Exhibit 10.1


 


PROMISSORY NOTE


 


	
  $225,000.00

  	
   

  	
  Phoenix,
  Arizona

  
	
   

  	
  June 9, 2003

  
	
   

  	
  Note Doc.060903225

  



 


FOR VALUED RECEIVED, and legally bound
hereby, RRF LIMITED PARTNERSHIP (“Maker”), a Delaware partnership, InnSuites
Hospitality Trust, General Partner, an Ohio real estate investment trust,
having an office at 1615 East Northern Avenue, Suite 102, Phoenix, Arizona
85020 hereby promises to pay to the order of Rare Earth Financial LLC
(“Payee”), an Arizona limited liability company, 1615 East Northern Avenue, Suite
102, Phoenix, Arizona 85020 or a such other place as the holder hereof may from
time to time designate in writing, the principal sum of TWO HUNDRED TWENTY FIVE
THOUSAND AND 00/100 DOLLARS ($225,000.00), with interest on the unpaid
principal balance thereon from time to time outstanding, at the rate of seven
percent (7.00%) per annum, computed on a three hundred sixty (360)-day year, to
be due and payable in installments of principal and interest as follows:


 


(A)                              Commencing on February 15, 2004, one
annual payment of accrued but unpaid interest on the outstanding principal
balance hereunder; and on February 15, 2004 (the “Maturity date”), one payment
in the amount of the then unpaid principal balance hereunder and all sums and
charges due and unpaid by Maker (collectively, the “Note”).


 


Subject to the requirements and approval of
Irwin Union Bank and subject to the cash flow of Maker, upon the sale or
refinance of any Trust hotel, twenty (20%) percent of the net proceeds shall be
made available at the option of Payee to pay or pre-pay principal and/or
accrued but unpaid interest on the outstanding principal balance on this Note.


 


Payments shall be applied first to any
charges or sums (other than principal and interest) due and payable by Maker,
second to accrued and unpaid interest on the principal balance hereof, and then
to further reduce the principal balance of this Note.


 


At any time during the term of this Note Maker may prepay all or part
of the unpaid principal amount of the Note, together with any accrued and
unpaid interest thereon and any other sums or charges due hereunder without any
prepayment premium or penalty.


 


Maker hereby waives for itself and, to the
fullest extent not prohibited by applicable law, for any subsequent lienor, any
right Maker may now or hereafter have under the doctrine of marshaling of
assets or otherwise which would require Payee to proceed against certain
property before proceeding against any other property.


 


Maker hereby agrees that in the event part of principal or interest is
not paid when due or the entire Note is not paid when due, then the rate of
interest on this Note shall, at the election of Payee upon ten (10) days prior
written notice, each of which is hereby expressly waived, be increased to nine
and 00/100 percent (9.00%) per annum or the highest rate for which the parties
may agree under applicable law, whichever is less (the “Default Rate”). Maker
shall be obligated thereafter to pay interest on the then unpaid principal
balance of the Note at the Default Rate, both before and after judgment, to be
computed from the due date through and including the date of actual receipt of
the overdue payment, whether a payment of interest or the entire Note.  Nothing herein shall be construed as an
agreement or privilege to extend the date of the payment or any installment or
the entire Note, or as a wavier of any other right or remedy accruing to Payee.


 


In the event that any regular monthly installment of principal and
interest herein provided shall not be received by Payee on the date such
payment is due, Payee shall have the right to assess Maker a late payment
charge in the amount of one-half 


 

















 


percent (.5%) of such overdue monthly installment, which shall become
due to Payee for the additional cost incurred by Payee by reason of such
nonpayment.  The Default Rate will only
accrue for periods of delinquent installments except for when Payee accepts
late payments of installments accompanied by a late payment charge as specified
above.


 


Upon any of the following Events of Default,
at the election of Payee, the entire unpaid principle balance of the Note,
together with all accrued but unpaid interest thereon at the Default Rate and
all other sums or changes due hereunder, shall become due and payable:


 


(a)                                  Maker’s failure to pay when due any
installment required to be paid hereunder, on or before the tenth (10th)
day following the applicable due date;


 


(b)                                 Maker’s failure to pay when due any
other payment required to be under this Note, subject to any notice and
applicable grace period, if any;


 


(c)                                  Maker’s breach of any other covenant
or agreement herein and such breach remains uncorrected at the expiration of
any applicable grace period expressly provided for herein;


 


(d)                                 Any creditor’s proceeding in which
Maker consents to the appointment or a receiver or trustee for any of

its property;


 


(e)                                  if any order, judgment or decree
shall be entered, without the consent of Maker, upon an application of a
creditor approving the appointment of a receiver or trustee for any of its property,
and such order, judgment, decree, or appointment is not dismissed or stayed
with an appropriate appeal bond within sixty (60) days following the entry or
rendition thereof; or


 


(f)                                    if Maker (i) makes a general
assignment for the benefit of creditors, (ii) fails to pay its debts generally
as such debts become due, (iii) is found to be insolvent by a court of
competent jurisdiction, (iv) voluntarily files a petition in bankruptcy or a
petition or answer seeking readjustment of debts under any state or federal
bankruptcy or like law, or (v) any such petition is filed against Maker and is
not vacated or dismissed within sixty (60) days after filling thereof.


 


(g)                                 Maker and Payee agree that no event
of default has occurred by effect of (a) through (f) above if the event is a
result of law or violates any other agreements that Maker and Payee as
President of InnSuites Hospitality Trust, General Partner of RRF Limited
Partnership has agreed.


 


Notice of such election by Payee is hereby
expressly waived as part of the consideration for this loan.  Nothing contained herein shall be construed
to restrict the exercise of any other rights or remedies granted to Payee
hereunder upon the failure of Maker to perform any provision hereof.


 


If this Note is not paid when due, whether at
maturity or by acceleration, Maker promises to pay all costs incurred by Payee,
including without limitation reasonable attorney’s fees to the fullest extent
not prohibited by law, and all expenses incurred in connection with the protection
or realization of any collateral, whether or not suit is filed hereon or on any
instrument granted a security interest.


 


Maker hereby expressly acknowledges and
represents that the indebtedness is for a business purpose and not consumer or
household purposes.


 


Maker hereby waves demand, presentment for payment, protest, notice of
protest, notice of non-payments and any and all lack of diligence or delays in
collection or


 


2

















 


enforcement of this Note, and expressly consents to any extension of
time of payment hereof, release of any party primarily or secondarily liable
hereunder or any of the security for this Note, acceptance of other parties to
be liable for any of the Note or of other security therefore, or any other
indulgence or forbearance which may be made, without notice to any party and
without in any way affecting the liability of any party.


 


No failure by Payee to exercise any right
hereunder shall be construed as a waiver of the right to exercise the same or
any other right any time or from time to time thereafter.


 


This Note shall be construed and enforced
according to, and governed by the laws of the State of Arizona.


 


Any notice required hereunder shall be in
writing, and shall be given to the receiving party the notice by personal
delivery or be certified mail, postage prepaid, return receipt requested, as
follows:


 


if to Payee, then addressed to Payee at 1615
East Northern Avenue Suite 102, Phoenix, Arizona 85020, (Tel.(602) 944-1500,
Fax (602) 678-0281, with a copy to James W. Reynolds, Esq., Dillingham Cross,
P.L.C., 5080 North 40th Street, Suite 335, Phoenix, Arizona 85018,
(Tel.(602) 468-1811, Fax (602) 468-0442);


 


if to Maker, then addressed to maker at 1615
East Northern Avenue, Suite 102, Phoenix, Arizona 85020, Attn: President
(Tel.(602) 944-1500, Fax (602) 678-0281), with a copy to James B. Aronoff,
Esq., Thompson Hine & Flory, LLP, 3900 Key center, 127 Public Square,
Cleveland, Ohio 44114 (Tel.(216) 566-5500, Fax (216) 566-5800).


 


Any party may, be given notice in writing to
designate another address as a place for service of notice. Such notices shall
be deemed to be received when delivered, if delivered in person, or seven (7)
business days after deposited in the United States mails, if mailed as herein
above provided.


 


By acceptance of this Note, Payee agrees
that, upon payment in full of the then unpaid principal balance of this Note,
together with all unpaid interest and other sums payable to Payee under this
Note, (a) Note shall be fully satisfied, (b) Payee shall promptly mark this
Note as being paid in full, satisfied and discharged and shall return the same
to 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

  	
   

  



 


3