EXHIBIT 1.02
FORM OF
AGREEMENT TO ACT AS "QUALIFIED INDEPENDENT UNDERWRITER"
SUMMIT SECURITIES, INC.
INVESTMENT CERTIFICATES, SERIES B AND SERIES B-1
This agreement (the "Agreement") is made as of the ___ day of October,
2002, among Summit Securities, Inc., an Idaho corporation ("Summit"),
Metropolitan Investment Securities, Inc., a Washington corporation ("MIS"), and
Xxxx Capital Partners, LLC, a California limited liability company ("Xxxx").
WITNESSETH:
WHEREAS, Summit intends to offer up to $50,000,000 in principal amount
of its Investment Certificates, Series B and Series B-1 (hereinafter referred to
as "Investment 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 a 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 offering only if the
yield at which the Investment Certificates offered to the public is no 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 (the "Agreement") describes the terms on which
Summit is retaining Xxxx to serve as such a "Qualified Independent Underwriter"
in connection with this offering of Investment 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 Investment 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
Investment 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, with conditions, by
MIS, as the managing agent, pursuant to the Selling Agreement in effect between
MIS and Summit which is filed as an exhibit to the Registration Statement
referred to above. Summit, through MIS, will continue to offer the securities
according to the terms and conditions of said agreement, including, without
limitation, Schedules "A" and "B" in accordance with this Agreement. 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 $60,000.00 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 $10,000.
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 Investment 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"), 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.
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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.
(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.
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(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 Investment 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 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.
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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 and
MIS hereby agree that they 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, a "Xxxx Indemnified Person")
harmless from and against any and all loss, claim, damage, liability,
cost or expense whatsoever to which such Xxxx 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 MIS or
based upon written information furnished by Summit or MIS filed in any
jurisdiction in order to qualify the Investment 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 or MIS in this
Agreement. Summit and MIS further agree that upon demand by a Xxxx
Indemnified Person at any time or from time to time, they will promptly
reimburse such Xxxx Indemnified Person for, or pay, any loss, claim,
damage, liability, cost or expense as to which Summit and MIS have
indemnified such person pursuant hereto. Notwithstanding the foregoing
provisions of this paragraph 7, any such payment or reimbursement by
Summit and MIS of fees, expenses or disbursement incurred by a Xxxx
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 Xxxx Indemnified Person as a
direct result of such person's negligence, bad faith or willful
misfeasance will be promptly repaid to Summit and MIS. In addition,
anything in this paragraph 7 to the contrary notwithstanding, neither
Summit or MIS shall be liable for any settlement of any action or
proceeding effected without their written consent.
(b) Promptly after receipt by a Xxxx Indemnified Person under
sub-paragraph (a) above of notice of the commencement of any action,
such Xxxx Indemnified Person will, if a claim in respect thereof is to
be made against Summit and MIS under paragraph (a), notify Summit and
MIS in writing of the commencement thereof; but the omission to so
notify Summit and MIS will not relieve Summit and MIS from any
liability which they may have to any Xxxx Indemnified Person otherwise
than under this paragraph 7 if such omission shall not have materially
prejudiced Summit's or MIS's ability to investigate or to defend
against such claim. In case any such action is brought against any Xxxx
Indemnified Person, and such Xxxx Indemnified Person notifies Summit
and MIS of the commencement thereof, Summit and MIS will be entitled to
participate therein and, to the extent that it may elect by written
notice delivered to the Xxxx Indemnified Person promptly after
receiving the aforesaid notice from such Xxxx Indemnified Person, to
assume the defense thereof with counsel reasonably satisfactory to such
Xxxx Indemnified Person; PROVIDED, HOWEVER, that if the defendants in
any such action include both the Xxxx Indemnified Person and Summit or
MIS or any corporation controlling, controlled by or under common
control with Summit or MIS, 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 Xxxx 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 Xxxx Indemnified Person shall have the right to select
separate counsel to represent it. Upon receipt of notice from Summit
and MIS to such Xxxx Indemnified Person of its election so to assume
the defense of such action and approval by the Xxxx Indemnified Person
of counsel, neither Summit nor MIS will be liable to such Xxxx
Indemnified Person under this paragraph 7 for any fees of counsel
subsequently incurred by such Xxxx Indemnified Person in connection
with the defense thereof (other than the reasonable costs of
investigation subsequently incurred by such Xxxx Indemnified Person)
unless (i) the Xxxx Indemnified Person shall have employed separate
counsel in accordance with the provision of the next preceding sentence
(it being understood, however, that Summit and MIS shall not be liable
for the expenses of more than one separate counsel in any one
jurisdiction representing the Xxxx Indemnified Person, which counsel
shall be approved by Xxxx), (ii) Summit and MIS, within a reasonable
time after notice of commencement of the action, shall not have
employed counsel reasonably satisfactory to the Xxxx Indemnified Person
to represent the Xxxx Indemnified Person, or (iii) Summit and MIS shall
have authorized in writing the employment of counsel for the Xxxx
Indemnified Person at the expense of Summit and MIS, 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).
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(c)
(i) 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 Exchange
Act, or the rules and regulations thereunder (individually, a
"Summit Indemnified Person") harmless from and against any and
all loss, claim, damage, liability, cost or expense whatsoever
to which such Summit 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 a Summit Indemnified
Person at any time or from time to time, it will promptly
reimburse such Summit 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 a Summit 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 Summit 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) and (d) with respect to
any claim against Xxxx hereunder.
(ii) Subject to the conditions set forth below, and
in addition to any rights of indemnification and contribution
to which MIS 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 MIS and each person controlling, controlled
by or under common control with MIS within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, or
the rules and regulations thereunder (individually, a "MIS
Indemnified Person") harmless from and against any and all
loss, claim, damage, liability, cost or expense whatsoever to
which such MIS 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 a MIS Indemnified Person at any time or from time to
time, it will promptly reimburse such MIS 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 a MIS 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 MIS 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 MIS agree that they shall each follow the
procedures set forth in paragraph 7(b) and (d) with respect to
any claim against Xxxx hereunder.
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(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 and MIS to Xxxx on grounds of
policy or otherwise, Summit, MIS 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 the same) to which Summit, MIS 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 and MIS are responsible for the balance, except
as Summit and MIS 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"; Notwithstanding anything in this Agreement to the
contrary (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 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 (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 or MIS
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 and MIS shall have
the same rights to contribution as Summit and MIS, subject in each case
to clause (i) of this paragraph (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 paragraph
(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 paragraph (d). 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 Xxxx Indemnified Person, any
Summit Indemnified Person, any MIS 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.
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SECTION 10. AUTHORIZATION BY XXXX. Xxxx represents and warrants to MIS
and Summit 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 Xxxxxxxx; (b) if to Summit, at 000
Xxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxxxxx,
General Counsel; and (c) if to MIS, at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxx Xxxxxxxxxx.
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.
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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:
---------------------------------------
Xxxxx Xxxxxxx, Secretary
XXXX CAPITAL PARTNERS, LLC
By:
---------------------------------------
Xxxxx Xxxxxxxx,
Managing Director, Corporate Finance
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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
Deposit (CD) Government Enter Lesser of Summit's
Calculation Rate 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) below) (enter in (a) 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)
