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.




 




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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.




 




 




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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.




 




 




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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


  





 




 




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