Exhibit-1(b)
FORM OF AGREEMENT TO ACT AS QUALIFIED INDEPENDENT UNDERWRITER
SUMMIT SECURITIES, INC.
Preferred Stock, Series S-3
This agreement made as of the ____ day of ____________, by and between
Summit Securities, Inc., an Idaho corporation ("Summit"), Metropolitan
Investment Securities, Inc., a Washington corporation ("MIS"), and CRUTTENDEN
XXXX INCORPORATED a California corporation ("CRUTTENDEN").
WITNESSETH:
WHEREAS Summit intends to offer 200,000 shares of Preferred Stock,
designated as "Variable Rate Cumulative Preferred Stock, Series S-3,"
(hereinafter referred to as the "Preferred Stock"), which will be offered in
reliance on a registration statement filed on Form S-2, bearing SEC file number
333-43831; and,
WHEREAS, MIS, a wholly owned broker/dealer of Summit and a member of
the National Association of Securities Dealers ("NASD"), will be engaged as the
managing agent for Summit and MIS may enter into Selected Dealer Agreements with
other qualified broker/dealers; and,
WHEREAS, pursuant to subparagraph (c) of Rule 2720 of the Bylaws of the
NASD, MIS, as a NASD member, may participate in such underwriting only if the
price at which the Preferred Stock is offered to the public is no higher than
the price recommended by a "Qualified Independent Underwriter" as that term is
defined in subparagraph (b)(15) of Rule 2720 to the Bylaws of the NASD, and who
participates in the preparation of the registration statement and prospectus
relating to the offering and exercises customary standards of due diligence,
with respect thereto; and,
WHEREAS, this agreement ("Agreement") describes the terms on which
Summit is retaining CRUTTENDEN to serve as such a "Qualified Independent
Underwriter" in connection with this offering of Preferred Stock; and,
NOW, THEREFORE, in consideration of the recitations set forth above,
and the terms, promises, conditions, and covenants herein contained, the parties
hereby contract and agree as follows:
DEFINITIONS.
As hereinafter used, except as the context may otherwise require, the
term "Registration Statement" means the registration statement on Form S-2
(including the related preliminary prospectus, financial statements, exhibits
and all other documents to be filed as a part thereof or incorporated therein)
for the registration of the offer and sale of the Preferred Stock under the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Act") filed with the Securities and Exchange Commission (the
"Commission"), and any amendment thereto, and the term "Prospectus" means the
prospectus including any preliminary or final prospectus (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.
1. RULE 2720.
CRUTTENDEN hereby confirms its agreement as set forth in
sub-paragraph 15(f) of Rule 2720 of the Bylaws of the NASD and
represents that, as appropriate, CRUTTENDEN satisfies or at
the times designated in such paragraph (l5) will satisfy the
other requirements set forth therein or will receive an
exemption from such requirements from the NASD.
2. CONSENT.
CRUTTENDEN hereby consents to be 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.
3. PRICING FORMULA AND RECOMMENDATION LETTER
CRUTTENDEN agrees to render a written letter of recommendation
as to the price above which Summit's Preferred Stock may not
be offered based on the computation of distributions to be
declared on those shares that is set forth in Schedules "A"
and "B" 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 an
exhibit to the Registration Statement referred to above.
Summit, through MIS, will continue to offer the Preferred
Stock according to the terms and conditions of said Selling
Agreement, and in accordance with this Agreement, including,
without limitation, Schedules "A" and "B". 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 shall terminate or
otherwise lapse under operation of law.
4. FEES AND EXPENSE.
It is agreed that CRUTTENDEN shall be paid a fee in the amount
of $8,000 payable upon delivery of the Pricing Recommendation
Letter referred to in paragraph 3 above.
5. MATERIAL FACTS.
Summit represents and warrants to CRUTTENDEN that at the time
the Registration Statement and, at the time the Prospectus is
filed with the Commission (including any preliminary
prospectus and the form of prospectus filed with the
Commission pursuant to Rule 424(b)) and at all times
subsequent thereto, to and including the date on which payment
for, and delivery of, the Preferred Stock to be sold in the
Offering is made by the underwriter or underwriters, as the
case may be, 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 said 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.
(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 Closing 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 or 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 it, a
reasonable number of copies of any amendment or
amendments or a supplement or supplements to the
Prospectus (in form and substance satisfactory to
CRUTTENDEN) which will amend or supplement the
Prospectus so that as amended or supplemented it will
not contain any untrue statement of a material fact or
omit
to state a material fact necessary to make the
statements therein in light of the circumstances
existing at the time the Prospectus is delivered to a
purchaser, not misleading.
(h) Summit hereby warrants and represents that it will
offer the Preferred Stock in accordance with the
pricing formula that is set forth in Schedules "A" and
"B" which are incorporated by reference herein.
(i) All representations, warranties and agreements
contained in this Agreement, or contained in
certificates of officers of Summit submitted pursuant
hereto, shall remain operative and in full force and
effect, surviving the date of this Agreement.
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 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 Post Effective Amendment 1 to the
Registration Statement. 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.
7. INDEMNIFICATION.
(a) Subject to the conditions set forth below, and in
addition to any rights of indemnification and
contribution to which CRUTTENDEN may be entitled pursuant
to any agreement among underwriters, underwriting
agreement or otherwise, and to the extent allowed by law,
Summit hereby agrees that it will indemnify and hold
CRUTTENDEN and each person controlling, controlled by or
under common control with CRUTTENDEN within the meaning
of Section 15 of the Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or
the rules and regulations thereunder (individually, an
"Indemnified Person") harmless from and against any and
all loss, claim, damage, liability, cost or expense
whatsoever to which such Indemnified Person may become
subject under the Act, the Exchange Act, or other federal
or state statutory law or regulation, at common law or
otherwise, arising out of, based upon, or in any way
related or attributed to (i) this Agreement, (ii) any
untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or
Prospectus or any other filing, report, document, release
or communication, whether oral or written, referred to in
paragraph 5 hereof or the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, (iii) any application or other document
executed by Summit or based upon written information
furnished by Summit filed in any jurisdiction in order to
qualify the Preferred Stock under the securities or Blue
Sky laws thereof, or the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or (iv) the breach of any representation or
warranty made by Summit in this Agreement. Summit further
agrees that upon demand by an Indemnified Person at any
time or from
time to 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 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) 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
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.
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.
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.
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.
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 Xxxx Incorporated at 00000 Xxx Xxxxxx, Xxxxx 000,
Xxxxxx, XX 00000, Attention: Xxxxx Xxxx and (b) if to Summit
or Metropolitan Investment Securities, Inc., at 000 X. Xxxxxxx
Xxx., Xxxxxxx, XX 00000, Attention: Xxxxx X. Xxxxxxx,
Assistant Corporate Counsel.
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.
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:
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Xxx Xxxxxx, President
METROPOLITAN INVESTMENT SECURITIES, INC.
By:
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Xxxxx Xxxxxxx, Secretary
CRUTTENDEN XXXX INCORPORATED
By:
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Xxxxx Xxxx, Vice President, Corporate Finance
SCHEDULE A
Summit Securities, Inc.
The opinion of CRUTTENDEN is conditioned upon Summit's undertaking to
maintain the distribution rate of the Preferred Stock in accordance with the
formula set forth below:
Notwithstanding anything to the contrary herein the Applicable Rate for
any monthly distribution period shall not, in any event, be less than 6% or
greater than 14% per annum. The Board of Directors may, however, by resolution,
authorize distributions in excess of the Applicable Rate. The Applicable Rate
for any monthly distribution period shall be the highest of the Treasury Xxxx
Rate, the Ten Year Constant Maturity Rate and the Twenty Year Constant Maturity
Rate (each as defined in the Preferred Stock Authorizing Resolution) plus one
half of one percentage point for such distribution period. In the event that the
Company determines in good faith that for any reason one or more of such rates
cannot be determined for any distribution period, then the Applicable Rate for
such period shall be the higher of whichever of such rates can be so determined.
SCHEDULE B
Summit Securities, Inc.
VARIABLE RATE, CUMULATIVE PREFERRED STOCK, SERIES S-3
PRICING
For Distributions Payable On:
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Distributions Record Date:
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Applicable Effective Resultant
Date Date Average Rate Rate* Rate
3 Mo Treasury Xxxx --------------------- +.5% +2% ---------
10 Yr Constant Rate --------------------- +.5% +2% ---------
20 Yr Constant Rate --------------------- +.5% +2% ---------
HIGHEST RESULTANT RATE:
-----------------------------
MONTHLY DISTRIBUTION PER SHARE:
----------------------
(Highest applicable rate divided by 12)
As resolved by the Board of Directors, distribution will be deemed
declared on the 1st day of each month, payable on the 20th of each month to the
holders of record on the 5th of each month.
* Includes any distribution authorized by the Board in excess of the Applicable
Rate.
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Authorized Signature
