Exhibit 10.2
Albuquerque Suite Hospitality LLC
Restructuring Agreement

 
This Agreement is made as of August 30, 2010, by and among:
 
RARE EARTH FINANCIAL, LLC, an Arizona limited liability company (“Rare Earth”);
 
RRF LIMITED PARTNERSHIP, a Delaware limited partnership (“RRF”);
 
INNSUITES HOSPITALITY TRUST, an Ohio business trust (“IHT”) and General Partner
of RRF; and
 
ALBUQUERQUE SUITE HOSPITALITY LLC, an Arizona limited liability company (“ASH”)
 
RECITALS:
 
 
A.
ASH owns and operates the Albuquerque InnSuites Hotels & Suites, a 101-unit
hotel in Albuquerque, New Mexico (the “Property”).

 
 
B.
ASH is currently owned approximately 88% by RRF and approximately 12% by Rare
Earth.
 

 
C.
Rare Earth and RRF wish to restructure ASH, creating Class A, Class B and Class
C Membership Interests (referred to collectively as “Interests”), and cause ASH
to offer and sell up to 400 Class A Interests in ASH to accredited investors for
$4,000,000 (the “Offering”).  Rare Earth, as the new Administrative Member of
ASH, will coordinate the offering and sale of Class A Interests to third
parties.  Rare Earth and other Affiliates may purchase Interests under the
offering.

 
 
D.
As a part of the restructuring, RRF would exchange its current Membership
Interests in ASH for 295 Class B Interests in ASH, and Rare Earth would exchange
its current Interest in ASH for 40 Class C Interests in ASH. Proceeds from the
Offering will be used in part to redeem Class B Interests, and may be used in
part to redeem Class C Interests.

 
FOR VALUABLE CONSIDERATION RECEIVED, the parties agree as follows:
 
1. Restructuring of ASH.  As soon as practicable after execution of this
Agreement, Rare Earth and RRF, as the sole Members and Manager of ASH, will
amend the Articles of Organization and Operating Agreement, in form and
substance reasonably acceptable to RRF and ASH, for ASH to:
 
(a) Change ASH from a manager-managed to a member-managed limited liability
company;
 
(b) Create three classes of Membership Interests authorized for issuance in
amounts sufficient to accommodate the offering and the restructuring issuances
to Rare Earth and RRF, and provide for distribution and liquidation rights and
preferences as described in Section 3 and 7 below and the exchange provided for
in Recital D above; and
 
(c) Name Rare Earth as the Administrative Member of ASH.
 
2. Offering.  Upon completion of the restructuring, ASH will conduct an offering
to accredited investors only of up to 400 Class A Interests at $10,000 per
Interest (the “Offering”), for a total offering $4,000,000 (the “Offering
Price”). The Offering Price reflects the appraised value of the Property of
$4,900,000, less current debt and other liabilities of approximately $1,550,000
for a net equity value of approximately $3,350,000. The $3,350,000 net equity
value is further reduced by the $400,000 in Interests held by Rare Earth to net
of $2,950,000 to RRF. As Class A Interests are sold in the Offering, RRF’s Class
B Interests will be redeemed on a one-for-one basis.  The Offering contemplates
the sale of 65 Interests to build cash reserves estimated at $650,000, less a
Restructuring and Offering Fee of $320,000 to Rare Earth and offering costs of
$30,000, for a net of $300,000 in cash reserves.  Subject to the closing of the
Offering, ASH will pay:  (a) a Restructuring and Offering Fee to Rare Earth of
8% of the Offering Price ($320,000); and (b) offering costs of $30,000.  If 51%
of the Interests in the Offering are not sold (including Interests purchased by
Rare Earth and its affiliates), Rare Earth will be paid a fee equal to 8% of the
aggregate offering price of the actual Interests sold, including $400,000 worth
of Interests sold to Rare Earth and its affiliates (the “Alternate Fee”),
instead of the $320,000 Restructuring and Offering Fee.  The Alternate Fee will
be payable by ASH in cash or Class C Interests of ASH valued at $10,000 per
Interest, as agreed between ASH and RRF, and will be due on the earlier of the
closing of the Offering or December 31, 2011.
 
3. Interests.
 
(a) All Membership Interests will have equal voting rights and will share
equally in all distributions (including distributions or proceeds payable upon a
Triggering Event), subject to (1) priority distribution rights and distribution
catch-up rights described in paragraph 3(b), and (2) the Administrative Member’s
50% participation right described in paragraph 3(e).  All Memberships will be
redeemable by ASH for $10,000 after payment of all distributions to which such
Interests are entitled under paragraphs 3(b) and (c).
 
(b) All Membership Interests will be entitled to receive priority distributions
annually from ASH of $700 per $10,000 Interest from January 1, 2011 through
December 31, 2015.  However, priority distributions will be paid first to Class
A Interests, second to Class B Interests and third to Class C
Interests.  Priority distributions will be cumulative, so that all priority
distributions must be paid in full to Class A Interests before any priority
distributions are paid to Class B or C Interests, and all priority distributions
must be paid in full to Class A and B Interests before priority distributions
are paid to Class C Interests.  Rare Earth, James Wirth and certain named
affiliates shall elect to defer receiving all priority distributions on their
Class A Interests until all priority distributions to other holders of Class A
and Class B Interests have been paid current.  Upon completion of priority
distributions due Class A Interests through December 31, 2015, Class A Interests
will not participate in distributions by ASH until Class B and Class C priority
distributions have been paid current through December 31, 2015.  Upon completion
of priority distributions due Class A and Class B Interests through December 31,
2015, Class A and Class B Interests will not participate in distributions by ASH
until Class C priority distributions have been paid current through December 31,
2015.  If a Triggering Event of ASH occurs (including a sale or refinancing of
substantially all of the assets of ASH or merger, sale, liquidation or other
winding-up of ASH) prior to the payment of all priority distributions to Class
A, B and C Interests, such priority distributions will be paid to the respective
Members out of any proceeds of the event before general distribution of the
proceeds to the Members (including the Administrative Member’s participation
described in 3(e)).
 
(c) After December 31, 2015, all Membership Interests will be entitled to annual
distributions of $700 per $10,000 Interest, which will be cumulative.  All
Interests will share equally in all such distributions.  If a Triggering Event
(as defined in 3(b)) of ASH occurs prior to the payment of any accumulated
distributions to the Members, such accumulated distributions will be paid out of
any proceeds of the event before general distribution of the proceeds to the
Members (including the Administrative Member’s participation described in
3(e)).  In the event that funds generated from a Triggering Event are
insufficient to pay the total amount of all such accumulated distributions owed
to the Members, all Members will participate pro rata in the funds available for
distribution to them.
 
(d) Distributions will be payable quarterly in arrears based on calendar
quarters, due 40 days after the end of the quarter.  The first regularly
scheduled distribution will be for the first calendar quarter January 1 through
March 31st and will be payable 40 days later on May 10, 2011.  Thereafter,
distributions will be made every three months provided, in the sole judgment and
discretion of the Administrative Member, cash is available for such
distributions.  ASH will use its best efforts to pay the quarterly distributions
contemplated in paragraphs 3(b) and (c).
 
(e) In the event that either (a) all Interests have been redeemed or (b) all
Interests are current in the distributions to which they are entitled and each
Interest has received distributions totaling at least $10,000, Rare Earth will
receive 50% of (1) any distributions made by ASH and (2) the proceeds from any
Triggering Event (as defined in 3(b)) as consideration for its role as
Administrative Member.
 
4. Payments from Rare Earth to RRF.  As consideration for the transactions
contemplated by this Agreement and with the expectation that the transactions
contemplated by this Agreement will be consummated, Rare Earth has paid RRF
$400,000 prior to the date of this Agreement for Rare Earth’s current 12%
Interest in ASH.
 
5. Administrative Member.  If a minimum of 160 Interests (excluding 40 Interests
sold to Rare Earth) are not sold by December 31, 2011, Rare Earth will resign as
Administrative Member of ASH, and Rare Earth and RRF will cause RRF to be
elected as Administrative Member.  Rare Earth will use its best efforts to sell
at least 160 Interests (excluding 40 Interests sold to Rare Earth) on or before
January 31, 2011.
 
 
 
 
6. Removal of Administrative Member.  At any time, a Majority-in-Interest of the
Class A Members may remove Rare Earth as Administrative Member and elect a new
Administrative Member.  Notwithstanding its removal as Administrative Member
pursuant to this paragraph, Rare Earth will retain the participation right
described in paragraph 3(e) provided that 160 or more Interests have been sold
by December 31, 2011.
 
7. Ownership of ASH.  The table below demonstrates the capital structure of ASH
immediately upon restructuring, the capital structure in the event of the sale
of 203 Class A Interests in the Offering, and the capital structure in the event
of the sale of all 400 Class A Interests in the Offering.
 

 
Immediately Upon Restructuring
In the Event of Sale of 203 Class A Interests
In the Event of Sale of 400 Class A Interests
Owners
Interests
Interests
Interests
Third Parties
0
203 Class A
400 Class A
RRF
295 Class B
95 Class B
0 Class B
Rare Earth
40 Class C
72 Class C
0 Class C
Authorized & Unissued
65
30
0
Total
400
400
400

 
8. Miscellaneous.
 
(a) Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona.
 
(b) Waiver.  No waiver or modification of this Agreement shall be valid unless
in writing and executed by the party against which the waiver or modification is
to be enforced.  No waiver of any breach or default shall operate as a waiver of
any other breach or default, whether similar or different from the breach or
default waived.
 
(c) Severability.  All provisions of this Agreement are severable, and if any
provision is held to be invalid, illegal or unenforceable in any respect by any
court of competent jurisdiction, the validity, legality and enforceability of
the remaining provisions shall not be affected, and this Agreement shall be
interpreted as if such invalid, illegal or unenforceable provisions were not
contained herein.
 
(d) Entire Agreement.  This Agreement constitutes the complete understanding of
the parties hereto, and supersedes all prior understandings or agreements,
whether oral or written.  This Agreement shall be binding upon the inure to the
benefit of the parties hereto, their successors, their legal representatives,
heirs and assigns.
 
The parties have executed this Agreement effective as of the date first written
above.
 
RRF LIMITED Partnership

By:  InnSuites Hospitality Trust
Its:  General Partner

 
          /s/  Marc E. Berg

By:             Marc E. Berg                                                   

Its:             Executive Vice President                           

RARE EARTH FINANCIAL LLC

 
          /s/  James F. Wirth

By:            James Wirth, Manager

ALBUQUERQUE SUITE HOSPITALITY LLC

By:  RRF Limited Partnership, Manager

          /s/  Marc E. Berg

By:            Marc E. Berg                                                   

Its:            Executive Vice President                                        

JAMES WIRTH
 
         /s/  James F. Wirth