<PAGE>
As filed with the Securities and Exchange Commission on January 25, 1999
Registration No. 333 -
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SUMMIT SECURITIES, INC.
(Exact name of registrant as specified in its charter)
---------------
Idaho 601 West First Avenue 82-0438135
(State or other Spokane, Washington (I.R.S. Employer
jurisdiction of 99201-5015 Identification No.)
incorporation or (509) 838-3111
organization)
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
Tom Turner, President
Summit Securities, Inc.
601 West First Avenue
Spokane, WA 99201
(509) 838-3111
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With copies to:
Susan Thomson, Esq. Robert J. Ahrenholz, Esq.
Associate Corporate Counsel Kutak Rock
601 West First Avenue 717 Seventeenth Street, Suite 2900
Spokane, WA 99201 Denver, Colorado 80202
(509) 838-3111 (303) 297-2400
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [X]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum
Title of Each Class of Securities Amount to be Offering Price Aggregate Amount of
to be Registered(1) Registered Per Unit Offering Price(1)(2) Registration Fee(3)
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<S> <C> <C> <C> <C>
Preferred Stock Series
S-3................... 200,000 $100 $20,000,000 $5,560
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(a).
(2) Includes $12,000,000 of Preferred Stock, Series S-3 that remains unsold and
is being carried forward from Registration Statement No. 333-43831 pursuant
to Rule 429 of the Securities Act of 1933, for which a filing fee of $3,336
was previously paid.
(3) A filing fee of $3,336 was previously paid for the $12,000,000 of Preferred
Stock carried forward from Registration Statement No. 333-43831 pursuant to
Rule 429.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission acting pursuant to said
Section 8(a) may determine.
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
included in this Registration Statement also relates to securities registered
and remaining unissued under Registration Statement No. 333-43831 previously
filed by the Registrant.
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- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED JANUARY 25, 1999.
PROSPECTUS
Summit Securities, Inc.
200,000 Preferred Shares, Series S-3
- -------------------------------------------------------------------------------
You should consider carefully the risk factors beginning on page 9 in this
prospectus.
The preferred shares are securities of our company and they are not insured or
guaranteed by any bank, governmental agency, any insurance company, any
affiliate of our company or any other person or entity.
- -------------------------------------------------------------------------------
Summit Securities, Inc. is offering Variable Rate Cumulative Preferred Stock
with the following terms:
. The Preferred Stock is subordinate to all debts of Summit including Summit's
certificates of indebtedness.
. Preferred Stock distributions are cumulative and will be declared monthly
according to a variable rate formula described in this prospectus.
. The Preferred Stock has a liquidation preference of $100 per share.
. The Preferred Stock may be redeemed by us at a price of $100 per share plus
the amount of any declared but unpaid distribution.
<TABLE>
<CAPTION>
Per Preferred Share Maximum Total
------------------- -------------
<S> <C> <C>
Public Offering Price................... $100 $20,000,000
Maximum Underwriting Commissions(1)..... 6% $ 1,200,000
Proceeds, before expenses, to Issuer.... $ 94 $18,800,000
</TABLE>
- ------
(1) You will not incur a direct sales charge. Preferred Stock distributions
will be based on their full offering price, without deduction for
underwriting discounts or commissions. We will reimburse our underwriters
for commissions paid to licensed securities sales representatives. Sales
commission rates on the sale of Preferred Stock depend upon the terms of
the sale. See "PLAN OF DISTRIBUTION."
. Currently, there is no trading market for the Preferred stock and you should
not expect one to be established in the future.
. The Preferred Stock is being issued only in book-entry form.
. The underwriter maintains a list of persons willing to sell or purchase our
issued and outstanding shares of preferred stock.
. We are offering the Preferred Stock on a continuous, best efforts basis.
. There is no minimum amount of Preferred Stock that must be sold.
. You may not purchase the Preferred Stock pursuant to this prospectus after
January 31, 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
METROPOLITAN INVESTMENT SECURITIES, INC.
The date of this prospectus is January , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
FORWARD-LOOKING STATEMENTS................................................. 2
PROSPECTUS SUMMARY......................................................... 3
RISK FACTORS............................................................... 9
USE OF PROCEEDS............................................................ 11
DESCRIPTION OF SECURITIES.................................................. 11
PLAN OF DISTRIBUTION....................................................... 15
LEGAL MATTERS.............................................................. 16
EXPERTS.................................................................... 16
AVAILABLE INFORMATION...................................................... 16
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 16
</TABLE>
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions about Summit, including, among other things:
. Our anticipated growth strategies;
. Anticipated trends in our businesses, including trends in the markets
for insurance, mortgages and annuities;
. Future interest rate trends, movements and fluctuations;
. Future originations of commercial loans;
. Future expenditures for purchasing receivables; and
. Our ability to continue to control costs and accurately price the risk
of default on the payment of receivables.
----------------
You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate as of the date on the
front cover of this prospectus only. Our business, financial condition, results
of operations and prospects may have changed since that date.
2
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all of the information that
you should consider before investing in the Preferred Stock. You should read
both the prospectus and the accompanying Annual Report of Summit on Form 10-K
for the fiscal year ended September 30, 1998, carefully before making your
investment decision.
The Company
General
Summit Securities, Inc. ("Summit") was incorporated under the laws of the
State of Idaho on July 25, 1990. Its principal executive offices are located at
601 West First Avenue, Spokane, Washington 99201-5015. Its mailing address is
P.O. Box 2162, Spokane, WA 99210-2162 and its telephone number is (509) 838-
3111. Summit also maintains an office at 8601 W. Emerald, Suite 150, Boise,
Idaho 83704 and its telephone number at that address is (208) 376-8260. Summit
and its subsidiaries are jointly referred to as the "Consolidated Group," while
references solely to the parent company will be to "Summit."
History
We were founded in 1990, as a wholly owned subsidiary of Metropolitan
Mortgage & Securities Co., Inc. ("Metropolitan") and we were later acquired by
National Summit Corp. ("National") on September 9, 1994. In the first six
months of 1995, we acquired a broker/dealer, Metropolitan Investment
Securities, Inc. ("MIS"), and a subsidiary holding company of Summit, Summit
Group Holding Company, who acquired Old Standard Life Insurance Company ("Old
Standard") from Metropolitan. On December 28, 1995, Old Standard acquired
another insurance company, Arizona Life Insurance Company ("Arizona Life"),
which subsequently changed its name to Old West Annuity & Life Insurance
Company ("Old West"). We also own a property development company, Summit
Property Development, Inc. The chart on the next page depicts the relationships
among certain significant companies within the Consolidated Group.
Even though our parent company changed from Metropolitan to National, we
continue to be controlled by C. Paul Sandifur, Jr., who is both the owner of
National and the President and controlling shareholder of Metropolitan. As a
result of Mr. Sandifur's control, we have several affiliates that are
subsidiaries of Metropolitan, including Metwest Mortgage Services, Inc.
("Metwest") and Western United Life Assurance Company (Western United).
Collectively, Metropolitan, Metwest and Western United are referred to as
"Affiliated Companies."
Business
The Consolidated Group is engaged in a nationwide business of originating,
acquiring, holding and selling receivables. These receivables include small to
mid-size commercial real estate loans and real estate contracts and promissory
notes that are secured by first position liens on residential real estate. The
Consolidated Group also invests in receivables consisting of real estate
contracts and promissory notes secured by second and lower position liens,
structured settlements, annuities, lottery prizes, and other investments. These
assets are collectively referred to in this prospectus as "Receivables." The
Receivables secured by real estate are typically non-conventional because they
were either financed by the sellers of the property or they were originated by
institutional lenders who originate loans for borrowers with impaired credit or
for non-conventional properties. In addition to Receivables, the Consolidated
Group invests in U.S. Treasury obligations, corporate bonds and other
securities.
3
<PAGE>
Our capital to invest in these Receivables comes from several sources. The
Consolidated Group uses funds generated from Receivable cash flows, the sale of
annuities, the sale and securitization of Receivables, the sale of certificates
and preferred stock, collateralized borrowing, and securities portfolio
earnings.
The Affiliated Companies provide services to the Consolidated Group for a
fee and engage in various business transactions with the Consolidated Group.
Metropolitan provides Receivable acquisition services, and Metwest provides
Receivable collection and servicing to Summit, Old Standard and Old West. For a
more detailed discussion of the business of the Consolidated Group, see "Item
1" in Summit's Annual Report filed on Form 10-K for the year ended September
30, 1998, which is attached to this prospectus.
Organizational structure chart
(as of September 30, 1998)
[CHART APPEARS HERE]
NATIONAL SUMMIT CORP.
|
100%|
SUMMIT
SECURITIES, INC.
|
_______________________________________________________________
| | |
100%| 100%| 100%|
METROPOLITAN SUMMIT SUMMIT
INVESTMENT PROPERTY GROUP HOLDING
SECURITIES, INC. DEVELOPMENT, INC. COMPANY
|
100%|
OLD STANDARD
LIFE INSURANCE
COMPANY
|
100%|
OLD WEST
ANNUITY &
LIFE INSURANCE
COMPANY
The Consolidated Group consists of Summit Securities, Inc. and all of its
subsidiaries. The above chart lists the principal operating subsidiaries and
ownership of the Consolidated Group.
National Summit Corp.: The parent company of Summit, inactive except as
owner of Summit Securities, Inc. Wholly owned by C. Paul Sandifur, Jr., who is
also President and controlling shareholder of Metropolitan.
Summit Securities, Inc.: Invests in Receivables (as defined herein) and
other investments that are principally funded by proceeds from Receivable
investments, other investments and securities offerings.
Metropolitan Investment Securities, Inc.: Broker/dealer that is in the
business of marketing securities that are offered by Summit and Metropolitan,
mutual funds and general securities.
Summit Property Development, Inc.: Provides real estate development services
to others, principally to Metropolitan and its subsidiaries.
4
<PAGE>
Summit Group Holding Company: Inactive except as the owner of Old Standard
Life Insurance Company.
Old Standard Life Insurance Company: Invests in Receivables and other
investments that are principally funded by proceeds from Receivable investments
and from annuity sales.
Old West Annuity & Life Insurance Company: This company, formerly known as
Arizona Life Insurance Company, invests in Receivables and other investments
that are principally funded by the proceeds from Receivable investments and
from annuity sales.
Offering Summary
Preferred Stock Offering We are offering 200,000 shares of Variable Rate
Cumulative Preferred Stock, Series S-3 (the
"Preferred Stock") at $100 per share. The
Preferred Stock will be sold in whole and
fractional shares. There is no minimum amount of
Preferred Stock that must be sold. The Preferred
Stock will be issued only in book-entry form.
Distributions We will pay dividends on the Preferred Stock on a
cumulative basis from the date the shares are
issued. When we make dividend distributions, they
will be paid monthly at the applicable rates
described in "DESCRIPTION OF PREFERRED STOCK--
Distributions." All preferred stock, including
the preferred stock already outstanding, are
entitled to an equal amount of dividends. See
"DESCRIPTION OF PREFERRED STOCK--Distributions."
Liquidation Rights If we liquidate Summit, you would have a right to
receive a liquidation preference of $100 per
share, plus declared and unpaid dividends. Your
liquidation rights would not be paid until all of
our debts, including our outstanding investment
certificates, were paid. Your liquidation rights
would be paid before any liquidating
distributions to the common stockholders. Your
liquidation rights are identical to the
liquidation rights of all other holders of
preferred stock that is currently authorized,
issued and outstanding. See "DESCRIPTION OF
PREFERRED STOCK--Liquidation Rights."
Redemption Upon Request of We may consider a written shareholder request you
Holder make to redeem your shares. We will generally not
consider a request to redeem shares unless they
have been listed for sale on MIS's trading list
for at least 60 days. We are under no obligation
to redeem your shares of Preferred Stock. Our
decision whether or not to redeem your shares
will depend, in part, on our financial condition
and our liquidity position at the time. Any
shares that we do redeem will be redeemed at a
price per share that is at the discretion of our
board of directors, and will include any declared
but unpaid dividends. See "DESCRIPTION OF
PREFERRED STOCK--Redemption of Shares" and "RISK
FACTORS."
Redemption Upon Call by We can redeem any or all shares of your Preferred
Summit Stock if we provide you with at least 30 but not
more than 60 days' notice by mail. If we decide
to redeem your shares, you will be paid $100
5
<PAGE>
per share plus the amount of any declared but
unpaid dividends as of the date that is fixed for
redemption. See "DESCRIPTION OF PREFERRED STOCK--
Redemption of Shares."
Voting Rights Your voting rights would be limited to two
situations. First, you will have those voting
rights expressly granted by the laws of the State
of Idaho. Second, you will have voting rights at
such time as distributions payable to you on your
Preferred Stock remain unpaid for a period of
time that equals twenty-four monthly
distributions. See "DESCRIPTION OF PREFERRED
STOCK--Voting Rights."
Federal Income Tax If we earn a profit during any future year, any
Considerations earnings or profits that we distribute to you
will be taxable. We cannot predict whether we
will have future distributions, or whether those
distributions will be taxable to you. You are
encouraged to consult your own tax advisors about
whether the distributions you would receive will
be taxable income. See "DESCRIPTION OF PREFERRED
STOCK--Federal Income Tax Consequences of
Distributions."
Use of Proceeds We will use the proceeds of this Preferred Stock
offering to invest in Receivables and to make
other investments which may include investments
in existing subsidiaries, new business ventures,
to acquire other companies or for other
investment purposes. We may also use the proceeds
to retire maturing certificates, to pay preferred
stock dividends and for general corporate
purposes. See "USE OF PROCEEDS."
Risk Factors Your investment in the Preferred Stock involves a
certain degree of risk. You should invest in the
Preferred Stock only after reviewing the risks
described in this prospectus. See "RISK FACTORS"
for a complete discussion of the risks associated
with investing in the Preferred Stock.
6
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Consolidated Group
at September 30, 1998:
<TABLE>
<S> <C>
Debt Payable:
Real estate contracts and mortgage notes payable 6.5% to 8.0%,
due 1998 to 2008................................................ $ 184,421
-----------
Total Debt Payable............................................... 184,421
-----------
Investment Certificates:
Investment Certificates, maturing 1998 to 2004, at 6.35% to 10%.. 49,680,868
Compound and accrued interest.................................... 6,213,225
-----------
Total Investment Certificates.................................... 55,894,093
-----------
Stockholders Equity:
Preferred Stock, $10 par: 10,000,000 shares authorized; 66,587
shares issued and outstanding (liquidation preference
$6,658,680)..................................................... 665,868
Common Stock, $10 par: 2,000,000 shares authorized; 10,000 shares
issued and outstanding.......................................... 100,000
Additional paid-in capital....................................... 4,405,604
Retained earnings................................................ 5,420,838
Net unrealized gains on investments.............................. 91,754
-----------
Total Stockholders' Equity....................................... 10,684,064
-----------
Total Capitalization............................................. $66,762,578
===========
</TABLE>
7
<PAGE>
Summary Consolidated Financial Data
The summary consolidated financial data shown below as of September 30, 1998
and 1997 and for the years ended September 30, 1998, 1997 and 1996 (other than
the ratio of earnings to fixed charges and preferred stock dividends) have been
derived from, and should be read in conjunction with, the consolidated
financial statements, related notes, and Management's Discussion and Analysis
of Financial Condition and Results of Operations appearing in Summit's Form 10-
K, which is incorporated herein by reference and attached to this prospectus.
The consolidated financial data shown below as of September 30, 1996, 1995 and
1994 and for the years ended September 30, 1995 and 1994 (other than the ratio
of earnings to fixed charges and preferred stock dividends) have been derived
from the consolidated financial statements not included elsewhere herein.
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................ $ 29,965,547 $ 19,785,462 $ 14,536,449 $ 9,576,615 $ 3,395,352
============ ============ ============ =========== ===========
Net income.............. $ 2,524,027 $ 1,851,240 $ 1,244,522 $ 587,559 $ 264,879
Preferred stock
dividends.............. (498,533) (446,560) (333,606) (309,061) (2,930)
------------ ------------ ------------ ----------- -----------
Income applicable to
common stockholder..... $ 2,025,494 $ 1,404,680 $ 910,916 $ 278,498 $ 261,949
============ ============ ============ =========== ===========
PER COMMON SHARE DATA:
Basic and diluted income
per share applicable to
common stockholder..... $ 202.55 $ 140.47 $ 91.09 $ 27.85 $ 13.47
============ ============ ============ =========== ===========
Weighted average number
of common shares
outstanding............ 10,000 10,000 10,000 10,000 19,455
============ ============ ============ =========== ===========
Ratio of earnings to
fixed charges.......... 1.64 1.46 1.40 1.25 1.16
Ratio of earnings to
fixed charges and
preferred stock
dividends.............. 1.46 1.31 1.26 1.11 1.16
BALANCE SHEET DATA:
Due from/(to) affiliated
companies, net......... $ 10,985,805 $ 870,525 $ 1,296,290 $(1,960,104) $ (267,735)
Total assets............ $206,594,234 $166,354,070 $117,266,680 $96,346,572 $35,101,988
Investment certificates
and other debt
payable................ $ 56,078,514 $ 50,607,983 $ 46,674,841 $38,650,532 $31,212,718
Stockholders' equity.... $ 10,684,064 $ 7,756,643 $ 5,358,774 $ 3,907,067 $ 3,321,230
</TABLE>
8
<PAGE>
RISK FACTORS
When deciding whether or not to purchase the Preferred Stock offered in this
prospectus, you should consider the risks set forth in the "INTRODUCTION--
Factors Affecting Future Operating Results" section of our Annual Report on
Form 10-K for the year ended September 30, 1998 incorporated into and attached
to this prospectus. You should also consider the following risks associated
with an investment in the Preferred Stock:
We can issue more stock Summit's and your rights and obligations in the
preferred stock are defined in the Statement of
Rights, Designations and Preferences of
Variable Rate Cumulative Preferred Stock Series
S-3. This statement does not restrict our
ability to issue additional preferred stock or
other equity in our company.
Preferred Stock is not The Preferred Stock is not insured or
insured against the risk of guaranteed by any bank, any governmental
loss agency, any insurance company, any affiliate of
our company or any other person or entity.
Thus, the Preferred Stock has greater risk than
investments that are insured by such entities
against the risk of loss.
There is no established The Preferred Stock is not listed on any
market to trade the national or regional stock exchange. We do not
Preferred Stock anticipate that we will apply to have the
Preferred Stock listed on any national or
regional stock exchange or that an independent
public market for Preferred Stock will develop.
Trading list does not The broker/dealer for the offering maintains a
guarantee a market for the trading list of persons willing to sell or
Preferred Stock purchase outstanding shares of our Preferred
Stock. We do not guarantee that this list will
continue to operate or that it will provide you
with a means to sell your shares.
Our discretionary redemption Under our discretionary redemption option, we
option does not guarantee are under no obligation to redeem your shares.
the ability to sell You should not rely on this option as a
securities to Summit guarantee that you will be able to have us
reacquire your shares. See "DESCRIPTION OF
PREFERRED STOCK--Redemption of Shares."
Limitations on redemption If we have not paid cumulative dividends to all
and restrictions on preferred shareholders, we cannot purchase or
distributions offer to exchange your shares unless we make
the same offer to all preferred shareholders.
See "DESCRIPTION OF PREFERRED STOCK--Redemption
of Shares." We will not make distributions to
you unless distributions can be made to all
other holders of preferred stock. See
"DESCRIPTION OF PREFERRED STOCK--
Distributions."
Liquidation rights junior to If we liquidate Summit, we must pay all of our
Summit's outstanding debt outstanding debt before we can make any
distributions to you. If there is not enough
money to distribute to all preferred
shareholders their entire liquidation rights,
you will share the shortfall equally with all
other holders of Preferred Stock.
9
<PAGE>
Extraordinary corporate Your preferences in liquidation could be
events could eliminate the adversely effected if we have an asset sale, a
liquidation rights of the capital restructuring, a merger, a
holders of Preferred Stock reorganization or a bankruptcy. If one of these
events occurs, your rights may be compromised
by a negotiation between all interested parties
or by a court determination.
Lack of voting control of You will have very few voting rights as an
the company owner of the preferred stock. The only class of
stock carrying regular voting rights is the
common stock. See "DESCRIPTION OF PREFERRED
STOCK--Voting Rights."
Summit can redeem or call We have the option of calling or redeeming your
Preferred Stock at its own shares at any time for $100 per share plus any
discretion declared and unpaid dividends. See "DESCRIPTION
OF PREFERRED STOCK--Redemption of Shares."
10
<PAGE>
USE OF PROCEEDS
If all of the Preferred Stock is sold, we expect net proceeds to total
$20,000,000 before deducting offering expenses and sales commissions. Offering
expenses are estimated at $118,000 and sales commissions will be a maximum of
six percent (6%) of the offering proceeds. There can be no assurance, however,
that any of the Preferred Stock can or will be sold.
In conjunction with the other funds available to us through operations
and/or borrowings, we currently plan to utilize the proceeds of the offered
Preferred Stock for the following purposes, which are shown in descending
order of priority: funding investments in Receivables and other investments,
which may include investing in existing subsidiaries, commencing new business
ventures and acquiring other companies. The Consolidated Group continues to
evaluate possible acquisition candidates, but there are presently no
commitments or agreements for material acquisitions. To the extent internally
generated funds are insufficient or unavailable for the retirement of maturing
certificates through the period ending January 31, 2000, proceeds of this
offering may be used for retiring maturing certificates, preferred stock
dividends and for general corporate purposes (debt service, and other general
operating expenses). Approximately $8,638,000 in principal amount of debt
securities will mature between February 1, 1999 and January 31, 2000 with
interest rates ranging from 6.35% to 10.0% and averaging approximately 8.0%
per annum. See "BUSINESS--Factors Affecting Future Operating Results" in our
Annual Report on Form 10-K for the year ended September 30, 1998.
Management anticipates that some of the proceeds of this offering will be
invested in money market funds, bank repurchase agreements, commercial paper,
U.S. Treasury Bills and similar short-term investments until used as stated
above. Due to our inability to accurately forecast the total amount of
Preferred Stock to be sold pursuant to this offering, no specific amounts have
been allocated for any of the foregoing purposes.
In the event substantially less than the maximum proceeds are obtained, we
do not anticipate any material changes to its planned use of proceeds from
those described above.
DESCRIPTION OF SECURITIES
Description of Capital Stock
The authorized capital of Summit consists of 2,000,000 shares of common
stock, $10 par value, and 10,000,000 shares of Series S preferred stock, $10
par value. Of the stock authorized, 10,000 shares of Common Stock and 66,587
shares of Series S preferred stock were issued and outstanding as of September
30, 1998.
Description of Preferred Stock
This offering consists of 200,000 shares of Variable Rate Cumulative
Preferred Stock, Series S-3. All of the shares of Preferred Stock offered by
Summit, hereby, when issued and sold against the consideration set forth in
this prospectus will be validly issued, fully paid and nonassessable. The
relative rights and preferences of Preferred Stock have been fixed and
determined by the Board of Directors of Summit and are set forth in the
Statement of Rights, Designations and Preferences of Preferred Stock (the
"Statement of Rights") duly approved by the Board of Directors of Summit. The
Preferred Stock is issued in book-entry form only.
The following statements relating to the Preferred Stock are summaries and
do not purport to be complete and are qualified in their entirety by reference
to the Statement of Rights, a copy of which is incorporated by reference as an
exhibit to the Registration Statement of which this prospectus is a part, and
is available for inspection at the principal office of Summit.
11
<PAGE>
Distributions
Distributions on Preferred Stock are cumulative and are to be declared
monthly on the first business day of the month payable to the shareholders of
record as of the fifth calendar day of each month. Distributions are to be
paid in cash on the twentieth calendar day of each month in an amount equal to
the offering price of $100 per share multiplied by the distribution rate
divided by twelve. The annual distribution rate will be the "Applicable Rate"
as defined herein subject to the authority of Summit's Board of Directors to
authorize, by resolution, a higher rate.
The Applicable Rate for any monthly distribution period cannot be less than
6% or greater than 14% per annum. Within those limits, the Applicable Rate for
any monthly distribution period shall be (a) the highest of the three-month
U.S. Treasury Bill Rate, the Ten-Year Constant Maturity Rate and the Twenty-
Year Constant Maturity Rate (each as more fully described below), (b) plus
one-half of one percentage point (0.5%).
The three-month Treasury Bill Rate for each distribution period is based on
the weekly per annum market discount rate for three-month U.S. Treasury bills.
The Ten Year Constant Maturity Rate for each distribution period is based on
the weekly per annum average yield to maturity for actively traded marketable
U.S. treasury fixed interest rate securities adjusted to constant maturities
of ten years. The Twenty Year Constant Maturity Rate for each distribution
period is based on the weekly per annum average yield to maturity for actively
traded marketable U.S. treasury fixed interest rate securities adjusted to
constant maturities of twenty years.
Each of the above three rates shall be calculated as the arithmetic average
of the two most recent weekly per annum yields as published weekly by the
Federal Reserve Board, the Federal Reserve Bank or any U.S. Government
department or agency selected by Summit, during the fourteen calendar days
immediately prior to the ten calendar days immediately preceding the first day
of the distribution period for which the distribution rate on Preferred Stock
is being determined.
If any or all of these methods are unavailable, the Statement of Rights
includes other methods to determine each of the respective maturity rates.
Should Summit determine in good faith that one or more of such rates cannot be
determined for any distribution period, then the Applicable Rate for such
period shall be the higher of whichever of such rates can be so determined,
plus one half of one percentage point. Should Summit determine in good faith
that none of such rates can be determined for any distribution period, then
the Applicable Rate in effect for the preceding distribution period shall be
continued for such distribution period. The distribution rate for each monthly
distribution period shall be calculated as promptly as practical by Summit.
Summit will cause notice of the distribution rate to be enclosed with the next
mailed distribution payment check. In making such calculation, the three-month
U.S. Treasury Bill Rate, Ten-Year Constant Maturity Rate and Twenty-Year
Constant Maturity Rate shall each be rounded to the nearest five hundredths of
a percentage point.
Prior to the effective date of this prospectus, Summit's Board of Directors
had adopted a resolution authorizing a distribution rate on the Preferred
Stock at two percentage points higher than the Applicable Rate. Such higher
distribution rate will continue from month to month until the Board elects to
terminate it. The Board may increase, decrease or eliminate the additional
points at any time, in its sole discretion.
Restrictions on Distributions
Summit may not declare or pay a distribution on any share of Preferred
Stock for any distribution period unless, at the same time, a like
distribution shall be declared or paid on all shares of preferred stock then
issued and outstanding and entitled to receive distributions. See
"CAPITALIZATION." Distributions may be paid only from legally available funds.
So long as any shares of Preferred Stock are outstanding, and unless the
full cumulative distributions on all previously outstanding preferred stock,
including the Preferred Stock offered by this prospectus shall have been paid
or declared and set apart for all past distribution periods, Summit may not:
(a) declare, pay or set aside for
12
<PAGE>
payment any distribution, except as provided below; (b) declare or pay any
other distribution upon common stock or upon any other stock ranking junior to
or on a parity with Preferred Stock as to distributions or upon liquidation;
or (c) redeem, purchase or otherwise acquire common stock or any other stock
of Summit ranking junior to or on a parity with Preferred Stock as to
distributions or upon liquidation for any consideration, or pay or make
available any funds for a sinking fund for the redemption of any shares of any
such stock, except by conversion into or exchange for stock of Summit ranking
junior to Preferred Stock as to distributions and upon liquidation.
Notwithstanding the foregoing, Summit may declare, pay or set aside for
payment for (i) distributions in common stock; (ii) distributions in any other
stock ranking junior to Preferred Stock as to distributions; (iii) liquidation
rights; and (iv) distributions where a like distribution shall be declared or
paid on all shares of preferred stock then issued and outstanding and entitled
to receive distributions.
Summit may make distributions ratably on the shares of Preferred Stock and
shares of any stock of Summit ranking on a parity therewith with regard to the
payment of distributions, in accordance with the sums which would be payable
on such shares if all distributions, including accumulations, if any, were
declared and paid in full. As of the date hereof, no distributions on Summit's
preferred stock are in arrears. No interest will be paid for or on account of
any unpaid distributions.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of Summit, the holders of shares of Preferred Stock will be
entitled to receive out of the assets of Summit available for distribution to
shareholders, before any distribution of assets is made to holders of common
stock or any stock of Summit ranking, upon liquidation, junior to Preferred
Stock, liquidating distributions in the amount of $100 per share plus declared
and unpaid distributions. Preferred Stock is junior in liquidation to
outstanding debt of Summit. As of September 30, 1998, the total consolidated
liabilities of Summit ranking senior in liquidation preference to Preferred
Stock were approximately $195,910,000. Obligations ranking on a parity with
Preferred Stock upon liquidation (i.e. the total liquidation preference of the
outstanding shares of all previously issued series of preferred stock) as of
September 30, 1998 were approximately $6,659,000. There are no limitations on
Summit's ability to incur additional secured or unsecured indebtedness. See
"CAPITALIZATION" and "RISK FACTORS."
The Statement of Rights provides that, without limitation, the voluntary
sale, lease or conveyance of all or substantially all of Summit's property or
assets to, or its consolidation or merger with, any other corporation shall
not be deemed to be a liquidation, dissolution or winding up of Summit. If,
upon any voluntary or involuntary liquidation, dissolution or winding up of
Summit, the amounts payable with respect to Preferred Stock and any other
shares of stock of Summit ranking as to any such distribution on a parity with
Preferred Stock are not paid in full, the holders of Preferred Stock and of
such other shares will share ratably in any such distribution of assets of
Summit in proportion to the full respective preferential amounts to which they
are entitled. After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of shares of Preferred Stock will not
be entitled to any further participation in any distribution of assets by
Summit.
Redemption of Shares
Upon call by Summit. Subject to regulatory restrictions affecting
redemptions during an offering, the shares of Preferred Stock are redeemable,
in whole or in part, only at the option of Summit at a redemption price of
$100 per share if redeemed anytime after December 31, 1998 plus declared and
unpaid distributions to the date fixed for redemption. In the event that fewer
than all of the outstanding shares of Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by Summit and the shares
to be redeemed shall be determined by such method as Summit, in its sole
discretion, deems to be equitable.
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<PAGE>
Discretionary Redemption Upon Request of the Holder. As provided in the
Preferred Stock Statement of Rights, the shares of Preferred Stock are not
redeemable at the option of the holder. If, however, Summit receives an
unsolicited written request for redemption of shares from any holder, Summit
may, in its sole discretion, subject to regulatory restrictions affecting
redemptions during an offering, and subject to the limitations described
below, accept such shares for redemption. Such redemption requests are
reviewed in the order received, and are subject to review by Summit's
executive management. Any shares so tendered, which Summit in its discretion
allows for redemption, shall be redeemed by Summit directly, and not from or
through a broker/dealer, at a price established by the Board, from time to
time, in its sole discretion plus any declared but unpaid distributions.
There can be no assurance that Summit's financial condition will allow it
to exercise its discretion to accept any particular request for redemption of
Preferred Stock. Summit will not redeem any such shares tendered for
redemption if to do so would, in the opinion of Summit's management, be unsafe
or unsound in light of Summit's financial condition, including its liquidity
position; if payment of interest or principal on any outstanding instrument of
indebtedness is in arrears or in default; or if payment of any distribution on
Preferred Stock or share of any stock of Summit ranking at least on a parity
therewith is in arrears as to distributions. In the event that cumulative
distributions on Preferred Stock have not been paid in full, Summit may not
purchase or acquire any shares of Preferred Stock otherwise than pursuant to a
purchase or exchange offer made on the same terms to all holders of Preferred
Stock.
Absence of Trading Market
The Preferred Stock is not expected to be traded on any national or
regional stock exchange and no independent public market for Preferred Stock
is anticipated to develop. Management does not anticipate applying for a
listing for such public trading. The broker-dealer for this offering, MIS,
maintains a trading list to match buyers and sellers of preferred stock. With
limited exceptions, Summit has established a policy that all preferred
shareholders, including holders of the Preferred Stock offered herein, must
place their shares for sale on the trading list for 60 consecutive days before
Summit will entertain a request for redemption. See "RISK FACTORS."
Voting Rights
The Preferred Stock has no voting rights except as provided in the
Statement of Rights and except as required by Idaho State Law regarding
amendments to Summit's Articles of Incorporation which adversely affect
holders of such shares as a class and requires approval of a majority of the
outstanding shares entitled to vote.
The Statement of Rights provides that holders of Preferred Stock, together
with the holders of Summit's other preferred stock previously authorized,
voting separately and as a single class, shall be entitled to elect a majority
of the Board of Directors of Summit in the event that distributions payable on
any shares of Preferred Stock shall be in arrears in an amount equal to
twenty-four full monthly distributions or more per share. Such right will
continue until all distributions in arrears have been paid in full.
Federal Income Tax Consequences of Distributions
The following discussion of the federal income tax consequences of
distributions paid is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), existing Treasury Department regulations, current published
administrative positions of the Internal Revenue Service (the "Service")
contained in revenue rulings, revenue procedures and notes and existing
judicial decisions. No assurance can be given that legislative or
administrative changes or court decisions may not be forthcoming that could
significantly modify the statements in this discussion. Any such changes may
or may not be retroactive with respect to transactions effected prior to the
date of such changes.
14
<PAGE>
Distributions paid to the holders of Preferred Stock will either be taxable
or not depending, in part, on the extent to which they are made out of current
or accumulated earnings and profits of Summit as calculated for federal income
tax purposes. To the extent, if any, that distributions paid by Summit to the
holders of Preferred Stock exceed current and accumulated earnings and profits
of Summit, such distributions will be treated first as a tax-free return of
capital, reducing the holder's basis in Preferred Stock (not below zero) and
thereafter as capital gains (provided Preferred Stock is held by the holder as
a capital asset).
Summit believes that the majority of the distributions on its outstanding
preferred stock were tax free returns of capital for federal income tax
purposes in calendar 1994, and were taxable for 1995 through 1998. Summit is
currently unable to predict the character of its distributions for future
years, but as required by the Code, will report annually to shareholders
regarding the tax character of the prior year's distributions.
Each preferred shareholder's individual tax circumstance is unique;
accordingly, preferred shareholders are advised to consult their own tax
advisor with respect to the income tax treatment or any distribution made with
respect to the Preferred Stock.
Distributions paid with respect to Preferred Stock, whether deemed to be
distributions, return of capital, or capital gains for federal income tax
purposes will result in the same federal income tax consequences to Summit as
other payments of distributions. These distributions are not deductible by
Summit under current tax law. Additionally, distributions to foreign taxpayers
are subject to special rules not discussed herein.
Transfer Agent and Registrar
Metropolitan acts as Transfer Agent and Registrar for Summit's capital
stock, including its Preferred Stock.
PLAN OF DISTRIBUTION
The Preferred Stock is offered directly to the public on a continuing best
efforts basis through Metropolitan Investment Securities, Inc. ("MIS"), a
subsidiary of Summit. Accordingly, the offering has not received the
independent selling agent review customarily made when an unaffiliated selling
agent offers securities. No commission or other expense of the offering will
be paid by the purchasers of the Preferred Stock. A commission in the maximum
amount of 6% of the offering price will be paid by Summit on most Preferred
Stock sales. Preferred Stock is offered for cash or other consideration,
tangible or intangible property, which is acceptable to Summit as determined
in good faith by the Board of Directors. MIS will transmit such funds or other
consideration directly to Summit by noon of the next business day after
receipt. Summit will also pay certain other expenses in connection with the
offering. During the fiscal year ended September 30, 1998, MIS received
commissions of $70,092 from Summit on sales of approximately $1,246,000 of
Summit's preferred stock.
MIS is a member of the National Association of Securities Dealers, Inc.
(the "NASD"). As such, NASD Rule 2720 applies and requires, in part, that a
qualified independent underwriter be engaged to make a recommendation
regarding the pricing of the Preferred Stock offered through this prospectus.
Accordingly, MIS has obtained a letter from Cruttenden Roth Incorporated, a
NASD member ("Cruttenden"), which states that the offering price of the
Preferred Stock is consistent with Cruttenden's recommendations which were
based on conditions and circumstances, existing as of the date of the
prospectus. Accordingly, the price offered for the Preferred Stock will be no
higher than Cruttenden would have independently recommended. Cruttenden has
assumed the responsibilities of acting as the qualified independent
underwriter in pricing the offering and conducting due diligence. For
performing its functions as a qualified independent underwriter with respect
to the Preferred Stock offered hereunder, Cruttenden is to be paid $13,333 in
fees.
Summit has agreed to indemnify Cruttenden, against or make contributions to
Cruttenden with respect to certain liabilities under the Securities Act of
1933, as amended, (the "Securities Act") and the Securities Exchange Act of
1934, as amended (the "Exchange Act").
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<PAGE>
There is not now and Summit does not expect that there will be a public
trading market for the Preferred Stock in the future. MIS does not intend to
make a market for the Preferred Stock. Summit, through MIS, undertakes to
maintain a list of persons willing to sell or purchase outstanding shares of
preferred stock. See "RISK FACTORS" and "DESCRIPTION OF SECURITIES--Redemption
of Shares."
MIS may enter into selected dealer agreements with and reallow to certain
dealers who are members of the NASD, and certain foreign dealers who are not
eligible for membership in the NASD, a commission of up to 6% of the principal
amount of Preferred Stock sold by such dealers. After the commencement of the
offering, the commissions and reallowances, if any, may be lowered.
LEGAL MATTERS
Certain legal matters relating to the Preferred Stock to be offered hereby
will be passed upon for Summit by the law firm of Kutak Rock, Denver, Colorado.
EXPERTS
The consolidated balance sheets of Summit Securities, Inc. and its
subsidiaries as of September 30, 1998 and 1997 and the consolidated statements
of income, stockholders' equity and cash flows for each of the three years in
the period ended September 30, 1998, incorporated by reference in this
prospectus, have been incorporated herein in reliance on the report, which
includes an explanatory paragraph describing changes in the methods of
accounting for the transfer and servicing of financial assets in 1997 and
impaired loans in 1996, of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
AVAILABLE INFORMATION
Summit is subject to the informational requirements of the Exchange Act and,
in accordance therewith, files periodic reports and other information with the
Securities and Exchange Commission (the "Commission"). Such reports and other
information filed by Summit with the Commission can be inspected and copied at
the public reference facilities maintained by the Commission in Washington,
D.C. at 450 Fifth Street, N.W., Washington, DC 20549 and at certain of its
regional offices which are located in the New York Regional Office, Seven World
Trade Center, Suite 1300, New York, NY 10048, and the Chicago Regional Office,
CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661-2511.
In addition, the Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants, such as Summit, that file electronically with the Commission at
the following Internet address: (http://www.sec.gov).
Summit has filed with the Securities and Exchange Commission in Washington,
D.C., a Registration Statement on Form S-2 under the Securities Act, with
respect to the securities offered hereby. This prospectus does not contain all
of the information set forth in the Registration Statement, as permitted by the
rules and regulations of the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following document filed with the Commission is incorporated herein by
reference in this prospectus:
Annual Report on Form 10-K for the fiscal year ended September 30, 1998
(filed January 13, 1999).
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
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<PAGE>
Summit will provide without charge to each person, including to whom a
prospectus is delivered, upon written or oral request of such person, a copy
of any and all of the information that has been referenced in this prospectus
other than exhibits to such documents. Requests for such copies should be
directed to Corporate Secretary, Summit Securities, Inc., PO Box 2162,
Spokane, Washington 99210-2162, telephone number (509) 838-3111.
17
<PAGE>
Summit Securities, Inc.
[LOGO FOR SUMMIT SECURITIES APPEARS HERE]
$20,000,000 Preferred Shares, Series S-3
----------------
PROSPECTUS
----------------
January , 1999
Metropolitan Investment Services, Inc.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
SEC Registration Fee(1)............................................ $ 5,560
NASD Filing Fee.................................................... 1,500
Independent Underwriter Fee and Expenses........................... 13,333
Printing Expenses(2)............................................... 23,500
Legal Fees and Disbursements(2).................................... 10,000
Accounting Fees and Expenses(2).................................... 50,000
Blue Sky Fees and Expenses(2)...................................... 13,000
Miscellaneous Expenses(2).......................................... 1,107
--------
Total Expenses..................................................... $118,000
========
</TABLE>
--------
(1) $3,336 of this fee was previously paid with Registration No. 333-43831
(2) Estimated
Item 15. Indemnification of Directors and Officers
Summit has no contractual or other arrangement with its controlling persons,
directors or officers regarding indemnification, other than as set forth in its
Articles of Incorporation. Summit's Articles of Incorporation permits
indemnification of a director, officers or employee up to the indemnification
limits permitted by Idaho state law which permits indemnification for
judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with an action, suit or proceeding if the indemnified
person acted in good faith and in a manner reasonably believed to be in and not
opposed to the best interests of the corporation.
Item 16. Exhibits
<TABLE>
<C> <S>
(a) Exhibits:
1(a). Form of Selling Agreement between Summit and Metropolitan Investment
Securities, Inc. with respect to Preferred Stock Series S-3
(incorporated by reference to Exhibit 1(a)(ii) to Registration No.
333-19787).
*1(b). Form of Agreement to Act as Qualified Independent Underwriter between
Summit, Metropolitan Investment Securities, Inc. and Cruttenden Roth
Incorporated with respect to Preferred Stock, Series S-3.
*1(c). Form of Pricing Recommendation Letter of Cruttenden Roth Incorporated
with respect to Preferred Stock, Series S-3.
4. Statement of Rights, Designations and Preferences of Variable Rate
Cumulative Preferred Stock Series S-3 (incorporated by reference to
Exhibit 4(d) to Amendment 3 to Registration No. 333-19787).
*5. Opinion of Kutak Rock as to validity of Preferred Stock.
10(a). Management Receivable Acquisition and Servicing Agreement between
Summit Securities Inc. and Metropolitan Mortgage & Securities Co.,
Inc. dated September 9, 1994 (incorporated by reference to Exhibit
10(a) to Registration No. 33-57619).
10(b). Receivable Acquisition, Management and Services Agreement between Old
Standard Life Insurance Company and Metropolitan Mortgage & Securities
Co., Inc. dated December 31, 1994 (incorporated by reference to
Exhibit 10(d) to Registration No. 333-115).
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
10(c). Receivable Acquisition, Management and Services Agreement between
Arizona Life Insurance Company and Metropolitan Mortgage & Securities
Co., Inc. dated October 10, 1996 (incorporated by reference to Exhibit
10(d) to Registration No. 333-19787).
10(d). Reinsurance Agreement between Western United Life Assurance Company
and Old Standard Life Insurance Company (incorporated by reference to
Exhibit 10(d) to Form 10-K filed January 7, 1998).
11. Statement of computation of earnings per common share (incorporated by
reference to Exhibit 11 to Form 10-K filed January 13, 1999).
12. Statement of computation of ratio of earnings to fixed charges
(incorporating reference to Exhibit 12 to Form 10-K filed January 13,
1999).
*23(a). Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23(b). Consent of Kutak Rock (included in Exhibit 5).
24. Power of attorney (included on page II-5 of the Registration
Statement).
27. Financial Data Schedule (incorporated by reference to Exhibit 27 to
Form 10-K filed January 13, 1999).
</TABLE>
- --------
* Filed herewith
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling persons of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling
II-2
<PAGE>
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) For the purpose of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
For the purpose of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Spokane, State of Washington, on this 25th day of
January, 1999.
SUMMIT SECURITIES, INC.
/s/ Tom Turner
By __________________________________
Tom Turner, President
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, whose signatures
appear below, hereby constitute and appoint Tom Turner their true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for them and in their name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
full and to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Tom Turner President and Director January 25, 1999
______________________________________ (Principal Executive
Tom Turner Officer)
/s/ Philip Sandifur Vice President and January 25, 1999
______________________________________ Director
Philip Sandifur
/s/ Greg Gordon Secretary, Treasurer and January 25, 1999
______________________________________ Director
Greg Gordon
/s/ Robert Potter Director January 25, 1999
______________________________________
Robert Potter
/s/ Steven Crooks Principal Accounting January 25, 1999
______________________________________ Officer and Principal
Steven Crooks Financial Officer
</TABLE>
II-5
<PAGE>
Exhibit-1(b)
FORM OF AGREEMENT TO ACT AS QUALIFIED INDEPENDENT UNDERWRITER
SUMMIT SECURITIES, INC.
Preferred Stock, Series S-3
This agreement made as of the ____ day of ____________, by and between
Summit Securities, Inc., an Idaho corporation ("Summit"), Metropolitan
Investment Securities, Inc., a Washington corporation ("MIS"), and CRUTTENDEN
ROTH INCORPORATED a California corporation ("CRUTTENDEN").
WITNESSETH:
WHEREAS Summit intends to offer 200,000 shares of Preferred Stock,
designated as "Variable Rate Cumulative Preferred Stock, Series S-3,"
(hereinafter referred to as the "Preferred Stock"), which will be offered in
reliance on a registration statement filed on Form S-2, bearing SEC file number
333-43831; and,
WHEREAS, MIS, a wholly owned broker/dealer of Summit and a member of
the National Association of Securities Dealers ("NASD"), will be engaged as the
managing agent for Summit and MIS may enter into Selected Dealer Agreements with
other qualified broker/dealers; and,
WHEREAS, pursuant to subparagraph (c) of Rule 2720 of the Bylaws of the
NASD, MIS, as a NASD member, may participate in such underwriting only if the
price at which the Preferred Stock is offered to the public is no higher than
the price recommended by a "Qualified Independent Underwriter" as that term is
defined in subparagraph (b)(15) of Rule 2720 to the Bylaws of the NASD, and who
participates in the preparation of the registration statement and prospectus
relating to the offering and exercises customary standards of due diligence,
with respect thereto; and,
WHEREAS, this agreement ("Agreement") describes the terms on which
Summit is retaining CRUTTENDEN to serve as such a "Qualified Independent
Underwriter" in connection with this offering of Preferred Stock; and,
NOW, THEREFORE, in consideration of the recitations set forth above,
and the terms, promises, conditions, and covenants herein contained, the parties
hereby contract and agree as follows:
DEFINITIONS.
As hereinafter used, except as the context may otherwise require, the
term "Registration Statement" means the registration statement on Form S-2
(including the related preliminary prospectus, financial statements, exhibits
and all other documents to be filed as a part thereof or incorporated therein)
for the registration of the offer and sale of the Preferred Stock under the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Act") filed with the Securities and Exchange Commission (the
"Commission"), and any amendment thereto, and the term "Prospectus" means the
prospectus including any preliminary or final prospectus (including the form of
prospectus to be filed with the Commission pursuant to Rule 424(b) under the
Act) and any amendment or supplement thereto, to be used in connection with the
offering.
1. RULE 2720.
CRUTTENDEN hereby confirms its agreement as set forth in
sub-paragraph 15(f) of Rule 2720 of the Bylaws of the NASD and
represents that, as appropriate, CRUTTENDEN satisfies or at
the times designated in such paragraph (l5) will satisfy the
other requirements set forth therein or will receive an
exemption from such requirements from the NASD.
2. CONSENT.
<PAGE>
CRUTTENDEN hereby consents to be named in the Registration
Statement and Prospectus as having acted as a "Qualified
Independent Underwriter" solely for the purposes of Rule 2720
referenced herein. Except as permitted by the immediately
preceding sentence or to the extent required by law, all
references to CRUTTENDEN in the Registration Statement or
Prospectus or in any other filing, report, document, release
or other communication prepared, issued or transmitted in
connection with the offering by Summit or any corporation
controlling, controlled by or under common control with
Summit, or by any director, officer, employee, representative
or agent of any thereof, shall be subject to CRUTTENDEN's
prior written consent with respect to form and substance.
3. PRICING FORMULA AND RECOMMENDATION LETTER
CRUTTENDEN agrees to render a written letter of recommendation
as to the price above which Summit's Preferred Stock may not
be offered based on the computation of distributions to be
declared on those shares that is set forth in Schedules "A"
and "B" attached hereto, and incorporated herein by reference
(the "Pricing Recommendation Letter"). It is understood and
agreed by CRUTTENDEN that the securities to which this
Agreement relates will be offered on a continuous, best
efforts basis by MIS, as the managing agent, pursuant to the
Selling Agreement in effect between MIS and Summit which is an
exhibit to the Registration Statement referred to above.
Summit, through MIS, will continue to offer the Preferred
Stock according to the terms and conditions of said Selling
Agreement, and in accordance with this Agreement, including,
without limitation, Schedules "A" and "B". CRUTTENDEN reserves
the right to review and amend its Pricing Recommendation
Letter upon the filing of any post-effective amendment to the
Registration Statement or upon occurrence of any material
event which may or may not require such an amendment to be
filed, or at such time as the offering shall terminate or
otherwise lapse under operation of law.
4. FEES AND EXPENSE.
It is agreed that CRUTTENDEN shall be paid a fee in the amount
of $8,000 payable upon delivery of the Pricing Recommendation
Letter referred to in paragraph 3 above.
5. MATERIAL FACTS.
Summit represents and warrants to CRUTTENDEN that at the time
the Registration Statement and, at the time the Prospectus is
filed with the Commission (including any preliminary
prospectus and the form of prospectus filed with the
Commission pursuant to Rule 424(b)) and at all times
subsequent thereto, to and including the date on which payment
for, and delivery of, the Preferred Stock to be sold in the
Offering is made by the underwriter or underwriters, as the
case may be, participating in the Offering and by Summit (such
date being referred to herein as the "Closing Date"), the
Prospectus (as amended or supplemented if it shall have been
so amended or supplemented) will contain all material
statements which are required to be stated therein in
accordance with the Act and will conform to all other
requirements of the federal securities laws, and will not, on
such date include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and
that all contracts and documents required by the Act to be
filed or required as exhibits to said registration statement
have been filed. Summit further represents and warrants that
any further filing, report, document, release or communication
which in any way refers to CRUTTENDEN or to the services to be
performed by CRUTTENDEN pursuant to this Agreement will not
contain any untrue or misleading statement of a material fact
or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
<PAGE>
Summit further warrants and represents that:
(a) All leases, contracts and agreements referred to in or
filed as exhibits to the Registration Statement to
which Summit or its subsidiaries is a party or by which
it is bound are in full force and effect.
(b) Summit has good and marketable title, except as
otherwise indicated in the Registration Statement and
Prospectus, to all of its assets and properties
described therein as being owned by it, free and clear
of all liens, encumbrances and defects except such
encumbrances and defects which do not, in the
aggregate, materially affect or interfere with the use
made and proposed to be made of such properties as
described in the Registration Statement and Prospectus;
and Summit has no material leased properties except as
disclosed in the Prospectus.
(c) Summit is duly organized under the laws of the State of
Idaho and, as of the effective date of the Registration
Statement and at Closing Summit will be validly
existing and in good standing under the laws of the
State of Idaho with full corporate power and authority
to own its properties and conduct its business to the
extent described in the Registration Statement and
Prospectus; Summit is duly qualified to do business as
a foreign corporation and is in good standing in all
jurisdictions in which the nature of the business
transacted by it or its ownership of properties or
assets makes qualification necessary; the authorized
and outstanding capitalization of Summit is as set
forth in the Prospectus and the description in the
Prospectus of the capital stock of Summit conforms with
and accurately describes the rights set forth in the
instruments defining the same;
(d) Summit is not in violation of its Certificate of
Incorporation or Bylaws or in default in the
performance or observance of any material obligation,
agreement, covenant or condition contained in any bond,
debenture, note, or other evidence of indebtedness,
contract or lease or in any indenture or loan agreement
to which it is a party or by which it is bound.
(e) The execution, delivery and performance of this
Agreement has been duly authorized by all necessary
corporate action on the part of Summit and MIS and
performance of the foregoing agreement and the
consummation of the transactions contemplated thereby,
will not conflict with or result in a breach of any of
the terms or constitute a violation of the respective
Certificates of Incorporation or Bylaws of Summit or
MIS, or any deed of trust, lease, sublease, indenture,
mortgage, or other agreement or instrument to which
Summit or MIS is a party or by which either of them or
their property is bound, or any applicable law, rule,
regulation, judgment, order or decree of any
government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over Summit or
MIS or their properties or obligations; and no consent,
approval, authorization or order of any court or
governmental agency or body is required for the
consummation of the transactions contemplated herein
and in the other agreements previously referred to in
this paragraph except as may be required under the Act
or under any state securities or laws.
(f) Any certificate signed by an officer of Summit and
delivered to CRUTTENDEN pursuant to this Agreement
shall be deemed a representation and warranty by Summit
to CRUTTENDEN, to have the same force and effect as
stated herein, as to the matters covered thereby.
(g) If any event relating to or affecting Summit shall
occur as a result of which it is necessary, in
CRUTTENDEN's opinion, to amend or supplement the
Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, Summit
undertakes to inform CRUTTENDEN of such events within a
reasonable time thereafter, and will forthwith prepare
and furnish to CRUTTENDEN, without expense to it, a
reasonable number of copies of any amendment or
amendments or a supplement or supplements to the
Prospectus (in form and substance satisfactory to
CRUTTENDEN) which will amend or supplement the
Prospectus so that as amended or supplemented it will
not contain any untrue statement of a material fact or
omit
<PAGE>
to state a material fact necessary to make the
statements therein in light of the circumstances
existing at the time the Prospectus is delivered to a
purchaser, not misleading.
(h) Summit hereby warrants and represents that it will
offer the Preferred Stock in accordance with the
pricing formula that is set forth in Schedules "A" and
"B" which are incorporated by reference herein.
(i) All representations, warranties and agreements
contained in this Agreement, or contained in
certificates of officers of Summit submitted pursuant
hereto, shall remain operative and in full force and
effect, surviving the date of this Agreement.
6. AVAILABILITY OF INFORMATION.
Summit hereby agrees to provide CRUTTENDEN, at its expense,
with all information and documentation with respect to its
business, financial condition and other matters as CRUTTENDEN
may deem relevant based on the standards of reasonableness and
good faith and shall request in connection with CRUTTENDEN's
performance under this Agreement, including, without
limitation, copies of all correspondence with the Commission,
certificates of its officers, opinions of its counsel and
comfort letters from its auditors. The above-mentioned
certificates, opinions of counsel and comfort letters shall be
provided to CRUTTENDEN as CRUTTENDEN may request on the
effective date of the Post Effective Amendment 1 to the
Registration Statement. Summit will make reasonably available
to CRUTTENDEN, its auditors, counsel, and officers and
directors to discuss with CRUTTENDEN any aspect of Summit
which CRUTTENDEN may deem relevant. In addition, Summit, at
CRUTTENDEN's request, will cause to be delivered to CRUTTENDEN
copies of all certificates, opinions, letters and reports to
be delivered to the underwriter or underwriters, as the case
may be, pursuant to any underwriting agreement executed in
connection with the Offering or otherwise, and shall cause the
person issuing such certificate, opinion, letter or report to
authorize CRUTTENDEN to rely thereon to the same extent as if
addressed directly to CRUTTENDEN. Summit represents and
warrants to CRUTTENDEN that all such information and
documentation provided pursuant to this paragraph 6 will not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statement therein
not misleading. In addition, Summit will promptly advise
CRUTTENDEN of all telephone conversations with the Commission
which relate to or may affect the Offering.
7. INDEMNIFICATION.
(a) Subject to the conditions set forth below, and in
addition to any rights of indemnification and
contribution to which CRUTTENDEN may be entitled pursuant
to any agreement among underwriters, underwriting
agreement or otherwise, and to the extent allowed by law,
Summit hereby agrees that it will indemnify and hold
CRUTTENDEN and each person controlling, controlled by or
under common control with CRUTTENDEN within the meaning
of Section 15 of the Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or
the rules and regulations thereunder (individually, an
"Indemnified Person") harmless from and against any and
all loss, claim, damage, liability, cost or expense
whatsoever to which such Indemnified Person may become
subject under the Act, the Exchange Act, or other federal
or state statutory law or regulation, at common law or
otherwise, arising out of, based upon, or in any way
related or attributed to (i) this Agreement, (ii) any
untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or
Prospectus or any other filing, report, document, release
or communication, whether oral or written, referred to in
paragraph 5 hereof or the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, (iii) any application or other document
executed by Summit or based upon written information
furnished by Summit filed in any jurisdiction in order to
qualify the Preferred Stock under the securities or Blue
Sky laws thereof, or the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or (iv) the breach of any representation or
warranty made by Summit in this Agreement. Summit further
agrees that upon demand by an Indemnified Person at any
time or from
<PAGE>
time to time, it will promptly reimburse such Indemnified
Person for, or pay, any loss, claim, damage, liability,
cost or expense as to which Summit has indemnified such
person pursuant hereto. Notwithstanding the foregoing
provisions of this paragraph 7, any such payment or
reimbursement by Summit of fees, expenses or disbursement
incurred by an Indemnified Person in any proceeding in
which a final judgment by a court of competent
jurisdiction (after all appeals or the expiration of time
to appeal) is entered against such Indemnified Person as
a direct result of such person's negligence, bad faith or
willful misfeasance will be promptly repaid to Summit. In
addition, anything in this paragraph 7 to the contrary
notwithstanding, Summit shall not be liable for any
settlement of any action or proceeding effected without
its written consent.
(b) Promptly after receipt by an Indemnified Person under
sub-paragraph (a) above of notice of the commencement of
any action, such Indemnified Person will, if a claim in
respect thereof is to be made against Summit under
paragraph (a), notify Summit in writing of the
commencement thereof; but the omission to so notify
Summit will not relieve Summit from any liability which
it may have to any Indemnified Person otherwise than
under this paragraph 7 if such omission shall not have
materially prejudiced Summit's ability to investigate or
to defend against such claim. In case any such action is
brought against any Indemnified Person, and such
Indemnified Person notifies Summit of the commencement
thereof, Summit will be entitled to participate therein
and, to the extent that it may elect by written notice
delivered to the Indemnified Person promptly after
receiving the aforesaid notice from such Indemnified
Person, to assume the defense thereof with counsel
reasonably satisfactory to such Indemnified Person;
PROVIDED, HOWEVER, that if the defendants in any such
action include both the Indemnified Person and Summit or
any corporation controlling, controlled by or under
common control with Summit, or any director, officer,
employee, representative or agent of any thereof, or any
other "Qualified Independent Underwriter" retained by
Summit in connection with the Offering and the
Indemnified Person shall have reasonably concluded that
there may be legal defenses available to it which are
different from or additional to those available to such
other defendant, the Indemnified Person shall have the
right to select separate counsel to represent it. Upon
receipt of notice from Summit to such Indemnified Person
of its election so to assume the defense of such action
and approval by the Indemnified Person of counsel, Summit
will not be liable to such Indemnified Person under this
paragraph 7 for any fees of counsel subsequently incurred
by such Indemnified Person in connection with the defense
thereof (other than the reasonable costs of investigation
subsequently incurred by such Indemnified Person) unless
(i) the Indemnified Person shall have employed separate
counsel in accordance with the provision of the next
preceding sentence (it being understood, however, that
Summit shall not be liable for the expenses of more than
one separate counsel in any one jurisdiction representing
the Indemnified Person, which counsel shall be approved
by CRUTTENDEN), (ii) Summit, within a reasonable time
after notice of commencement of the action, shall not
have employed counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person,
or (iii) Summit shall have authorized in writing the
employment of counsel for the Indemnified Person at the
expense of Summit, and except that, if clause (i) or
(iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or
(iii).
(c) In order to provide for just and equitable contribution
in circumstances in which the indemnification provided
for in paragraph 7 is due in accordance with its terms
but is for any reason held by a court to be unavailable
from Summit to CRUTTENDEN on grounds of policy or
otherwise, Summit and CRUTTENDEN shall contribute to the
aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in
connection with investigating or defending same) to which
Summit and CRUTTENDEN may be subject in such proportion
so that CRUTTENDEN is responsible for that portion
represented by the percentage that its fee under this
Agreement bears to the public offering price appearing on
the cover page of the Prospectus and Summit is
responsible for the balance, except as Summit may
otherwise agree to reallocate a portion of such liability
with respect to such balance with any other person,
including, without limitation, any other "Qualified
Independent Underwriter"; PROVIDED, HOWEVER, that (i) in
no case shall CRUTTENDEN be responsible for any amount in
excess of the fee set
<PAGE>
forth in paragraph 4 above and (ii) no person guilty of
fraudulent misrepresentation within the meaning of
Section 11(f) of the Act shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this
paragraph (c), any person controlling, controlled by or
under common control with CRUTTENDEN, or any partner,
director, officer, employee, representative or any agent
of any thereof, shall have the same rights to
contribution as CRUTTENDEN and each person who controls
Summit within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, each officer of Summit
who shall have signed the Registration Statement and each
director of Summit shall have the same rights to
contribution as Summit, subject in each case to clause
(i) of this paragraph (c). Any party entitled to
contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution
may be made against the other party under this paragraph
(c), notify such party from whom contribution may be
sought, but the omission to so notify such party shall
not relieve the party from whom contribution may be
sought from any other obligation it or they may have
hereunder or otherwise than under this paragraph (c). The
indemnity and contribution agreements contained in this
paragraph 7 shall remain operative and in full force and
effect regardless of any investigation made by or on
behalf of any Indemnified Person or termination of this
Agreement.
8. AUTHORIZATION BY SUMMIT.
Summit represents and warrants to CRUTTENDEN that this
Agreement has been duly authorized, executed and delivered by
Summit and constitutes a valid and binding obligation of
Summit.
9. AUTHORIZATION BY MIS.
MIS represents and warrants to CRUTTENDEN that this Agreement
has been duly authorized, executed and delivered by MIS and
constitutes a valid and binding obligation of MIS.
10. AUTHORIZATION BY CRUTTENDEN.
CRUTTENDEN represents and warrants to Summit that this
Agreement has been duly authorized, executed and delivered by
CRUTTENDEN and constitutes a valid and binding obligation of
CRUTTENDEN.
11. NOTICE.
Whenever notice is required to be given pursuant to this
Agreement, such notice shall be in writing and shall be mailed
by first class mail, postage prepaid, addressed (a) if to
Cruttenden Roth Incorporated at 18301 Von Karman, Suite 100,
Irvine, CA 92612, Attention: Byron Roth and (b) if to Summit
or Metropolitan Investment Securities, Inc., at 929 W. Sprague
Ave., Spokane, WA 99201, Attention: Susan A. Thomson,
Assistant Corporate Counsel.
12. GOVERNING LAW.
This Agreement shall be construed (both as to validity and
performance) and enforced in accordance with and governed by
the laws of the State of Idaho applicable to agreements made
and to be performed wholly within such jurisdiction.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the day and year first above mentioned.
SUMMIT SECURITIES, INC.
By:
---------------------------------------------
Tom Turner, President
METROPOLITAN INVESTMENT SECURITIES, INC.
By:
---------------------------------------------
Reuel Swanson, Secretary
CRUTTENDEN ROTH INCORPORATED
By:
---------------------------------------------
Monte Brem, Vice President, Corporate Finance
<PAGE>
SCHEDULE A
Summit Securities, Inc.
The opinion of CRUTTENDEN is conditioned upon Summit's undertaking to
maintain the distribution rate of the Preferred Stock in accordance with the
formula set forth below:
Notwithstanding anything to the contrary herein the Applicable Rate for
any monthly distribution period shall not, in any event, be less than 6% or
greater than 14% per annum. The Board of Directors may, however, by resolution,
authorize distributions in excess of the Applicable Rate. The Applicable Rate
for any monthly distribution period shall be the highest of the Treasury Bill
Rate, the Ten Year Constant Maturity Rate and the Twenty Year Constant Maturity
Rate (each as defined in the Preferred Stock Authorizing Resolution) plus one
half of one percentage point for such distribution period. In the event that the
Company determines in good faith that for any reason one or more of such rates
cannot be determined for any distribution period, then the Applicable Rate for
such period shall be the higher of whichever of such rates can be so determined.
<PAGE>
SCHEDULE B
Summit Securities, Inc.
VARIABLE RATE, CUMULATIVE PREFERRED STOCK, SERIES S-3
PRICING
For Distributions Payable On:
----------------------------------
Distributions Record Date:
-------------------------------------
Applicable Effective Resultant
Date Date Average Rate Rate* Rate
3 Mo Treasury Bill --------------------- +.5% +2% ---------
10 Yr Constant Rate --------------------- +.5% +2% ---------
20 Yr Constant Rate --------------------- +.5% +2% ---------
HIGHEST RESULTANT RATE:
-----------------------------
MONTHLY DISTRIBUTION PER SHARE:
----------------------
(Highest applicable rate divided by 12)
As resolved by the Board of Directors, distribution will be deemed
declared on the 1st day of each month, payable on the 20th of each month to the
holders of record on the 5th of each month.
* Includes any distribution authorized by the Board in excess of the Applicable
Rate.
-------------------------------------------------------
Authorized Signature
<PAGE>
Exhibit 1(c)
FORM OF PRICING RECOMMENDATION LETTER
Date: January __, 1999
C. Paul Sandifur, Jr., President
Metropolitan Investment Securities, Inc.
917 W. Sprague Avenue
Spokane, Washington 99201
Re: Pricing of Summit Securities, Inc. Offering of $20,000,000 of Variable
Rate Cumulative Preferred Stock, Series S-3
Dear Mr. Sandifur:
This letter will serve to confirm our engagement as a "qualified
independent underwriter" as that term is defined in subparagraph (b)(15)of Rule
2720 to the NASD bylaws, as amended ("Rule 2720").
Based upon our review of the registration statement, and the
performance of "due diligence" as required in subparagraph (c)(3)to Rule 2720,
it appears that the price of $100.00 per share on the Variable Rate Cumulative
Preferred Stock, Series S-3 (provided that the manner in which the computation
of distributions are those set forth in Schedules A and B to the Agreement to
Act as "Qualified Independent Underwriter" dated January __, 1999 which is filed
as Exhibit _____ to the registration statement), is no higher than that which we
would recommend.
We hereby consent to the use of our name as a "qualified independent
underwriter," to the Registration Statement filed by Summit Securities, Inc.
with respect to the above-referenced matter.
Very truly yours,
CRUTTENDEN ROTH INCORPORATED
By:
----------------------------------
cc: National Association of Securities Dealers, Inc.
<PAGE>
Exhibit-5
OPINION OF KUTAK ROCK
<PAGE>
<TABLE>
<S> <C> <C>
KUTAK ROCK
SUITE 2900 ATLANTA
KANSAS CITY
717 SEVENTEENTH STREET LITTLE ROCK
NEW YORK
DENVER, COLORADO 80202-3329 NEWPORT BEACH
OKLAHOMA CITY
303-297-2400 OMAHA
PHOENIX
FACSIMILE 303-292-7799 PITTSBURGH
WASHINGTON
http://www.kutakrock.com
-------------------------
</TABLE>
January 25, 1999
Summit Securities, Inc.
601 West First Avenue
Spokane, WA 99201-5015
Re: Summit Securities, Inc. Variable Rate Cumulative Preferred Stock,
Series S-3
Ladies and Gentlemen:
We have acted as counsel to Summit Securities, Inc. (the "Company") in
connection with the filing of a registration statement to which this opinion is
filed as an exhibit on Form S-2, under the Securities Act of 1933, as amended
(the "Act"). The registration statement covers a proposed offering by the
Company of up to 200,000 shares of Variable Rate Cumulative Preferred Stock,
Series S-3 at $100 per share (the "Preferred Stock"). Such registration
statement, as amended, on file with the Securities and Exchange Commission (the
"Commission") at the time such registration statement becomes effective
(including financial statements and schedules, exhibits and all other documents
filed as a part thereof or incorporated therein) are herein referred to as the
"Registration Statement."
In connection with this opinion, we have made such investigations and
examined such records, including the Company's Certificate of Incorporation,
Bylaws and corporate minutes as we deemed necessary to the performance of our
services and to give this opinion. We have also examined and are familiar with
the originals or copies, certified or otherwise identified to our satisfaction,
of such other documents, corporate records and other instruments as we have
deemed necessary for the preparation of this opinion. In expressing this
opinion, we have relied, as to any questions of fact upon which our opinion is
predicated, upon representations and certificates of the officers of the
Company.
In giving this opinion we assumed:
(a) the genuineness of all signatures and the authenticity and
completeness of all documents submitted to us as originals;
(b) the conformity to originals and the authenticity of all
documents supplied to us as certified, photocopied, conformed or
facsimile copies and the authenticity and completeness of the originals
of any such documents; and
<PAGE>
Summit Securities, Inc.
January 25, 1999
Page 2
(c) the proper, genuine and due execution and delivery of all
documents by all parties to them and that there has been no breach of
the terms thereof.
Based upon the foregoing and subject to the qualifications set forth
above, and assuming (i) that the Registration Statement has become effective
under the Act, (ii) that all required actions are taken and conditions satisfied
with respect to the issuance of the Company's Preferred Stock as specified in
the prospectus and (iii) consideration is received for the Preferred Stock: we
are of the opinion that, when issued the Preferred Stock will be legally issued,
fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and the use of our name in the Registration Statement. In
giving such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Act or the Rules and
Regulations of the Commission promulgated pursuant thereto.
Very truly yours,
/s/ Kutak Rock
--------------
Kutak Rock
<PAGE>
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
Summit Securities, Inc.
Spokane, Washington
We consent to the incorporation by reference in this Registration
Statement on Form S-2 of our reports, which include an explanatory paragraph
describing changes in the methods of accounting for the transfer and servicing
of financial assets in fiscal 1997 and impaired loans in fiscal 1996, dated
November 20, 1998 on our audits of the consolidated financial statements and
financial statement schedules of Summit Securities, Inc. and its subsidiaries as
of September 30, 1998 and 1997 and for each of the three years in the period
ended September 30, 1998, which report is included in the Annual Report on Form
10-K.
We also consent to the reference of our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
-----------------------------------
PricewaterhouseCoopers LLP
Spokane, Washington
January 25, 1999
