selected Site. As used in this Section 6.1, the phrase “to the knowledge of MHI” means that none of the MHI Principals (as defined in the Operating Agreement) have, or would have after conducting a diligent review, inquiry
and examination of all of the written Project Information that is in the possession or control of such individual, any actual knowledge that the statements following such phrase are not true and complete. 
 (vii) The Investment Package sets forth (i) a true and complete list of each parcel comprising the proposed Sites that either will be
owned in fee simple by the applicable Venture or under contract by the Company or one or more of its Ventures, and (ii) the identity of any additional parcels that are neither owned nor under contract as of the date hereof but which are
acquisition targets for the Company. 
 (viii) The execution of the Lease Agreement with respect to the Selected Site will not
result in the imposition of any deed, transfer, recording or similar tax or fee. 
 (g) With respect to any Selected Site which was owned in
whole or in part by MHI or any of its Affiliates prior to the applicable Closing Date, the following representations, warranties and covenants shall be made simultaneously with such Selected Site being conveyed to a Venture, as of the Closing of
such Selected Site: 
 (i) MHI shall assign, transfer and convey or cause to be assigned, transferred, or conveyed to the
applicable Venture, fee simple title in the real property comprising the Selected Site and any existing Improvements thereon owned by the MHI or its Affiliates with respect to such Site being so transferred. 
 (ii) Except for the items or matters which have been disclosed in the Title Commitment or Survey delivered to Carlyle, to the knowledge of
MHI, there are no easements, encumbrances or other agreements affecting title to, or creating a lien or charge upon, the Site, including, without limitation, any leases, tenancies, licenses or other rights of occupancy or use for all or any portion
of the Site. 
 (iii) The Site is its own separate tax parcel with its own tax identification number, which does not include
any property other than the Site. To the knowledge of MHI, there are no 

  

 16 

 
assessments or pending assessments affecting or relating to the Site except as disclosed in the Title Commitment previously provided to Carlyle. 

(iv) Except as disclosed in the Environmental Studies previously provided to Carlyle, to the knowledge of MHI (i) the Project is
in all respects in compliance with all Environmental Laws, (ii) neither the Company, MHI nor any prior owner or prior occupant of the Project, or any portion thereof, engaged in or permitted any dumping, discharge, disposal, spillage, use or
leakage (whether legal or illegal, accidental or intentional) of Hazardous Substances, at, on, in, under or about the Project, or any portion thereof, and (iii) there is not present at, on, in, under or about the Project, or any portion
thereof, any Hazardous Substances, or any structures, fixtures, equipment or other objects or materials containing Hazardous Substances. MHI has, prior to the date hereof, provided to Carlyle a true, correct and complete copy of the Environmental
Studies for the Project and of all other environmental reports and information concerning the Project in the possession of MHI or any of its Affiliates. 
 (v) Except as disclosed in any soils report delivered to Carlyle as part of the Investment Package, to the knowledge of MHI, there are no unusual topographical, soil, subsurface or other geological conditions on the
Site. MHI has, prior to the date hereof, provided to Carlyle a true, correct and complete copy of any such soils report and of all other soils and subsurface reports and information concerning the Site in the possession of MHI or any of its
Affiliates. 
 (vi) The zoning district and the relevant zoning or use restrictions of the Site is described in the Investment
Package. Except as otherwise set forth in the Investment Package, the Project is not subject to any special zoning districts or areas with overlay regulations. To the knowledge and belief of MHI, the proposed Project is a permitted use of the Site
under the current zoning for the Site, and there are no pending zoning or other land-use regulation proceedings nor any proposed change in any applicable zoning or other land-use laws or regulations which could materially, detrimentally affect the
proposed Project. 
 (vii) To the knowledge of MHI, the Project does not currently violate any of the existing Development
Restrictions, and the Project can be completed in accordance with the requirements of the Business Plan without violating any of the existing or anticipated Development Restrictions. 
 (viii) To the knowledge of MHI, all Development Permit Approvals required to complete the Project in accordance with the Development Plan
and the Capital Improvement Budget are included in the Investment Package, and either have been obtained and will be acquired by the Company or the applicable Venture with the Project or are obtainable in the normal course within the anticipated
time periods set forth in such Investment Package and in the Business Plan and for the anticipated costs set forth in the Capital Improvement Budget. To the knowledge of MHI, the Business Plan accounts for each and every Development Approval which
is subject to revocation or renewal and the timing and cost of each step required by the Company or applicable Venture to prevent such revocation or to obtain such renewal prior to the revocation or expiration of the Development Approval. To the
knowledge of MHI, the Business Plan also accounts for each and every new Development Approval or modification to an existing Development Approval, and the timing and cost of each step thereof, required for the Property to comply with the terms of
the Business Plan. To the knowledge of MHI, MHI has delivered to Carlyle a true, correct and complete copy of the each of the Development Permit Approvals in the Investment Package which have been obtained to date. 
  

 17 

 (ix) To the knowledge of MHI, all water, sewer, natural gas, electric, telephone,
internet communication, cable television (or substantially equivalent television service), drainage facilities and other utilities required by law for the operation of the Project in accordance with the Business Plan (i) are available for
connection to the intended Improvements where appropriate, with valid permits, subject only to the payment of applicable tap or hook-up charges or deposits, and (ii) have adequate reserved capacity to service the intended Improvements as set
forth in the Business Plan. 
 (x) To the knowledge of MHI, the Company has not received from any insurer any notice of any
matters or conditions on the Project which constitute a defect, inadequacy, non-compliance or default under any insurance policy carried or to be carried by the Company, the applicable Venture or its Affiliates, for the Project, and there is no
outstanding matter or condition on, or relating to, the Project which would render any such insurance policies or coverages otherwise provided thereunder void or unenforceable in any respect. 
 (xi) To the knowledge of MHI, no cause, action, suit or other proceeding is pending or threatened against the Property, the Company or MHI
or any of its Affiliates that arises out of the ownership of the Project or that might materially, detrimentally affect (i) the use and operation of the Project as contemplated in the Business Plan or (ii) the value of the Project. Without
limiting the generality of the foregoing, there is no action, suit or proceeding under the Bankruptcy Code pending or threatened against MHI or any of its Affiliates. 
 (xii) Except as approved in writing by Carlyle, there are no loan applications, commitments or other agreements or financing documents to
which MHI or any of its Affiliates, or to the knowledge of MHI, the Company or the applicable Venture, is or would be bound regarding any financing for the Project or any Capital Contribution required to be made by MHI under the terms of this
Agreement or the Operating Agreement. 
 (xiii) Neither MHI, MHI TRS nor any of their Affiliates has any interest in,
contractual right to or entitlement to any other hotel site and improvements within the Primary Competitive Set of the Project that has not already been transferred or assigned to the Company or one or more of its Ventures except as previously
disclosed in the Investment Package for such Project. 
 6.2 Representations and Warranties of Carlyle. Carlyle hereby makes the
following representations and warranties to MHI, which representations and warranties shall be deemed remade upon the acquisition of any Project by a Venture: 
 (a) Carlyle is a limited liability company duly formed and validly existing under the laws of the State of Delaware, with all requisite power and authority to carry on its business as now being conducted. Carlyle has
all requisite power and authority to enter into this Agreement and the other agreements contemplated to be entered into by it in connection herewith and to carry out the transactions contemplated hereby and thereby. 
 (b) The execution and delivery of this Agreement and the other agreements to be entered into by it in connection herewith and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of Carlyle. This Agreement and such other agreements have been executed and delivered by a duly authorized officer or agent of Carlyle and
constitute the valid and binding obligations of Carlyle, enforceable against Carlyle in accordance with the terms hereof and thereof, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors’ rights and to general principles of equity. 
  

 18 

 (c) The execution, delivery and performance of this Agreement and all other agreements contemplated
hereby by Carlyle do not: (i) violate any decree or judgment of any court or governmental authority that may be applicable to Carlyle; (ii) violate any law (or regulation promulgated under any law); (iii) violate or conflict with, or
result in a breach of, or constitute a default (or an event with or without notice or lapse of time or both would constitute a default) under, any contract or agreement to which Carlyle is a party; or (iv) violate or conflict with any provision
of the organizational documents of Carlyle. 
 ARTICLE 7 
 MISCELLANEOUS 
 7.1 Notices. All notices provided for or permitted to be given pursuant to
this Agreement must be in writing and shall be given or served by (a) depositing the same in the United States mail addressed to the party to be notified, postpaid and certified with return receipt requested, (b) by delivering such notice
in person to such party, or (c) by Federal Express, United Parcel Service or other nationally recognized overnight courier delivery service. All notices are to be sent to or made at the addresses set forth below: 
 If to Carlyle, addressed as follows: 
 The Carlyle Group 
 1001 Pennsylvania Avenue, Suite 220 South 
 Washington, D.C. 20004 
 Attention: Gary Block and Hayden Jones 
 with a copy to: 
 Katten Muchin Rosenman LLP 
 1025 Thomas Jefferson Street, N.W. 
 East Lobby, Suite 700 
 Washington, D.C. 20007 
 Attention: Bruce Kosub and John Muir 
 If to MHI, addressed as follows: 
 MHI Hospitality Corporation 
 4801 Courthouse Street, Suite 201 
 Williamsburg, Virginia 23188 
 Attention: Mr. Andrew Sims 
 with a copy to: 
 Baker & McKenzie 
 815 Connecticut Avenue, N.W. 
 Washington, D.C. 20006 
 Attention: Tom Egan 
  

 19 

 All notices given in accordance with this Agreement shall be effective upon delivery at the address of the addressee. By
giving written notice thereof, each party to this Agreement shall have the right from time to time to change its address pursuant hereto. 
 7.2 Expenses. Except as otherwise set forth in the Operating Agreement, each party hereto shall bear its own expenses with respect to entering into this Agreement. 
 7.3 No Third-Party Beneficiaries. The provisions of this Agreement and the Operating Agreement are solely for the benefit of the parties hereto
and thereto and no other party shall be entitled to any benefit by virtue hereof or thereof as a third party beneficiary or under any other theory. 
 7.4 No Assignment. No party to this Agreement shall have the right to assign any right or obligation under this Agreement to any other Person, without the prior written consent of the other parties, except that either party may
assign its rights, but not its obligations hereunder, to an Affiliate; provided that the assigning party shall not be relieved of any of its obligations hereunder as a result of any such assignment. 
 7.5 Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument. In addition, this Agreement may contain more than one counterpart of the signature page, and this Agreement may be executed by the affixing of the signature of either party to any of such counterpart
signature pages; all of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. 
 7.6 Amendments. This Agreement may be amended, modified or supplemented but only in a writing signed by all of the parties hereto. 
 7.7 Validity. If any provision of this Agreement or the application of such provision to any Person or circumstance shall be held invalid, the
remainder of this Agreement or the application of such provision to Persons or circumstances other than those with respect to which it is held invalid shall not be affected thereby and shall continue to be binding and in force. 
 7.8 Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and interpreted in accordance with the internal
laws of the State of Delaware without giving effect to the principles of conflicts of law thereof. 
 7.9 Waiver. The waiver by any
party hereto of the breach of any term, covenant, agreement or condition herein contained shall not be deemed a waiver of any subsequent breach of the same or any other term, covenant, agreement or condition herein, nor shall any custom, practice or
course of dealings arising among the parties hereto in the administration hereof be construed as a waiver or diminution of the right of any party hereto to insist upon the strict performance by any other party hereto of the terms, covenants,
agreements and conditions herein contained. 
 7.10 Binding Effect. Except as herein otherwise provided, this Agreement shall be
binding upon and inure to the benefit of the parties, their legal representatives, heirs, administrators, executors, successors and permitted assigns. 
 7.11 Entire Agreement. This Agreement, including the Schedules and Exhibits hereto and the other agreements contemplated hereby, including, without limitation, the Operating Agreement, constitutes the entire
understanding and agreement of the parties hereto with respect to the subject matter 

  

 20 

 
hereof and supersedes all other prior agreements and understandings, written or oral, between the parties with respect to the subject matter hereof.

 7.12 Remedies Not Exclusive. Any remedies herein contained for breaches of obligations hereunder shall not be deemed to be
exclusive and shall not impair the right of any party to exercise any other right or remedy, whether for damages, injunction or otherwise. 
 7.13 Approvals in Writing. All approvals required by Carlyle hereunder shall be in writing and shall be at Carlyle’s sole and absolute discretion unless otherwise specified in this Agreement and all approvals required by MHI
hereunder shall be in writing and shall be at MHI’s sole and absolute discretion unless otherwise specified in this Agreement. 
 7.14
Costs of Enforcement. In the event of any action or proceeding brought by any party against another under this Agreement, the prevailing party shall be entitled to recover all costs and expenses including its attorneys’ fees in such
action or proceeding in such amount as the court may adjudge reasonable. The prevailing party shall be determined by the court based upon an assessment of which party’s major arguments made or positions taken in the proceedings could fairly be
said to have prevailed over the other party’s major arguments or positions on major disputed issues in the court’s decision. 
 [Signature page follows] 
  

 21 

 SIGNATURE PAGE TO PROGRAM AGREEMENT 
 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 
  

			
	 CRP/MHI HOLDINGS, L.L.C.,
 a Delaware limited
liability company

		
	By:	 	/s/ Gary E. Block
		 	Gary E. Block, Vice President
	
	 MHI HOTEL INVESTMENTS HOLDINGS LLC,
 a
Delaware limited liability company

		
	By:	 	/s/ Andrew M. Sims
	Name:	 	Andrew M. Sims
	Title:	 	Managing Member
	
	 MHI HOSPITALITY TRS II, LLC,
 a Delaware
limited liability company

		
	By:	 	/s/ Andrew M. Sims
	Name:	 	Andrew M. Sims
	Title:	 	Managing Member

  

					
	MHI/CARLYLE HOTEL INVESTMENT PROGRAM I, L.L.C.,
	a Delaware limited liability company
		
	By:	 	 CRP/MHI HOLDINGS, L.L.C.,
 a Delaware limited
liability company

			
		 	By:	 	/s/ Gary E. Block
		 		 	Gary E. Block, Vice President
		
	By:	 	 MHI HOTEL INVESTMENTS HOLDINGS LLC,
 a
Delaware limited liability company

			
		 	By:	 	/s/ Andrew M. Sims
		 	Name:	 	Andrew M. Sims
		 	Title:	 	Managing Member

					
	MHI/CARLYLE HOTEL LESSEE PROGRAM I, L.L.C.,
	a Delaware limited liability company
		
	By:	 	 CRP/MHI HOLDINGS, L.L.C.,
 a Delaware limited
liability company

			
		 	By:	 	/s/ Gary E. Block
		 	Name:	 	Gary E. Block
		 	Title:	 	Vice President
		
	By:	 	 MHI HOSPITALITY TRS II, L.L.C.,
 a Delaware
limited liability company

			
		 	By:	 	/s/ Andrew M. Sims
		 	Name:	 	Andrew M. Sims
		 	Title:	 	Managing Member

 SCHEDULE OF EXHIBITS 
  

			
	 Exhibit A
	  	Form of Investment Return Summary
		
	 Exhibit B
	  	Form of Property Management Agreement
		
	 Exhibit C
	  	Parameters for ROFO Project
		
	 Exhibit D
	  	Form of Capital Improvement Budget
		
	 Exhibit E
	  	Form of Business Plan
		
	 Exhibit F
	  	Investment Package
		
	 Exhibit G
	  	Form of Assignment of Hotel Purchase Contract
		
	 Exhibit H
	  	Form of Asset Management Agreement

 EXHIBIT A 
 Form of Investment Return Summary 
 [Attached] 

 EXHIBIT B 
 Form of Property Management Agreement 
 [Attached] 

 EXHIBIT C 
 Parameters for ROFO Projects 
 ROFO Projects shall include all lodging and lodging related projects
(including, without limitation, any mixed-use project which includes a hotel, any hotel condominium or time share) in excess of Thirty Million Dollars ($30,000,000) in total capitalization available to MHI or any Affiliate thereof in which MHI or
any of its Affiliates is interested in pursuing, or actually does pursue and/or obtain, an ownership or performance-based earnings interest; provided, however, that ROFO Projects shall not include any lodging or lodging related project or asset
owned by MHI or any of its Affiliates as of the Effective Date or any lodging related asset or project under contract to MHI or any of its Affiliates on the Effective Date or any lodging or lodging related assets or projects identified or originated
by Coakley & Williams Hotel Management Company or any of its affiliates prior to or following the Effective Date. 

 EXHIBIT D 
 Form of Capital Improvement Budget 
 [Attached] 

 EXHIBIT E 
 Form of Business Plan 
 [Attached] 

 EXHIBIT F 
 Investment Package 
 (1) A description of the Project as it currently exists (including, without limitation, a
description of its location, current facilities, number of rooms, number of employees, operating history and related information) and a description of the proposed Improvements or operational changes to the Project, including attaching any proposed
Plans for the Project. 
 (2) The amount of the MHI Capital Commitment which MHI will commit to funding if the Project is approved by Carlyle which amount
will be set forth in the sources and uses section of the Capital Improvement Budget (as defined below). 
 (3) A complete copy of the Hotel Purchase Contract
including all exhibits and other attachments and amendments and modifications (and including information on any ground lease, if applicable), or a letter of intent granting MHI or its Affiliate the exclusive right, for a reasonable period of time,
to negotiate a purchase and sale agreement for the purchase of the Property on terms consistent with the letter of intent. 
 (4) A summary of the expected
material terms of the applicable Project Loan, and any potential lender termsheets then available. 
 (5) A pro forma income and expense statement with a
line-by-line cost savings analysis, and an investment return summary in the form attached to this Agreement as Exhibit A. 
 (6) A detailed
competitive room rate and occupancy analysis and an analysis of sales of recent comparable hotel projects. A detailed marketing report, which at least sets forth a list of existing and prospective cross-marketing parties (such as airlines, travel
agencies, tour and holiday package providers, time-share resorts, etc.), a description of anticipated room rates and service charges, the anticipated or actual date of bookings and vacancies, and the marketing expenses, rebates, discounts and
concessions over the applicable fiscal periods. 
 (7) A detailed Capital Improvement Budget for such Site in substantially the form attached to this
Agreement as Exhibit D (a “Capital Improvement Budget”), and a Business Plan for the Project in substantially the form attached to this Agreement as Exhibit E. 
 (8) A survey of the hotel market and demographic information for the location in which the Site is located and which hotels are in the Projects competitive set.

 (9) A summary of any required governmental or other approvals known to MHI, together with a projected timeline for obtaining such approvals. 

(10) An MAI appraisal of the Project. 
 (11) A property condition report,
including photographs of the Project 
 (12) Copies of real estate tax invoices for the current tax year and the two prior years together with projections of
taxes on the Project going forward, as available (including any projected tax rollbacks, credits or reductions) 
 (13) All environmental, geotechnical,
wetlands and archaeological investigations of the Selected Site in the possession of MHI (collectively, the “Environmental Studies”) 

 (14) A current title report or commitment, issued by the Title Company, showing all matters of record with respect to the
Site that would be an exception to such commitment (including legible copies of all such recorded documents evidencing matters of record or otherwise noted as an exception to such commitment) with respect to the Project (the “Title
Commitment”). 
 (15) An ALTA/ACSM Class A survey (or the customary equivalent in the jurisdiction in which the Project is located) (the
“Survey”). 
 (16) Evidence that the zoning classification of the Project permits the intended use of the Project or if not, that any
required zoning variances are available to the Venture along with a timeline for obtaining such required zoning variances, together with evidence that there are no outstanding zoning or permit violations (the “Zoning Evidence”).

 (17) A detailed description of all material staffing and employment related issues and incentives. 
 (18) An estimated due diligence and Project Completion time line. 
 (19) All
other material information received by or known to MHI in connection with such Site. 

 EXHIBIT G 
 Form of Assignment of Hotel Purchase Contract 
 [Attached] 

 EXHIBIT H 
 Form of Asset Management Agreement 
 [Attached]

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