<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)
---------------
Idaho 601 West First Avenue Spokane, 82-0438135
(State or other Washington 99201-5015 (509) 838- (I.R.S. Employer
jurisdiction of 3111 Identification No.)
Incorporation or
organization)
---------------
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 to be offering price Aggregate Registration
of securities to be registered registered per unit Offering Price (1)(2) Fee (3)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Certificates, Series
B............................... $50,000,000 -- $50,000,000 $13,200
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(a).
(2) Includes $28,000,000 of certificates that remains unsold and is being
carried forward from Registration Statement No. 333-71085 pursuant to Rule
429 of the Securities Act of 1933, for which a filing fee of $7,392 was
previously paid.
(3) A filing fee of $7,392 was previously paid for the $28,000,000 of
certificates carried forward from Registration Statement No. 333-71085
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. 333-71085 previously
filed by the Registrant. This Registration Statement also constitutes post-
effective amendment No. 1 to Registration Statement No. 333-71085.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<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.
$50,000,000 Investment Certificates, Series B
Summit is offering investment certificates with the following terms:
. The certificates are unsecured debt instruments, senior only to our
outstanding equity securities.
. The certificates rank equally with our unsecured debt and are subordinate to
all of our secured debt.
<TABLE>
<CAPTION>
Minimum Annual
Investment Term to Maturity Interest Rate(1)
---------- ---------------- ----------------
<S> <C> <C>
%
%
%
%
%
%
%
%
%
%
%
%
--------
%
</TABLE>
- -----
(1) You may elect one of three options to receive principal and interest
payments on the certificates: (1) to receive interest monthly, quarterly,
semi-annually or annually, without compounding, (2) to leave the interest
with Summit and it will compound semi-annually, or (3) at the above
identified installment terms, to receive equal monthly installments of
principal and interest in accordance with an amortization schedule that you
select.
You should consider carefully the risk factors beginning on page 9 in this
prospectus.
<TABLE>
<CAPTION>
Per Certificate Total
--------------- -----
<S> <C> <C>
Public offering price................. 100% $50,000,000
Underwriting discounts and
commissions*......................... 0% to 6% None-$3,000,000
Maximum proceeds to Summit (before
expenses)............................ 100% to 94% $50,000,000-$47,000,000
</TABLE>
- -----
* You will not incur a direct sales charge. Certificates earn interest, 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 certificates depend
upon the terms of the sale and upon whether the sales are reinvestments or
new purchases. See "PLAN OF DISTRIBUTION."
. Currently, there is no trading market for the certificates and you should not
expect one to be established in the future.
. The certificates are being issued only in book-entry form.
. This offering of certificates is subject to withdrawal or cancellation by
Summit without notice.
. We are offering the certificates on a continuous, best efforts basis, and
there is no minimum amount of certificates that must be sold.
. You may not purchase certificates pursuant to this prospectus after January
31, 2001.
The certificates are obligations 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>
<S> <C>
FORWARD-LOOKING STATEMENTS.................................................. 2
PROSPECTUS SUMMARY.......................................................... 3
RISK FACTORS................................................................ 9
USE OF PROCEEDS............................................................. 10
DESCRIPTION OF CERTIFICATES................................................. 10
PLAN OF DISTRIBUTION........................................................ 13
LEGAL MATTERS............................................................... 13
EXPERTS..................................................................... 14
AVAILABLE INFORMATION....................................................... 14
INCORPORATION OF DOCUMENTS BY REFERENCE..................................... 14
</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 certificates. 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 Certificate Offering
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<C> <S>
Certificate offering............. We are offering $50,000,000 in principal
amount of investment certificates, series
B. They will be issued at the minimum
investment amounts, terms and rates listed
on the cover page of this prospectus. There
is no minimum amount of certificates that
must be sold. Certificates will be issued
only in book-entry form. See "DESCRIPTION
OF CERTIFICATES."
Certificates..................... The certificates are unsecured debt
instruments of Summit. At September 30,
1999, we had outstanding approximately
$71,807,000, including principal and
compounded and accrued interest, of
certificate debt and $280,000, including
principal and accrued interest, of
collateralized debt and similar
obligations. See "CAPITALIZATION."
Principal and interest payments.. You may elect one of three options to
receive principal and interest payments on
the certificates: (1) to receive interest
monthly, quarterly, semi-annually or
annually, without compounding, (2) to leave
the interest with Summit and it will
compound semi-annually, or (3) for the
certificates purchased under the
installment option, equal monthly
installments of principal and interest in
accordance with an amortization schedule
that you select. We may change the minimum
investment amounts, terms and interest
rates on unissued certificates offered in
this prospectus from time to time by
supplementing this prospectus. The terms of
certificates issued prior to any change
will not be affected by the change. See
"DESCRIPTION OF CERTIFICATES--Payment of
Principal and Interest."
</TABLE>
5
<PAGE>
<TABLE>
<C> <S>
Use of proceeds.................. We will use the proceeds from the sales of
this certificate offering to invest in
receivables and to make other investments,
which may include investments in existing
subsidiaries, new business ventures or to
acquire other companies. We may also use
the proceeds to retire maturing investment
certificates, pay preferred stock
dividends, for property development and for
general corporate purposes. See "USE OF
PROCEEDS."
Risk factors..................... Your investment in the certificates
involves risk. You should review the risks
described in this prospectus and those
described in the attached Annual Report on
Form 10-K of Summit before you invest in
the certificates. See "RISK FACTORS" for a
discussion of the risks associated with
investing in the certificates.
</TABLE>
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 certificates, 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 certificates:
<TABLE>
<C> <S>
The indenture does not restrict our
ability to incur additional debt.... Summit's and your rights and obligations
in the certificates are defined in an
indenture dated as of November 15, 1990.
The indenture does not restrict our
ability to issue additional certificates
or to incur other debt. We are not
required to maintain any specified
financial ratios, minimum net worth,
minimum working capital or a sinking
fund.
Certificates are not insured against
the risk of loss.................... The certificates offered in this
prospectus are unsecured obligations of
our company and they are not insured or
guaranteed by any bank, any governmental
agency, any insurance company, any
affiliate of our company or any other
person or entity. Thus, the certificates
have greater risk than investments that
are insured against the risk of loss.
Certificates are not a liquid
investment due to the absence of an
established trading market.......... There is no trading market for the
certificates and it is not anticipated
that one will develop. Generally, you
cannot have your certificates redeemed
until they mature. There are only limited
situations in which certificates will be
redeemed early. These may include
situations where there is a mutual
agreement between you and Summit, or when
the "prepayment on death" provision
applies. You should consider your needs
for liquidity before investing in the
certificates and you should be prepared
to hold any certificates purchased in
this offering until their maturity. See
"DESCRIPTION OF CERTIFICATES."
Risk of holding book-entry
certificates because there are no
physical certificates to transfer... Our use of book-entry certificates rather
than actual physical certificates 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
certificates for the certificates may
prevent a secondary market from
developing because investors may be
unwilling to invest in securities if they
cannot obtain delivery of physical
certificates. The use of book-entry
certificates may delay payments to you
because distributions on the certificates
would be made first to the person in
whose name the certificates are
registered.
</TABLE>
9
<PAGE>
USE OF PROCEEDS
If all of the certificates we are offering are sold, we expect proceeds to
total $50,000,000 before deducting sales commissions and other expenses.
Offering expenses are estimated at $156,000 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 certificates can or will be sold.
In conjunction with the other funds available to us through operations
and/or borrowings, we currently plan to utilize the proceeds of the certificate
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 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 the total principal amount of
certificates that 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 CERTIFICATES
General
The certificates will be issued under an indenture dated as of November 15,
1990 and a supplement to the indenture dated as of December 31, 1997. We refer
to both of these documents together as the "indenture." The following
statements relating to the certificates and the indenture are summaries and are
not complete. These summaries are subject to the detailed provisions of the
indenture and are qualified in their entirety by reference to the indenture, a
copy of which is filed as an exhibit to the registration statement that
includes this prospectus and is also available for inspection at the office of
the trustee.
The certificates will represent unsecured general obligations of Summit and
will be issued in book-entry form without coupons, in fractional denominations
of $0.01 or more subject to the stated minimum investment amount requirements.
The certificates will be sold to the public at 100% of their principal amount.
The certificates will be issued in accordance with the minimum investment
amounts, maturities and interest rates listed on the cover page of this
prospectus. We may change the stated interest rates, maturities, and minimum
investment amounts of any unissued certificates at any time by supplementing
this prospectus. Any change will have no effect on the terms of the
certificates sold prior to the change.
Certificates may be transferred or exchanged for other certificates of the
same series, of a like aggregate principal amount, subject to the limitations
contained in the indenture. No service charge will be made for any transfer or
exchange of certificates. We may require payment of taxes or other governmental
charges imposed in connection with any transfer or exchange. Interest will
accrue at the stated rate from the date of issue until maturity. The
certificates are not convertible into capital stock or any other securities of
Summit.
10
<PAGE>
The certificates are not subject to redemption prior to maturity, but may be
prepaid pursuant to the prepayment on death provision described below. Also, in
limited circumstances involving an investor's demonstrated financial hardship,
subject to regulatory restrictions affecting redemptions and exchanges of
securities during an offering, we may, in our sole discretion, consider a
request for an early payment of a certificate upon terms mutually agreed to by
the holder of the certificate and Summit. Early payment requests are reviewed
in the order received and are subject to review by Summit's executive
management.
Payment of Principal and Interest
Interest will be payable to certificate holders under one of several
interest payment plans. You may select an interest payment plan at the time you
purchase the certificates and can change this plan at any time by giving
written notice to Summit. You may elect to have interest paid on a monthly,
quarterly, semi-annual or annual basis, without compounding. Or, you may elect
to leave the accrued interest with Summit, in which case it will compound semi-
annually at the stated interest rate. Under this compounding option, upon
written notice to Summit, you may withdraw the interest accumulated during the
last two completed semi-annual compounding periods as well as the interest
accrued from the end of the last compounding period to the date Summit receives
the notice. Amounts compounded prior to the last two semi-annual compounding
periods are available only at maturity.
Alternatively, under the installment option, at your election, at the time
of investment and subject to the minimum term and investment requirements
listed on the cover page of this prospectus, level monthly installments
comprised of principal and interest will be paid to you commencing 30 days from
date of issue of the certificate until maturity. The amount of each installment
will be determined by the amortization term you designate at the time the
certificate is purchased.
Certificate holders are notified in writing between 15 and 45 days prior to
the date their certificates will mature. When a certificate matures, the
amounts due on maturity are placed in a separate bank trust account until paid
to the registered owner(s). Certificates do not earn interest after the
maturity date. Summit will pay the principal and accumulated interest due on
matured certificates to the registered owner(s) in cash at Summit's main office
in Spokane, Washington or by check mailed to the address designated by the
registered owner.
Prepayment on Death
In the event of the death of a certificate holder, any party entitled to
receive some or all of the proceeds from that certificate may elect to have his
or her portion of the principal and any accrued but unpaid interest prepaid in
full in five consecutive equal monthly installments. Interest will continue to
accrue on the declining principal balance of the portion of the certificate
being prepaid. No interest penalty will be assessed. Any request for prepayment
shall be made to Summit in writing and shall be accompanied by evidence
satisfactory to Summit of the death of the registered owner or joint registered
owner. Before prepayment, we may require the submission of additional documents
or other material which we consider necessary to determine the portion of the
proceeds the requesting party is entitled to receive, or assurances which, in
our discretion, we consider necessary to fulfill our obligations.
Related Indebtedness
The indenture governing the certificates does not restrict our ability to
issue additional certificates or to incur other debt. The indenture does not
require us to maintain any specified financial ratios, minimum net worth or
minimum working capital. There is no sinking fund for the redemption of the
certificates. Certificates will not be guaranteed or insured by any
governmental agency. At September 30, 1999, Summit had outstanding
approximately $71,807,000, including principal and compounded and accrued
interest, of certificate debt and $280,000, including principal and accrued
interest, of collateralized debt and similar obligations. The certificates
offered in this prospectus are senior in liquidation preference to all
outstanding equity securities of
11
<PAGE>
Summit. They are subordinate to Summit's collateralized debt and are on a
parity with unsecured accounts payable and accrued liabilities. The
certificates rank equally with our other certificates that are outstanding.
There are no limitations on our ability to incur additional debt. You should
not rely on the terms of the indenture for protection of your investment, but
should look rather to the creditworthiness of Summit and its ability to satisfy
its obligations.
Concerning the Trustee
First Trust National Association was appointed successor trustee under the
indenture on April 24, 1996. First Trust assumed all of the duties and
obligations of the trustee contained in the indenture. The trustee is obligated
under the indenture to oversee and, if necessary, to take action to enforce
fulfillment of Summit's obligations to certificate holders. The trustee is a
national banking association with a combined capital and surplus in excess of
$100 million. Summit and some of its affiliates may maintain deposit accounts
with and may, from time to time, borrow money from the trustee and conduct
other banking transactions with it. At September 30, 1999, and as of the date
of this prospectus, no loans from the trustee were outstanding. In the event of
default, the indenture permits the trustee to become a creditor of Summit and
does not preclude the trustee from enforcing its rights as a creditor,
including rights as a holder of collateralized indebtedness.
Rights and Procedures in the Event of Default
Events of default include:
. the failure of Summit to pay interest on any certificate for a period of
30 days after it becomes due and payable;
. the failure to pay the principal or any required installment of any
certificate when due;
. the failure to perform any other covenant in the indenture for 60 days
after notice; and
. some events of bankruptcy, insolvency or reorganization with respect to
Summit.
If an event of default occurs, either the trustee or the holders of 25% or
more in principal amount of certificates then outstanding may declare the
principal of all the certificates outstanding to be immediately due and
payable.
The trustee must give the certificate holders notice by mail of any default
within 90 days after the occurrence of the default, unless it has been cured or
waived. The trustee may withhold the notice if it determines in good faith that
withholding the notice is in the best interests of the certificate holders,
unless the default is a failure to pay principal or interest on any
certificate.
Subject to some conditions, any of these defaults, except for a failure to
pay principal or interest when due, may be waived by the holders of a majority
in aggregate principal amount of the certificates then outstanding. The holders
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or of exercising any power
conferred on the trustee, except as otherwise provided in the indenture. The
trustee may require reasonable indemnity from holders of certificates before
acting at their direction.
Within 120 days after the end of each fiscal year, Summit must furnish to
the trustee a statement of some of the officers of Summit concerning their
knowledge as to whether or not Summit is in default under the indenture.
Modification of the Indenture
Certificate holders' rights may be modified with the consent of the holders
of 66 2/3% of the outstanding principal amounts of certificates, and 66 2/3% of
those series specifically affected. In general, no adverse modification of the
terms of payment and no modifications reducing the percentage of certificates
required for modification is effective against any certificate holder without
his or her consent.
12
<PAGE>
Restrictions on Consolidation, Merger and Other Fundamental Corporate Changes
Summit may not consolidate with or merge into any other corporation or
transfer substantially all its assets unless either Summit is the continuing
corporation after the consolidation or merger or the person acquiring by
conveyance or transfer of the assets is a corporation organized and existing
under the laws of the United States, or any state of the United States, which
assumes the performance of every covenant of Summit under the indenture and
other conditions precedent are fulfilled.
Transfer Agent and Registrar
Metropolitan acts as the transfer agent and registrar of the certificates.
PLAN OF DISTRIBUTION
The certificates are being offered to the public on a continuing best
efforts basis through Metropolitan Investment Securities, Inc. ("MIS"), which
is one of our subsidiaries. Accordingly, the offering has not received the
independent selling agent review customarily made when an unaffiliated selling
agent offers securities. No commission or other expense of the offering will be
paid by the purchasers of the certificates. A commission will, however, be paid
by Summit on most certificate purchases up to a maximum amount of 6% of the
certificate price, generally depending on the term of the certificate and
whether or not the transaction is a reinvestment or new purchase. Certificates
are offered only for cash or cash equivalents. MIS will transmit funds 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 $2,128,000 from Summit on sales of approximately $53,230,000 of
Summit's debt securities.
MIS is a member of the National Association of Securities Dealers, Inc. Due
to the affiliation of Summit and MIS, Rule 2720 of the NASD Conduct Rules
requires, in part, that a qualified independent underwriter be engaged to make
a recommendation regarding the interest rates to be paid on the certificates
offered by this prospectus. Accordingly, MIS has obtained a letter from
Cruttenden Roth Incorporated ("Cruttenden"), a NASD member, stating that the
interest rates on the certificates, using a formula tied to corresponding
interest rates paid by the U.S. Treasury and regional financial institutions,
are consistent with Cruttenden's recommendations, which were based on
conditions and circumstances existing as of the date of this prospectus. Summit
undertakes to maintain the interest rates on certificates no lower than those
recommended by Cruttenden based on the formula. Therefore, the yield at which
the certificates will be distributed will be no lower than that recommended by
Cruttenden. Cruttenden has assumed the responsibilities of acting as the
qualified independent underwriter in pricing the offering and conducting due
diligence. For performing its functions as a qualified independent underwriter
with respect to the certificates offered in this prospectus, Cruttenden will
receive $66,667 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 in the future, a
public trading market for the certificates. MIS does not intend to make a
market for the certificates. See "RISK FACTORS."
MIS may enter into selected dealer agreements with and reallow to 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
certificates sold by these dealers.
LEGAL MATTERS
The legality of the certificates being offered by this prospectus will be
passed upon for Summit by the law firm of Kutak Rock LLP, Denver, Colorado.
13
<PAGE>
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of Summit 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 certificates 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.
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.
14
<PAGE>
Summit Securities, Inc.
[LOGO OF SUMMIT SECURITIES]
$50,000,000 Investment Certificates, Series B
----------------
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............................................ $ 13,200
NASD Filing Fee................................................. 5,500
Independent Underwriter Fee and Expenses........................ 33,334
Blue Sky Fees................................................... 13,000
Accounting Fees and Expenses (1)................................ 50,000
Legal Fees and Disbursements (1)................................ 15,000
Printing Expenses (1)........................................... 24,500
Miscellaneous Expenses (1)...................................... 1,466
--------
Total Expenses.................................................. $156,000
========
</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 certificates 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 certificates to be
registered.
1.03* Form of Pricing Recommendation Letter of Cruttenden Roth
Incorporated with respect to the certificates to be registered.
4.01 Indenture, dated as of November 15, 1990, between Summit and West
One Bank, Idaho, N.A., Trustee (incorporated by reference to
Exhibit 4(a) to Registration No. 333-36775).
4.02 Tri-Party Agreement dated as of April 24, 1996 between West One
Bank, First Trust and Summit, appointing First Trust as successor
Trustee (incorporated by reference to Exhibit 4(c) to Registration
No. 333-19787).
4.03 First Supplemental Indenture between Summit and First Trust dated
as of December 31, 1997 (incorporated by reference to Exhibit 4(c)
to Registration No. 33-36775).
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).
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
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.
25.01* Statement of eligibility of the trustee.
</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.
II-2
<PAGE>
(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.
(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
_____________________________________
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
--------- ----- ----
<C> <S> <C>
/s/ Tom Turner President and Director January 5, 2000
_________________________________ (Principal
Tom Turner Executive Officer)
/s/ Philip Sandifur Vice President and January 5, 2000
_________________________________ Director
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 January 5, 2000
_________________________________ Officer and Principal
</TABLE> Steven Crooks Financial Officer
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 certificates 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 certificates to be
registered.
1.03* Form of Pricing Recommendation Letter of Cruttenden Roth
Incorporated with respect to the certificates to be registered.
4.01 Indenture, dated as of November 15, 1990, between Summit and West
One Bank, Idaho, N.A., Trustee (incorporated by reference to
Exhibit 4(a) to Registration No. 333-36775).
4.02 Tri-Party Agreement dated as of April 24, 1996 between West One
Bank, First Trust and Summit, appointing First Trust as successor
Trustee (incorporated by reference to Exhibit 4(c) to Registration
No. 333-19787).
4.03 First Supplemental Indenture between Summit and First Trust dated
as of December 31, 1997 (incorporated by reference to Exhibit 4(c)
to Registration No. 33-36775).
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.
25.01* Statement of eligibility of the trustee.
</TABLE>
<PAGE>
Exhibit 1.02
AGREEMENT TO ACT AS "QUALIFIED INDEPENDENT UNDERWRITER"
SUMMIT SECURITIES, INC.
Investment Certificates, Series B
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 $50,000,000 in Investment Certificates
Series B (hereinafter referred to as "Certificates"), 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 Certificates 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 Certificates;
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 Certificates 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 yields below which
Summit's Certificates may not be offered based on the pricing formula 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 debt 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 $33,334 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 Certificates to be sold in the Offering is made by the underwriter or
underwriters, as the case may be, participating in the Offering and by Summit
(such date being referred to herein as the "Closing Date"),
2
<PAGE>
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
Certificates 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 Certificates 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 rates on its Certificates at least equal to
an "assumed floor." Based upon the pricing formula described below:
1. The interest rate to be paid on the Certificates shall be fixed by Summit
from time to time. However, the rate shall not be lower than the
computation made per the worksheet on Schedule B, which is attached and
incorporated by reference herein.
2. The "assumed floor" for 6 to 11 month Certificates shall be at least 1.0%
above the lesser of the interest rate on the 6 month U.S. Treasury Bills,
on a discounted basis, based upon the auction average (which is published
widely in newspapers throughout the country, normally on the day following
the auction) and a composite average of the offering rates on 6 month
certificates of deposit currently being offered by banks and savings
institutions in the northwestern section of the United States. For
purposes of this composite average of certificate of deposit rates, the
rates being offered by the following institutions shall be considered
initially:
a. Seattle First National Bank
b. Security State Bank
c. U.S. Bank of Washington
d. Wells Fargo Bank
e. Washington Trust Bank
f. Washington Mutual Savings Bank
Cruttenden and Summit agree to review on an ongoing basis the group which
comprises the composite average, and may substitute another institution in
the composite group from time-to-time by mutual agreement, as the case may
be.
3. The "assumed floor" for 60 to 120 month Certificates shall be computed in
like manner as that described in paragraph "2" above, except that the
latest auction average on 5 year U.S. Treasury Notes shall be considered in
place of the 6 month U.S. Treasury Bills, and 5 year certificates of
deposit currently offered in the composite group shall be considered in
lieu of the 6 month rate.
4. Rates on 12 to 23 month, 24 to 35 month, 36 to 47 month and 48 to 59 month
Certificates shall be at least equal to the interpolated differences
between the computation of the "assumed floor" of 6 to 11 month
Certificates and 60 to 120 month Certificates, based upon the computation
set forth in Schedule B.
5. Rates on Certificates payable in installments of principal and interest
shall be no lower than .25% below the "assumed floor" for 60 to 120 month
Certificates.
6. The computation of the "assumed floor" shall be made monthly, as of the
first Tuesday of each month, or at such other times during any month that
Summit causes the offering rates to change from those in effect on the
first Tuesday of
<PAGE>
each month ("the computation date"). Summit agrees to furnish Cruttenden
with a computation of the "assumed floor" by completing the worksheet on
Schedule B. Should the offering rates at that time on Summit's Certificates
be less than the "assumed floor" as computed, Summit agrees to raise the
rates on its Certificates to at least the "assumed floor" within 10
calendar days of the computation date. Should Summit fail to raise its
offering rates within the 10 day period referred to above, Cruttenden
reserves the right, in its uncontrolled discretion, to withdraw its Pricing
Recommendation Letter regarding the offering rates on the Certificates.
<PAGE>
SCHEDULE B
Summit Securities, Inc.
PRICING FORMULA
C.D. RATE
- ---------
Average rate among a composite of 6 selected Banks and Savings and Loans as of
the 1st Tuesday of each month.
GOVERNMENT RATE
- ---------------
Most current of 8 selected auction rates available on the 1st Tuesday of each
month.
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
<S> <C> <C> <C> <C>
Certificate of Government
Deposit (CD) Rate Enter Lesser of Summit's
Calculation Calculation Column A or B Assumed Floor Current Rate
---------- ----------- ------------- ------------ ------------
5 yr CD rate = 5 yr Gov't Rate =
- -------- ---------
6 mo CD rate = 6 mo Gov't Rate =
- -------- ---------
DIFFERENCE = DIFFERENCE =
- -------- ---------
x .20 X .20
-------- ---------
Differential = Differential =
- -------- ---------
(enter in (a) (enter in (a)
below) below)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
6 mo (actual) 6 mo (actual)
rate = rate =
- -------- --------- _______________ + 1%___________ _______________
(a) + (a) + 6-11 months
-------- ---------
1 yr rate = 1 yr rate =
- -------- --------- _______________ + 1%___________ _______________
(a) + (a) + 12-23 months
-------- ---------
2 yr rate = 2 yr rate =
- -------- --------- _______________ + 1%___________ _______________
(a) + (a) + 24-35 months
-------- ---------
3 yr rate = 3 yr rate =
- -------- --------- _______________ + 1%___________ _______________
(a) + (a) + 36-47 months
-------- ---------
4 yr rate = 4 yr rate =
- -------- --------- _______________ + 1%___________ _______________
(a) + (a) + 48-59 months
-------- ---------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
5 yr (actual) 5 yr (actual)
rate = rate =
- -------- --------- _______________ + 1%___________ _______________
(a) + (a) + 60-120 months
-------- ---------
</TABLE>
INSTALLMENT PAYMENTS (Floor equal to yearly _______ _______ ____________
rate MINUS .50) (yearly -.50 rate)
<PAGE>
FORM OF PRICING RECOMMENDATION LETTER
Date: January ___, 2000
C. Paul Sandifur, Jr., President
Metropolitan Investment Securities, Inc.
601 West First Avenue
Spokane, Washington 99201-5015
Re: Pricing Recommendation of Cruttenden Roth Incorporated
Summit Securities, Inc., Offering of $50,000,000 in
Principal Amount of Investment Certificates, Series B
Dear Mr. Sandifur:
This letter will serve to confirm our engagement as a "qualified
independent underwriter" as that term is defined 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 yields on the Investment Certificates, Series B (which are based upon
the computation 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), are no lower than those which we
would recommend.
We hereby consent to the use of our name as a "qualified independent
underwriter," in 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
LINCOLN
DENVER, COLORADO 80202-3329 LITTLE ROCK
NEW YORK
303-297-2400 NEWPORT BEACH
FACSIMILE 303-292-7799 OKLAHOMA CITY
OMAHA
www.kutakrock.com PASADENA
PITTSBURGH
SCOTTSDALE
WASHINGTON
January 5, 2000
Summit Securities, Inc.
601 West First Avenue
Spokane, WA 99201-5015
Re: Summit Securities, Inc. Investment Certificates, Series B
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 $50,000,000 in principal amount of Investment Certificates,
Series B (the "Certificates"). 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
(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.
<PAGE>
KUTAK ROCK LLP
January 5, 2000
Page 2
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 Certificates as
specified in the prospectus and (iii) consideration is received for the
Certificates: we are of the opinion that, when issued, the Certificates will be
binding obligations of the Company.
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
<PAGE>
EXHIBIT 25.01
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
Statement of Eligibility Under
the Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
____________________
U.S. BANK TRUST NATIONAL ASSOCIATION
------------------------------------
(Exact name of trustee as specified in its charter)
91-7587893
----------
(I.R.S. Employer Identification No.)
601 Union Street, Suite 2120
Seattle, WA 98101
- ---------------------------------------- ---------------------
(Address of principal executive offices) (Zip code)
_________________________
Summit Securities, Inc.
-----------------------
(Exact name of obligor as specified in its charter)
Idaho 82-0438135
---------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
601 West 1st Avenue
Spokane, Washington 99201
---------------------------- ----------
(Address of principal executive offices) (Zip code)
Investment Certificates Series B
--------------------------------
(Title of the indenture securities)
<PAGE>
1. General Information. Furnish the following information as to the trustee--
-------------------
(a) Name and address of each examining or supervising authority to which it
is subject.
Comptroller of the Currency, Washington D.C. 20521
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor and Underwriters. If the obligor or any
------------------------------------------
underwriter for the obligor is an affiliate of the trustee, describe each such
affiliation.
No such affiliation exists with the Trustee, U.S. Bank Trust National
Association.
Items 3-15 are not applicable because to the best of the Trustee's
------------------------------------------------------------------
knowledge the obligor is not in default under any Indenture for which the
-------------------------------------------------------------------------
Trustee acts as Trustee.
------------------------
16. List of Exhibits. List below all exhibits filed as a part of this
----------------
statement of eligibility and qualification.
1. Articles of Association of U.S. Bank Trust National Association.(1)
2. Certificate of Authority of U.S. Bank Trust National Association to
Commence Business.(1)
3. Authorization of the trustee to exercise corporate trust powers.(1)
4. Bylaws of U.S. Bank Trust National Association.(1)
5. Not Applicable.
6. Consents of U.S. Bank Trust National Association required by Section
321(b) of the Act.(2)
7. Latest Report of Condition of U.S. Bank Trust National Association.(3)
_____________
(1) Incorporated by reference to the exhibit of the same number to the
Form T-1 filed with registration statement number 333-71087.
(2) Attached.
(3) Incorporated by reference to the exhibit of the same number to the
Form T-1 filed with registration statement number 333-88605.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
U.S. Bank Trust National Association, a national banking association organized
under the laws of the United States, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Seattle, and State of Washington, on the 16th day
of December, 1999.
U.S. BANK TRUST NATIONAL ASSOCIATION
By /s/ Sherrie L. Pantle
---------------------------------
Vice President
<PAGE>
Exhibit 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 in connection with the proposed issuance by Summit Securities, Inc. of
Investment Certificates Series B, we hereby consent that reports of examinations
by federal, state, territorial and district authorities may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
U.S. BANK TRUST NATIONAL ASSOCIATION
By /s/ Sherrie L. Pantle
-------------------------------------------
Vice President
Dated: December 16, 1999
