**Exhibit 10.16**

 

**PROMISSORY NOTE**

 

| $110,000.00 |   | Phoenix, Arizona       |
|-------------|--------|------------------------|
|        |   | December 26, 2002 |
|        |   | Note Doc. 122602122    |

 

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 NorthernAvenue, Suite 102, Phoenix, Arizona 85020 hereby promises to pay to the orderof Fort Worth/Dallas Suite Hospitality Partnership (“Payee”), an Arizonapartnership, 1615 East Northern Avenue, Suite 102, Phoenix, Arizona 85020 or asuch other place as the holder hereof may from time to time designate inwriting, the principal sum of ONE HUNDRED TEN THOUSAND AND 00/100 DOLLARS($110,000.00), with interest on the unpaid principal balance thereon from timeto time outstanding, at the rate of seven percent (7.00%) per annum, computedon a three hundred sixty (360)-day year, to be due and payable ininstallments of principal and interest as follows:

 

(A)                              Commencing on February 1, 2003, onepayment of accrued but unpaid interest on the outstanding principal balancehereunder; and one payment in the amount of the then unpaid principal balancehereunder and all sums and charges due and unpaid by Maker (collectively, the“Note”).

 

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

 

Maker shall gave the right any time during the term of this Note torepay all or part of the unpaid principal amount of the Note, together with anyaccrued and unpaid interest thereon any other sums or charges due hereunderwithout any prepayment premium or penalty.

 

Maker hereby waives for itself and, to the fullest extent notprohibited by applicable law, for any subsequent lienor, any right Maker maynow or hereafter have under the doctrine of marshaling of assets or otherwisewhich would require Payee to proceed against certain property before proceedingagainst any other property.

 

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

 

In the event that any regular payment of interest herein provided shallnot be received by Payee on the date such payment is due, Payee shall have theright to assess Maker a late payment charge in the amount of one-halfpercent (.5%) of such overdue monthly installment, which shall become due toPayee for the additional cost incurred by Payee by reason of such nonpayment.The Default Rate will only accrue for

 

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periods of delinquent installments except for such when Payee acceptslate payments of installments accompanied by a late payment charge as specifiedabove.

 

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 butunpaid interest thereon at the Default Rate and all other sums or changes duehereunder, shall become due and payable:

 

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

 

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

 

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

 

(d)                                 Any creditor’sproceeding in which Maker consents to the appointment or a receiver or trusteefor any of its property;

 

(e)                                  if any order,judgment or decree shall be entered, without the consent of Maker, upon anapplication of a creditor approving the appointment of a receiver or trusteefor any of its property, and such order, judgment, decree, or appointment isnot dismissed or stayed with an appropriate appeal bond within sixty (60) daysfollowing 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 answerseeking readjustment of debts under any state or federal bankruptcy or likelaw, or (v) any such petition is filed against Maker and is not vacated ordismissed within sixty (60) days after filling thereof.

 

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

 

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

 

If this Note is not paid when due, whether at maturity or byacceleration, Maker promises to pay all costs incurred by Payee, includingwithout limitation reasonable attorney’s fees to the fullest extent notprohibited by law, and all expenses incurred in connection with the protectionor realization of any collateral, whether or not suit is filed hereon or on anyinstrument granted a security interest.

 

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

 

Maker hereby waves demand, presentment for payment, protest, notice ofprotest, notice of non-payments and any and all lack of diligence ordelays in collection or enforcement of this Note, and expressly

 

 

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

 

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

 

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

 

Any notice required hereunder shall be in writing, and shall be givento 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 Suite102, Phoenix, Arizona 85020, (Tel.(602) 944-1500, Fax (602) 678-0281,with a copy to James W. Reynolds, Esq., Dillingham Cross, P.L.C., 5080North 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., ThompsonHine 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 addressas a place for service of notice. Such notices shall be deemed to be receivedwhen delivered, if delivered in person, or seven (7) business days afterdeposited in the United States mails, if mailed as herein above provided.

 

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

 
|   | 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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