<PAGE>
As filed with the Securities and Exchange Commission on January 5, 2000.
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)
---------------
<TABLE>
<S> <C> <C>
Idaho 601 West First Avenue 82-0438135
(State or other jurisdiction of Spokane, Washington 99201-5015 (I.R.S. Employer
incorporation or organization) (509) 838-3111 Identification No.)
</TABLE>
(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, Washington 99201-5015
(509) 838-3111
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With copies to:
<TABLE>
<S> <C>
Susan Thomson, Esq. Robert J. Ahrenholz, Esq.
Associate General Counsel Kutak Rock LLP
601 West First Avenue 717 Seventeenth Street, Suite 2900
Spokane, Washington 99201 Denver, Colorado 80202
(509) 838-3111 (303) 297-2400
</TABLE>
---------------
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 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
Amount maximum maximum Amount of
Title of each class of to be offering price aggregate registration
securities to be registered registered per unit offering price(1)(2) fee(3)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Stock Series S-3...... 200,000 $100 $20,000,000 $5,280
- ----------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(a).
(2) Includes $7,600,000 of preferred stock that remains unsold and is being
carried forward from Registration Statement No. 333-71117 pursuant to Rule
429 of the Securities Act of 1933, for which a filing fee of $2,006.40 was
previously paid.
(3) A filing fee of $2,006.40 was previously paid for the $7,600,000 of
preferred stock carried forward from Registration Statement No. 333-71117
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. 333-71117 previously
filed by the Registrant. This Registration Statement also constitutes post-
effective amendment No. 1 to Registration Statement No. 333-71117.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. These +
+securities may not be sold nor may offers to buy be accepted before the time +
+this prospectus is delivered in final form. 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 5, 2000
[LOGO OF SUMMIT SECURITIES]
PROSPECTUS
SUMMIT SECURITIES, INC.
200,000 Shares of Preferred Stock, Series S-3
We are offering variable rate cumulative preferred stock with the following
terms:
. The preferred stock is subordinate to all of our debt, including our
investment certificates.
. 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.
. We may redeem the preferred stock at any time at a price of $100 per share
plus the amount of any declared but unpaid distributions.
You should consider carefully the risk factors beginning on page 9 in this
prospectus.
<TABLE>
<CAPTION>
Per Preferred Share Total
------------------- -----------
<S> <C> <C>
Public offering price....................... $100 $20,000,000
Maximum underwriting discounts and
commissions*............................... 6% $ 1,200,000
Maximum proceeds to Summit (before
expenses).................................. $ 94 $18,800,000
</TABLE>
* 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, and
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, 2001.
The shares of preferred stock are securities of our company and they are not
insured or guaranteed by any governmental agency, any insurance company, any
affiliate of our company or any other person or entity.
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 , 2000.
<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 DOCUMENTS BY REFERENCE..................................... 17
</TABLE>
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We 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:
. Our anticipated growth strategies,
. Anticipated trends in our businesses, including trends in the markets
for insurance, mortgages, annuities and real estate,
. Future interest rate trends, movements and fluctuations,
. 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 only rely 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 this prospectus and the attached Annual Report on Form 10-K of Summit for
the fiscal year ended September 30, 1999, carefully before you make your
investment decision.
The Summit Consolidated Group Of Companies
------------------------------------------
General
Summit Securities, Inc. 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 collectively referred to in this prospectus as the
"consolidated group," while the terms "Summit," "we" and "our" refer solely to
the parent company, Summit Securities, Inc.
History
We were founded in 1990, as a wholly owned subsidiary of Metropolitan
Mortgage & Securities Co., Inc., or "Metropolitan." We were later acquired by
National Summit Corp. on September 9, 1994. In the first six months of 1995, we
acquired a broker/dealer, Metropolitan Investment Securities, Inc. from
Metropolitan, and created a subsidiary holding company, Summit Group Holding
Company. Summit Group Holding Company then acquired Old Standard Life Insurance
Company from Metropolitan. On December 28, 1995, Old Standard acquired another
insurance company, Arizona Life Insurance Company, which subsequently changed
its name to Old West Annuity & Life Insurance Company. We also own a property
development company, Summit Property Development, Inc. The chart on the next
page depicts the relationship among the significant companies within the
consolidated group. The chart excludes affiliated companies that are not
subsidiaries of Summit.
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 Chief Executive Officer, 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. and Western United Life Assurance Company. 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.
Currently, the consolidated group is focusing its receivable investing
activities on loans collateralized by commercial real estate. 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 investment securities, including U.S. Treasury obligations,
corporate bonds and other securities, and in other assets.
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, 1999, which is attached to this prospectus.
Organizational Chart
(as of September 30, 1999)
The consolidated group consists of Summit Securities, Inc. and all of its
subsidiaries. The chart below lists the principal operating subsidiaries and
ownership of the consolidated group.
[CHART]
National Summit Corp.: The parent company of Summit; inactive except as
owner of Summit Securities, Inc. It is wholly owned by C. Paul Sandifur, Jr.,
who is also president and controlling shareholder of Metropolitan.
4
<PAGE>
Summit Securities, Inc.: Invests in receivables 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.
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: 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.
Summary of the Preferred Stock Offering
Preferred stock offering
........................... We are offering 200,000 shares of variable rate
cumulative preferred stock, series S-3 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 distributions on the preferred stock
on a cumulative basis from the date the shares
are issued. When we make distributions, they will
be paid monthly at the applicable annual rates
described in "DESCRIPTION OF SECURITIES--
Distributions."
Liquidation rights......... If we liquidate Summit, you will have a right to
receive a liquidation preference of $100 per
share, plus declared and unpaid distributions.
Your liquidation rights will be paid only after
all of our debts, including our outstanding
investment certificates, are paid. Your
liquidation rights will be paid before any
liquidating distributions to the common
stockholders.
Redemption upon request of
holder..................... We may consider a written shareholder request you
make to have your shares redeemed. We will
generally not consider a request to redeem shares
unless they have been listed for sale on
Metropolitan Investment Securities, Inc.'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 determined by our board
of directors in its discretion, and will include
any declared but unpaid distributions. This price
may be less than your original $100 per share
purchase price. See "DESCRIPTION OF SECURITIES--
Redemption of Shares" and "RISK FACTORS."
5
<PAGE>
Redemption upon call by
Summit...................... We can redeem any or all shares of the preferred
stock if we provide you with notice at least 30
but not more than 60 days prior to redemption by
mail. If we decide to redeem your shares, you
will be paid $100 per share plus the amount of
any declared but unpaid distributions as of the
date fixed for redemption. See "DESCRIPTION OF
SECURITIES--Redemption of Shares."
Voting rights............... Your voting rights will be limited to two
situations. First, you will have those voting
rights expressly granted by the laws of the State
of Washington. Second, you will have voting
rights if the distributions payable to you on
your preferred stock remain unpaid for a period
of time that equals twenty-four monthly
distributions. See "DESCRIPTION OF SECURITIES--
Voting Rights."
Federal income tax
considerations.............. If we earn a profit on a tax accounting basis
during any future year, any earnings or profits
that we distribute to you will be taxable. If we
incur a loss on a tax accounting basis, the
distributions will be a return of capital and not
taxed, but will reduce your basis. 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 will receive will be taxable
income. See "DESCRIPTION OF SECURITIES--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. The proceeds may also be
used to retire maturing investment certificates,
for property development, to pay preferred stock
distributions and for general corporate purposes.
See "USE OF PROCEEDS."
Risk factors................ Your investment in the preferred stock involves
risk. You should review the risks described in
this prospectus and those described in the
attached Annual Report of Summit, on Form 10-K,
before investing in the preferred stock. See
"RISK FACTORS" for a 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, 1999:
<TABLE>
<S> <C>
Debt Payable:
Real estate contracts and mortgage notes payable 6.5% to 8.0%,
due 1999 to 2020............................................... $ 279,792
-----------
Total Debt Payable.............................................. 279,792
-----------
Investment Certificates:
Investment Certificates, maturing 1999 to 2009, at 6.1% to
10.0%.......................................................... 65,504,128
Compound and accrued interest................................... 7,302,776
-----------
Total Investment Certificates................................... 71,806,904
-----------
Stockholders' Equity:
Preferred Stock, $10 par: 10,000,000 shares authorized; 155,747
shares issued and outstanding (liquidation preference
$15,574,690)................................................... 1,557,469
Common Stock, $10 par: 2,000,000 shares authorized; 10,000
shares issued and outstanding.................................. 100,000
Additional paid-in capital...................................... 11,988,926
Retained earnings............................................... 7,397,310
Accumulated other comprehensive loss............................ (1,938,750)
-----------
Total Stockholders' Equity...................................... 19,104,955
-----------
Total Capitalization............................................ $91,191,651
===========
</TABLE>
7
<PAGE>
Summary Consolidated Financial Data
The summary consolidated financial data shown below as of September 30, 1999
and 1998 and for the years ended September 30, 1999, 1998 and 1997, other than
the ratios 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 into and attached to this prospectus. The consolidated
financial data shown below as of September 30, 1997, 1996 and 1995 and for the
years ended September 30, 1996 and 1995, other than the ratios of earnings to
fixed charges and preferred stock dividends, have been derived from
consolidated financial statements not included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year Ended September 30,
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
INCOME
STATEMENT
DATA:
Revenues..... $ 36,198,936 $ 29,965,547 $ 19,785,462 $ 14,536,449 $ 9,576,615
============ ============ ============ ============ ===========
Net income... $ 2,814,828 $ 2,524,027 $ 1,851,240 $ 1,244,522 $ 587,559
Preferred
stock
dividends... (838,356) (498,533) (446,560) (333,606) (309,061)
------------ ------------ ------------ ------------ -----------
Income
applicable
to common
stockholder.. $ 1,976,472 $ 2,025,494 $ 1,404,680 $ 910,916 $ 278,498
============ ============ ============ ============ ===========
PER COMMON
SHARE DATA:
Basic and
diluted
income per
share
applicable
to common
stockholder.. $ 197.65 $ 202.55 $ 140.47 $ 91.09 $ 27.85
============ ============ ============ ============ ===========
Weighted
average
number of
common
shares
outstanding.. 10,000 10,000 10,000 10,000 10,000
============ ============ ============ ============ ===========
Cash
dividends
per common
share....... $ 0.00 $ 21.07 $ 0.00 $ 0.00 $ 0.00
============ ============ ============ ============ ===========
Ratio of
earnings to
fixed
charges..... 1.57 1.64 1.46 1.40 1.25
Ratio of
earnings to
fixed
charges and
preferred
stock
dividends... 1.34 1.46 1.31 1.26 1.11
BALANCE SHEET
DATA:
Due from/(to)
affiliated
companies,
net......... $ (151,077) $ 10,985,805 $ 870,525 $ 1,296,290 $(1,960,104)
Total
assets...... $295,115,959 $206,594,234 $166,354,070 $117,266,680 $96,346,572
Investment
certificates
and other
debt
payable..... $ 72,086,696 $ 56,078,514 $ 50,607,983 $ 46,674,841 $38,650,532
Stockholders'
equity...... $ 19,104,955 $ 10,684,064 $ 7,756,643 $ 5,358,774 $ 3,907,067
</TABLE>
8
<PAGE>
RISK FACTORS
When deciding whether or not to purchase the preferred stock, you should
carefully consider the risks contained in the section entitled "BUSINESS
OVERVIEW--Factors Affecting Future Operating Results" of Summit's Annual Report
on Form 10-K for the year ended September 30, 1999, 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 company
securities...................
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 debt, preferred
stock or other equity securities in our
company.
Preferred stock is not
insured against the risk of
loss......................... The preferred stock is 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 preferred stock has greater risk than
investments that are insured against the risk
of loss.
Preferred stock is not a
liquid investment because
there is no established
trading market...............
The preferred stock is not listed for trading
on a stock exchange. We do not anticipate
listing the preferred stock on any stock
exchange or that an independent public market
for the preferred stock will develop.
Trading list does not
guarantee a market for the
preferred stock..............
The broker/dealer for this offering maintains a
trading list of persons willing to sell or
purchase outstanding shares of our preferred
stock. We can not assure you that this list
will continue to operate or that it will
provide you a means to sell your shares.
Our discretionary redemption
option does not guarantee
you the ability to sell
securities to Summit.........
Under our discretionary redemption option, we
are under no obligation to redeem your shares.
You should not rely on this option as a
guarantee that you will be able to have us
reacquire your shares. See "DESCRIPTION OF
SECURITIES--Redemption of Shares."
The preferred stock has
limitations on redemption
and restrictions on
distributions................
If we have not paid cumulative distributions to
all preferred shareholders, we cannot purchase
or offer to exchange your shares unless we make
the same offer to all preferred shareholders.
See "DESCRIPTION OF SECURITIES--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
SECURITIES--Distributions."
9
<PAGE>
Liquidation rights are
junior to Summit's
outstanding debt............. If we liquidate, we must pay all of our
outstanding debt before we can make any
distributions to you. If there is not enough
money to distribute to all preferred
shareholders for their entire respective
liquidation rights, you will share the
shortfall with the other preferred shareholders
in proportion to your respective liquidation
rights.
Extraordinary corporate
events could eliminate the
liquidation rights of the
holders of preferred stock... Your preferences in liquidation could be
adversely effected if we have an asset sale, a
capital restructuring, a merger, a
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
the company.................. You will have very few voting rights as an
owner of preferred stock. The only class of
stock carrying full voting rights is the common
stock. See "DESCRIPTION OF SECURITIES--Voting
Rights."
Summit can redeem or call
the preferred stock at its
own discretion............... We have the option of calling or redeeming your
shares at any time for $100 per share plus any
declared and unpaid distributions. See
"DESCRIPTION OF SECURITIES--Redemption of
Shares."
Risk of holding book-entry
shares of preferred stock
because there are no
physical shares to
transfer..................... Our use of book-entry shares of preferred stock
rather than actual physical shares in this
offering could limit the markets for these
securities, prevent a secondary market from
forming and could delay payments to you. The
absence of physical shares may prevent a
secondary market from developing because
investors may be unwilling to invest in
securities if they cannot obtain delivery of
physical shares. The use of book-entry shares
may delay payments to you because distributions
on the shares would be made first to the person
in whose name the shares are registered.
10
<PAGE>
USE OF PROCEEDS
If all of the preferred stock we are offering is sold, we expect proceeds to
total $20,000,000 before deducting sales commissions and other expenses.
Offering expenses are estimated at $124,000 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 preferred
stock offering for the following purposes: priority will be given first to (1)
funding investments in receivables and other investments, which may include
investments in existing subsidiaries, the commencement of new business ventures
or the acquisition of other companies, and then to (2) the development of real
estate. We do not have any commitments or agreements for material acquisitions.
However, the consolidated group continues to evaluate possible acquisition
candidates. To the extent internally generated funds are insufficient or
unavailable for the retirement of maturing investment certificates, proceeds of
this offering may be used for retiring maturing investment certificates,
preferred stock distributions and for general corporate purposes, including
debt service and other general operating expenses. Approximately $8.6 million
in principal amount of debt securities will mature between February 1, 2000 and
January 31, 2001 with interest rates ranging from 6.1% to 10.0% and averaging
approximately 7.8% per annum. See "BUSINESS OVERVIEW--Factors Affecting Future
Operating Results" under Item 1 in our Annual Report on Form 10-K for the year
ended September 30, 1999.
We anticipate that some of the proceeds from this offering will be invested
in money market funds, bank repurchase agreements, commercial paper, U.S.
Treasury Bills and similar securities investments while awaiting use as
described above. Since we do not know how many shares of preferred stock will
be sold, we are unable to accurately forecast the total net proceeds generated
by this offering. Therefore, we have not allocated specific amounts 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 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 155,747
shares of Series S preferred stock were issued and outstanding as of September
30, 1999.
Description of Preferred Stock
This offering consists of 200,000 shares of variable rate cumulative
preferred stock, Series S-3. All of the outstanding shares of preferred stock
and the shares of preferred stock we are offering in this prospectus, when
issued and sold, will be validly issued, fully paid and nonassessable. The
relative rights and preferences of preferred stock have been fixed and
determined by our board of directors and are set forth in the statement of
rights, designations and preferences of preferred stock, duly approved by the
board of directors. The preferred stock is issued in book-entry form only.
The following statements relating to the preferred stock are summaries, do
not purport to be complete and are qualified in their entirety by reference to
the statement of rights which is filed as an exhibit to the registration
statement that includes this prospectus. The statement of rights is also
available for inspection at the principal office of Summit.
11
<PAGE>
Distributions
Distributions on the preferred stock are cumulative and will 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 will 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 distribution rate will be the "applicable rate," as defined below,
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. The applicable rate for any monthly
distribution period shall be (1) the highest of the three-month U.S. Treasury
Bill rate, the ten-year constant maturity rate or the twenty-year constant
maturity rate, each as described below, plus (2) 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 period of 14 calendar days
immediately prior to the 10 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 the distribution rate. If we determine in
good faith that one or more of these rates cannot be determined for any
distribution period, then the applicable rate for that period will be the
higher of whichever of the rates that can be determined, plus one-half of one
percentage point. If we determine in good faith that none of the rates can be
determined for any distribution period, then the applicable rate in effect for
the preceding distribution period will be continued for that distribution
period. The distribution rate for each monthly distribution period will be
calculated as promptly as practicable by Summit. Summit will enclose notice of
the distribution rate with the next mailed distribution payment check. In
making the calculation, the three-month U.S. Treasury Bill rate, ten-year
constant maturity rate and twenty-year constant maturity rate will each be
rounded to the nearest five one-hundredths of a percentage point.
Prior to the effective date of this prospectus, Summit's board of directors
adopted a resolution authorizing a distribution rate on the preferred stock at
two percentage points higher than the applicable rate. This 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 percentage rate at
any time in its sole discretion.
Restrictions on Distributions
Summit may not declare or pay a distribution on any share of preferred stock
offered in this prospectus for any distribution period unless, at the same
time, a like distribution is declared and paid on all shares of preferred stock
previously issued and outstanding and entitled to receive distributions.
Distributions may only be paid from legally available funds.
If any shares of preferred stock are outstanding and the full cumulative
distributions on all previously outstanding preferred stock, including the
preferred stock offered by this prospectus, have not been paid or declared and
set apart for all past distribution periods, Summit may not:
. declare, pay or set aside for payment any distribution, except as
provided below;
12
<PAGE>
. 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
. 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 that stock, except by conversion into or exchange for stock of Summit
ranking junior to preferred stock as to distributions and upon
liquidation.
Notwithstanding the above, Summit may declare, pay or set aside payment for:
. distributions in common stock;
. distributions in any other stock ranking junior to preferred stock as to
distributions;
. liquidation rights; and
. distributions where a like distribution is 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 with the preferred stock with
regard to the payment of distributions, in accordance with the sums which would
be payable on those shares if all distributions, including accumulations, if
any, were declared and paid in full. As of the date of this prospectus, no
distributions on Summit's preferred stock were in arrears. No interest will be
paid for or on account of any unpaid distributions.
Liquidation Rights
If any voluntary or involuntary liquidation, dissolution or winding up of
Summit occurs, the preferred stock shareholders will be entitled to receive
liquidating distributions, in the amount of $100 per share plus declared and
unpaid regular monthly distributions, 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. The preferred stock is junior in liquidation to
outstanding debt of Summit and on parity with all other issued and outstanding
preferred stock to the extent of its liquidation preference of $100 per share.
As of September 30, 1999, the total consolidated liabilities of Summit ranking
senior in liquidation preference to preferred stock were approximately
$274,910,000. Obligations ranking on a parity with preferred stock upon
liquidation, like the total liquidation preference of the outstanding shares of
all previous series of preferred stock, as of September 30, 1999, were
approximately $15,575,000. There are no limitations on Summit's ability to
incur additional secured indebtedness. See "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 will not
be deemed to be a liquidation, dissolution or winding up of Summit. If the
aggregate liquidation preference payable with respect to preferred stock and
any other shares of stock of Summit ranking on a parity with preferred stock
with respect to the distribution are not paid in full upon any voluntary or
involuntary liquidation, dissolution or winding up of Summit, then the holders
of preferred stock and of these other shares will share ratably in any
distribution of assets of Summit in proportion to the full respective
preferential amounts they are entitled to receive. After payment of the full
amount of the liquidating distribution they are entitled to receive, the
preferred stock shareholders 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
13
<PAGE>
price of $100 per share plus declared and unpaid distributions to the date
fixed for redemption. If fewer than all of the outstanding shares of preferred
stock are redeemed, the number of shares redeemed will be determined by Summit
and the shares to be redeemed will be determined by any method Summit in its
sole discretion deems to be equitable.
Discretionary Redemption Upon Request of the Holder. Preferred Stock is 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,
consider redemption of these shares. Redemption requests, when received, are
reviewed in the order received. Any shares so tendered, which Summit in its
discretion allows for redemption, will be redeemed by Summit directly, and not
from or through a broker/dealer, at a price established by the board of
directors, from time to time, in its sole discretion.
There can be no assurance that Summit's financial condition will allow it to
exercise its discretion to accept any request for redemption of preferred
stock. Summit will not redeem any 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 on shares of any
stock of Summit ranking at least on a parity with the preferred stock is
in arrears as to distributions.
If cumulative distributions on preferred stock have not been paid in full,
Summit may not purchase or acquire any shares of preferred stock other than by
a purchase or exchange offer made on the same terms to all holders of preferred
stock.
Absence of Trading Market
We do not anticipate listing the preferred stock for trading on any national
or regional stock exchange nor do we anticipate an independent public market
for the preferred stock to develop. The underwriter for this offering,
Metropolitan Investment Securities, Inc. 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 in this prospectus, 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 that adversely affect holders of these
shares as a class and requires approval of 66 2/3% of the outstanding shares
entitled to vote.
The statement of rights provides that holders of the preferred stock,
together with the holders of Summit's other outstanding preferred stock and any
other preferred stock previously authorized, voting separately and as a single
class, are entitled to elect a majority of the board of directors of Summit if
distributions payable on any shares of preferred stock are in arrears in an
amount equal to twenty-four or more full monthly distributions per share. This
right will continue until all distributions in arrears have been paid in full.
14
<PAGE>
Federal Income Tax Consequences of Distributions
The following discussion of the federal income tax consequences of
distributions paid on the preferred stock is based upon the Internal Revenue
Code of 1986 (the "tax code"), existing Treasury Department regulations,
current published administrative positions of the Internal Revenue 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 of these changes
may or may not be retroactive with respect to transactions effected prior to
the date of the changes.
Distributions paid to the holders of preferred stock may or may not be
taxable 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, these distributions will be treated first as a
tax-free return of capital, reducing the holder's basis in preferred stock,
but not below zero, and thereafter, as capital gains, or ordinary gains if the
preferred stock is not 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 1999, 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 tax code, will report annually to
shareholders regarding the tax character of the prior year's distributions.
Each preferred shareholder's individual tax circumstances 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 the preferred stock, whether deemed to
be dividends, 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 in this prospectus.
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 being offered 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 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 the funds or other
consideration it receives directly to Summit by noon of the next business day
after receipt. During the three fiscal years ended September 30, 1999, MIS
received commissions of $46,835 from Summit on sales of approximately $781,000
of Summit's preferred stock through an in-house trading list.
MIS is a member of the National Association of Securities Dealers, Inc. Due
to the affiliation of Summit and MIS, NASD Rule 2720 of the NASD Conduct Rules
requires, in part, that a qualified independent underwriter be engaged to
render a recommendation regarding the pricing of the preferred stock offered
15
<PAGE>
through this prospectus. Accordingly, MIS has obtained a letter from Cruttenden
Roth Incorporated, a NASD member, stating 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. Therefore, 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 in this prospectus, Cruttenden will receive $13,333 in fees.
We have agreed to indemnify Cruttenden against, or make contributions with
respect to some liabilities under the Securities Act of 1933 and the Securities
Exchange Act of 1934.
There is not now and we do 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 some
dealers, who are members of the NASD, and some 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 those dealers.
LEGAL MATTERS
The legality of the preferred stock being issued in this prospectus is being
passed upon for Summit by the law firm of Kutak Rock LLP, Denver, Colorado.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report of Summit on Form 10-K for the year ended
September 30, 1999 have been incorporated in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act and, in compliance with this act, file periodic reports and other
information with the SEC. These reports and the other information we file with
the SEC can be inspected and copied at the public reference facilities
maintained by the SEC in Washington, D.C. at 450 Fifth Street, N.W.,
Washington, DC 20549 and at some 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 SEC maintains a
World Wide Web site that contains reports, proxy statements and other
information regarding registrants like Summit that file electronically with the
SEC at the following Internet address: (http://www.sec.gov).
We have filed with the SEC in Washington, D.C. a registration statement on
Form S-2 under the Securities Act with respect to the preferred stock offered
by this prospectus. This prospectus does not contain all of the information
contained in the registration statement, as permitted by the rules and
regulations of the SEC.
16
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The following document filed with the SEC is incorporated in this prospectus
by reference:
Annual Report on Form 10-K of Summit for the fiscal year ended September 30,
1999.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus modifies or supersedes that statement. Any
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 that person, a copy of
any and all of the information that has been referenced in this prospectus
other than exhibits to these documents. Requests for these copies should be
directed to Corporate Secretary, Summit Securities, Inc., P.O. Box 2162,
Spokane, Washington 99210-2162, telephone number (509) 838-3111.
17
<PAGE>
Summit Securities, Inc.
[LOGO OF SUMMIT SECURUTUES]
200,000 Preferred Shares, Series S-3
----------------
PROSPECTUS
----------------
, 2000
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........................................... $ 5,280
NASD Filing Fee................................................ 2,500
Independent Underwriter Fee and Expenses....................... 13,333
Blue Sky Qualification Fees and Expenses....................... 13,000
Accounting Fees and Expenses(1)................................ 50,000
Legal Fees and Disbursements(1)................................ 15,000
Printing Expenses (1).......................................... 23,500
Miscellaneous Expenses(1)...................................... 1,387
--------
Total Expenses................................................. $124,000
========
</TABLE>
(1) 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, officer or employee up to the indemnification
limits permitted by Washington 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
(a) Exhibits
<TABLE>
<C> <S>
1.01 Form of Selling Agreement between Summit and Metropolitan Investment
Securities, Inc. with respect to the preferred stock to be registered
(incorporated by reference to Exhibit 1(a) to Registration No. 333-
43829).
1.02* Agreement to Act as "Qualified Independent Underwriter," between
Summit, Metropolitan Investment Securities, Inc. and Cruttenden Roth
Incorporated with respect to the preferred stock to be registered.
1.03* Form of Pricing Recommendation Letter of Cruttenden Roth Incorporated
with respect to the preferred stock to be registered.
5.01* Opinion of Kutak Rock LLP as to the validity of the certificates.
10.01 Management Receivable Acquisition and Servicing Agreement between
Summit and Metropolitan Mortgage & Securities Co., Inc. dated
September 9, 1994 (incorporated by reference to Exhibit 10(a) to
Registration No. 33-57619).
10.02 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).
10.03 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).
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
10.04 Reinsurance Agreement between Western United Life Assurance Company
and Old Standard Life Insurance Company (incorporated by reference to
Exhibit 10(d) to Summit's Annual Report on Form 10-K filed January 7,
1998).
11.01 Statement indicating computation of earnings per common share
(incorporated by reference to Exhibit 11.01 to Summit's Annual Report
on Form 10-K filed December 27, 1999).
12.01 Statement of computation of ratio of earnings to fixed charges and
preferred stock dividends (incorporated by reference to Exhibit 11.01
to Summit's Annual Report on Form 10-K filed December 27, 1999).
23.01* Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.02 Consent of Kutak Rock LLP (included in Exhibit 5.01).
24.01 The Power of Attorney, included on Page II-4 of the Registration
Statement, is incorporated herein by reference.
</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 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.
II-2
<PAGE>
(c) The undersigned registrant hereby undertakes that:
(1) 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.
(2) 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 5th day of
January, 2000.
SUMMIT SECURITIES, INC.
/s/ Tom Turner
By: _________________________________
Tom Turner, President
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 5, 2000
____________________________________ (Principal Executive
Tom Turner Officer)
/s/ Philip Sandifur Vice President and Director January 5, 2000
____________________________________
Philip Sandifur
/s/ Greg Gordon Secretary, Treasurer and January 5, 2000
____________________________________ Director
Greg Gordon
/s/ Robert Potter Director January 5, 2000
____________________________________
Robert Potter
/s/ Steven Crooks Principal Accounting Officer January 5, 2000
____________________________________ and Principal Financial
Steven Crooks Officer
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<C> <S>
1.01 Form of Selling Agreement between Summit and Metropolitan Investment
Securities, Inc. with respect to the preferred stock to be registered
(incorporated by reference to Exhibit 1(a) to Registration No. 333-
43829).
1.02* Agreement to Act as "Qualified Independent Underwriter," between
Summit, Metropolitan Investment Securities, Inc. and Cruttenden Roth
Incorporated with respect to the preferred stock to be registered.
1.03* Form of Pricing Recommendation Letter of Cruttenden Roth Incorporated
with respect to the preferred stock to be registered.
5.01* Opinion of Kutak Rock LLP as to the validity of the certificates.
10.01 Management Receivable Acquisition and Servicing Agreement between
Summit and Metropolitan Mortgage & Securities Co., Inc. dated
September 9, 1994 (incorporated by reference to Exhibit 10(a) to
Registration No. 33-57619).
10.02 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).
10.03 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).
10.04 Reinsurance Agreement between Western United Life Assurance Company
and Old Standard Life Insurance Company (incorporated by reference to
Exhibit 10(d) to Summit's Annual Report on Form 10-K filed January 7,
1998).
11.01 Statement indicating computation of earnings per common share
(incorporated by reference to Exhibit 11.01 to Summit's Annual Report
on Form 10-K filed December 27, 1999).
12.01 Statement of computation of ratio of earnings to fixed charges and
preferred stock dividends (incorporated by reference to Exhibit 11.01
to Summit's Annual Report on Form 10-K filed December 27, 1999).
23.01* Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.02 Consent of Kutak Rock LLP (included in Exhibit 5.01).
24.01 The Power of Attorney, included on Page II-4 of the Registration
Statement, is incorporated herein by reference.
</TABLE>
<PAGE>
EXHIBIT 1.02
AGREEMENT TO ACT AS "QUALIFIED INDEPENDENT UNDERWRITER"
SUMMIT SECURITIES, INC.
Preferred Stock, Series S-3
This agreement made as of the 30th day of December, 1999, among Summit
Securities, Inc., a 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 it Preferred Stock,
designated as "Variable Rate Cumulative Preferred Stock, Series S-3,"
(hereinafter referred to as "Preferred Stock"), which will be offered in
reliance on a registration statement filed on Form S-2 with the Securities and
Exchange Commission; and,
WHEREAS, MIS, a broker/dealer and subsidiary of Summit and a member of the
National Association of Securities Dealers ("NASD"), will be engaged as the sole
managing agent for Summit; and,
WHEREAS, pursuant to subparagraph (c) of Rule 2720 of the NASD Conduct
Rules, MIS, as a NASD member, may participate in such underwriting only if the
yield at which the Preferred Stock offered to the public is not lower than the
yield recommended by a "Qualified Independent Underwriter" as that term is
defined in Rule 2720, subparagraph (b)(15), of the NASD Conduct Rules, 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;
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 and any materials incorporated by reference into
and attached to the Prospectus (including the form of prospectus to be
<PAGE>
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.
Section 1. Rule 2720 Requirement. Cruttenden hereby confirms its agreement
as set forth in subparagraph (b)(15)(F) of Rule 2720 of the NASD Conduct Rules
and represents that, as appropriate, Cruttenden satisfies or at the times
designated in such subparagraph (l5) will satisfy the other requirements set
forth therein or will receive an exemption from such requirements from the NASD.
Section 2. Consent. Cruttenden hereby consents to being 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.
Section 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 dividends to be
declared on those shares that is set forth in Schedules "A" and "B," copies of
which are 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 filed as an exhibit to the
Registration Statement referred to above. Summit, through MIS, will continue to
offer the securities according to the terms and conditions of said agreement,
including, without limitation, Schedules "A" and "B" in accordance with this
Agreement. 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 under
this registration shall terminate or otherwise lapse under operation of law.
Section 4. Fees and Expense. It is agreed that Cruttenden shall be paid a
fee in the amount of $13,333 payable upon delivery of the Pricing Recommendation
Letter referred to in paragraph 3 above.
Section 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,
2
<PAGE>
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 the 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.
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, except as
may otherwise be disclosed in the Registration Statement.
(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 the
Closing Date 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.
3
<PAGE>
(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 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 them, a reasonable number of copies of an
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 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.
Section 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
4
<PAGE>
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 Registration Statement and on the Closing Date. 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.
Section 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 time
to
5
<PAGE>
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
6
<PAGE>
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) Subject to the conditions set forth below, and in addition to any
rights of indemnification and contribution to which Summit may be entitled
pursuant to any agreement among underwriters, underwriting agreement or
otherwise, and to the extent allowed by law, Cruttenden hereby agrees that
it will indemnify and hold Summit and each person controlling, controlled
by or under common control with Summit 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 the failure of Cruttenden to be a "qualified independent underwriter" as
contemplated by this Agreement. Cruttenden further agrees that upon demand
by an Indemnified Person at any time or from time to time, it will promptly
reimburse such Indemnified Person for, or pay, any loss, claim, damage,
liability, cost or expense as to which Cruttenden has indemnified such
person pursuant hereto. Notwithstanding the foregoing provisions of this
paragraph 7, any such payment or reimbursement by Cruttenden 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 Cruttenden. In
addition, anything in this paragraph 7 to the contrary notwithstanding,
Cruttenden shall not be liable for any settlement of any action or
proceeding effected without its written consent. Cruttenden and Summit
agree that they shall each follow the procedures set forth in paragraph
7(b) with respect to any claim against Cruttenden hereunder.
(d) 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
7
<PAGE>
excess of the fee set 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.
Section 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.
Section 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.
Section 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.
Section 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: Walter W.
Cruttenden and (b) if to Summit, at 601 W. 1st. Avenue - Department 115000,
Spokane, Washington 99201, Attention: Susan Thomson, Assistant Corporate
Counsel.
Section 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.
8
<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: /s/ Tom Turner
--------------
Tom Turner, President
METROPOLITAN INVESTMENT SECURITIES, INC.
By: /s/ Reuel Swanson
-----------------
Reuel Swanson, Secretary
CRUTTENDEN ROTH INCORPORATED
By: /s/ Shelly Singhal
------------------
Shelly Singhal, Executive Vice President
9
<PAGE>
SCHEDULE A
Summit Securities, Inc.
The Pricing Recommendation Letter 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,
authorized 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 dividend 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: ____________________________________
<TABLE>
<CAPTION>
Applicable Effective Resultant
Date Date Average Rate Rate* Rate
-------- -------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
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)
</TABLE>
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>
FORM OF PRICING RECOMMENDATION LETTER
Date: January __, 2000
C. Paul Sandifur, Jr., President
Metropolitan Investment Securities, Inc.
917 W. Sprague Avenue
Spokane, Washington 99201
Re: Pricing Recommendation of Cruttenden Roth Incorporated
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 Conduct Rules, 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 December 30, 1999 which is filed as Exhibit 1.02
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>
KUTAK ROCK LLP
SUITE 2900 ATLANTA
717 SEVENTEENTH STREET KANSAS CITY
DENVER, COLORADO 80202-3329 LINCOLN
LITTLE ROCK
303-297-2400 NEW YORK
FACSIMILE 303-292-7799 NEWPORT BEACH
OKLAHOMA CITY
www.kutakrock.com OMAHA
PASADENA
PITTSBURGH
SCOTTSDALE
WASHINGTON
January 5, 2000
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>
KUTAK ROCK LLP
January 5, 2000
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 LLP
Kutak Rock LLP
<PAGE>
Exhibit 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-2 of our report dated December 6, 1999 relating
to the financial statements and financial statement schedules, which appears in
Summit Securities, Inc.'s Annual Report on Form 10-K for the year ended
September 30, 1999. We also consent to the references to us under the heading
"Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Spokane, Washington
January 5, 2000
