EXHIBIT 10.1
PROMISSORY NOTE
$200,000 Phoenix, Arizona
August 14, 2000
FOR VALUED RECEIVED, and legally bound hereby, INNSUITES HOSPITALITY TRUST
("Maker"), an Ohio real estate investment trust, having an office at 1625 East
Northern Avenue, Suite 201, Phoenix, Arizona 85020 hereby promises to pay to the
order of Pepper Tree/Freeway Community Limited Partnership ("Payee"), an Arizona
partnership, ComVest Capital Corporation, General Partner, an Arizona
corporation, 1625 East Northern Avenue, Suite 201, 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 THOUSAND AND 00/100 DOLLARS
($200,000), with interest on the unpaid principal balance thereon from time to
time outstanding, at the rate of seven percent (7.00%) per year, 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 May 15, 2001, one annual payment of accrued but
unpaid interest on the outstanding principal balance
hereunder; and on May 15, 2001, (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").
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.
Maker shall give the right 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 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
-1-
<PAGE>
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 two percent (2.0%) of such
overdue quarterly installment, which shall become immediately due to Payee for
the additional cost agreed compensation to Payee for the additional costs and
expenses reasonable expected to be incurred by Payee by reason of such
nonpayment. Maker acknowledges that the exact amount of such cost and expenses
may be difficult, if not impossible, to determine with certainty, and further
acknowledges and confesses the amount of such charge to be a consciously
considered, good faith estimate of the actual damage to Payee by reason of such
default. 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 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;
-2-
<PAGE>
(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.
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-
<PAGE>
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 1625 East Northern Avenue,
Suite 201, Phoenix, Arizona 85020, Attn: President, (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 1625 East Northern Avenue,
Suite 201, 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
-4-
