Document:

Yuma
Hospitality Properties LLLP

Restructuring
Agreement

 

This
Agreement is made as of February 15, 2017 by and among:

 

RARE
EARTH FINANCIAL, LLC, an Arizona limited liability company (“REF”) and General Partner of Yuma Hospitality Properties,
LLLP;

 

INNSUITES
HOSPITALITY TRUST, an Ohio business trust (“IHT”) and General Partner of Yuma Hospitality Properties, LLLP; and

 

YUMA
HOSPITALITY PROPERTIES LIMITED PARTNERSHIP, an Arizona Limited Partnership (“Yuma”)

 

RECITALS:

 

		A.	Yuma
                                         owns and operates the Yuma InnSuites Best Western Hotel & Suites, a 166-unit hotel
                                         in Yuma, Arizona (the “Property”).
	 	 	 
		B.	Yuma
                                         currently has 394 Class A Interests or 49.25% owned by third party Accredited Investors,
                                         401 Class B Interests or 50.12% owned by IHT and 5 Class C Interests or .63% owned by
                                         REF. There are a total of 800 units or interests.
	 	 	 
		C.	REF
                                         and IHT wish to restructure the Yuma Partnership ownership from General Partner majority-owned
                                         to accredited investor majority-owned. Total Interests outstanding will remain unchanged
                                         at 800 with Class A, Class B and Class C Limited Liability Limited Partnership Interests
                                         (referred to collectively as “Interests”) restructured with the Yuma Partnership
                                         purchasing 300 existing IHT Class B Interests and reissuing 300 Class A units to accredited
                                         investors as Class A Interests causing Yuma to offer and sell up to approximately 300
                                         Class A (2017 series) Interests, (there is a potential over-allotment of up to 40 Interests)
                                         in Yuma to accredited investors at $10,000 per interest for 300 Interests for $3 million)
                                         (the “Offering”). REF, as a General Partner (“GP”) of Yuma, will
                                         coordinate the offering and sale of Class A Interests to qualified third parties. REF
                                         and other REF Affiliates may purchase Interests under the offering.
	 	 	 
		D.	There
                                         are an existing 800 units. The 300 (to 340) Class B units held by IHT are being sold
                                         to the partnership and replaced by a like number of new Class A units reducing IHT ownership
                                         from 50.12% to 12.62% (or 7.62% if over-allotment exercised). The total number of units
                                         will remain unchanged at 800 units.
	 	 	 
		E.	Offering
                                         proceeds of 300 units would be as follows:
	 	 	 
	 	 	All
                                         proceeds go to the Partnership for Class A units and then go from the Partnership to
                                         IHT to purchase like number of Class B units from IHT. IHT will use proceeds as follows:

 

	●	 	$	30,000	 	 	Offering
    Expenses
	 	 	 	 	 	 	 
	●	 	$	2,730,000	 	 	Build
    equity and cash reserves of IHT
	 	 	 	 	 	 	 
	●	 	$	240,000	 	 	Rare
    Earth Restructuring Fee (if at least $1,000,000 in  Interests are sold)
	 	 	 	 	 	 	 
	●	 	$	3,000,000	 	 	Total

 

    	 	 	 

     

    

 

Note:
In this example the Yuma Partnership will sell 300 units purchased from IHT to the Yuma Partners to be reissued as Class A units.

 

FOR
VALUABLE CONSIDERATION RECEIVED, the parties agree as follows:

 

1.       Restructuring
of Yuma. As soon as practical after execution of this Agreement, but no later than February 15, 2017, REF and IHT,
as the GPs of Yuma, will:

 

	 	(a)	amend
                                         and restate the Partnership Agreement, in form and substance acceptable to Yuma, REF
                                         and IHT to:
	 	 	 
		(i)	Consent
                                         Partnership to purchase Class B IHT Interests and reissue to accredited investors as
                                         Class A Interests for a maximum of 340 Interests.

 

		(ii)	REF
                                         and IHT will agree upon completion of the offering IHT will resign as General Partner,
                                         with REF to continue as sole GP having final GP decision authority.

 

2.       Offering.
Yuma Partnership will conduct the Offering to accredited investors only, of up to 300 Class A Interests (plus a possible over
allocation of up to 40 Interests) at $10,000 per Interest (the “Offering Price”), for a total of $3,000,000 (the “Offering”)
or upon over-allotment a total of $3,400,000.

 

The
Offering contemplates costs of $30,000, and if at least $1,000,000 in Interests are sold, a Restructuring Fee of $240,000 goes
to REF all paid by IHT and not by the Partnership.

 

3.       Interests.

 

(a)       All
Partnership 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) REF 50% incentive participation described in paragraph 3(e).

(b)       All
Partnership Interests will be entitled to receive priority distributions annually from Yuma of 7% per net $10,000 invested ($700)
prorated from date of investment through January 31, 2020. 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 through January 31, 2020,
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. Once all priority distributions to other holders of Class A Interests have been paid current with
completion of priority distributions due Class A Interests through January 31, 2020, thereafter Class A Interests will not participate
in distributions by Yuma until Class B distributions have been paid current through January 31, 2020. Then Class C Interests are
brought current thereafter. If a Triggering Event of Yuma occurs (including a sale or refinancing of substantially all of the
assets of YUMA, or merger, sale, liquidation or other winding-up of Yuma) prior to the payment of all priority distributions of
proceeds to the Partners (including the GP participation described in 3(e), then priority distributions will be caught up first.

 

    	 	 2	 

     

    

 

(c)
       After January 31, 2020, all Partnership Interests will share equally in all distributions.
If a Triggering Event (as defined in 3(b)) of Yuma occurs prior to the payment of all accumulated distributions to the Partners,
such accumulated distributions will be paid out of any proceeds of the event before general distribution of the proceeds to the
Partners (including the REF General Partners’ incentive 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 Partners, all
Class A Partners will participate pro rata in the funds available for distribution to them until paid in full, then Class B, then
Class C.

 

(d)       Distributions
will be payable quarterly in arrears based on calendar quarters, due 50 days after the end of the quarter. Scheduled distributions
will be prorated initially and will be payable on or before 50 days after the end of each calendar quarter. Thereafter, distributions
will be made every three months provided, in the sole judgment and discretion of the GP, cash is available for such distributions.
Yuma will use its best efforts to pay the 7% annual distribution, paid quarterly contemplated in paragraph 3(b) and quarterly
distributions contemplated in paragraph 3(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 including 7% per year for each full or partial year held, and they have received distributions of at least $10,000
per Interest in addition to 7% annual distributions, REF will receive a profit participation incentive of 50% of (1) any distributions
to Yuma Class A, B and C Interests and (2) 50% of the proceeds from any Triggering Event (as defined in 3(b)) as additional consideration
as a General Partner. The remaining distributions to all partners (Class A, B, and C) will be pro rata based on number of Interests
owned.

 

4.       Best
efforts:. Rare Earth will use its best efforts to sell at least 100 Interests on or before February 15, 2018.

 

5.       Removal
of General Partner. At any time, a Majority-in-Interest of all LP and GP interests of Yuma may remove REF and/or IHT as GP
and elect a new GP. Notwithstanding its removal as GP pursuant to this paragraph, REF will retain the profit participation incentive
right described in paragraph 3(e).

6.       Ownership
of Yuma. The table below demonstrates the capital structure of Yuma. 0

 

In
the event of the sale of 150 or 300 units (and in the event the maximum additional 40 units) capitalization would be as follows:

 

	 	 	Initially	 	 	%	 	 	Syndication
    of 

    150 Offering Units*	 	 	%	 	 	Syndication
    of 

    300 Offering Units**	 	 	%	 	 	If
    40 units are 

    over subscribed	 	 	%	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Investors	 	 	394	 	 	 	(49.25	)	 	 	544	 	 	 	(68.00	)	 	 	694	 	 	 	(86.75	)	 	 	734	 	 	 	(91.75	)
	IHT	 	 	401	 	 	 	(50.125	)	 	 	251	 	 	 	(31.375	)	 	 	101	 	 	 	(12.625	)	 	 	61	 	 	 	(7.625	)
	REF	 	 	5	 	 	 	(.625	)	 	 	5	 	 	 	(.625	)	 	 	5	 	 	 	(.625	)	 	 	5	 	 	 	(.625	)
	 	 	 	800	 	 	 	100	%	 	 	800	*	 	 	100	%	 	 	800	**	 	 	100	%	 	 	800	 	 	 	100	%

 

*In
this example, IHT will sell 150 units to Yuma to be reissued to investors as Class A units.

**In
this example IHT will sell 300 to Yuma to be reissued to investors as Class A units.

 

    	 	 3	 

     

    

 

7.       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 form 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.

 

(e)       Board
Approval. IHT and Yuma will obtain approval of the Board of Trustees of InnSuites Hospitality Trust with James Wirth abstaining
prior to authorizing Marc Berg to sign on behalf of these entities.

 

The
parties have executed this Agreement effective as of the date first written above.

 

	INNSUITES
    HOSPITALITY TRUST (IHT)	 
	 	 	 
	By:	/s/
    Marc Berg	 
	 	Marc
    Berg – Executive Vice President	 
	 	 	 
	RARE
    EARTH FINANCIAL LLC (REF)	 
	 	 	 
	By:	/s/
    James Wirth	 
	 	James
    Wirth, Manager	 
	 	 	 
	YUMA
    HOSPITALITY PROPERTIES LIMITED PARTNERSHIP	 
	 	 	 
	By:	InnSuites
    Hospitality Trust, GP	 
	 	 	 
	By:	/s/
    Marc Berg	 
	 	Marc
    Berg – Executive Vice President	 
	 	 	 
	JAMES
    WIRTH	 
	 	 	 
	 	/s/
    James Wirth 	 

 

    	 	 4IBC
Bonus Agreement

 

InnSuites
Hospitality Trust (the “Company” or “IHT”) has approved the payment of bonuses (“IBC Bonuses”)
to Pamela Barnhill, Adam Remis, and Marc Berg in connection with the consummation of a liquidity event for IBC, a division of
IHT. This Agreement sets forth the terms and conditions of the IBC Bonuses for Barnhill, Remis and Berg (collectively “Executives”),
including the requirements that Executives must meet to receive their IBC Bonus.

 

Recitals

 

	 	1.	Certain
    Executives have assisted in creating and developing IBC, a division of IHT.
	 	 	 
	 	2.	Certain
    Executives have increased the initial value of IBC from $3,000,000 (“Starting Value”) to its current business
    value of $10,350,000 as determined by the “IBC Online” business valuation prepared by Business Valuation Center,
    Inc. as of December 31, 2016 (the “2016 Valuation”). 
	 	 	 
	 	3.	IHT
    desires a partial or full sale of IBC to a third party, an infusion of capital, or a liquidity event involving substantially
    all the stock and/or assets of IBC on or before January 31, 2019. 
	 	 	 
	 	4.	IHT
    desires to recognize Barnhill’s, Berg’s and Remis’ contributions to IBC’s development and success
    through agreed upon IBC Bonus eligibility as set forth herein. 
	 	 	 
	 	5.	On
    January 24, 2017, the IHT Compensation Committee recommended to the IHT Board of Trustees and the Board adopted a Board Resolution
    agreeing to the basic terms of this Agreement. 

 

Agreement

 

NOW,
THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, the Parties agree as follows:

 

	 	1.	The
    above Recitals are incorporated herein by this reference.
	 	 	 
	 	2.	Eligibility:

 

	 	a.	Subject
    to the terms of this Agreement, Executives will be entitled to receive IBC Bonuses if Executives (i) remain in the continuous
    employ of the Company until the date of consummation of a sale, capital infusion and/or liquidity event (“Closing Date”)
    and (ii) such sale, capital infusion and/or liquidity event occurs prior to the IBC Bonus Program Termination Date of January
    31, 2019. If Executive’s employment with Company terminates without cause prior to the IBC Closing Date and/or a sale
    or liquidity event does not occur before the IBC Bonus Program Termination Date, Executive will not be entitled to receive
    an IBC Bonus, this Agreement shall immediately terminate and the Company shall have no liability to Executives hereunder.
    

 

	 	i.	“Termination
    Without Cause” means termination by the Company other than because of:

 

	 	1.	willful
    refusal by you to follow lawful directives of the President the Company or the Board which are consistent with the scope and
    nature of your duties and responsibilities; if an isolated, insubstantial or inadvertent action or failure which is remedied
    by you within 10 days after written notice from the President;
	 	 	 
	 	2.	your
    conviction of, or plea of guilty or nolo contendere to, a felony or of any crime involving moral turpitude, fraud or embezzlement
	 	 	 
	 	3.	any
    gross negligence or willful misconduct by you resulting in a material loss to the Company or any of its subsidiaries, or material
    damage to the reputation of the Company or any of its subsidiaries;
	 	 	 
	 	4.	any
    material breach by you of any one or more of the covenants contained in any proprietary interest protection, confidentiality,
    non-competition or non-solicitation agreement between you and the Company; or
	 	 	 
	 	5.	any
    violation of any statutory or common law duty of loyalty to the Company or any of its subsidiaries.

 

    	 

    	 

    

 

	 	b.	Subject
    to the provisions of this Agreement, Executive’s IBC Bonus shall be subject to a clawback if Executive fails to disclose
    any prior business dealings or relationships with the acquiring entity of IBC. This provision shall act to prevent Executives
    from self-dealing or undermining the value of IBC. 

 

	 	3.	Amount
    of IBC Bonus: 

 

	 	a.	Barnhill’s
    IBC Bonus will be an amount equal to 10% of the gross sale or transfer price over and above the Starting Value ($3M currently)
    or 10% of the capital raised. For example, if IBC sells for $10 million cash and the Starting Value remains $3 million, the
    increase is $7 million and Barnhill’s IBC Bonus would be $700,000 ($7M x .10). 
	 	 	 
	 	b.	The
    IBC Bonuses to Remis and Berg will be based on the IBC Bonus earned by Barnhill and such IBC Bonuses will be paid by IHT,
    not from a reduction of Barnhill’s IBC Bonus. 

 

	 	i.	Remis
    will receive an IBC Bonus of 25% of the amount paid to Barnhill or similar amount. For example, if Barnhill’s IBC Bonus
    is $700,000, Remis’ IBC Bonus will be $175,000. The Compensation Committee expressly reserves the right to award Remis
    an amount in the range of 20% to 40% of the amount paid to Barnhill. 
	 	 	 
	 	ii.	Berg
    will receive an IBC Bonus of 10% of the amount paid to Barnhill. For example, if Barnhill’s IBC Bonus is $700,000, Berg’s
    IBC Bonus will be $70,000. 

 

	 	4.	Additional
    IBC Bonus for Barnhill. If Barnhill procures the purchaser or investor for IBC or otherwise is a key contributor in the
    sale of IBC, Barnhill will receive an Additional IBC Bonus of 3% of the gross sale. Barnhill must identify in writing to James
    Wirth those purchasers she induces to make an offer to IBC prior to Due Diligence. For those purchasers or investors for whom
    Barnhill asserts she is a key contributor, Barnhill must similarly state in writing to James Wirth prior to Closing Date that
    she is a key contributor. 
	 	 	 
	 	5.	Payment
    of IBC Bonuses. 

 

	 	a.	Cash
    transactions result in IBC Bonuses that are due and payable to Executives in a cash lump sum within 7 days of the Closing
    Date. 
	 	 	 
	 	b.	IBC
    Bonuses shall be due and payable in stock if the sale is an exchange for stock within 14 days of the Closing Date.
	 	 	 
	 	c.	IBC
    Bonuses shall be due and payable as a combination of cash and stock in the event of a sale or liquidity event involving both
    cash and stock, with the configuration of such combination to be in the reasonable discretion of Barnhill (with Barnhill deciding
    for all Executives). The IBC Bonuses shall be made within 7 days if cash and 14-days if stock of the Closing Date. 
	 	 	 
	 	d.	Additional
    IBC Bonuses are due and payable on the same terms as IBC Bonuses. 
	 	 	 
	 	e.	Nothing
    in this Agreement precludes Executives from earning more than one IBC Bonus. 

 

	 	6.	Unfunded
    Status. All rights of Executives to IBC Bonuses under this Agreement are unfunded obligations of the Company. IBC Bonuses
    shall be paid from the general assets of the Company, and each Executive shall have the status of an unsecured general creditor
    of the Company. 

 

    	 

    	 

    

 

	 	7.	Tax
    Withholding. The Company may withhold from IBC Bonuses all federal, state, city or other taxes that may be required to
    be withheld pursuant to any law or governmental regulation or ruling. Notwithstanding any other provision of this letter agreement,
    the Company shall not be obligated to guarantee any particular tax result for Executives with respect to any payment provided
    hereunder, and Executives shall be responsible for any taxes imposed with respect to any such payment. Company will however
    work in good faith with Executives to limit tax liabilities to Executives. 
	 	 	 
	 	8.	Successors
    and Assigns. This Agreement shall inure to the benefit of, and shall be binding upon, the Parties hereto and their respective
    heirs, personal representatives, successor and assigns. This Agreement, however, is not intended to confer any rights or benefits
    upon any person or entity other than the parties hereto and their respective heirs, personal representatives, successors and
    assigns.
	 	 	 
	 	9.	Other
    Benefits; No Right to Employment. No payments hereunder shall count toward, be substituted in lieu of, or be considered
    in determining payments or benefits due to Executives under applicable law or under any other plan, program or agreement of
    the Company. Nothing in this Agreement shall be deemed to give any Executive the right to remain employed by the Company or
    to limit, in any way, the right of the Company to terminate, or to change the terms of, an Executive’s employment at
    any time.
	 	 	 
	 	10.	Discretionary
    Authority. The Compensation Committee may, from time to time prior, amend or terminate this Agreement, provided that any
    resulting reduction in an Executive’s right to payments under a previously granted Award shall be compensated for by
    a replacement plan or arrangement of comparable or greater value to the affected Executive. The determination of whether a
    replacement agreement or arrangement is of comparable or greater value shall be made by the Compensation Committee in its
    sole discretion, acting in good faith and based upon the facts and circumstances existing at the time of the Committee’s
    determination.
	 	 	 
	 	11.	Mediation
    and Binding Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof,
    shall be submitted for mediation and if needed, binding arbitration by an arbitrator the parties mutually agree upon. If the
    parties are unable to reach agreement on an arbitrator, the parties shall each submit three names of proposed arbitrators
    and draw the arbitrator by random lot. 
	 	 	 
	 	12.	Governing
    Law. This Agreement shall be governed by the law of the State of Arizona. 

 

InnSuites
Hospitality Trust, Inc.

 

	/s/ James
    Wirth 	 

James
Wirth

 

	Accepted
    and Agreed to:	 	Accepted
    and Agreed to:	 	Accepted
    and Agreed to:
	 	 	 	 	 
	/s/
    Pamela Barnhill 	 	/s/ Adam
    Remis 	 	/s/
    Marc Berg 
	Pamela
    Barnhill	 	Adam
    Remis	 	Marc
    Berg

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