EXHIBIT 10.10
SUMMIT HOTEL PROPERTIES, LLC
0000 XXXXX XXXXXXXXX XXXXXX, XXXXX 0
XXXXX XXXXX, XX 00000
Date: October 31, 2005
Re: Soliciting Dealer Agreement
Gentlemen:
Summit Hotel Properties, LLC (the "Company"), a South Dakota limited
liability company with its principal office at 0000 Xxxxx Xxxxxxxxx Xxxxxx,
Xxxxx 0, Xxxxx Xxxxx, Xxxxx Xxxxxx 00000, will issue and sell Class A-1
Membership Units (the "Units") of the Company. The Units will be offered in a
private placement offering (the "Offering") in accordance with the Offering
Memorandum of the Company dated October 21, 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 and authorized Dealer on a nonexclusive basis to solicit offers
to purchase the Units on a "best efforts" basis, and Dealer has accepted
said appointment. This Agreement shall become effective upon your written
acceptance of the Agreement. It is understood and agreed that 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, and to enter into agreements with other persons
qualified to offer and sell the Units on such terms as the Company deems
appropriate.
2. Compensation.
In consideration of Dealer's agreements and Dealer's service as soliciting
dealer hereunder, the Company hereby agrees to pay Dealer a selling
commission of up to six percent (6%) and a non-accountable offering expense
allowance of up to one percent 1% of the gross offering price of Units sold
to persons from whom Dealer's representatives have solicited offers to
purchase.
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) Any other soliciting dealers appointed by the Company to solicit
offers to purchase Units will represent to the Company that they are
registered as broker- dealers with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934, as
amended, and will be members in good standing of the National
Association of Securities Dealers ("NASD"), and the Company will
contractually require such other brokers to comply with the
requirements of applicable federal and state securities laws in
connection with all offers of the Units made by them.
(d) 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.
(e) 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.
(f) This Soliciting Dealer Agreement has been duly and validly authorized,
executed and delivered by the Company and will be, if accepted by
Dealer, 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
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 Soliciting Dealer Agreement has been duly and validly authorized,
executed and delivered by the Dealer and is a valid, binding and
enforceable agreement of the Dealer except as the enforceability of
the indemnification provisions of Paragraph 6 may be limited by
application of the federal securities laws.
(l) Delivery of subscription agreements for a Class A-1 Membership Unit
shall be made by the Dealer to Summit Real Estate Investments, LLC or
Chauner Securities, Inc. (the Managing Dealers of the Offering) within
24 hours of written execution by the Investor.
(m) There is not now pending or threatened against the Dealer any action
or proceeding of which the Dealer has been advised, either in any
court of competent jurisdiction, before the Securities and Exchange
Commission, or before any state securities commission concerning the
Dealer's activities as a Broker or Dealer, nor has the Dealer been
named as a "Cause" in any such action or proceeding.
(n) In the event any action or proceeding of the nature referred to in
sub-paragraph (b) above shall be instituted or threatened against the
Dealer at any time prior to the effective date hereunder, or in the
event there shall be filed by or against the Dealer in any court
pursuant to any federal, state, local, or municipal statue, a petition
in bankruptcy or insolvency or for reorganization or for the
appointment of a Receiver of Trustee of its assets, the Dealer shall
make an assignment for the benefit of creditors, the Company shall
have the right on three days' written notice to Dealer to terminate
this Contract without any liability to the Dealer of any kind.
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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.
(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.
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
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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 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 fifteen (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 five (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.
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(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 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.
7. Confidentiality.
Dealer agrees that all materials provided to Dealer 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 Dealer in
confidence for use of Dealer's personnel, clients and advisors of clients
only for the purpose of evaluating an investment in the Units and will not
be provided to any other persons or entities without the prior written
approval of the Company. The Company agrees that all information on
subscribers introduced by Dealer, including the Investor Questionnaire
("Questionnaire") will be kept strictly confidential. The Questionnaire may
be subject to review by the Company's legal counsel and one or both of the
Managing Dealers, all of whom will be required to maintain confidentiality.
The Company agrees not to solicit any of Dealer's subscribers for any
subsequent offering by the Company or its affiliates without Dealer's 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 Xxxxx Xxxxxxxxx Xxxxxx,
Xxxxx 0, Xxxxx Xxxxx, Xxxxx Xxxxxx 00000, and, whenever notice shall be in
writing, addressed to Dealer at the address shown on page 1 of this
Agreement.
9. Termination.
(a) This Contract may be terminated by the Dealer by Notice to the Company
at any time before the effective date of this Contract as set forth in
this Contract.
(b) This Contract may be terminated by the Dealer, by notice to the
Company, in the event that the Company shall have failed or been
unable to comply with any of the terms, conditions, or provisions of
this Contract on the part of the Company to be performed, complied
with, or fulfilled (including, but not limited to, those specified in
Sections 2, 3, and 9 hereof) within the respective times herein
provided for, unless compliance therewith or performance or
satisfaction thereof shall have been expressly waived by the Dealer in
writing.
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(c) Any termination of this Contract pursuant to this Section 9 shall be
without liability of any character (including, but not limited to,
loss of anticipated profits or consequential damages) on the part of
any party hereto, except that the Company shall remain obligated to
pay the costs and expenses provided to be paid by it and the Company
and the Dealer shall be obligated to pay, respectively, all losses,
claims, damages or liabilities, joint or several, under Section 7, in
the case of the Partnership, and Section 7, in the case of the Dealer.
10. 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: /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxxxxx,
President of Company Manager
AGREED AND ACCEPTED:
SUMMIT REAL ESTATE INVESTMENTS, LLC
By: /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------
Its: President
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