Document:

Exhibit

10.2

PROMISSORY NOTE

 

 

	

  $158,666.67

  	

   

  	

  Phoenix, Arizona

  	

   

  
	

   

  	

   

  	

  May 1, 2002

  	

   

  
	

   

  	

   

  	

  Note Doc.

  031502158I

  	

   

  
	

   

  	

   

  	

   

  	

   

  

FOR VALUED RECEIVED, and legally bound hereby, INNSUITES HOSPITALITY

TRUST (“Maker”), 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 James Wirth (“Payee”), 5700 East Glen Drive, Paradise Valley,

Arizona 85253 or  such other place as

the holder hereof may from time to time designate in writing, the principal sum

of ONE HUNDRED FIFTY EIGHT THOUSAND SIX HUNDRED SIXTY SIX AND 67/100 DOLLARS

($158,666.67), bearing interest on the unpaid principal balance 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 March 15, 2004, one

annual payment of accrued but unpaid interest on the outstanding principal

balance hereunder; and on March 15, 2004 (the “Maturity date”), one payment in

the amount of the then unpaid principal balance hereunder, and all other 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 and then applied to further reduce the

principal balance of this Note.

 

This Promissory Note

consists of accrued but unpaid interest due March 15, 2002 on the Promissory

Note of the outstanding principal balance of $2,000,000.

 

Maker may exercise the

right at any time during the term of this Note to repay all or part of the unpaid

principal amount of the Note, together with any accrued and unpaid interest

thereon 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 and Payee agree

with the prior approval of Payee that the Note can be automatically extended

for a period of three years for the outstanding principal balance at the

Maturity Date. 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 on 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 of or the entire Note, or as a wavier of any other right or remedy

accruing to Payee.

 

In the event that any regular payment of 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 such 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 sums required to be paid 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 

 

2

 

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.

 

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 Indebtedness 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.

 

3

 

 

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 5700 East Glen Drive, Paradise Valley, Arizona 85253,

(Tel.(602) 596-0224, Fax (602) 596-0225), with a copy to James W. Reynolds,

Esq., Dillingham & Reynolds L.L.P., 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 or 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.

 

 

	

   

  	

  INNSUITES HOSPITALITY TRUST,

  an Ohio real estate investment trust

   

   

  
	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Marc E. Berg

  
	

   

  	

  Name:   

  	

  Marc E. Berg

  
	

   

  	

  Title:  

  	

  Executive Vice-President

  
					

 

 

 

4Exhibit

10.3

 

PROMISSORY NOTE

 

 

	

  $311,808.97

  	

   

  	

  Phoenix, Arizona

  
	

   

  	

   

  	

  July 15, 2002

  
	

   

  	

   

  	

  Note Doc. 071502311I

  

 

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 Development Company (“Payee”), an Arizona corporation,

1615 East Northern Avenue, Suite 102, Phoenix, Arizona 85020 or such other

place as the holder hereof may, from time to time, designate in writing, the

principal sum of THREE HUNDRED ELEVEN THOUSAND EIGHT HUNDRED EIGHT AND 97/100

DOLLARS ($311,808.97), bearing interest on the unpaid principal balance 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 July 15, 2007, one annual

payment of accrued but unpaid interest on the outstanding principal balance

hereunder; and on July 15, 2007 (the “Maturity date”), one payment in the

amount of the then unpaid principal balance hereunder, and all other 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 and then applied to further reduce the

principal balance of this Note.

 

This Promissory Note

consists of accrued but unpaid interest due July 15, 2002 on the previous

Promissory Notes outstanding principal balances of $3,802,500.

 

Maker may exercise the

right at any time during the term of this Note to repay all or part of the

unpaid principal amount of the Note, together with any accrued and unpaid

interest thereon 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.

 

 

1

 

 

Maker and Payee agree

with the prior approval of Payee that the Note can be automatically extended

for a period of three years for the outstanding principal balance at the

Maturity Date. 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 on 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 of or the entire Note, or as a wavier of any other right or remedy

accruing to Payee.

 

In the event that any regular payment of 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 such 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

sums required to be paid 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, 

 

 

2

 

 

                                                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.

 

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 Indebtedness 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.

 

 

3

 

 

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 & Reynolds L.L.P., 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 or 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 covenants and 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

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