<PAGE>
As filed with the Securities and Exchange Commission on January 5, 2000.
Registration No. 333- .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
(Exact Name of Registrant as Specified in its Charter)
Washington 601 West First Avenue 91-0609840
(State or other Spokane, Washington 99201-5015 (I.R.S. Employer
jurisdiction of (509) 838-3111 Identification No.)
incorporation or
organization)
Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
C. Paul Sandifur, Jr., President
Metropolitan Mortgage & Securities Co., Inc.
601 West First Avenue Spokane, Washington 99201-5015
(509) 838-3111
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With copies to:
<TABLE>
<S> <C>
Susan Thomson, Esq. Robert J. Ahrenholz, Esq.
Associate General Counsel Kutak Rock LLP
601 West First Avenue 717 Seventeenth Street, Suite 2900
Spokane, Washington 99201 Denver, Colorado 80202
(509) 838-3111 (303) 297-2400
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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 check the following box. [X]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, 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. [_]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Amount Maximum Aggregate Amount of
Title of each Class of to be Offering Price Offering Registration
Securities to be Registered Registered Per Unit Price(1)(2) Fee(3)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Stock, Series E-7..... 100,000 $100 $10,000,000 $2,640
</TABLE>
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(a).
(2) Includes $2,700,000 of preferred stock that remains unsold and is being
carried forward from Registration Statement No. 333-71083 pursuant to Rule
429 of the Securities Act of 1933, for which a filing fee of $712.80 was
previously paid.
(3) A filing fee of $712.80 was previously paid for the $2,700,000 of
Preferred Stock carried forward from Registration Statement No. 333-71083
pursuant to Rule 429.
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, as amended, or until this Registration Statement
shall become effective on such date as the Commission acting pursuant to said
Section 8(a) may determine.
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
included in this Registration Statement also relates to securities registered
and remaining unissued under Registration Statement No. 333-71083 previously
filed by the Registrant. This Registration Statement also constitutes post-
effective amendment No. 1 to Registration Statement No. 333-71083.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. These +
+securities may not be sold nor may offers to buy be accepted before the time +
+this prospectus is delivered in final form. This prospectus is not an offer +
+to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion dated January 5, 2000
PROSPECTUS
[LOGO OF METROPOLITAN MORTGAGE]
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
100,000 Shares of Preferred Stock, Series E-7
We are offering variable rate cumulative preferred stock with the following
terms:
. The preferred stock is subordinate to all of our debt, including our notes
and debentures.
. Preferred stock distributions are cumulative and will be declared monthly
according to a variable rate formula described in this prospectus.
. The preferred stock has a liquidation preference of $100 per share.
. We may redeem the preferred stock at any time at a price of $100 per share
plus the amount of any declared but unpaid distributions.
You should consider carefully the risk factors beginning on page 9 in this
prospectus.
<TABLE>
<CAPTION>
Per Preferred Share Total
------------------- -----------
<S> <C> <C>
Public offering price........................ $100 $10,000,000
Maximum underwriting discounts and
commissions*................................ 6% $ 600,000
Maximum proceeds to Metropolitan (before
expenses)................................... $ 94 $ 9,400,000
</TABLE>
* You will not incur a direct sales charge. Preferred stock distributions will
be based on their full offering price, without deduction for underwriting
discounts or commissions. We will reimburse our underwriters for commissions
paid to licensed securities sales representatives. Sales commission rates on
the sale of preferred stock depend upon the terms of the sale. See "PLAN OF
DISTRIBUTION."
. Currently there is no trading market for the preferred stock and you should
not expect one to be established in the future.
. The preferred stock is being issued only in book-entry form.
. The underwriter maintains a list of persons willing to sell or purchase our
issued and outstanding shares of preferred stock.
. We are offering the preferred stock on a continuous, best efforts basis, and
there is no minimum amount of preferred stock that must be sold.
. You may not purchase the preferred stock pursuant to this prospectus after
January 31, 2001.
The shares of preferred stock are securities of our company and they are not
insured or guaranteed by any governmental agency, any insurance company, any
affiliate of our company or any other person or entity.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
METROPOLITAN INVESTMENT SECURITIES, INC.
The date of this prospectus is , 2000.
<PAGE>
<TABLE>
<S> <C>
FORWARD-LOOKING STATEMENTS.................................................. 2
PROSPECTUS SUMMARY.......................................................... 3
RISK FACTORS................................................................ 9
USE OF PROCEEDS............................................................. 11
DESCRIPTION OF SECURITIES................................................... 11
PLAN OF DISTRIBUTION........................................................ 17
LEGAL MATTERS............................................................... 18
EXPERTS..................................................................... 18
AVAILABLE INFORMATION....................................................... 18
INCORPORATION OF DOCUMENTS BY REFERENCE..................................... 19
</TABLE>
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We based these forward-
looking statements on our current expectations and projections about future
events. These forward-looking statements are subject to risks, uncertainties,
and assumptions about Metropolitan, including:
. Our anticipated growth strategies,
. Anticipated trends in our businesses, including trends in the markets
for insurance, mortgages, annuities and real estate,
. Future interest rate trends, movements and fluctuations,
. Future expenditures for purchasing receivables, and
. Our ability to continue to control costs and accurately price the risk
of default on the payment of receivables.
----------------
You should only rely on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate as of the date on the
front cover of this prospectus only. Our business, financial condition, results
of operations and prospects may have changed since that date.
2
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all of the information that
you should consider before investing in the preferred stock. You should read
both this prospectus and the attached Annual Report on Form 10-K of
Metropolitan for the fiscal year ended September 30, 1999, carefully before you
make your investment decision.
The Metropolitan Consolidated Group Of Companies
General
Metropolitan was incorporated in the State of Washington in January 1953.
Its principal executive offices are located at 601 West First Avenue, Spokane,
Washington 99201-5015. Its mailing address is P.O. Box 2162, Spokane,
Washington 99210-2162 and its telephone number is (509) 838-3111. Metropolitan
and its subsidiaries are collectively referred to in this prospectus as the
"consolidated group," while the terms "Metropolitan," "we" and "our" refer
solely to the parent company, Metropolitan Mortgage & Securities Co., Inc.
History
Metropolitan's controlling shareholder is C. Paul Sandifur, Jr. Mr. Sandifur
has control through his voting power over a family trust and through his direct
ownership of common stock. See "Item 12" in Metropolitan's Annual Report on
Form 10-K for the year ended September 30, 1999, which is attached to this
prospectus. As a result of Mr. Sandifur's common control, we have several other
affiliates, including Summit Securities, Inc., Old Standard Life Insurance
Company and Old West Annuity & Life Insurance Company. Collectively, these
affiliated companies are referred to as "affiliated companies." The chart on
the next page depicts the relationship of some of the significant companies in
the Metropolitan consolidated group, which excludes affiliated companies that
are not subsidiaries of Metropolitan.
Business
The consolidated group is engaged in a nationwide business of acquiring,
holding, selling and securitizing receivables. These receivables include real
estate contracts and promissory notes that are secured by first position liens
on real estate. The consolidated group also invests in receivables consisting
of real estate contracts and promissory notes secured by second and lower
position liens, structured settlements, annuities, lottery prizes, equipment
leases and other investments. The receivables secured by real estate are
typically non-conventional because they were either financed by the sellers of
the properties involved or they were originated by institutional lenders who
originate loans for borrowers with impaired credit or for non-conventional
properties. In addition to receivables, the consolidated group invests in other
assets, including U.S. Treasury obligations, corporate bonds and other
securities.
The consolidated group's capital to invest in these receivables comes from
several sources. The consolidated group uses funds generated from the sale and
securitization of receivables, collateralized borrowings, receivable cash
flows, the sale of annuities, the sale of debt and equity securities, the sale
of real estate and securities portfolio earnings.
The consolidated group provides services to the affiliated companies for a
fee and engages in various business transactions with the affiliated companies.
Metropolitan provides receivable acquisition services to the affiliated
companies and to our insurance subsidiary, Western United Life Assurance
Company. Metropolitan's wholly owned subsidiary, Metwest Mortgage Services,
Inc., conducts receivable collection and servicing activities for the
affiliated companies, Metropolitan and Western United.
3
<PAGE>
The consolidated group owns various properties acquired through repossession
and other sources. These properties are held for sale and/or development. For a
more detailed discussion of the business of the consolidated group, see "Item
1" in Metropolitan's Annual Report filed on Form 10-K for the year ended
September 30, 1999, which is attached to this prospectus.
Organizational Chart
(as of September 30, 1999)
The chart below lists the consolidated group's principal operating
subsidiaries and their ownership.
[CHART]
- --------
* The remaining 3.5% of Consumers Group Holding Co., Inc. is owned by Summit
Securities, Inc.
Metropolitan Mortgage & Securities Co., Inc.: Parent organization; invests
in receivables and other investments, including real estate development, which
are principally funded by proceeds from receivable investments, other
investments, and securities offerings.
Consumers Group Holding Co., Inc.: A holding company; its sole business
activity is being a shareholder of Consumers Insurance Co., Inc.
Consumers Insurance Company: Inactive property and casualty insurer; its
principal business activity is being a shareholder of Western United Life
Assurance Company.
Western United Life Assurance Company: Metropolitan's largest subsidiary and
largest company within the consolidated group; is engaged in investing in
receivables and other investments principally funded by annuity contract sales
and premiums from the sale of life insurance policies.
Metwest Mortgage Services, Inc.: Performs loan origination, collection and
servicing functions. It is an FHA/HUD licensed servicer and lender and is
licensed as a Fannie Mae seller/servicer.
4
<PAGE>
Summary of the Preferred Stock Offering
Preferred stock offering........ We are offering 100,000 shares of
variable rate cumulative preferred stock,
series E-7 at $100 per share. The
preferred stock will be sold in whole and
fractional shares. There is no minimum
amount of preferred stock that must be
sold. The preferred stock will be issued
only in book-entry form.
Distributions................... We will pay distributions on the
preferred stock on a cumulative basis
from the date the shares are issued. When
we make distributions, they will be paid
monthly at the applicable annual rates
described in "DESCRIPTION OF SECURITIES--
Distributions."
Liquidation rights.............. If we liquidate Metropolitan, you will
have a right to receive a liquidation
preference of $100 per share, plus
declared and unpaid distributions. Your
liquidation rights will be paid only
after all of our debts, including our
outstanding notes and debentures, are
paid. Your liquidation rights will be
paid before any liquidating distributions
to the common stockholders.
Redemption upon request of
holder.......................... We may consider a written shareholder
request you make to have your shares
redeemed. We will generally not consider
a request to redeem shares unless they
have been listed for sale on Metropolitan
Investment Securities, Inc.'s trading
list for at least 60 days. We are under
no obligation to redeem your shares of
preferred stock. Our decision whether or
not to redeem your shares will depend, in
part, on our financial condition and our
liquidity position at the time. Any
shares that we do redeem will be redeemed
at a price per share that is determined
by our board of directors in its
discretion, and will include any declared
but unpaid distributions. This price may
be less than your original $100 per share
purchase price. See "DESCRIPTION OF
SECURITIES--Redemption of Shares" and
"RISK FACTORS."
Redemption upon call by
Metropolitan.................... We can redeem any or all shares of the
preferred stock if we provide you with
notice at least 30 but not more than 60
days prior to redemption by mail. If we
decide to redeem your shares, you will be
paid $100 per share plus the amount of
any declared but unpaid distributions as
of the date fixed for redemption. See
"DESCRIPTION OF SECURITIES--Redemption of
Shares."
Voting rights .................. Your voting rights will be limited to two
situations. First, you will have those
voting rights expressly granted by the
laws of the State of Washington. Second,
you will have voting rights if the
distributions payable to you on your
preferred stock remain unpaid for a
period of time that equals twenty-four
monthly distributions. See "DESCRIPTION
OF SECURITIES--Voting Rights."
5
<PAGE>
Federal income tax
considerations.................. If we earn a profit on a tax accounting
basis during any future year, any
earnings or profits that we distribute to
you will be taxable. If we incur a loss
on a tax accounting basis, the
distributions will be a return of capital
and not taxed, but will reduce your
basis. We cannot predict whether we will
have future distributions, or whether
those distributions will be taxable to
you. You are encouraged to consult your
own tax advisors about whether the
distributions you will receive will be
taxable income. See "DESCRIPTION OF
SECURITIES--Federal Income Tax
Consequences of Distributions."
Use of proceeds................. We will use the proceeds of this
preferred stock offering to invest in
receivables and to make other investments
which may include investments in existing
subsidiaries, new business ventures, to
acquire other companies or for other
investment purposes. The proceeds may
also be used to retire maturing
debentures, for property development, to
pay preferred stock distributions and for
general corporate purposes. See "USE OF
PROCEEDS."
Risk factors.................... Your investment in the preferred stock
involves risk. You should review the
risks described in this prospectus and
those described in the attached Annual
Report on Form 10-K of Metropolitan
before investing in the preferred stock.
See "RISK FACTORS" for a discussion of
the risks associated with investing in
the preferred stock.
6
<PAGE>
Capitalization
The following table shows the capitalization of the consolidated group at
September 30, 1999.
<TABLE>
<CAPTION>
Amount
Class Outstanding
----- ------------
<S> <C>
Debt Payable:
Advances under funding facility with Bank of America, interest
at 6.383% per annum; due on March 24, 2000; collateralized by
$65,505,000 in real estate contracts and mortgage notes....... $ 62,908,030
Reverse repurchase agreements with Seattle Northwest; interest
at 5.35% per annum; due on October 13, 1999; collateralized by
$5,000,000 in U.S. Treasury Bonds............................. 4,962,500
Reverse repurchase agreements with Bear Stearns; interest at
5.33% per annum; due October 13, 1999; collateralized by
$10,000,000 in collateralized mortgage obligation ("CMO")
bonds......................................................... 10,000,000
Note payable to Old Standard Life Insurance Company; interest
at 10.50% per annum; due May 3, 2004; collateralized by Beach
House Restaurant.............................................. 2,507,289
Note payable to Summit Securities, Inc., interest at 11.0% per
annum; due on June 30, 2000; collateralized by $12,500,000 in
structured settlement agreements.............................. 10,000,000
Notes payable to Federal Home Loan Bank of Seattle, interest
rates ranging from 5.39% to 5.42% per annum; due October 25,
1999; collateralized by $41,250,000 in CMO bonds.............. 33,000,000
Note payable to IDS Life Insurance Company, interest at 7.04%
per annum; due August 1, 2009; collateralized by Metropolitan
Financial Center located in Spokane, Washington............... 11,970,474
Real estate contracts and mortgage notes payable, interest
rates ranging from 3% to 11.6% per annum, due through 2026;
collateralized by senior liens on certain of the Company's
real estate contracts, mortgage notes and real estate held for
sale.......................................................... 1,877,056
Accrued interest payable....................................... 119,281
------------
Total Debt Payable........................................... 137,344,630
------------
Debenture Bonds:
Investment Debentures, Series III maturing in 1999 to 2009, at
5.5% to 11%................................................... 71,406,000
Investment Debentures, Series II maturing in 1999 to 2002, at
5.5% to 11%................................................... 104,676,000
Installment Debentures Series I, maturing in 1999 to 2007 at
7.5% to 10.25%................................................ 157,000
Compound and accrued interest.................................. 22,649,779
------------
Total Debenture Bonds........................................ 198,888,779
------------
Stockholders' Equity:
Preferred Stock................................................ 19,099,294
Common Stock................................................... 291,167
Additional paid-in capital..................................... 22,522,036
Accumulated comprehensive loss................................. (3,638,723)
Retained earnings.............................................. 33,430,689
------------
Total Stockholders' Equity................................... 71,704,463
------------
Total Capitalization......................................... $407,937,872
============
</TABLE>
7
<PAGE>
Summary Consolidated Financial Data
The summary consolidated financial data shown below as of September 30, 1999
and 1998 and for the years ended September 30, 1999, 1998 and 1997, other than
the ratios of earnings to fixed charges and preferred stock dividends, have
been derived from, and should be read in conjunction with, the consolidated
financial statements, related notes, and Management's Discussion and Analysis
of Financial Condition and Results of Operations appearing in Metropolitan's
Form 10-K for the year ended September 30, 1999, which is incorporated in this
prospectus by reference and attached to this prospectus. The summary
consolidated financial data shown below as of September 30, 1997, 1996 and 1995
and for the years ended September 30, 1996 and 1995, other than the ratios of
earning, to fixed charges and preferred stock dividends, have been derived from
consolidated financial statement not included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year Ended September 30,
----------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(dollars in thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS
OF INCOME DATA:
Revenues................ $ 165,221 $ 155,955 $ 155,135 $ 156,672 $ 138,107
========== ========== ========== ========== ==========
Income before minority
interest............... $ 16,593 $ 10,453 $ 9,791 $ 8,146 $ 6,376
Income allocated to
minority interests..... (318) (126) (123) (108) (73)
---------- ---------- ---------- ---------- ----------
Net income.............. 16,275 10,327 9,668 8,038 6,303
Preferred stock
dividends.............. (3,642) (3,732) (4,113) (3,868) (4,038)
---------- ---------- ---------- ---------- ----------
Income applicable to
common stockholders.... $ 12,633 $ 6,595 $ 5,555 $ 4,170 $ 2,265
========== ========== ========== ========== ==========
Ratio of earnings to
fixed charges.......... 1.12 1.75 1.77 1.46 1.35
Ratio of earnings to
fixed charges and
preferred stock
dividends.............. (1) 1.37 1.31 1.14 1.03
PER COMMON SHARE DATA:
Basic and diluted income
per share applicable to
common
stockholders(2)........ $ 97,933 $ 50,728 $ 42,733 $ 32,073 $ 17,288
========== ========== ========== ========== ==========
Weighted average number
of common shares
outstanding............ 129 130 130 130 131
========== ========== ========== ========== ==========
Cash dividends per
common share........... $ 2,400 $ 1,200 $ -- $ -- $ 3,800
========== ========== ========== ========== ==========
CONSOLIDATED BALANCE
SHEET DATA:
Total assets............ $1,230,957 $1,226,665 $1,112,389 $1,282,659 $1,078,468
Debentures, line of
credit advances, other
debt payable and
securities sold, not
owned.................. $ 336,233 $ 323,908 $ 190,131 $ 363,427 $ 226,864
Stockholders' equity.... $ 71,704 $ 58,757 $ 54,113 $ 46,343 $ 40,570
</TABLE>
- --------
(1) Earnings were insufficient to meet fixed charges and preferred stock
dividends by approximately $808,000 for the year ended September 30, 1999.
The consolidated ratio of earnings to fixed charges and preferred stock
dividends was 1.37, 1.31, 1.14 and 1.03 for the years ended September 30,
1998, 1997, 1996 and 1995, respectively. Assuming no benefit from the
earnings of its subsidiaries with the exception of direct dividend
payments, earnings were insufficient to meet fixed charges and preferred
stock dividends by approximately $390,000 for the year ended September 30,
1999. The ratio of earnings to fixed charges and preferred dividends for
Metropolitan alone was 1.10, 1.01, 1.11, and 1.05 for the years ended
September 30, 1998, 1997, 1996 and 1995, respectively. The consolidated
ratio of earnings to fixed charges excluding preferred stock dividends was
1.12, 1.75, 1.77, 1.46 and 1.35 for the years ended September 30, 1999,
1998, 1997, 1996 and 1995, respectively. The ratio of earnings to fixed
charges excluding preferred stock dividends for Metropolitan, assuming no
benefit from the earnings of its subsidiaries with the exception of direct
dividend payments was 1.13, 1.40, 1.36, 1.48 and 1.40 for the years ended
September 30, 1999, 1998, 1997, 1996 and 1995, respectively.
(2) Earnings per common share, basic and diluted, are computed by deducting
preferred stock dividends from net income and dividing the result by the
weighted average number of shares of common stock outstanding. There were
no common stock equivalents or potentially dilutive securities outstanding
during any period presented.
8
<PAGE>
RISK FACTORS
When deciding whether or not to purchase the preferred stock, you should
carefully consider the risks contained in the section entitled "BUSINESS
OVERVIEW--Factors Affecting Future Operating Results" of Metropolitan's Annual
Report on Form 10-K for the year ended September 30, 1999, incorporated into
and attached to this prospectus. You should also consider the following risks
associated with an investment in the preferred stock:
We can issue more
company securities....... Metropolitan's and your rights and obligations in
the preferred stock are defined in the Statement
of Rights, Designations and Preferences of
Variable Rate Cumulative Preferred Stock Series
E-7. This statement does not restrict our ability
to issue additional debt, preferred stock or
other equity securities in our company.
Preferred stock is not
insured against the risk
of loss.................. The preferred stock is not insured or guaranteed
by any bank, any governmental agency, any
insurance company, any affiliate of our company
or any other person or entity. Thus, the
preferred stock has greater risk than investments
that are insured against the risk of loss.
Preferred stock is not a
liquid investment due to
the absence of an
established trading
market................... The preferred stock is not listed for trading on
a stock exchange. We do not anticipate listing
the preferred stock on any stock exchange or that
an independent public market for the preferred
stock will develop.
Trading list does not
guarantee a market for
the preferred stock...... The broker/dealer for this offering maintains a
trading list of persons willing to sell or
purchase outstanding shares of our preferred
stock. We can not assure you that this list will
continue to operate or that it will provide you a
means to sell your shares.
Our discretionary
redemption option does
not guarantee you the
ability to sell
securities to
Metropolitan............. Under our discretionary redemption option, we are
under no obligation to redeem your shares. You
should not rely on this option as a guarantee
that you will be able to have us reacquire your
shares. See "DESCRIPTION OF SECURITIES--
Redemption of Shares."
The preferred stock has
limitations on
redemption and
restrictions on
distributions............ If we have not paid cumulative distributions to
all preferred shareholders, we cannot purchase or
offer to exchange your shares unless we make the
same offer to all preferred shareholders. See
"DESCRIPTION OF SECURITIES--Redemption of
Shares." We will not make distributions to you
unless distributions can be made to all other
holders of preferred stock. See "DESCRIPTION OF
SECURITIES--Distributions."
9
<PAGE>
Liquidation rights are
junior to Metropolitan's
outstanding debt......... If we liquidate, we must pay all of our
outstanding debt before we can make any
distributions to you. If there is not enough
money to distribute to all preferred shareholders
for their entire respective liquidation rights,
you will share the shortfall with the other
preferred shareholders in proportion to your
respective liquidation rights.
Extraordinary corporate
events could eliminate
the liquidation rights
of the holders of
preferred stock.......... Your preferences in liquidation could be
adversely effected if we have an asset sale, a
capital restructuring, a merger, a reorganization
or a bankruptcy. If one of these events occurs,
your rights may be compromised by a negotiation
between all interested parties or by a court
determination.
Lack of voting control
of the company........... You will have very few voting rights as an owner
of preferred stock. The only class of stock
carrying full voting rights is the common stock.
See "DESCRIPTION OF SECURITIES--Voting Rights."
Metropolitan can redeem
or call the preferred
stock at its own
discretion............... We have the option of calling or redeeming your
shares at any time for $100 per share plus any
declared and unpaid distributions. See
"DESCRIPTION OF SECURITIES---Redemption of
Shares."
Risk of holding book-
entry shares of
preferred stock because
there are no physical
shares to transfer....... Our use of book-entry shares of preferred stock
rather than actual physical shares in this
offering could limit the markets for these
securities, prevent a secondary market from
forming and could delay payments to you. The
absence of physical shares may prevent a
secondary market from developing because
investors may be unwilling to invest in
securities if they cannot obtain delivery of
physical shares. The use of book-entry shares may
delay payments to you because distributions on
the shares would be made first to the person in
whose name the shares are registered.
10
<PAGE>
USE OF PROCEEDS
If all of the preferred stock we are offering is sold, we expect proceeds to
total $10,000,000 before deducting sales commissions and other expenses.
Offering expenses are estimated at $112,000 and sales commissions will be a
maximum of six percent (6%) of the offering proceeds. There can be no
assurance, however, that any of the preferred stock can or will be sold.
In conjunction with the other funds available to us through operations
and/or borrowings, we currently plan to utilize the proceeds of the preferred
stock offering for the following purposes: priority will be given first to (1)
funding investments in receivables and other investments, which may include
investments in existing subsidiaries, the commencement of new business ventures
or the acquisition of other companies, and then to (2) the development of real
estate we currently hold or acquire in the future. We do not have any
commitments or agreements for material acquisitions. However, the consolidated
group continues to evaluate possible acquisition candidates. To the extent
internally generated funds are insufficient or unavailable for the retirement
of maturing debentures, proceeds of this offering may be used for retiring
maturing debentures, preferred stock distributions and for general corporate
purposes, including debt service and other general operating expenses.
Approximately $26.5 million in principal amount of debt securities will mature
between February 1, 2000 and January 31, 2001 with interest rates ranging from
5.57% to 9.75% and averaging approximately 7.7% per annum. See "BUSINESS
OVERVIEW--Factors Affecting Future Operating Results" under Item 1 in our
Annual Report on Form 10-K for the year ended September 30, 1999.
We anticipate that some of the proceeds from this offering will be invested
in money market funds, bank repurchase agreements, commercial paper, U.S.
Treasury Bills and similar securities investments while awaiting use as
described above. Since we do not know how many shares of preferred stock will
be sold, we are unable to accurately forecast the total net proceeds generated
by this offering. Therefore, we have not allocated specific amounts for any of
the foregoing purposes.
In the event substantially less than the maximum proceeds are obtained, we
do not anticipate any material changes to our planned use of proceeds from
those described above.
DESCRIPTION OF SECURITIES
Description of Capital Stock
The authorized capital stock of Metropolitan consists of:
. 222 shares of Class A Common Stock, $2,250 par value,
. 222 shares of Class B Common Stock, $2,250 par value,
. 750,000 shares of Preferred Stock, Series A, $1 par value,
. 200,000 shares of Preferred Stock, Series B, $10 par value,
. 1,000,000 shares of Preferred Stock, Series C, $10 par value,
. 1,375,000 of Preferred Stock, Series D, $10 par value,
. 5,000,000 shares of Preferred Stock, Series E, $10 par value, and
. 1,000,000 shares of Subordinate Preferred Stock, no par value.
Of the shares authorized, 129 shares of Common A, 373,052 shares of
Preferred C, 539,058 shares of Preferred D and 997,820 shares of Preferred E
were issued and outstanding as of September 30, 1999.
11
<PAGE>
Description of Preferred Stock
This offering consists of 100,000 shares of variable rate cumulative
preferred stock, Series E-7. All of the outstanding shares of preferred stock
and the shares of preferred stock we are offering in this prospectus, when
issued and sold, will be validly issued, fully paid and nonassessable. The
relative rights and preferences of preferred stock have been fixed and
determined by our board of directors and are set forth in the statement of
rights, designations and preferences of preferred stock, duly approved by the
board of directors. The preferred stock is issued in book-entry form only.
The following statements relating to the preferred stock are summaries, do
not purport to be complete and are qualified in their entirety by reference to
the statement of rights which is filed as an exhibit to the registration
statement that includes this prospectus. The statement of rights is also
available for inspection at the principal office of Metropolitan.
Distributions
Distributions on the preferred stock are cumulative and will be declared
monthly on the first business day of the month, payable to the shareholders of
record as of the fifth calendar day of each month. Distributions will be paid
in cash on the twentieth calendar day of each month in an amount equal to the
offering price of $100 per share multiplied by the distribution rate divided by
twelve. The distribution rate will be the "applicable rate," as defined below,
subject to the authority of Metropolitan's board of directors to authorize, by
resolution, a higher rate.
The applicable rate for any monthly distribution period cannot be less than
6% or greater than 14% per annum. The applicable rate for any monthly
distribution period shall be (1) the highest of the three-month U.S. Treasury
Bill rate, the ten-year constant maturity rate or the twenty-year constant
maturity rate, each as described below, plus (2) one-half of one percentage
point (0.5%).
The three-month Treasury Bill rate for each distribution period is based on
the weekly per annum market discount rate for three-month U.S. Treasury bills.
The ten-year constant maturity rate for each distribution period is based on
the weekly per annum average yield to maturity for actively traded marketable
U.S. Treasury fixed interest rate securities adjusted to constant maturities of
ten years. The twenty-year constant maturity rate for each distribution period
is based on the weekly per annum average yield to maturity for actively traded
marketable U.S. Treasury fixed interest rate securities adjusted to constant
maturities of twenty years.
Each of the above three rates shall be calculated as the arithmetic average
of the two most recent weekly per annum yields as published weekly by the
Federal Reserve Board, the Federal Reserve Bank or any U.S. Government
department or agency selected by Metropolitan, during the period of 14 calendar
days immediately prior to the 10 calendar days immediately preceding the first
day of the distribution period for which the distribution rate on preferred
stock is being determined.
If any or all of these methods are unavailable, the statement of rights
includes other methods to determine the distribution rate. If we determine in
good faith that one or more of these rates cannot be determined for any
distribution period, then the applicable rate for that period will be the
higher of whichever of the rates that can be determined, plus one-half of one
percentage point. If we determine in good faith that none of the rates can be
determined for any distribution period, then the applicable rate in effect for
the preceding distribution period will be continued for that distribution
period. The distribution rate for each monthly distribution period will be
calculated as promptly as practicable by Metropolitan. Metropolitan will
enclose notice of the distribution rate with the next mailed distribution
payment check. In making the calculation, the three-month U.S. Treasury Bill
rate, ten-year constant maturity rate and twenty-year constant maturity rate
will each be rounded to the nearest five one-hundredths of a percentage point.
12
<PAGE>
Prior to the effective date of this prospectus, Metropolitan's board of
directors adopted a resolution authorizing a distribution rate on the preferred
stock at one percentage point higher than the applicable rate. This higher
distribution rate will continue from month to month until the board elects to
terminate it. The board may increase, decrease or eliminate the additional
percentage rate at any time in its sole discretion.
Restrictions on Distributions
Metropolitan may not declare or pay a distribution on any share of preferred
stock offered in this prospectus for any distribution period unless, at the
same time, a like distribution is declared and paid on all shares of preferred
stock previously issued and outstanding and entitled to receive distributions.
Distributions may only be paid from legally available funds.
If any shares of preferred stock are outstanding and the full cumulative
distributions on all previously outstanding preferred stock, including the
preferred stock offered by this prospectus, have not been paid or declared and
set apart for all past distribution periods, Metropolitan may not:
. declare, pay or set aside for payment any distribution, except as
provided below;
. declare or pay any other distribution upon common stock or upon any
other stock ranking junior to or on a parity with preferred stock as to
distributions or upon liquidation; or
. redeem, purchase or otherwise acquire common stock or any other stock of
Metropolitan ranking junior to or on a parity with preferred stock as to
distributions or upon liquidation for any consideration, or pay or make
available any funds for a sinking fund for the redemption of any shares
of that stock, except by conversion into or exchange for stock of
Metropolitan ranking junior to preferred stock as to distributions and
upon liquidation.
Notwithstanding the above, Metropolitan may declare, pay or set aside
payment for:
. distributions in common stock;
. distributions in any other stock ranking junior to preferred stock as to
distributions;
. liquidation rights; and
. distributions where a like distribution is declared or paid on all
shares of preferred stock then issued and outstanding and entitled to
receive distributions.
Metropolitan may make distributions ratably on the shares of preferred stock
and shares of any stock of Metropolitan ranking on a parity with the preferred
stock with regard to the payment of distributions, in accordance with the sums
which would be payable on those shares if all distributions, including
accumulations, if any, were declared and paid in full. As of the date of this
prospectus, no distributions on Metropolitan's preferred stock were in arrears.
No interest will be paid for or on account of any unpaid distributions.
Liquidation Rights
If any voluntary or involuntary liquidation, dissolution or winding up of
Metropolitan occurs, the preferred stock shareholders will be entitled to
receive liquidating distributions, in the amount of $100 per share plus
declared and unpaid regular monthly distributions, out of the assets of
Metropolitan available for distribution to shareholders, before any
distribution of assets is made to holders of common stock or any stock of
Metropolitan ranking, upon liquidation, junior to preferred stock. The
preferred stock is junior in liquidation to outstanding debt of Metropolitan
and on parity with all other issued and outstanding preferred stock to the
extent of its liquidation preference of $100 per share. As of September 30,
1999, the total consolidated liabilities of Metropolitan ranking senior in
liquidation preference to preferred stock were approximately
13
<PAGE>
$1,159,252,000. Obligations ranking on a parity with preferred stock upon
liquidation, the total liquidation preference of the outstanding shares of all
previous series of preferred stock, as of September 30, 1999, were
approximately $53,095,000. There are no limitations on Metropolitan's ability
to incur additional secured indebtedness. See "RISK FACTORS."
The statement of rights provides that, without limitation, the voluntary
sale, lease or conveyance of all or substantially all of Metropolitan's
property or assets to, or its consolidation or merger with, any other
corporation will not be deemed to be a liquidation, dissolution or winding up
of Metropolitan. If the aggregate liquidation preference payable with respect
to preferred stock and any other shares of stock of Metropolitan ranking on a
parity with preferred stock with respect to the distribution are not paid in
full upon any voluntary or involuntary liquidation, dissolution or winding up
of Metropolitan, then the holders of preferred stock and of these other shares
will share ratably in any distribution of assets of Metropolitan in proportion
to the full respective preferential amounts they are entitled to receive. After
payment of the full amount of the liquidating distribution they are entitled to
receive, the preferred stock shareholders will not be entitled to any further
participation in any distribution of assets by Metropolitan.
Redemption of Shares
Upon call by Metropolitan. Subject to regulatory restrictions affecting
redemptions during an offering, the shares of preferred stock are redeemable,
in whole or in part, only at the option of Metropolitan at a redemption price
of $100 per share plus declared and unpaid distributions to the date fixed for
redemption. If fewer than all of the outstanding shares of preferred stock are
redeemed, the number of shares redeemed will be determined by Metropolitan and
the shares to be redeemed will be determined by any method Metropolitan in its
sole discretion deems to be equitable.
Discretionary Redemption Upon Request of the Holder. Preferred Stock is not
redeemable at the option of the holder. If, however, Metropolitan receives an
unsolicited written request for redemption of shares from any holder,
Metropolitan may, in its sole discretion, subject to regulatory restrictions
affecting redemptions during an offering, and subject to the limitations
described below, consider redemption of these shares. Redemption requests, when
received, are reviewed in the order received. Any shares so tendered, which
Metropolitan in its discretion allows for redemption, will be redeemed by
Metropolitan directly, and not from or through a broker/dealer, at a price
established by the board of directors, from time to time, in its sole
discretion.
There can be no assurance that Metropolitan's financial condition will allow
it to exercise its discretion to accept any request for redemption of preferred
stock. Metropolitan will not redeem any shares tendered for redemption:
. if to do so would, in the opinion of Metropolitan's management, be
unsafe or unsound in light of Metropolitan's financial condition,
including its liquidity position;
. if payment of interest or principal on any outstanding instrument of
indebtedness is in arrears or in default; or
. if payment of any distribution on preferred stock or on shares of any
stock of Metropolitan ranking at least on a parity with the preferred
stock is in arrears as to distributions.
If cumulative distributions on preferred stock have not been paid in full,
Metropolitan may not purchase or acquire any shares of preferred stock other
than by a purchase or exchange offer made on the same terms to all holders of
preferred stock.
As provided in the statement of rights, for a period of three years from the
date of initial sale of each share of preferred stock, any redemption of that
share, at the sole discretion of Metropolitan, will occur only upon the death
or major medical emergency, as demonstrated to the satisfaction of
Metropolitan's management, of the
14
<PAGE>
holder or any joint holder of the share requested to be redeemed. As further
provided in the statement of rights, any optional redemption of a share in any
calendar year after the third year from the date of sale of the share, not
arising from the death or medical emergency of the holder or any joint holder
shall occur only when the sum of all optional redemptions, including those
arising out of the death or medical emergency of the holder or any joint
holder, of shares of preferred stock during that calendar year will not exceed
ten percent of the number of shares of preferred stock outstanding at the end
of the preceding calendar year. In the event the ten percent limit is reached
in any calendar year, the only redemptions which may be considered during that
calendar year will be those arising from the death or medical emergency of the
holder or any joint holder; provided, however, that to the extent that total
optional redemptions in any calendar year do not reach the ten percent limit,
the amount by which the optional redemptions shall fall short of the ten
percent limit may be carried over into ensuing years; and, provided further,
that to the extent that all redemptions, including those involving the death or
medical emergency of the holder or any joint holder, exceed the ten percent
limit in any year, the amount by which the redemptions exceed the ten percent
limit shall reduce the limit in the succeeding year for limiting redemptions
not involving the death or medical emergency of a holder or any joint holder.
In no event shall the optional redemptions of all types in any single calendar
year exceed 20% of the number of shares of preferred stock outstanding at the
end of the preceding calendar year.
Absence of Trading Market
We do not anticipate listing the preferred stock for trading on any national
or regional stock exchange nor do we anticipate an independent public market
for the preferred stock to develop. The broker-dealer for this offering,
Metropolitan Investment Securities, Inc. maintains a trading list to match
buyers and sellers of preferred stock. With limited exceptions, Metropolitan
has established a policy that all preferred shareholders, including holders of
the preferred stock offered in this prospectus, must place their shares for
sale on the trading list for 60 consecutive days before Metropolitan will
entertain a request for redemption. See "RISK FACTORS."
Voting Rights
The preferred stock has no voting rights except as provided in the statement
of rights and except as required by Washington State law regarding amendments
to Metropolitan's Articles of Incorporation that adversely affect holders of
these shares as a class and requires approval of 66 2/3% of the outstanding
shares entitled to vote.
The statement of rights provides that holders of the preferred stock,
together with the holders of Metropolitan's other outstanding preferred stock
and any other preferred stock previously authorized, voting separately and as a
single class, shall be entitled to elect a majority of the board of directors
of Metropolitan in the event that distributions payable on any shares of
preferred stock are in arrears in an amount equal to twenty-four or more full
monthly distributions per share. This right will continue until all
distributions in arrears have been paid in full.
Federal Income Tax Consequences of Distributions
The following discussion of the federal income tax consequences of
distributions paid on the preferred stock is based upon the Internal Revenue
Code of 1986 (the "tax code"), existing Treasury Department regulations,
current published administrative positions of the Internal Revenue Service
contained in revenue rulings, revenue procedures and notes and existing
judicial decisions. No assurance can be given that legislative or
administrative changes or court decisions may not be forthcoming that could
significantly modify the statements in this discussion. Any of these changes
may or may not be retroactive with respect to transactions effected prior to
the date of the changes.
Distributions paid to the holders of preferred stock may or may not be
taxable depending, in part, on the extent to which they are made out of current
or accumulated earnings and profits of Metropolitan as calculated
15
<PAGE>
for federal income tax purposes. To the extent, if any, that distributions paid
by Metropolitan to the holders of preferred stock exceed current and
accumulated earnings and profits of Metropolitan, these distributions will be
treated first as a tax-free return of capital, reducing the holder's basis in
preferred stock, but not below zero, and thereafter, as capital gains, or
ordinary gains if the preferred stock is not held by the holder as a capital
asset.
Metropolitan believes that distributions with respect to Metropolitan's
preferred stock paid during the calendar years 1984 through 1992 and in 1994
were a return of capital under Section 301 of the tax code. Metropolitan has
filed a Report of Nontaxable Distributions for the years 1984 through 1992 and
in 1994 with the IRS. Metropolitan believes that distributions paid during 1993
and 1995 through 1999 were taxable. Metropolitan is currently unable to predict
the character of its distributions for future years, but as required by the tax
code, will report annually to shareholders regarding the tax character of the
prior year's distributions.
Each preferred shareholder's individual tax circumstances is unique;
accordingly, preferred shareholders are advised to consult their own tax
advisor with respect to the income tax treatment or any distribution made with
respect to the preferred stock.
Distributions paid with respect to the preferred stock, whether deemed to be
dividends, return of capital, or capital gains for federal income tax purposes,
will result in the same federal income tax consequences to Metropolitan as
other payments of distributions. These distributions are not deductible by
Metropolitan under current tax law. Additionally, distributions to foreign
taxpayers are subject to special rules not discussed in this prospectus.
Transfer Agent and Registrar
Metropolitan acts as its own transfer agent and registrar of its common and
preferred stock.
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<PAGE>
Summary of Preferred Stock Attributes
The following table shows several of the primary differences and relative
rights of the various series of outstanding preferred stock of Metropolitan as
of the date of this prospectus, including the preferred stock, Series E-7
offered in this prospectus:
<TABLE>
<CAPTION>
Offering Liquidation Redemption
Series Price Preference Price(l) Distribution Rate(4)
- ------ -------- ----------- ---------- -------------------
<S> <C> <C> <C> <C>
C $ 10 $ 10 $ 9.90 Applicable Rate
D $ 10 $ 10 $ 9.90 Applicable Rate
E-1 $ 10 $ 10 $ 9.90 Applicable Rate
E-2 $100 $ 10(2) $99.00 Applicable Rate plus
.5%
E-3 $100 $ 10(2) $99.00 Applicable Rate plus
.5%
E-4 $100 $100 $99.00(3) Applicable Rate plus
.5%
E-5 $100 $100 $99.00(3) Applicable Rate plus
.5%
E-6 $100 $100 (3) Applicable Rate plus
.5%
E-7 $100 $100 (3) Applicable Rate plus
.5%
</TABLE>
- --------
(1) The redemption price shown is for redemptions at the request of the
shareholder. For Series E-7, the redemption price for redemptions at the
request of the holder is at the discretion of Metropolitan. The decision to
redeem shares is also at the sole discretion of Metropolitan. In the event
of a redemption at the request of Metropolitan, the redemption price per
share for authorized shares of Series C, D, and E-1 preferred stock is $10
and for Series E-2 through E-7 preferred stock is $100.
(2) The liquidation preference for classes E-2 and E-3 is $10. In addition,
Metropolitan's amended Articles of Incorporation provide that the E-2 and
E-3 shareholders will receive liquidation distributions of up to $90 per
share prior to any distribution to the common shareholders.
(3) Series E-4, E-5, E-6 and E-7 preferred stock are not redeemable during the
first three years after their respective issuance except for instances of
death or medical emergency. See "DESCRIPTION OF SECURITIES--Redemption of
Shares."
(4) The board of directors has authorized, for an indefinite period, a
distribution payment on all series of preferred stock of an additional one
percentage point above the Distribution Rate listed. The board of directors
may at its sole discretion eliminate the additional percentage point above
the listed Distribution Rate.
PLAN OF DISTRIBUTION
The preferred stock is being offered to the public on a continuing best
efforts basis through Metropolitan Investment Securities, Inc. ("MIS"), which
is affiliated with Metropolitan through the common control of C. Paul Sandifur,
Jr. Accordingly, the offering has not received the independent selling agent
review customarily made when an unaffiliated selling agent offers securities.
No commission or other expense of the offering will be paid by the purchasers
of the preferred stock. A commission in the maximum amount of 6% of the
offering price will be paid by Metropolitan on most preferred stock sales.
Preferred stock is offered for cash or other consideration, tangible or
intangible property, which is acceptable to Metropolitan as determined in good
faith by the board of directors. MIS will transmit the funds or other
consideration it receives directly to Metropolitan by noon of the next business
day after receipt. During the three fiscal years ended September 30, 1999, MIS
received commissions of $426,603 from Metropolitan on sales of approximately
$7,110,000 of Metropolitan's preferred stock through an in-house trading list.
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<PAGE>
MIS is a member of the National Association of Securities Dealers, Inc. Due
to the affiliation of Metropolitan and MIS, NASD Rule 2720 of the NASD Conduct
Rules requires, in part, that a qualified independent underwriter be engaged to
render a recommendation regarding the pricing of the preferred stock offered
through this prospectus. Accordingly, MIS has obtained a letter from Cruttenden
Roth Incorporated, a NASD member, stating that the offering price of the
preferred stock is consistent with Cruttenden's recommendations which were
based on conditions and circumstances existing as of the date of the
prospectus. Therefore, the price offered for the preferred stock will be no
higher than Cruttenden would have independently recommended. Cruttenden has
assumed the responsibilities of acting as the qualified independent underwriter
in pricing the offering and conducting due diligence. For performing its
functions as a qualified independent underwriter with respect to the preferred
stock offered in this prospectus, Cruttenden will receive $6,666 in fees.
We have agreed to indemnify Cruttenden against, or make contributions with
respect to some liabilities under the Securities Act of 1933 and the Securities
Exchange Act of 1934.
There is not now and we do not expect that there will be a public trading
market for the preferred stock in the future. MIS does not intend to make a
market for the preferred stock. Metropolitan, through MIS, undertakes to
maintain a list of persons willing to sell or purchase outstanding shares of
preferred stock. See "RISK FACTORS" and "DESCRIPTION OF SECURITIES--Redemption
of Shares."
MIS may enter into selected dealer agreements with and reallow to some
dealers, who are members of the NASD, and some foreign dealers who are not
eligible for membership in the NASD, a commission of up to 6% of the principal
amount of preferred stock sold by those dealers.
LEGAL MATTERS
The legality of the preferred stock being issued in this prospectus is being
passed upon for Metropolitan by the law firm of Kutak Rock LLP, Denver,
Colorado.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of Metropolitan for the year ended
September 30, 1999 have been incorporated in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act and, in compliance with this act, file periodic reports and other
information with the SEC. These reports and the other information we file with
the SEC can be inspected and copied at the public reference facilities
maintained by the SEC in Washington, D.C. at 450 Fifth Street, N.W.,
Washington, DC 20549 and at some of its regional offices which are located in
the New York Regional Office, Seven World Trade Center, Suite 1300, New York,
NY 10048, and the Chicago Regional Office, CitiCorp Center, 500 West Madison
Street, Suite 1400, Chicago, IL 60661-2511. In addition, the SEC maintains a
World Wide Web site that contains reports, proxy statements and other
information regarding registrants like Metropolitan that file electronically
with the SEC at the following Internet address: (http://www.sec.gov).
18
<PAGE>
We have filed with the SEC in Washington, D.C. a registration statement on
Form S-2 under the Securities Act with respect to the preferred stock offered
by this prospectus. This prospectus does not contain all of the information
contained in the registration statement, as permitted by the rules and
regulations of the SEC.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following document filed with the SEC is incorporated in this prospectus
by reference:
Annual Report on Form 10-K of Metropolitan for the fiscal year ended
September 30, 1999.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus modifies or supersedes that statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
Metropolitan will provide without charge to each person, including to whom a
prospectus is delivered, upon written or oral request of that person, a copy of
any and all of the information that has been referenced in this prospectus
other than exhibits to these documents. Requests for these copies should be
directed to Corporate Secretary, Metropolitan Mortgage & Securities Co., Inc.,
P.O. Box 2162, Spokane, Washington 99210-2162, telephone number (509) 838-3111.
19
<PAGE>
Metropolitan Mortgage & Securities Co., Inc.
[LOGO OF METROPOLITAN MORTGAGE & SECURITIES CO., INC.]
100,000 Shares of Preferred Stock, Series E-7
----------------
PROSPECTUS
----------------
, 2000
Metropolitan Investment Securities, Inc.
<PAGE>
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
SEC Registration Fee.................................................. $ 2,640
NASD Filing Fee....................................................... 1,500
Independent Underwriter Fee and Expenses.............................. 6,666
Blue Sky Qualification Fees and Expenses.............................. 3,000
Accounting Fees and Expenses(1)....................................... 50,000
Legal Fees and Disbursements(1)....................................... 20,000
Printing Expenses(1).................................................. 26,500
Miscellaneous Expenses(1)............................................. 1,694
--------
Total Expenses $112,000
========
</TABLE>
- --------
(1) Estimated
Item 15. Indemnification of Directors and Officers
Metropolitan has no contractual or other arrangement with its controlling
persons, directors or officers regarding indemnification, other than as set
forth in its Articles of Incorporation. Metropolitan's Articles of
Incorporation permits indemnification of a director, officer or employee up to
the indemnification limits permitted by Washington state law which permits
indemnification for judgments, fines and amounts paid in settlement actually
and reasonably incurred in connection with an action, suit or proceeding if the
indemnified person acted in good faith and in a manner reasonably believed to
be in and not opposed to the best interests of the corporation.
Item 16. Exhibits
(a) Exhibits
1.01 Form of Selling Agreement between Metropolitan and Metropolitan
Investment Securities, Inc. with respect to Preferred Stock, Series
E-7 (incorporated by reference to Exhibit 1(f)(ii) to Amendment 1 to
Registration No. 333-19755).
1.02* Agreement to Act as "Qualified Independent Underwriter," between
Metropolitan, Metropolitan Investment Securities, Inc. and
Cruttenden Roth Incorporated with respect to the preferred stock to
be registered.
1.03* Form of Pricing Opinion of Cruttenden Roth Incorporated with respect
to the preferred stock to be registered.
4.01 Statement of Rights, Designations and Preferences of variable rate
cumulative Preferred Stock, Series E-7 (incorporated by reference to
Exhibit 4(d) to Amendment 1 to Registration No. 333-19755).
5.01* Opinion of Kutak Rock LLP as to the validity of the preferred stock.
10.01 Employment Agreement between Metropolitan and Bruce Blohowiak
(incorporated by reference to Exhibit 10(a) to Metropolitan's Annual
Report on Form 10-K filed January 8, 1998).
10.02 Employment Agreement between Metropolitan and Michael Kirk
(incorporated by reference to Exhibit 10(b) to Metropolitan's Annual
Report on Form 10-K filed January 8, 1998).
II-1
<PAGE>
10.03 Employment Agreement between Metropolitan and Jon McCreary
(incorporated by reference to Exhibit 10(c) to Metropolitan's Annual
Report on Form 10-K filed January 8, 1998).
10.04 Reinsurance Agreement between Western United Life Assurance Company
and Old Standard Life Insurance Company (incorporated by reference
to Exhibit 10(d) to Metropolitan's Annual Report on Form 10-K filed
January 8, 1998).
10.05 Employment Agreement between Metropolitan and William D. Snider
(incorporated by reference to Exhibit 10(c) to Metropolitan's Form
10-Q filed May 20, 1999).
11.01 Statement indicating computation of earnings per common share
(incorporated by reference to Exhibit 11.01 to Metropolitan's Annual
Report on Form 10-K filed December 29, 1999).
12.01 Statement of computation of ratio of earnings to fixed charges and
preferred stock dividends (incorporated by reference to Exhibit
12.01 to Metropolitan's Annual Report on Form 10-K filed December
29, 1999).
23.01* Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.02 Consent of Kutak Rock LLP (included in Exhibit 5.01).
24.01 The Power of Attorney, included on Page II-4 of the Registration
Statement, is incorporated herein by reference.
- --------
* Filed herewith
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 of 1933, as amended (the "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;
(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;
(2) That, for the purpose of determining any liability under the 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) Insofar as indemnification for liabilities arising under the 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 Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for
II-2
<PAGE>
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or
controlling persons 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.
(c) The undersigned registrant hereby undertakes that:
(1) For the purpose of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus 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.
II-3
<PAGE>
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-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Spokane, State of Washington, on this 5th day of
January, 2000.
METROPOLITAN MORTGAGE & SECURITIES
CO., INC.
/s/ C. Paul Sandifur, Jr.
-------------------------------------
C. Paul Sandifur, Jr.,
President, Chief Executive
Officer and Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, whose signatures
appear below, hereby constitute and appoint C. Paul Sandifur, Jr. their true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for them and in their name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as full and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
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.
Signature Title Date
/s/ C. Paul Sandifur, Jr. President, Chief January 5, 2000
- ------------------------------------- Executive Officer
C. Paul Sandifur, Jr. and Chairman of the
Board (Principal
Executive Officer)
/s/ Bruce J. Blohowiak Executive Vice January 5, 2000
- ------------------------------------- President, Chief
Bruce J. Blohowiak Operating Officer
and Director
/s/ William Snider Chief Financial January 5, 2000
- ------------------------------------- Officer (Principal
William Snider Accounting Officer)
/s/ Reuel Swanson Secretary and January 5, 2000
- ------------------------------------- Director
Reuel Swanson
II-4
<PAGE>
/s/ Charles Stolz Director January 5, 2000
- -------------------------------------
Charles Stolz
/s/ Irv Marcus Director January 5, 2000
- -------------------------------------
Irv Marcus
/s/ John T. Trimble Director January 5, 2000
- -------------------------------------
John T. Trimble
/s/ Harold Erfurth Director January 5, 2000
- -------------------------------------
Harold Erfurth
II-5
<PAGE>
INDEX TO EXHIBITS
1.01 Form of Selling Agreement between Metropolitan and Metropolitan
Investment Securities, Inc. with respect to Preferred Stock, Series
E-7 (incorporated by reference to Exhibit 1(f)(ii) to Amendment 1 to
Registration No. 333-19755).
1.02* Agreement to Act as "Qualified Independent Underwriter," between
Metropolitan, Metropolitan Investment Securities, Inc. and
Cruttenden Roth Incorporated with respect to the preferred stock to
be registered.
1.03* Form of Pricing Opinion of Cruttenden Roth Incorporated with respect
to the preferred stock to be registered.
4.01 Statement of Rights, Designations and Preferences of variable rate
cumulative Preferred Stock, Series E-7 (incorporated by reference to
Exhibit 4(d) to Amendment 1 to Registration No. 333-19755).
5.01* Opinion of Kutak Rock LLP as to the validity of the preferred stock.
10.01 Employment Agreement between Metropolitan and Bruce Blohowiak
(incorporated by reference to Exhibit 10(a) to Metropolitan's Annual
Report on Form 10-K filed January 8, 1998).
10.02 Employment Agreement between Metropolitan and Michael Kirk
(incorporated by reference to Exhibit 10(b) to Metropolitan's Annual
Report on Form 10-K filed January 8, 1998).
10.03 Employment Agreement between Metropolitan and Jon McCreary
(incorporated by reference to Exhibit 10(c) to Metropolitan's Annual
Report on Form 10-K filed January 8, 1998).
10.04 Reinsurance Agreement between Western United Life Assurance Company
and Old Standard Life Insurance Company (incorporated by reference
to Exhibit 10(d) to Metropolitan's Annual Report on Form 10-K filed
January 8, 1998).
10.05 Employment Agreement between Metropolitan and William D. Snider
(incorporated by reference to Exhibit 10(c) to Metropolitan's Form
10-Q filed May 20, 1999).
11.01 Statement indicating computation of earnings per common share
(incorporated by reference to Exhibit 11.01 to Metropolitan's Annual
Report on Form 10-K filed December 29, 1999).
12.01 Statement of computation of ratio of earnings to fixed charges and
preferred stock dividends (incorporated by reference to Exhibit
12.01 to Metropolitan's Annual Report on Form 10-K filed December
29, 1999).
23.01* Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.02 Consent of Kutak Rock LLP (included in Exhibit 5.01).
24.01 The Power of Attorney, included on Page II-4 of the Registration
Statement, is incorporated herein by reference.
<PAGE>
EXHIBIT 1.02
AGREEMENT TO ACT AS "QUALIFIED INDEPENDENT UNDERWRITER"
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
Preferred Stock, Series E-7
This agreement made as of the 30th day of December, 1999, among
Metropolitan Mortgage & Securities Co., Inc., a Washington corporation
("Metropolitan"), Metropolitan Investment Securities, Inc., a Washington
corporation ("MIS"), and Cruttenden Roth Incorporated, a California corporation
("Cruttenden").
WITNESSETH:
WHEREAS, Metropolitan intends to offer 100,000 shares of its Preferred
Stock designated "Variable Rate Cumulative Preferred Stock, Series E-7"
(hereinafter referred to as "Preferred Stock"), which will be offered in
reliance on a registration statement filed on Form S-2 with the Securities and
Exchange Commission; and,
WHEREAS, MIS, a broker/dealer and affiliate of Metropolitan and a member of
the National Association of Securities Dealers ("NASD"), will be engaged as the
sole managing agent for Metropolitan; and,
WHEREAS, pursuant to subparagraph (c) of Rule 2720 of the NASD Conduct
Rules, MIS, as a NASD member, may participate in such underwriting only if the
yield at which the Preferred Stock offered to the public is not lower than the
yield recommended by a "Qualified Independent Underwriter" as that term is
defined in Rule 2720, subparagraph (b)(15), of the NASD Conduct Rules, and who
participates in the preparation of the registration statement and prospectus
relating to the offering and exercises customary standards of due diligence,
with respect thereto; and,
WHEREAS, this agreement ("Agreement") describes the terms on which
Metropolitan is retaining Cruttenden to serve as such a "Qualified Independent
Underwriter" in connection with this offering of Preferred Stock;
NOW, THEREFORE, in consideration of the recitations set forth above, and
the terms, promises, conditions, and covenants herein contained, the parties
hereby contract and agree as follows:
Definitions
As hereinafter used, except as the context may otherwise require, the term
"Registration Statement" means the registration statement on Form S-2 (including
the related preliminary prospectus, financial statements, exhibits and all other
documents to be filed as a part thereof or incorporated therein) for the
registration of the offer and sale of the debentures under the Securities Act of
1933, as amended, and the rules and regulations thereunder (the "Act") filed
with the Securities and Exchange Commission (the "Commission"), and any
amendment thereto, and the term "Prospectus" means the prospectus including any
preliminary or final prospectus and any materials incorporated by reference into
and attached to the Prospectus (including the form of prospectus to be filed
with the Commission pursuant to Rule 424(b) under the Act) and any amendment or
supplement thereto, to be used in connection with the offering.
<PAGE>
Section 1. Rule 2720 Requirement. Cruttenden hereby confirms its agreement
as set forth in subparagraph (b)(15)(F) of Rule 2720 of the NASD Conduct Rules
and represents that, as appropriate, Cruttenden satisfies or at the times
designated in such subparagraph (l5) will satisfy the other requirements set
forth therein or will receive an exemption from such requirements from the NASD.
Section 2. Consent. Cruttenden hereby consents to being named in the
Registration Statement and Prospectus as having acted as a "Qualified
Independent Underwriter" solely for the purposes of Rule 2720 referenced herein.
Except as permitted by the immediately preceding sentence or to the extent
required by law, all references to Cruttenden in the Registration Statement or
Prospectus or in any other filing, report, document, release or other
communication prepared, issued or transmitted in connection with the offering by
Metropolitan or any corporation controlling, controlled by or under common
control with Metropolitan, or by any director, officer, employee, representative
or agent of any thereof, shall be subject to Cruttenden's prior written consent
with respect to form and substance.
Section 3. Pricing Formula and Recommendation Letter. Cruttenden agrees to
render a written letter of recommendation as to the price above which
Metropolitan's Preferred Stock may not be offered based on the computation of
dividends to be declared on those shares that is set forth in Schedules "A" and
"B," copies of which are attached hereto, and incorporated herein by reference
(the "Pricing Recommendation Letter"). It is understood and agreed by Cruttenden
that the securities to which this Agreement relates will be offered on a
continuous, best efforts basis by MIS, as the managing agent, pursuant to the
Selling Agreement in effect between MIS and Metropolitan which is filed as an
exhibit to the Registration Statement referred to above. Metropolitan, through
MIS, will continue to offer the securities according to the terms and conditions
of said agreement, including, without limitation, Schedules "A" and "B" in
accordance with this Agreement. Cruttenden reserves the right to review and
amend its Pricing Recommendation Letter upon the filing of any post- effective
amendment to the Registration Statement or upon occurrence of any material event
which may or may not require such an amendment to be filed, or at such time as
the offering under this registration shall terminate or otherwise lapse under
operation of law.
Section 4. Fees and Expense. It is agreed that Cruttenden shall be paid a
fee in the amount of $6,666 payable upon delivery of the Pricing Recommendation
Letter referred to in paragraph 3 above.
Section 5. Material Facts. Metropolitan represents and warrants to
Cruttenden that at the time the Registration Statement and, at the time the
Prospectus is filed with the Commission (including any preliminary prospectus
and the form of prospectus filed with the Commission pursuant to Rule 424(b))
and at all times subsequent thereto, to and including the date on which payment
for, and delivery of, the Preferred Stock to be sold in the Offering is made by
the underwriter or underwriters, as the case may be, participating in the
Offering and by Metropolitan (such date being referred to herein as the "Closing
Date"), the Prospectus (as amended or supplemented if it shall have been so
amended or supplemented) will contain all material statements which are required
to be stated therein in accordance with the Act and will conform to all other
requirements of the federal securities laws, and will not, on such date include
any untrue statement of a material fact or omit to state a material fact
required to be
<PAGE>
stated therein or necessary to make the statements therein not misleading and
that all contracts and documents required by the Act to be filed or required as
exhibits to the Registration Statement have been filed. Metropolitan further
represents and warrants that any further filing, report, document, release or
communication which in any way refers to Cruttenden or to the services to be
performed by Cruttenden pursuant to this Agreement will not contain any untrue
or misleading statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
Metropolitan further warrants and represents that:
(a) All leases, contracts and agreements referred to in or filed as
exhibits to the Registration Statement to which Metropolitan or its
subsidiaries is a party or by which it is bound are in full force and
effect, except as may otherwise be disclosed in the Registration Statement.
(b) Metropolitan has good and marketable title, except as otherwise
indicated in the Registration Statement and Prospectus, to all of its
assets and properties described therein as being owned by it, free and
clear of all liens, encumbrances and defects except such encumbrances and
defects which do not, in the aggregate, materially affect or interfere with
the use made and proposed to be made of such properties as described in the
Registration Statement and Prospectus; and Metropolitan has no material
leased properties except as disclosed in the Prospectus.
(c) Metropolitan is duly organized under the laws of the State of
Washington and, as of the effective date of the Registration Statement and
at the Closing Date Metropolitan will be validly existing and in good
standing under the laws of the State of Washington with full corporate
power and authority to own its properties and conduct its business to the
extent described in the Registration Statement and Prospectus; Metropolitan
is duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the nature of the business
transacted by it or its ownership of properties or assets makes
qualification necessary; the authorized and outstanding capitalization of
Metropolitan is as set forth in the Prospectus and the description in the
Prospectus of the capital stock of Metropolitan conforms with and
accurately describes the rights set forth in the instruments defining the
same.
(d) Metropolitan is not in violation of its Certificate of
Incorporation or Bylaws or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
bond, debenture, note, or other evidence of indebtedness, contract or lease
or in any indenture or loan agreement to which it is a party or by which it
is bound.
(e) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate action on the part of
Metropolitan and MIS and performance of the foregoing agreement and the
consummation of the transactions contemplated thereby, will not conflict
with or result in a breach of any of the terms or constitute a violation of
the respective Certificates of Incorporation or Bylaws of Metropolitan or
MIS, or any deed of trust, lease, sublease, indenture, mortgage, or other
<PAGE>
agreement or instrument to which Metropolitan or MIS is a party or by which
either of them or their property is bound, or any applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over
Metropolitan or MIS or their properties or obligations; and no consent,
approval, authorization or order of any court or governmental agency or
body is required for the consummation of the transactions contemplated
herein and in the other agreements previously referred to in this paragraph
except as may be required under the Act or under any state securities laws.
(f) Any certificate signed by an officer of Metropolitan and delivered
to Cruttenden pursuant to this Agreement shall be deemed a representation
and warranty by Metropolitan to Cruttenden, to have the same force and
effect as stated herein, as to the matters covered thereby.
(g) If any event relating to or affecting Metropolitan shall occur as
a result of which it is necessary, in Cruttenden's opinion, to amend or
supplement the Prospectus in order to make the Prospectus not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser, Metropolitan undertakes to inform Cruttenden of such events
within a reasonable time thereafter, and will forthwith prepare and furnish
to Cruttenden, without expense to them, a reasonable number of copies of an
amendment or amendments or a supplement or supplements to the Prospectus
(in form and substance satisfactory to Cruttenden) which will amend or
supplement the Prospectus so that as amended or supplemented it will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein in light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, not
misleading.
(h) Metropolitan hereby warrants and represents that it will offer the
Preferred Stock in accordance with the pricing formula that is set forth in
Schedules "A" and "B" which are incorporated by reference herein.
(i) All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of Metropolitan
submitted pursuant hereto, shall remain operative and in full force and
effect, surviving the date of this Agreement.
Section 6. Availability of Information. Metropolitan hereby agrees to
provide Cruttenden, at its expense, with all information and documentation with
respect to its business, financial condition and other matters as Cruttenden may
deem relevant based on the standards of reasonableness and good faith and shall
request in connection with Cruttenden's performance under this Agreement,
including, without limitation, copies of all correspondence with the Commission,
certificates of its officers, opinions of its counsel and comfort letters from
its auditors. The above-mentioned certificates, opinions of counsel and comfort
letters shall be provided to Cruttenden as Cruttenden may request on the
effective date of the Registration Statement and on the Closing Date.
Metropolitan will make reasonably available to Cruttenden, its auditors,
counsel, and officers and directors to discuss with Cruttenden any aspect of
Metropolitan which Cruttenden may deem relevant. In addition, Metropolitan, at
Cruttenden's
<PAGE>
request, will cause to be delivered to Cruttenden copies of all certificates,
opinions, letters and reports to be delivered to the underwriter or
underwriters, as the case may be, pursuant to any underwriting agreement
executed in connection with the Offering or otherwise, and shall cause the
person issuing such certificate, opinion, letter or report to authorize
Cruttenden to rely thereon to the same extent as if addressed directly to
Cruttenden. Metropolitan represents and warrants to Cruttenden that all such
information and documentation provided pursuant to this paragraph 6 will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statement therein not misleading. In addition,
Metropolitan will promptly advise Cruttenden of all telephone conversations with
the Commission which relate to or may affect the Offering.
Section 7. Indemnification.
(a) Subject to the conditions set forth below, and in addition to
any rights of indemnification and contribution to which Cruttenden may
be entitled pursuant to any agreement among underwriters, underwriting
agreement or otherwise, and to the extent allowed by law, Metropolitan
hereby agrees that it will indemnify and hold Cruttenden and each
person controlling, controlled by or under common control with
Cruttenden within the meaning of Section 15 of the Act or Section 20
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the rules and regulations thereunder (individually, an
"Indemnified Person") harmless from and against any and all loss,
claim, damage, liability, cost or expense whatsoever to which such
Indemnified Person may become subject under the Act, the Exchange Act,
or other federal or state statutory law or regulation, at common law
or otherwise, arising out of, based upon, or in any way related or
attributed to (i) this Agreement, (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or Prospectus or any other filing, report, document, release
or communication, whether oral or written, referred to in paragraph 5
hereof or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) any application or other document
executed by Metropolitan or based upon written information furnished
by Metropolitan filed in any jurisdiction in order to qualify the
Preferred Stock under the securities or Blue Sky laws thereof, or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or (iv) the breach of any representation or warranty made
by Metropolitan in this Agreement. Metropolitan further agrees that
upon demand by an Indemnified Person at any time or from time to time,
it will promptly reimburse such Indemnified Person for, or pay, any
loss, claim, damage, liability, cost or expense as to which
Metropolitan has indemnified such person pursuant hereto.
Notwithstanding the foregoing provisions of this paragraph 7, any such
payment or reimbursement by Metropolitan of fees, expenses or
disbursement incurred by an Indemnified Person in any proceeding in
which a final judgment by a court of competent jurisdiction (after all
appeals or the expiration of time to appeal) is entered against such
Indemnified Person as a direct result of such person's negligence, bad
faith or willful misfeasance will be promptly repaid to Metropolitan.
In addition, anything in this paragraph 7 to the contrary
notwithstanding, Metropolitan shall not be liable for any settlement
of any action or proceeding effected without its written consent.
<PAGE>
(b) Promptly after receipt by an Indemnified Person under sub-paragraph (a)
above of notice of the commencement of any action, such Indemnified Person will,
if a claim in respect thereof is to be made against Metropolitan under paragraph
(a), notify Metropolitan in writing of the commencement thereof; but the
omission to so notify Metropolitan will not relieve Metropolitan from any
liability which it may have to any Indemnified Person otherwise than under this
paragraph 7 if such omission shall not have materially prejudiced Metropolitan's
ability to investigate or to defend against such claim. In case any such action
is brought against any Indemnified Person, and such Indemnified Person notifies
Metropolitan of the commencement thereof, Metropolitan will be entitled to
participate therein and, to the extent that it may elect by written notice
delivered to the Indemnified Person promptly after receiving the aforesaid
notice from such Indemnified Person, to assume the defense thereof with counsel
reasonably satisfactory to such Indemnified Person; PROVIDED, HOWEVER, that if
the defendants in any such action include both the Indemnified Person and
Metropolitan or any corporation controlling, controlled by or under common
control with Metropolitan, or any director, officer, employee, representative or
agent of any thereof, or any other "Qualified Independent Underwriter" retained
by Metropolitan in connection with the Offering and the Indemnified Person shall
have reasonably concluded that there may be legal defenses available to it which
are different from or additional to those available to such other defendant, the
Indemnified Person shall have the right to select separate counsel to represent
it. Upon receipt of notice from Metropolitan to such Indemnified Person of its
election so to assume the defense of such action and approval by the Indemnified
Person of counsel, Metropolitan will not be liable to such Indemnified Person
under this paragraph 7 for any fees of counsel subsequently incurred by such
Indemnified Person in connection with the defense thereof (other than the
reasonable costs of investigation subsequently incurred by such Indemnified
Person) unless (i) the Indemnified Person shall have employed separate counsel
in accordance with the provision of the next preceding sentence (it being
understood, however, that Metropolitan shall not be liable for the expenses of
more than one separate counsel in any one jurisdiction representing the
Indemnified Person, which counsel shall be approved by Cruttenden), (ii)
Metropolitan, within a reasonable time after notice of commencement of the
action, shall not have employed counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person, or (iii) Metropolitan
shall have authorized in writing the employment of counsel for the Indemnified
Person at the expense of Metropolitan, and except that, if clause (i) or (iii)
is applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii).
(c) Subject to the conditions set forth below, and in addition to any
rights of indemnification and contribution to which Metropolitan may be entitled
pursuant to any agreement among underwriters, underwriting agreement or
otherwise, and to the extent allowed by law, Cruttenden hereby agrees that it
will indemnify and hold Metropolitan and each person controlling, controlled by
or under common control with Metropolitan within the meaning of Section 15 of
the Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the rules and regulations thereunder (individually, an
"Indemnified Person") harmless from and against any and all loss, claim, damage,
liability, cost or expense whatsoever to which such Indemnified Person may
become subject under the Act, the Exchange Act, or other federal or state
statutory
<PAGE>
law or regulation, at common law or otherwise, arising out of, based upon, or in
any way related or attributed to the failure of Cruttenden to be a "qualified
independent underwriter" as contemplated by this Agreement. Cruttenden further
agrees that upon demand by an Indemnified Person at any time or from time to
time, it will promptly reimburse such Indemnified Person for, or pay, any loss,
claim, damage, liability, cost or expense as to which Cruttenden has indemnified
such person pursuant hereto. Notwithstanding the foregoing provisions of this
paragraph 7, any such payment or reimbursement by Cruttenden of fees, expenses
or disbursement incurred by an Indemnified Person in any proceeding in which a
final judgment by a court of competent jurisdiction (after all appeals or the
expiration of time to appeal) is entered against such Indemnified Person as a
direct result of such person's negligence, bad faith or willful misfeasance will
be promptly repaid to Cruttenden. In addition, anything in this paragraph 7 to
the contrary notwithstanding, Cruttenden shall not be liable for any settlement
of any action or proceeding effected without its written consent. Cruttenden and
Metropolitan agree that they shall each follow the procedures set forth in
paragraph 7(b) with respect to any claim against Cruttenden hereunder.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph 7 is due in
accordance with its terms but is for any reason held by a court to be
unavailable from Metropolitan to Cruttenden on grounds of policy or otherwise,
Metropolitan and Cruttenden shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) to which Metropolitan and
Cruttenden may be subject in such proportion so that Cruttenden is responsible
for that portion represented by the percentage that its fee under this Agreement
bears to the public offering price appearing on the cover page of the Prospectus
and Metropolitan is responsible for the balance, except as Metropolitan may
otherwise agree to reallocate a portion of such liability with respect to such
balance with any other person, including, without limitation, any other
"Qualified Independent Underwriter"; PROVIDED, HOWEVER, that (i) in no case
shall Cruttenden be responsible for any amount in excess of the fee set forth in
paragraph 4 above and (ii) no person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the Act shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this paragraph (c), any person controlling, controlled by or under
common control with Cruttenden, or any partner, director, officer, employee,
representative or any agent of any thereof, shall have the same rights to
contribution as Cruttenden and each person who controls Metropolitan within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each officer
of Metropolitan who shall have signed the Registration Statement and each
director of Metropolitan shall have the same rights to contribution as
Metropolitan, subject in each case to clause (i) of this paragraph (c). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against the other party under this
paragraph (c), notify such party from whom contribution may be sought, but the
omission to so notify such party shall not relieve the party from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this paragraph (c). The indemnity and
contribution agreements contained in this
<PAGE>
paragraph 7 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Indemnified Person or
termination of this Agreement.
Section 8. Authorization by Metropolitan. Metropolitan represents and
warrants to Cruttenden that this Agreement has been duly authorized, executed
and delivered by Metropolitan and constitutes a valid and binding obligation of
Metropolitan.
Section 9. Authorization by MIS. MIS represents and warrants to Cruttenden
that this Agreement has been duly authorized, executed and delivered by MIS and
constitutes a valid and binding obligation of MIS.
Section 10. Authorization by Cruttenden. Cruttenden represents and warrants
to Metropolitan that this Agreement has been duly authorized, executed and
delivered by Cruttenden and constitutes a valid and binding obligation of
Cruttenden.
Section 11. Notice. Whenever notice is required to be given pursuant to
this Agreement, such notice shall be in writing and shall be mailed by first
class mail, postage prepaid, addressed (a) if to Cruttenden Roth Incorporated,
at 18301 Von Karman, Suite 100, Irvine, CA 92612, Attention: Walter W.
Cruttenden and (b) if to Metropolitan, at 601 W. 1st. Avenue - Department
115000, Spokane, Washington 99201, Attention: Susan Thomson, Assistant Corporate
Counsel.
Section 12. Governing Law. This Agreement shall be construed (both as to
validity and performance) and enforced in accordance with and governed by the
laws of the State of Washington applicable to agreements made and to be
performed wholly within such jurisdiction.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above mentioned.
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
By: /s/ C. Paul Sandifur, Jr.
--------------------------------------
C. Paul Sandifur, Jr., President
METROPOLITAN INVESTMENT SECURITIES, INC.
By: /s/ Reuel Swanson
---------------------------------------
Reuel Swanson, Secretary
CRUTTENDEN ROTH INCORPORATED
By: /s/ Shelly Singhal
---------------------------------------
Shelly Singhal, Executive Vice President
<PAGE>
SCHEDULE A
Metropolitan Mortgage & Securities Co., Inc.
The Pricing Recommendation Letter of CRUTTENDEN is conditioned upon
Metropolitan's undertaking to maintain the distribution rate of the Preferred
Stock in accordance with the formula set forth below:
Notwithstanding anything to the contrary herein the Applicable Rate for any
monthly distribution period shall not, in any event, be less than 6% or greater
than 14% per annum. The Board of Directors may, however, by resolution,
authorized distributions in excess of the Applicable Rate. The Applicable Rate
for any monthly distribution period shall be the highest of the Treasury Bill
Rate, the Ten Year Constant Maturity Rate and the Twenty Year Constant Maturity
Rate (each as defined in the Preferred Stock Authorizing Resolution) plus one
half of one percentage point for such dividend period. In the event that the
Company determines in good faith that for any reason one or more of such rates
cannot be determined for any distribution period, then the Applicable Rate for
such period shall be the higher of whichever of such rates can be so determined.
<PAGE>
SCHEDULE B
Metropolitan Mortgage & Securities Co., Inc.
VARIABLE RATE, CUMULATIVE PREFERRED STOCK,
SERIES E-7 PRICING
For Distributions Payable On: _________________________________
Distributions Record Date: ____________________________________
<TABLE>
<CAPTION>
Date Date Average Applicable Rate Effective Resultant
Rate* Rate* Rate
<S> <C> <C> <C> <C> <C> <C>
3 Mo Treasury Bill _____________________ +.5% +2% _________
10 Yr Constant Rate _____________________ +.5% +2% _________
20 Yr Constant Rate _____________________ +.5% +2% _________
</TABLE>
HIGHEST RESULTANT RATE: ___________________________
MONTHLY DISTRIBUTION PER SHARE: ___________________
(Highest applicable rate divided by 12)
As resolved by the Board of Directors, distribution will be deemed
declared on the 1st day of each month, payable on the 20th of each month to the
holders of record on the 5th of each month.
* Includes any distribution authorized by the Board in excess of the
Applicable Rate.
--------------------------
Authorized Signature
<PAGE>
Exhibit 1.03
FORM OF PRICING RECOMMENDATION LETTER
Date: January __, 2000
C. Paul Sandifur, Jr., President
Metropolitan Investment Securities, Inc.
917 W. Sprague Avenue
Spokane, Washington 99201
Re: Pricing Opinion of CRUTTENDEN ROTH INCORPORATED
Metropolitan Mortgage & Securities Co., Inc. Offering of
$10,000,000 Variable Rate Cumulative Preferred Stock, Series E-7
Dear Mr. Sandifur:
This letter will serve to confirm our engagement as a "qualified
independent underwriter" as that term is defined in subparagraph (b)(15)of Rule
2720 to the NASD Conduct Rules, as amended ("Rule 2720").
Based upon our review of the registration statement, and the
performance of "due diligence" as required in subparagraph (c)(3)to Rule 2720,
it appears that the price of $100.00 per share on the Variable Rate Cumulative
Preferred Stock, Series E-7 (provided that the manner in which the computation
of dividends are those set forth in Schedules A and B to the Agreement to
Act as "Qualified Independent Underwriter" dated December 30, 1999, which is
filed as Exhibit 1.02 to the registration statement), is no higher than that
which we would recommend.
We hereby consent to the use of our name as a "qualified independent
underwriter," to the Registration Statement filed by Metropolitan Mortgage &
Securities Co., Inc. with respect to the above-referenced matter.
Very truly yours,
CRUTTENDEN ROTH INCORPORATED
By:______________________________
cc: National Association of Securities Dealers, Inc.
<PAGE>
KUTAK ROCK LLP
SUITE 2900 ATLANTA
717 SEVENTEENTH STREET KANSAS CITY
LINCOLN
DENVER, COLORADO 80202-3329 LITTLE ROCK
NEW YORK
303-297-2400 NEWPORT BEACH
FACSIMILE 303-292-7799 OKLAHOMA CITY
OMAHA
www.kutakrock.com PASADENA
PITTSBURGH
SCOTTSDALE
WASHINGTON
January 5, 2000
Metropolitan Mortgage & Securities Co., Inc.
601 West First Avenue
Spokane, WA 99201-5015
Re: Metropolitan Mortgage & Securities Co., Inc.
Variable Rate Cumulative Preferred Stock, Series E-7
Ladies and Gentlemen:
We have acted as counsel to Metropolitan Mortgage & Securities Co.,
Inc. (the "Company") in connection with the filing of a registration statement
to which this opinion is filed as an exhibit on Form S-2, under the Securities
Act of 1933, as amended (the "Act"). The registration statement covers a
proposed offering by the Company of up to 100,000 shares of Variable Rate
Cumulative Preferred Stock, Series E-7 at $100 per share (the "Preferred
Stock"). Such registration statement, as amended, on file with the Securities
and Exchange Commission (the "Commission") at the time such registration
statement becomes effective (including financial statements and schedules,
exhibits and all other documents filed as a part thereof or incorporated
therein) are herein referred to as the "Registration Statement."
In connection with this opinion, we have made such investigations and
examined such records, including the Company's Certificate of Incorporation,
Bylaws and corporate minutes as we deemed necessary to the performance of our
services and to give this opinion. We have also examined and are familiar with
the originals or copies, certified or otherwise identified to our satisfaction,
of such other documents, corporate records and other instruments as we have
deemed necessary for the preparation of this opinion. In expressing this
opinion, we have relied, as to any questions of fact upon which our opinion is
predicated, upon representations and certificates of the officers of the
Company.
In giving this opinion we assumed:
(a) the genuineness of all signatures and the authenticity and
completeness of all documents submitted to us as originals;
<PAGE>
KUTAK ROCK LLP
January 5, 2000
Page 2
(b) the conformity to originals and the authenticity of all
documents supplied to us as certified, photocopied, conformed or
facsimile copies and the authenticity and completeness of the originals
of any such documents; and
(c) the proper, genuine and due execution and delivery of all
documents by all parties to them and that there has been no breach of
the terms thereof.
Based upon the foregoing and subject to the qualifications set forth
above, and assuming (i) that the Registration Statement has become effective
under the Act, (ii) that all required actions are taken and conditions satisfied
with respect to the issuance of the Company's Preferred Stock as specified in
the prospectus and (iii) consideration is received for the Preferred Stock: we
are of the opinion that, when issued the Preferred Stock will be legally issued,
fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and the use of our name in the Registration Statement. In
giving such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Act or the Rules and
Regulations of the Commission promulgated pursuant thereto.
Very truly yours,
/s/ Kutak Rock LLP
Kutak Rock LLP
<PAGE>
Exhibit 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-2 of our report dated December 6, 1999 relating
to the financial statements and financial statement schedules, which appears in
Metropolitan Mortgage & Securities Co., Inc.'s Annual Report on Form 10-K for
the year ended September 30, 1999. We also consent to the references to us under
the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Spokane, Washington
January 5, 2000
