<PAGE>
RULE NO. 424(b)(1)
REGISTRATION NO. 333-71085
PROSPECTUS
SUMMIT SECURITIES, INC.
$50,000,000 Investment Certificates, Series B
- --------------------------------------------------------------------------------
You should consider carefully the risk factors beginning on page 8 in this
prospectus.
The Certificates are obligations 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 Certificates with the following terms:
. The Certificates are unsecured debt instruments, senior only to outstanding
equity securities of Summit.
. The Certificates rank equally with unsecured debt of Summit and are
subordinate to all other debt of Summit.
<TABLE>
<CAPTION>
Minimum Annual
Investment Term To Maturity Interest Rate(1)
---------- ---------------- ----------------
<S> <C> <C>
$100 120 Months 8.875%
$100 96 to 119 Months 8.500%
$100 72 to 95 Months 8.250%
$100 60 to 71 Months 8.000%
$100 48 to 59 Months 7.000%
$100 36 to 47 Months 6.750%
$100 24 to 35 Months 6.500%
$100 12 to 23 Months 6.350%
$250,000 120 Months 9.250%
$250,000 96 to 119 Months 9.000%
$250,000 72 to 95 Months 8.750%
$250,000 60 to 71 Months 8.500%
Installment Payment Option
$2,000 60 to 120 Months 6.500%
</TABLE>
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(1) You may elect one of three options to receive principal and interest
payments on the Certificates: (a) to receive interest monthly, quarterly,
semi-annually or annually, without compounding, (b) to leave the interest
with Summit and it will compound semi-annually, or (c) at the above
identified installment terms, equal monthly installments of principal and
interest in accordance with an amortization schedule that you select.
<TABLE>
<CAPTION>
Per Certificate Total
--------------- -----
<S> <C> <C>
Public Offering Price.............. 100% $50,000,000
Underwriting Discounts and
Commissions(1).................... 0% to 6% None-$3,000,000
Proceeds, before expenses, to
Issuer or Other Persons........... 100% to 94% $50,000,000-$47,000,000
</TABLE>
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(1) You will not incur a direct sales charge. Certificates earn interest,
without deduction for underwriting discounts or commissions. Summit will
reimburse our underwriter for commissions paid to licensed securities sales
representatives. Sales commission rates on the sale of Certificates depend
upon the terms of the sale and upon whether the sales are reinvestments or
new purchases. See "PLAN OF DISTRIBUTION."
. Currently, there is no trading market for the Certificates and you should not
expect one to be established in the future.
. This offering of Certificates is subject to withdrawal or cancellation by
Summit without notice.
. We are offering the Certificates on a continuous, best efforts basis.
. The Certificates are being issued only in book-entry form.
. There is no minimum amount of Certificates that must be sold.
. You may not purchase Certificates 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 February 9, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
FORWARD-LOOKING STATEMENTS.................................................. 2
PROSPECTUS SUMMARY.......................................................... 3
RISK FACTORS................................................................ 8
USE OF PROCEEDS............................................................. 9
DESCRIPTION OF CERTIFICATES................................................. 9
PLAN OF DISTRIBUTION........................................................ 12
LEGAL MATTERS............................................................... 13
EXPERTS..................................................................... 13
AVAILABLE INFORMATION....................................................... 13
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 13
</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 Certificates. 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, Washington 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., 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 relationship
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-sized 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
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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
Investment Certificates We are offering $50,000,000 in principal amount
Offering of Investment Certificates, Series B. They are
being issued at the minimum investment amounts,
terms, and rates set forth on the cover page of
this prospectus. There is no minimum amount of
Certificates that must be sold. The Certificates
will be issued only in book-entry form. See
"DESCRIPTION OF CERTIFICATES."
Certificates The Certificates are unsecured debt of Summit. At
September 30, 1998, we had outstanding
approximately $55,894,000 (principal and
compounded and accrued interest) of certificates
and similar obligations and approximately
$184,000 (principal and accrued interest) of
collateralized debt and similar obligations. See
"CAPITALIZATION."
Principal and Interest You may elect one of three options to receive
Payments principal and interest payments on the
Certificates: (1) to receive interest monthly,
quarterly, semi-annually or annually, without
compounding, (2) to leave the interest with
Summit and it will compound semi-annually, or (3)
for the installment Certificates, monthly
installments of principal and interest in
accordance with an amortization schedule that you
select. The minimum investment amounts, terms and
interest rates on unissued Certificates offered
hereby may be changed from time to time by Summit
by supplementing this prospectus. The terms of
Certificates issued prior to such change will not
be affected. See "DESCRIPTION OF CERTIFICATES--
Payment of Principal and Interest."
Use of Proceeds We will use the proceeds of this Certificate
offering to invest in Receivables and to make
other investments, which may include investments
in existing subsidiaries, new business ventures
or to acquire other companies. 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 Certificates involves a
certain degree of risk. You should purchase the
Certificates only after reviewing the risks
described in this prospectus. See "RISK FACTORS"
for a complete discussion of the risks associated
with investing in the Certificates.
5
<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>
6
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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>
7
<PAGE>
RISK FACTORS
When deciding whether or not to purchase the Certificates 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 Certificates:
The Indenture does not Summit's and your rights and obligations in the
restrict the ability of certificates offered in this prospectus
Summit to incur additional ("Certificates") are defined in an indenture
debt dated as of November 15, 1990, and the first
supplement to that indenture dated as of
December 31, 1997. The indenture does not
restrict our ability to issue additional
certificates or to incur other unsecured or
collateralized debt. We are not required to
maintain any specified financial ratios,
minimum net worth, minimum working capital or a
sinking fund.
Certificates are not insured The Certificates offered in this prospectus are
against the risk of loss unsecured obligations of our company and they
are not insured or guaranteed by any bank, any
governmental agency, any insurance company, any
affiliate of our company or any other person or
entity. Thus, the Certificates have greater
risk than investments that are insured by such
entities against the risk of loss.
Certificates are not a There is no trading market for the
liquid investment due to the certificates, and it is not anticipated that
absence of a market to trade one will develop. Generally, you cannot have
the Certificates your Certificates redeemed until they mature.
There are only limited situations in which
Certificates can be redeemed early. These may
include situations where there is a mutual
agreement between you and Summit, or when the
"prepayment on death" provision applies. You
should consider your needs for liquidity before
investing in the Certificates and you should be
prepared to hold any Certificates purchased in
this offering until their maturity. See
"DESCRIPTION OF CERTIFICATES."
Risks with using the book- Our use of book-entry certificates rather than
entry certificates because actual physical certificates in this offering
there are no physical could limit the markets for these securities,
certificates to transfer prevent a secondary market from forming and
could delay payments to you. The absence of
physical certificates for the Certificates may
prevent a secondary market from developing
because investors like yourself may be
unwilling to invest in securities if they
cannot obtain delivery of physical
certificates. The use of book-entry
certificates may delay payments to you because
distributions on such Certificates would be
made first to the person in whose name the
Certificates are registered.
8
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USE OF PROCEEDS
If all of the Certificates that are offered in this prospectus are sold, we
expect net proceeds to total $50,000,000 before deducting offering expenses
and sales commissions. Sales commissions will range from zero to six percent
(0% -6%) of the offering proceeds (between $0 and $3,000,000), depending on
the maturities of the Certificates sold and whether sales are reinvestments or
new purchases. Other expenses are estimated to be $157,000. There can be no
assurance, however, that any of the Certificates 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
Certificates 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
Certificates 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 our planned use of proceeds from
those described above.
DESCRIPTION OF CERTIFICATES
General
The Certificates will be issued under an indenture, as amended, dated as of
November 15, 1990 and a supplement thereto dated as of December 31, 1997
(collectively, the "Indenture"). The following statements under this caption
relating to the Certificates and the Indenture are summaries and do not
purport to be complete. Such summaries are subject to the detailed provisions
of the Indenture and are qualified in their entirety by reference to the
Indenture, a copy of which is filed as an exhibit to the Registration
Statement and is also available for inspection at the principal office of
Summit.
The Certificates will represent general unsecured obligations of Summit and
will be issued in book-entry form without coupons, in fractional denominations
of $0.01 or more. The Certificates will have the minimum investment amounts,
maturities and the interest rates set forth on the cover page of this
prospectus. The stated interest rates, maturities, and minimum investment
amounts of unissued Certificates may be changed at any time by Summit by way
of supplement to this prospectus. Any such change will have no effect on the
terms of the previously sold Certificates.
Certificates may be transferred or exchanged for other Certificates of the
same series of a like aggregate principal amount, subject to the limitations
set forth in the Indenture. No service charge will be made for any transfer or
exchange of Certificates. Summit may require payment of taxes or other
governmental charges
9
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imposed in connection with any such transfer or exchange. Interest will accrue
at the stated rate from the date of issue until maturity. The Certificates are
not convertible into capital stock or other securities of Summit.
The Certificates are not subject to redemption prior to maturity, but may
be prepaid pursuant to the prepayment on death provision described below.
Also, in limited circumstances involving an investor's demonstrated financial
hardship, subject to regulatory restrictions affecting redemptions and
exchanges of securities during an offering, Summit may, in its sole
discretion, consider a request for an early payout of a Certificate upon terms
mutually agreed to by the holder of the Certificate and Summit. Such early
payout requests are reviewed in the order received and are subject to the
review by Summit's executive management.
Payment of Principal and Interest
Interest will be payable to the Certificate holder(s) under one of several
interest payment plans. The purchaser selects an interest payment plan at the
time the Certificates are purchased and can change this plan at any time by
giving written notice to Summit. The purchaser may elect to have uncompounded
interest paid on a monthly, quarterly, semi-annual or annual basis without
compounding. Or, an investor may elect to leave the accrued interest with
Summit in which case it will compound semi-annually at the stated interest
rate. Purchasers who choose the compounding option, upon written notice to
Summit, may withdraw the interest accumulated during the last two completed
semi-annual compounding periods and the interest accrued from the end of the
last compounding period to the date Summit receives the notice. However,
interest that was compounded prior to the last two completed semi-annual
compounding periods is available only at maturity.
Alternatively, the Certificate holder can elect to level monthly
installments comprised of principal and interest, subject to the minimum term
and investment requirements set forth on the cover page of this prospectus.
These payments will be paid to the Certificate holder commencing 30 days from
the issue date of the Certificate until maturity. The amount of each
installment will be determined by the amortization term designated by the
Certificate holder at the time the Certificate is purchased.
Certificate holders will be notified in writing approximately 30 days prior
to the date their Certificates will mature. The amounts due on maturity are
placed in a separate bank trust account until paid to the Certificate
holder(s). Certificates do not earn interest after the maturity date. Unless
otherwise requested by the Certificate holder, Summit will pay the principal
and accumulated interest due on the matured certificate to the Certificate
holder(s) at Summit's main office, or by mail to the address designated by the
Certificate holder(s).
Prepayment on Death
In the event of the death of a registered owner of a Certificate, any party
entitled to receive some or all of the proceeds of the Certificate may elect
to have his or her portion of the principal and any accrued but unpaid
interest prepaid in full in five consecutive equal monthly installments.
Interest will continue to accrue on the declining principal balance of such
portion. No interest penalties will be assessed. Any request for prepayment
shall be made to Summit in writing and shall be accompanied by the Certificate
and evidence satisfactory to Summit of the death of the registered owner or
joint registered owner. Before prepayment, Summit may require the submission
of additional documents or other material which it may consider necessary to
determine the portion of the proceeds the requesting party is entitled to
receive, or assurances which, in Summit's discretion, it considers necessary
to the fulfillment of its obligations.
Related Indebtedness
The Indenture pursuant to which the Certificates are issued does not
restrict Summit's ability to issue additional Certificates or to incur other
debt. The Indenture does not require Summit to maintain any specified
financial ratios, minimum net worth or minimum working capital. Certificates
will not be guaranteed or insured by any governmental or private agency. The
Certificates offered hereby are senior in liquidation to all outstanding
equity securities of Summit. They are subordinate to Summit's secured debt and
are on a parity with all other
10
<PAGE>
outstanding certificates, unsecured accounts payable and accrued liabilities.
The amount of outstanding certificates on September 30, 1998, including
compound and accrued interest, was approximately $55,894,000. There are no
limitations on Summit's ability to incur collateralized debt. Collateralized
debt outstanding on that date was approximately $184,000, including principal
and accrued interest. Certificate holders should not rely on the terms of the
Indenture for protection of their investment, but should look rather to the
creditworthiness of Summit and its ability to satisfy its obligations.
Concerning the Trustee
First Trust National Association ("First Trust") was appointed successor
trustee (the "Trustee") under the Indenture on April 24, 1996, at which time
Management was informed by West One that the reason for the resignation was
its business decision to discontinue Trust services. First Trust assumed all
of the duties and obligations of the trustee as set forth in the Indenture, as
amended and supplemented. The Trustee is obligated under the Indenture to
oversee, and if necessary, to take action to enforce fulfillment of Summit's
obligations to Certificate holders. First Trust was subsequently acquired by
U.S. Bank Trust National Association, but continues its role as Trustee. The
Trustee is a national banking association, with a combined capital and surplus
in excess of $100 million. Summit and certain of its affiliates may maintain
deposit accounts with and may, from time to time, borrow money from the
Trustee and conduct other banking transactions with it. At September 30, 1998
and as of the date of this prospectus, no loans from the Trustee were
outstanding. In the event of default, the Indenture permits the Trustee to
become a creditor of Summit and does not preclude the Trustee from enforcing
its rights as a creditor, including rights as a holder of collateralized
indebtedness.
Rights and Procedures in the Event of Default
Events of default include the failure of Summit to pay interest on any
Certificate for a period of 30 days after it becomes due and payable; the
failure to pay the principal or any required installment thereof of any
Certificate when due; the failure to perform any other covenant in the
Indenture for 60 days after notice; and certain events in bankruptcy,
insolvency or reorganization with respect to Summit. Upon the occurrence of an
event of default, either the Trustee or the holders of 25% or more in
principal amount of Certificates then outstanding may declare the principal of
all the Certificates to be due and payable immediately.
The Trustee must give the Certificate holders notice by mail of any default
within 90 days after the occurrence of the default, unless the default has
been cured or waived. The Trustee may withhold such notice if it determines in
good faith that such withholding is in the best interest of the Certificate
holders, except if the default consists of failure to pay principal or
interest on any Certificate.
Subject to certain conditions, any such default, except failure to pay
principal or interest when due, may be waived by the holders of a majority (in
aggregate principal amount) of the Certificates then outstanding. Such holders
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or of exercising any power
conferred on the Trustee, except as otherwise provided in the Indenture. The
Trustee may require reasonable indemnity from holders of Certificates before
acting at their direction.
Within 120 days after the end of each fiscal year, Summit must furnish to
the Trustee a statement of certain officers of Summit concerning their
knowledge as to whether or not Summit is in default under the Indenture.
Modification of the Trust Indenture
Certificate holders' rights may be modified with the consent of the holders
of 66 2/3% of the outstanding principal amounts of Certificates, and 66 2/3%
of each series affected. In general, no adverse modification of the terms of
payment and no modification reducing the percentage of Certificates required
for modification is effective against any Certificate holder without his or
her consent.
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Restrictions on Consolidation, Merger and Other Fundamental Corporate Changes
Summit may not consolidate with or merge into any other corporation or
transfer substantially all its assets unless either Summit is the continuing
corporation formed by such consolidation, or into which Summit is merged, or
the person acquiring by conveyance or transfer of such assets shall be a
corporation organized and existing under the laws of the United States or any
state thereof which assumes the performance of every covenant of Summit under
the Indenture and certain other conditions precedent are fulfilled. The
Indenture contains no other provisions or covenants which afford holders of
the Certificates special protection in the event of a highly leveraged buyout
transaction.
Transfer Agent and Registrar
Metropolitan acts as Transfer Agent and Registrar for Summit's
Certificates.
PLAN OF DISTRIBUTION
The Certificates are offered directly to the public on a continuing best
efforts basis through Metropolitan Investment Securities, Inc. ("MIS"), which
is 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 Certificates. A commission will, however, be
paid by Summit on most Certificate purchases in the maximum amount of 6% of
the Certificate price, generally depending on the term of the Certificate and
whether or not the transaction is a reinvestment or new purchase. Certificates
are offered only for cash or cash equivalents. MIS will transmit such funds
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 $492,169
from Summit on sales of approximately $14,169,000 of Summit's debt securities.
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 interest rates to be paid on the Certificates offered through
this prospectus. Accordingly, MIS has obtained a letter from Cruttenden Roth
Incorporated, a NASD member, ("Cruttenden") that the interest rates on the
Certificates using a formula tied to corresponding interest rates paid by the
U.S. Treasury and regional financial institutions is consistent with
Cruttenden's recommendations which were based on conditions and circumstances
existing as of the date of the prospectus. Summit undertakes to maintain the
interest rates on Certificates no lower than those recommended by Cruttenden
based on the formula. Accordingly, the yield at which the Certificates will be
distributed will be no lower than that recommended by Cruttenden. 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 Certificates offered hereunder, Cruttenden is to be paid $33,334 in
fees.
The Registrant 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").
There is not now and Summit does not expect that there will be a public
trading market for the Certificates in the future. MIS does not intend to make
a market for the Certificates. See "RISK FACTORS--Certificates are not a
liquid investment due to the absence of a market to trade the Certificates."
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 Certificates sold by such dealers.
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LEGAL MATTERS
Certain legal matters relating to the Certificates 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.
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.
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Summit Securities, Inc.
[LOGO] SUMMIT
SECURITIES
$50,000,000 Investment Certificates, Series B
----------------
PROSPECTUS
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February 9, 1999
Metropolitan Investment Services, Inc.
