EXHIBIT 10.9
SUMMIT HOTEL PROPERTIES, LLC
0000 X. XXXXXXXXX XXXXXX, XXXXX 0
XXXXX XXXXX, XX 00000
October 31, 2005
Summit Real Estate Investments, LLC
0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 0
Xxxxx Xxxxx, XX 00000
RE: Managing Dealer Agreement
Gentlemen:
Summit Hotel Properties, LLC (the "Company"), a South Dakota limited liability
company with its principal office at 0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 0, Xxxxx
Xxxxx, XX 00000, will issue and sell Class A-l Membership Interests (the
"Units") of the Company with each Unit having a gross offering price of $100,000
("Gross Offering Price"), with fractional Units available. The Units will be
offered in a private placement offering (the "Offering") in accordance with the
Offering Memorandum of the Company dated October 31, 2005 and any supplements
thereto (the "Offering Memorandum") a copy of which has been delivered to Summit
Real Estate Investments, LLC ("Dealer").
1. Authorization to Solicit Offers to Purchase Units.
On the basis of the representations and warranties contained in this
Agreement and subject to its terms and conditions, the Company has
appointed Dealer co-managing dealer ("Managing Dealer") and authorized you
to form a selling group of securities dealers ("Soliciting Dealers"),
including Dealer, in connection with the offer and sale of Units and
authorized Managing Dealer on a nonexclusive basis to solicit offers to
purchase the Units on a "best efforts" basis, and Managing Dealer has
accepted said appointment. This Agreement shall become effective upon your
written acceptance of the Agreement. It is understood and agreed that
Managing Dealer may not accept on behalf of the Company any offers to
purchase the Units unless Dealer receives written authority from the
Company to the contrary. Dealer's authorization hereunder is limited to
soliciting offers to purchase the Units using the form of Subscription
Documents included in the Offering Memorandum and transmitting to the
Company any and all such written offers received. The Company reserves the
right to terminate the Offering at any time.
2. Compensation.
In consideration of your agreements and your service as a soliciting dealer
hereunder, the Company hereby agrees to pay you selling commissions of up
to 6% and a non-accountable offering expense allowance of up to 1% of the
Gross Offering Price of Units sold to persons from whom your
representatives have solicited offers to purchase as described in "Plan of
Distribution" in the Offering Memorandum. The above fees are payable upon
sale of the minimum number of Units accepted by the Company at that time
and within 15 days of the acceptance of further Units sold through you.
As compensation for the services rendered by you as Managing Dealer, the
Company will pay you a managing dealer fee of 1% of the Gross Offering
Price of Units sold by the Soliciting Dealers listed on Exhibit A (and as
such Exhibit A may be amended from time to time), such fee to be payable at
the conclusion of the Offering, and which is waivable by you in whole or in
part.
3. Representations and Warranties of the Company.
(a) The Offering Memorandum does not include any untrue statement of any
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they are made, not misleading.
(b) The Company has complied and will comply, subject to your compliance,
with the terms of this Agreement, with the requirements under the
Securities Exchange Act of 1934, as amended, and applicable state
securities laws in connection with all offers and sales of the Units.
(c) The Company is a duly organized limited liability company under the
laws of the State of South Dakota and will be qualified to do business
in all jurisdictions in which the nature of its business requires such
qualification and will be authorized to conduct its business as
described in the Offering Memorandum. The Units, when issued and
payment received, will be fully paid and nonassessable.
(d) The Company will offer Units only in such a manner as will assure the
offering and sale thereof (i) will be exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended,
and (ii) will be exempt from any registration requirements under the
laws of any state or other jurisdiction in which they may be offered.
(e) This Managing Dealer Agreement has been duly and validly authorized,
executed and delivered by the Company and will be, if accepted by you,
a valid, binding and enforceable agreement of the Company except as
the enforceability of the indemnification provisions of Paragraph 6
may be limited by application of the federal securities laws.
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4. Representations and Warranties of Dealer
Dealer represents and warrants to the Company that:
(a) Dealer will not offer or sell Units by means of any form of general
solicitation or advertising.
(b) Prior to an offer to or solicitation of a potential purchaser, Dealer
will undertake all necessary and appropriate investigation, review and
inquiry to insure, to the best of its reasonable knowledge and belief,
that (i) each potential purchaser of Units from whom Dealer has
solicited an offer to purchase meets with applicable investor
qualification requirements under federal and any applicable state
securities laws and the requirements as set forth in the Offering
Memorandum; and (ii) the investment is suitable for such potential
purchaser upon the basis of the information known to Dealer or
disclosed by such potential purchaser as to his other security
holdings and as to his financial situation and needs. Dealer shall
keep written records supporting this representation and such records
shall be made available to the Company promptly upon request.
(c) Dealer will deliver to each offeree, prior to any submission by him of
a written offer to buy any Units, a numbered copy of the Offering
Memorandum, and will keep record of to whom, by what manner and on
what date it delivered each such copy.
(d) Dealer will not deliver to any offeree any written documents
pertaining to the Company or the Units other than the Offering
Memorandum and exhibits thereto, any amendments thereto and any other
materials specifically designated as sales information which are
supplied to Dealer by the Company. Without intending to limit the
generality of the foregoing, Dealer will not deliver to any offeree
any material pertaining to the Company which has been furnished as
"broker/dealer information only."
(e) Dealer will make reasonable inquiry to determine whether a prospective
purchaser is acquiring Units for his own account or on behalf of other
persons.
(f) Dealer will not give any information or make any representation in
connection with the offering of Units other than those contained in
the Offering Memorandum and any amendments thereto.
(g) Dealer will abide by, and will take reasonable precautions to insure
that all offerees and investors from whom Dealer has solicited an
offer to purchase will comply with, all provisions contained in the
Offering Memorandum regulating the terms and manner of offering the
Units. Dealer will not submit any Subscription Documents to the
Company which Dealer knows, or has reason to believe, contain any
misstatements or misrepresentations of fact.
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(h) In its solicitation of subscriptions for Units, Dealer will comply
with any applicable requirements of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, as well as
the published rules and regulations thereunder, and the rules and
regulations of all state securities authorities, as applicable, to the
best of its knowledge, after due inquiry and investigation and to the
extent within its direct control.
(i) Dealer is (and will continue to be) a member in good standing with the
NASD, will abide by its Rules of Fair Practice, and is in full
compliance with all applicable requirements under the Securities Act
of 1934, as amended, and is registered as a broker-dealer in all of
the jurisdictions in which Dealer solicits offers or makes sales.
Dealer is duly licensed to sell the Units.
(j) Dealer will not take or omit to take any action in conflict with the
conditions and requirements of the Securities Act of 1933, as amended
(Regulation D or other applicable rule), or applicable state
securities or blue sky laws as described in the Offering Memorandum,
which would make such exemptions unavailable with respect to the
offering and the sale of the Units.
(k) This Managing Dealer Agreement has been duly and validly authorized,
executed and delivered by Managing Dealer and is a valid, binding and
enforceable agreement of Managing Dealer except as the enforceability
of the indemnification provisions of Paragraph 6 may be limited by
application of the federal securities laws.
5. Further Agreements of the Company.
The Company agrees that:
(a) If at any time any event shall occur as a result of which it becomes
necessary to amend or supplement the Offering Memorandum so that it
does not include any untrue statement of any material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time the
Offering Memorandum is delivered to any offeree, not misleading, the
Company will promptly notify Dealer and will supply Dealer with
amendments or supplements correcting such statement or omission.
(b) The Company will make such filings with the SEC and state and other
governmental agencies as may be necessary to register the Units for
sale or to assure or confirm the exemption of the offering and sale of
the Units from the registration requirements of the Securities Act of
1933, as amended, and of the securities laws of any state or
jurisdiction in which the Units may be offered.
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(c) The Company will make available during the course of the offering and
prior to sale, to each offeree or his investor representative or both,
the opportunity to ask questions and/or receive answers from the
Company or to obtain additional information necessary to verify the
accuracy of the Offering Memorandum, to the extent the Company
possesses such information or can acquire it without unreasonable
effort or expense.
(d) The Company will pay all expenses in connection with the preparation
and duplication of the Offering Memorandum and any amendments or
supplements thereto, and the legal fees and disbursements of counsel
for the Company.
(e) Copies of all correspondence and reports that are sent to investors
during and after the Offering will also be sent to Dealer and its
representatives who made sales in the Offering.
6. Indemnity.
(a) The Company agrees to indemnify and hold harmless Dealer from and
against any and all losses, claims, damages, expenses or liabilities,
to which Dealer may become subject under any federal or state
securities laws and other statute, common law or otherwise insofar as
such losses, claims, damages, expenses or liabilities arise out of or
are based upon: (i) any untrue statement or alleged untrue statement
of a material fact in the Offering Memorandum, or any amendment or
supplement thereto; (ii) any omission or alleged omission to state in
the Offering Memorandum a material fact required to be stated therein
or necessary to make the statements therein not misleading; (iii) any
violation or alleged violation of securities registration requirements
under the Securities Act of 1933, as amended, or any state securities
laws, in connection with the sale of the Units, except to the extent
caused by Dealer's breach of the representations and warranties of
Paragraph 4; or (iv) any breach or alleged breach of the
representations and warranties of Paragraph 3 or the provisions of
Paragraph 5.
(b) Dealer agrees to indemnify and hold harmless the Company from and
against any and all losses, claims, damages, expenses or liabilities
to which the Company may become subject under any federal or state
securities laws, any other statute, common law or otherwise insofar as
such losses, claims, damages, expenses or liabilities arise out of or
are based upon the Dealer's breach or alleged breach of the
representations and warranties of Paragraph 4.
(c) Except as set out in subparagraph (d) below, the indemnity provided by
subparagraphs (a) and (b) above shall also extend to any and all
expenses whatsoever reasonably incurred by any indemnified party in
connection with investigation, preparing for or defending against any
such loss, damage, expense, liability or claim or such action in
respect thereof, whether or not resulting in any liability. Such
indemnity shall also include any loss to the extent of the aggregate
amount paid in settlement of any litigation, commenced or threatened,
or of any
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claim whatsoever as set forth herein only if such settlement is
effected with the written consent of the indemnifying party. Such
indemnity shall be in addition to any liability that the indemnifying
party might otherwise have to an indemnified party and shall extend
upon the same terms and conditions to each officer, director, agent or
employee of any indemnified party within the meaning of the Securities
Act of 1933, as amended, and Section 20 of the Securities Exchange Act
of 1934, as amended.
(d) Within 15 days after the receipt by an indemnified party under this
Paragraph 6 of notice of the commencement of any action, but in no
event later than 5 business days prior to the date specified in such
notice for the filing of a responsive pleading in such action, such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under this Paragraph 6, notify such
indemnifying party in writing of the commencement thereof. The
omission to so notify the indemnifying party shall relieve it from
liability to such indemnified party under this Paragraph 6 to the
extent that the ability of the indemnifying party to defend a claim
was prejudiced by the failure to timely send such notice. In case any
such action shall be brought against any indemnified party, and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein, and,
after notice from the indemnifying party to such indemnified party of
its election, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party. In the event the indemnifying
party elects so to assume the defense of any such suit, such
indemnified party may retain additional counsel but the indemnified
party shall bear the fees and expenses of such counsel.
(e) The indemnity provided by the Paragraph 6 shall remain operative and
in full force and effect, regardless of any termination or
cancellation of this Agreement, and shall survive the sale of the
Units and Notes; and any successor or assignee of any indemnified
party and heir or legal representative of any such party shall be
entitled to the benefit of such indemnity.
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7. Confidentiality.
You agree that all materials provided to you for due diligence and
marketing purposes pertaining to the Company, including, but not limited
to, the Offering Memorandum, as supplemented, subscription and suitability
documents and financial statements of the Company will be held by you in
confidence for use of your personnel, clients and advisors of clients only
for the purpose of evaluating an investment in the Units will not be
provided to any other persons or entities without the prior written
approval of the Company. We agree that all information on subscribers
introduced by you including the Investor Questionnaire ("Questionnaire")
will be kept strictly confidential. The Questionnaire may be subject to
review by the Company's legal counsel who will be required to maintain
confidentiality. We agree not to solicit any of your subscribers for any
subsequent offering by our affiliates or us without your prior written
approval.
8. Notices.
Whenever notice is required by the provisions of this Agreement to be given
to the Company, such notice shall be in writing addressed to the party of
parties entitled to such notice, sent certified mail, return receipt
requested or by commercial overnight delivery service with proof of receipt
available, to Summit Hotel Properties, LLC, 0000 X. Xxxxxxxxx Xxxxxx, Xxxxx
0, Xxxxx Xxxxx, XX 00000, and, whenever notice shall be in writing,
addressed to Dealer at the address shown on page 1 of this Agreement.
(The rest of this page is intentionally left blank.)
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9. Miscellaneous.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, their heirs, legal representatives, successors and assigns.
This Agreement is made under and shall be construed in accordance with the
laws of the State of South Dakota and may not be amended except in writing
signed by the parties hereto.
Very truly yours,
SUMMIT HOTEL PROPERTIES, LLC,
By: The Summit Group, Inc.,
its Company Manager,
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxxxx,
President
AGREED AND ACCEPTED:
SUMMIT REAL ESTATE INVESTMENTS, LLC
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxxxx,
President
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EXHIBIT A
BROKER/DEALERS
Summit Real Estate Investments, LLC
Stanford Trust Company
First National Capital Markets, Inc.
Xxxxx Securities
VSR Financial Services
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