FORM OF
AGREEMENT TO ACT AS "QUALIFIED INDEPENDENT UNDERWRITER"
SUMMIT SECURITIES, INC.
__% Notes due 2005
This agreement (the "Agreement") is made as of the 25th day of May, 2000,
among SUMMIT SECURITIES, INC., an Idaho corporation ("Summit"), METROPOLITAN
INVESTMENT SECURITIES, INC., a Washington corporation ("MIS"), and XXXX CAPITAL
PARTNERS, INC., a California corporation ("Xxxx").
WITNESSETH:
WHEREAS, Summit intends to offer $22,500,000 in __% Notes due 2005
(hereinafter referred to as the "Notes"), which will be offered under a
registration statement filed on Form S-2 with the Securities and Exchange
Commission (the "Offering"); and,
WHEREAS, MIS, a broker/dealer and subsidiary of Summit, and a member of the
National Association of Securities Dealers, Inc. ("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 Notes offered to the public is not lower than the yield
recommended by a "Qualified Independent Underwriter" as that term is defined in
subparagraph (b)(15) of Rule 2720 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 describes the terms under which Summit is retaining
Xxxx to serve as such a "Qualified Independent Underwriter" in connection with
the Offering of Notes;
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 Notes 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
required by subparagraph (b)(15)(F) of Rule 2720 of the Conduct Rules of the
NASD 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 yield below which Summit's Notes
may not be offered and the exchange value below which the Notes may not be
exchanged (the "Pricing Recommendation Letter"). It is understood and agreed by
Xxxx that the securities to which this Agreement relates will be offered on a
minimum to maximum, 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 offer the Notes according to the terms and conditions of said agreement,
and 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 the 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 for
its services hereunder in the amount of $25,000 payable upon delivery of the
Pricing Recommendation Letter referred to in Section 3 above. In addition, Xxxx
will be reimbursed by Summit for Xxxx'x actual out-of-pocket expenses, up to a
maximum of $7,000, incurred in connection with its performance of its duties and
obligations hereunder.
SECTION 5. MATERIAL FACTS. Summit represents and warrants to Xxxx 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 Notes to be sold in the Offering is made by the underwriter or
underwriters, as the case may be, participating in the Offering and by Summit
(such date being referred to herein as the "Closing Date"), the Registration
Statement and the Prospectus (as the same may be amended or supplemented if such
documents, including documents incorporated therein by reference, 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
contain 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
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required by the Act to be filed or required to be filed 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, note,
or other evidence of indebtedness, contract or lease or in any indenture or
loan agreement to which it is a party or by which it is bound.
(e) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate action on the part of Summit and
MIS and performance of the foregoing agreement and the consummation of the
transactions contemplated thereby, will not conflict with or result in a
breach of any of the terms or constitute a violation of the respective
Certificates of Incorporation or Bylaws of Summit or MIS, or any deed of
trust, lease, sublease, indenture, mortgage, or other agreement or
instrument to which Summit or MIS is a party or by which either of them or
their
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property is bound, or any applicable law, rule, regulation, judgment, order
or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over Summit or MIS or their
properties or obligations; and no consent, approval, authorization or order
of any court or governmental agency or body is required for the
consummation of the transactions contemplated herein and in the other
agreements previously referred to in this paragraph except as may be
required under the Act or under any state securities or laws.
(f) Any certificate signed by an officer of Summit and delivered to
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 the Notes were priced
at an annual yield of __% simple interest computed on a 360 day year basis
consisting of twelve monthly periods.
(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 xxxx relevant based
on the standards of reasonableness and good faith and shall request in
connection with Xxxx'x 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 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
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extent as if addressed directly to Xxxx. Summit represents and warrants to Xxxx
that all such information and documentation provided pursuant to this Section 6
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements 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 Section 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 Notes 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. Notwithstanding the foregoing provisions of this Section
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 Section 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-section
(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 sub-section (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 Section 7 if such omission shall not have materially prejudiced
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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 Section 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,
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 Section 7, any such payment or
reimbursement by Xxxx of fees,
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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 Section 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 Section 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 Section 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 Section 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 sub-section (d), 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 sub-section (d). 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 sub-section (d), 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
sub-section (d). The indemnity and contribution agreements contained in
this Section 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
that this Agreement has been duly authorized, executed and delivered by Summit
and constitutes a valid and binding obligation of Summit.
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SECTION 9. AUTHORIZATION BY MIS. MIS represents and warrants to Xxxx 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, at 00 Xxxxxxxxx Xxxxx,
Xxxxxxx Xxxxx, XX 00000, Attention: Xxxxx Xxxx and (b) if to Summit, at 000 X.
0xx. Xxxxxx - Department 115000, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx
X. Xxxxxxxxxxx, General 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 Washington applicable to agreements made and to be
performed wholly within such jurisdiction.
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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:
-------------------------------
Xxx Xxxxxx, President
METROPOLITAN INVESTMENT SECURITIES, INC.
By:
-------------------------------
C. Xxxx Xxxxxxxx, Xx., President
XXXX CAPITAL PARTNERS, INC.
By:
-------------------------------
Xxxxxx Xxxxxxx, Executive Vice
President, Corporate Finance
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