Exhibit 10.1

 

PROMISSORY NOTE

 

$125,000.00

 

Phoenix, Arizona

 

 

October 8, 2002

 

 

Note Doc.100802125

 

FOR VALUED RECEIVED, the undersigned RRF LIMITED PARTNERSHIP, a Delaware
partnership, (“Maker”), promises to pay to the order of Capital Resource
Lenders-I, L.L.C., an Arizona limited liability company, (the “Payee”; Payee and
each subsequent transferee and/or owner of this Note, whether taking by
endorsement or otherwise, are herein successively called “Holder”) at 1615 East
Northern Avenue, Suite 102, Phoenix, Arizona 85020-3932, or at such other place
as the Holder may from time to time designate in writing, the principal sum of
ONE HUNDRED TWENTY FIVE THOUSAND AND 00/100 DOLLARS ($125,000.00), or so much as
has been advanced, plus interest calculated on a daily basis (based on a 360-day
year) from the date hereof on the principal balance from time to time
outstanding as hereinafter provided, principal, interest and all other sums
payable hereunder to be paid in lawful money of the United States of America as
follows:

 

(A)                              During the term of the Note, interest shall
accrue quarterly at the floating rate equal to the greater of (i) 8% per annum
or (ii) the Prime Rate plus 0.5%, and shall be adjusted at the beginning of each
calendar quarter. Notwithstanding the foregoing, at no time shall the interest
rate hereunder be greater than 10% per annum. The Prime Rate is defined as the
rate of interest, as of the first business day of each quarter, designated in
The Wall Street Journal as the “prime rate.”

 

(B)                                All accrued interest shall be due and payable
on the first day of each calendar quarter after the date of this Note commencing
with October 1, 2002, and continuing on each January 1, April 1, and July 1
thereafter until this Note is paid in full.

 

(C)                                Payments shall be interest only, payable
quarterly until April 1, 2003; commencing on April 1, 2003, quarterly payments
shall include both interest and principal amortized over 20 years.

 

(D)                               The entire unpaid principal balance, all
accrued and unpaid interest, and all other amounts payable hereunder shall be
due and payable in full no later than September 30, 2009.

 

Maker hereby agrees that not less than 80% of each advance shall be used by
Maker to reduce the obligations under that certain loan secured by a deed of
trust in first position on the Real Property in the original principal amount of
$1,825,000. Advances shall in no event exceed the maximum principal amount of
this Note. Any advances made shall be and become sums secured by this Note and
subject to repayment pursuant to the terms hereof. Notwithstanding anything
herein to the contrary, Lender shall not be obliged to make any advance under
this Note and the determination to provide any advances requested by Maker shall
be made in Lender’s sole and absolute discretion.

 

1

--------------------------------------------------------------------------------

 

If payment is ten (10) days or more late, Maker will be charged five percent
(5%) of the regularly scheduled payment. This late charge may be assessed
without written notice and shall be immediately due and payable and shall be in
addition to all other rights and remedies available to Holder.

 

Unless otherwise agreed to, in writing, or otherwise required by applicable law,
payments will be applied first to late charges and any unpaid collection costs,
then to accrued, unpaid interest, then to principal and other charges; provided,
however, upon delinquency or other default, Holder reserves the right to apply
payments among principal, interest, late charges, collection costs and other
charges at its discretion. All prepayments shall be applied to the indebtedness
owing hereunder in such order and manner as Holder may from time to time
determine in its sole discretion.

 

This Note is issued pursuant to that Loan Agreement (the “Loan Agreement”) of
even date herewith between Maker and Payee and is secured by, among other
things, one or more Deeds of Trust, Assignments of Rents, Security Agreements
and Fixture Filings (collectively, the “Deed of Trust”) of even date herewith,
executed by Maker, as trustor, in favor of Payee, as beneficiary, encumbering
property situated in Scottsdale, Maricopa County, Arizona, (the “Real
Property”). The Deed of Trust and all other documents or instruments securing
the indebtedness evidenced by this Note or executed or delivered in connection
with the indebtedness evidenced by this Note are hereinafter called the
“Security Documents.” The capitalized terms used herein and not otherwise
defined shall have the same meanings as set forth in the Loan Agreement.

 

Time is of the essence of this Note. At the option of Holder, the entire unpaid
principal balance, all accrued and unpaid interest and all other amounts payable
hereunder shall become immediately due and payable without notice upon the
failure to pay any sum due and owing hereunder as provided herein if such
failure continues for thirty (30) days after written notice thereof to Maker or
upon the occurrence of any Event of Default as defined in the Loan Agreement or
any of the Security Documents.

 

Upon default, including failure to pay upon final maturity, Holder, at its
option, may also, if permitted under applicable law, do one or both of the
following: (a) increase the applicable interest rate on this Note to fifteen
percent (15%) per annum, and (b) add any unpaid accrued interest to principal
and such sum will bear interest therefrom until paid at the rate provided in
this Note (including any increased rate). The interest rate will not exceed the
maximum rate permitted by applicable law. Maker shall pay all costs and
expenses, including reasonable attorneys’ fees and court costs, incurred in the
collection or enforcement of all or any part of this Note. All such costs and
expenses shall be secured by the Deed of Trust and by all other Security
Documents. In the event of any court proceedings, court costs and attorneys’
fees shall be set by the court and not by jury and shall be included in any
judgment obtained by Holder.

 

Maker shall not be entitled to prepay this Note at any time during the first
year of the Note. Thereafter, Maker shall have the option to prepay this Note,
in full or in part, at any time, provided that Maker pays a 4% prepayment
penalty based on the amount prepaid and Holder receives at least five (5) days
prior written notice of the intent to make such prepayment.

 

 

2

--------------------------------------------------------------------------------

 

Failure of Holder to exercise any option hereunder shall not constitute a waiver
of the right to exercise the same in the event of any subsequent default or in
the event of continuance of any existing default after demand for strict
performance hereof.

 

Maker and all sureties, guarantors and/or endorsers hereof (or of any obligation
hereunder) and accommodation parties hereon (all of which, including Maker, are
severally each hereinafter called a “Surety”) each:  (a) agree that the
liability under this Note of all parties hereto is joint and several; (b)
severally waive any homestead or exemption laws and right thereunder affecting
the full collection of this Note; (c) severally waive any and all formalities in
connection with this Note to the maximum extent allowed by law, including (but
not limited to) demand, diligence, presentment for payment, protest and demand,
and notice of extension, dishonor, protest, demand and nonpayment of this Note;
and (d) consent that Holder may extend the time of payment or otherwise modify
the terms of payment of any part or the whole of the debt evidenced by this Note
at the request of any other person liable hereon, and such consent shall not
alter nor diminish the liability of any person hereon.

 

Maker agrees that to the extent Maker or any Surety makes any payment to Holder
in connection with the indebtedness evidenced by this Note, and all or any part
of such payment is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid by Holder or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a “Preferential
Payment”), then the indebtedness of Maker under this Note shall continue or
shall be reinstated, as the case may be, and, to the extent of such payment or
repayment by Holder, the indebtedness evidenced by this Note or part thereof
intended to be satisfied by such Preferential Payment shall be revived and
continued in full force and effect as if said Preferential Payment had not been
made.

 

Without limiting the right of Holder to bring any action or proceeding against
Maker or any Surety or against any property of Maker or any Surety (an “Action”)
arising out of or relating to this Note or any indebtedness evidenced hereby in
the courts of other jurisdictions, Maker and each Surety hereby irrevocably
submit to the jurisdiction, process and venue of any Arizona State or Federal
court sitting in Phoenix, Arizona, and hereby irrevocably agree that any Action
may be heard and determined in such Arizona State court or in such Federal
court. Maker and all Sureties each hereby irrevocably waives, to the fullest
extent it may effectively do so, the defenses of lack of jurisdiction over any
person, inconvenient forum or improper venue, to the maintenance of any Action
in any jurisdiction.

 

This Note shall be binding upon Maker and its successors and assigns and shall
inure to the benefit of Payee, and any subsequent holders of this Note, and
their successors and assigns.

 

All notices required or permitted in connection with this Note shall be given at
the place and in the manner provided in the Loan Agreement for the giving of
notices.

 

This Note shall be governed by and construed according to the laws of the State
of Arizona, without giving effect to conflict of laws principles.

 

 

3

--------------------------------------------------------------------------------

 

 

JURY WAIVER. THE UNDERSIGNED AND HOLDER (BY ITS ACCEPTANCE HEREOF) HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT
OR OTHERWISE) BETWEEN OR AMONG THE UNDERSIGNED AND HOLDER ARISING OUT OF OR IN
ANY WAY RELATED TO THIS DOCUMENT OR ANY OTHER AGREEMENTS, DOCUMENTS OR
INSTRUMENTS EXECUTED OR DELIVERED IN CONNECTION WITH, OR OTHERWISE RELATING TO,
THE INDEBTEDNESS EVIDENCED HEREBY (TOGETHER WITH THIS NOTE, THE “RELATED
DOCUMENTS”), OR ANY RELATIONSHIP BETWEEN HOLDER AND THE UNDERSIGNED. THIS
PROVISION IS A MATERIAL INDUCEMENT TO HOLDER TO PROVIDE THE FINANCING DESCRIBED
HEREIN OR IN THE OTHER RELATED DOCUMENTS.

 

IN WITNESS WHEEREOF, these presents are executed as of the date first written
above.

 

 

MAKER

 

 

 

RRF LIMITED PARTNERSHIP,

a Delaware limited partnership,

InnSuites Hospitality Trust,

General Partner, an Ohio real estate investment trust

 

 

 

By:

/s/ Marc E. Berg

 

 

Name: Marc E. Berg

 

 

Title: Executive Vice-President

 

 

4

--------------------------------------------------------------------------------