Document:

Exhibit 10.12

 Exhibit 10.12 
  
 AGREEMENT TO ASSIGN AND SUBLEASE COMMERCIAL SPACE LEASE 
  
 This Agreement to Assign and Sublease Commercial Space Lease (“Agreement”) is made and entered into this
             day of             , 2004 by and among MHI Hotels Two, Inc., a North Carolina corporation (“Assignor”),
and MHI Hospitality L.P., a Delaware limited partnership (“Assignee”). 
  
 RECITALS 
  
 A. Pursuant to
a lease agreement between Shell Island Homeowners Association, Inc. (“Owner”) and Assignor, dated May 12, 2003, as amended by a lease addendum dated as of July 31, 2004 (as amended, the “Lease”), Owner leased to Assignor the
reconstructed C-1 Commercial Unit within the Shell Island Resort condominium in Wrightsville Beach, North Carolina and certain parts or portions of the facilities associated with the C-1 Commercial Unit, as specifically described in the Lease
Agreement (collectively, the “Demised Premises”). 
  
 B. Subject to and effective upon the consummation of the IPO (as defined below), Assignor desires to assign to Assignee, and Assignee desires to assume from Assignor, all of Assignor’s rights and obligations under the Lease, on
the terms set forth in the form of assignment attached hereto as Exhibit A. 
  
 C. Subject to and effective upon the consummation of the IPO, Assignee desires to sublease to Assignor, and Assignor desires to sublease from Assignee, the Demised Premises on the terms set forth in the form of
sublease attached hereto as Exhibit B (the “Sublease”). 
  
 D. The Assignee is the operating partnership of a Maryland corporation which will seek to qualify as a real estate investment trust for Federal income tax purposes and will seek to complete an underwritten public
offering of shares of its common stock (the “IPO”). 
  
 E. Pursuant to a separate agreement, MHI Hotels Services LLC has agreed, in the event of a monetary default under the Sublease on the part of Assignor, as subtenant under the Sublease, to make a contribution to the capital of Assignor in an
amount sufficient to cure such default, and the Assignee is entering into this Agreement partially in reliance on the agreements set forth in such separate agreement. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the premises set forth above, the mutual promises and covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are mutually acknowledged, the parties, desiring to be legally bound hereby, agree as follows: 
  
 1. Assignment and Assumption of Lease. Subject to the terms and conditions of this Agreement and the consummation of the IPO, Assignor hereby
agrees to assign, transfer, convey and deliver to Assignee (the “Assignment”), and Assignee agrees to then accept such assignment, transfer, conveyance and delivery of, all of Assignor’s right, title and interest in, to and under the
Lease pursuant to an instrument of assignment attached hereto and incorporated by reference as Exhibit A to be executed and delivered by Assignor and Assignee at the closing of the IPO. 
  
 2. Assignment Fee and Agreement to Sublease. Subject to the consummation of the IPO and concurrent with the
Assignment, Assignee shall pay Assignor Five Hundred Thousand Dollars 
  

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 ($500,000) (the “Assignment Fee”) and shall sublease back to Assignor the Demised Premises on the terms and
conditions of the Sublease. 
  
 3. Assignment Fee
Adjustment. The assignment fee set forth in paragraph 2 hereof is based on the assumption of the parties that the term of the Sublease shall be for not less than 10 years. In the event that the Sublease or the Lease is terminated prior to the
expiration of such 10-year period due to either (x) termination of the Lease by Owner for any reason (assuming that termination of the Lease also causes termination of the Sublease), or (y) termination of the Sublease by Assignor (except in the case
of Assignee’s election to terminate or a default by Assignee), then the Assignment Fee shall be reduced by an amount equal to the product of (i) the assignment fee paid under paragraph 2, and (ii) the fraction the numerator of which is the
number of months remaining in such ten-year period at the time of termination of the Sublease and the denominator of which is 120. Assignor shall pay such amount (the “Damages”) to Assignee in twelve equal quarterly payments over a 36
month period commencing on the last day of the first fiscal quarter following such termination of the Sublease, provided that if, in the opinion of tax counsel reasonably acceptable to Assignee, receipt of all or any portion of the Damages could
adversely affect the qualification of MHI Hospitality Corporation (the “Corporation”) as a real estate investment trust (“REIT”) for Federal income tax purposes for any fiscal year, then the amount of the Damages payable by
Assignor to Assignee for such fiscal year shall be limited to the amount, if any, which could be paid by Assignor to Assignee without adversely affecting the Corporation’s status as a REIT, and any unpaid portion shall be carried over to and
paid in such subsequent fiscal year (if any) in which tax counsel concludes that payment can be made without adversely affecting Corporation’s status as a REIT. 
  
 4. Further Acts. Each party hereto shall execute, deliver and file any and all agreements, instruments or the like
necessary to effect the foregoing. 
  
 5. Indemnification.
Assignor indemnifies and holds Assignee harmless against all of the liabilities and obligations of Assignor under the Lease arising or accruing on or prior to the time of closing of the IPO. Subject to Assignor’s obligations under the Sublease,
Assignee indemnifies and holds harmless Assignor against all of the liabilities and obligations under the Lease arising or accruing after the time of the closing of the IPO. 
  
 6. Governing Law. This Agreement shall be governed by the law of the State of Delaware without regard to Delaware
principles of conflict of laws. 
  
 [signatures follow on next
page] 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to Assign and Sublease Commercial Space
Lease to be signed by a duly authorized officer this      day of                         , 2004

  
 MHI HOTELS TWO, INC., a North Carolina corporation

  
 By:
                                        
                 
 [                        ] 
 President 
  
 MHI HOSPITALITY
L.P., a Delaware Limited 
 partnership 
  
 By: MHI HOSPITALITY 
        CORPORATION, 
        its general partner 

 
 By:
                                        
                 
 [                        ] 
 President 

	

  

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 Exhibit A 
  
 ASSIGNMENT AND ASSUMPTION OF LEASE 
  
 This Assignment and Assumption of Lease (“Assignment”) is made and entered into this
     day of                         , 2004 by and among MHI Hotels Two, Inc., a North Carolina
corporation (“Assignor”) and MHI Hospitality L.P., a Delaware limited partnership (“Assignee”). 
  
 RECITAL 
  
 Assignor desires to assign to Assignee, and Assignee desires to assume from Assignor all of Assignor’s rights and obligations under a lease agreement between Shell Island Homeowners Association, Inc. and Assignor dated May 12, 2003, as
amended by a lease addendum dated as of July 31, 2004 (as amended, the “Lease”), on the terms set forth below. The Assignee is the operating partnership of a Maryland corporation which will seek to qualify as a real estate investment trust
for Federal income tax purposes and will seek to complete an underwritten public offering of shares of its common stock (the “IPO”). 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of Five Hundred Thousand Dollars ($500,000), subject to adjustment as set forth in the Agreement to Assign and Sublease
Commercial Space Lease, dated as of                         , 2004, by and between Assignor and Assignee, paid to Assignor
and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned agree as follows: 
  
 1. Assignment of Lease. Assignor hereby assigns, transfers, conveys and delivers to Assignee all of Assignor’s right, title and interest in,
to and under the Lease. 
  
 2. Assumption. Assignee
unconditionally accepts such assignment, transfer, conveyance and delivery and assumes and covenants that it shall promptly, fully, completely and faithfully keep, fulfill, observe, perform and discharge each and every covenant and obligation that
may accrue and become performable, due or owing under the Lease. 
  
 3. Governing Law. This Assignment shall be governed by the law of the State of Delaware without regard to Delaware principles of conflict of laws. 
  
 4. Indemnification. Assignor indemnifies and holds Assignee harmless against all of the liabilities and obligations
of Assignor under the Lease arising or accruing on or prior to the time of closing of the IPO. Subject to Assignor’s obligations under the Sublease, Assignee indemnifies and holds harmless Assignor against all of the liabilities and obligations
under the Lease arising or accruing after the time of the closing of the IPO. 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be signed by a duly authorized
officer this          day of             , 2004 
  

			
	MHI Hotels Two, Inc., a North Carolina corporation
		
	By:	 	 
	 [                        ]
 President

  
  

			
	MHI HOSPITALITY L.P.
	
	 By: MHI HOSPITALITY
        CORPORATION,
         its general partner

		
	By:	 	 
	 [                        ]
 President

 Exhibit B 
  
 SUBLEASE AGREEMENT 
  
 THIS SUBLEASE AGREEMENT (the “Sublease”) is made as of the              day
of [            ], 2004 by and between MHI Hospitality L.P., a Delaware limited partnership (the “Sublessor”) and MHI Hotels Two, Inc., a North Carolina corporation (the
“Subtenant”). Any capitalized word or term used and not defined herein shall have the meaning ascribed to such word or term in the Prime Lease. 
  
 RECITAL 
  
 WHEREAS, by a written lease (the “Prime Lease”) dated May 12, 2003 by and between Shell Island Homeowners Association (the “Prime
Landlord”) and the legal predecessor of Subtenant, Prime Landlord leased to Subtenant, as Tenant, certain common areas and facilities of Shell Island Resort Hotel referred to as Commercial Unit C-1 (the “Leased Premises”), at the rent
and upon and subject to the terms and conditions set forth in the Prime Lease; 
  
 WHEREAS, effective as of the closing of the initial public offering of Sublessor’s general partner (the “IPO”), Subtenant assigned all of its right, title and interest in the Prime Lease to
Sublessor with effect as of the concurrent entry of this Sublease (the “Assignment”); 
  
 WHEREAS, Subtenant desires to sublet from Sublessor, and Sublessor desires to sublet to Subtenant subject to the terms and conditions of this
Sublease, the Leased Premises; and 
  
 WHEREAS, pursuant to
a separate agreement, MHI Hotels Services LLC has agreed, in the event of a monetary default under this Sublease on the part of Subtenant or a termination of the Prime Lease or this Sublease (other than at the election of or as a result of a default
by the Sublessor), to make a contribution to the capital of Subtenant in an amount sufficient to cure such default or make Sublessor whole in accordance with the Assignment Fee adjustment included in the Agreement to Assign and Sublease Commercial
Space Lease, dated                     , 2004, between Sublessee and Sublessor, and the Sublessor is entering into this Sublease partially in
reliance on the agreements set forth in such separate agreement. 
  
 AGREEMENT 
  
 NOW, THEREFORE, the parties
hereto, for themselves, their successors and assigns, mutually covenant and agree as follows: 

 1. Terms of Prime Lease. Except as otherwise expressly provided in this Sublease: (i) all of the terms,
provisions, representations, warranties, covenants and conditions of the Prime Lease are incorporated herein by reference and are hereby made a part of this Sublease as if the Prime Lease was fully set forth in this Section 1; (ii) Subtenant
hereby expressly assumes and agrees to be bound by all of the Sublessor’s obligations under the Prime Lease as if Subtenant were the tenant thereunder, unless the context clearly otherwise requires, including, without limitation and for the
purposes of illustration of such context, that the Subtenant shall not have the right to exercise any renewal option held by the Sublessor under the Prime Lease, or except in such cases where a term of this Sublease is more restrictive than a term
of the Prime Lease dealing with the same subject matter; and (iii) Subtenant agrees that Sublessor may enforce all of the terms, provisions, representations, warranties, covenants and conditions of the Prime Lease against Subtenant as if Subtenant
and Sublessor executed the Prime Lease as tenant and landlord respectively, unless the context clearly otherwise requires, or except in such cases where a term of this Sublease is more restrictive than a term of the Prime Lease dealing with the same
subject matter. Subtenant represents to Sublessor and acknowledges that Subtenant has received a true and complete copy of the Prime Lease and that it has reviewed and is familiar with the complete contents thereof. 
  
 2. Leased Premises. Sublessor hereby sublets to Subtenant, and Subtenant hereby
subleases from Sublessor, for the term and upon the conditions provided herein, the Leased Premises. Subtenant agrees that the Leased Premises are in a commercially acceptable condition and hereby subleases the Leased Premises in “AS-IS”
condition. 
  
 3. Term. The term of this Sublease shall commence on the
closing of the IPO (the “Commencement Date”) and shall be co-terminus with the Prime Lease, as the term of the Prime Lease may be extended or renewed but in no event shall be less than ten years following the Commencement Date. Each lease
year under the Prime Lease shall be a lease year for purposes of this Sublease, subject to any partial initial lease year or partial final lease year under the Sublease. 
  
 4. Conditions. This Sublease is conditioned upon and shall be effective only upon obtaining the written consent of Prime Landlord. If
Prime Landlord’s consent to this Sublease has not been obtained, this Sublease shall be null and void and of no further force or effect. 
  
 5. Rent. Subtenant shall pay the Sublessor rent in two components. With regard to the first component (the “Fixed Rental Payment”), Subtenant shall pay
Sublessor annual rent in the amount of Ninety-One Thousand Four Hundred Thirty Dollars and Forty Cents ($91,430.40) in six equal installments of Fifteen Thousand Two Hundred Thirty-Eight Dollars and Forty Cents ($15,238.40) on the first day of each
of the months of May, June, July, August, September and October each lease year during the term of this Sublease (the “Payment Dates”), commencing on the first such Payment Date immediately after the Commencement Date, which amount shall
be payable without any demand, deduction, setoff or abatement whatsoever. In the event the term of this Sublease expires on a date other than an anniversary of the Commencement Date, Subtenant’s Fixed Rental Payments for the lease year of such
expiration shall be pro rated for the number of calendar months in the lease year prior to the expiration date and any unpaid portion shall be paid on or prior to the expiration date. With regard to the second component, Subtenant 
  

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 shall pay Sublessor “seasonal rent” in the months of May, June, July, August and September of each year during
the term of this Sublease in the amount due under the Prime Lease by Sublessor to Prime Landlord on or before the first day of May, June, July, August and September each year, which amount shall be payable without any demand, deduction, setoff or
abatement whatsoever. The current amount of such “seasonal rent” is Twenty-Four Thousand Three Hundred Dollars and No Cents ($24,300) annually. Sublessor shall provide Subtenant prior notice of any change in the amount of such seasonal
rent. 
  
 6. Additional Rent. Throughout the term of this Sublease,
Subtenant agrees to pay to Sublessor, as additional rent under this Sublease, all charges for any additional services provided to Subtenant and any other amounts payable under the Prime Lease by the tenant thereunder which are not included within
the amounts payable by Subtenant under Section 5 above. 
  
 7.
Insurance. Subtenant shall obtain and maintain, with respect to the Leased Premises, all insurance types and coverages as specified in the Prime Lease to be obtained and maintained by Sublessor, as Tenant, in amounts not less than those
specified in the Prime Lease. All policies of insurance obtained by Subtenant shall name Prime Landlord and Sublessor as additional insureds and loss payees thereon in accordance with the Prime Lease. Subtenant’s insurance shall be primary over
Prime Landlord’s and Sublessor’s insurance. 
  
 8. Compliance with
Laws. Subtenant, at its sole cost and expense, shall comply with all present and future laws, rules, orders, regulations, ordinances and requirements of all federal, state and municipal governments, courts, departments, commissions, boards, and
offices having jurisdiction over the Leased Premises, as well as all lawful rules, orders, and regulations of the board of fire underwriters having jurisdiction over the Leased Premises (together “Laws”), which pertain to the Leased
Premises or any equipment or furnishings therein. 
  
 9. Alterations.
Subtenant shall not make any alteration, improvement, or installation (hereinafter called “Alterations”) in or to the Leased Premises, without in each instance obtaining the prior written consent of Prime Landlord and Sublessor.

  
 10. Brokers. Each party hereby represents and warrants to the other
that it has not dealt with any person or company acting as a broker in connection with this Sublease for the Leased Premises, and agrees to indemnify and hold harmless against any claim or claims for brokerage or other commission or fee arising from
or out of any breach of the foregoing representation or warranty. 
  
 11.
Successors and Assigns. Sublessee cannot assign this Sublease without the prior written consent of Sublessor. The obligations of this Sublease shall bind and benefit the successors and permitted assigns of the parties with the same effect as
if mentioned in each instance where a party hereto is named or referred to. 
  
 12. Notices. Any and all communications delivered hereunder shall be sent by hand delivery or recognized overnight courier: if to Prime Landlord, Shell Island Resort Homeowners’ Association, Inc., P.O. Box 31, Wrightsville Beach
North Carolina 28480; and if to Subtenant, 6411 Ivy Lane, Suite 510, Greenbelt, MD 20770 and if to Sublessor, 814 Capitol Landing Road, 
  

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 Williamsburg, VA 23185 or to such other address and attention as any of the above shall notify the others in writing. Any
such notices shall be deemed given when deposited with such overnight courier or when actually hand delivered. 
  

	13.	Defaults of Subtenant. 

  
 (a) Event of Default. Each of the following events shall constitute an “Event of Default” by Subtenant under this Sublease: 

 
 (i) If Subtenant fails to pay any rent when due, or any
other charge required to be paid by Subtenant hereunder within six (6) business days after Sublessor delivers notice that the same is past due and payable; 
  
 (ii) If Subtenant fails to maintain insurance required hereunder or fails to timely deliver any estoppel certificate required hereunder;

  
 (iii) If Subtenant fails to perform or
observe any other term, provision, covenant, condition, representation, warranty or requirement of this Sublease, or any term provision, covenant, condition, representation, warranty or requirement of the Prime Lease incorporated in this Sublease
and binding on Subtenant, on the part of Subtenant to be performed or observed, and such failure continues for twelve (12) days after written notice from Sublessor (except that such twelve (12) day period shall be extended for such additional period
of time as may reasonably be necessary to cure such Event of Default, if such Event of Default, by its nature, cannot be cured within such twelve (12) day period, provided that Subtenant commences to cure such Event of Default (and so notifies
Sublessor in writing) within such twelve (12) day period and is, at all times thereafter, in the process of diligently curing the same; 
  
 (iv) The assignment, transfer, mortgaging or encumbering of this Sublease or the subletting of the Leased Premises in a manner not
permitted in accordance with the Prime Lease; or 
  
 (v) The taking of this Sublease or the Leased Premises, or any part thereof, upon execution or by other process of law directed against Subtenant, or upon or subject to any attachment at the insistence of any creditor of or claimant against
Subtenant, which execution or attachment shall not be discharged or disposed of within thirty (30) days after the levy thereof, or the occurrence of any of the events listed in Section 12 of the Prime Lease. 
  
 (b) Remedies. Upon the occurrence of an Event of Default, Sublessor
shall have the same rights and remedies as to Subtenant and the Leased Premises as Prime Landlord would 

 have following the occurrence of an event of default by Sublessor as tenant under the Prime Lease. 
  

	14.	Miscellaneous. 

  
 (a) Entire Agreement. This Sublease, the Prime Lease, and any Exhibits or Addenda attached thereto contain the entire integrated agreement of the
parties hereto and there are no promises, agreements, conditions, undertakings, warranties or representations between them other than as herein or therein set forth. This Sublease may be amended only by a written amendment duly executed by Sublessor
and Subtenant. 
  
 (b) Governing Law; Venue. This Sublease
shall be governed by the laws of the State of North Carolina without regard to its conflict of laws principles. 
  
 (c) Captions and Section References. Captions and numbers contained in this Sublease are inserted only as a matter of convenience and in no way
define, limit, construe or describe the scope or intent of such sections of this Sublease nor in any other way affect this Sublease. Section references shall refer to sections of this Sublease, unless otherwise stated. 
  
 (d) Days. Unless expressly stated to the contrary, all references in
this Sublease to “days” shall mean calendar days, not business days. The term “business day” shall mean each calendar day Monday through Friday except for legal holidays. 
  
 (e) Subtenant Authority. Subtenant represents that it has the power
and authority to enter into this Sublease, and that all requisite action to authorize Subtenant to enter into this Sublease has been duly taken. 
  
 (f) Counterparts. This Sublease may be executed in several counterparts, but all counterparts shall constitute one and the same instrument.

  
 (g) No Waiver. No delay or failure by Sublessor to
exercise or enforce any of Sublessor’s rights or remedies or Subtenant’s obligations shall constitute a waiver of any such rights, remedies or obligations. 
  
 (h) Savings Clause. If any provision of this Sublease or the application thereof to any person or circumstance is to
any extent held invalid, then the remainder of this Sublease or the application of such provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby, and each provision of this Sublease shall be
valid and enforced to the fullest extent permitted by law. 
  
 (i)
Termination of Prime Lease. Sublessor agrees that it will not voluntarily terminate the Prime Lease so long as this Sublease is in full force and effect. Sublessee agrees to use its best efforts to avoid a termination of the Prime Lease.

 [signatures follow on next page] 
  

 IN WITNESS WHEREOF, the parties have duly executed this Sublease as of the day and year first above written. 

 

			
	SUBLESSOR:
		
	 	 	 
	 	 	 

  

			
	 MHI HOSPITALITY L.P.

		
	By:	 	 MHI HOSPITALITY
 CORPORATION,
 its general partner

  

			
	 
		
	By:	 	 
	 [                                ]
 President

  
  

			
	 SUBTENANT:
  
 MHI HOTELS TWO, INC., a North Carolina corporation

		
	By:	 	 
	 [                                ]
 PresidentExhibit 10.15

 Exhibit 10.15 
  
 CONTRIBUTION AGREEMENT 
  
 THIS CONTRIBUTION AGREEMENT (the “Agreement”) is made and entered into as of this         
day of                 , 2004, by and among MHI Hotels Services LLC, a Maryland limited liability company (hereinafter referred to as “Services”), MHI
Hotels, L.L.C., a Virginia limited liability company (hereinafter referred to as “Hotels”), and MHI Hotels Two, Inc., a North Carolina corporation (hereinafter referred to as “MHI Two”). 
  
 RECITALS 
  
 A. MHI Hospitality, L.P., a Delaware limited partnership (the “Partnership”), is the operating partnership of MHI
Hospitality Corporation, a Maryland corporation, which will seek to qualify as a real estate investment trust for federal income tax purposes (the “REIT”), and the REIT intends to complete an underwritten initial public offering of shares
of its common stock (the “IPO”). 
  
 B. In connection
with the IPO, the Partnership will acquire all of Hotels’ rights and obligations as tenant under a lease agreement between Shell Island Homeowners Association, Inc., a North Carolina non-profit corporation (“Owner”), and MHI Recovery
Management, Inc., a Maryland corporation and legal predecessor of Hotels, dated December 31, 1993, as amended by a lease addendum dated as of July 31, 2004 (as amended, the “Common Space Lease”), and, pursuant to a separate sublease
agreement (the “Common Space Sublease Agreement”), the Partnership will sublease back to Hotels the premises subject to the Common Space Lease. 
  
 C. In connection with the IPO, the Partnership will acquire all of MHI Two’s rights and obligations as tenant under a lease agreement between Owner
and MHI Two dated May 12, 2003, as amended by a lease addendum dated as of July 31, 2004 (as amended, the “Commercial Space Lease”), and pursuant to a separate sublease agreement (the “Commercial Space Sublease Agreement”), the
Partnership will sublease back to MHI Two the premises subject to the Commercial Space Lease. 
  
 D. In consideration of the benefits Services will receive as a result of the consummation of the IPO and the performance of certain other agreements connected with the IPO to which Services is a party, including but
not limited to, management agreements between Services and the Partnership and certain of its subsidiaries with respect to the hotels to be owned by the Partnership and its subsidiaries upon completion of the IPO and related formation transactions
and as a condition to the assignment of the Commercial Space Lease and the Common Space Lease, Services agrees to commit to make a capital contribution to Hotels and MHI Two, as the case may be, in the event of a payment default under the Commercial
Space Lease or the Common Space Lease in an amount sufficient for the defaulting party to cure such payment default or in the event that the Commercial Space Lease, the Common Space Lease, the Commercial Space Sublease Agreement or the Common Space
Sublease Agreement is terminated (other than at the election of or fault of the Partnership) in an amount equal to the Assignment Fee 

 
adjustment under the Agreement to Assign and Sublease Commercial Space Lease dated
                        , 2004, by and between MHI Two and the Partnership (“Commercial Space Agreement”) or the
Agreement to Assign and Sublease Common Space Lease dated                         , 2004 by and between Hotels and the
Partnership (“Common Space Agreement”), and each of Hotels and MHI Two desires to receive and accept such capital contribution and cure such payment default and make the Assignment Fee adjustment, as the case may be, in such an event.

  
 AGREEMENTS: 
  
 NOW, THEREFORE, in consideration of the premises set forth above and the
mutual covenants herein contained, the parties hereto agree as follows: 
  
 ARTICLE I 
 AGREEMENT TO MAKE CAPITAL CONTRIBUTION 
  
 1.1 Common Space Sublease. Subject to the consummation of the IPO, the assignment of the Common Space Lease to
Hotels, the execution by Hotels and the Partnership of the Common Space Sublease Agreement and the terms and conditions of this Agreement, Services hereby agrees to contribute to the capital of Hotels from time to time a sum of money in an amount
sufficient for Hotels to cure any payment default that Hotels might incur from time to time during the term of the Common Space Sublease Agreement or to pay the Assignment Fee adjustment following termination of the Common Space Lease or Common
Space Sublease Agreement (other than at the election or fault of the Partnership) at the times and in the amounts specified in the Common Space Agreement. Services agrees that, if Services receives notice that Hotels has so defaulted in a payment
required under the Common Space Sublease Agreement or must pay the Assignment Fee adjustment as provided in the Common Space Agreement, (a) such notice shall conclusively establish that such payment default has occurred or such payment or payments
must be made in accordance with such agreement and the amount of the payment default or Assignment Fee adjustment, and (b) Services shall have no right to challenge whether such a default has occurred or the amount of such payment default or whether
such Assignment Fee adjustment must be made in accordance with such agreement and Services hereby waives any right it may have to file a suit or commence a proceeding of any kind whether at law or in equity seeking a declaratory judgment or
otherwise, all provided that such notice was delivered in good faith. Services agrees to make a capital contribution to Hotels in cash in an amount equal to the payment default specified in the notice of default. Such capital contribution shall be
made no later than five (5) days after receipt of notice of such payment default, which notice may be delivered to Services either by Hotels (with a copy to the Partnership) or by the Partnership. Services also agrees to make capital contributions
to Hotels in cash in such amounts and at such time or times as shall be necessary to permit Hotels to make the Assignment Fee adjustment payments as provided in the Common Space Agreement. In the event of such payment default or Assignment Fee
adjustment, Hotels agrees to accept such capital contribution or capital contributions, issue to Services equity securities 

  

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representing the value of such capital contribution and promptly thereafter use the capital contribution to cure such default or make the applicable
Assignment Fee adjustment payment. Upon making such capital contribution, Services shall deliver to the Partnership written notice that it made such capital contribution. Upon cure, Hotels shall deliver to Services and the Partnership written notice
of cure. 
  
 1.2 Commercial Space Sublease. Subject to the
consummation of the IPO, the assignment of the Commercial Space Lease to MHI Two, the execution by MHI Two and the Partnership of the Commercial Space Sublease Agreement and the terms and conditions of this Agreement, Services hereby agrees to
contribute to the capital of MHI Two from time to time, a sum of money in an amount sufficient for MHI Two to cure any payment default that MHI Two might incur from time to time during the term of the Commercial Space Sublease Agreement or to pay
the Assignment Fee adjustment following termination of the Commercial Space Lease or Commercial Space Sublease Agreement (other than at the election or fault of the Partnership) at the times and in the amounts specified in the Commercial Space
Agreement. Services agrees that, if Services receives notice that MHI Two has so defaulted in a payment required under the Commercial Space Sublease Agreement or must pay the Assignment Fee adjustment as provided in the Commercial Space Agreement,
(a) such notice shall conclusively establish that such payment default has occurred or such payment must be made in accordance with such agreement and the amount of the payment default or Assignment Fee adjustment, and (b) Services shall have no
right to challenge whether such a default has occurred or the amount of such payment default or whether such Assignment Fee adjustment must be made in accordance with such agreement and Services hereby waives any right it may have to file a suit or
commence a proceeding of any kind whether at law or in equity seeking a declaratory judgment or otherwise, all provided that such notice was delivered in good faith. Services agrees to make a capital contribution to MHI Two in cash in an amount
equal to the payment default specified in the notice of default. Such capital contribution shall be made no later than five (5) days after receipt of notice of such payment default, which notice may be delivered to Services either by MHI Two (with a
copy to the Partnership) or by the Partnership. Services also agrees to make capital contributions to MHI Two in cash in such amounts and at such time or times as shall be necessary to permit MHI Two to make the Assignment Fee adjustment payments as
provided in the Commercial Space Agreement. In the event of such payment default or Assignment Fee adjustment, MHI Two agrees to accept such capital contribution or capital contributions, issue to Services equity securities representing the value of
such capital contribution and promptly thereafter use the capital contribution to cure such default or make the applicable Assignment Fee adjustment payment. Upon making such capital contribution, Services shall deliver to the Partnership written
notice that it made such capital contribution. Upon cure, MHI Two shall deliver to Services and the Partnership written notice of cure. 
  

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 ARTICLE II 
 NOTICES 
  
 2.1
Notices. Any notice provided for by this Agreement and any other notice, demand, or communication required hereunder shall be in writing and either delivered in person (including by confirmed facsimile transmission) or sent by hand delivered
against receipt or sent by recognized overnight delivery service or by certified or registered mail, postage prepaid, with return receipt requested. All notices shall be addressed as follows: 
  

	         If to Services: 
	 MHI Hotels Services, L.L.C. 

	 	 6411 Ivy Lane 

	 	 Suite 510 

	 	 Greenbelt, MD 20770 

	 	 Attention: President 

  

	         If to Hotels: 
	 MHI Hotels, L.L.C. 

	 	 6411 Ivy Lane 

	 	 Suite 510 

	 	 Greenbelt, MD 20770 

	 	 Attention: President 

  

	         If to MHI Two: 
	 MHI Hotels Two, Inc. 

	 	 6411 Ivy Lane 

	 	 Suite 510 

	 	 Greenbelt, MD 20770 

	 	 Attention: President. 

  
 Notwithstanding anything set forth in this Agreement, any party delivering any notice required hereunder shall deliver a copy of such notice to the
Partnership at: 
  

	 	 MHI Hospitality, L.P. 

	 	 814 Capitol Landing Road 

	 	 Williamsburg, VA 23185. 

  
 Any address or name specified above may be changed by a notice given by the addressee to the other party. Any notice, demand or other communication shall
be deemed given and effective as of the date of delivery in person or receipt set forth on the return receipt. The inability to deliver because of changed address of which no notice was given, or rejection or other refusal to accept any notice,
demand or other communication, shall be deemed to be receipt of the notice, demand or other communication as of the date of such attempt to deliver or rejection or refusal to accept. 
  
 ARTICLE III 
 MISCELLANEOUS 
  
 3.1 Entire Agreement.
This Agreement shall constitute the entire agreement among the parties with respect to the subject matter thereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter. 
  

 4 

 3.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws
of the State of Virginia without regard to the principles of conflict of laws thereof. 
  
 3.3 Amendments and Waivers. No amendment, modification or supplement to this Agreement shall be binding on any of the parties hereto unless it is in writing and signed by the parties in interest at the time of
the modification. No provision hereof may be waived except by a writing signed by the party against whom any such waiver is sought. The waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed as a
waiver of any subsequent breach. 
  
 3.4 Assignment.
Neither this Agreement nor any rights or obligations hereunder shall be assignable or delegable by a party to this Agreement without the prior, express written consent of each other party to this Agreement. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and permitted assigns. 
  
 3.5 Titles and Headings. Titles and headings to articles and sections in this Agreement are inserted for the convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of this Agreement. 
  
 3.6 Further Assurances. The parties to this Agreement will execute and deliver or cause the execution and delivery of such further instruments and documents and will take such other actions as any other party
to the Agreement may reasonably request in order to effectuate the purpose of this Agreement and to carry out the terms hereof. 
  
 3.7 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but together shall be deemed one and
the same Agreement. 
  
 3.8 Term. The term of this
agreement shall extend until all obligations of Hotels and MHI Two pursuant to each of the Common Space Sublease Agreement, Commercial Space Sublease Agreement, Common Space Agreement and Commercial Space Agreement shall have been satisfied in full.

  
 3.9 Third-Party Beneficiary. The Partnership shall be a
third-party beneficiary of this Agreement and shall have the right to enforce this Agreement in the event that Services is required to make a capital contribution in accordance with this Agreement. 
  
 [signatures follow on next page] 
  

 5 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized
officers, as of the date first above written. 
  

			
	 MHI HOTELS SERVICES LLC,
 a Virginia limited liability company

		
	By:	 	 
	 	 	 [Kim E. Sims]

  

			
	MHI HOTELS, L.L.C., a Virginia limited liability company
		
	By:	 	 
	 	 	 [            ]
 President

  

			
	MHI HOTELS TWO, INC., a North Carolina corporation
		
	By:	 	 
	 	 	 [            ]
 President

  

 6

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