<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 2000
REGISTRATION NO.
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C>
METROPOLITAN FINANCIAL CORP. METROPOLITAN CAPITAL TRUST II
(Exact name of Registrant as specified in its (Exact name of Registrant as specified in its
charter) charter)
OHIO DELAWARE
(State or other jurisdiction of incorporation or (State or other jurisdiction of incorporation or
organization) organization)
34-1109469 34-7091236
(I.R.S. Employer Identification Number) (I.R.S. Employer Identification Number)
</TABLE>
6001 LANDERHAVEN DRIVE
MAYFIELD HEIGHTS, OHIO 44124
(440) 646-1111
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
KENNETH T. KOEHLER
PRESIDENT, ASSISTANT SECRETARY AND ASSISTANT TREASURER
METROPOLITAN FINANCIAL CORP.
6001 LANDERHAVEN DRIVE
MAYFIELD HEIGHTS, OHIO 44124
(440) 646-1111
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
PAUL N. HARRIS, ESQ.
THOMPSON HINE & FLORY LLP
3900 KEY CENTER
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114
(216) 566-5500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES TO BE AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
9.50% Trust Preferred Securities
of Metropolitan Capital Trust II 100,000 $5.52 $552,000 $145.73
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Metropolitan Financial Corp.
Guarantee with respect to the
Trust Preferred Securities N/A N/A N/A N/A
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Total 100,000 $5.52 $552,000 $145.73
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act, based on the average
of the high and low bids reported for Metropolitan Capital Trust II
preferred securities on the Nasdaq Stock Market's National Market on May 10,
2000.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE> 2
PROSPECTUS
METROPOLITAN FINANCIAL CORP.
METROPOLITAN CAPITAL TRUST II
100,000
9.50% TRUST PREFERRED SECURITIES
Ryan, Beck & Co., Inc., the selling security holder, is offering 100,000
preferred securities of Metropolitan Capital Trust II for its own account.
Neither Metropolitan Financial Corp. nor Trust II will receive any of the
proceeds from the sales of preferred securities by the selling security holder.
The selling security holder acquired 1.6 million preferred securities in a
public offering by Metropolitan and Trust II in May 1999. The selling security
holder was the managing underwriter in the public offering and distributed
substantially all of the preferred securities in that offering. The selling
security holder desires to resell 100,000 of the preferred securities it
acquired in its capacity as a dealer for the public offering. The 100,000
preferred securities represent unsold allotment securities from the public
offering. In order to enable the selling security holder to publicly sell such
preferred securities, Metropolitan and Trust II have agreed to register 100,000
preferred securities of Trust II. The selling security holder may sell its
preferred securities from time to time, either in ordinary brokerage
transactions on the Nasdaq Stock Market's National Market, or in private
transactions at market or negotiated prices. The selling security holder has
sole discretion as to whether and on what terms to sell its preferred
securities.
The preferred securities are listed on the Nasdaq Stock Market's National
Market under the symbol "METFO." On May 12, 2000, the average of the high and
low bids of Trust II's preferred securities on the Nasdaq Stock Market's
National Market was $5.563.
INVESTING IN THE PREFERRED SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THESE SECURITIES ARE NOT DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS
OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENTAL AGENCY.
The date of this Prospectus is May 15, 2000
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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PAGE
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SUMMARY..................................................... 1
RISK FACTORS................................................ 3
FORWARD-LOOKING STATEMENTS.................................. 7
PRICE RANGE OF PREFERRED SECURITIES......................... 7
RATIO OF EARNINGS TO FIXED CHARGES.......................... 8
THE SELLING SECURITY HOLDER................................. 8
USE OF PROCEEDS............................................. 8
PLAN OF DISTRIBUTION........................................ 8
DESCRIPTION OF THE PREFERRED SECURITIES..................... 9
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES........... 20
DESCRIPTION OF THE GUARANTEE................................ 29
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES, THE EXPENSE AGREEMENT AND THE
GUARANTEE................................................. 32
LEGAL MATTERS............................................... 33
EXPERTS..................................................... 33
WHERE YOU CAN FIND MORE INFORMATION......................... 34
</TABLE>
<PAGE> 4
SUMMARY
This summary highlights information contained in this prospectus. This
summary is not complete and does not contain all the information that you should
consider before investing in the preferred securities. We urge you to read the
entire prospectus carefully.
METROPOLITAN FINANCIAL CORP.
We are a savings and loan holding company. Our primary operating subsidiary
is Metropolitan Bank & Trust Company. Metropolitan Bank operates 22 full service
retail banking offices that primarily serve Northeastern Ohio.
Our executive office is located at 6001 Landerhaven Drive, Mayfield
Heights, Ohio 44124, and our telephone number is (440) 646-1111.
Operating Strategy. Our strategy is to maximize long-term profitability by
increasing our assets. We seek to maintain strong growth by:
- Continuing to focus on the origination and purchase of multifamily
and commercial real estate loans which provide higher yields than
one-to four-family residential loans;
- Building a portfolio of business and consumer loans which provide
higher yields and shorter maturities than one-to four-family
residential loans;
- Keeping loan losses to a low level;
- Increasing deposits from customers through marketing initiatives and
continuing to open new branches;
- Supplementing customer deposit growth with borrowings and deposits
we primarily receive from other financial institutions; and
- Re-investing our earnings in Metropolitan Bank and raising
additional capital when appropriate.
Recent Results. As a result of this strategy, our assets have increased
from $479.4 million at December 31, 1994, to $1.6 billion at December 31, 1999,
an annual compound growth rate of 27.4%. Our net income has increased over the
same period from $3.4 million for 1994 to $4.5 million for 1999.
Market Area. Metropolitan Bank originates multifamily and commercial real
estate loans primarily in Ohio, Southeastern Michigan, Central and Northern New
Jersey, Northern Kentucky, Western Pennsylvania and California, and purchases
them in other areas of the country.
Metropolitan Bank's Loan Portfolio. At December 31, 1999, our loan
portfolio totaled $1.19 billion. Of this amount:
- $292.0 million, or 23.3%, were multifamily loans;
- $247.5 million, or 19.7%, were commercial real estate loans; and
- $295.0 million, or 23.5%, were residential real estate loans.
We intend to continue to focus on originating and purchasing adjustable
rate, and to a lesser degree fixed rate, multifamily loans. We also plan to
continue to add commercial real estate loans to our portfolio through purchases
and, to a lesser extent, through originations.
METROPOLITAN CAPITAL TRUST II
We formed Metropolitan Capital Trust II to:
- issue and sell its preferred securities to the public;
- issue and sell its common securities to us; and
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<PAGE> 5
- use the proceeds from the sale of its preferred securities and
common securities to purchase 9.50% junior subordinated debentures
from us.
The executive office and telephone number of Trust II are the same as ours.
THE OFFERING
SECURITIES OFFERED............... Preferred securities of Trust II owned by
Ryan, Beck & Co., Inc., the selling
security holder.
NUMBER OF SECURITIES OFFERED..... Since the selling security holder may sell
all, some or none of the preferred
securities being offered by this
prospectus, no estimate can be made of the
number of preferred securities that the
selling security holder will offer.
However, the number of offered securities
will not exceed 100,000.
NASDAQ STOCK MARKET SYMBOL....... METFO
USE OF PROCEEDS.................. The selling security holder will sell the
preferred securities on its own behalf, at
a time and manner of its individual
choosing. Neither Metropolitan nor Trust II
will receive any proceeds from those sales.
RISK FACTORS..................... We urge you to read carefully the "Risk
Factors" section of this prospectus,
beginning on page 3, and the rest of this
prospectus.
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<PAGE> 6
RISK FACTORS
An investment in the preferred securities involves a number of risks. We
urge you to read all of the information contained in this prospectus. In
addition, we urge you to consider carefully the following risk factors in
evaluating us, our business and Trust II before you purchase the preferred
securities offered by this prospectus.
Trust II used the proceeds it received from the May 1999 public offering to
purchase from us $16.0 million in aggregate principal amount of junior
subordinated debentures issued by us. Because Trust II will rely on the payments
it receives on the junior subordinated debentures to fund all payments on the
preferred securities, and because Trust II may distribute the junior
subordinated debentures in exchange for the preferred securities, purchasers of
the preferred securities are making an investment decision that relates to the
junior subordinated debentures as well as the preferred securities. We also have
issued a guarantee of Trust II's obligations under the preferred securities.
Purchasers should carefully review the information in this prospectus about the
preferred securities, the junior subordinated debentures and the guarantee.
RISK FACTORS RELATING TO METROPOLITAN'S BUSINESS
STATUTORY RESTRICTIONS ON BANK DIVIDENDS COULD LIMIT THE AMOUNTS METROPOLITAN
BANK MAY PAY TO US AND OUR ABILITY TO MAKE PAYMENTS ON OUR DEBT.
As a holding company, we conduct our operations mainly through our
subsidiaries. Other than our investing and financing activities, our principal
source of cash is dividends Metropolitan Bank pays to us. If Metropolitan Bank
is unable to pay dividends to us, we may be unable to make interest or principal
payments on our debt, including payments on the junior subordinated debentures.
Various statutory provisions could restrict the amount of dividends Metropolitan
Bank can pay to us. For example, Metropolitan Bank operates with lower capital
ratios than most other banks and, as a result, faces a higher risk of falling
below regulatory capital requirements. If Metropolitan Bank becomes
undercapitalized, Metropolitan Bank will have to comply with increased
restrictions on the payment of dividends and may lose its ability to pay
dividends.
DECLINE IN REAL ESTATE VALUES, PARTICULARLY IN OHIO, COULD REDUCE METROPOLITAN
BANK'S INCOME
The value of Metropolitan Bank's real estate collateral could be adversely
affected by downturns in the real estate markets where it conducts its business.
A decline in real estate values, particularly in Ohio, would reduce the value of
the real estate collateral securing Metropolitan Bank's loans and increase the
risk that Metropolitan Bank would incur losses if borrowers defaulted on their
loans. At December 31, 1999, real estate secured approximately 79% of
Metropolitan Bank's loans. At December 31, 1999, properties located in Ohio
secured approximately 53% of the principal amount of Metropolitan Bank's real
estate loans.
METROPOLITAN BANK'S EMPHASIS ON MULTIFAMILY AND COMMERCIAL REAL ESTATE LOANS
INCREASES THE POSSIBILITY OF LOAN LOSSES
We may incur significant losses because approximately 23% of Metropolitan
Bank's loans are secured by multifamily properties and approximately 20% of
Metropolitan Bank's loans are secured by commercial real estate. Loans secured
by multifamily properties and commercial real estate are generally larger, and
are considered to have a higher risk of loss, than loans secured by one- to
four-family residences. Significant losses on loans secured by multifamily
properties are possible because the cash flows from multifamily properties
securing the loans may become inadequate to service the loan payments.
Significant losses on loans secured by commercial real estate are possible
because the repayment of loans secured by commercial real estate typically
depends upon the successful operation of the business activities being conducted
at the commercial real estate. Metropolitan's nonperforming assets, which are
secured primarily by multifamily and commercial real estate collateral, are
higher than its regional and national peers.
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<PAGE> 7
ROBERT M. KAYE CONTROLS METROPOLITAN AND HIS INTERESTS COULD BE DIFFERENT THAN
YOUR INTERESTS
Mr. Robert M. Kaye of Rumson, New Jersey, owns approximately 75% of the
outstanding shares of our common stock and has control of our company. He is
able to elect or remove all of our directors and determine the outcome of any
issue submitted to a vote of the shareholders, such as:
- approval of mergers or other business combinations;
- issuance of any additional common stock or other equity securities;
and
- issuance of any debt other than in the ordinary course of business.
Mr. Kaye's ability to reject an unsolicited bid for Metropolitan or any
other change in control could have an adverse effect on the market price of our
common stock.
IF LOAN LOSSES EXCEED OUR ALLOWANCE FOR LOAN LOSSES, OUR INCOME COULD BE REDUCED
We maintain an allowance for losses on loans at a level we consider
adequate to cover currently anticipated losses. The amount of future losses is
vulnerable to changes in economic, operating, and other conditions, including
changes in interest rates. These changes may be beyond our control. We cannot
assure you that this allowance will be adequate to cover actual losses. If our
allowance is inadequate, our results of operations could be adversely affected.
AN INCREASE IN INTEREST RATES COULD REDUCE INCOME
Rising interest rates could adversely affect our business by reducing our
net income. This is because Metropolitan Bank has more short-term
interest-bearing liabilities than it has short-term interest-earning assets.
Consequently, an increase in interest rates could increase our interest expense
without an offsetting increase in our interest income.
CHANGES IN REGULATIONS COULD ADVERSELY AFFECT THE GROWTH OF OUR ASSETS
We are governed by significant federal and state regulation and supervision
which is primarily for the benefit and protection of our customers and not for
the benefit of our investors. Laws, regulations and policies currently affecting
us and our subsidiaries may change at any time. For example, Congress has
considered legislation that may result in thrift institutions like Metropolitan
Bank being forced to convert into state or national banks. If Congress enacts
this type of legislation, we could become a bank holding company and be subject
to the regulations of the Federal Reserve Board. These regulations impose
capital requirements. Metropolitan, as a savings and loan holding company, is
not currently subject to capital requirements. Therefore, our business may be
adversely affected by any future changes in laws, regulations or policies.
RISK FACTORS RELATING TO THE PREFERRED SECURITIES
HOLDERS OF OUR SENIOR INDEBTEDNESS WILL GET PAID BEFORE YOU GET PAID UNDER THE
GUARANTEE
Our obligations under the guarantee are unsecured and rank:
- junior in right of payment to all our senior indebtedness, and
- equal to our most senior preferred or preference stock, including
the $27.8 million aggregate principal amount of debentures we sold
during the second quarter of 1998 to Metropolitan Capital Trust I.
Our obligations under the junior subordinated debentures are unsecured and
rank junior in right of payment to all of our senior indebtedness and equal to
our other junior debt securities. The junior subordinated debentures also will
be effectively junior to all obligations of our subsidiaries.
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<PAGE> 8
The preferred securities, the junior subordinated debentures and the
guarantee do not limit our ability to incur additional indebtedness, including
indebtedness that ranks senior to the junior subordinated debentures and the
guarantee. See "Description of the Guarantee -- Status of the Guarantee" and
"Description of the Junior Subordinated Debentures -- Subordination."
IF METROPOLITAN BANK DOES NOT PAY DIVIDENDS TO US AND AS A RESULT WE ARE UNABLE
TO MAKE PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES, TRUST II WILL NOT BE
ABLE TO PAY DISTRIBUTIONS AND OTHER PAYMENTS ON THE PREFERRED SECURITIES AND THE
GUARANTEE WILL NOT APPLY
Trust II's ability to pay distributions on the preferred securities depends
upon our making timely payments on the junior subordinated debentures. In turn,
our ability to make payments on the junior subordinated debentures depends on
Metropolitan Bank paying dividends to us in amounts sufficient for us to service
our obligations. If we default on our obligations to pay principal and interest
on the junior subordinated debentures, Trust II will not have sufficient funds
to pay distributions on, or the $10 liquidation amount of, the preferred
securities.
If we default on our obligation, you will not be able to rely upon the
guarantee for payment because the guarantee only applies if we make a payment of
principal or interest on the junior subordinated debentures. Instead, you or the
property trustee will have to sue us to enforce the property trustee's rights
under the indenture relating to the junior subordinated debentures. See
"Description of the Guarantee."
IF WE DEFER DISTRIBUTIONS ON THE JUNIOR SUBORDINATED DEBENTURES, YOU WILL HAVE
TO INCLUDE INTEREST IN YOUR TAXABLE INCOME BEFORE YOU RECEIVE CASH
You will not receive distributions on the preferred securities if we defer
interest payments on the junior subordinated debentures. If this occurs, you
will have to include accrued interest in your income for United States federal
income tax purposes before you actually receive the cash distributions. In
addition, you would not receive the cash related to that income from Trust II if
you sell your preferred securities before the record date for the payment of any
deferred distribution, even if you held the preferred securities on the date
that the payments would normally have been paid.
If we are not in default on the payment of interest on the junior
subordinated debentures, we may defer interest payments on the junior
subordinated debentures one or more times for up to 20 consecutive quarters, but
not beyond the maturity date of the junior subordinated debentures. During an
interest deferral period, Trust II would defer distributions on the preferred
securities in the same amount. See "Description of the Preferred
Securities -- Distributions" and "Description of the Junior Subordinated
Debentures -- Right to Defer Interest Payment Obligation."
If we defer any interest payment on the junior subordinated debentures, the
preferred securities will likely trade at prices that do not fully reflect the
value of accrued but unpaid interest related to the underlying junior
subordinated debentures. If you sell your preferred securities during an
interest deferral period, you must treat any accrued but unpaid interest on the
junior subordinated debentures as ordinary income. You must also add the amount
of the accrued but unpaid interest to your adjusted tax basis in the preferred
securities. You will recognize a capital loss if the selling price is less than
your adjusted tax basis. Generally, you cannot apply capital losses to offset
ordinary income for United States federal income tax purposes.
IF WE DEFER DISTRIBUTIONS ON THE JUNIOR SUBORDINATED DEBENTURES, THE MARKET
PRICE OF THE PREFERRED SECURITIES MAY DECLINE
If we defer interest payments in the future, the market price of the
preferred securities will likely be adversely affected. Therefore, if you sell
your preferred securities during an interest deferral period, you may not
receive the same return on your investment as someone who continues to hold
their preferred securities. In addition, due to our right to defer interest
payments, the market price of the preferred securities may be more volatile than
the market prices of other similar securities that are not subject to optional
deferrals.
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THE PREFERRED SECURITIES MAY BE REDEEMED PRIOR TO MATURITY; YOU MAY BE TAXED ON
THE PROCEEDS AND YOU MAY NOT BE ABLE TO REINVEST THE PROCEEDS AT THE SAME OR A
HIGHER RATE OF RETURN
If a tax event, an investment company event or a capital treatment event
occurs and continues as described under the caption "Description of the Junior
Subordinated Debentures -- Redemption or Exchange" we may be able to redeem the
junior subordinated debentures in whole, but not in part, within 90 days
following the event. We may also redeem the preferred securities at our option
in whole or in part on or after June 30, 2004. We will not exercise our right of
redemption unless we have received any necessary prior regulatory approval and
are in compliance with the restrictions set forth in the indenture (the "1995
Notes Indenture") for our 9.625% subordinated notes maturing January 1, 2005
(the "1995 Notes").
If the junior subordinated debentures are redeemed, the preferred
securities will be redeemed at a redemption price equal to the $10 liquidation
amount, plus accumulated and unpaid distributions to the redemption date. Under
current United States federal income tax law, the redemption of the preferred
securities would be a taxable event to you. In addition, you may not be able to
reinvest the money you receive in the redemption at a rate that is equal to or
higher than the rate of return you received on the preferred securities. See
"Description of the Preferred Securities -- Redemption."
THE JUNIOR SUBORDINATED DEBENTURES MAY BE DISTRIBUTED TO THE HOLDERS OF THE
PREFERRED SECURITIES AND THE JUNIOR SUBORDINATED DEBENTURES MAY TRADE AT A LOWER
PRICE THAN WHAT YOU PAID FOR THE PREFERRED SECURITIES
We may dissolve Trust II at any time and distribute the junior subordinated
debentures to you in exchange for your preferred securities. We cannot predict
the market prices for the junior subordinated debentures that may be distributed
to you when Trust II is dissolved or liquidated. The junior subordinated
debentures may trade at a lower price than what you paid to purchase the
preferred securities in this offering.
If the junior subordinated debentures are distributed to the holders of
preferred securities if Trust II is liquidated, we will use our best efforts to
list the junior subordinated debentures on the Nasdaq Stock Market's National
Market or SmallCap Market or the stock exchanges on which the preferred
securities are then listed. However, we cannot assure you that the exchange will
approve the junior subordinated debentures for listing or that a trading market
will exist for the junior subordinated debentures.
Under United States federal income tax law, a distribution of junior
subordinated debentures upon the dissolution of Trust II would not be a taxable
event to you. If, however, Trust II were characterized as an association taxable
as a corporation at the time of the dissolution of Trust II, the distribution of
the junior subordinated debentures would constitute a taxable event to you. In
addition, any redemption of the preferred securities for cash would be a taxable
event to you.
IF YOU SELL YOUR PREFERRED SECURITIES BETWEEN RECORD DATES FOR DISTRIBUTION
PAYMENTS, YOU MAY HAVE TO INCLUDE ACCRUED BUT UNPAID DISTRIBUTIONS IN YOUR
TAXABLE INCOME
The preferred securities may trade at prices that do not fully reflect the
value of accrued but unpaid interest on the underlying junior subordinated
debentures.
If the Internal Revenue Service determines that the junior subordinated
debentures are subject to the original issue discount rules, and you dispose of
your preferred securities between record dates for any distribution payments,
you will have to include as ordinary income for United States federal income tax
purposes an amount equal to the accrued but unpaid interest on your
proportionate share of the interest on the junior subordinated debentures
through the date of your disposition. However, we believe that the junior
subordinated debentures are not subject to the original issue discount rules.
You will recognize a capital loss in the amount that the selling price is
less than your adjusted tax basis. Normally, you may not apply capital losses to
offset ordinary income for United States federal income tax purposes.
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WE GENERALLY WILL CONTROL TRUST II BECAUSE YOUR VOTING RIGHTS ARE VERY LIMITED;
YOUR INTERESTS MAY NOT BE THE SAME AS OUR INTERESTS
As a holder of preferred securities, you will have limited voting rights.
These voting rights will relate only to modifications of the preferred
securities and trust agreement and the exercise of Trust II's rights as holder
of the junior subordinated debentures and the guarantee. In general, only we, as
holder of Trust II's common securities, can appoint, remove or replace the
trustees under the trust agreement.
We and the trustees of Trust II may amend the trust agreement without your
consent, even if it adversely affects your interests as described under the
heading "Description of the Preferred Securities -- Removal of Trust II
Trustees" and "-- Voting Rights; Amendment of Trust Agreement."
YOU MAY HAVE DIFFICULTY SELLING YOUR PREFERRED SECURITIES IF AN ACTIVE TRADING
MARKET DOES NOT DEVELOP
The preferred securities are listed on the Nasdaq Stock Market's National
Market. We can make no assurances regarding the depth of the trading market for
the preferred securities and the ability of holders to sell their preferred
securities easily.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the Securities
Exchange Act of 1934. Some of the forward-looking statements in this prospectus
can be identified by the use of words such as "anticipates," "plans," "expects,"
"believes," and similar words. Forward-looking statements involve inherent risks
and uncertainties. A number of important facts could cause actual results to
differ materially from those in the forward-looking statements. These factors
include general economic conditions, interest rate environment, competitive
conditions in the financial services industry, changes in law, governmental
policies and regulations, and rapidly changing technology affecting financial
services. For a more detailed discussion of factors that could cause actual
results to differ, please see the discussion under "Risk Factors."
PRICE RANGE OF PREFERRED SECURITIES
The preferred securities are listed for trading on the Nasdaq Stock
Market's National Market under the symbol "METFO." The following table provides,
for the periods indicated, the high and low bid price for the preferred
securities as reported by the Nasdaq Stock Market's National Market.
<TABLE>
<CAPTION>
BID PRICE
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HIGH LOW
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<S> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Second Quarter.............................................. 10.375 9.875
Third Quarter............................................... 10.125 8.750
Fourth Quarter.............................................. 9.250 5.750
</TABLE>
The quotations set out above represent prices for the specific periods
indicated between dealers and do not include retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
The last reported bid price for the preferred securities on the Nasdaq
Stock Market's National Market on May 12, 2000 was $5.375.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth Metropolitan's consolidated ratios of
earnings to fixed charges for the periods indicated. For purposes of computing
the ratios of earnings to fixed charges, earnings represent income from
continuing operations before income taxes, extraordinary items and cumulative
effect of a change in accounting principle plus fixed charges. Fixed charges
represent total interest expense, including and excluding interest on deposits,
as applicable, as well as the interest component of rental expense.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1999 1998 1997 1996(1) 1995
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<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Including interest on deposits........... 1.09x 1.21x 1.22x 1.08x 1.21x
Excluding interest on deposits........... 1.35x 1.96x 2.18x 1.50x 2.59x
</TABLE>
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(1) Income from continuing operations before income taxes in 1996 includes a
$2.9 million one-time assessment to recapitalize the Savings Association
Insurance Fund.
THE SELLING SECURITY HOLDER
All of the preferred securities offered by this prospectus are owned by
Ryan, Beck & Co., Inc., a NASD member investment banking firm located in
Livingston, New Jersey. The selling security holder acquired these preferred
securities of Trust II in May 1999 when Metropolitan and Trust II completed a
public offering of 1.6 million preferred securities. The selling security holder
was the managing underwriter in the public offering. The selling security holder
acquired the preferred securities being offered in this prospectus in its
capacity as a dealer for the public offering. The 100,000 preferred securities
represent unsold allotment securities from the public offering. In order to
enable the selling security holder to sell its preferred securities publicly, we
and Trust II have agreed to register 100,000 preferred securities owned by the
selling security holder. Prior to this offering the selling security holder
owned 100,000 preferred securities (without consideration of any preferred
securities that the selling security holder may own from time to time in the
ordinary course of conducting its broker dealer operations). The selling
security holder was the managing underwriter in a public offering by
Metropolitan and Metropolitan Capital Trust I of 8.60% cumulative trust
preferred securities in April 1998.
USE OF PROCEEDS
The selling security holder will sell its preferred securities on its own
behalf, at a time and in a manner of its individual choosing. Neither
Metropolitan nor Trust II will receive any the proceeds from those sales.
PLAN OF DISTRIBUTION
The preferred securities offered in connection with this prospectus may be
sold from time to time by the selling security holder, or by pledgees, donees,
transferees or other successors in interest. Such sales may be made on one or
more stock exchanges or in the over-the-counter market or otherwise, at prices
and at terms then prevailing or at prices related to the then current market
price, or in negotiated transactions. The preferred securities may be sold in
one or more of the following: (a) a block trade in which the broker-dealer so
engaged will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker-dealer as principal and resale by such broker-dealer for its account
pursuant to this prospectus; (c) an exchange distribution in accordance with the
rules of such exchange; and (d) ordinary brokerage transactions and transactions
in which the broker solicits purchasers. In effecting sales, broker-dealers
engaged by the selling security holder may arrange for other broker-dealers to
participate in resales.
In connection with distribution of preferred securities offered by this
prospectus or otherwise, the selling security holder may enter into hedging
transactions with broker-dealers. In connection with such transactions,
broker-dealers may engage in short sales of preferred securities in the course
of hedging the positions they assume with the selling security holder. The
selling security holder may also sell preferred securities short and
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redeliver the preferred securities offered by this prospectus to close out such
short positions. The selling security holder may also enter into option or other
transactions with broker-dealers which require the delivery to the broker-dealer
of the preferred securities offered by this prospectus, which the broker-dealer
may resell or otherwise transfer pursuant to this prospectus. The selling
security holder may also loan or pledge the preferred securities offered by this
prospectus to a broker-dealer and the broker-dealer may sell the preferred
securities so loaned or upon default the broker-dealer may effect sales of the
pledged shares pursuant to this prospectus. The selling security holder may also
pledge preferred securities offered by this prospectus to a lender other than a
broker-dealer, and upon default such lender may sell the preferred securities so
pledged pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling security holder in
amounts to be negotiated in connection with the sale of preferred securities.
Such broker-dealers and any other participating broker-dealers may be deemed to
be "underwriters" within the meaning of the Securities Act in connection with
such sales and any such commission, discount or concession may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition, any
securities covered by the prospectus which qualify for sale under Rule 144 under
the Securities Act may be sold pursuant to Rule 144 rather than pursuant to this
prospectus.
All costs, expenses and fees in connection with the registration of the
preferred securities offered by this prospectus shall be borne by Metropolitan.
Commissions and discounts, if any, attributable to the sales of preferred
securities offered by this prospectus will be borne by the selling security
holder. The selling security holder may agree to indemnify any broker-dealer or
agent that participates in transactions involving sales of preferred securities
against certain liabilities, including liabilities arising under the Securities
Act.
DESCRIPTION OF THE PREFERRED SECURITIES
The following is a summary of the material terms and provisions of the
preferred securities. This summary is not complete and is subject to, and
qualified in its entirety by reference to, the trust agreement (the "Trust
Agreement") among Metropolitan, as depositor, Wilmington Trust Company, as
property trustee (the "Property Trustee") and the administrative trustees of
Trust II (the "Administrative Trustees"), and the Trust Indenture Act.
Metropolitan has incorporated by reference the form of the trust agreement as an
exhibit to the registration statement of which this prospectus is a part. Unless
we indicate otherwise, all references to Metropolitan appearing under this
caption "Description of the Preferred Securities" and under the caption
"Description of the Junior Subordinated Debentures" mean Metropolitan Financial
Corp. excluding its consolidated subsidiaries.
DISTRIBUTIONS
The preferred securities represent preferred undivided beneficial interests
in the assets of Trust II. Trust II pays preferential cumulative cash
distributions ("Distributions") on the preferred securities at the annual rate
of 9.50% of the stated liquidation amount of $10. The Trust pays the dividends
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, to the holders of the preferred securities on the relevant record dates.
The record date is the 15th day of the month in which the relevant Distribution
payment date occurs. Distributions accumulate from the date of the initial
issuance of the preferred securities and are cumulative. The first Distribution
payment date for the preferred securities was June 30, 1999. The Trust computes
the amount of Distributions payable for any period on the basis of a 360-day
year of twelve thirty-day months. If Distributions on the preferred securities
are payable on a date that is not a business day, Trust II pays such
Distributions on the next day that is a business day. Trust II will not pay any
additional Distributions or other payment as a result of the delay. If, however,
that business day is in the next calendar year, Trust II will make such payment
on the immediately preceding business day. That payment will have the same force
and effect as if it were made on the date the payment was originally payable
(each date on which Distributions are payable in accordance with the foregoing,
a "Distribution Date"). A "business day" means any day other than a Saturday or
a Sunday, or a day on which banking institutions in the City of New York are
authorized or required by law or executive order to remain closed or a day on
which the principal corporate trust office of the Property Trustee or the
trustee under the Indenture (the "Indenture") between Metropolitan and
Wilmington Trust Company, as trustee, is closed for business.
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If Metropolitan is not in default, it may, under the Indenture, defer the
payment of interest on the junior subordinated debentures at any time or from
time to time for a period not exceeding 20 consecutive quarters with respect to
each deferral period (each, an "Extension Period"). No Extension Period may
extend beyond the stated maturity date of the junior subordinated debentures. As
a result of any deferral of interest, Trust II will defer quarterly
Distributions on the preferred securities during the Extension Period.
Distributions to which holders of the preferred securities are entitled will
accumulate additional Distributions at the rate per annum of 9.50%, compounded
quarterly from the relevant payment date for such Distributions. The term
"Distributions" as used in this prospectus includes any such additional
Distributions.
The terms of the Indenture limit Metropolitan's ability to make certain
payments during any Extension Period. Metropolitan may not make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem, any
debt securities of Metropolitan that rank equal in priority with or junior in
right of payment to the junior subordinated debentures. Metropolitan may not
make any guarantee payments under any guarantee by Metropolitan of the debt
securities of any of its subsidiaries if such guarantee ranks equal in priority
with or junior in right of payment to the junior subordinated debentures other
than payments pursuant to the preferred securities guarantee agreement.
Metropolitan may not declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment relating to, any of
Metropolitan's capital stock other than:
- the reclassification of any class of Metropolitan's capital stock
into another class of capital stock;
- dividends or distributions payable in shares of common stock of
Metropolitan;
- any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of shares under any
such plan in the future or the redemption or repurchase of any such
rights pursuant thereto;
- payments under the guarantee; and
- purchases of shares of common stock related to the issuance of
shares of common stock or rights under any of Metropolitan's benefit
plans for its directors, officers or employees.
Additionally, during any Extension Period, Metropolitan may not redeem,
purchase or acquire less than all the outstanding junior subordinated debentures
or any of the preferred securities.
During any Extension Period, interest would continue to accrue and holders
of the preferred securities would be required to accrue interest income for
United States federal income tax purposes, even though such holders would not
receive current cash distributions with which to pay tax, if any, arising with
respect to such accrued interest income.
Before the termination of any Extension Period, Metropolitan may further
defer the payment of interest on the junior subordinated debentures if no
Extension Period exceeds twenty consecutive quarters or extends beyond the
stated maturity date of the junior subordinated debentures. Upon the termination
of any such Extension Period and the payment of all accrued and unpaid interest
(together with interest thereon at the rate of 9.50%, compounded quarterly, to
the extent permitted by law), Metropolitan may begin a new Extension Period.
There is no limitation on the number of times that Metropolitan may begin an
Extension Period. See "Description of the Junior Subordinated
Debentures -- Right to Defer Interest Payment Obligation."
The Trust has invested the proceeds from the issuance and sale of its
common securities and the preferred securities in the junior subordinated
debentures. The revenue available for distribution to holders of Trust II's
preferred securities will be limited to payments under the junior subordinated
debentures. See "Description of the Junior Subordinated Debentures." If
Metropolitan does not make interest payments on the junior subordinated
debentures, the Property Trustee (as defined herein) will not have funds
available to pay Distributions on the preferred securities. Metropolitan will
guarantee the payment of Distributions on a limited basis as described in this
prospectus under "Description of the Guarantee."
Metropolitan has no current intention of deferring payments of interest on
the junior subordinated debentures.
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SUBORDINATION OF TRUST II'S COMMON SECURITIES
Trust II pays Distributions on, and will pay the Redemption Price (as
defined herein) of, its common securities and the preferred securities, as
applicable, pro rata based on their liquidation amount. However, in general, if
Metropolitan is in default under the Indenture on any Distribution Date or
Redemption Date, Trust II will not make any Distribution on, or pay the
Redemption Price of, any of its common securities, or make any other payment on
account of the redemption, liquidation or other acquisition of its common
securities. In the event of such a default, Trust II may make such payments only
under limited circumstances. In the case of payment of Distributions, Trust II
must make payment in full in cash of all accumulated and unpaid Distributions on
all of the outstanding preferred securities for all Distribution periods
terminating on or prior to the relevant date. In the case of payment of the
Redemption Price, Trust II must pay the full amount of the Redemption Price on
all of the outstanding preferred securities then called for redemption. In
addition, the Property Trustee must first apply all available funds to the
payment in full in cash of all Distributions on, or Redemption Price of, the
preferred securities then due and payable.
If an event of default occurs under the Trust Agreement as a result of an
event of default under the Indenture, Metropolitan, as holder of Trust II's
common securities, will be deemed to have waived any right to act with respect
to any such event of default under the Trust Agreement until the effect of all
such defaults with respect to the preferred securities are cured, waived or
otherwise eliminated. Until all such events of default under the Trust Agreement
are cured, waived or otherwise eliminated, the Property Trustee will act solely
on behalf of the holders of the preferred securities and not on behalf of
Metropolitan as holder of Trust II's common securities, and only the holders of
the preferred securities will be able to direct the Property Trustee to act on
their behalf.
REDEMPTION
The preferred securities are subject to mandatory redemption, in whole or
in part, upon repayment of the junior subordinated debentures at their stated
maturity date or earlier redemption as provided in the Indenture. The Property
Trustee will apply the proceeds from the repayment or redemption to redeem
preferred securities with a liquidation value equal to the principal amount of
the junior subordinated debentures so redeemed. The Property Trustee will give
not less than thirty nor more than sixty days' notice before the date fixed for
repayment or redemption. The Property Trustee will redeem the preferred
securities at a redemption price equal to the aggregate liquidation amount of
the preferred securities plus accumulated and unpaid Distributions thereon (the
"Redemption Price") to the date of redemption (the "Redemption Date"). For a
description of the stated maturity and redemption provisions of the junior
subordinated debentures see "Description of the Junior Subordinated
Debentures -- General" and "-- Redemption or Exchange."
Metropolitan may redeem the junior subordinated debentures before maturity
on or after June 30, 2004, in whole at any time, or in part from time to time.
As a result, Metropolitan can cause a mandatory redemption of an equivalent
liquidation value of the preferred securities. Any time that a Tax Event, an
Investment Company Event or a Capital Treatment Event (each as defined herein)
occurs and continues, Metropolitan may redeem the junior subordinated debentures
in whole but not in part. As a result, Metropolitan can cause a mandatory
redemption of the preferred securities in whole but not in part. Any redemption
before the stated maturity date of the junior subordinated debentures will be
subject to prior regulatory approval, if then required, under applicable capital
guidelines or regulatory policies, and the restrictions in the 1995 Notes
Indenture. See "Description of the Junior Subordinated Debentures -- Redemption
or Exchange."
REDEMPTION PROCEDURES
The Trust will redeem preferred securities at the Redemption Price by using
proceeds from the contemporaneous redemption of a liquidation value equal to the
principal amount of the junior subordinated debentures. The Trust will redeem
the preferred securities and pay the Redemption Price on each Redemption Date
only to the extent that Trust II has funds on hand available for the payment of
the Redemption Price.
If Trust II gives a notice of redemption relating to the preferred
securities, then, by 10:00 a.m., New York City time, on the Redemption Date, the
Property Trustee will deposit irrevocably with Depository Trust Company ("DTC")
funds sufficient to pay the applicable Redemption Price. The Property Trustee
will also give DTC
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irrevocable instructions and authority to pay the Redemption Price to holders
when the holders surrender their certificates evidencing the preferred
securities. Despite any redemption, Trust II will make Distributions payable on
or before the Redemption Date for the preferred securities being redeemed to
recordholders of the preferred securities on the relevant record dates. If Trust
II has given a notice of redemption and deposited funds, then, upon the date of
such deposit, all rights of the holders of preferred securities being redeemed
will terminate, except for their right to receive the Redemption Price without
interest. In addition, upon the date of such deposit, such preferred securities
will cease to be outstanding.
If any date fixed for redemption of the preferred securities is not a
business day, Trust II will pay the Redemption Price on the next day which is a
business day. The Trust will not pay any interest or other payment as a result
of such delay. If that business day falls in the next calendar year, Trust II
will make the payment on the immediately preceding business day. If either Trust
II or Metropolitan improperly withholds or refuses to pay the Redemption Price
on the preferred securities being redeemed, under the guarantee, the
Distributions on the preferred securities will continue to accrue. These
Distributions will accrue at the then applicable rate, from the Redemption Date
originally established by Trust II for such preferred securities to the date
such Redemption Price is actually paid. See "Description of the Guarantee."
Under such circumstances, the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price.
Subject to applicable law, Metropolitan or its subsidiaries may at any time
and from time to time purchase outstanding preferred securities by private
agreement.
Payment of the Redemption Price on the preferred securities and any
distribution of the junior subordinated debentures to holders of the preferred
securities will be made to the recordholders as they appear on the register for
the preferred securities on the relevant record date. The relevant record date
will be one business day before the relevant Redemption Date. However, in the
event the preferred securities do not remain in book entry form, the relevant
record date will be the date at least 15 days before the Redemption Date or
liquidation date, as applicable.
If Trust II redeems less than all of its common securities and the
preferred securities on a Redemption Date, then the aggregate liquidation amount
of Trust II's common securities and preferred securities to be redeemed will be
allocated pro rata to its common securities and the preferred securities based
upon the relative liquidation amounts of such classes. The Property Trustee will
select the particular preferred securities to be redeemed within 60 days of the
Redemption Date, or, if the preferred securities are then held in the form of a
global preferred security, in accordance with DTC's customary procedures. The
Property Trustee will promptly notify the trust registrar in writing of the
preferred securities selected for redemption and, in the case of any preferred
securities selected for partial redemption, the liquidation amount to be
redeemed. For all purposes of the Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of the preferred securities
will relate, in the case of the preferred securities redeemed or to be redeemed
only in part, to the portion of the aggregate liquidation amount of the
preferred securities which has been or is to be redeemed.
The Trustee will mail notice of any redemption at least thirty but not more
than sixty days before the Redemption Date to each holder of the preferred
securities to be redeemed at its registered address. Unless Metropolitan
defaults in payment of the Redemption Price on the junior subordinated
debentures, interest will cease to accrue, on and after the Redemption Date, on
the junior subordinated debentures or portions of those debentures called for
redemption.
LIQUIDATION OF TRUST II AND DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES
TO HOLDERS
Metropolitan may at any time dissolve Trust II. After satisfaction of the
liabilities of creditors of Trust II as provided by law, Metropolitan may cause
junior subordinated debentures to be distributed to the holders of the preferred
securities and Trust II's common securities in exchange for those securities
upon liquidation of Trust II.
After the liquidation date for any distribution of the junior subordinated
debentures for preferred securities, those preferred securities will no longer
be deemed to be outstanding. DTC or its nominee, as the registered holder of
preferred securities, will receive a registered global certificate or
certificates representing the junior subordinated debentures to be delivered
upon the distribution with respect to preferred securities held by DTC or
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its nominee. Any certificates representing the preferred securities not held by
DTC or its nominee will be deemed to represent junior subordinated debentures
having a principal amount equal to the stated liquidation amount of the
preferred securities and bearing accrued and unpaid interest in an amount equal
to the accumulated and unpaid Distributions on such series of the preferred
securities until such certificates are presented to the Administrative Trustees
or their agent for transfer or reissuance.
Under United States federal income tax law and interpretations, a
distribution of the junior subordinated debentures should not be a taxable event
to holders of the preferred securities. However, if there is a change in law, a
change in legal interpretation, a Tax Event or other circumstances, the
distribution could be a taxable event to holders of the preferred securities.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Trust Agreement, Trust II will automatically dissolve at
the end of its term. Trust II will also dissolve if any of the following events
occurs:
- the entry of an order for the dissolution of Trust II by a court of
competent jurisdiction;
- certain events of bankruptcy, dissolution or liquidation of
Metropolitan, subject in certain instances to any such event
remaining in effect for a period of ninety consecutive days;
- the distribution of a liquidation value equal to the principal
amount of the junior subordinated debentures to the holders of its
preferred securities, if Metropolitan, as depositor, has given
written direction to the Property Trustee to dissolve Trust II
(which direction is optional and wholly within the discretion of
Metropolitan, as depositor); and
- redemption of all of the preferred securities as described under
"-- Redemption."
If an early dissolution occurs as described in one of the first three
clauses listed above, the Trust II trustees will liquidate Trust II as quickly
as possible by first satisfying the liabilities to creditors of Trust II, if
any, as provided by law, and then by distributing to the holders of the
preferred securities an equivalent liquidation value of the junior subordinated
debentures. If the Administrative Trustees determine this distribution is not
practical, after satisfaction of liabilities to creditors of Trust II, if any,
as provided by law, holders of the preferred securities will receive out of the
assets of Trust II available for distribution to holders, an amount equal to the
liquidation amount plus accrued and unpaid Distributions to the date of payment
(such amount being the "Liquidation Distribution"). If the Liquidation
Distribution can be paid only in part because Trust II has insufficient assets
available to pay the Liquidation Distribution in full, then Trust II will pay
the amounts due on a pro rata basis. Metropolitan, as the holder of Trust II's
common securities, will receive distributions upon any such liquidation pro rata
with the holders of the preferred securities. However, if Metropolitan is in
default under the Indenture, the preferred securities will have a priority over
Trust II's common securities with respect to any such distributions.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the preferred securities
and Trust II's common securities issued under the Trust Agreement. Each event
constitutes an Event of Default regardless of the reason for the Event of
Default and whether it is voluntary or involuntary or effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body:
- the occurrence of an event of default under the Indenture (see
"Description of the Junior Subordinated Debentures -- Debenture
Events of Default"); or
- default in the payment of any Distribution when it becomes due and
payable, and the continuation of the default for a period of 30
days; or
- default in the payment of any Redemption Price when it becomes due
and payable; or
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- default in the performance, or breach, in any material respect, of
any covenant or warranty of any trustee under the Trust Agreement
(other than a covenant or warranty a default in the performance of
which or the breach of which is dealt with in the clauses listed
above), and continuation of such default or breach for a period of
60 days after there has been given, by registered or certified mail,
to the defaulting trustee or trustees by the holders of at least 25%
in aggregate liquidation amount of the outstanding preferred
securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Trust Agreement; or
- the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by Metropolitan to
appoint a successor Property Trustee within 60 days of such event of
bankruptcy or insolvency.
Within 90 days after the occurrence of any Event of Default actually known
to the Property Trustee, the Property Trustee will send notice of the Event of
Default to the holders of the preferred securities, the Administrative Trustees
and Metropolitan, as depositor, unless the Event of Default has been cured or
waived. Metropolitan, as depositor, and the Administrative Trustees are required
to file annually with the Property Trustee a certificate stating whether or not
they are in compliance with all the conditions and covenants applicable to them
under the Trust Agreement.
If an event of default under the Indenture has occurred and is continuing,
the preferred securities will have a preference over Trust II's common
securities as described above. See "-- Subordination of Trust II's Common
Securities." The holders of the preferred securities cannot accelerate the
payment of the preferred securities due to an event of default.
REMOVAL OF TRUST II TRUSTEES
Unless an event of default under the Indenture has occurred and is
continuing, the holder of Trust II's common securities may remove any trustee
under the Trust Agreement at any time. If an event of default under the
Indenture has occurred and is continuing, the holders of a majority in
liquidation amount of the outstanding preferred securities may remove the
Property Trustee at such time. The holders of the preferred securities will not
have the right to vote to appoint, remove or replace the Administrative
Trustees. The voting rights of the Administrative Trustees are vested
exclusively in Metropolitan as the holder of Trust II's common securities. No
resignation or removal of any trustee under the Trust Agreement and no
appointment of a successor trustee will be effective until the successor trustee
accepts its appointment in accordance with the provisions of the Trust
Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default has occurred and is continuing, for the purpose
of meeting the legal requirements of the Trust Indenture Act, if applicable, or
of any jurisdiction where part of the property and assets of Trust II are
located, Metropolitan, as the holder of Trust II's common securities, may
appoint one or more persons either to act as a co-trustee, jointly with the
Property Trustee, of all or any part of that Trust Property, or to act as
separate trustee of any of that property. The co-trustee or separate trustee
will have the powers described in the instrument of appointment. Metropolitan
may vest in the person or persons in such capacity any property, title, right or
power deemed necessary or desirable, subject to the provisions of the Trust
Agreement. If an event of default under the Indenture has occurred and is
continuing, the Property Trustee alone may make the appointment.
MERGER OR CONSOLIDATION OF THE PROPERTY TRUSTEE
Provided such entity shall be otherwise qualified and eligible, the
successor of the Property Trustee under the Trust Agreement will be:
- Any entity into which the trustee that is not a natural person may
be merged or converted,
- Any entity with which the trustee may be consolidated,
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- Any entity resulting from any merger, conversion or consolidation to
which the trustee will be a party, or
- Any entity succeeding to all or substantially all the corporate
trust business of the trustee.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF TRUST II
Trust II may not merge with or into, consolidate, amalgamate, be replaced
by, convey, transfer or lease its properties and assets substantially as an
entirety to any entity or other person, except as described below or as
otherwise described in the Trust Agreement. Trust II may, at the request of
Metropolitan, with the consent of the Administrative Trustees and without the
consent of the holders of the preferred securities or the Property Trustee,
merge with or into, consolidate, amalgamate, be replaced by, convey, transfer or
lease its properties and assets substantially as an entirety to, a trust
organized as such under the laws of any state if certain conditions are met.
These conditions are:
- the successor entity either (a) expressly assumes all of the
obligations of Trust II with respect to the preferred securities or
(b) substitutes for the preferred securities other securities having
substantially the same terms as the preferred securities (the
"Successor Securities") so long as the Successor Securities rank the
same as the preferred securities in priority with respect to
Distributions and payments upon liquidation, redemption and
otherwise,
- Metropolitan expressly appoints a trustee of the successor entity
possessing the same powers and duties as the Property Trustee as the
holder of the junior subordinated debentures,
- the Successor Securities are registered or listed, or any Successor
Securities will be registered or listed upon notification of
issuance, on any national securities exchange or other organization
on which the preferred securities are then registered or listed
(including, if applicable, the Nasdaq Stock Market's National
Market), if any,
- such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the preferred securities (including
any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization,
- the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the preferred securities (including
any Successor Securities) in any material respect,
- the successor entity has a purpose substantially identical to that
of Trust II,
- before the transaction, Metropolitan receives an opinion from
independent counsel experienced in such matters to the effect that
(a) the transaction does not adversely affect the rights,
preferences and privileges of the holders of the preferred
securities (including any Successor Securities) in any material
respect and (b) following the transaction, neither Trust II nor such
successor entity will be required to register as an investment
company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and
- Metropolitan or any permitted successor or assignee owns all of the
common securities or its equivalent of the successor entity and
guarantees the obligations of the successor entity under the
Successor Securities at least to the extent provided by the
guarantee.
Even if these conditions are met, if the consolidation, amalgamation,
merger, replacement, conveyance, transfer or lease would cause Trust II or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes, Trust II will not enter into such
transaction without the consent of holders of 100% in liquidation amount of the
preferred securities.
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VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of the
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the preferred securities will have no voting
rights.
The Trust Agreement may be amended from time to time by Metropolitan, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the preferred securities:
- with respect to acceptance of appointment of a successor trustee,
- to cure any ambiguity, correct or supplement any provisions in the
Trust Agreement that may be inconsistent with any other provision or
to make any other provisions with respect to matters or questions
arising under the Trust Agreement, which will not be inconsistent
with the other provisions of the Trust Agreement, or
- to modify, eliminate or add to any provisions of the Trust Agreement
to the extent necessary to ensure that Trust II will be classified
for United States federal income tax purposes as a grantor trust at
all times that the preferred securities are outstanding or to ensure
that Trust II will not be required to register as an "investment
company" under the Investment Company Act.
If Metropolitan, the Property Trustee and the Administrative Trustees amend
the Trust Agreement to cure an ambiguity, the action may not adversely affect in
any material respect the interests of any holder of the preferred securities.
Any amendments of the Trust Agreement described above will become effective when
notice of the amendment is given to the holders of the preferred securities.
The Trust Agreement may be amended by the Trust trustees and Metropolitan
with:
- the consent of holders representing not less than a majority (based
upon liquidation amounts) of the outstanding preferred securities,
and
- receipt by the Trust II trustees of an opinion of counsel to the
effect that such amendment or the exercise of any power granted to
the Trust II trustees in accordance with such amendment will not
affect Trust II's status as a grantor trust for United States
federal income tax purposes or Trust II's exemption from status as
an "investment company" under the Investment Company Act.
Some of the provisions in the Trust Agreement may not be amended without
the consent of each affected holder of the preferred securities. Consent is
required to amend the Trust Agreement to:
- change the amount or timing of any Distribution on the preferred
securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the preferred
securities as of a specified date, and
- restrict the right of a holder of the preferred securities to
institute suit for the enforcement of any such payment on or after
such date.
If the junior subordinated debentures are held by the Property Trustee, the
Trust II trustees will not take any of the following actions without obtaining
the prior approval of the holders of a majority in aggregate liquidation amount
of all outstanding preferred securities:
- direct the time, method and place of conducting any proceeding for
any remedy available to the trustee under the Indenture or executing
any trust or power conferred on the Property Trustee with respect to
the junior subordinated debentures,
- waive any past default that is waivable under the Indenture,
- exercise any right to rescind or annul a declaration that the
principal of all the junior subordinated debentures will be due and
payable, or
- consent to any amendment, modification or termination of the
Indenture or the junior subordinated debentures, where such consent
is required.
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If a consent under the Indenture would require the consent of each holder
of the junior subordinated debentures affected by the actions described above,
the Property Trustee will not give that consent without the prior consent of
each holder of the preferred securities. The Trust trustees will not revoke any
action previously authorized or approved by a vote of the holders of the
preferred securities except by subsequent vote of the holders of the preferred
securities. The Property Trustee will notify each holder of the preferred
securities of any notice of default with respect to the junior subordinated
debentures. In addition to obtaining the approval of the holders of the
preferred securities, before taking any of the foregoing actions, Trust II
trustees will obtain an opinion of counsel experienced in such matters to the
effect that Trust II will not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
Any required approval of holders of the preferred securities may be given
at a meeting of holders of the preferred securities called for such purpose or
by written consent. The Property Trustee will cause a notice of any meeting at
which holders of the preferred securities are entitled to vote to be given to
each holder of record of the preferred securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of the preferred securities will be
required for Trust II to redeem and cancel the preferred securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the preferred securities are entitled to
vote or consent under any of the circumstances described above, any of the
preferred securities that are owned by Metropolitan, the Trust II trustees or
any affiliate of Metropolitan or the Trust II trustees will, for purposes of
such vote or consent, be treated as if they were not outstanding.
LIQUIDATION VALUE
The amount payable on the preferred securities in the event of any
liquidation of Trust II is $10 per preferred security plus accumulated and
unpaid Distributions. This amount may be paid in the form of a distribution in
junior subordinated debentures, subject to certain exceptions. See
"-- Liquidation Distribution Upon Dissolution."
EXPENSES AND TAXES
In the Indenture, Metropolitan, as borrower, has agreed to pay all debts
and other obligations (other than with respect to the preferred securities) and
all costs and expenses of Trust II including costs and expenses relating to the
organization of Trust II, the fees and expenses of the trustees under the Trust
Agreement and the costs and expenses relating to the operation of Trust II.
Metropolitan has also agreed to pay any and all taxes and all costs and expenses
with respect thereto (other than United States withholding taxes) to which Trust
II might become subject. These obligations of Metropolitan under the Indenture
are for the benefit of, and will be enforceable by, any person to whom any such
debts, obligations, costs, expenses and taxes are owed (a "Creditor") whether or
not that Creditor has received notice thereof. Any Creditor may enforce the
obligations of Metropolitan directly against Metropolitan. Metropolitan has
irrevocably waived any right or remedy to require that a Creditor take any
action against Trust II or any other person before proceeding against
Metropolitan. Metropolitan has also agreed in the Indenture to execute any
additional agreements necessary or desirable to give full effect to the
foregoing.
BOOK ENTRY, DELIVERY AND FORM
The Trust issued the preferred securities in the form of one or more fully
registered global securities. The global securities were deposited with, or on
behalf of, DTC and registered in the name of DTC's nominee. Unless and until a
global security is exchangeable in whole or in part for the preferred securities
in definitive form, the global security may not be transferred except as a whole
by:
- DTC to a nominee of DTC;
- a nominee of DTC to DTC or another nominee of DTC; or
- DTC or any such nominee to a successor of such depository or a
nominee of such successor.
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Ownership of beneficial interests in a global security is limited to
persons that have accounts with DTC or its nominee ("Participants") or persons
that may hold interests through Participants. Metropolitan believes that, each
time a global security is issued, DTC credits, on its book-entry registration
and transfer system, the Participants' accounts with their respective principal
amounts of the preferred securities represented by the global security.
Ownership of beneficial interests in the global security is shown on, and the
transfer of such ownership interests is effected only through, records
maintained by DTC (with respect to interests of Participants) and on the records
of Participants (with respect to interests of persons held through
Participants). Beneficial owners will not receive written confirmation from DTC
of their purchase. However, Metropolitan expects the beneficial owner to receive
written confirmations from the Participants through which the beneficial owner
entered into the transaction. Transfers of ownership interests will be
accomplished by entries on the books of Participants acting on behalf of the
beneficial owners.
So long as DTC, or its nominee, is the registered owner of a global
security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the preferred securities represented by the global security
for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in a global security will not be entitled to receive
physical delivery of the preferred securities in certificated form and will not
be considered the owners or holders of the preferred securities under the
Indenture. Accordingly, to exercise any rights of a holder of preferred
securities under the Indenture, each person owning a beneficial interest in such
a global security must rely on the procedures of DTC and, if such person is not
a Participant, on the procedures of the Participant through which such person
owns its interest. Metropolitan understands that, under DTC's existing
practices, if Metropolitan requests any action of holders, or an owner of a
beneficial interest in such a global security desires to take any action which a
holder is entitled to take under the Indenture, DTC would authorize the
Participants holding the relevant beneficial interests to take such action. In
turn, those Participants would authorize beneficial owners owning through the
Participants to take the action or would otherwise act upon the instructions of
beneficial owners owning through them. Redemption notices will also be sent to
DTC. If less than all of the preferred securities are being redeemed,
Metropolitan understands that it is DTC's existing practice to determine by lot
the amount of the interest of each Participant to be redeemed.
Trust II will make Distributions on the preferred securities registered in
the name of DTC or its nominee to DTC or its nominee, as the case may be, as the
registered owner of the global security representing such preferred securities.
None of Metropolitan, the Trust II trustees, any Paying Agent (as defined
herein) or any other agent of Metropolitan or the Trust II trustees will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
security for such preferred securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests. DTC will
be responsible for the disbursements of Distributions to Participants. DTC's
practice is to credit Participants' accounts on a payable date in accordance
with their respective holdings shown on DTC's records unless DTC believes that
it will not receive payment on the payable date. Standing instructions and
customary practices will govern payments by Participants to beneficial owners,
as is the case with securities held for the accounts of customers in bearer form
or registered in "street name." The Participants will be responsible for such
payments, not DTC, Metropolitan, the Trust II trustees, the Paying Agent or any
other agent of Metropolitan, subject to any statutory or regulatory requirements
as may be in effect from time to time.
DTC may discontinue providing its services as securities depository with
respect to the preferred securities at any time by giving reasonable notice to
Metropolitan or the Trust II trustees. If DTC notifies Metropolitan or the Trust
II trustees that it is unwilling to continue as depository, or if it is unable
to continue or ceases to be a clearing agency registered under the Securities
Exchange Act of 1934 and a successor depository is not appointed by Metropolitan
within ninety days after receiving such notice or becoming aware that DTC is no
longer so registered, Metropolitan will issue the preferred securities in
definitive form upon registration of transfer of, or in exchange for, a global
security. In addition, Trust II may, at any time and in its sole discretion,
determine not to have the preferred securities represented by one or more global
securities. Under these and certain other circumstances, Metropolitan will issue
preferred securities in definitive form in exchange for all of the global
securities representing such preferred securities.
DTC has advised Metropolitan and Trust II of the following information. DTC
is a limited purpose trust company organized under the laws of the State of New
York, a member of the Federal Reserve System, a
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"clearing corporation" within the meaning of the Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities and Exchange Act of 1934. DTC was created to hold securities for its
Participants and to facilitate the clearance and settlement of securities
transactions between Participants through electronic book entry changes to
accounts of its Participants. The use of electronic book entry changes
eliminates the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include other organizations. Some of the Participants (or their
representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through, or maintain a custodial relationship with, a
Participant, either directly or indirectly.
The information in this section concerning DTC and book-entry systems has
been obtained from sources that Metropolitan and Trust II believe to be
reliable. However, neither Metropolitan nor Trust II take responsibility for the
accuracy of this information.
PAYMENT AND PAYING AGENCY
DTC will credit payments in respect of the preferred securities to the
relevant accounts at DTC on the applicable Distribution Dates. If the preferred
securities are not held by DTC, the Paying Agent will make such payments by
check mailed to the address of the holder entitled to such payments at the
address appearing on the securities register for the preferred securities and
Trust II's common securities. The initial paying agent (the "Paying Agent") is
the Property Trustee and any co-Paying Agent chosen by the Property Trustee and
acceptable to the Administrative Trustees. The Paying Agent may resign as Paying
Agent upon thirty days' written notice to the Trust II trustees. If the Property
Trustee is no longer the Paying Agent, the Property Trustee will appoint a
successor to act as Paying Agent. The successor must be a bank or trust company
reasonably acceptable to the Administrative Trustees.
REGISTRAR AND TRANSFER AGENT
The Property Trustee acts as the registrar and the transfer agent for the
preferred securities. Registration of transfers of preferred securities will be
effected without charge by or on behalf of Trust II, except for the payment of
any tax or other governmental charges that may be imposed in connection with any
transfer or exchange. Upon any redemption, Trust II will not be required to
issue, register the transfer of, or exchange any preferred securities during a
period beginning at the opening of business fifteen days before the date of
mailing of a notice of redemption of any preferred securities called for
redemption and ending at the close of business on the day of such mailing. Trust
II will also not be required to register the transfer of or exchange any
preferred securities selected for redemption, in whole or in part, except the
unredeemed portion of any such preferred securities being redeemed in part.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
Other than upon the occurrence and during the continuance of an Event of
Default, the Property Trustee undertakes to perform only such duties as are
specifically set forth in the Trust Agreement. After an Event of Default, the
Property Trustee must exercise the same degree of care and skill as a prudent
person would exercise or use in the conduct of his or her own affairs. Subject
to this provision, the Property Trustee is under no obligation to exercise any
of the powers vested in it by the Trust Agreement at the request of any holder
of preferred securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
the Trust Agreement, or is unsure of the application of any provision of the
Trust Agreement, and the matter is not one on which holders of preferred
securities are entitled under the Trust Agreement to vote, then the Property
Trustee will take such action as it deems advisable and in the best interests of
the holders of the preferred securities. The Property Trustee will have no
liability for such action except for its own negligence or willful misconduct.
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MISCELLANEOUS
The Administrative Trustees are to conduct the affairs of and to operate
Trust II in such a way that Trust II will not be deemed to be an "investment
company" required to be registered under the Investment Company Act or
classified as an association taxable as a corporation for United States federal
income tax purposes and so that the junior subordinated debentures will be
treated as indebtedness of Metropolitan for United States federal income tax
purposes. Metropolitan and the Administrative Trustees are authorized to take
any action, not inconsistent with applicable law, the certificate of trust of
Trust II or the Trust Agreement, that Metropolitan and the Administrative
Trustees determine in their discretion to be necessary or desirable for such
purposes.
Holders of the preferred securities have no preemptive or similar rights.
The Trust Agreement and the preferred securities will be governed by, and
construed in accordance with, the laws of the State of Delaware.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Metropolitan issued the junior subordinated debentures under the Indenture.
The Indenture was qualified as an indenture under the Trust Indenture Act. This
summary of material terms and provisions of the junior subordinated debentures
and the Indenture is not complete and is subject to, and is qualified in its
entirety by reference to, the Indenture, and to the Trust Indenture Act.
Metropolitan has incorporated by reference the form of the Indenture as an
exhibit to the registration statement of which this prospectus forms a part.
GENERAL
At the same time Trust II issued the preferred securities, Trust II
invested the proceeds from its sale, along with the consideration paid by
Metropolitan for Trust II's common securities, in the junior subordinated
debentures. The junior subordinated debentures bear interest at the annual rate
of 9.50%, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year (each, an "Interest Payment Date"). Interest payments
commenced June 30, 1999. Metropolitan pays interest to the person in whose name
each junior subordinated debenture is registered, subject to certain exceptions,
at the close of business on the business day immediately prior to the Interest
Payment Date. It is anticipated that, until the liquidation, if any, of Trust
II, the Property Trustee will hold the junior subordinated debentures in trust
for the benefit of the holders of the preferred securities. Metropolitan
computes the amount of interest payable for any period on the basis of a 360-
day year of twelve thirty-day months. If interest on the junior subordinated
debentures is payable on a date that is not a business day, Metropolitan will
pay that interest on the next day that is a business day. Metropolitan will not
pay any additional interest or other payment as a result of the delay. If that
business day is in the next calendar year, Metropolitan will make that payment
on the immediately preceding business day. This payment will have the same force
and effect as if it were made on the date the payment was originally payable.
Accrued interest that is not paid on the applicable Interest Payment Date will
bear additional interest at the rate per annum of 9.50% thereof, compounded
quarterly from the relevant Interest Payment Date. The term "interest" as used
in this section includes quarterly interest payments, interest on quarterly
interest payments not paid on the applicable Interest Payment Date and
Additional Interest (as defined herein), as applicable.
The junior subordinated debentures have a stated maturity date of June 30,
2029.
The junior subordinated debentures are unsecured and rank junior and be
subordinate in right of payment to all indebtedness of Metropolitan senior in
right of payment to them. The junior subordinated debentures will rank equal in
right of payment to the $27.8 million aggregate principal amount of debentures
Metropolitan sold during the second quarter of 1998 to Metropolitan Capital
Trust I. Because Metropolitan is a holding company, the right of Metropolitan to
participate in any distribution of assets of any subsidiary, including
Metropolitan Bank, upon such subsidiary's liquidation or reorganization or
otherwise, is subject to the prior claims of creditors of that subsidiary,
except to the extent that Metropolitan may itself be recognized as a creditor of
that subsidiary. Accordingly, the junior subordinated debentures are effectively
subordinated to all existing and future liabilities of Metropolitan's
subsidiaries, and holders of the junior subordinated debentures should look only
to the assets of Metropolitan for payments on the junior subordinated
debentures. The Indenture does not limit Metropolitan's
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ability to incur or issue other secured or unsecured debt, including
indebtedness senior in right of payment to the junior subordinated debentures,
whether under the Indenture or any existing or other indenture that Metropolitan
may enter into in the future or otherwise.
RIGHT TO DEFER INTEREST PAYMENT OBLIGATION
If Metropolitan is not in default under the Indenture, Metropolitan may,
under the Indenture at any time or from time to time during the term of the
junior subordinated debentures, defer the payment of interest on the junior
subordinated debentures for a period not exceeding twenty consecutive quarters
with respect to each Extension Period. No Extension Period may extend beyond the
stated maturity date of the junior subordinated debentures. At the end of each
Extension Period, Metropolitan must pay all interest then accrued and unpaid on
the junior subordinated debentures (together with interest on such unpaid
interest at the annual rate of 9.50%, compounded quarterly from the relevant
Interest Payment Date, to the extent permitted by applicable law, referred to
herein as "Compounded Interest"). During an Extension Period, interest would
continue to accrue and holders of the junior subordinated debentures would be
required to accrue interest income for United States federal income tax purposes
even though such holders would not receive current cash distributions with which
to pay tax, if any, arising with respect to such accrued interest income.
During any Extension Period, Metropolitan may not take certain actions.
Metropolitan may not make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of Metropolitan that rank
equal in priority with or junior in right of payment to the junior subordinated
debentures. Metropolitan may not make any guarantee payments with respect to any
guarantee by Metropolitan of the debt securities of any subsidiary of
Metropolitan if such guarantee ranks equal in priority with or junior in right
of payment to the junior subordinated debentures other than payments pursuant to
the guarantee. Metropolitan may not declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of Metropolitan's capital stock other than:
- the reclassification of any class of Metropolitan's capital stock
into another class of capital stock,
- dividends or distributions in shares of common stock of
Metropolitan,
- any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of shares under any
such plan in the future or the redemption or repurchase of any such
rights pursuant thereto,
- payments under the guarantee, and
- purchases of common shares related to the issuance of common shares
or rights under any of Metropolitan's benefit plans for its
directors, officers or employees.
Additionally, during any Extension Period, Metropolitan will not redeem,
purchase or acquire less than all the outstanding junior subordinated debentures
or any of the preferred securities.
Before the termination of any Extension Period, Metropolitan may further
defer the payment of interest on the junior subordinated debentures if no
Extension Period exceeds twenty consecutive quarters or extends beyond the
stated maturity date of the junior subordinated debentures. Upon the termination
of any such Extension Period and the payment of all Compounded Interest,
Metropolitan may begin a new Extension Period subject to the above requirements.
No interest will be due and payable during an Extension Period, except at the
end of such Extension Period. Metropolitan must give the Property Trustee, the
Administrative Trustees and the trustee under the Indenture notice of its
election to begin an Extension Period at least one Business Day before the
earlier of:
- the date interest on the junior subordinated debentures would have
been payable except for the election to begin such Extension Period,
or
- the date the Administrative Trustees are required to give notice of
the record date, or the date such Distributions are payable, to the
Nasdaq Stock Market's National Market or other applicable self-
regulatory organization or to holders of the preferred securities as
of the record date or the date such Distributions are payable, but
in any event not less than one Business Day before such record date.
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The trustee under the Indenture will give notice of Metropolitan's election
to begin a new Extension Period to the holders of the preferred securities.
There is no limitation on the number of times that Metropolitan may begin an
Extension Period.
ADDITIONAL INTEREST
If at any time while Trust II or the Property Trustee is the holder of any
junior subordinated debentures they are required to pay any additional taxes,
duties or other governmental charges (other than withholding taxes) imposed by
the United States or any other taxing authority, Metropolitan will pay the
Additional Interest relating to such taxes, duties or other governmental
charges. Trust II will not reduce the amounts payable by it as a result of any
such additional taxes, duties or other governmental charges.
REDEMPTION OR EXCHANGE
The junior subordinated debentures will not be subject to any sinking fund.
Metropolitan may redeem the junior subordinated debentures before maturity
on or after June 30, 2004, in whole at any time or in part from time to time, or
at any time in whole (but not in part) within ninety days following the
occurrence and continuation of a Tax Event, an Investment Company Event or a
Capital Treatment Event. In each case, the redemption price shall equal the
accrued and unpaid interest on the redeemed junior subordinated debentures to
the date fixed for redemption, plus 100% of the principal amount of such junior
subordinated debentures. Any redemption before the stated maturity date of the
junior subordinated debentures will be subject to prior regulatory approval, if
then required under applicable capital guidelines or regulatory policies, and
the restrictions in the 1995 Notes Indenture.
Metropolitan will mail notice of any redemption at least thirty but not
more than sixty days before the redemption date to each holder of the junior
subordinated debentures to be redeemed. Metropolitan will mail notice to such
holder's registered address. Unless Metropolitan defaults in payment of the
redemption price, on and after the redemption date interest ceases to accrue on
the junior subordinated debentures or portions thereof called for redemption.
"Additional Interest" means the additional amounts necessary to be paid on
the junior subordinated debentures so that the net amount received by Trust II
and the Property Trustee after paying any additional taxes, duties or other
governmental charges (other than withholding taxes) imposed by the United States
or any taxing authority shall not be reduced as a result of any additional
taxes, duties and other governmental charges.
"Investment Company Event" means the receipt by Trust II of an Opinion of
Counsel to the effect that, as a result of a change in law or regulation or a
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, Trust II is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act and that the change becomes effective on or after the
date of original issuance of the preferred securities.
"Capital Treatment Event" means the receipt by Trust II of an Opinion of
Counsel to the effect that as a result of any amendment to, or change (including
any proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such proposed change, pronouncement, action or decision is
announced on or after the date of original issuance of the preferred securities,
there is more than an insubstantial risk that the preferred securities would not
constitute Tier 1 Capital (or the then equivalent thereof) applied as if
Metropolitan (or its successor) were a bank holding company for purposes of the
capital adequacy guidelines of the Federal Reserve (or any successor regulatory
authority with jurisdiction over bank holding companies), or any capital
adequacy guidelines as then in effect and applicable to Metropolitan. There are
currently no capital adequacy guidelines applicable to savings and loan holding
companies such as Metropolitan.
"Tax Event" means the receipt by Trust II of an Opinion of Counsel to the
effect that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of
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any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the preferred securities under the Trust Agreement, there is more than an
insubstantial risk that:
- Trust II is, or will be within ninety days of the date of such
opinion, subject to United Stated federal income tax with respect to
income received or accrued on the junior subordinated debentures,
- interest payable by Metropolitan on the junior subordinated
debentures is not, or within ninety days of the date of such opinion
will not be, deductible by Metropolitan, in whole or in part, for
United States federal income tax purposes or
- Trust II is, or will be within ninety days of the date of such
opinion, subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"Opinion of Counsel" means an opinion in writing of independent legal
counsel experienced in matters being opined upon, that is delivered to Trust II
trustees.
AUTHENTICATION
A junior subordinated debenture will not be valid until authenticated
manually by an authorized signatory of the trustee under the Indenture, or by an
authenticating agent. That signature will be conclusive evidence that the junior
subordinated debenture has been duly authenticated and delivered under the
Indenture and that the holder is entitled to the benefits of the Indenture. Each
junior subordinated debenture will be dated the date of its authentication by
the trustee under the Indenture.
REGISTRATION, DENOMINATION AND TRANSFER
The junior subordinated debentures were initially registered in the name of
Cede & Co., as nominee of DTC, on behalf of Trust II. If the junior subordinated
debentures are distributed to holders of preferred securities, Metropolitan
anticipates that the depository arrangements for the junior subordinated
debentures will be substantially identical to those in effect for the preferred
securities. See "Description of the Preferred Securities -- Book Entry, Delivery
and Form."
Although DTC has agreed to the procedures described above, DTC is under no
obligation to perform or continue to perform such procedures. DTC may
discontinue such procedures at any time. If DTC is at any time unwilling or
unable to continue as depository and a successor depository is not appointed by
Metropolitan within ninety days of receipt of notice from DTC, and in other
circumstances, including at Metropolitan's option, Metropolitan will cause the
junior subordinated debentures to be issued in certificated form.
Metropolitan will make payments on junior subordinated debentures
represented by a global security to Cede & Co., the nominee for DTC, as the
registered holder of the junior subordinated debentures, as described under
"Description of the Preferred Securities -- Book Entry, Delivery and Form." If
junior subordinated debentures are issued in certificated form, principal and
interest will be payable, the transfer of the junior subordinated debentures
will be registrable, and junior subordinated debentures will be exchangeable for
junior subordinated debentures of other authorized denominations of a like
aggregate principal amount, at the corporate trust office of Wilmington Trust
Company, the trustee under the Indenture, in Wilmington, Delaware or at the
offices of any Paying Agent or transfer agent appointed by Metropolitan.
However, at the option of Metropolitan, payment of any interest may be made:
- by check mailed to the address of the person entitled to such
payment that appears in the securities register for the junior
subordinated debentures; or
- by wire transfer of immediately available funds upon written request
to the trustee under the Indenture no later than fifteen calendar
days before the date on which the interest is payable by a holder of
$1 million or more in aggregate principal amount of the junior
subordinated debentures.
Junior subordinated debentures will be exchangeable for other junior
subordinated debentures of like tenor, of any authorized denominations and of a
like aggregate principal amount.
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A holder of junior subordinated debentures may present for exchange as
provided above, and may present for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), that holder's junior subordinated debentures. The holder of
junior subordinated debentures takes such action at the office of the securities
registrar appointed under the Indenture or at the office of any transfer agent
designated by Metropolitan without service charge and upon payment of any taxes
and other governmental charges as described in the Indenture. Metropolitan will
appoint the trustee under the Indenture as securities registrar under the
Indenture. Metropolitan may at any time designate additional transfer agents
with respect to the junior subordinated debentures.
In the event of any redemption, neither Metropolitan nor the trustee under
the Indenture will be required to issue, register the transfer of, or exchange
junior subordinated debentures during a period beginning at the opening of
business fifteen days before the day of mailing of notice for redemption of the
junior subordinated debentures to be redeemed (if less than all are to be
redeemed) and ending at the close of business on the day of mailing of the
relevant notice of redemption. In addition, neither Metropolitan nor the trustee
under the Indenture will be required to transfer or exchange any junior
subordinated debentures selected for redemption, except, in the case of any
junior subordinated debentures being redeemed in part, any portion thereof not
to be redeemed.
Any monies deposited with the trustee under the Indenture or any Paying
Agent, and any monies held by Metropolitan in trust, for the payment of the
principal of (and premium, if any) or interest on any junior subordinated
debenture that remains unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable will, at the request of
Metropolitan, be repaid to Metropolitan. After that repayment, the holder of the
junior subordinated debenture will look, as a general unsecured creditor, only
to Metropolitan for payment of principal or interest.
RESTRICTIONS ON CERTAIN PAYMENTS
Metropolitan also covenants, as to the junior subordinated debentures,
that, during any Extension Period, it will not take certain actions.
Metropolitan will not make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of Metropolitan that
rank equal in priority with or junior in right of payment to the junior
subordinated debentures. Metropolitan will not make any guarantee payments with
respect to any guarantee by Metropolitan of the debt securities of any
subsidiary of Metropolitan if such guarantee ranks equal in priority with or
junior in right of payment to the junior subordinated debentures other than
payments pursuant to the guarantee. Metropolitan will not declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of Metropolitan's capital stock other
than:
- the reclassification of any class of Metropolitan's capital stock
into another class of capital stock;
- dividends or distributions payable in shares of common stock of
Metropolitan;
- any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of shares under any
such plan in the future or the redemption or repurchase of any such
rights pursuant thereto;
- payments under the guarantee; and
- purchases of common shares related to the issuance of common shares
or rights under any of Metropolitan's benefit plans for its
directors, officers or employees.
Additionally, Metropolitan will not redeem, purchase or acquire less than
all the outstanding junior subordinated debentures or any of the preferred
securities if at such time:
- there shall have occurred an event of default under the Indenture,
- Metropolitan shall be in default with respect to its obligations
under the guarantee relating to such preferred securities, or
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- Metropolitan shall have given notice of its selection of an
Extension Period as provided in the Indenture with respect to the
junior subordinated debentures and shall not have rescinded such
notice, or such Extension Period, or any extension thereof, shall be
continuing.
MODIFICATION OF INDENTURE
From time to time Metropolitan and the trustee under the Indenture may,
without the consent of the holders of the junior subordinated debentures, amend,
waive or supplement the Indenture for specified purposes. These purposes
include, among other things, curing ambiguities, defects or inconsistencies,
changes that do not materially adversely affect the interest of the holders of
the junior subordinated debentures and changes to qualify, or maintain the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting Metropolitan and the trustee under the Indenture,
with the consent of the holders of not less than a majority in principal amount
of the junior subordinated debentures affected, to modify the Indenture in a
manner affecting the rights of the holders of the junior subordinated
debentures. However, no such modification may, without the consent of the holder
of each outstanding junior subordinated debenture so affected,
- extend the stated maturity date of the junior subordinated
debentures, reduce the principal amount thereof or reduce the rate
or extend the time of payment of interest thereon, or
- reduce the percentage of principal amount of the junior subordinated
debentures, the holders of which are required to consent to any such
modification of the Indenture.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following events with
respect to the junior subordinated debentures that has occurred and is
continuing constitutes a "Debenture Event of Default":
- failure for thirty days to pay interest (including Additional
Interest or Compounded Interest, if any) on the junior subordinated
debentures when due (subject to the deferral of certain due dates in
the case of an Extension Period); or
- failure to pay any principal on the junior subordinated debentures
when due, whether at stated maturity, upon declaration of
acceleration of maturity or otherwise; or
- failure to observe or perform certain other covenants contained in
the Indenture for ninety days after written notice to Metropolitan
from the trustee under the Indenture or the holders of at least 25%
in aggregate outstanding principal amount of the outstanding junior
subordinated debentures; or
- certain events in bankruptcy, insolvency or reorganization of
Metropolitan, subject in certain instances to any such event
remaining in effect for a period of sixty consecutive days.
The holders of a majority in aggregate outstanding principal amount of the
junior subordinated debentures may direct the time, method and place of
conducting any proceeding for any remedy available to the trustee under the
Indenture. The trustee under the Indenture or the holders of not less than 25%
in aggregate outstanding principal amount of the junior subordinated debentures
may declare the principal due and payable immediately upon a Debenture Event of
Default. The holders of a majority in aggregate outstanding principal amount of
the junior subordinated debentures may annul such declaration and waive the
default if the default (other than the non-payment of the principal of the
junior subordinated debentures which has become due solely by such acceleration)
and all other Debenture Events of Default have been cured and Metropolitan has
deposited with the trustee under the Indenture a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration.
Metropolitan is required to file annually with the trustee under the
Indenture a certificate as to whether or not Metropolitan is in compliance with
all the conditions and covenants applicable to it under the Indenture.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing due to the
failure of Metropolitan to pay interest or principal on the junior subordinated
debentures when payable, a holder of the preferred securities may institute a
legal proceeding directly against Metropolitan. That holder may institute such a
proceeding to enforce payment to the holder of the principal of or interest on
such junior subordinated debentures having a principal amount equal to the
aggregate liquidation amount of the preferred securities of such holder.
Metropolitan may not amend the Indenture to remove the right to bring such a
legal proceeding without the prior written consent of the holders of all of the
preferred securities. If the right to bring such a legal proceeding is removed,
Trust II may become subject to the reporting obligations under the Securities
and Exchange Act of 1934. Metropolitan may under the Indenture set-off any
payment made to such holder of the preferred securities by Metropolitan in
connection with such a legal proceeding.
The holders of the preferred securities will not be able to exercise
directly any remedies other than those described in the above paragraph
available to the holders of the junior subordinated debentures. See "Description
of the Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that Metropolitan will not consolidate with or merge
into any other entity or convey, transfer or lease its properties and assets
substantially as an entirety to any entity, and no entity will consolidate with
or merge into Metropolitan or convey, transfer or lease its properties and
assets substantially as an entirety to Metropolitan, unless certain conditions
prescribed in the Indenture are met. In the event Metropolitan consolidates with
or merges into another entity or conveys or transfers its properties and assets
substantially as an entirety to any entity, these conditions include that the
successor entity is organized under the laws of the United States or any state
or the District of Columbia, and that the successor entity expressly assumes
Metropolitan's obligations on the junior subordinated debentures issued under
the Indenture. In addition, immediately after giving effect to the transaction,
no Debenture Event of Default, and no event which, after notice or lapse of time
or both, would become a Debenture Event of Default, shall have occurred and be
continuing.
The general provisions of the Indenture do not afford holders of the junior
subordinated debentures protection in the event of a highly leveraged or other
change in control transaction involving Metropolitan that may adversely affect
holders of the junior subordinated debentures.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to
Metropolitan's obligations to pay all other sums due pursuant to the Indenture
and to provide the officers' certificates and opinions of counsel described
therein), and Metropolitan will be deemed to have satisfied and discharged the
Indenture when certain events occur. These events include when all of the junior
subordinated debentures not previously delivered to the trustee under the
Indenture for cancellation
- have become due and payable, or
- will become due and payable at their stated maturity date or will be
called for redemption within one year,
and Metropolitan deposits or causes to be deposited with the trustee under the
Indenture funds, in trust. The deposited funds are for the purpose and in an
amount in the currency or currencies in which the junior subordinated debentures
are payable sufficient to pay and discharge the entire indebtedness on the
junior subordinated debentures not previously delivered to the trustee under the
Indenture for cancellation, for the principal and interest to the date of the
deposit or to the stated maturity date or redemption, as the case may be.
SUBORDINATION
In the Indenture, Metropolitan has covenanted and agreed that the junior
subordinated debentures issued under the Indenture will be subordinate and
junior in right of payment to all indebtedness of Metropolitan senior
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in right of payment to them to the extent provided in the Indenture. Upon any
payment or distribution of assets to creditors upon the liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of Metropolitan, the holders of indebtedness of
Metropolitan senior in right of payment to the junior subordinated debentures
will first receive payment in full of principal of (and premium, if any) and
interest, if any, on such senior indebtedness. The holders of indebtedness
senior in right of payment to the junior subordinated debentures will receive
such payment before the holders of the junior subordinated debentures, or the
Property Trustee on behalf of the holders, receive or retain any payment in
respect of the principal of or interest, if any, on the junior subordinated
debentures.
In the event of the acceleration of the maturity of any of the junior
subordinated debentures, the holders of all indebtedness senior in right of
payment to them outstanding at the time of such acceleration will receive
payment in full of all amounts due (including any amounts due upon acceleration)
before the holders of the junior subordinated debentures receive or retain any
payment in respect of the principal of or interest, if any, on the junior
subordinated debentures.
No payments on account of principal or interest, if any, in respect of the
junior subordinated debentures may be made if there shall have occurred and be
continuing a default in any payment with respect to indebtedness senior in right
of payment to the junior subordinated debentures, or an event of default with
respect to any such senior indebtedness resulting in the acceleration of the
maturity of the senior indebtedness, and any payments so received may be
required to be paid over to the holders of the senior indebtedness.
The Indenture places no limitation on the amount of indebtedness senior in
right of payment to the junior subordinated debentures that may be incurred by
Metropolitan. Metropolitan may from time to time incur indebtedness constituting
such senior indebtedness.
"Debt" means with respect to any person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent:
- every obligation of such person for money borrowed;
- every obligation of such person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or
businesses;
- every reimbursement obligation of such person with respect to
letters of credit, bankers' acceptances or similar facilities issued
for the account of such person;
- every obligation of such person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of
business);
- every capital lease obligation of such person;
- all indebtedness of such person whether incurred on or before the
date of the Indenture or thereafter incurred, for claims in respect
of derivative products, including interest rate, foreign exchange
rate and commodity forward contracts, options and swaps and similar
arrangements; and
- every obligation of the type referred to in the clauses above of
another person and all dividends of another person the payment of
which, in either case, such person has guaranteed or is responsible
or liable, directly or indirectly, as obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to Metropolitan whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or before the date of the Indenture or thereafter incurred,
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that such obligations are not superior
in right of payment to the
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junior subordinated debentures or to other Debt which is equal in priority with,
or subordinated to, the junior subordinated debentures. However, Senior Debt
does not include:
- any Debt of Metropolitan which when incurred and without respect to
any election under Section 1111(b) of the United States Bankruptcy
Code of 1978, as amended, was without recourse to Metropolitan;
- any Debt of Metropolitan to any of its subsidiaries; and
- any Debt to any employee of Metropolitan.
"Subordinated Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to Metropolitan whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or before the date of the Indenture or thereafter
incurred, which is by its terms expressly provided to be junior and subordinate
to other Debt of Metropolitan (other than the junior subordinated debentures),
except that Subordinated Debt shall not include the junior subordinated
debentures or the $27.75 million aggregate principal amount of debentures
Metropolitan sold during the second quarter of 1998 to Metropolitan Capital
Trust I.
GOVERNING LAW
The Indenture and the junior subordinated debentures will be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to conflicts of laws principles thereof.
INFORMATION CONCERNING THE TRUSTEE UNDER THE INDENTURE
The trustee under the Indenture will have and be subject to all the duties
and responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the trustee under the Indenture
is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of the junior subordinated debentures,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The trustee under the Indenture
is not required to expend or risk its own funds or otherwise incur personal
financial liability in the performance of its duties if it reasonably believes
that repayment or adequate indemnity is not reasonably assured to it.
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES
Under certain circumstances involving the termination of Trust II, after
satisfaction of liabilities to creditors of Trust II as provided by applicable
law, junior subordinated debentures may be distributed to the holders of the
preferred securities in exchange for their preferred securities upon liquidation
of Trust II. See "Description of the Preferred Securities -- Liquidation of
Trust II and Distribution of the Junior Subordinated Debentures to Holders." Any
distribution will be subject to receipt of prior regulatory approval if then
required. If the junior subordinated debentures are distributed to the holders
of preferred securities upon the liquidation of Trust II, Metropolitan will use
its best efforts to list the junior subordinated debentures on the Nasdaq Stock
Market's National Market or such stock exchanges, if any, on which the preferred
securities are then listed. Metropolitan can make no assurance as to the market
price of any junior subordinated debentures that may be distributed to the
holders of the preferred securities.
PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on the junior subordinated
debentures will be made at the offices of Wilmington Trust Company, trustee
under the Indenture in the city of Wilmington, Delaware or at the offices of
such Paying Agent or Paying Agents as Metropolitan may designate from time to
time. However, at the option of Metropolitan, payment of any interest may be
made
- by check mailed to the address of the person entitled to such
payment that appears in the securities register for the junior
subordinated debentures, or
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- by wire transfer of immediately available funds upon written request
to the trustee under the Indenture no later than fifteen calendar
days before the date on which the interest is payable by a holder of
$1 million or more in aggregate principal amount of the junior
subordinated debentures.
Payment of any interest on the junior subordinated debentures will be made to
the person in whose name the junior subordinated debenture is registered at the
close of business on the regular record date for such interest, except in the
case of interest due and payable, but not timely paid. Metropolitan may at any
time designate additional Paying Agents or rescind the designation of any Paying
Agent.
Any monies deposited with the trustee under the Indenture or any Paying
Agent, or any monies held by Metropolitan in trust, for the payment of the
principal of or interest on the junior subordinated debentures and remaining
unclaimed for two years after such principal or interest has become due and
payable will be repaid to Metropolitan upon written request of Metropolitan on
May 31 of each year or (if then held in trust by Metropolitan) will be
discharged from such trust. After that repayment, the holders of the junior
subordinated debentures will look, as general unsecured creditors, only to
Metropolitan for payment of such principal and interest.
REGISTRAR AND TRANSFER AGENT
The trustee under the Indenture will act as the registrar and the transfer
agent for the junior subordinated debentures. Junior subordinated debentures may
be presented for registration of transfer (with the form of transfer endorsed
thereon, or a satisfactory written instrument of transfer, duly executed) at the
office of the registrar. Metropolitan may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts if Metropolitan maintains a transfer agent in the place
of payment. Metropolitan may at any time designate additional transfer agents
with respect to the junior subordinated debentures. In the event of any
redemption, neither Metropolitan nor the trustee under the Indenture will be
required to issue, register the transfer of or exchange junior subordinated
debentures during a period beginning at the opening of business fifteen days
before the day of mailing of notice of redemption of junior subordinated
debentures (if less than all are to be redeemed) and ending at the close of
business on the day of mailing of the relevant notice of redemption. In
addition, neither Metropolitan nor the trustee under the Indenture will be
required to transfer or exchange any junior subordinated debentures selected for
redemption, except, in the case of any junior subordinated debentures being
redeemed in part, any portion thereof not to be redeemed.
DESCRIPTION OF THE GUARANTEE
Metropolitan executed and delivered a guarantee at the same time Trust II
issued the preferred securities. Wilmington Trust Company holds the guarantee as
the trustee under the guarantee for the benefit of the holders of the preferred
securities. The guarantee was qualified under the Trust Indenture Act. This
summary of material provisions of the guarantee is not complete and is subject
to, and qualified in its entirety by reference to, all of the provisions of the
guarantee and the Trust Indenture Act. Metropolitan has incorporated by
reference the form of the guarantee as an exhibit to the registration statement
of which this prospectus forms a part.
GENERAL
To the extent described below, Metropolitan has irrevocably agreed to pay
in full, on a subordinated basis, the guarantee Payments (as defined herein) to
the holders of the preferred securities, as and when due, regardless of any
defense, right of set-off or counterclaim that Trust II may have or assert other
than the defense of payment. If not paid by or on behalf of Trust II, the
following payments that relate to the preferred securities (the "guarantee
Payments") will be subject to the guarantee:
- any accrued and unpaid Distributions required to be paid on the
preferred securities, to the extent that Trust II has funds on hand
available for such Distributions at such time;
- the Redemption Price, including unpaid Distributions to the date of
redemption, with respect to any preferred securities called for
redemption, to the extent that Trust II has funds on hand available
to pay such Redemption Price at such time; or
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- upon a voluntary or involuntary dissolution, winding-up or
termination of Trust II (unless the junior subordinated debentures
are distributed to holders of the preferred securities or all
preferred securities are redeemed), the lesser of:
- the liquidation amount and all accrued and unpaid Distributions
on the preferred securities, to the extent that Trust II has
funds available for such a payment at such time; and
- the amount of assets of Trust II remaining available for
distribution to holders of the preferred securities after
satisfaction of liabilities to creditors of Trust II as required
by applicable law.
Metropolitan may satisfy its obligation to make a guarantee Payment by
directly paying the required amounts to the holders of the preferred securities
or by causing Trust II to pay such amounts to such holders.
If Metropolitan does not make interest payments on the junior subordinated
debentures held by Trust II, Trust II will not be able to pay Distributions on
the preferred securities and will not have funds available for such
Distributions. The guarantee will rank subordinate and junior in right of
payment to all indebtedness of Metropolitan senior in right of payment to the
junior subordinated debentures. See "Description of the Guarantee -- Status of
the Guarantee." Because Metropolitan is a holding company, the right of
Metropolitan to participate in any distribution of assets of any subsidiary upon
that subsidiary's liquidation or reorganization or otherwise is subject to the
prior claims of creditors of that subsidiary, except to the extent Metropolitan
may itself be recognized as a creditor of that subsidiary. Accordingly,
Metropolitan's obligations under the guarantee will be effectively subordinated
to all existing and future liabilities of Metropolitan's subsidiaries, and
claimants should look only to the assets of Metropolitan for payments under the
guarantee. The guarantee does not limit Metropolitan's ability to incur or issue
other secured or unsecured debt, including indebtedness senior in right of
repayment to the junior subordinated debentures, whether under the Indenture,
any other indenture that Metropolitan may enter into in the future, or
otherwise. Metropolitan may from time to time incur indebtedness constituting
such senior indebtedness.
Metropolitan and Trust II believe that, taken together, the obligations of
Metropolitan under the guarantee, the Trust Agreement, the junior subordinated
debentures, the Indenture and the Expense Agreement (as defined herein),
constitute, in the aggregate, a full, irrevocable and unconditional guarantee,
on a subordinated basis, of all of Trust II's obligations under the preferred
securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of Trust II's obligations under the
preferred securities.
STATUS OF THE GUARANTEE
The guarantee will constitute an unsecured obligation of Metropolitan and
will rank subordinate and junior in right of payment to all indebtedness of
Metropolitan senior in right of repayment to the junior subordinated debentures.
The guarantee ranks equal to the guarantee agreement executed by Metropolitan in
respect of the 8.60% preferred securities sold during the second quarter of 1998
by Metropolitan Capital Trust I.
The guarantee will constitute a guarantee of payment and not of collection.
As a result, the guaranteed party may institute a legal proceeding directly
against Metropolitan to enforce its rights under the guarantee without first
instituting a legal proceeding against any other person or entity. The trustee
under the guarantee will hold the guarantee for the benefit of the holders of
the preferred securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the preferred securities (in which case no vote will be
required), the guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate liquidation amount of such
outstanding preferred securities. The manner of obtaining any such approval will
be as set forth under "Description of the Preferred Securities -- Voting Rights;
Amendment of the Trust Agreement." All guarantees and agreements contained in
the guarantee will bind the successors, assigns, receivers, trustees and
representatives of Metropolitan and will inure to the benefit of the holders of
the preferred securities then outstanding.
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EVENTS OF DEFAULT
An event of default under the guarantee will occur upon the failure of
Metropolitan to perform any of its payments or other obligations thereunder. The
holders of not less than a majority in aggregate liquidation amount of the
preferred securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee under the
guarantee in respect of such guarantee or to direct the exercise of any trust or
power conferred upon the trustee under the guarantee.
Metropolitan, as guarantor, is required to file annually with the trustee
under the guarantee a certificate as to whether or not Metropolitan is in
compliance with all the conditions and covenants applicable to it under the
guarantee.
INFORMATION CONCERNING THE TRUSTEE UNDER THE GUARANTEE
The trustee under the guarantee, other than during an event of default by
Metropolitan in the performance of the guarantee, undertakes to perform only
such duties as are specifically set forth in the guarantee. After an event of
default under the guarantee, the trustee must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or her
own affairs. Subject to this provision, the trustee under the guarantee is under
no obligation to exercise any of the powers vested in it by the guarantee at the
request of any holder of the preferred securities unless it is offered
reasonable indemnity by such holder against the costs, expenses and liabilities
that might be incurred thereby. The trustee under the guarantee is not required
to expend or risk its own funds or otherwise incur personal financial liability
in the performance of its duties if the it reasonably believes repayment or
adequate indemnity is not reasonably assured to it.
TERMINATION OF THE GUARANTEE
The guarantee will terminate and be of no further force and effect upon:
- full payment of the Redemption Price of the preferred securities;
- full payment of the amounts payable upon liquidation of Trust II; or
- distribution of the junior subordinated debentures to the holders of
the preferred securities in exchange for their preferred securities.
The guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of the preferred securities must restore
payment of any sums paid under the preferred securities or the guarantee.
GOVERNING LAW
The guarantee will be governed by and construed in accordance with the laws
of the State of Delaware, without regard to conflicts of laws principles
thereof.
THE EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by Metropolitan under the
Trust Agreement (the "Expense Agreement"), Metropolitan will irrevocably and
unconditionally guarantee to each person or entity to whom Trust II becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
Trust II, other than obligations of Trust II to pay to the holders of the
preferred securities the amounts due such holders pursuant to the terms of the
preferred securities. Third party creditors of Trust II may proceed directly
against Metropolitan under the Expense Agreement, regardless of whether such
creditors had notice of the Expense Agreement.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES, THE EXPENSE AGREEMENT AND
THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the preferred securities
(to the extent Trust II has funds available for the payment of such
Distributions) are irrevocably guaranteed by Metropolitan as and to the extent
set forth under "Description of the Guarantee." Metropolitan believes that,
taken together, the obligations of Metropolitan under the guarantee, the Trust
Agreement, the junior subordinated debentures, the Indenture and the Expense
Agreement, constitute, in the aggregate, a full, irrevocable and unconditional
guarantee, on a subordinated basis, of all of Trust II's obligations under the
preferred securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of Trust
II's obligations under the preferred securities. If and to the extent that
Metropolitan does not make payments on the junior subordinated debentures, Trust
II will not pay Distributions or other amounts due on its preferred securities.
The guarantee does not cover payment of Distributions when Trust II does not
have sufficient funds to pay such Distributions. In such event, the remedy of a
holder of the preferred securities is to institute a legal proceeding against
Metropolitan for enforcement of payment of the junior subordinated debentures to
the extent permitted by the Indenture and Trust Agreement. The obligations of
Metropolitan under the guarantee are subordinate and junior in right of payment
to all indebtedness senior in right of payment to the junior subordinated
debentures.
SUFFICIENCY OF PAYMENTS
If payments of interest and other payments are made when due on the junior
subordinated debentures, such payments will be sufficient to cover Distributions
and other payments due on the preferred securities. Such payments are sufficient
primarily because:
- The aggregate principal amount of the junior subordinated debentures
will be equal to the sum of the aggregate stated liquidation amount
of the preferred securities and Trust II's common securities;
- The interest rate and interest and other payment dates on the junior
subordinated debentures will match the distribution rate and
Distribution and other payment dates for the preferred securities;
- Metropolitan will pay for all and any costs, expenses and
liabilities of Trust II except Trust II's obligations to holders of
its preferred securities; and
- The Trust Agreement further provides that Trust II will not engage
in any activity that is not consistent with the limited purposes of
Trust II.
Notwithstanding anything to the contrary contained in the Indenture,
Metropolitan has the right to set-off any payment it is otherwise required to
make under the Indenture if, and to the extent, Metropolitan has made, or is
concurrently making, a payment under the guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF THE PREFERRED SECURITIES
A holder of a preferred security may institute a legal proceeding directly
against Metropolitan to enforce its rights under the guarantee without first
instituting a legal proceeding against the trustee under the guarantee or
against the Trust or any other person or entity.
A default or event of default under any indebtedness of Metropolitan senior
to the junior subordinated debentures would not constitute a default or event of
default under the Indenture. However, in the event of payment defaults under, or
acceleration of, any such senior indebtedness, the subordination provisions of
the Indenture provide that no payments may be made in respect of the junior
subordinated debentures until such senior indebtedness has been paid in full or
any payment default thereunder has been cured or waived. Failure to
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make required payments on the junior subordinated debentures within any
applicable grace period would constitute an event of default under the
Indenture.
LIMITED PURPOSE OF TRUST II
The preferred securities evidence preferred undivided beneficial interests
in Trust II. Trust II exists for the sole purpose of issuing its preferred
securities and common securities and investing the proceeds of such issuance in
junior subordinated debentures. A principal difference between the rights of a
holder of a preferred security and a holder of a junior subordinated debenture
is that a holder of a junior subordinated debenture is entitled to receive from
Metropolitan the principal amount of and interest accrued on junior subordinated
debentures held, while a holder of the preferred securities is entitled to
receive Distributions from Trust II (or from Metropolitan under the guarantee)
if, and to the extent, Trust II has funds available for the payment of such
Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
Trust II involving the liquidation of the junior subordinated debentures, after
satisfaction of liabilities to creditors of Trust II, if any, as provided by
applicable law, the holders of the preferred securities will receive, out of
assets held by Trust II, the Liquidation Distribution in cash. See "Description
of the Preferred Securities -- Liquidation Distribution Upon Dissolution." Upon
any voluntary or involuntary liquidation or bankruptcy of Metropolitan, the
Property Trustee, as holder of the junior subordinated debentures, would be a
subordinated creditor of Metropolitan. As a result, the Property Trustee would
be subordinated in right of payment to all indebtedness of Metropolitan senior
in right of payment to the junior subordinated debentures as set forth in the
Indenture, but entitled to receive payment in full of principal and interest
before any shareholders of Metropolitan receive payments or distributions. Since
Metropolitan is the guarantor under the guarantee and has agreed to pay for all
costs, expenses and liabilities of Trust II (other than Trust II's obligations
to the holders of its preferred securities), the positions of a holder of such
preferred securities and a holder of the junior subordinated debentures relative
to other creditors and to shareholders of Metropolitan in the event of
liquidation or bankruptcy of Metropolitan are expected to be substantially the
same.
LEGAL MATTERS
Richards, Layton & Finger, P.A. will pass upon the validity of the
preferred securities.
EXPERTS
Crowe, Chizek and Company LLP, independent auditors, have audited our
consolidated financial statements included in our annual report on Form 10-K for
the year ended December 31, 1999, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our consolidated financial statements are incorporated by reference
in reliance on Crowe, Chizek and Company LLP's report, given on their authority
as experts in accounting and auditing.
33
<PAGE> 37
WHERE YOU CAN FIND MORE INFORMATION
Metropolitan files annual, quarterly, and current reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). You can read and copy such reports, proxy statements and other
information at the following locations of the Commission:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661
</TABLE>
You may also obtain copies of this information by mail at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20459. You can obtain further information on the operation of
the Commission's Public Reference Room in Washington, D.C. by calling the
Commission at 1-800-SEC-0330.
The Commission also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers like Metropolitan
who file electronically with the Commission. The address of that site is
http://www.sec.gov.
Metropolitan and Trust II have filed with the Commission a registration
statement on Form S-3 (together with all amendments, the "Registration
Statement") that relates to the preferred securities offered pursuant to this
prospectus. This prospectus is only part of the Registration Statement. It does
not contain all of the information in the Registration Statement. The rules and
regulations of the Commission permit us to omit certain portions of the
Registration Statement from the prospectus. For more information regarding
Metropolitan, Trust II, and the preferred securities, you should refer to the
Registration Statement, including the attached exhibits.
Wherever a reference is made in this prospectus to a contract or other
document, please be aware that the reference is not necessarily complete and
that you should refer to the exhibits that are a part of the Registration
Statement for a copy of the contract or other document. Each such reference in
this prospectus is qualified in its entirety by reference to the complete
document. You may read the Registration Statement without charge at the
principal office of the Commission in Washington, D.C., and you may obtain
copies of all or part of it from the Commission by paying the prescribed fees.
The Commission allows us to "incorporate by reference" the information we
file with the Commission, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus.
Information that we file in the future with the Commission and incorporate
by reference in this prospectus will automatically update and replace this
information. We incorporate by reference the documents listed below and any
future filings made by us with the Commission under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 if the filings are made before the
time that all of the preferred securities are sold in this offering:
- annual report on Form 10-K for the year ended December 31, 1999.
You may request a copy of these filings at no cost by writing or telephoning us
at the following address:
Metropolitan Capital Trust II
6001 Landerhaven Drive
Mayfield Heights, Ohio 44124
Attention: Investor Relations Department
(440) 646-1111
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this
34
<PAGE> 38
prospectus is accurate as of any date other than the date of this prospectus or
the date of the documents incorporated by reference in this prospectus.
No separate financial statements of Trust II have been included herein.
Metropolitan does not consider that such financial statements would be material
to holders of preferred securities because (i) all of the voting securities of
Trust II will be owned by Metropolitan, a reporting company under the Securities
and Exchange Act of 1934, (ii) Trust II has no independent operations but exists
for the sole purpose of issuing securities representing undivided beneficial
interests in the assets of Trust II and investing the proceeds thereof in junior
subordinated debentures issued by Metropolitan, and (iii) taken together, the
obligations of Metropolitan under the guarantee, the Trust Agreement, the junior
subordinated debentures, the Indenture and the Expense Agreement, constitute, in
the aggregate, a full, irrevocable and unconditional guarantee, on a
subordinated basis, of all of Trust II's obligations under the preferred
securities. See "Description of the Junior Subordinated Debentures" and
"Description of Guarantee." Metropolitan does not expect that Trust II will file
reports, proxy statements and other information under this Act with the
Commission.
35
<PAGE> 39
- ------------------------------------------------------
- ------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROPSECTUS OR OTHER
INFORMATION TO WHICH THIS PROSPECTUS REFERS. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE UNDER THIS PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF METROPOLITAN SINCE THE DATE OF THIS PROSPECTUS OR THAT THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME AFTER THE
DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS NOT PERMITTED.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................. 1
Risk Factors............................. 3
Forward-Looking Statements............... 7
Price Range of Preferred Securities...... 7
Ratio of Earnings to Fixed Charges....... 8
The Selling Security Holder.............. 8
Use of Proceeds.......................... 8
Plan of Distribution..................... 8
Description of the Preferred
Securities............................. 9
Description of the Junior Subordinated
Debentures............................. 20
Description of the Guarantee............. 29
Relationship Among the Preferred
Securities, the Junior Subordinated
Debentures, the Expense Agreement and
the Guarantee.......................... 32
Legal Matters............................ 33
Experts.................................. 33
Where You Can Find More Information...... 34
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
[Metropolitan LOGO]
METROPOLITAN
CAPITAL TRUST II
100,000
9.50% TRUST PREFERRED SECURITIES
METROPOLITAN
FINANCIAL CORP.
------------------------
PROSPECTUS
------------------------
May 15, 2000
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 40
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Metropolitan will bear the entire cost of the estimated expenses, as set
forth in the following table, in connection with the distribution of the
securities covered by this registration statement.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 145.73
Legal fees and expenses..................................... 15,000.00
Accounting fees and expenses................................ 5,000.00
Miscellaneous (including printing).......................... 2,000.00
----------
Total............................................. $22,145.73
==========
</TABLE>
Metropolitan shall be responsible for the payment of any additional
expenses in connection with the preparation and filing of this registration
statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Ohio law, Ohio corporations are authorized to indemnify directors,
officers, employees and agents within prescribed limits and must indemnify them
under certain circumstances. Ohio law does not provide statutory authorization
for a corporation to indemnify directors, officers, employees and agents for
settlements, fines or judgments in the context of derivative suits. However, it
provides that directors (but not officers, employees and agents) are entitled to
mandatory advancement of expenses, including attorneys' fees, incurred in
defending any action, including derivative actions, brought against the
director, provided the director agrees to cooperate with the corporation
concerning the matter and to repay the amount advanced if it is proved by clear
and convincing evidence that his act or failure to act was done with deliberate
intent to cause injury to the corporation or with reckless disregard to the
corporation's best interests.
Ohio law does not authorize payment of judgments to a director, officer,
employee or agent after a finding of negligence or misconduct in a derivative
suit absent a court order. Indemnification is required, however, to the extent
such person succeeds on the merits. In all other cases, if a director, officer,
employee or agent acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, indemnification
is discretionary except as otherwise provided by a corporation's articles of
incorporation, code of regulations or by contract except with respect to the
advancement of expenses of directors.
Under Ohio law, a director is not liable for monetary damages unless it is
proved by clear and convincing evidence that his action or failure to act was
undertaken with deliberate intent to cause injury to the corporation or with
reckless disregard for the best interests of the corporation. There is, however,
no comparable provision limiting the liability of officers, employees or agents
of a corporation. The statutory right to indemnification is not exclusive in
Ohio, and Ohio corporations may, among other things, procure insurance for such
persons.
Metropolitan's Amended and Restated Code of Regulations provide that
Metropolitan shall indemnify, subject to certain limitations, any person (and
the heirs, executors and administrators of each such person) made or threatened
to be made a party to any action, suit, proceeding, or claim by reason of the
fact that he is or was a director or officer of Metropolitan or of any other
corporation for which he was serving as a director or officer at the request of
Metropolitan for all expenses and liabilities incurred by him in connection with
the defense of any such action, suit, proceeding, or claim.
Under a directors' and officers' liability insurance policy, directors and
officers of Metropolitan are insured against certain liabilities, including
certain liabilities arising under the Securities Act.
ITEM 16. EXHIBITS
See Exhibit Index.
II-1
<PAGE> 41
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mayfield Heights, State of Ohio, on this 15th day of
May, 2000.
METROPOLITAN FINANCIAL CORP.
By: /s/ KENNETH T. KOEHLER
------------------------------------
Kenneth T. Koehler
President, Assistant Secretary and
Assistant Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
By: /s/ ROBERT M. KAYE Chairman of the Board, Chief May 15, 2000
- ------------------------------------------------ Executive Officer and Director
Robert M. Kaye (Principal Executive Officer)
By: /s/ KENNETH T. KOEHLER President, Assistant Secretary, May 15, 2000
- ------------------------------------------------ Assistant Treasurer and Director
Kenneth T. Koehler (Principal Financial and Accounting
Officer)
By: /s/ MALVIN E. BANK Director May 15, 2000
- ------------------------------------------------
Malvin E. Bank
By: /s/ ROBERT R. BROADBENT Director May 15, 2000
- ------------------------------------------------
Robert R. Broadbent
By: /s/ MARJORIE M. CARLSON Director May 15, 2000
- ------------------------------------------------
Marjorie M. Carlson
By: /s/ LOIS K. GOODMAN Director May 15, 2000
- ------------------------------------------------
Lois K. Goodman
By: /s/ MARGUERITE B. HUMPHREY Director May 15, 2000
- ------------------------------------------------
Marguerite B. Humphrey
By: /s/ JAMES A. KARMAN Director May 15, 2000
- ------------------------------------------------
James A. Karman
By: /s/ RALPH D. KETCHUM Director May 15, 2000
- ------------------------------------------------
Ralph D. Ketchum
By: /s/ ALFONSE M. MATTIA Director May 15, 2000
- ------------------------------------------------
Alfonse M. Mattia
</TABLE>
II-3
<PAGE> 43
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
By: /s/ DAVID P. MILLER Director May 15, 2000
- ------------------------------------------------
David P. Miller
By: /s/ KENNETH T. KOEHLER Attorney-in-Fact for the Officers May 15, 2000
- ------------------------------------------------ and Directors signing in the
Kenneth T. Koehler capacities indicated
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, Metropolitan
Capital Trust II certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Mayfield Heights, State of Ohio, on the 15th day
of May, 2000.
METROPOLITAN CAPITAL TRUST II
By: METROPOLITAN FINANCIAL CORP.,
AS DEPOSITOR
By: /s/ KENNETH T. KOEHLER
------------------------------------
Kenneth T. Koehler
President, Assistant Secretary and
Assistant Treasurer
II-4
<PAGE> 44
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.1 Indenture, dated as of April 30, 1998, of Metropolitan
relating to the 8.60% Junior Subordinated Debentures due
June 30, 2028 (filed as Exhibit 4.1 to Metropolitan's Form
10-Q, filed May 15, 1998, and incorporated herein by
reference).
4.2 Amended and Restated Trust Agreement, dated as of April 30,
1998, of Metropolitan Capital Trust I (filed as Exhibit 4.2
to Metropolitan's Form 10-Q, filed May 15, 1998, and
incorporated herein by reference).
4.3 Guarantee of Metropolitan relating to the Trust Preferred
Securities dated April 30, 1998 (filed as Exhibit 4.3 to
Metropolitan's Form 10-Q, filed May 15, 1998, and
incorporated herein by reference).
4.4 Agreement as to Expenses and Liabilities, dated as of April
30, 1998 (filed as Exhibit 4.4 to Metropolitan's Form 10-Q,
filed May 15, 1998, and incorporated herein by reference).
4.5 Indenture, dated as of May 14, 1999, of Metropolitan
relating to the 9.50% Junior Subordinated Debentures due
June 30, 2029 (filed as Exhibit 4.1 to Metropolitan's Form
S-1, filed May 11, 1999, and incorporated herein by
reference.
4.6 Amended and Restated Trust Agreement, dated as of May 14,
1999, of Metropolitan Capital Trust II (filed as Exhibit 4.4
to Metropolitan's Form S-1, filed May 11, 1999, and
incorporated herein by reference).
4.7 Guarantee of Metropolitan relating to the Trust Preferred
Securities dated May 14, 1999 (filed as Exhibit 4.6 to
Metropolitan's Form S-1, filed May 11, 1999, and
incorporated herein by reference).
4.8 Agreement as to Expenses and Liabilities, dated as of May
14, 1999 (filed as Exhibit D to Exhibit 4.4 to
Metropolitan's Form S-1, filed May 11, 1999, and
incorporated herein by reference).
4.9 Specimen Subordinated Note relating to the 9 5/8%
Subordinated Notes due January 1, 2005 (found at Sections
2.2 and 2.3 of the Form of Indenture filed as Exhibit 4.1 to
Metropolitan's Amendment No. 1 to Registration Statement on
Form S-1, filed November 13, 1995, and incorporated herein
by reference).
4.10 Form of Indenture entered into December 1, 1995, between
Metropolitan and Boatmen's Trust Company (filed as Exhibit
4.1 to Metropolitan's Amendment No. 1 to Registration
Statement on Form S-1, filed November 13, 1995, and
incorporated herein by reference).
5 Opinion regarding Legality (prepared by Richards, Layton &
Finger).
10 Third Amendment to Restated Loan Agreement by and between
The Huntington National Bank and Metropolitan dated as of
May 28, 1999 (incorporated herein by reference to Exhibit
99.1 to Metropolitan's Form 10-Q filed on May 14, 1998).
12 Statement regarding computation of ratios of earnings to
fixed charges.
23.1 Consent of Crowe, Chizek and Company LLP.
23.2 Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5).
24 Power of Attorney.
</TABLE>
II-5
<PAGE> 1
Exhibit 5
May __, 2000
Metropolitan Capital Trust II
c/o Metropolitan Financial Corp.
6001 Landerhaven Drive
Mayfield Hts., OH 44124
Re: Metropolitan Financial Corp. and
Metropolitan Capital Trust II- offering of trust preferred securities
---------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Metropolitan Financial
Corp., an Ohio corporation (the "Company"), and Metropolitan Capital Trust II, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated February 23, 1999, as
filed with the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on February 23, 1999;
(b) The Trust Agreement, dated as of February 23, 1999, as amended and
restated by the Amended and Restated Trust Agreement, dated as of May 14, 1999
between the Company, and the trustees of the Trust named therein, (as amended
and restated, the "Trust Agreement");
(c) The Registration Statement (the "Registration Statement") on Form
S-3, including a preliminary prospectus with respect to the Trust (the
"Prospectus"), relating to the Preferred Securities of the Trust representing
preferred undivided beneficial interests in the assets of the
<PAGE> 2
Metropolitan Capital Trust II
May __, 2000
Page 2
Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), filed by the Company and the Trust with the Securities and
Exchange Commission on May __, 2000; and
(d) A Certificate of Good Standing for the Trust, dated May __, 2000,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (d) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (d) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and the
Certificate of Trust are in full force and effect and have not been amended,
(ii) except to the extent provided in paragraph 1 below, the due creation or the
due organization or due formation, as the case may be, and valid existence in
good standing of each party to the documents examined by us under the laws of
the jurisdiction governing its creation, organization or formation, (iii) the
legal capacity of natural persons who are parties to the documents examined by
us, (iv) that each of the parties to the documents examined by us has the power
and authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security has been issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Securities Certificate for such Preferred
Security and the payment for such Preferred Security acquired by it, in
accordance with the Trust Agreement and the registration statement on Form S-1
previously filed for the Preferred Securities, and (vii) that the Preferred
Securities were issued and sold to the Preferred Security Holders in accordance
with the Trust Agreement and such registration statement. We have not
participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
This opinion is limited to the laws of the State of Delaware, and we
have not considered and express no opinion on the laws of any other
jurisdiction, including federal laws and rules and regulations relating thereto.
Our opinions are rendered only with respect to Delaware laws
<PAGE> 3
Metropolitan Capital Trust II
May __, 2000
Page 3
(excluding securities laws) and rules, regulations and orders thereunder which
are currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 DEL.
C. Section 3801, ET SEQ.
2. The Preferred Securities issued to the Preferred Security Holders
have been duly authorized by the Trust Agreement and were duly and validly
issued and, subject to the qualifications set forth in paragraph 3 below, are
fully paid and nonassessable undivided beneficial interests in the assets of the
Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
are entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In giving the
foregoing consents, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
EAM/TLM
<PAGE> 1
Exhibit 12
METROPOLITAN FINANCIAL CORP.
Computation of Earnings to Fixed Charges
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
COMPUTATION OF EARNINGS --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net income................................... 4,510,756 7,039,495 5,802,887 1,538,903 3,542,419
Income taxes 2,020,000 4,049,000 3,492,000 1,095,000 2,154,700
---------- ---------- ---------- ---------- ----------
Income before taxes.......................... 6,530,756 11,088,495 9,294,887 2,633,903 5,697,119
Fixed charges less interest.................. 18,911,508 11,577,389 7,890,654 5,275,600 3,574,470
---------- ---------- ---------- ---------- ----------
Earnings excluding deposit interest.......... 25,442,264 22,665,884 17,185,541 7,909,503 9,271,589
Interest on Deposits......................... 55,288,975 42,436,460 34,120,452 28,131,837 23,521,751
---------- ---------- ---------- ---------- ----------
Earnings including Deposit Interest.......... 80,731,239 65,102,344 51,305,993 36,041,340 32,793,340
========== ========== ========== ========== ==========
Interest expense............................. 18,494,117 11,247,517 7,582,855 4,984,212 3,294,520
Gross rental expense......................... 1,252,174 989,617 923,395 874,164 839,849
Less: noninterest............................ (834,783) 659,745 615,597 582,776 559,899
---------- ---------- ---------- ---------- ----------
417,391 329,872 307,798 291,388 279,950
---------- ---------- ---------- ---------- ----------
Fixed charges excluding deposit interest..... 18,911,508 11,577,389 7,890,653 5,275,600 3,574,470
Interest on deposits......................... 55,288,975 42,436,460 34,120,452 28,131,837 23,521,751
---------- ---------- ---------- ---------- ----------
Fixed charges including interest............. 74,200,483 54,013,849 42,011,105 33,407,437 27,096,221
========== ========== ========== ========== ==========
Earnings to Fixed Charges excluding Deposit
Interest................................... 1.35 1.96 2.18 1.50 2.59
Earnings to Fixed Charges including Deposit
Interest................................... 1.09 1.21 1.22 1.08 1.21
</TABLE>
II-6
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
Metropolitan Financial Corp. on Form S-3 of our report dated February 25, 2000,
on Metropolitan Financial Corp.'s consolidated financial statements appearing
in the Annual Report on Form 10-K of Metropolitan Financial Corp. for the year
ended December 31, 1999, and to the reference to us under the heading "Experts"
in the Prospectus, which is part of this Registration Statement.
Crowe, Chizek and Company LLP
Cleveland, Ohio
May 10, 2000
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
WHEREAS, Metropolitan Financial Corp. intends to file a registration
statement with the Securities and Exchange Commission ("the SEC") on Form S-3
("Form S-3") under the Securities Act of 1933 to register 100,000 shares of
9.50% Trust Preferred Securities of Metropolitan Capital Trust II owned by Ryan,
Beck & Co., Inc., the selling security holder; and,
WHEREAS, each of the directors and/or officers of Metropolitan Financial
Corp. desire to appoint attorneys-in-fact to implement the filing of the Form
S-3 and take all such further and other action relating thereto as is set forth
herein,
NOW, THEREFORE, each of the directors and/or officers of Metropolitan
Financial Corp. whose signature appears below hereby appoints and grants full
authority to Robert M. Kaye, Kenneth T. Koehler and Donald F. Smith, and each of
them severally, as his or her attorney-in-fact to sign in his or her name and
behalf, in any and all capacities stated below and to file with the SEC and
NASDAQ the Form S-3, any and all amendments and supplements thereto, as
appropriate, and generally to do all such things in their behalf in their
capacities as directors and/or officers to enable Metropolitan Financial Corp.
to comply with the provisions of the Securities Act of 1933 and all requirements
of the SEC and NASDAQ and all other regulatory requirements and hereby approve
and ratify all that said attorneys-in-fact, and each of them, may lawfully do,
have done or cause to be done by virtue hereof.
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-1-
<PAGE> 2
Name Title Date
---- ----- ----
By: /s/ Robert M. Kaye Chairman of the Board, Chief
----------------------------- Executive and Director (Principal
Robert M. Kaye Executive Officer) May 12, 2000
By: /s/ Kenneth T. Koehler President, Assistant Secretary,
----------------------------- Assistant Treasurer and Director
Kenneth T. Koehler (Principal Financial and
Accounting Officer) May 12, 2000
By: /s/ Malvin E. Bank Director May 12, 2000
------------------------------
Malvin E. Bank
By: /s/ Robert R. Broadbent Director May 12, 2000
------------------------------
Robert R. Broadbent
By: /s/ Marjorie M. Carlson Director May 12, 2000
------------------------------
Marjorie M. Carlson
By: /s/ Lois K. Goodman Director May 12, 2000
------------------------------
Lois K. Goodman
By: /s/ Marguerite B. Humphrey Director May 12, 2000
------------------------------
Marguerite B. Humphrey
By: /s/ James A. Karman Director May 12, 2000
------------------------------
James A. Karman
By: /s/ Ralph D. Ketchum Director May 12, 2000
------------------------------
Ralph D. Ketchum
By: /s/ Alfonse M. Mattia Director May 12, 2000
------------------------------
Alfonse M. Mattia
By: /s/ David P. Miller Director May 12, 2000
------------------------------
David P. Miller
