EXHIBIT 1.02
AGREEMENT TO ACT AS "QUALIFIED INDEPENDENT UNDERWRITER"
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
Investment Debentures, Series III
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 Xxxx Incorporated, a California corporation
("Cruttenden").
WITNESSETH:
WHEREAS, Metropolitan intends to offer $100,000,000 in Investment
Debentures Series III (hereinafter referred to as "Debentures"), 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 Debentures 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 Debentures;
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.
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 (15) 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 yields below which
Metropolitan's Debentures may not be offered based on the pricing formula that
is set forth in Schedules "A" and "B," copies of which are attached hereto, and
incorporated herein by reference (the "Pricing Recommendation Letter"). It is
understood and agreed by 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 debt 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 Expenses. It is agreed that Cruttenden shall be paid a
fee in the amount of $66,667 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 Debentures 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
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securities laws, and will not, on such date include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and that all contracts
and documents required by the Act to be filed or required as exhibits to the
Registration Statement have been filed. 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 or 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
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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 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
Debentures 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
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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 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 Debentures 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
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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.
(b) Promptly after receipt by an Indemnified Person under subparagraph
(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)
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Metropolitan shall have authorized in writing the employment of counsel for
the Indemnified Person at the expenses 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 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
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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 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 Xxxx Incorporated,
at 00000 Xxx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000, Attention: Xxxxxx X.
Xxxxxxxxxx and (b) if to Metropolitan, at 000 X. 0xx. Xxxxxx - Department
115000, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx Xxxxxxx, 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 laws
of the State of Washington applicable to agreements made and to be performed
wholly within such jurisdiction.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above mentioned.
METROPOLITAN MORTGAGE &
SECURITIES CO., INC.
By:/s/ C. Xxxx Xxxxxxxx Xx.
----------------------------------
C. Xxxx Xxxxxxxx, Xx., President
METROPOLITAN INVESTMENT
SECURITIES, INC.
By:/s/ Xxxxx Xxxxxxx
----------------------------------
Xxxxx Xxxxxxx, Secretary
CRUTTENDEN XXXX INCORPORATED
By:/s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx, Executive Vice President
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SCHEDULE A
Metropolitan Mortgage & Securities Co., Inc.
The Pricing Recommendation Letter of Cruttenden is conditioned upon
Metropolitan's undertaking to maintain the rates on its Debentures at least
equal to an "assumed floor." Based upon the pricing formula described below:
1. The interest rate to be paid on the Debentures shall be fixed by
Metropolitan from time to time. However, the rate shall not be lower than the
computation made per the worksheet on Schedule B, which is attached and
incorporated by reference herein.
2. The "assumed floor" for 6 to 11 month Debentures shall be at least 1.0%
above the lesser of the interest rate on the 6 month U.S. Treasury Bills, on a
discounted basis, based upon the auction average (which is published widely in
newspapers throughout the country, normally on the day following the auction)
and a composite average of the offering rates on 6 month certificates of deposit
currently being offered by banks and savings institutions in the northwestern
section of the United States. For purposes of this composite average of
certificate of deposit rates, the rates being offered by the following
institutions shall be considered initially:
a. Seattle First National Bank
b. Security State Bank
c. U.S. Bank of Washington
x. Xxxxx Fargo Bank
x. Xxxxxxxxxx Trust Bank
x. Xxxxxxxxxx Mutual Savings Bank
Cruttenden and Metropolitan agree to review on an ongoing basis the group
which comprises the composite average and may substitute another institution in
the composite group from time-to-time by mutual agreement, as the case may be.
3. The "assumed floor" for 60 to 120 month Debentures shall be computed in
like manner as that described in paragraph "2" above, except that the latest
auction average on 5 year U.S. Treasury Notes shall be considered in place of
the 6 month U.S. Treasury Bills, and 5 year certificates of deposit currently
offered in the composite group shall be considered in lieu of the 6 month rate.
4. Rates on 12 to 23 month, 24 to 35 month, 36 to 47 month and 48 to 59 month
Debentures shall be at least equal to the interpolated differences between the
computation of the "assumed floor" of 6 to 11 month Debentures and 60 to 120
month Debentures, based upon the computation set forth in Schedule B.
5. Rates on Debentures payable in installments of principal and interest shall
be no lower than 25% below the "assumed floor" for 60 to 120 month Debentures.
6. The computation of the "assumed floor" shall be made monthly, as of the
first Tuesday of each month, or at such other times during any month that
Metropolitan causes the offering rates to change from those in effect on
the first Tuesday of each month ("the computation date"). Metropolitan
agrees to furnish Cruttenden with a computation of the "assumed floor" by
completing the worksheet on Schedule B. Should the offering rates at that
time on Metropolitan's Debentures be less than the "assumed floor" as
computed, Metropolitan agrees to raise the rates on its Debentures to at
least the "assumed floor" within 10 calendar days of the computation date.
Should Metropolitan fail to raise its offering rates within the 10 day
period referred to above, Cruttenden reserves the right, in its
uncontrolled discretion, to withdraw its Pricing Recommendation Letter
regarding the offering rates on the Debentures.
SCHEDULE B
Metropolitan Mortgage & Securities Co., Inc.
PRICING FORMULA
C.D. RATE
Average rate among a composite of 6 selected Banks and Savings and Loans as of
the 1st Tuesday of each month.
GOVERNMENT RATE
Most current of 8 selected auction rates available on the 1st Tuesday of each
month.
Column A Column B Column C Column D Column E
Certificate of Government
Deposit (CD) Rate Enter Lesser of Metropolitan's
Calculation Calculation Column A or B Assumed Floor Current Rate
------------ ----------- --------------- ------------- -------------
5 yr Cd rate = 5 yr Gov't Rate
________ = _______
6 mo CD rate = 6 mo Gov't Rate
________ = ________
DIFFERENCE DIFFERENCE
= _______ = _______
X .20 X .20
________ ________
Differential = Differential =
________ ________
(enter in (a) (enter in (a)
below) below)
6 mo (actual) 6 mo (actual)
rate = rate =
______ ______ ____________ + 1% ____________ ____________
(a) + (a) + 6-11 months
________ ________
1 yr rate = 1 yr rate =
______ ______ ____________ + 1% ____________ ____________
(a) + (a) + 12-23 months
________ ________
2 yr rate = 2 yr rate =
______ ______ ____________ + 1% ____________ ____________
(a) + (a) + 24-35 months
________ ________
3 yr rate = 3 yr rate =
______ ______ ____________ + 1% ____________ ____________
(a) + (a) + 36-47 months
________ ________
4 yr rate = 4 yr rate =
______ ______ ____________ + 1% ____________ ____________
(a) + (a) + 48-59 months
________ ________
5 yr (actual) 5 yr (actual)
rate = rate =
_______ _______ _______________ + 1%____________ ____________
(a) + (a) + 60-120 months
_______ _______
INSTALLMENT PAYMENTS (Floor equal to yearly ________ _______
__________
rates MINUS .50) (yearly -.50
rate)
