Document:

ex10-2.htm

Exhibit 10.2

 

PROMISSORY NOTE

 

	$42,500.00 	April 8, 2016

 

For value received, the undersigned, CLS HOLDINGS USA, INC., a Nevada corporation (the “Maker”), hereby promises to pay to the order of Jeffrey Binder (the “Holder”), at 11767 S. Dixie Highway, Suite 115, Miami, FL 33156 (or such other place(s) as Holder may designate from time to time), the principal sum of Forty-Two Thousand Five Hundred and 00/100 Dollars ($42,500.00), or such portion thereof as shall have been advanced from time to time, together with accrued and unpaid interest thereon, on the terms provided in this promissory note (this “Note”).

Interest shall accrue on the unpaid principal balance of this Note, commencing on the date that such principal was advanced, at the rate of six percent (6%) per annum through February 29, 2016 and ten percent (10%) per annum, the first advance hereunder having been made on January 7, 2016.  On April 1, 2017, Maker shall pay all then accrued interest to Holder.  Commencing on July 1, 2017, Maker shall pay the outstanding principal balance on such date, in eight (8) equal quarterly installments, together with accrued interest, in arrears, and continuing on the first day of each October, January, April and July thereafter until paid in full.  All outstanding principal and any accrued unpaid interest thereon shall be due and payable on April 1, 2019 (the “Maturity Date”).  There shall be no further advances by the Holder pursuant to this Note following the initial payment of principal hereunder. Both principal and interest are payable in lawful money of the United States of America.

All amounts under this Note shall become at once due and payable, at Holder’s option, if one or more of the following events shall happen and be continuing (an “Event of Default”):  (a) failure to make any payment of principal or interest on this Note within five (5) business days after notice by Holder of such failure; (b) assignment made by the Maker for the benefit of credits or upon the appointment of a receiver, liquidator or trustee of the Maker or the admission in writing by the Maker of its inability to pay its debts generally as they become due or the adjudication of the Maker to be a bankrupt or insolvent, or the filing of any petition for the bankruptcy, reorganization or arrangement of the Maker; or (c) issuance of any tax lien warrant, process or order of attachment, garnishment or other lien and/or the filing of a lien against any property of the Maker which is not discharged within fourteen (14) days from the date of filing.  After the occurrence of an Event of Default and for so long as it shall be continuing, this Note shall bear interest at the highest rate permitted under then applicable law.

 

In the case that any Event of Default shall happen and be continuing, the Holder may proceed to enforce the payment of this Note or to enforce any other legal or equitable rights as such Holder may have under applicable law.

In the event Holder retains or consults an attorney to enforce the terms hereof, Holder shall be entitled to collect from the Maker all costs and expenses incurred in enforcing or preserving its rights hereunder, including, but not limited to, reasonable attorney’s fees (including those incurred in connection with judicial, bankruptcy, appellate, administrative and other proceedings).  No delay or omission by Holder in exercising any right or remedy hereunder shall operate as a waiver of any such right or remedy hereunder.  All remedies of Holder hereunder are cumulative, and no exercise by Holder of any one or more of his rights or remedies hereunder or under applicable law shall be deemed to be an election of remedies by Holder.

 

  

  

  

Upon thirty (30) days' prior notice to Holder, the Maker may prepay this Note, in whole or in part, without penalty; provided that any such prepayment will be applied first to the payment of unpaid expenses accrued under this Note, second to unpaid interest accrued on this Note, and third, if the amount of prepayment exceeds the amount of all such expenses and accrued interest, to the unpaid principal amount of this Note.

At Holder's election, at any time prior to payment or prepayment of this Note in full, all principal and accrued interest under this Note may be converted in whole, but not in part, into shares of common stock and warrants to purchase common stock of Maker (the "Conversion Shares").  For each $1.07 converted, Holder shall receive one share of common stock and a five-year warrant to purchase one share of common stock at a price of $1.07 per share.  With respect to the Conversion Shares, Maker shall grant Holder "piggyback" registration rights, which contain such terms and restrictions as Maker reasonably determines.

 

In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the unpaid principal amount of this Note.

The Maker hereby waives presentment for payment, demand, notice of dishonor and protest of this Note, and further agrees that this Note shall be deemed to have been made under and shall be governed by and construed in accordance with the laws of the State of Florida in all respects, including matters of construction, validity and performance, and that none of its terms or provisions may be waived, altered, modified or amended except as Holder may expressly consent thereto in a writing duly executed by an authorized representative of Holder. The federal or state courts located in Miami-Dade County, Florida, shall have exclusive jurisdiction in connection with all matters which may arise under or in connection with this Note, and the Maker shall not assert that any action brought in such forum is inconvenient and should be moved to another jurisdiction.  Venue shall be had exclusively in the state and federal courts located in Miami-Dade County, Florida, to the exclusion of all other places of venue.

The Maker agrees to pay all costs in connection with this Note, including any applicable documentary stamps. All of the terms of this Note shall inure to the benefit of the Holder and its successors and assigns and shall be binding upon the Maker and its successors and assigns.

  

2

  

 

IN WITNESS WHEREOF, the Maker has executed this Note as of the day and year first above written.

 

	 	MAKER:	 
	 	 	 
	 	CLS HOLDINGS USA, INC.	 
	 	 	 
	 	 	 	 
	

 

	
By: 

	/s/ Jeffrey I. Binder	 
	 	 	Name:  Jeffrey I. Binder
	 	 	

Title: Chairman, President and 

  Chief Executive Officer

	 	 	 	 

 

 

  

3ex10-1.htm

Exhibit 10.1

 

VOTING AGREEMENT

This VOTING AGREEMENT (this “Agreement”), dated as of April 13, 2016, is entered into by and among Apple REIT Ten, Inc., a Virginia corporation (the “Company”), Apple Hospitality REIT, Inc., a Virginia corporation (“Parent,” and collectively with the Company, the “Apple REITs” or individually, an “Apple REIT”), and Glade M. Knight (the “Company Securityholder”).

 

WHEREAS, the Apple REITs and 34 Consolidated, Inc., a Virginia corporation and wholly-owned subsidiary of Parent (“Merger Sub”), are entering into an Agreement and Plan of Merger, dated as of April 13, 2016 (as it may be amended or otherwise modified from time to time, the “Merger Agreement”), pursuant to which the Company will merge with and into Merger Sub (the “Merger”), with Merger Sub continuing as the Surviving Corporation in the Merger (all capitalized terms used but not defined herein shall have the meanings set forth in the Merger Agreement);

 

WHEREAS, as the date hereof, the Company Securityholder is the beneficial and record owner of, and has the sole or shared right to vote and dispose of, all the issued and outstanding Series B Convertible Preferred Shares, no par value, of the Company (the “Series B Convertible Shares”) and 8,042,857 Parent Common Shares, no par value, as more particularly described on Schedule 1 hereto; and

 

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, each of the Apple REITs has required that the Company Securityholder agree, and the Company Securityholder is willing to agree, to the matters set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree, intending to be legally bound hereby, as follows:

 

SECTION 1.                          Disposition of Series B Shares

 

During the period from the date hereof through the earlier of (i) the date on which the Merger is consummated or (ii) the date on which the Merger Agreement is terminated according to its terms (such period hereinafter referred to as the “Term”), the Company Securityholder shall not, directly or indirectly, (a) sell, sell short, transfer (including by gift), pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other agreement or understanding with respect to the sale, transfer, pledge, encumbrance, assignment or other disposition of, any Series B Convertible Shares or any other Company Shares or Parent Common Shares that the Company Securityholder may beneficially own during the Term (collectively, with the Series B Convertible Shares, the “Subject Shares”), (b) grant any proxies or powers of attorney for any Subject Shares with respect to any matters described in paragraphs (a) and (b) of Section 2 hereof (other than a proxy directing the holder thereof to vote the Subject Shares in a manner required by paragraphs (a) and (b) of Section 2 hereof), (c) deposit any Subject Shares into a voting trust or enter into a voting agreement or other arrangement with respect to any Subject Shares with respect to any of the matters described in paragraphs (a) and (b) of Section 2 hereof, or tender any Subject Shares in a transaction other than a transaction contemplated by the Merger Agreement, or (d) take any action which is intended to have the effect of preventing or disabling the Company Securityholder from performing his obligations under this Agreement; provided, however, that nothing herein shall prevent (i) the sale, transfer, pledge, encumbrance, assignment or other disposition of any of such Subject Shares, provided that the purchaser, transferee, pledgee or assignee thereof agrees in writing with the Apple REITs, prior to such sale, transfer, pledge, encumbrance, assignment or other disposition, to be bound by the terms of this Agreement or (ii) the assignment of certain benefits by the Company Securityholder pursuant to agreements entered into before the date hereof with respect to Series B Convertible Shares as to which the Company Securityholder is not the sole beneficial owner.

 

  

  

  

 

SECTION 2.                          Voting

 

During the Term, the Company Securityholder shall:

 

(a) be present, in person or represented by proxy, at each meeting (whether annual or special and whether or not an adjourned or postponed meeting) of the shareholders of either Apple REIT, however called, so that all of such Company Securityholder’s Subject Shares may be counted for purposes of determining the presence of a quorum at each such Apple REIT shareholders’ meeting; and

 

(b) cast or cause to be cast all votes attributable to the Subject Shares at any annual or special meeting of shareholders of either Apple REIT, including any adjournments or postponements thereof, or in connection with any written consent or other vote of the shareholders of an Apple REIT, in favor of (i) with respect to a shareholders’ meeting of the Company, approval and adoption of the Merger Agreement (including any amendments or modifications of the terms of the Merger Agreement approved by the boards of directors of the Company, upon the recommendation of the Company Special Committee, that would not materially adversely affect the Company Securityholder in his capacity as beneficial owner of the Subject Shares), the related Plan of Merger, approval of the Merger, each of the other actions contemplated in the Merger Agreement and the other transactions contemplated by the Merger Agreement and any actions required in furtherance thereof, (ii) with respect to a shareholders’ meeting of Parent, approval of the issuance of the Parent Common Shares to be issued in the Merger, (iii) approval and adoption of any proposal to adjourn or postpone such Apple REIT shareholders’ meeting to a later date if there are not sufficient votes for the foregoing matters to be approved at each such meeting on the date on which the Apple REIT shareholders’ meetings are held and (iv) at each such meeting, and at any adjournment or postponement thereof, vote against: (A) any action or agreement that would reasonably be expected to frustrate the purposes of, impede, hinder, interfere with, or prevent or delay the consummation of the transactions contemplated by the Merger Agreement and (B) any Acquisition Proposal (other than the Merger) and any action required in furtherance thereof.

 

(c) The Company Securityholder will retain the right to vote his Subject Shares, in his sole discretion, on all matters other than those described in paragraphs (a) and (b) of this Section 2, and the Company Securityholder may grant proxies and enter into voting agreements or voting trusts for his Subject Shares in respect of such other matters, in each case so long as such other arrangements do not interfere with or prevent the Company Securityholder from complying with his obligations under this Agreement.

 

  

  

  

 

(d) The Company Securityholder constitutes and appoints each Apple REIT, from and after the date hereof until the earlier to occur of the Effective Time and the termination of this Agreement pursuant to Section 16 (at which point such constitution and appointment shall automatically be revoked), as such Company Securityholder’s attorney, agent and proxy (each such constitution and appointment, an “Irrevocable Proxy”), with full power of substitution, to vote and otherwise act with respect to all of the Subject Shares of such Apple REIT at any annual, special or other meeting of the shareholders of such Apple REIT, and at any adjournment or adjournments or postponement thereof, and in any action by written consent of the shareholders of such Apple REIT, on the matters and in the manner specified in Section 2(b); provided, however, that the foregoing shall only be effective if the Company Securityholder fails to be counted as present and to vote all of the Subject Shares of each such Apple REIT in accordance with paragraphs (a) and (b) of this Section 2.  EACH SUCH PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, SHALL BE VALID AND BINDING ON ANY PERSON TO WHOM THE COMPANY SECURITYHOLDER MAY TRANSFER ANY OF HIS SUBJECT SHARES IN BREACH OF THIS AGREEMENT.  The Company Securityholder hereby revokes all other proxies and powers of attorney with respect to any or all of the Subject Shares that may have heretofore been appointed or granted with respect to the matters covered by Section 2(b), and no subsequent proxy or power of attorney shall be given (and if given, shall not be effective) by the Company Securityholder with respect thereto on the matters covered by Section 2(b).  All authority herein conferred or agreed to be conferred by the Company Securityholder shall survive the death or incapacity of the Company Securityholder and any obligation of the Company Securityholder under this Agreement shall be binding upon the heirs, personal representatives, successors and assigns of the Company Securityholder.  It is agreed that no Apple REIT will use the Irrevocable Proxy granted by the Company Securityholder unless the Company Securityholder fails to comply with Section 2(a) or (b) and that, to the extent an Apple REIT uses any such Irrevocable Proxy, it will only vote the Subject Shares subject to such Irrevocable Proxy with respect to the matters specified in, and in accordance with the provisions of, Section 2(b).

 

SECTION 3.                          Waiver of Appraisal Rights

 

The Company Securityholder hereby waives any rights of appraisal or rights to dissent from the Merger, and agrees to prevent the execution of any rights of appraisal and dissenters’ rights relating to the Merger that the Company Securityholder may have directly or indirectly by virtue of the ownership of the Subject Shares.

SECTION 4.                          Additional Shares

 

Without limiting any provisions of the Merger Agreement, in the event of any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of capital stock of either Apple REIT on, of or affecting any Subject Shares, then the terms of this Agreement shall apply to the shares of capital stock or other such securities of such Apple REIT held by the Company Securityholder immediately following the effectiveness of such event.

 

  

  

  

 

SECTION 5.                          Representations and Warranties of the Company Securityholder

 

The Company Securityholder represents and warrants to the Apple REITs as follows:

 

(a) The Company Securityholder has the legal capacity, power, authority and right (contractual or otherwise) to execute and deliver this Agreement and to perform his obligations hereunder.

 

(b) This Agreement has been duly executed and delivered by the Company Securityholder and constitutes a valid and binding obligation of the Company Securityholder enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity.

 

(c) The execution and delivery of this Agreement does not, and the consummation of the transactions herein contemplated will not, conflict with or violate any law, regulation, court order, judgment or decree applicable to the Company Securityholder or the Subject Shares, or conflict with or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) or give rise to any right of termination, cancellation or acceleration under any contract or agreement to which the Company Securityholder is a party or by which the Company Securityholder is bound or affected or under which the Subject Shares are bound by or are otherwise subject to, which conflict, violation, breach or default would materially and adversely affect the Company Securityholder’s ability to perform any of his obligations under this Agreement.

 

(d) Subject to any required filings under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company Securityholder is not required to give any notice or make any report or other filing with any governmental or regulatory authority in connection with the execution or delivery of this Agreement or the performance of the Company Securityholder’s obligations hereunder and no waiver, consent, approval or authorization of any governmental or regulatory authority or any other person or entity is required to be obtained by the Company Securityholder for the performance of the Company Securityholder’s obligations hereunder, other than where the failure to make such filings, give such notices or obtain such waivers, consents, approvals or authorizations would not materially and adversely affect the Company Securityholder’s ability to perform his obligations under this Agreement.

 

(e) The Series B Convertible Shares, Company Units and Parent Common Shares set forth opposite the name of the Company Securityholder on Schedule 1 hereto are, as of the date hereof, the only Subject Shares owned beneficially or of record by the Company Securityholder or over which the Company Securityholder exercises voting control.  The Company Securityholder is the sole record and beneficial owner of the Subject Shares as set forth on Schedule 1 hereto.

 

  

  

  

 

SECTION 6.                          Further Assurances

 

During the Term, the Company Securityholder shall make such filings as may be required under the 1934 Act and, upon the request of either Apple REIT, execute and deliver such documents and take such actions as such Apple REIT may reasonably deem necessary to effectuate the purposes of this Agreement.

 

SECTION 7.                          Descriptive Headings

 

The descriptive headings herein are inserted for convenience only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

 

SECTION 8.                          Counterparts

 

This Agreement may be executed in counterparts, each of which when so executed and delivered shall be an original, but all of such counterparts shall together constitute one and the same instrument.

 

SECTION 9.                          Entire Agreement; Assignment

 

This Agreement (i) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof and (ii) shall not be assigned by the Company Securityholder, by operation of law or otherwise.  The Company Securityholder agrees that this Agreement and the obligations of the Company Securityholder hereunder shall attach to any Subject Shares and shall be binding upon any Person to which legal or beneficial ownership of such Subject Shares shall pass, whether by operation of law or otherwise, including in breach of this Agreement.

 

SECTION 10.                        Governing Law; Consent to Jurisdiction; Waiver of Jury Trial

 

(a) This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia without regard to the principles of conflicts of laws thereof.

 

(b) The Company Securityholder hereby submits and consents to non-exclusive personal jurisdiction in any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in a federal court located in the Commonwealth of Virginia or in a Virginia state court.  Any process, summons, notice or document delivered by mail to the address set forth on Schedule 1 hereto shall be effective service of process for any action, suit or proceeding in any Virginia state court or any federal court located in the Commonwealth of Virginia with respect to any matters to which the Company Securityholder has submitted to jurisdiction in this Section 10.  The Company Securityholder irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in any Virginia state court or any federal court located in the Commonwealth of Virginia, and hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.  THE COMPANY SECURITYHOLDER IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT.

 

  

  

  

 

SECTION 11.                        Specific Performance

 

The parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the parties hereto shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity.

 

SECTION 12.                        Parties in Interest

 

This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person or Persons any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.

 

SECTION 13.                       Amendment; Waivers

 

This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by each of the parties hereto; provided that no such written agreement shall be binding on an Apple REIT unless approved by the Company Special Committee or the Parent Board, as applicable.  No delay or failure on the part of any party hereto in exercising any right, power or privilege under this Agreement shall impair any such right, power or privilege or be construed as a waiver of any default or any acquiescence thereto.  No single or partial exercise of any such right, power or privilege shall preclude the further exercise of such right, power or privilege, or the exercise of any other right, power or privilege.  No waiver shall be valid against any party hereto, unless made in writing and signed by the party against whom enforcement of such waiver is sought, and then only to the extent expressly specified therein.

 

SECTION 14.                        Severability

 

Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

SECTION 15.                       Capacity of Company Securityholder

 

The Company Securityholder has executed this Agreement solely in his capacity as a securityholder of each Apple REIT and not in his capacity as an officer, director, employee or manager of either Apple REIT.  Without limiting the foregoing, nothing in this Agreement shall limit or affect any actions taken by the Company Securityholder in his capacity as an officer, director or employee of either Apple REIT in connection with the exercise of either Apple REIT’s rights under the Merger Agreement.

 

  

  

  

 

SECTION 16.                        Termination

 

This Agreement shall terminate immediately upon the expiration of the Term.  None of the representations, warranties, covenants or agreements in this Agreement shall survive the termination of this Agreement; provided, however, that nothing contained herein shall release the Company Securityholder from any liability arising from any willful and material breach of any of his representations, warranties, covenants or agreements in this Agreement.

 

 

[Rest of page intentionally left blank]

 

 

 

 

 

 

 

  

  

  

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Voting Agreement, or have caused this Voting Agreement to be duly executed and delivered in their names and on their behalf, as of the date first written above.

 

APPLE REIT TEN, INC.

	
  

	
By:

	
/s/ David Buckley                                        

	
  

	
Name:

	
David Buckley

	
  

	
Title:

	
Executive Vice President

APPLE HOSPITALITY REIT, INC.

	
  

	
By:

	
/s/ Bryan Peery                                        

	
  

	
Name:

	
Bryan Peery

	
  

	
Title:

	
Executive Vice President

/s/ Glade M. Knight                                        

GLADE M. KNIGHT

  

  

  

Schedule 1

	  	
Number of Series

B Convertible Shares

	
Number of Series B Convertible Shares as to which Glade M. Knight is Sole Beneficial Owner

	
   Company

   Units*

	
Apple REIT Ten, Inc.

 

	  	  	  
	
Name of Record and Beneficial Owner

 

	  	  	  
	
Glade M. Knight

 

	
480,000

	
300,991

	
    90,920

	  	
Number of Parent Common Shares

	
Number of Parent Common Shares as to which Glade M. Knight is Sole Beneficial Owner

	
Apple Hospitality REIT, Inc.

 

	  	  
	
Name of Record and Beneficial Owner

 

	  	  
	
Glade M. Knight

 

	
8,246,742

	
8,042,857

_______________

*Sole record and beneficial owner

Any process, summons, notice or document delivered by mail pursuant to Section 10 hereof to the beneficial or record holder set forth on this Schedule 1, shall be delivered to:

 

Apple Hospitality REIT, Inc.

814 E. Main Street

Richmond, Virginia   23219

Attention:                       Glade M. Knight

Tel:                       (804) 344-8121

Fax:                       (804) 344-8129

 

With a copy to:

Hogan Lovells US LLP

555 Thirteenth Street, NW

Washington, D.C. 20004

Attention:                      Paul D. Manca

Tel:                      (202) 637-5821

Fax:                      (202) 637-5910

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