AGREEMENT TO ACT AS "QUALIFIED INDEPENDENT UNDERWRITER"
SUMMIT SECURITIES, INC.
INVESTMENT CERTIFICATES, SERIES B AND SERIES B-1
This agreement made as of the 28th day of February, 2001, among Summit
Securities, Inc., an Idaho corporation ("Summit"), Metropolitan Investment
Securities, Inc., a Washington corporation ("MIS"), and Xxxx Capital Partners,
LLC., a California corporation ("Xxxx").
WITNESSETH:
WHEREAS, Summit intends to offer up to $100,000,000 in Investment
Certificates Series B and Series B-1 (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 an 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 Xxxx 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
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. Xxxx 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, Xxxx 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. Xxxx 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 Xxxx 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 Xxxx'x prior written consent with respect to
form and substance.
SECTION 3. PRICING FORMULA AND RECOMMENDATION LETTER. Xxxx 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 Xxxx 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. Xxxx 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 Xxxx shall be paid a fee
in the amount of $40,000 payable upon delivery of the Pricing Recommendation
Letter referred to in paragraph 3 above. Xxxx shall also be reimbursed for
actual expenses incurred in connection with its duties hereunder in an amount
not to exceed $7,000.
SECTION 5. MATERIAL FACTS. Summit represents and warrants to Xxxx that
at the time the Registration Statement is declared effective 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
2
herein as the "Closing Date"), the Prospectus (as amended or supplemented if
it shall have been so amended or supplemented) will contain all material
statements which are required to be stated therein in accordance with the Act
and will conform to all other requirements of the federal securities laws,
and will not, on such date include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and that all contracts and
documents required by the Act to be filed or required as exhibits to the
Registration Statement have been filed. Summit further represents and
warrants that any further filing, report, document, release or communication
which in any way refers to Xxxx or to the services to be performed by Xxxx
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
(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 Xxxx pursuant to this Agreement shall be deemed a
representation and warranty by Summit to Xxxx, 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 Xxxx'x 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 Xxxx of such
events within a reasonable time thereafter, and will forthwith prepare
and furnish to Xxxx, 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 Xxxx) 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
Xxxx, at its expense, with all information and documentation with respect to its
business, financial condition and other matters as Xxxx may deem relevant based
on the standards of reasonableness and good faith and shall request in
connection with Xxxx'x performance
4
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
Xxxx as Xxxx may request on the effective date of the Registration Statement
and on the Closing Date. Summit will make reasonably available to Xxxx, its
auditors, counsel, and officers and directors to discuss with Xxxx any aspect
of Summit which Xxxx may deem relevant. In addition, Summit, at Xxxx'x
request, will cause to be delivered to Xxxx 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 Xxxx
to rely thereon to the same extent as if addressed directly to Xxxx. Summit
represents and warrants to Xxxx 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
Xxxx 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 Xxxx 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 Xxxx and each person
controlling, controlled by or under common control with Xxxx 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 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.
5
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 Xxxx), (ii)
Summit, within a reasonable time after notice of commencement of the
action, shall not have employed counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person, or (iii) Summit
shall have authorized in writing the employment of counsel for the
Indemnified Person at the expense of Summit,
6
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, Xxxx 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 Xxxx to be
a "qualified independent underwriter" as contemplated by this
Agreement. Xxxx 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 Xxxx has indemnified such person
pursuant hereto. Notwithstanding the foregoing provisions of this
paragraph 7, any such payment or reimbursement by Xxxx 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 Xxxx. In addition, anything in this paragraph 7 to the
contrary notwithstanding, Xxxx shall not be liable for any settlement
of any action or proceeding effected without its written consent. Xxxx
and Summit agree that they shall each follow the procedures set forth
in paragraph 7(b) with respect to any claim against Xxxx 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 Xxxx on grounds of policy or
otherwise, Summit and Xxxx 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 Xxxx may be subject in such proportion so that Xxxx
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 Xxxx be
responsible for any amount in excess of the fee set forth in paragraph
4 above and (ii) no person guilty of fraudulent misrepresentation
within
7
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 Xxxx, or any
partner, director, officer, employee, representative or any agent of
any thereof, shall have the same rights to contribution as Xxxx 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
Xxxx and MIS 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 Xxxx
and Summit 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 XXXX. Xxxx represents and warrants to
Summit and MIS that this Agreement has been duly authorized, executed and
delivered by Xxxx and constitutes a valid and binding obligation of Xxxx.
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 Xxxx Capital Partners, LLC., at
00 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000, Attention: Xxxxx Xxxxxxxx, (b) if
to Summit, at 000 X. 0xx Xxxxxx - Department 115000, Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxxxxxxxx, Esq., General Counsel, and (c) if to MIS, at
000 X. 0xx Xxxxxx - Department 141000, Spokane, Washington, Attention: Xxx
Xxxxxx.
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
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/ Xxx Xxxxxx
-------------------------------------------
Xxx Xxxxxx, President
METROPOLITAN INVESTMENT SECURITIES, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------------------
Xxxxx Xxxxxxx, Secretary
XXXX CAPITAL PARTNERS, LLC.
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------------
Xxxxx Xxxxxxxx,
Managing Director, Corporate Finance
9
SCHEDULE A
SUMMIT SECURITIES, INC.
The Pricing Recommendation Letter of Xxxx 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
x. Xxxxx Fargo Bank
x. Xxxxxxxxxx Trust Bank
x. Xxxxxxxxxx Mutual Savings Bank
Xxxx 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
each month ("the computation date"). Summit agrees to furnish Xxxx
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, Xxxx reserves the right, in its
uncontrolled discretion, to withdraw its Pricing Recommendation
Letter regarding the offering rates on the Certificates.
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.
Column A Column B Column C Column D Column E
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)
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
----- -----
5 yr (actual) 5 yr (actual)
rate = _____ rate = _____ _______________ + 1%___________ ____________
(a) + (a) + 60-120 months
----- -----
INSTALLMENT PAYMENTS
(Floor equal to yearly _______ _______ ____________ rate MINUS
.50) (yearly -.50 rate)
