Exhibit 10.1


 


PROMISSORY NOTE


 


	
  $400,000.00

  	
   

  	
  Phoenix, Arizona

  
	
   

  	
   

  	
  October 14,
  2005

  
	
   

  	
   

  	
  Note
  Doc.101305400

  



 


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 FOUR HUNDRED THOUSAND AND 00/100 DOLLARS ($400,000.00), 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 one installment of principal and interest as
follows:


 


(A)                              Commencing
on April 15, 2006, one annual payment of accrued but unpaid interest on
the outstanding principal balance hereunder; and on April 15, 2006 (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”).


 


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.


 


This note is secured in
proportion by units held by RRF Limited Partnership in Tucson Saint Mary’s Suite Hospitality
L.L.C.


 


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


 


1





















 


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


 


2





















 


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.


 


(f)                                    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
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.


 


3





















 


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

  



 


4