Filed Pursuant to Rule 424(b)(3)
Registration No. 333-61282
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS
NOT COMPLETE AND MAY BE CHANGED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS ARE NOT AN OFFER TO SELL THESE SECURITIES AND ARE NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED FEBRUARY 6, 2003
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 1, 2001
$
[METLIFE LOGO]
[SNOOPY LOGO]
% DEBENTURES DUE MAY 15, 2005
---------------------
This prospectus supplement relates to the remarketing of $ aggregate
principal amount of debentures, due May 15, 2005, of MetLife, Inc. We issued the
debentures to MetLife Capital Trust I, or the Trust, in April 2000 in connection
with our issuance and sale to the public of equity security units. Each equity
security unit initially consisted of (a) a contract to purchase, for $50, shares
of our common stock on May 15, 2003, and (b) a capital security of the Trust,
with a stated liquidation amount of $50. The capital securities represented
undivided beneficial ownership interests in the assets of the Trust, which
consisted solely of the debentures we issued to the Trust.
In accordance with the terms of the capital securities, we have dissolved
the Trust and distributed the debentures to the holders of the capital
securities in exchange for their capital securities.
We will pay interest on the debentures quarterly on February 15, May 15,
August 15, and November 15 of each year, subject to our right to defer payment
of interest as described in this prospectus supplement. We presently have no
intention to defer any payments of interest on the remarketed debentures.
Interest on the debentures will accrue at % per annum from February 15,
2003. The first such interest payment on the debentures will be made on May 15,
2003.
We may not redeem the debentures prior to their maturity on May 15, 2005.
The debentures are being remarketed through Credit Suisse First Boston LLC
and Goldman, Sachs & Co., as joint remarketing agents, pursuant to a remarketing
agreement with us. We will not receive any of the proceeds from the remarketing.
See "Relationship of the Equity Security Units to the Remarketing" in this
prospectus supplement.
PER DEBENTURE TOTAL
------------- --------
Price to the Public.........................................
Maximum Remarketing Fee to Remarketing Agents...............
Delivery of the debentures, in book-entry form only, will be made on or
about February , 2003.
None of the Securities and Exchange Commission, any state securities
commission, the New York Superintendent of Insurance or any other regulatory
body has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
Joint Remarketing Agents
CREDIT SUISSE FIRST BOSTON GOLDMAN, SACHS & CO.
The date of this prospectus supplement is February , 2003
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
About This Prospectus Supplement............................ S-4
Summary of the Remarketing.................................. S-5
MetLife, Inc. .............................................. S-8
Recent Developments......................................... S-8
Use of Proceeds............................................. S-8
Selected Consolidated Financial Information................. S-9
Capitalization.............................................. S-14
Ratio of Earnings to Fixed Charges.......................... S-15
Relationship of the Equity Security Units to the
Remarketing............................................... S-16
Description of the Remarketed Debentures.................... S-17
Certain United States Federal Income Tax Consequences....... S-27
Plan of Distribution........................................ S-31
Offering Restrictions....................................... S-32
Legal Opinions.............................................. S-33
PROSPECTUS
About This Prospectus....................................... 2
Where You Can Find More Information......................... 2
Special Note Regarding Forward-Looking Statements........... 3
MetLife, Inc................................................ 5
The Trusts.................................................. 5
Use of Proceeds............................................. 7
Ratio of Earnings to Fixed Charges.......................... 7
Description of Securities................................... 7
Description of Debt Securities.............................. 7
Description of Capital Stock................................ 16
Description of Trust Preferred Securities................... 23
Description of Guarantees................................... 25
Plan of Distribution........................................ 28
Legal Opinions.............................................. 29
Experts..................................................... 29
---------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. NEITHER
WE NOR THE REMARKETING AGENTS HAVE AUTHORIZED ANYONE TO PROVIDE YOU WITH
ADDITIONAL OR DIFFERENT INFORMATION. IF ANYONE PROVIDED YOU WITH ADDITIONAL OR
DIFFERENT INFORMATION, YOU SHOULD NOT RELY ON IT. NEITHER WE NOR THE REMARKETING
AGENTS ARE MAKING AN OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION WHERE
THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION
CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS
ACCURATE ONLY AS OF THEIR RESPECTIVE DATES AND THAT ANY INFORMATION WE HAVE
INCORPORATED BY REFERENCE IS ACCURATE ONLY AS OF THE DATE OF THE DOCUMENT
INCORPORATED BY REFERENCE. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF
OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THOSE DATES.
---------------------
S-2
The debentures are offered for sale in those jurisdictions in the United
States, Canada, Europe, Asia and elsewhere where it is lawful to make such
offers. The distribution of this prospectus supplement and the accompanying
prospectus and the offering or sale of the debentures in some jurisdictions may
be restricted by law. Persons into whose possession this prospectus supplement
and the accompanying prospectus come are required by us and the remarketing
agents to inform themselves about and to observe any applicable restrictions.
This prospectus supplement and the accompanying prospectus may not be used for
or in connection with an offer or solicitation by any person in any jurisdiction
in which that offer or solicitation is not authorized or to any person to whom
it is unlawful to make that offer or solicitation. See "Offering Restrictions"
in this prospectus supplement.
S-3
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement contains the terms of this remarketing of
debentures. This prospectus supplement may add, update or change information in
the accompanying prospectus. In addition, the information incorporated by
reference in the accompanying prospectus may have added, updated or changed
information in the accompanying prospectus. If information in this prospectus
supplement is inconsistent with any information in the accompanying prospectus
(or any information incorporated therein by reference), this prospectus
supplement will apply and will supersede such information.
It is important for you to read and consider all information contained in
this prospectus supplement and the accompanying prospectus in making your
investment decision. You should also read and consider the additional
information under the caption "Where You Can Find More Information" in the
accompanying prospectus.
Unless otherwise stated or the context otherwise requires, references in
this prospectus supplement and the accompanying prospectus to "MetLife," "we,"
"our," or "us" refer to MetLife, Inc., together with Metropolitan Life Insurance
Company, or Metropolitan Life, and their respective direct and indirect
subsidiaries, while references to "MetLife, Inc." refer only to the holding
company on an unconsolidated basis.
S-4
SUMMARY OF THE REMARKETING
Issuer........................ MetLife, Inc.
Securities Offered............ $ aggregate principal amount of %
debentures due May 15, 2005.
Principal Amount.............. $50 per debenture.
Interest Rate................. The debentures will bear interest from February
15, 2003 at the rate of % per annum.
Interest Payment Dates........ February 15, May 15, August 15 and November 15
of each year. May 15, 2003 will be the first
interest payment date on which the above rate
of interest applies.
Deferral Right................ We have the right to defer payment of interest
on the debentures at any time, and from time to
time. No deferral period, however, may extend
beyond May 15, 2005. During any period in which
we defer interest payments on the debentures,
we cannot
- declare or pay any dividends or
distributions on our capital stock;
- redeem, purchase, acquire or make a
liquidation payment on any of our
capital stock;
- make any interest, principal or premium
payment on, or repurchase or redeem, any
of our debt securities that rank equally
with or junior in interest to the
debentures; or
- make any payment on any guarantee of the
debt securities of any of our
subsidiaries if such guarantee ranks
equal with or junior in interest to the
debentures.
We presently have no intention to defer any
payments of interest on the remarketed
debentures.
The Remarketing............... We issued the debentures in April 2000 to the
Trust, in connection with our issuance and sale
to the public of equity security units. Each
equity security unit initially consisted of a
stock purchase contract and a capital security
of the Trust. Each capital security represented
an undivided beneficial ownership interest in
the assets of the Trust, which consisted solely
of the debentures. In order to secure their
obligations under the stock purchase contracts,
investors in the capital securities pledged
their capital securities in our favor. We have
dissolved the Trust and distributed the
debentures to the holders of the capital
securities. Under the terms of the equity
security units, we are obligated to engage one
or more nationally recognized investment banks
to remarket the debentures on behalf of the
holders (other than those holders who have
elected not to participate in the remarketing)
pursuant to a remarketing agreement between us
and the remarketing agents. We have appointed
Credit Suisse First Boston LLC
S-5
and Goldman, Sachs & Co. to act as joint
remarketing agents.
Pricing of the Remarketed
Debentures.................... Pursuant to the remarketing agreement, the
remarketing agents will use their commercially
reasonable best efforts to sell the remarketed
debentures in this offering at a price equal to
100.5% of the "remarketing value." Subject to
market conditions, we expect that the
remarketed debentures will be offered for sale
at a price calculated at a premium to their
principal amount of $50 per debenture. The
remarketing value with respect to each
debenture that is being offered in this
remarketing is the sum of:
- the value at February 12, 2003 of such
amount of U.S. Treasury securities
(CUSIP No. 912795MM0) as will pay, on or
prior to May 15, 2003, an amount of cash
equal to the interest scheduled to be
paid on the debenture on that date, at
the rate of interest in effect prior to
the re-setting of the interest rate in
the remarketing; and
- the value at February 12, 2003 of such
amount of U.S. Treasury securities
(CUSIP No. 912795MM0) as will pay, on or
prior to May 15, 2003, an amount of cash
equal to $50.
On February 12, 2003, the remarketing agents
will attempt to reset the rate of interest
payable on the remarketed debentures to a rate
they believe is sufficient to cause the market
value of each debenture to be equal to 100.5%
of the remarketing value.
Long-Term Senior Unsecured
Debt Ratings.................. Standard & Poor's: A
Moody's: A2
Fitch: A
A.M. Best: a+
The ratings set forth above are not a
recommendation to purchase, hold or sell the
remarketed debentures, inasmuch as the ratings
do not comment as to market price or
suitability for a particular investor. The
ratings are based on current information
MetLife, Inc. has furnished to the rating
agencies and information obtained by the rating
agencies from other sources. The ratings are
only accurate as of the date hereof and may be
changed, superseded or withdrawn as a result of
changes in, or unavailability of, such
information and, therefore, a prospective
purchaser should check the current ratings
before purchasing the remarketed debentures.
Ranking....................... The debentures are unsecured obligations of
MetLife, Inc. and rank equally in right of
payment with all of our existing and future
senior unsecured and unsubordinated
indebtedness, subject, as provided in the
indenture, to our
S-6
right to defer payment of interest on the
debentures. During any period in which we defer
interest payments on the debentures, in
general, we could not make any interest,
principal or premium payment on, or repurchase
or redeem, any of our debt securities that rank
equally with or junior to the debentures.
Redemption.................... We may not redeem the debentures at any time
prior to the date of their maturity.
Use of Proceeds............... We will not receive any of the proceeds from
the remarketing. See "Relationship of the
Equity Security Units to the Remarketing."
Clearance and Settlement...... The debentures will be cleared through The
Depository Trust Company, Clearstream,
Luxembourg and the Euroclear System.
Governing Law................. State of New York.
S-7
METLIFE, INC.
We are a leading provider of insurance and financial services to a broad
spectrum of individual and institutional customers. We offer life insurance,
annuities, automobile and property insurance and mutual funds to individuals. We
also provide group insurance, reinsurance, as well as retirement and savings
products and services to corporations and other institutions with approximately
33 million employees and members.
We distribute our products and services nationwide through multiple
channels, with the primary distribution systems being our core career agency
system, our general agency distribution systems, our regional sales forces, our
dedicated sales forces, financial intermediaries, independent agents and product
specialists. We operate in the international markets that we serve through
subsidiaries and joint ventures. Our international segment focuses on the
Asia/Pacific region, Latin America and selected European countries and currently
has insurance operations in 13 countries.
MetLife, Inc. is incorporated under the laws of the State of Delaware. Our
principal executive offices are located at One Madison Avenue, New York, New
York 10010-3690 and our telephone number is (212) 578-2211.
RECENT DEVELOPMENTS
OFFERING OF SENIOR NOTES
On December 3, 2002, we issued $400.0 million aggregate principal amount of
5.375% senior notes due 2012 and $600.0 million aggregate principal amount of
6.50% senior notes due 2032.
USE OF PROCEEDS
We will not receive any of the proceeds from the remarketing. See
"Relationship of the Equity Security Units to the Remarketing."
S-8
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected historical consolidated financial
information for MetLife. The selected historical consolidated financial
information for the years ended December 31, 2001, 2000 and 1999 and at December
31, 2001 and 2000 has been derived from our audited consolidated financial
statements included in our Annual Report on Form 10-K for the year ended
December 31, 2001. This selected consolidated financial information should be
read in conjunction with and is qualified by reference to these financial
statements and the related notes. The selected historical consolidated financial
information for the years ended December 31, 1998 and 1997 and at December 31,
1999, 1998 and 1997 has been derived from our audited consolidated financial
statements not included or incorporated by reference in this prospectus
supplement or the accompanying prospectus. The selected historical consolidated
financial information at and for the nine months ended September 30, 2002 and
2001 has been derived from the unaudited interim condensed consolidated
financial statements included in our Quarterly Report on Form 10-Q for the nine
months ended September 30, 2002. The following consolidated statements of income
and consolidated balance sheet data have been prepared in conformity with
accounting principles generally accepted in the United States of America
("GAAP"). Some previously reported amounts have been reclassified to conform
with the presentation for the nine months ended September 30, 2002.
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
------------------- -----------------------------------------------
2002 2001 2001 2000 1999 1998 1997
-------- -------- ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
STATEMENTS OF INCOME DATA
Revenues:
Premiums........................... $13,858 $12,634 $17,212 $16,317 $12,088 $11,503 $11,278
Universal life and investment-type
product policy fees.............. 1,558 1,413 1,889 1,820 1,433 1,360 1,418
Net investment income(1)........... 8,401 8,406 11,261 11,028 9,467 9,861 9,416
Other revenues..................... 1,076 1,130 1,507 2,229 1,861 1,785 1,236
Net investment gains and
losses(1)(3)(4).................. (547) (380) (603) (394) (70) 2,020 779
------- ------- ------- ------- ------- ------- -------
Total revenues(4)(5)............. 24,346 23,203 31,266 31,000 24,779 26,529 24,127
------- ------- ------- ------- ------- ------- -------
Expenses:
Policyholder benefits and
claims(6)........................ 14,239 13,447 18,454 16,893 13,100 12,638 12,403
Interest credited to policyholder
account balances................. 2,177 2,228 3,084 2,935 2,441 2,711 2,878
Policyholder dividends............. 1,489 1,567 2,086 1,919 1,690 1,651 1,742
Payments to former Canadian
policyholders(4)................. -- -- -- 327 -- -- --
Demutualization costs.............. -- -- -- 230 260 6 --
Other expenses(7).................. 4,978 4,893 7,022 7,400 6,210 7,544 5,516
------- ------- ------- ------- ------- ------- -------
Total expenses(4)(5)............. 22,883 22,135 30,646 29,704 23,701 24,550 22,539
------- ------- ------- ------- ------- ------- -------
Income from continuing operations
before provision for income
taxes.............................. 1,463 1,068 620 1,296 1,078 1,979 1,588
Provision for income taxes(1)(8)..... 473 360 228 422 523 701 438
------- ------- ------- ------- ------- ------- -------
Income from continuing operations.... 990 708 392 874 555 1,278 1,150
Income from discontinued operations,
net of income taxes(1)............. 54 61 81 79 62 65 53
------- ------- ------- ------- ------- ------- -------
Net income........................... $ 1,044 $ 769 $ 473 $ 953 $ 617 $ 1,343 $ 1,203
======= ======= ======= ======= ======= ======= =======
Net income after April 7, 2000 (date
of demutualization)................ $ 1,173
=======
S-9
AT DECEMBER 31,
AT SEPTEMBER 30, ----------------------------------------------------
2002 2001 2000 1999 1998 1997
---------------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
BALANCE SHEET DATA
Assets:
General account assets(2)... $211,885 $194,184 $183,884 $160,291 $157,278 $154,444
Separate account assets..... 56,049 62,714 70,250 64,941 58,068 48,338
-------- -------- -------- -------- -------- --------
Total assets.............. $267,934 $256,898 $254,134 $225,232 $215,346 $202,782
======== ======== ======== ======== ======== ========
Liabilities:
Life and health policyholder
liabilities(9)............ $158,972 $148,323 $140,012 $122,637 $122,726 $125,849
Property and casualty
policyholder
liabilities(9)............ 2,693 2,610 2,559 2,318 1,477 1,509
Short-term debt............. 878 355 1,085 4,180 3,572 4,564
Long-term debt.............. 3,428 3,628 2,400 2,494 2,886 2,866
Separate account
liabilities............... 56,049 62,714 70,250 64,941 58,068 48,338
Other liabilities(2)........ 27,574 21,950 20,349 14,972 11,750 5,649
-------- -------- -------- -------- -------- --------
Total liabilities......... 249,594 239,580 236,655 211,542 200,479 188,775
-------- -------- -------- -------- -------- --------
Company-obligated
mandatorily redeemable
securities of subsidiary
trusts.................... 1,263 1,256 1,090 -- -- --
-------- -------- -------- -------- -------- --------
Equity:
Common Stock, at par value.. 8 8 8 -- -- --
Additional paid-in
capital(10)............... 14,967 14,966 14,926 -- -- --
Retained earnings(10)....... 2,393 1,349 1,021 14,100 13,483 12,140
Treasury stock, at
cost(10).................. (2,405) (1,934) (613) -- -- --
Accumulated other
comprehensive income
(loss).................... 2,114 1,673 1,047 (410) 1,384 1,867
-------- -------- -------- -------- -------- --------
Total equity.............. 17,077 16,062 16,389 13,690 14,867 14,007
-------- -------- -------- -------- -------- --------
Total liabilities and
equity.................. $267,934 $256,898 $254,134 $225,232 $215,346 $202,782
======== ======== ======== ======== ======== ========
AT OR FOR THE NINE MONTHS
ENDED SEPTEMBER 30, AT OR FOR THE YEARS ENDED DECEMBER 31,
------------------------- ----------------------------------------------------
2002 2001 2001 2000 1999 1998 1997
----------- ----------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
OTHER DATA
Net income........... $ 1,044 $ 769 $ 473 $ 953 $ 617 $ 1,343 $ 1,203
Return on
equity(11)......... N/A N/A 3.2% 6.5% 4.5% 10.5% 10.4%
Operating cash
flows.............. $ 2,540 $ 2,939 $ 4,799 $ 1,299 $ 3,883 $ 842 $ 2,872
Total assets under
management(12)..... $290,181 $276,750 $282,414 $301,297 $373,612 $360,703 $338,731
INCOME FROM CONTINUING
OPERATIONS PER SHARE
DATA(13)
Basic earnings per
share.............. $ 1.40 $ 0.95 $ 0.53 $ 1.13 N/A N/A N/A
Diluted earnings per
share.............. $ 1.35 $ 0.91 $ 0.51 $ 1.11 N/A N/A N/A
S-10
AT OR FOR THE NINE MONTHS
ENDED SEPTEMBER 30, AT OR FOR THE YEARS ENDED DECEMBER 31,
------------------------- ----------------------------------------------------
2002 2001 2001 2000 1999 1998 1997
----------- ----------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
INCOME FROM
DISCONTINUED
OPERATIONS PER SHARE
DATA(13)
Basic earnings per
share.............. $ 0.08 $ 0.08 $ 0.11 $ 0.10 N/A N/A N/A
Diluted earnings per
share.............. $ 0.07 $ 0.08 $ 0.11 $ 0.10 N/A N/A N/A
NET INCOME PER SHARE
DATA(13)
Basic earnings per
share.............. $ 1.48 $ 1.03 $ 0.64 $ 1.52 N/A N/A N/A
Diluted earnings per
share.............. $ 1.42 $ 0.99 $ 0.62 $ 1.49 N/A N/A N/A
DIVIDENDS DECLARED PER
SHARE(14)............ N/A N/A $ 0.20 $ 0.20 N/A N/A N/A
---------------
(1) In accordance with Statement of Financial Accounting Standards ("SFAS") No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets, income
related to real estate sold or classified as held-for-sale for transactions
initiated on or after January 1, 2002 is presented as discontinued
operations. The following table presents the components of income from
discontinued operations:
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
-------------- --------------------------------
2002 2001 2001 2000 1999 1998 1997
----- ----- ---- ---- ---- ---- ----
(DOLLARS IN MILLIONS)
Net investment income................ $88 $91 $119 $116 $97 $101 $75
Net investment gains and losses...... (8) -- -- 4 -- 1 8
--- --- ---- ---- --- ---- ---
Total revenues................... 80 91 119 120 97 102 83
Provision for income taxes........... 26 30 38 41 35 37 30
--- --- ---- ---- --- ---- ---
Income from discontinued
operations..................... $54 $61 $ 81 $ 79 $62 $ 65 $53
=== === ==== ==== === ==== ===
(2) In 1998, we adopted the provisions of Financial Accounting Standards Board
("FASB") Statement No. 125, Accounting for Transfers and Services of
Financial Assets and Extinguishments of Liabilities, with respect to our
securities lending program. Adoption of the provisions had the effect of
increasing assets and liabilities by $3,769 million at December 31, 1998.
Effective April 1, 2001, we adopted certain additional accounting and
reporting requirements of SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities -- a
replacement for FASB Statement No. 125, relating to the derecognition of
transferred assets and extinguished liabilities and the reporting of
servicing assets and liabilities. The adoption of these requirements did
not have a material impact on our unaudited interim condensed consolidated
financial statements or on our audited annual consolidated financial
statements.
S-11
(3) Investment gains and losses are presented net of related policyholder
amounts. The amounts netted against investment gains and losses are the
following:
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
------------- ---------------------------------------
2002 2001 2001 2000 1999 1998 1997
----- ----- ----- ----- ----- ------ ------
(DOLLARS IN MILLIONS)
Gross investment gains and
losses.................. $(649) $(487) $(737) $(448) $(137) $2,628 $1,010
----- ----- ----- ----- ----- ------ ------
Less amounts allocable to:
Future policy benefit
loss recognition...... -- -- -- -- -- (272) (126)
Deferred policy
acquisition costs..... 26 15 (25) 95 46 (240) (70)
Participating pension
contracts............. (2) -- -- (126) 21 (96) (35)
Policyholder dividend
obligation............ 78 92 159 85 -- -- --
----- ----- ----- ----- ----- ------ ------
Total................. 102 107 134 54 67 (608) (231)
----- ----- ----- ----- ----- ------ ------
Net investment gains and
losses.................. $(547) $(380) $(603) $(394) $ (70) $2,020 $ 779
===== ===== ===== ===== ===== ====== ======
Gross investment gains and losses exclude amounts related to real estate
operations reported as discontinued operations in accordance with SFAS
144.
Investment gains and losses have been reduced by (i) additions to future
policy benefits resulting from the need to establish additional
liabilities due to the recognition of investment gains, (ii) deferred
policy acquisition amortization, to the extent that such amortization
results from investment gains and losses, (iii) adjustments to
participating contractholder accounts when amounts equal to such
investment gains and losses are applied to the contractholder's accounts,
and (iv) adjustments to the policyholder dividend obligation resulting
from investment gains and losses. This presentation may not be comparable
to presentations made by other insurers.
(4) Includes the following combined financial statement data of Conning
Corporation ("Conning"), which was sold on July 2, 2001, our controlling
interest in Nvest Companies, L.P. ("Nvest") and its affiliates, which were
sold in 2000, MetLife Capital Holdings, Inc., which was sold in 1998, and
our Canadian operations and U.K. insurance operations, substantially all of
which were sold in 1998 and 1997:
FOR THE NINE
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
2001 2001 2000 1999 1998 1997
------------- ---- ---- ---- ------ ------
(DOLLARS IN MILLIONS)
Total revenues.................. $32 $32 $605 $655 $1,405 $2,149
=== === ==== ==== ====== ======
Total expenses.................. $33 $33 $580 $603 $1,275 $1,870
=== === ==== ==== ====== ======
As a result of these sales, we recorded investment gains of $25 million
for the nine months ended September 30, 2001, and of $25 million, $663
million, $520 million and $139 million for the years ended December 31,
2001, 2000, 1998 and 1997, respectively.
In July 1998, Metropolitan Life sold a substantial portion of its Canadian
operations to Clarica Life Insurance Company ("Clarica Life"). As part of
that sale, a large block of policies in effect with Metropolitan Life in
Canada was transferred to Clarica Life, and the holders of the transferred
Canadian policies became policyholders of Clarica Life. Those transferred
policyholders are no longer policyholders of Metropolitan Life and,
therefore,
S-12
were not entitled to compensation under the plan of reorganization.
However, as a result of a commitment made in connection with obtaining
Canadian regulatory approval of that sale and in connection with the
demutualization, Metropolitan Life's Canadian branch made cash payments to
those who were, or were deemed to be, holders of these transferred
Canadian policies. The payments were determined in a manner that is
consistent with the treatment of, and fair and equitable to, eligible
policyholders of Metropolitan Life.
(5) Included in total revenues and total expenses for the nine months ended
September 30, 2002 are $192 million and $164 million, respectively, related
to Aseguradora Hidalgo S.A., which was acquired on June 20, 2002. Included
in total revenues and total expense for the year ended December 31, 2000
are $3,739 million and $3,561 million, respectively, related to GenAmerica
Financial Corporation, which was acquired on January 6, 2000.
(6) Policyholder benefits and claims exclude $(76) million and $(92) million
for the nine months ended September 30, 2002 and 2001, respectively, and
$(159) million, $41 million, $(21) million, $368 million and $161 million
for the years ended December 31, 2001, 2000, 1999, 1998 and 1997,
respectively, of future policy benefit loss recognition, adjustments to
participating contractholder accounts and changes in the policyholder
dividend obligation that have been netted against net investment gains and
losses as such amounts are directly related to such gains and losses. This
presentation may not be comparable to presentations made by other insurers.
(7) Other expenses exclude $(26) million and $(15) million for the nine months
ended September 30, 2002 and 2001, respectively, and $25 million, $(95)
million, $(46) million, $240 million and $70 million for the years ended
December 31, 2001, 2000, 1999, 1998 and 1997, respectively, of amortization
of deferred policy acquisition costs that have been netted against net
investment gains and losses as such amounts are directly related to such
gains and losses. This presentation may not be comparable to presentations
made by other insurers.
(8) Provision for income taxes includes $(145) million, $125 million, $18
million and $(40) million for surplus tax (credited) accrued by
Metropolitan Life for the years ended December 31, 2000, 1999, 1998 and
1997, respectively. Prior to its demutualization, Metropolitan Life was
subject to surplus tax imposed on mutual life insurance companies under
Section 809 of the Internal Revenue Code.
(9) Policyholder liabilities include future policy benefits, policyholder
account balances, other policyholder funds, policyholder dividends payable
and the policyholder dividend obligation.
(10) For additional information regarding these items, see Notes 1 and 17 to the
Consolidated Financial Statements contained in our Annual Report on Form
10-K for the year ended December 31, 2001.
(11) Return on equity is defined as net income divided by average total equity,
excluding accumulated other comprehensive income (loss).
(12) Includes MetLife's general account and separate account assets managed on
behalf of third parties. Includes $21 billion of assets under management
managed by Conning at December 31, 2000. Conning was sold on July 2, 2001.
Includes $133 billion, $135 billion and $125 billion of assets under
management managed by Nvest at December 31, 1999, 1998 and 1997,
respectively. Nvest was sold on October 30, 2000.
(13) Based on earnings subsequent to the date of demutualization. For additional
information regarding net income per share data, see Note 19 to the
Consolidated Financial Statements contained in our Annual Report on Form
10-K for the year ended December 31, 2001.
(14) On October 22, 2002, our Board of Directors declared a dividend of $0.21
per common share payable by December 13, 2002 to shareholders of record on
November 8, 2002.
S-13
CAPITALIZATION
The following table sets forth our capitalization at September 30, 2002, on
an actual basis and as adjusted to give effect to:
- our issuance on December 3, 2002 of $400.0 million aggregate principal
amount of 5.375% senior notes due 2012 and $600.0 million aggregate
principal amount of 6.50% senior notes due 2032; and
- this remarketing of the debentures (including the dissolution of the
Trust and distribution of the debentures to unitholders prior to the
remarketing).
AT SEPTEMBER 30, 2002
--------------------------------
AS ADJUSTED FOR
----------------------
SENIOR
NOTES
ACTUAL OFFERING REMARKETING
------- -------- -----------
(DOLLARS IN MILLIONS)
Short-term debt..................................... $ 878 $ 878 $
Long-term debt...................................... 3,428 4,420
------- ------- --------
Total debt..................................... 4,306 5,298
------- ------- --------
Company-obligated mandatorily redeemable securities
of subsidiary trusts(1)........................... 1,263 1,263
------- ------- --------
Stockholders' equity:
Common stock, at par value.......................... 8 8
Additional paid-in capital.......................... 14,967 14,967
Retained earnings................................... 2,393 2,393
Treasury stock, at cost............................. (2,405) (2,405)
Accumulated other comprehensive income.............. 2,114 2,114
------- ------- --------
Total stockholders' equity(2).................. 17,077 17,077
------- ------- --------
Total capitalization...................... $22,646 $23,638 $
======= ======= ========
---------------
(1) Includes the capital securities issued by the Trust. As a result of the
dissolution of the Trust, approximately $1 billion of the debentures that
underlie the capital securities will be reflected on our balance sheet as
long-term debt.
(2) In connection with the settlement of the stock purchase contracts on May 15,
2003, we expect to issue additional common stock for an aggregate purchase
price of $1,006,250,000.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges.
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- --------------------------------
2002 2001 2001 2000 1999 1998 1997
----- ----- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges............ 1.57 1.39 1.16 1.35 1.33 1.62 1.53
For purposes of this computation, earnings are defined as income from
continuing operations before provision for income taxes excluding undistributed
income and losses from equity method investments, minority interest and fixed
charges. Fixed charges are the sum of interest and debt issue costs, interest
credited to policyholder account balances, interest on bank deposits and an
estimated interest component of rent expense.
S-15
RELATIONSHIP OF THE EQUITY SECURITY UNITS TO THE REMARKETING
In April 2000, in connection with our demutualization, we issued 20,125,000
equity security units in a public offering. Each equity security unit consisted
of (a) a contract to purchase, for $50, a specified number of shares of our
common stock on May 15, 2003, and (b) a capital security of the Trust, with a
stated liquidation amount of $50. The capital securities represented undivided
beneficial ownership interests in the assets of the Trust, which consisted
solely of the debentures.
In accordance with the terms of the capital securities, we have dissolved
the Trust and caused the debentures to be distributed to the holders of the
capital securities.
Under the terms of the equity security units, MetLife, Inc. has engaged
Credit Suisse First Boston LLC and Goldman, Sachs & Co. to remarket the
debentures, on February 12, 2003, on behalf of the holders (other than those
holders who have elected not to participate in the remarketing), pursuant to a
remarketing agreement between us and the remarketing agents. See "Plan of
Distribution."
We will not receive any of the proceeds from the remarketing. The
remarketing agents will use the net proceeds of the remarketing of debentures
comprising part of "normal units" (i.e., units consisting of a debenture and a
stock purchase contract) to purchase certain U.S. Treasury securities which will
mature on or about the settlement date for the stock purchase contracts. These
U.S. Treasury securities will be pledged to support the obligations of holders
of normal units to purchase shares of our common stock under those contracts. On
May 15, 2003, when the stock purchase contracts are scheduled to be settled, we
expect to receive the purchase price for the shares in the aggregate amount of
$1,006,250,000 from the proceeds paid upon maturity of the U.S. Treasury
securities. The remarketing agents will retain a remarketing fee not exceeding
25 basis points (.25%) of the total proceeds of the remarketing. The remarketing
agents will remit the remaining portion of the proceeds, if any, for the benefit
of holders of debentures participating in the remarketing.
S-16
DESCRIPTION OF THE REMARKETED DEBENTURES
A description of the specific terms of the debentures of MetLife, Inc.
being offered in this remarketing is set forth below. The description is
qualified in its entirety by reference to the indenture, dated as of April 7,
2000, between MetLife, Inc. and The Bank of New York, as trustee, as
supplemented by the first supplemental indenture, dated as of April 7, 2000,
under which the debentures have been issued. We refer to the indenture and the
first supplemental indenture together as the indenture. The indenture has been
qualified as an indenture under the Trust Indenture Act. The terms of the
indenture are those provided in the indenture and those made part of the
indenture by the Trust Indenture Act. We have filed a copy of the indenture with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as a result of which the indenture is incorporated by reference as an
exhibit to the registration statement of which this prospectus supplement forms
a part.
OVERVIEW
The aggregate principal amount of debentures to be remarketed pursuant to
this prospectus supplement is $ .
The debentures are unsecured and rank equally in right of payment to all of
our other senior unsecured debt to the extent provided in the indenture, subject
to our right to defer payment of interest on the debentures at any time, or from
time to time. The debentures have been issued as a separate series of senior
debt securities under the indenture, limited to $1,037,371,150 in aggregate
principal amount.
The debentures are not subject to a sinking fund provision. The entire
principal amount of the debentures will mature and become due and payable,
together with any accrued and unpaid interest thereon including compound
interest, if any, on May 15, 2005.
Because MetLife, Inc. is principally a holding company, its right to
participate in any distribution of assets of any subsidiary, upon the
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
the holders of debentures to benefit indirectly from any such distribution), is
subject to the prior claims of creditors of the subsidiary, except to the extent
MetLife, Inc. may be recognized as a creditor of that subsidiary. Accordingly,
MetLife, Inc.'s obligations under the debentures will be effectively
subordinated to all existing and future liabilities of its subsidiaries, and
claimants should look only to its assets for payment thereunder. The indenture
does not limit the incurrence or issuance of other secured or unsecured debt by
MetLife, Inc., including senior debt. MetLife, Inc. has an aggregate principal
amount of approximately $ of senior debt outstanding and our subsidiaries
have an aggregate principal amount of approximately $ of total debt.
Under specific limited circumstances, debentures may be issued in
certificated form in exchange for a global security. In the case that debentures
are issued in certificated form, these debentures will be in denominations of
$50 and integral multiples of $50 and may be transferred or exchanged at the
offices described below. Payments on debentures issued as a global security will
be made to the depositary, a successor depositary or, in the case that no
depositary is used, to a paying agent for the debentures. In the case that
debentures are issued in certificated form, principal and interest will be
payable, the transfer of the debentures will be registrable and debentures will
be exchangeable for debentures of other denominations of a like aggregate
principal amount, at the corporate trust office or agency of the trustee in New
York, New York. However, at our option, payment of interest may be made by check
mailed to the address of the entitled holder or by wire transfer to an account
appropriately designated by the entitled holder.
S-17
The indenture does not contain provisions that afford holders of the
debentures protection in case we are involved in a highly leveraged transaction
or other similar transaction that may adversely affect those holders.
INTEREST
Following the remarketing, each debenture will bear interest from February
15, 2003 at the rate of % per year, payable quarterly in arrears on
February 15, May 15, August 15, and November 15 of each year, subject to the
deferral provisions described below, commencing May 15, 2003 and ending on May
15, 2005. The interest rate of the remarketed debentures will be set by the
remarketing agents to a rate they believe is sufficient to cause the market
value of each debenture to be equal to 100.5% of the remarketing value. Subject
to market conditions, we expect that the remarketed debentures will be offered
for sale at a price calculated at a premium to their principal amount of $50 per
debenture. Interest is payable to the person in whose name that debenture is
registered, subject to certain exceptions, at the close of business on the
business day next preceding that interest payment date. If debentures do not
remain in book-entry only form, we will have the right to select record dates,
which shall be more than one business day but less than 60 business days prior
to the interest payment date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year consisting of twelve 30-day months. The amount of interest
payable for any period shorter than a full quarterly period for which interest
is computed will be computed on the basis of the actual number of days elapsed
in that 90-day period. In the case that any date on which interest is payable on
the debentures is not a business day, then payment of the interest payable on
that date will be made on the next succeeding day that is a business day.
However, no interest or other payment shall be paid in respect of the delay but
if that business day is in the next succeeding calendar year, then that payment
shall be made on the immediately preceding business day, in each case with the
same force and effect as if made on that date.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no event of default has occurred and is continuing, we will have
the right under the indenture to defer the payment of interest on the debentures
at any time and from time to time for a period not exceeding five years. No
deferral period, however, may extend beyond the stated maturity of the
debentures on May 15, 2005, and any deferral period must end on an interest
payment date. At the end of an extension period, we must pay all interest then
accrued and unpaid, together with any interest on the accrued and unpaid
interest, to the extent permitted by applicable law. During any deferral period,
interest will continue to accrue and holders of debentures will be required to
accrue such deferred interest income for United States federal income tax
purposes prior to the receipt of cash (in the form of original issue discount)
attributable to such income, regardless of the method of accounting used by the
holders.
Prior to the termination of any deferral period, we may extend such
deferral period, provided that such extension does not:
- cause such extension period to exceed the maximum deferral period;
- end on a date other than an interest payment date; or
- extend beyond the stated maturity of the debentures.
Upon the termination of any deferral period, or any extension of the
related deferral period, and the payment of all amounts then due, we may begin a
new deferral period, subject to the limitations described above. No interest
shall be due and payable during a deferral period except at the end thereof. We
must give the debenture trustee notice of our election to begin or extend a
deferral period at least five business days prior to the date interest on the
debentures would have been payable except for the election to begin or extend
the deferral period.
S-18
The trustee shall give notice of our election to begin or extend a deferral
period to the holders of the debentures. Subject to the foregoing limitations,
there is no limitation on the number of times that we may begin or extend an
extension period. We presently have no intention to defer any payments of
interest on the remarketed debentures.
RESTRICTIONS ON CERTAIN PAYMENTS
We have covenanted that if at any time:
- there shall have occurred any event of which we have actual knowledge
that is, or with the giving of notice or the lapse of time, or both,
would be, an event of default; or
- we shall have given notice or our election to exercise our right to begin
or extend a deferral period as provided in the indenture and shall not
have rescinded such notice, and such deferral period, or any extension
thereof, shall have commenced and be continuing,
then we will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our
capital stock other than stock dividends which consist of stock of the
same class as that on which the dividends are being paid;
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem or make any other payment in respect to any of our
debt securities, including other debentures, that rank equally with or
junior in interest to the debentures; or
- make any guarantee payments with respect to any guarantee by us of the
debt securities of any of our subsidiaries, including under any
guarantees to be issued by us with respect to securities of other trusts
or entities to be established by us similar to the Trust, if such
guarantee ranks equally with or junior in interest to the debentures,
in each case other than:
- dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, our capital stock;
- any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan
in the future, or the redemption or repurchase of any such rights
pursuant thereto;
- as a result of reclassification of our capital stock or the exchange or
conversion of one class or series of our capital stock for another class
or series of our capital stock;
- the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged; and
- purchases or acquisition of shares of our common stock, in connection
with the satisfaction by us of our obligations under any employee benefit
plan or any other contractual obligation (other than a contractual
obligation ranking expressly by its terms equal with or junior to the
debentures).
EVENTS OF DEFAULT
If any event of default occurs and is continuing, the trustee or the
holders of at least 25% in aggregate principal amount of debentures then
outstanding may declare the principal of, and any accrued interest on, all the
debentures due and payable immediately.
S-19
The following are events of default under the indenture with respect to the
debentures:
- failure to pay interest on the debentures when due, continued for a
period of 30 days (subject to the deferral of any due date in the case of
a deferral period);
- failure to pay the principal of the debentures when due and payable on
May 15, 2005, or when otherwise due;
- failure to comply, within 90 days after notice provided in accordance
with the terms of the indenture, with our other obligations under the
indenture; and
- certain events of bankruptcy, insolvency or reorganization relating to
us.
If an event of default occurs and is continuing, the trustee or the holders
of at least 25% in principal amount of the outstanding debentures may declare
the principal of and accumulated but unpaid interest on all the debentures to be
due and payable. Upon such a declaration, such principal and interest shall be
due and payable immediately. If an event of default relating to specific events
of our bankruptcy, insolvency or reorganization occurs and is continuing, the
principal of and interest on all the debentures will become and be immediately
due and payable without any declaration or other act on the part of the trustee
or any holders of the debentures. Under some circumstances, the holders of a
majority in principal amount of the then-outstanding debentures may rescind any
acceleration and its consequences.
The trustee is under no obligation to perform any duty or exercise any
right or power vested in it by the indenture at the request or direction of any
debenture holder unless it receives security or indemnity satisfactory to it
against any costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction. Except to enforce the right to
receive payment of principal or interest when due, no debenture holder may
pursue any remedy with respect to the indenture or the debentures unless:
- the holders have previously given the trustee notice that an event of
default is continuing;
- holders of at least 25% in principal amount of the outstanding debentures
have requested in writing the trustee to pursue a remedy;
- the holders provide the trustee security or indemnity reasonably
satisfactory to it against any loss, liability or expense;
- the trustee has not complied with such request within 60 days of
receiving it with an offer of security or indemnity; and
- the holders of a majority in principal amount of the outstanding
debentures have not given the trustee a direction inconsistent with such
request within such 60-day period.
Subject to some restrictions, the holders of a majority in principal amount
of the outstanding debentures are given the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee, or
of exercising any trust or power conferred on the trustee. The trustee, however,
may refuse to follow any direction that conflicts with law or the indenture or
that the trustee determines is unduly prejudicial to the rights of any other
debenture holder, or that may involve the trustee in personal liability.
The indenture provides that if an event of default or default (an event
which with notice or passage of time, or both, would be an event of default)
occurs and is continuing and is known to the trustee, the trustee must mail
notice of the event of default or default within 90 days after it becomes known
to the trustee to each holder of the debentures unless such event of default or
default has been cured or waived. For purposes of the obligations described in
the preceding sentence, the trustee is not deemed to have knowledge of an event
of default or default unless specified officers of the trustee have actual
knowledge of the event of default or default. Except in the case of a default in
the payment of principal of or interest on any debenture, the trustee
S-20
may withhold notice if and so long as a committee of its trust officers
determines that withholding notice is in the interests of the holders of the
debentures. In addition, we must deliver to the trustee, within 120 days after
the end of each fiscal year, an officer's certificate indicating whether the
signers thereof know of any default that occurred during the previous year. We
also are required to deliver to the trustee, within 30 days after its
occurrence, written notice of any events which would constitute certain
defaults, their status and what action we are taking or propose to take.
Prior to the acceleration of the maturity of the debentures, the holders of
a majority in aggregate principal amount of the then-outstanding debentures may
on behalf of all the debentures waive any past default or event of default,
except:
- a default in the payment of the principal of or interest on any of the
debentures; or
- a default that cannot be waived without the consent of each holder
affected.
When a default or event of default is waived, it is deemed cured and ceases to
exist. No waiver will extend to any subsequent or other default or event of
default.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
We may not (a) merge with or into or consolidate with any other entity, or
(b) sell, assign, transfer, lease or convey all or substantially all of our
properties and assets to any person, firm or corporation, other than, with
respect to this clause (b), a direct or indirect wholly-owned subsidiary of
MetLife, Inc., and no person shall (x) merge with or into or consolidate with us
or (y) except in the case of any direct or indirect wholly-owned subsidiary of
MetLife, Inc., sell, assign, transfer, lease or convey all or substantially all
of its properties and assets to us, unless:
- we are the surviving corporation or in case we merge with or into or
consolidate with, or sell, assign, transfer, lease or convey all or
substantially all of our properties and assets to, any person, firm or
corporation, the successor person is organized under the laws of the
United States of America or any state or the District of Columbia, and
such successor person expressly assumes our obligations under the
debentures and the indenture;
- immediately after giving effect thereto, no default or event of default,
shall have occurred and be continuing; and
- certain other conditions as prescribed in the indenture are met.
SATISFACTION AND DISCHARGE
The indenture will cease to be of further effect, except as to our
obligations to pay all other sums due pursuant to the indenture and to provide
the required officers' certificates and opinions of counsel, and we will be
deemed to have satisfied and discharged the indenture, when, among other things,
all debentures not previously delivered to the trustee for cancellation:
- have become due and payable; or
- will become due and payable at maturity or upon redemption within one
year;
and we deposit or cause to be deposited with the trustee funds, in trust, for
the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the debentures not previously delivered to the trustee for
cancellation, for the principal and interest to the date of the deposit or to
the stated maturity thereof, as the case may be.
The debentures do not limit MetLife, Inc.'s ability or the ability of its
subsidiaries to incur additional indebtedness, including other senior
indebtedness. MetLife, Inc. has an aggregate principal amount of approximately
$ of senior debt outstanding and our subsidiaries have an aggregate
principal amount of approximately $ of total debt.
S-21
BOOK-ENTRY; DELIVERY AND FORM
Following their distribution to holders of capital securities in connection
with the dissolution of the Trust, the debentures are in the form of one or more
global certificates (each, a global security) in fully registered, book-entry
form. Each global security has been deposited with, or on behalf of, The
Depository Trust Company ("DTC") (the "Depositary"), as depositary, and
registered in the name of Cede & Co. (DTC's partnership nominee). The global
securities described above may not be transferred except by the depositary to a
nominee of the depositary or by a nominee of the depositary to the depositary or
another nominee of the depositary or to a successor depositary or its nominee.
We may appoint a successor to the depositary or any successor depositary if the
depositary or a successor depositary is unable or unwilling to continue as a
depositary for the global securities.
Except under the limited circumstances described below, debentures
represented by the global security will not be exchangeable for, and will not
otherwise be issuable as, debentures in certificated form. Investors may elect
to hold interests in the global securities through either the Depositary (in the
United States) or through Clearstream Banking, societe anonyme, Luxembourg
("Clearstream") or Euroclear Bank S.A./N.V., as operator of the Euroclear System
("Euroclear"), if they are participants in such systems, or indirectly through
organizations which are participants in such systems. Clearstream and Euroclear
will hold interests on behalf of their participants through customers'
securities accounts in Clearstream's and Euroclear's names on the books of their
respective depositaries, which in turn will hold such interests in customers'
securities accounts in the depositaries' names on the books of DTC. Citibank,
N.A. will act as depositary for Clearstream and The Chase Manhattan Bank will
act as depositary for Euroclear (in such capacities, collectively, the "U.S.
Depositaries").
DTC advises that it is a limited-purpose trust company organized under the
New York Banking Law, a member of the Federal Reserve System, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates settlement of securities
transactions among its Participants, such as transfers and pledges in deposited
securities through electronic computerized book-entry changes in accounts of the
Participants, thereby eliminating the need for physical movement of securities
certificates.
"Direct Participants" in DTC include securities brokers and dealers and
banks. DTC is owned by members of the financial industry. Access to DTC's
book-entry system is also available to others, such as banks, securities brokers
and dealers that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants").
The distribution of the debentures under DTC's book-entry system was made
by or through Direct Participants, which received a credit for the debentures on
the records of DTC. The ownership interest of each holder of the debentures,
which we refer to as the "beneficial owner," was in turn recorded on the
Participants' records. Beneficial owners have not received written confirmation
from DTC of their distribution, but beneficial owners are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings from the Direct or Indirect Participant through
which the beneficial owner entered into the transaction. Transfers of ownership
interests in the global securities have been effected only through entries made
on the books of Participants acting on behalf of beneficial owners. Beneficial
owners have not received nor will not receive certificates representing their
ownership interests in the global securities, except in the event that use of
the book-entry system for the debentures is discontinued. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to own, transfer or pledge beneficial interests in the global
securities.
S-22
To facilitate subsequent transfers, all global securities deposited by
Participants with DTC have been registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of the global securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial ownership.
DTC has no knowledge of the actual beneficial owners of the debentures; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such debentures are credited, which may or may not be the beneficial owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
So long as DTC or its nominee is the registered owner and holder of the
global securities, DTC or its nominee, as the case may be, will be considered
the sole owner or holder of the debentures represented by the global securities
for all purposes under the indenture. Except as provided below, beneficial
owners of interests in the global securities will not be entitled to receive
physical delivery of debentures in certified form and will not be considered the
owners or holders for any purpose under the indenture. No global security
representing debentures shall be exchangeable, except for another global
security of like denomination and tenor to be registered in the name of the
depositary or its nominee or to a successor depositary or its nominee.
Accordingly, each beneficial owner must rely on the procedures of DTC and, if
the person is not a Participant, on the procedures of the Participants through
which such person owns its interest, to exercise any rights of a holder under
the indenture. We understand that under existing industry practices, in the
event that we request any action of holders of debentures or that an owner of a
beneficial interest in the debentures desires to give or take any action which a
holder is entitled to give or take under the indenture, DTC would authorize the
Participants holding the relevant beneficial interests to give or take the
action, and the Participants would authorize beneficial owners owning through
the Participants to give or to take the action or would otherwise act upon the
instructions of beneficial owners. Conveyance of notices and other
communications by DTC to Participants, by Participants to Indirect Participants,
and by Participants and Indirect Participants to beneficial owners, is governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
A global security shall be exchangeable for debentures registered in the
names of persons other than the depositary or its nominee only if:
- the depositary notifies us that it is unwilling or unable to continue as
a depositary for that global security and we do not appoint an eligible
successor depositary within 90 days;
- the depositary at any time ceases to be a clearing agency registered
under the Securities Exchange Act of 1934 at which time the depositary is
required to be so registered to act as a depositary and we do not appoint
an eligible successor depositary within 90 days; or
- we, in our sole discretion, determine that the global security shall be
so exchangeable.
Any global security that is exchangeable according to the preceding
sentence shall be exchangeable for debentures registered in those names as the
depositary shall direct. It is expected that these instructions will be based
upon directions received by the depositary from its participants with respect to
ownership of beneficial interests in the global security.
Payments of principal of and interest on the debentures are made to DTC. We
will continue to send all required reports and notices solely to DTC as long as
DTC is the registered holder of the global securities. Neither we, the trustee,
nor any other agent of ours or agent of the trustee has any responsibility or
liability for any aspect of the records relating to, or payments made on account
of, beneficial ownership interests in a global securities for the debentures or
for maintaining, supervising or reviewing any records relating to the beneficial
ownership interests. DTC's practice is to credit the accounts of the Direct
Participants with payment in amounts proportionate to their respective holdings
in principal amount of beneficial interest in a security as shown on the records
of DTC, unless DTC has reason to believe that it will not receive payment on the
payment date. Payments by Participants to beneficial owners will be governed by
standing
S-23
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of the Participants.
Clearstream advises that it is incorporated as a limited liability company
under the laws of Luxembourg. Clearstream was formed in January 2000 by the
merger of Cedel International and Deutsche Borse Clearing and recently fully
acquired by the Deutsche Borse Group. Clearstream holds securities for its
participating organizations ("Clearstream Participants") and facilitates the
clearance and settlement of securities transactions between Clearstream
Participants through electronic book-entry changes in accounts of Clearstream
Participants, thereby eliminating the need for physical movement of
certificates. Clearstream Participants are recognized financial institutions
around the world, including underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations. In the United States, Clearstream
Participants are limited to securities brokers and dealers and banks, and may
include the underwriters. Indirect access to Clearstream is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Clearstream Participant either
directly or indirectly. Clearstream is an Indirect Participant in DTC.
Clearstream provides to Clearstream Participants, among other things, services
for safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Clearstream interfaces
with domestic securities markets in several countries. Clearstream has
established an electronic bridge with Euroclear Bank S.A./N.V. to facilitate
settlement of trades between Clearstream and Euroclear.
Distributions with respect to the debentures held beneficially through
Clearstream will be credited to cash accounts of Clearstream Participants in
accordance with its rules and procedures, to the extent received by Clearstream.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing, and interfaces with domestic markets in
several countries. The Euroclear System is owned by Euroclear plc and operated
through a license agreement by Euroclear Bank S.A./N.V., a bank incorporated
under the laws of the Kingdom of Belgium (the "Euroclear Operator"), under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the underwriters. Indirect access to Euroclear is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator advises that it is regulated and examined by the
Belgian Banking and Finance Commission and the National Bank of Belgium.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the
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Terms and Conditions only on behalf of Euroclear Participants, and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to the debentures held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S.
Depositary for Euroclear.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Secondary market trading between the Depositary Participants will occur in
the ordinary way in accordance with the Depositary's rules and will be settled
in immediately available funds using DTC's Same-Day Funds Settlement System.
Secondary market trading between Clearstream Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Clearstream and Euroclear and will be settled
using the procedures applicable to conventional Eurobonds in immediately
available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC on the one hand, and directly or indirectly through Clearstream or
Euroclear Participants, on the other, will be effected in DTC in accordance with
the DTC rules on behalf of the relevant European international clearing system
by its U.S. Depositary; however, such cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such system in accordance with its rules and procedures
and within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its U.S. Depositary to take action to
effect final settlement on its behalf by delivering interests in the senior
notes to or receiving interests in the senior notes from DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Clearstream Participants and Euroclear
Participants may not deliver instructions directly to DTC.
Because of time-zone differences, credits of interests in the debentures
received in Clearstream or Euroclear as a result of a transaction with a
Depositary Participant will be made during subsequent securities settlement
processing and will be credited the business day following the DTC settlement
date. Such credits or any transactions involving interests in such debentures
settled during such processing will be reported to the relevant Euroclear or
Clearstream Participants on such business day. Cash received in Clearstream or
Euroclear as a result of sales of interests in the debentures by or through a
Clearstream Participant or a Euroclear Participant to a Depositary Participant
will be received with value on the DTC settlement date but will be available in
the relevant Clearstream or Euroclear cash account only as of the business day
following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of the debentures among participants
of DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
PAYMENT AND PAYING AGENTS
Payment of principal of and interest on the debentures will be made at the
office of the trustee in the City of New York or at the office of such paying
agent or paying agents as we may designate from time to time, except that at our
option payment of any interest may be made, except in the case of a global
certificate representing debentures, by:
- check mailed to the address of the person entitled thereto as such
address shall appear in the applicable securities register for
debentures; or
- wire transfer to an account maintained by the person entitled thereto as
specified in such securities register.
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Payment of any interest on any debenture will be made to the person in whose
name such debenture is registered at the close of business on the record date
for such interest, except in the case of defaulted interest. We may at any time
designate additional paying agents or rescind the designation of any paying
agent; provided, however, that we will at all times be required to maintain a
paying agent in each place of payment for the debentures.
Any money deposited with the trustee or any paying agent, or then held by
us in trust, for the payment of the principal of or interest on any debentures
and remaining unclaimed for two years after such principal and premium, if any,
or interest has become due and payable will, at our request, be repaid to us and
the holder of such debentures shall thereafter look, as a general unsecured
creditor, only to us for payment thereof.
INFORMATION CONCERNING THE TRUSTEE
The trustee is subject to all the duties and responsibilities specified
with respect to an indenture trustee under the Trust Indenture Act. Subject to
the foregoing, the trustee is not under any obligation to perform any duty or
exercise any right or power vested in it by the indenture at the request or
direction of any debenture holder, unless it receives security or indemnity
satisfactory to it against any costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction. The trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the trustee reasonably believes
that repayment or adequate indemnity is not reasonably assured to it.
The trustee is one of a number of banks and trust companies with which we
and our subsidiaries maintain ordinary banking and trust relationships.
GOVERNING LAW
The indenture and the debentures are governed by, and construed in
accordance with, the internal laws of the State of New York, without regard to
its principles of conflicts of laws.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain United States federal income tax
consequences of the purchase, ownership and disposition of debentures to Holders
(as defined below) who purchase debentures in the remarketing at the remarketing
offering price and hold the debentures as capital assets. This discussion
assumes we will not exercise our right to defer payment of interest on the
debentures and that the remarketing offering price will exceed $50.16 (the
adjusted issue price of each debenture as of February 19, 2003). This discussion
is based upon the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations (including proposed Treasury regulations) issued
thereunder, Internal Revenue Service ("IRS") rulings and pronouncements and
judicial decisions now in effect, all of which are subject to change, possibly
with retroactive effect.
This discussion does not address all aspects of United States federal
income taxation that may be relevant to Holders in light of their particular
circumstances, such as Holders who are subject to special tax treatment (for
example, (1) banks, regulated investment companies, insurance companies, dealers
in securities or currencies or tax-exempt organizations, (2) persons holding
debentures as part of a straddle, hedge, conversion transaction or other
integrated investment or (3) persons whose functional currency is not the U.S.
dollar), some of which may be subject to special rules, nor does it address
alternative minimum taxes or state, local or foreign taxes. PROSPECTIVE
INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF DEBENTURES IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES, AS
WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
For purposes of this discussion, "U.S. holder" means a beneficial owner of
a debenture that is, for United States federal income tax purposes, (1) an
individual citizen or resident of the United States, (2) a corporation, or other
entity treated as a corporation, created or organized in or under the laws of
the United States or any state thereof or the District of Columbia or (3) a
domestic partnership, estate or trust. For purposes of this discussion,
"Non-U.S. holder" means a beneficial owner of a debenture that is not a U.S.
holder and U.S. holders and Non-U.S. holders shall be referred to collectively
as "Holders".
U.S. HOLDERS
Interest Income. Because of the manner in which the interest rate on the
debentures is reset, the debentures are classified as contingent payment debt
instruments subject to the "noncontingent bond method" for accruing interest, as
set forth in applicable Treasury regulations. As discussed more fully below,
under such method a U.S. holder of debentures accrues interest (regardless of
its method of accounting) based on the "adjusted issue price" of and "comparable
yield" for the debentures, which interest is reduced (1) to reflect the
differences between the projected payment schedule for the debentures (described
below) and the payments actually made on the debentures and (2) to reflect the
excess of the U.S. holder's basis in the debentures upon their purchase over the
adjusted issue price of the debentures at that time.
The amount of interest that accrues on a debenture for each accrual period
is determined by multiplying the comparable yield for the debenture (adjusted
for the length of the accrual period) by the debenture's adjusted issue price at
the beginning of the accrual period, subject to the reductions described below.
The comparable yield for the debentures is the rate at which we would have
issued a fixed rate debt instrument on the original issue date of the debentures
with terms and conditions similar to the debentures. We have determined that the
comparable yield for the debentures is 8.27%. We have also determined that the
adjusted issue price of each debenture on the original issue date was $49.76,
and the adjusted issue price of each debenture at the beginning of each
subsequent accrual period is $49.76, increased by any interest
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previously accrued on such debenture (without regard to the reductions described
below) and decreased by the projected amount of any payments previously made on
the debenture (i.e., as set forth on the projected payment schedule). On this
basis, the adjusted issue price of each debenture as of February 19, 2003, which
should be the first day of the first accrual period after the remarketing, is
$50.16. The amount of interest so determined for an accrual period will be
allocated on a ratable basis to each day in such accrual period that the U.S.
holder holds the debenture.
We have determined that the projected payments for the debentures, per $50
of principal amount, are $1.05 for each quarter ending after February 15, 2003
and prior to the maturity date, and $51.05 at the maturity date (which includes
the stated principal amount of the debentures as well as the final projected
interest payment). The actual payments for the debentures, per $50 of principal
amount, are scheduled to be $ for each quarter ending after February
15, 2003 and prior the maturity date, and $ at the maturity date (which
includes the stated principal amount of the debentures as well as the final
interest payment). Since the actual payments on the debentures for each quarter
ending after February 15, 2003 will be less than the projected payments for such
periods, such differences should be taken into account by a U.S. holder as a
reduction in interest income in a reasonable manner over the period to which
they relate. We expect to account for any such difference with respect to a
period as a reduction in the accrual of interest for that period.
To the extent that a U.S. holder's tax basis in a debenture exceeds the
adjusted issue price of the debenture at the time of its purchase, such excess
should be allocated to daily portions of interest over the remaining term of the
debenture. The amount so allocated to a daily portion of interest should be
taken into account by a U.S. holder as a reduction in such interest.
The net effect of the foregoing is that a U.S. holder will accrue interest
on a debenture for United States federal income tax purposes in a manner that
generally reflects the yield to maturity of the debenture. The amount of
interest so accrued on a debenture for each quarter ending after February 15,
2003 will be less than the amount of interest paid on the debenture for such
quarter.
We expect to use the foregoing comparable yield and projected payment
schedule for purposes of determining our own taxable income and for any required
information reporting. U.S. holders are generally bound by the comparable yield
and projected payment schedule provided by us unless either is unreasonable. If
a U.S. holder of debentures does not use this comparable yield and projected
payment schedule to determine interest accruals, such U.S. holder must apply the
foregoing rules using its own comparable yield and projected payment schedule. A
U.S. holder that uses its own comparable yield or projected payment schedule
must explicitly disclose this fact and the reason why it has used its own
comparable yield or projected payment schedule. In general, this disclosure must
be made on a statement attached to the timely filed United States federal income
tax return of the U.S. holder for the taxable year that includes the date of its
acquisition of the debentures.
The foregoing comparable yield and projected payment schedule are supplied
by us solely for computing income under the noncontingent bond method for United
States federal income tax purposes, and do not reflect the amounts the holders
of debentures will actually receive.
Sale, Exchange or Other Disposition of Debentures. Upon the sale, exchange
or other disposition of a debenture, a U.S. holder will recognize gain or loss
in an amount equal to the difference between the amount realized by such U.S.
holder and such U.S. holder's adjusted tax basis in the debenture. Gain or loss
recognized on such a sale, exchange or disposition generally will be treated as
capital gain or loss. Capital gain of individuals derived in respect of
debentures held for more than one year is taxed at a maximum rate of 20%. The
deductibility of capital losses is subject to limitations. A U.S. holder's tax
basis in its debentures generally will be
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increased by the amount of any income recognized by such U.S. holder with
respect to such debentures, and decreased by payments received with respect to
such debentures.
NON-U.S. HOLDERS
United States federal withholding tax will not apply to any payment of
interest on debentures held by a Non-U.S. holder if the interest qualifies for
the so-called "portfolio interest exemption." This will be the case provided
that: (1) the Non-U.S. holder does not actually or constructively own 10% or
more of the total combined voting power of all classes of our stock that are
entitled to vote within the meaning of section 871(h)(3) of the Code; (2) the
Non-U.S. holder is not a controlled foreign corporation that is related to us
through stock ownership; (3) the Non-U.S. holder is not a bank whose receipt of
interest on the debenture is described in section 881(c)(3)(A) of the Code; and
(4) the Non-U.S. holder satisfies the statement requirement (described generally
below) set forth in section 871(h) and 881(c) of the Code and the regulations
thereunder.
To satisfy the requirement referred to in clause (4) above, the Non-U.S.
holder or a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business and that is holding the debenture on behalf of such Non-U.S. holder,
must provide, in accordance with specified procedures, the withholding agent
with a statement to the effect that the Non-U.S. holder is not a U.S. person.
This requirement will be met if (1) the Non-U.S. holder certifies to the
withholding agent under penalties of perjury that it is not a United States
person (which certification can be made on IRS Form W-8BEN) and provides his
name and address or (2) a financial institution holding the debentures certifies
to the withholding agent under penalties of perjury that such statement has been
received from the Non-U.S. holder by it and furnishes the withholding agent with
a copy of such statement. Applicable Treasury regulations provide alternative
methods for satisfying these requirements. These regulations also generally
require, in the case of debentures held by a foreign partnership, that (1) the
requirement referred to in clause (4) above be satisfied by the partners rather
than the foreign partnership and (2) the partnership provide certain information
to the withholding agent. Each Non-U.S. holder should consult its own tax
advisor regarding the application to such holder of these regulations.
Subject to the discussion below concerning back-up withholding, any gain
realized on the sale, exchange or other disposition of a debenture by a Non-U.S.
holder generally will not be subject to U.S. federal income tax unless (1) that
gain is effectively connected with the conduct of a trade or business in the
United States by the Non-U.S. holder or (2) the Non-U.S. holder is an individual
who is present in the United States for 183 days or more in the taxable year of
that disposition and other conditions are met.
If a Non-U.S. holder is engaged in a trade or business in the United States
and the interest on a debenture or any gain realized on the sale, exchange or
disposition of a debenture is effectively connected with the conduct of that
trade or business, such Non-U.S. holder (although exempt from withholding tax)
will be subject to U.S. federal income tax on such interest or gain in the same
manner as if it were a U.S. holder. In addition, if the Non-U.S. holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% (or
lower applicable treaty rate) of its earnings and profits for the taxable year,
subject to adjustments, that are effectively connected with its conduct of a
trade or business in the United States.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
U.S. Holders. Unless a U.S. holder is an exempt recipient, such as a
corporation, payments on the debentures, and the proceeds received from sale of
debentures, may be subject to information reporting and may also be subject to
United States federal backup withholding tax at the appropriate rate if such
U.S. holder fails to supply an accurate taxpayer identification number
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or otherwise fails to comply with applicable United States information reporting
or certification requirements.
Non-U.S. Holders. In general, a Non-U.S. holder will not be subject to
backup withholding and information reporting with respect to payments on the
debentures, and the proceeds from sale of the debentures, provided that the
payor does not have actual knowledge that the holder is a United States person
and the holder has given the statement or provided the certifications described
above in clause (4) of the first paragraph under "Non-U.S. Holders." Withholding
agents must nevertheless report to the IRS and each Non-U.S. holder the amount
of interest (including original issue discount) paid with respect to the
debentures held by each Non-U.S. holder and the rate of withholding (if any)
applicable to each Non-U.S. holder.
Any amounts so withheld under the backup withholding rules will be allowed
as a credit against the Holder's United States federal income tax liability,
provided that the required procedures are followed.
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PLAN OF DISTRIBUTION
The remarketing is being made pursuant to a remarketing agreement between
us and Credit Suisse First Boston LLC and Goldman, Sachs & Co., as the
remarketing agents. Under the remarketing agreement, the remarketing agents will
use their commercially reasonable best efforts to sell the remarketed debentures
at a price equal to 100.5% of the "remarketing value." The remarketing value
with respect to each debenture that is being offered in this remarketing is the
sum of:
- the value at February 12, 2003 of such amount of U.S. Treasury securities
(CUSIP No. 912795MM0) as will pay, on or prior to May 15, 2003, an amount
of cash equal to the interest scheduled to be paid on the debenture on
that date, at the rate of interest in effect prior to the re-setting of
the interest rate in the remarketing; and
- the value at February 12, 2003 of such amount of U.S. Treasury securities
(CUSIP No. 912795MM0) as will pay, on or prior to May 15, 2003, an amount
of cash equal to $50.
On February 12, 2003, the remarketing agents will attempt to reset the rate of
interest payable on the remarketed debentures to a rate they believe is
sufficient to cause the market value of each debenture to be equal to 100.5% of
the remarketing value. Upon a successful remarketing, the remarketing agents
will use the net proceeds of the remarketing of debentures comprising a part of
"normal units" (i.e., units consisting of a debenture and a stock purchase
contract) to purchase the U.S. Treasury securities described above, which will
be pledged to support the obligations of holders of normal units to purchase
shares of our common stock under the stock purchase contracts.
Due to market conditions and other factors, the remarketing agents may be
unable to establish a reset rate of interest on the remarketed debentures that
will be sufficient to cause the aggregate market value of all the debentures
being remarketed on February 12, 2003 to be equal to 100.5% of the remarketing
value. In that event, if the remarketing agents are not able to sell the
remarketed debentures on February 12, 2003 at a price equal to 100.5% of the
remarketing value, determined on the basis of the debentures being remarketed,
the remarketing will be deemed to have failed. Provided that we have published a
notice of the failed remarketing, the remarketing agents may thereafter attempt
to establish a new reset rate and attempt subsequently to remarket the
debentures on one or more occasions until May 15, 2003. Any such subsequent
remarketing would be at a price equal to 100.5% of the remarketing value
determined on the basis of the debentures being remarketed and, in the event of
any failed subsequent remarketing, we will publish a notice of failed
remarketing in respect of the immediately preceding failed remarketing.
Pursuant to the remarketing agreement, the remarketing agents will retain a
total remarketing fee not exceeding 25 basis points (.25%) of the total proceeds
of the remarketing. Neither we nor the holders of debentures participating in
this remarketing will otherwise be responsible for any remarketing fee or
commission in connection with this remarketing.
We have been advised by the remarketing agents that they propose initially
to remarket the debentures to investors at the price to the public set forth on
the cover page of this prospectus supplement. After the initial remarketing, the
offering price may be changed.
The debentures have no established trading market. The remarketing agents
have advised us that they intend to make a market for the debentures, but they
have no obligation to do so and may discontinue market making at any time
without providing any notice. No assurance can be given as to the liquidity of
any trading market for the debentures.
In order to facilitate the remarketing of the debentures, the remarketing
agents may engage in transactions that stabilize, maintain or otherwise affect
the price of the debentures. These transactions consist of bids or purchases for
the purpose of pegging, fixing or maintaining the
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price of the debentures. In general, purchases of a security for the purpose of
stabilization could cause the price of the security to be higher than it might
be in the absence of these purchases. We and the remarketing agents make no
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the debentures. In
addition, we and the remarketing agents make no representation that the
remarketing agents will engage in these transactions or that these transactions,
once commenced, will not be discontinued without notice.
We have agreed to indemnify the remarketing agents against, or to
contribute to payments that the remarketing agents may be required to make in
respect of, certain liabilities, including liabilities under the Securities Act
of 1933.
Credit Suisse First Boston LLC and Goldman, Sachs & Co. have in the past
provided, and may in the future provide, investment banking and underwriting
services to us and our affiliates for which they have received, or will receive,
customary compensation. Robert H. Benmosche, Chairman of the Board, President,
Chief Executive Officer and a director of MetLife, Inc., is a director of Credit
Suisse Group, the parent company of Credit Suisse First Boston LLC. MetLife,
Inc. provides insurance-related products and services and leases a substantial
amount of office space to Credit Suisse Group affiliates. MetLife, Inc. is a
limited partner of certain limited partnerships affiliated with Credit Suisse
First Boston LLC.
Credit Suisse First Boston LLC and Goldman, Sachs & Co. have advised us
that they will make securities available for distribution on the Internet
through a proprietary Web site and/or a third-party system operated by Market
Axess Inc., an Internet-based communications technology provider. They have
further advised us that Market Axess Inc. is providing the system as a conduit
for communications between Credit Suisse First Boston LLC and Goldman, Sachs &
Co. and their customers and is not a party to the sale of debentures. We have
also been advised by Credit Suisse First Boston LLC and Goldman, Sachs & Co.
that Market Axess Inc. will not function as an underwriter or agent of MetLife,
Inc., nor will it act as a broker for any customer of Credit Suisse First Boston
LLC or Goldman, Sachs & Co. Credit Suisse First Boston LLC and Goldman, Sachs &
Co. have advised us that Market Axess Inc., a registered broker-dealer, will
receive compensation from Credit Suisse First Boston LLC and Goldman, Sachs &
Co. based on transactions the remarketing agents conduct through the system.
Credit Suisse First Boston LLC and Goldman, Sachs & Co. have advised us that
they will make securities available to their customers through the Internet,
whether made through a proprietary or third party system, on the same terms as
those made through other channels.
OFFERING RESTRICTIONS
The debentures are offered for sale in those jurisdictions in the United
States, Canada, Europe, Asia and elsewhere where it is lawful to make such
offers.
Each of the remarketing agents has severally represented and agreed that it
has not offered, sold or delivered and it will not offer, sell or deliver,
directly or indirectly, any of the debentures, or distribute this prospectus
supplement or the accompanying prospectus or any other offering material
relating to the debentures, in or from any jurisdiction except under
circumstances that will result in compliance with the applicable laws and
regulations thereof and that will not impose any obligations on us except as set
forth in the remarketing agreement.
United Kingdom. Each of the remarketing agents has severally represented
and agreed that it has not offered, and will not offer, prior to the expiry of a
period of six months from the issue date of the debentures, any debentures to
persons in the United Kingdom, except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995.
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A person may only communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning of Section 21 of
the Financial Services and Markets Act 2000 (the "FSMA")) received by it in
connection with the issue or sale of any securities in circumstances in which
Section 21(1) of the FSMA does not apply to MetLife, Inc.
This communication is directed only at persons who (1) are outside the
United Kingdom or (2) have professional experience in matters relating to
investments or (3) are persons falling within Article 49(2)(a) to (d) ("high net
worth companies, unincorporated associations etc.") of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2001 (all such persons together
being referred to as "relevant persons"). This communication must not be acted
on or relied on by persons who are not relevant persons. Any investment or
investment activity to which this communication relates is available only to
relevant persons and will be engaged in only with relevant persons."
Japan. The debentures have not been and will not be registered under the
Securities and Exchange Law of Japan. Each remarketing agent has severally
represented and agreed that it has not offered or sold, and it will not offer or
sell, directly or indirectly, any debentures in Japan or to, or for the account
or benefit of, any resident of Japan or to, or for the account or benefit, of
any resident for reoffering or resale, directly or indirectly, in Japan or to,
or for the account or benefit of, any resident of Japan except (1) pursuant to
an exemption from the registration requirements of, or otherwise in compliance
with, the Securities and Exchange Law of Japan, and (2) in compliance with the
other relevant laws and regulations of Japan.
Hong Kong. Each of the remarketing agents has severally represented and
agreed that it has not offered, and will not offer, in the Hong Kong Special
Administrative Region of the People's Republic of China ("Hong Kong") any
debentures, by means of any document, other than to persons whose ordinary
business is to buy or sell shares or debentures, whether as principal or agent,
except in circumstances which do not constitute an offer to the public within
the meaning of the Companies Ordinance (Cap.32) of Hong Kong, and unless
permitted to do so under the securities laws of Hong Kong, no person has issued
or had in its possession for the purposes of issue, and will not issue or have
in its possession for the purpose of issue, any advertisement, document or
invitation relating to the debentures in Hong Kong other than with respect to
the debentures intended to be disposed of to persons outside Hong Kong or only
to persons whose business involves the acquisition, disposal or holding of
securities whether as principal or agent.
Germany. No sales prospectus (Verkaufsprospekt) relating to the debentures
has been or will be published in Germany. Each remarketing agent has severally
represented and agreed that it will comply with the German law relating to
securities sales prospectuses (Verkaufsprospektgesetz), of September 13, 1990,
as amended (the "Law Concerning Prospectuses"), and that it will not offer or
sell the debentures in Germany, except pursuant to one of the placement
exemptions relating to prospectuses set forth in the Law Concerning
Prospectuses.
LEGAL OPINIONS
The validity of the debentures offered hereby will be passed upon for
MetLife, Inc. by Gary A. Beller, Senior Executive Vice-President and General
Counsel of MetLife, and by Debevoise & Plimpton. As of the date of this
prospectus supplement, Mr. Beller beneficially owns shares of MetLife, Inc.
common stock and holds options to purchase MetLife, Inc. common stock. Skadden,
Arps, Slate, Meagher & Flom LLP will pass upon certain legal matters for the
remarketing agents. Skadden, Arps, Slate, Meagher & Flom LLP has, from time to
time, represented, and may continue to represent, us in connection with various
legal matters. Each of Debevoise & Plimpton and Skadden, Arps, Slate, Meagher &
Flom LLP maintains a group life insurance policy with Metropolitan Life. Helene
L. Kaplan and Curtis H. Barnette, both directors of MetLife, Inc. and
Metropolitan Life, are of counsel to Skadden, Arps, Slate, Meagher & Flom LLP.
S-33
PROSPECTUS
$4,000,000,000
[METLIFE LOGO]
DEBT SECURITIES, PREFERRED STOCK AND COMMON STOCK
METLIFE CAPITAL TRUST II
METLIFE CAPITAL TRUST III
TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY METLIFE, INC.,
AS SET FORTH HEREIN
MetLife, Inc., MetLife Capital Trust II and MetLife Capital Trust III will
provide the specific terms of these securities in supplements to this
prospectus. You should read this prospectus and the accompanying prospectus
supplement carefully before you make your investment decision.
THIS PROSPECTUS MAY NOT BE USED TO SELL SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.
MetLife, Inc., MetLife Capital Trust II and MetLife Capital Trust III may
offer securities through underwriting syndicates managed or co-managed by one or
more underwriters, or directly to purchasers. The prospectus supplement for each
offering of securities will describe in detail the plan of distribution for that
offering. For general information about the distribution of securities offered,
please see "Plan of Distribution" in this prospectus.
MetLife, Inc.'s common stock is listed on the New York Stock Exchange under
the trading symbol "MET".
None of the Securities and Exchange Commission, any state securities
commission, the New York Superintendent of Insurance or any other regulatory
body has approved or disapproved of these securities or determined if this
prospectus or the accompanying prospectus supplement is truthful or complete.
Any representation to the contrary is a criminal offense.
The date of this prospectus is June 1, 2001
TABLE OF CONTENTS
PAGE
----
About This Prospectus....................................... 2
Where You Can Find More Information......................... 2
Special Note Regarding Forward-Looking Statements........... 3
MetLife, Inc................................................ 5
The Trusts.................................................. 5
Use of Proceeds............................................. 7
Ratio of Earnings to Fixed Charges.......................... 7
Description of Securities................................... 7
Description of Debt Securities.............................. 7
Description of Capital Stock................................ 16
Description of Trust Preferred Securities................... 23
Description of Guarantees................................... 25
Plan of Distribution........................................ 28
Legal Opinions.............................................. 29
Experts..................................................... 29
ABOUT THIS PROSPECTUS
Unless otherwise stated or the context otherwise requires, references in
this prospectus to "MetLife," "we," "our," or "us" refer to MetLife, Inc.,
together with Metropolitan Life Insurance Company, and their respective direct
and indirect subsidiaries, while references to "MetLife, Inc." refer only to the
holding company on a nonconsolidated basis. References in this prospectus to the
"trusts" refer to MetLife Capital Trust II and MetLife Capital Trust III.
This prospectus is part of a registration statement that MetLife, Inc.,
MetLife Capital Trust II and MetLife Capital Trust III filed with the SEC using
a "shelf" registration process. Under this shelf process, MetLife, Inc. may,
from time to time, sell any combination of debt securities, preferred stock and
common stock, and MetLife Capital Trust II and MetLife Capital Trust III may,
from time to time, sell trust preferred securities guaranteed by MetLife, Inc.,
as described in this prospectus, in one or more offerings up to a total dollar
amount of $4,000,000,000 or the equivalent thereof on the date of issuance in
one or more foreign currencies, foreign currency units or composite currencies.
This prospectus provides you with a general description of the securities
MetLife, Inc. and the trusts may offer. Each time that securities are sold, a
prospectus supplement that will contain specific information about the terms of
that offering will be provided. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described under the heading "Where You Can Find More Information."
You should rely on the information contained or incorporated by reference
in this prospectus. Neither MetLife, Inc. nor the trusts have authorized anyone
to provide you with different information. If anyone provides you with different
or inconsistent information, you should not rely on it. Neither MetLife, Inc.
nor the trusts are making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted.
You should assume that the information in this prospectus is accurate as of
the date of the prospectus. Our business, financial condition, results of
operations and prospects may have changed since that date.
WHERE YOU CAN FIND MORE INFORMATION
MetLife, Inc. files reports, proxy statements and other information with
the SEC. These reports, proxy statements and other information, including the
registration statement of which this prospectus is a part, can be read and
copied at the SEC's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference room. The SEC maintains an internet site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding companies that file electronically with the SEC,
including MetLife, Inc. MetLife, Inc.'s common stock is listed and traded on the
New York Stock Exchange. These reports, proxy statements and other information
can also be read at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
The SEC allows "incorporation by reference" into this prospectus of
information that MetLife, Inc. files with the SEC. This permits MetLife, Inc. to
disclose important information to you by referencing these filed documents. Any
information referenced this way is considered part of this prospectus, and any
information filed with the SEC subsequent to the date of this prospectus will
automatically be deemed to update and supersede this information. MetLife, Inc.
incorporates by reference the following documents which have been filed with the
SEC:
- Registration Statement on Form 8-A, dated March 31, 2000, relating to
registration of shares of MetLife, Inc.'s common stock and Registration
Statement on Form 8-A, dated March 31, 2000, relating to registration of
MetLife, Inc.'s Series A Junior Participating Preferred Stock purchase
rights;
- Annual Report on Form 10-K for the year ended December 31, 2000;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;
2
- Current Report on Form 8-K dated May 8, 2001; and
- Proxy Statement for the Annual Meeting of Shareholders Held on April 24,
2001.
MetLife, Inc. incorporates by reference the documents listed above and any
future filings made with the SEC in accordance with Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until MetLife, Inc., MetLife
Capital Trust II and MetLife Capital Trust III file a post-effective amendment
which indicates the termination of the offering of the securities made by this
prospectus.
MetLife, Inc. will provide without charge upon written or oral request, a
copy of any or all of the documents which are incorporated by reference into
this prospectus, other than exhibits which are specifically incorporated by
reference into those documents. Requests should be directed to Investor
Relations, MetLife, Inc., One Madison Avenue, New York, New York 10010-3690
(telephone number 1-800-649-3593). You may also obtain some of the documents
incorporated by reference into this document at MetLife's website,
www.metlife.com. You should be aware that the information contained on MetLife's
website is not a part of this document.
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus and the accompanying prospectus supplement may contain or
incorporate by reference information that includes or is based upon
forward-looking statements within the meaning of the Securities Litigation
Reform Act of 1995. Forward-looking statements give expectations or forecasts of
future events. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. They use words such as
"anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and
other words and terms of similar meaning in connection with a discussion of
future operating or financial performance. In particular, these include
statements relating to future actions, prospective services or products, future
performance or results of current and anticipated services or products, sales
efforts, expenses, the outcome of contingencies such as legal proceedings,
trends in operations and financial results.
Any or all forward-looking statements may turn out to be wrong. They can be
affected by inaccurate assumptions or by known or unknown risks and
uncertainties. Many such factors will be important in determining MetLife's
actual future results. These statements are based on current expectations and
the current economic environment. They involve a number of risks and
uncertainties that are difficult to predict. These statements are not guarantees
of future performance, and there are no guarantees about the performance of any
securities offered by this prospectus. Actual results could differ materially
from those expressed or implied in the forward-looking statements. Among factors
that could cause actual results to differ materially are:
- changes in general economic conditions, including the performance of
financial markets and interest rates;
- heightened competition, including with respect to pricing, entry of new
competitors and the development of new products by new and existing
competitors;
- unanticipated changes in industry trends;
- MetLife, Inc.'s primary reliance, as a holding company, on dividends from
its subsidiaries to meet debt payment obligations and the applicable
regulatory restrictions on the ability of the subsidiaries to pay such
dividends;
- deterioration in the experience of the "closed block" established in
connection with the reorganization of MetLife, Inc.'s subsidiary
Metropolitan Life Insurance Company;
- catastrophe losses;
- regulatory, accounting or tax changes that may affect the cost of, or
demand for, our products or services;
3
- downgrades in our ratings;
- discrepancies between actual claims experience and assumptions used in
setting prices for our products and establishing the liabilities for our
obligations for future policy benefits and claims;
- adverse litigation or arbitration results;
- our ability to identify and consummate on successful terms any future
acquisitions, and to successfully integrate acquired businesses with
minimal disruption;
- other risks and uncertainties described from time to time in MetLife,
Inc.'s or the trusts' filings with the Securities and Exchange
Commission;
- the risk factors or uncertainties listed herein or listed from time to
time in prospectus supplements or any document incorporated by reference
herein; and
- other risks and uncertainties that have not been identified at this time.
Neither MetLife, Inc. nor the trusts undertake any obligation to publicly
correct or update any forward-looking statement if MetLife, Inc. or the trusts
later become aware that it is not likely to be achieved. You are advised,
however, to consult any further disclosures MetLife, Inc. or the trusts make on
related subjects in reports to the SEC.
4
METLIFE, INC.
We are a leading provider of insurance and financial services to a broad
spectrum of individual and institutional customers. We currently provide
individual insurance, annuities and investment products to approximately nine
million households, or one of every 11 households in the U.S. We also provide
group insurance and retirement and savings products and services to
approximately 70,000 corporations and other institutions, including 87 of the
FORTUNE 100 largest companies. Our institutional clients have approximately 33
million employees and members.
We distribute our products and services nationwide through multiple
channels, with the primary distribution systems being our core career agency
system, our general agency distribution systems, our regional sales forces, our
dedicated sales forces, financial intermediaries, independent agents and product
specialists. We operate in the international markets that we serve through
subsidiaries and joint ventures. Our international segment focuses on the
Asia/Pacific region, Latin America and selected European countries and currently
has insurance operations in twelve countries.
MetLife, Inc. is incorporated under the laws of the State of Delaware. Its
principal executive offices are located at One Madison Avenue, New York, New
York 10010-3690. Its telephone number is (212) 578-2211.
THE REORGANIZATION
On April 7, 2000, pursuant to an order by the New York Superintendent of
Insurance approving its plan of reorganization, as amended, Metropolitan Life
Insurance Company converted from a mutual life insurance company to a stock life
insurance company and became MetLife, Inc.'s wholly-owned subsidiary. In
connection with the plan of reorganization, each policyholder's membership
interest was extinguished and each eligible policyholder received, in exchange
for that interest, trust interests representing shares of MetLife, Inc.'s common
stock to be held in the MetLife Policyholder Trust, cash or an adjustment to
policy values in the form of policy credits, as provided in the plan of
reorganization. A total of 494,466,664 shares of MetLife, Inc.'s common stock
were distributed to the MetLife Policyholder Trust for the benefit of
policyholders. For more information regarding the MetLife Policyholder Trust,
see "Description of Securities -- Description of Capital Stock -- MetLife
Policyholder Trust."
Immediately following the demutualization, MetLife, Inc. conducted an
initial public offering of a total of 232,300,000 shares of common stock, and
MetLife, Inc. and MetLife Capital Trust I, a Delaware statutory business trust
that MetLife, Inc. wholly owns, conducted a public offering of a total of
20,125,000 8.00% equity security units. Concurrently with the foregoing
offerings, MetLife, Inc. sold a total of 60,000,000 shares of common stock in
private placements. For more information regarding the private placements, see
"Description of Securities -- Description of Capital Stock -- Registration
Rights Granted, and Restrictions Imposed, in Connection With Private Placements
of MetLife, Inc.'s Common Stock."
THE TRUSTS
MetLife Capital Trust II and MetLife Capital Trust III are statutory
business trusts formed on May 17, 2001 under Delaware law pursuant to
declarations of trust between the trustees named therein and MetLife, Inc. and
the filing of certificates of trust with the Secretary of State of the State of
Delaware. MetLife, Inc., as sponsor of the trusts, and the trustees named in the
declarations of trust will amend and restate the declarations of trust in their
entirety substantially in the form filed as an exhibit to the registration
statement of which this prospectus forms a part, as of or prior to the date the
trusts issue any trust preferred securities. The declarations of trust will be
qualified as indentures under the Trust Indenture Act.
The trusts exist for the exclusive purposes of:
- issuing preferred securities and common securities;
- investing the gross proceeds of the preferred securities and common
securities in related series of debt securities, which may be senior or
subordinated, issued by MetLife, Inc.; and
5
- engaging in only those other activities which are necessary, appropriate,
convenient or incidental to the purposes set forth above.
The payment of periodic cash distributions on the trust preferred
securities and payments on liquidation and redemption with respect to the trust
preferred securities, in each case to the extent the trusts have funds legally
and immediately available, will be guaranteed by MetLife, Inc. to the extent set
forth under "Description of Guarantees."
MetLife, Inc. will own, directly or indirectly, all of the common
securities of the trusts. The common securities will represent an aggregate
liquidation amount equal to at least 3% of each trust's total capitalization.
The preferred securities of each trust will represent the remaining 97% of each
trust's total capitalization. The common securities will have terms
substantially identical to, and will rank equal in priority of payment with, the
preferred securities. However, if MetLife, Inc. defaults on the related series
of debt securities, then cash distributions and liquidation, redemption and
other amounts payable on the common securities will be subordinate to the trust
preferred securities in priority of payment.
The trusts each have a term of approximately 55 years, but may terminate
earlier as provided in their respective declarations of trust. The trusts'
business and affairs will be conducted by the trustees appointed by MetLife,
Inc., as the direct or indirect holder of all of the common securities. The
holder of the common securities of each trust will be entitled to appoint,
remove or replace any of, or increase or reduce the number of, the trustees of
the trust. However, the number of trustees shall be at least two, at least one
of which shall be an administrative trustee. The duties and obligations of the
trustees will be governed by the declaration of trust for each trust. A majority
of the trustees of each trust will be persons who are employees or officers of
or affiliated with MetLife, Inc. One trustee of each trust will be a financial
institution which will be unaffiliated with MetLife, Inc. and which will act as
property trustee and as indenture trustee for purposes of the Trust Indenture
Act of 1939, pursuant to the terms set forth in a prospectus supplement. In
addition, unless the property trustee maintains a principal place of business in
the State of Delaware, and otherwise meets the requirements of applicable law,
one trustee of each trust will have its principal place of business or reside in
the State of Delaware.
The property trustee will hold title to the debt securities for the benefit
of the holders of the trust securities and the property trustee will have the
power to exercise all rights, powers and privileges under the indenture as the
holder of the debt securities. In addition, the property trustee will maintain
exclusive control of a segregated noninterest bearing bank account to hold all
payments made in respect of the debt securities for the benefit of the holders
of the trust securities. The property trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of the trust securities out of funds from this property account.
The rights of the holders of the trust preferred securities, including
economic rights, rights to information and voting rights, are provided in the
declarations of trust of MetLife Capital Trust II and MetLife Capital Trust III,
including any amendments thereto, the trust preferred securities, the Delaware
Business Trust Act and the Trust Indenture Act.
MetLife, Inc. will pay all fees and expenses related to the trusts and the
offering of trust preferred securities. The principal offices of each trust is:
c/o Bank One Delaware, Inc., Three Christina Center, 201 North Walnut Street,
Wilmington, New Castle County, Delaware 19801. The telephone number of each
trust is: (212) 373-1105.
For financial reporting purposes,
- the trusts will be treated as MetLife, Inc.'s subsidiaries; and
- the accounts of the trusts will be included in MetLife, Inc.'s
consolidated financial statements.
The financial statements of the trusts will be consolidated in MetLife,
Inc.'s consolidated financial statements, with the trust preferred securities
shown on MetLife, Inc.'s consolidated balance sheets. The notes to our
consolidated financial statements will disclose that the sole assets of the
trusts will be the debt securities issued by MetLife, Inc. to the trusts.
Distributions on the trust preferred securities will be reported as a charge
6
to minority interest, which is included in Other Expenses in MetLife, Inc.'s
consolidated statements of income, whether paid or accrued.
Please read the prospectus supplement relating to the trust preferred
securities for further information concerning the trusts and the trust preferred
securities.
USE OF PROCEEDS
Unless otherwise set forth in a prospectus supplement, we intend to use the
proceeds of any securities sold for general corporate purposes. The trusts will
use all of the proceeds they receive from the sale of trust preferred securities
to purchase debt securities issued by MetLife, Inc.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth MetLife's ratio of earnings to fixed
charges.
THREE
MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------------
2001 2000 1999 1998 1997 1996
--------- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges(1)........ 1.36 1.39 1.31 1.65 1.56 1.43
---------------
(1) For purposes of this computation, earnings are defined as income before
provision for income taxes and discontinued operations and excluding
undistributed income and losses from equity method investments, minority
interest and fixed charges, excluding capitalized interest. Fixed charges
are the sum of interest and debt issue costs, interest credited to
policyholder account balances and an estimated interest component of rent
expense.
DESCRIPTION OF SECURITIES
This prospectus contains summary descriptions of the debt securities,
common stock and preferred stock that MetLife, Inc. may sell from time to time,
and the trust preferred securities guaranteed by MetLife, Inc. that MetLife
Capital Trust II and MetLife Capital Trust III may sell from time to time. These
summary descriptions are not meant to be complete descriptions of each security.
However, this prospectus and the accompanying prospectus supplement contain the
material terms of the securities being offered.
DESCRIPTION OF DEBT SECURITIES
As used in this prospectus, debt securities means the debentures, notes,
bonds and other evidences of indebtedness that MetLife, Inc. may issue from time
to time. The debt securities will either be senior debt securities or
subordinated debt securities. Senior debt securities will be issued under a
"Senior Indenture" and subordinated debt securities will be issued under a
"Subordinated Indenture". This prospectus sometimes refers to the Senior
Indenture and the Subordinated Indenture collectively as the "Indentures".
Unless the applicable prospectus supplement states otherwise, the trustee under
the Indentures will be Bank One Trust Company, N.A., a national banking
association.
The forms of Indentures are filed as exhibits to the registration
statement. The statements and descriptions in this prospectus or in any
prospectus supplement regarding provisions of the Indentures and debt securities
are summaries thereof, do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the
Indentures and the debt securities, including the definitions therein of certain
terms.
7
GENERAL
The debt securities will be direct unsecured obligations of MetLife, Inc.
The senior debt securities will rank equally with all of MetLife, Inc.'s other
senior and unsubordinated debt. The subordinated debt securities will be
subordinate and junior in right of payment to all of MetLife, Inc.'s present and
future senior indebtedness.
Because MetLife, Inc. is principally a holding company, its right to
participate in any distribution of assets of any subsidiary, including
Metropolitan Life Insurance Company, upon the subsidiary's liquidation or
reorganization or otherwise, is subject to the prior claims of creditors of the
subsidiary, except to the extent MetLife, Inc. may be recognized as a creditor
of that subsidiary. Accordingly, MetLife, Inc.'s obligations under the debt
securities will be effectively subordinated to all existing and future
indebtedness and liabilities of its subsidiaries, including liabilities under
contracts of insurance and annuities written by MetLife, Inc.'s insurance
subsidiaries, and holders of debt securities should look only to MetLife, Inc.'s
assets for payment thereunder.
The Indentures do not limit the aggregate principal amount of debt
securities that MetLife, Inc. may issue and provide that MetLife, Inc. may issue
debt securities from time to time in one or more series, in each case with the
same or various maturities, at par or at a discount. MetLife, Inc. may issue
additional debt securities of a particular series without the consent of the
holders of the debt securities of such series outstanding at the time of the
issuance. Any such additional debt securities, together with all other
outstanding debt securities of that series, will constitute a single series of
debt securities under the applicable Indenture. The Indentures also do not limit
our ability to incur other debt.
Each prospectus supplement will describe the terms relating to the specific
series of debt securities being offered. These terms will include some or all of
the following:
- the title of debt securities and whether they are subordinated debt
securities or senior debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the price or prices at which MetLife, Inc. will sell the debt securities;
- the maturity date or dates of the debt securities;
- the rate or rates of interest, if any, which may be fixed or variable,
per annum at which the debt securities will bear interest, or the method
of determining such rate or rates, if any;
- the date or dates from which any interest will accrue or the method by
which such date or dates will be determined;
- the right, if any, to extend the interest payment periods and the
duration of any such deferral period, including the maximum consecutive
period during which interest payment periods may be extended;
- whether the amount of payments of principal of (and premium, if any) or
interest on the debt securities may be determined with reference to any
index, formula or other method, such as one or more currencies,
commodities, equity indices or other indices, and the manner of
determining the amount of such payments;
- the dates on which MetLife, Inc. will pay interest on the debt securities
and the regular record date for determining who is entitled to the
interest payable on any interest payment date;
- the place or places where the principal of (and premium, if any) and
interest on the debt securities will be payable;
- if MetLife, Inc. possesses the option to do so, the periods within which
and the prices at which MetLife, Inc. may redeem the debt securities, in
whole or in part, pursuant to optional redemption provisions, and the
other terms and conditions of any such provisions;
- MetLife, Inc.'s obligation, if any, to redeem, repay or purchase debt
securities by making periodic payments to a sinking fund or through an
analogous provision or at the option of holders of the debt
8
securities, and the period or periods within which and the price or
prices at which MetLife, Inc. will redeem, repay or purchase the debt
securities, in whole or in part, pursuant to such obligation, and the
other terms and conditions of such obligation;
- the denominations in which the debt securities will be issued, if other
than denominations of $1,000 and integral multiples of $1,000;
- the portion, or methods of determining the portion, of the principal
amount of the debt securities which MetLife, Inc. must pay upon the
acceleration of the maturity of the debt securities in connection with an
Event of Default (as described below), if other than the full principal
amount;
- the currency, currencies or currency unit in which MetLife, Inc. will pay
the principal of (and premium, if any) or interest, if any, on the debt
securities, if not United States dollars;
- provisions, if any, granting special rights to holders of the debt
securities upon the occurrence of specified events;
- any deletions from, modifications of or additions to the Events of
Default or MetLife, Inc.'s covenants with respect to the applicable
series of debt securities, and whether or not such Events of Default or
covenants are consistent with those contained in the applicable
Indenture;
- the application, if any, of the terms of the Indenture relating to
defeasance and covenant defeasance (which terms are described below) to
the debt securities;
- whether the subordination provisions summarized below or different
subordination provisions will apply to the debt securities;
- the terms, if any, upon which the holders may convert or exchange such
debt securities into or for MetLife, Inc.'s common stock or other
securities or property;
- whether any of the debt securities will be issued in global form and, if
so, the terms and conditions upon which global debt securities may be
exchanged for certificated debt securities;
- any change in the right of the trustee or the requisite holders of debt
securities to declare the principal amount thereof due and payable
because of an Event of Default;
- the depositary for global or certificated debt securities;
- any special tax implications of the debt securities;
- any trustees, authenticating or paying agents, transfer agents or
registrars or other agents with respect to the debt securities; and
- any other terms of the debt securities not inconsistent with the
provisions of the Indentures, as amended or supplemented.
Unless otherwise specified in the applicable prospectus supplement, the
debt securities will not be listed on any securities exchange.
Unless otherwise specified in the applicable prospectus supplement, debt
securities will be issued in fully-registered form without coupons.
Debt securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. The applicable prospectus supplement will
describe the federal income tax consequences and special considerations
applicable to any such debt securities. The debt securities may also be issued
as indexed securities or securities denominated in foreign currencies or
currency units, as described in more detail in the prospectus supplement
relating to any of the particular debt securities. The prospectus supplement
relating to specific debt securities will also describe any special
considerations and certain additional tax considerations applicable to such debt
securities.
9
SUBORDINATION
The prospectus supplement relating to any offering of subordinated debt
securities will describe the specific subordination provisions. However, unless
otherwise noted in the prospectus supplement, subordinated debt securities will
be subordinate and junior in right of payment to all of MetLife, Inc.'s Senior
Indebtedness.
Under the Subordinated Indenture, "Senior Indebtedness" means all amounts
due on obligations in connection with any of the following, whether outstanding
at the date of execution of the Subordinated Indenture or thereafter incurred or
created:
- the principal of (and premium, if any) and interest in respect of
indebtedness of MetLife, Inc. for borrowed money and indebtedness
evidenced by securities, debentures, bonds or other similar instruments
issued by MetLife, Inc.;
- all capital lease obligations of MetLife, Inc.;
- all obligations of MetLife, Inc. issued or assumed as the deferred
purchase price of property, all conditional sale obligations of MetLife,
Inc. and all obligations of MetLife, Inc. under any title retention
agreement (but excluding trade accounts payable in the ordinary course of
business);
- all obligations of MetLife, Inc. for the reimbursement on any letter of
credit, banker's acceptance, security purchase facility or similar credit
transaction;
- all obligations of MetLife, Inc. in respect of interest rate swap, cap or
other agreements, interest rate future or options contracts, currency
swap agreements, currency future or option contracts and other similar
agreements;
- all obligations of the types referred to above of other persons for the
payment of which MetLife, Inc. is responsible or liable as obligor,
guarantor or otherwise; and
- all obligations of the types referred to above of other persons secured
by any lien on any property or asset of MetLife, Inc. whether or not such
obligation is assumed by MetLife, Inc.
Senior Indebtedness does not include:
- indebtedness or monetary obligations to trade creditors created or
assumed by MetLife, Inc. in the ordinary course of business in connection
with the obtaining of materials or services;
- indebtedness that is by its terms subordinated to or ranks equal with the
subordinated debt securities; and
- any indebtedness of MetLife, Inc. to its affiliates (including all debt
securities and guarantees in respect of those debt securities issued to
any trust, partnership or other entity affiliated with MetLife, Inc. that
is a financing vehicle of MetLife, Inc. in connection with the issuance
by such financing entity of preferred securities or other securities
guaranteed by MetLife, Inc.) unless otherwise expressly provided in the
terms of any such indebtedness.
The terms of MetLife, Inc,'s guarantees with respect to the capital securities
and common securities of MetLife Capital Trust I and the terms of MetLife,
Inc.'s 8.00% Debentures due 2005 held by MetLife Capital Trust I expressly
provide that each shall rank equally in right of payment with all other senior
unsecured debt of MetLife, Inc.
Senior Indebtedness shall continue to be Senior Indebtedness and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
Unless otherwise noted in the accompanying prospectus supplement, if
MetLife, Inc. defaults in the payment of any principal of (or premium, if any)
or interest on any Senior Indebtedness when it becomes due and payable, whether
at maturity or at a date fixed for prepayment or by declaration or otherwise,
then, unless and until such default is cured or waived or ceases to exist,
MetLife, Inc. will make no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) in respect of the principal of or interest
on the
10
subordinated debt securities or in respect of any redemption, retirement,
purchase or other requisition of any of the subordinated debt securities.
In the event of the acceleration of the maturity of any subordinated debt
securities, the holders of all senior debt securities outstanding at the time of
such acceleration will first be entitled to receive payment in full of all
amounts due on the senior debt securities before the holders of the subordinated
debt securities will be entitled to receive any payment of principal (and
premium, if any) or interest on the subordinated debt securities.
If any of the following events occurs, MetLife, Inc. will pay in full all
Senior Indebtedness before it makes any payment or distribution under the
subordinated debt securities, whether in cash, securities or other property, to
any holder of subordinated debt securities:
- any dissolution or winding-up or liquidation or reorganization of
MetLife, Inc., whether voluntary or involuntary or in bankruptcy,
insolvency or receivership;
- any general assignment by MetLife, Inc. for the benefit of creditors; or
- any other marshaling of MetLife, Inc.'s assets or liabilities.
In such event, any payment or distribution under the subordinated debt
securities, whether in cash, securities or other property, which would otherwise
(but for the subordination provisions) be payable or deliverable in respect of
the subordinated debt securities, will be paid or delivered directly to the
holders of Senior Indebtedness in accordance with the priorities then existing
among such holders until all Senior Indebtedness has been paid in full. If any
payment or distribution under the subordinated debt securities is received by
the trustee of any subordinated debt securities in contravention of any of the
terms of the Subordinated Indenture and before all the Senior Indebtedness has
been paid in full, such payment or distribution or security will be received in
trust for the benefit of, and paid over or delivered and transferred to, the
holders of the Senior Indebtedness at the time outstanding in accordance with
the priorities then existing among such holders for application to the payment
of all Senior Indebtedness remaining unpaid to the extent necessary to pay all
such Senior Indebtedness in full.
The Subordinated Indenture does not limit the issuance of additional Senior
Indebtedness.
If debt securities are issued to a trust in connection with the issuance of
trust preferred securities, such debt securities may thereafter be distributed
pro rata to the holders of such trust securities in connection with the
dissolution of such trust upon the occurrence of certain events described in the
applicable prospectus supplement.
RESTRICTIVE COVENANTS
Unless an accompanying prospectus supplement states otherwise, the
following restrictive covenants shall apply to each series of senior debt
securities:
Limitation on Liens. So long as any senior debt securities are
outstanding, neither MetLife, Inc. nor any of its subsidiaries will create,
assume, incur or guarantee any debt which is secured by any mortgage, pledge,
lien, security interest or other encumbrance on any capital stock of:
- Metropolitan Life Insurance Company;
- any successor to substantially all of the business of Metropolitan Life
Insurance Company which is also a subsidiary of MetLife, Inc.; or
- any corporation (other than MetLife, Inc.) having direct or indirect
control of Metropolitan Life Insurance Company or any such successor.
However, this restriction will not apply if the debt securities then outstanding
are secured at least equally and ratably with the otherwise prohibited secured
debt so long as it is outstanding.
11
Limitations on Dispositions of Stock of Certain Subsidiaries. So long as
any senior debt securities are outstanding and subject to the provisions of the
Senior Indenture regarding mergers, consolidations and sales of assets, neither
MetLife, Inc. nor any of its subsidiaries will sell or otherwise dispose of any
shares of capital stock (other than preferred stock having no voting rights of
any kind) of:
- Metropolitan Life Insurance Company;
- any successor to substantially all of the business of Metropolitan Life
Insurance Company which is also a subsidiary of MetLife, Inc.; or
- any corporation (other than MetLife, Inc.) having direct or indirect
control of Metropolitan Life Insurance Company or any such successor;
Except for, in each case:
- a sale or other disposition of any of such stock to a wholly-owned
subsidiary of MetLife, Inc. or of such subsidiary;
- a sale or other disposition of all of such stock for at least fair value
(as determined by MetLife, Inc.'s board of directors acting in good
faith); or
- a sale or other disposition required to comply with an order of a court
or regulatory authority of competent jurisdiction, other than an order
issued at MetLife, Inc.'s request or the request of any of MetLife,
Inc.'s subsidiaries.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
MetLife, Inc. may not (i) merge with or into or consolidate with another
corporation or sell, assign, transfer, lease or convey all or substantially all
of its properties and assets to, any other corporation other than a direct or
indirect wholly-owned subsidiary of MetLife, Inc., and (ii) no corporation may
merge with or into or consolidate with MetLife, Inc. or, except for any direct
or indirect wholly-owned subsidiary of MetLife, Inc., sell, assign, transfer,
lease or convey all or substantially all of its properties and assets to
MetLife, Inc., unless:
- MetLife, Inc. is the surviving corporation or the corporation formed by
or surviving such merger or consolidation or to which such sale,
assignment, transfer, lease or conveyance has been made, if other than
MetLife, Inc., has expressly assumed by supplemental indenture all the
obligations of MetLife, Inc. under the debt securities, the Indentures,
and any guarantees of preferred securities or common securities issued by
the trusts;
- immediately after giving effect to such transaction, no default or Event
of Default has occurred and is continuing;
- if at the time any preferred securities of the trusts are outstanding,
such transaction is not prohibited under the applicable declaration of
trust and the applicable preferred securities guarantee of each trust;
and
- MetLife, Inc. delivers to the trustee an officers' certificate and an
opinion of counsel, each stating that the supplemental indenture complies
with the applicable Indenture.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Unless an accompanying prospectus supplement states otherwise, the
following shall constitute "Events of Default" under the Indentures with respect
to each series of debt securities:
- MetLife, Inc.'s failure to pay any interest on any debt security of such
series when due and payable, continued for 30 days;
12
- MetLife, Inc.'s failure to pay principal (or premium, if any) on any debt
security of such series when due, regardless of whether such payment
became due because of maturity, redemption, acceleration or otherwise, or
is required by any sinking fund established with respect to such series;
- MetLife, Inc.'s failure to observe or perform any other of its covenants
or agreements with respect to such debt securities for 90 days after
MetLife, Inc. receives notice of such failure;
- certain defaults with respect to MetLife, Inc.'s debt (other than the
debt securities or non-recourse debt) in any aggregate principal amount
in excess of $100,000,000 consisting of the failure to make any payment
at maturity or that results in acceleration of the maturity of such debt;
- certain events of bankruptcy, insolvency or reorganization of MetLife,
Inc.; and
- certain events of dissolution or winding-up of the trusts in the event
that debt securities are issued to the trusts or a trustee of the trusts
in connection with the issuance of securities by the trusts.
If an Event of Default with respect to any debt securities of any series
outstanding under either of the Indentures shall occur and be continuing, the
trustee under such Indenture or the holders of at least 25% in aggregate
principal amount of the debt securities of that series outstanding may declare,
by notice as provided in the applicable Indenture, the principal amount (or such
lesser amount as may be provided for in the debt securities of that series) of
all the debt securities of that series outstanding to be due and payable
immediately; provided that, in the case of an Event of Default involving certain
events in bankruptcy, insolvency or reorganization, acceleration is automatic;
and, provided further, that after such acceleration, but before a judgment or
decree based on acceleration, the holders of a majority in aggregate principal
amount of the outstanding debt securities of that series may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal, have been cured or waived.
Upon the acceleration of the maturity of original issue discount securities, an
amount less than the principal amount thereof will become due and payable.
Reference is made to the prospectus supplement relating to any original issue
discount securities for the particular provisions relating to acceleration of
maturity thereof.
Any past default under either Indenture with respect to debt securities of
any series, and any Event of Default arising therefrom, may be waived by the
holders of a majority in principal amount of all debt securities of such series
outstanding under such Indenture, except in the case of (i) default in the
payment of the principal of (or premium, if any) or interest on any debt
securities of such series or (ii) default in respect of a covenant or provision
which may not be amended or modified without the consent of the holder of each
outstanding debt security of such series affected.
The trustee is required, within 90 days after the occurrence of a default
(which is known to the trustee and is continuing), with respect to the debt
securities of any series (without regard to any grace period or notice
requirements), to give to the holders of the debt securities of such series
notice of such default; provided, however, that, except in the case of a default
in the payment of the principal of (and premium, if any) or interest, or in the
payment of any sinking fund installment, on any debt securities of such series,
the trustee shall be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the interests of the
holders of the debt securities of such series.
The trustee, subject to its duties during default to act with the required
standard of care, may require indemnification by the holders of the debt
securities of any series with respect to which a default has occurred before
proceeding to exercise any right or power under the Indentures at the request of
the holders of the debt securities of such series. Subject to such right of
indemnification and to certain other limitations, the holders of a majority in
principal amount of the outstanding debt securities of any series under either
Indenture may direct the time, method and place of conducting any proceeding for
any remedy available to the trustee, or exercising any trust or power conferred
on the trustee with respect to the debt securities of such series.
No holder of a debt security of any series may institute any action against
MetLife, Inc. under either of the Indentures (except actions for payment of
overdue principal of (and premium, if any) or interest on such debt security or
for the conversion or exchange of such debt security in accordance with its
terms) unless
13
(i) the holder has given to the trustee written notice of an Event of Default
and of the continuance thereof with respect to the debt securities of such
series specifying an Event of Default, as required under the applicable
Indenture, (ii) the holders of at least 25% in aggregate principal amount of the
debt securities of that series then outstanding under such Indenture shall have
requested the trustee to institute such action and offered to the trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request and (iii) the trustee shall not have instituted
such action within 60 days of such request.
MetLife, Inc. is required to furnish annually to the trustee statements as
to MetLife, Inc.'s compliance with all conditions and covenants under each
Indenture.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
If indicated in the applicable prospectus supplement, MetLife, Inc. may
discharge or defease its obligations under each Indenture as set forth below.
MetLife, Inc. may discharge certain obligations to holders of any series of
debt securities issued under either the Senior Indenture or the Subordinated
Indenture which have not already been delivered to the trustee for cancellation
and which have either become due and payable or are by their terms due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the trustee cash or, in the case of debt securities
payable only in U.S. dollars, U.S. government obligations (as defined in either
Indenture), as trust funds in an amount certified to be sufficient to pay when
due, whether at maturity, upon redemption or otherwise, the principal of (and
premium, if any) and interest on such debt securities.
If indicated in the applicable prospectus supplement, MetLife, Inc. may
elect either (i) to defease and be discharged from any and all obligations with
respect to the debt securities of or within any series (except as otherwise
provided in the relevant Indenture) ("defeasance") or (ii) to be released from
its obligations with respect to certain covenants applicable to the debt
securities of or within any series ("covenant defeasance"), upon the deposit
with the relevant Indenture trustee, in trust for such purpose, of money and/or
government obligations which through the payment of principal and interest in
accordance with their terms will provide money in an amount sufficient, without
reinvestment, to pay the principal of (and premium, if any) or interest on such
debt securities to maturity or redemption, as the case may be, and any mandatory
sinking fund or analogous payments thereon. As a condition to defeasance or
covenant defeasance, MetLife, Inc. must deliver to the trustee an opinion of
counsel to the effect that the holders of such debt securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such defeasance or covenant defeasance and will be subject to federal income tax
on the same amounts and in the same manner and at the same times as would have
been the case if such defeasance or covenant defeasance had not occurred. Such
opinion of counsel, in the case of defeasance under clause (i) above, must refer
to and be based upon a ruling of the Internal Revenue Service or a change in
applicable federal income tax law occurring after the date of the relevant
Indenture. In addition, in the case of either defeasance or covenant defeasance,
the Company shall have delivered to the trustee (i) an officers' certificate to
the effect that the relevant debt securities exchange(s) have informed it that
neither such debt securities nor any other debt securities of the same series,
if then listed on any securities exchange, will be delisted as a result of such
deposit and (ii) an officers' certificate and an opinion of counsel, each
stating that all conditions precedent with respect to such defeasance or
covenant defeasance have been complied with.
MetLife, Inc. may exercise its defeasance option with respect to such debt
securities notwithstanding its prior exercise of its covenant defeasance option.
MODIFICATION AND WAIVER
Under the Indentures, MetLife, Inc. and the applicable trustee may
supplement the Indentures for certain purposes which would not materially
adversely affect the interests or rights of the holders of debt securities of a
series without the consent of those holders. MetLife, Inc. and the applicable
trustee may also modify the Indentures or any supplemental indenture in a manner
that affects the interests or rights of the holders of debt securities with the
consent of the holders of a least a majority in aggregate principal amount of
14
the outstanding debt securities of each affected series issued under the
Indenture. However, the Indentures require the consent of each holder of debt
securities that would be affected by any modification which would:
- extend the fixed maturity of any debt securities of any series, or reduce
the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any premium payable upon the
redemption thereof;
- reduce the amount of principal of an original issue discount debt
security or any other debt security payable upon acceleration of the
maturity thereof;
- change the currency in which any debt security or any premium or interest
is payable;
- impair the right to enforce any payment on or with respect to any debt
security;
- adversely change the right to convert or exchange, including decreasing
the conversion rate or increasing the conversion price of, any debt
security (if applicable);
- reduce the percentage in principal amount of outstanding debt securities
of any series, the consent of whose holders is required for modification
or amendment of the Indentures or for waiver of compliance with certain
provisions of the Indentures or for waiver of certain defaults;
- reduce the requirements contained in the Indentures for quorum or voting;
or
- modify any of the above provisions.
If debt securities are held by a trust or a trustee of a trust, a
supplemental indenture that affects the interests or rights of the holders of
debt securities will not be effective until the holders of not less than a
majority in liquidation preference of the preferred securities and common
securities of the applicable trust, collectively, have consented to the
supplemental indenture; provided, further, that if the consent of the holder of
each outstanding debt security is required, the supplemental indenture will not
be effective until each holder of the preferred securities and the common
securities of the applicable trust has consented to the supplemental indenture.
The Indentures permit the holders of at least a majority in aggregate
principal amount of the outstanding debt securities of any series issued under
the Indenture which is affected by the modification or amendment to waive
MetLife, Inc.'s compliance with certain covenants contained in the Indentures.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable prospectus supplement, payment
of interest on a debt security on any interest payment date will be made to the
person in whose name a debt security is registered at the close of business on
the record date for the interest.
Unless otherwise indicated in the applicable prospectus supplement,
principal, interest and premium on the debt securities of a particular series
will be payable at the office of such paying agent or paying agents as MetLife,
Inc. may designate for such purpose from time to time. Notwithstanding the
foregoing, at MetLife, Inc.'s option, payment of any interest may be made by
check mailed to the address of the person entitled thereto as such address
appears in the security register.
Unless otherwise indicated in the applicable prospectus supplement, a
paying agent designated by MetLife, Inc. and located in the Borough of
Manhattan, The City of New York will act as paying agent for payments with
respect to debt securities of each series. All paying agents initially
designated by MetLife, Inc. for the debt securities of a particular series will
be named in the applicable prospectus supplement. MetLife, Inc. may at any time
designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent acts,
except that MetLife, Inc. will be required to maintain a paying agent in each
place of payment for the debt securities of a particular series.
All moneys paid by MetLife, Inc. to a paying agent for the payment of the
principal, interest or premium on any debt security which remain unclaimed at
the end of two years after such principal, interest or premium
15
has become due and payable will be repaid to MetLife, Inc. upon request, and the
holder of such debt security thereafter may look only to MetLife, Inc. for
payment thereof.
DENOMINATIONS, REGISTRATIONS AND TRANSFER
Unless an accompanying prospectus supplement states otherwise, debt
securities will be represented by one or more global certificates registered in
the name of a nominee for The Depository Trust Company, or DTC. In such case,
each holder's beneficial interest in the global securities will be shown on the
records of DTC and transfers of beneficial interests will only be effected
through DTC's records.
A holder of debt securities may only exchange a beneficial interest in a
global security for certificated securities registered in the holder's name if:
- DTC notifies MetLife, Inc. that it is unwilling or unable to continue
serving as the depositary for the relevant global securities or DTC
ceases to maintain certain qualifications under the Securities Exchange
Act of 1934 and no successor depositary has been appointed for 90 days;
or
- MetLife, Inc. determines, in its sole discretion, that the global
security shall be exchangeable.
If debt securities are issued in certificated form, they will only be
issued in the minimum denomination specified in the accompanying prospectus
supplement and integral multiples of such denomination. Transfers and exchanges
of such debt securities will only be permitted in such minimum denomination.
Transfers of debt securities in certificated form may be registered at the
trustee's corporate office or at the offices of any paying agent or trustee
appointed by MetLife, Inc. under the Indentures. Exchanges of debt securities
for an equal aggregate principal amount of debt securities in different
denominations may also be made at such locations.
GOVERNING LAW
The Indentures and debt securities will be governed by, and construed in
accordance with, the internal laws of the State of New York, without regard to
its principles of conflicts of laws.
RELATIONSHIP WITH THE TRUSTEES
The trustee under the Indentures is Bank One Trust Company, N.A. MetLife,
Inc. and its subsidiaries maintain ordinary banking and trust relationships with
a number of banks and trust companies, including the trustee under the
Indentures.
CONVERSION OR EXCHANGE RIGHTS
The prospectus supplement will describe the terms, if any, on which a
series of debt securities may be convertible into or exchangeable for MetLife,
Inc.'s common stock, preferred stock or other debt securities. These terms will
include provisions as to whether conversion or exchange is mandatory, at the
option of the holder or at MetLife, Inc.'s option. These provisions may allow or
require the number of shares of MetLife, Inc.'s common stock or other securities
to be received by the holders of such series of debt securities to be adjusted.
DESCRIPTION OF CAPITAL STOCK
MetLife, Inc.'s authorized capital stock consists of:
- 200,000,000 shares of preferred stock, par value $0.01 per share, of
which no shares were issued or outstanding as of the date of this
prospectus;
- 10,000,000 shares of Series A Junior Participating Preferred Stock, par
value $0.01 per share, of which no shares were issued or outstanding as
of the date of this prospectus; and
16
- 3,000,000,000 shares of common stock, par value $0.01 per share, of which
749,733,176 shares, as well as the same number of rights to purchase
shares of Series A Junior Participating Preferred Stock pursuant to the
stockholder rights plan adopted by MetLife, Inc.'s board of directors on
September 29, 1999, were outstanding as of May 4, 2001. See
"-- Stockholder Rights Plan" for a description of the Series A Junior
Participating Preferred Stock. The remaining shares of authorized and
unissued common stock will be available for future issuance without
additional stockholder approval.
COMMON STOCK
Dividends. The holders of common stock, after any preferences of holders
of any preferred stock, are entitled to receive dividends as determined by the
board of directors. The issuance of dividends will depend upon, among other
factors deemed relevant by MetLife, Inc.'s board of directors, MetLife's
financial condition, results of operations, cash requirements, future prospects
and regulatory restrictions on the payment of dividends by Metropolitan Life
Insurance Company and MetLife, Inc.'s other subsidiaries. There is no
requirement or assurance that MetLife, Inc. will declare and pay any dividends.
In addition, the indenture governing the terms of our debentures issued to
MetLife Capital Trust I in connection with the offering of equity security units
prohibits the payment of dividends on common stock of MetLife, Inc. during a
deferral of interest payments on the debentures or an event of default under the
indenture or the related guarantee.
Voting Rights. The holders of common stock are entitled to one vote per
share on all matters on which the holders of common stock are entitled to vote
and do not have any cumulative voting rights.
Liquidation and Dissolution. In the event of MetLife, Inc.'s liquidation,
dissolution or winding-up, the holders of common stock are entitled to share
equally and ratably in MetLife, Inc.'s assets, if any, remaining after the
payment of all of MetLife, Inc.'s liabilities and the liquidation preference of
any outstanding class or series of preferred stock.
Other Rights. The holders of common stock have no preemptive, conversion,
redemption or sinking fund rights. The holders of shares of MetLife, Inc.'s
common stock are not required to make additional capital contributions.
Transfer Agent and Registrar. The transfer agent and registrar for
MetLife, Inc.'s common stock is Mellon Investor Services, successor to
ChaseMellon Shareholder Services, L.L.C.
PREFERRED STOCK
General. MetLife, Inc.'s board of directors has the authority to issue
preferred stock in one or more series and to fix the number of shares
constituting any such series and the designations, powers, preferences,
limitations and relative rights including dividend rights, dividend rate, voting
rights, terms of redemption, redemption price or prices, conversion rights and
liquidation preferences of the shares constituting any series, without any
further vote or action by stockholders.
MetLife, Inc. has authorized 10,000,000 shares of Series A Junior
Participating Preferred Stock for issuance in connection with its stockholder
rights plan. See "-- Stockholder Rights Plan" for a description of the Series A
Junior Participating Preferred Stock.
Voting Rights. The Delaware General Corporation Law provides that the
holders of preferred stock will have the right to vote separately as a class on
any proposal involving fundamental changes in the rights of holders of such
preferred stock.
Conversion or Exchange. The prospectus supplement will describe the terms,
if any, on which the preferred stock may be convertible into or exchangeable for
MetLife, Inc.'s common stock, debt securities or other preferred stock. These
terms will include provisions as to whether conversion or exchange is mandatory,
at the option of the holder or at MetLife, Inc.'s option. These provisions may
allow or require the number of shares of MetLife, Inc.'s common stock or other
securities to be received by the holders of preferred stock to be adjusted.
17
CERTAIN PROVISIONS IN METLIFE, INC.'S CERTIFICATE OF INCORPORATION AND BY-LAWS
AND IN DELAWARE AND NEW YORK LAW
A number of provisions of MetLife, Inc.'s certificate of incorporation and
by-laws deal with matters of corporate governance and rights of stockholders.
The following discussion is a general summary of selected provisions of MetLife,
Inc.'s certificate of incorporation and by-laws and regulatory provisions that
might be deemed to have a potential "anti-takeover" effect. These provisions may
have the effect of discouraging a future takeover attempt which is not approved
by MetLife, Inc.'s board of directors but which individual stockholders may deem
to be in their best interests or in which stockholders may receive a substantial
premium for their shares over then current market prices. As a result,
stockholders who might desire to participate in such a transaction may not have
an opportunity to do so. Such provisions will also render the removal of the
incumbent board of directors or management more difficult. Some provisions of
the Delaware General Corporation Law and the New York Insurance Law may also
have an anti-takeover effect. The following description of selected provisions
of MetLife, Inc.'s certificate of incorporation and by-laws and selected
provisions of the Delaware General Corporation Law and the New York Insurance
Law is necessarily general and reference should be made in each case to MetLife,
Inc.'s certificate of incorporation and by-laws, which are incorporated by
reference as exhibits to the registration statement of which this prospectus
forms a part, and to the provisions of those laws.
CLASSIFIED BOARD OF DIRECTORS AND REMOVAL OF DIRECTORS
Pursuant to MetLife, Inc.'s certificate of incorporation, the directors are
divided into three classes, as nearly equal in number as possible, with each
class having a term of three years. The classes serve staggered terms, such that
the term of one class of directors expires each year. Any effort to obtain
control of MetLife, Inc.'s board of directors by causing the election of a
majority of the board may require more time than would be required without a
staggered election structure. MetLife, Inc.'s certificate of incorporation also
provides that, subject to the rights of the holders of any class of preferred
stock, directors may be removed only for cause at a meeting of stockholders by a
vote of a majority of the shares then entitled to vote. This provision may have
the effect of slowing or impeding a change in membership of MetLife, Inc.'s
board of directors that would effect a change of control.
EXERCISE OF DUTIES BY BOARD OF DIRECTORS
MetLife, Inc.'s certificate of incorporation provides that while the
Metropolitan Life Policyholder Trust is in existence, each MetLife, Inc.
director is required, in exercising his or her duties as a director, to take the
interests of the trust beneficiaries into account as if they were holders of the
shares of common stock held in the trust, except to the extent that any such
director determines, based on advice of counsel, that to do so would violate his
or her duties as a director under Delaware law.
RESTRICTION ON MAXIMUM NUMBER OF DIRECTORS AND FILLING OF VACANCIES ON METLIFE,
INC.'S BOARD OF DIRECTORS
Pursuant to MetLife, Inc.'s by-laws and subject to the rights of the
holders of any class of preferred stock, the number of directors may be fixed
and increased or decreased from time to time by resolution of the board of
directors, but the board of directors will at no time consist of fewer than
three directors. Subject to the rights of the holders of any class of preferred
stock, stockholders can only remove a director for cause by a vote of a majority
of the shares entitled to vote, in which case the vacancy caused by such removal
may be filled at such meeting by the stockholders entitled to vote for the
election of the director so removed. Any vacancy on the board of directors,
including a vacancy resulting from an increase in the number of directors or
resulting from a removal for cause where the stockholders have not filled the
vacancy, subject to the rights of the holders of any class of preferred stock,
may be filled by a majority of the directors then in office, although less than
a quorum. If the vacancy is not so filled it will be filled by the stockholders
at the next annual meeting of stockholders. The stockholders are not permitted
to fill vacancies between annual meetings, except where the vacancy resulted
from a removal for cause. These provisions give incumbent directors significant
authority that may have the effect of limiting the ability of stockholders to
effect a change in management.
18
ADVANCE NOTICE REQUIREMENTS FOR NOMINATION OF DIRECTORS AND PRESENTATION OF NEW
BUSINESS AT MEETINGS OF STOCKHOLDERS; ACTION BY WRITTEN CONSENT
MetLife, Inc.'s by-laws provide for advance notice requirements for
stockholder proposals and nominations for director. In addition, pursuant to the
provisions of both the certificate of incorporation and the by-laws, action may
not be taken by written consent of stockholders; rather, any action taken by the
stockholders must be effected at a duly called meeting. Moreover, the
stockholders do not have the power to call a special meeting. Only the chief
executive officer or the secretary pursuant to a board resolution or, under some
circumstances, the president or a director who also is an officer, may call a
special meeting. These provisions make it more procedurally difficult for a
stockholder to place a proposal or nomination on the meeting agenda and prohibit
a stockholder from taking action without a meeting, and therefore may reduce the
likelihood that a stockholder will seek to take independent action to replace
directors or with respect to other matters that are not supported by management
for stockholder vote.
LIMITATIONS ON DIRECTOR LIABILITY
MetLife, Inc.'s certificate of incorporation contains a provision that is
designed to limit the directors' liability to the extent permitted by the
Delaware General Corporation Law and any amendments to that law. Specifically,
directors will not be held liable to MetLife, Inc. or its stockholders for an
act or omission in their capacity as a director, except for liability as a
result of:
- a breach of the duty of loyalty to MetLife, Inc. or its stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- payment of an improper dividend or improper repurchase of MetLife, Inc.'s
stock under Section 174 of the Delaware General Corporation Law; or
- actions or omissions pursuant to which the director received an improper
personal benefit.
The principal effect of the limitation on liability provision is that a
stockholder is unable to prosecute an action for monetary damages against a
director of MetLife, Inc. unless the stockholder can demonstrate one of the
specified bases for liability. This provision, however, does not eliminate or
limit director liability arising in connection with causes of action brought
under the federal securities laws. MetLife, Inc.'s certificate of incorporation
also does not eliminate the directors' duty of care. The inclusion of the
limitation on liability provision in the certificate may, however, discourage or
deter stockholders or management from bringing a lawsuit against directors for a
breach of their fiduciary duties, even though such an action, if successful,
might otherwise have benefitted MetLife, Inc. and its stockholders. This
provision should not affect the availability of equitable remedies such as
injunction or rescission based upon a director's breach of the duty of care.
MetLife, Inc.'s by-laws also provide that MetLife, Inc. indemnify its
directors and officers to the fullest extent permitted by Delaware law. MetLife,
Inc. is required to indemnify its directors and officers for all judgments,
fines, settlements, legal fees and other expenses reasonably incurred in
connection with pending or threatened legal proceedings because of the
director's or officer's position with MetLife, Inc. or another entity, including
Metropolitan Life Insurance Company, that the director or officer serves at
MetLife, Inc.'s request, subject to certain conditions, and to advance funds to
MetLife, Inc.'s directors and officers to enable them to defend against such
proceedings. To receive indemnification, the director or officer must succeed in
the legal proceeding or act in good faith and in a manner reasonably believed to
be in or not opposed to the best interests of MetLife, Inc. and with respect to
any criminal action or proceeding, in a manner he or she reasonably believed to
be lawful.
SUPERMAJORITY VOTING REQUIREMENT FOR AMENDMENT OF CERTAIN PROVISIONS OF THE
CERTIFICATE OF INCORPORATION AND BY-LAWS
Some of the provisions of MetLife, Inc.'s certificate of incorporation,
including those that authorize the board of directors to create stockholder
rights plans, that set forth the duties, election and exculpation from
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liability of directors and that prohibit stockholders from actions by written
consent, may not be amended, altered, changed or repealed unless the amendment
is approved by the vote of holders of 75% of the then outstanding shares
entitled to vote at an election of directors. This requirement exceeds the
majority vote of the outstanding stock that would otherwise be required by the
Delaware General Corporation Law for the repeal or amendment of such provisions
of the certificate of incorporation. MetLife, Inc.'s by-laws may be amended,
altered or repealed by the board of directors or by the vote of holders of 75%
of the then outstanding shares entitled to vote in the election of directors.
These provisions make it more difficult for any person to remove or amend any
provisions that have an antitakeover effect.
BUSINESS COMBINATION STATUTE
In addition, as a Delaware corporation, MetLife, Inc. is subject to Section
203 of the Delaware General Corporation Law, unless it elects in its certificate
of incorporation not to be governed by the provisions of Section 203. MetLife,
Inc. has not made that election. Section 203 can affect the ability of an
"interested stockholder" of MetLife, Inc. to engage in certain business
combinations, including mergers, consolidations or acquisitions of additional
shares of MetLife, Inc. for a period of three years following the time that the
stockholder becomes an "interested stockholder." An "interested stockholder" is
defined to mean any person owning, directly or indirectly, 15% or more of the
outstanding voting stock of a corporation. The provisions of Section 203 are not
applicable in some circumstances, including those in which (1) the business
combination or transaction which results in the stockholder becoming an
"interested stockholder" is approved by the corporation's board of directors
prior to the time the stockholder becomes an "interested stockholder" or (2) the
"interested stockholder," upon consummation of such transaction, owns at least
85% of the voting stock of the corporation outstanding prior to such
transaction.
RESTRICTIONS ON ACQUISITIONS OF SECURITIES
Section 7312 of the New York Insurance Law provides that, for a period of
five years after completion of the distribution of consideration pursuant to the
plan of reorganization, no person may directly or indirectly offer to acquire or
acquire in any manner the beneficial ownership (defined as the power to vote or
dispose of, or to direct the voting or disposition of, a security) of 5% or more
of any class of voting security (which term includes MetLife, Inc.'s common
stock) of MetLife, Inc. without the prior approval of the New York
Superintendent of Insurance. Pursuant to Section 7312, voting securities
acquired in excess of the 5% threshold without such prior approval will be
deemed non-voting.
The insurance laws and regulations of New York, the jurisdiction in which
MetLife, Inc.'s principal insurance subsidiary, Metropolitan Life Insurance
Company, is organized, may delay or impede a business combination involving
MetLife, Inc. In addition to the limitations described in the immediately
preceding paragraph, the New York Insurance Law prohibits any person from
acquiring control of MetLife, Inc., and thus indirect control of Metropolitan
Life Insurance Company, without the prior approval of the New York
Superintendent of Insurance. That law presumes that control exists where any
person, directly or indirectly, owns, controls, holds the power to vote or holds
proxies representing 10% or more of MetLife, Inc.'s outstanding voting stock,
unless the New York Superintendent, upon application, determines otherwise. Even
persons who do not acquire beneficial ownership of more than 10% of the
outstanding shares of MetLife, Inc.'s common stock may be deemed to have
acquired such control, if the New York Superintendent determines that such
persons, directly or indirectly, exercise a controlling influence over MetLife,
Inc.'s management and policies. Therefore, any person seeking to acquire a
controlling interest in MetLife, Inc. would face regulatory obstacles which may
delay, deter or prevent an acquisition.
The insurance holding company law and other insurance laws of many states
also regulate changes of control (generally presumed upon acquisitions of 10% or
more of voting securities) of insurance holding companies such as MetLife, Inc.
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STOCKHOLDER RIGHTS PLAN
MetLife, Inc.'s board of directors has adopted a stockholder rights plan
under which each outstanding share of MetLife, Inc.'s common stock issued
between April 4, 2000 and the distribution date (as described below) will be
coupled with a stockholder right. Initially, the stockholder rights will be
attached to the certificates representing outstanding shares of common stock,
and no separate rights certificates will be distributed. Each right will entitle
the holder to purchase one one-hundredth of a share of MetLife, Inc.'s Series A
Junior Participating Preferred Stock. Each one one-hundredth of a share of
Series A Junior Participating Preferred Stock will have economic and voting
terms equivalent to one share of MetLife, Inc.'s common stock. Until it is
exercised, the right itself will not entitle the holder thereof to any rights as
a stockholder, including the right to receive dividends or to vote at
stockholder meetings. The description and terms of the rights are set forth in a
rights agreement entered into between MetLife, Inc. and Mellon Investor
Services, successor to ChaseMellon Shareholder Services, L.L.C., as rights
agent. Although the material provisions of the rights agreement have been
accurately summarized, the statements below concerning the rights agreement are
not necessarily complete and in each instance reference is made to the form of
rights agreement itself, which is incorporated by reference into this prospectus
in its entirety. Each statement is qualified in its entirety by such reference.
Stockholder rights are not exercisable until the distribution date and will
expire at the close of business on April 4, 2010, unless earlier redeemed or
exchanged by MetLife, Inc. A distribution date would occur upon the earlier of:
- the tenth day after the first public announcement or communication to
MetLife, Inc. that a person or group of affiliated or associated persons
(referred to as an "acquiring person") has acquired beneficial ownership
of 10% or more of MetLife, Inc.'s outstanding common stock (the date of
such announcement or communication is referred to as the "stock
acquisition time"); or
- the tenth business day after the commencement or announcement of the
intention to commence a tender offer or exchange offer that would result
in a person or group becoming an acquiring person.
If any person becomes an acquiring person, each holder of a stockholder right
will be entitled to exercise the right and receive, instead of Series A Junior
Participating Preferred Stock, common stock (or, in certain circumstances, cash,
a reduction in purchase price, property or other securities of MetLife, Inc.)
having a value equal to two times the purchase price of the stockholder right.
All stockholder rights that are beneficially owned by an acquiring person or its
transferee will become null and void.
If at any time after a public announcement has been made or MetLife, Inc.
has received notice that a person has become an acquiring person, (1) MetLife,
Inc. is acquired in a merger or other business combination or (2) 50% or more of
MetLife, Inc.'s assets, cash flow or earning power is sold or transferred, each
holder of a stockholder right (except rights which previously have been voided
as set forth above) will have the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the purchase price of
the right.
The purchase price payable, the number of one one-hundredths of a share of
Series A Junior Participating Preferred Stock or other securities or property
issuable upon exercise of rights and the number of rights outstanding, are
subject to adjustment from time to time to prevent dilution. With certain
exceptions, no adjustment in the purchase price or the number of shares of
Series A Junior Participating Preferred Stock issuable upon exercise of a
stockholder right will be required until the cumulative adjustment would require
an increase or decrease of at least one percent in the purchase price or number
of shares for which a right is exercisable.
At any time until the earlier of (1) the stock acquisition time or (2) the
final expiration date of the rights agreement, MetLife, Inc. may redeem all the
stockholder rights at a price of $0.01 per right. At any time after a person has
become an acquiring person and prior to the acquisition by such person of 50% or
more of the outstanding shares of MetLife, Inc.'s common stock, MetLife, Inc.
may exchange the stockholder rights, in whole or in part, at an exchange ratio
of one share of common stock, or one one-hundredth of a share of
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Series A Junior Participating Preferred Stock (or of a share of a class or
series of preferred stock having equivalent rights, preferences and privileges),
per right.
The stockholder rights plan is designed to protect stockholders in the
event of unsolicited offers to acquire MetLife, Inc. and other coercive takeover
tactics which, in the opinion of its board of directors, could impair its
ability to represent stockholder interests. The provisions of the stockholder
rights plan may render an unsolicited takeover more difficult or less likely to
occur or may prevent such a takeover, even though such takeover may offer
MetLife, Inc.'s stockholders the opportunity to sell their stock at a price
above the prevailing market rate and may be favored by a majority of MetLife,
Inc.'s stockholders.
METLIFE POLICYHOLDER TRUST
Under the plan of reorganization, MetLife established the MetLife
Policyholder Trust to hold the shares of common stock allocated to eligible
policyholders. 494,466,664 shares of common stock were distributed to the
MetLife Policyholder Trust on the effective date of the plan of reorganization.
As of May 16, 2001, the trust held 440,904,570 shares of MetLife, Inc.'s common
stock. Because of the number of shares held by the trust and the voting
provisions of the trust, the trust may affect the outcome of matters brought to
a stockholder vote.
The trustee will generally vote all of the shares of common stock held in
the trust in accordance with the recommendations given by MetLife, Inc.'s board
of directors to its stockholders or, if the board gives no such recommendation,
as directed by the board, except on votes regarding certain fundamental
corporate actions. As a result of the voting provisions of the trust, MetLife,
Inc.'s board of directors will effectively be able to control votes on all
matters submitted to a vote of stockholders, excluding those fundamental
corporate actions described below, so long as the trust holds a substantial
number of shares of MetLife, Inc.'s common stock.
If the vote relates to fundamental corporate actions specified in the
trust, the trustee will solicit instructions from the beneficiaries and vote all
shares held in the trust in proportion to the instructions it receives, which
would give disproportionate weight to the instructions actually given by trust
beneficiaries. These actions include:
- an election or removal of directors in which a stockholder has properly
nominated one or more candidates in opposition to a nominee or nominees
of MetLife, Inc.'s board of directors or a vote on a stockholder's
proposal to oppose a board nominee for director, remove a director for
cause or fill a vacancy caused by the removal of a director by
stockholders, subject to certain conditions;
- a merger or consolidation, a sale, lease or exchange of all or
substantially all of the assets, or a recapitalization or dissolution of,
MetLife, Inc., in each case requiring a vote of MetLife, Inc.'s
stockholders under applicable Delaware law;
- any transaction that would result in an exchange or conversion of shares
of common stock held by the trust for cash, securities or other property;
and
- any proposal requiring MetLife, Inc.'s board of directors to amend or
redeem the rights under the stockholder rights plan, other than a
proposal with respect to which MetLife, Inc. has received advice of
nationally-recognized legal counsel to the effect that the proposal is
not a proper subject for stockholder action under Delaware law.
REGISTRATION RIGHTS GRANTED, AND RESTRICTIONS IMPOSED, IN CONNECTION WITH
PRIVATE PLACEMENTS OF METLIFE, INC.'S COMMON STOCK
Banco Santander Central Hispano, S. A. and affiliates of Credit Suisse
Group purchased from MetLife, Inc. an aggregate of 60,000,000 shares of common
stock in private placements that closed concurrently with MetLife, Inc.'s
initial public offering of common stock and its offering of equity security
units. Pursuant to the registration rights granted to these purchasers, they are
able to have their shares of common stock registered for resale under the
Securities Act on not more than one occasion for each purchaser each year, or
not more than five occasions for each purchaser in total (known as a "demand"
registration right). In addition, MetLife,
22
Inc. has agreed to use its reasonable efforts to register the shares for resale
on a shelf registration statement on Form S-3 as soon as practicable after April
7, 2001. MetLife, Inc. expects to file this shelf registration statement with
the SEC during the second quarter of 2001. We have agreed that each purchaser
may make not more than two offerings under the registration statement each year,
subject to a minimum offering size of $50,000,000 per offering, although
underwritten offerings will be subject to the limitations on the number of
demand registrations described above. The purchasers are also able to
participate, subject to specified limitations, in registrations effected by
MetLife, Inc. for its own account or others.
Sales of substantial amounts of MetLife, Inc. common stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices for MetLife, Inc.'s common stock.
In connection with the private placements, each purchaser has also agreed
that it will not, without MetLife, Inc.'s consent, increase its ownership of
voting securities above 4.9% of the outstanding shares (or 5.0% with the New
York Superintendent's approval), except for any increase resulting from
transactions in the ordinary course of the business of purchaser as underwriter,
broker/dealer, investment manager or investment adviser or from ordinary trading
activities (unless such transactions were made with the purpose of changing or
influencing the control of MetLife, Inc.), seek to obtain board representation,
solicit proxies in opposition to management or take certain other actions for
five years.
DESCRIPTION OF TRUST PREFERRED SECURITIES
This section describes the general terms and provisions of the trust
preferred securities that may be offered by this prospectus. When the trusts
offer to sell a particular series of the trust preferred securities, a
prospectus supplement will describe the specific terms of the series. The
prospectus supplement will also indicate whether the general terms described in
this section apply to that particular series of trust preferred securities.
Specified terms and provisions of the trust preferred securities are
described in this section. The summary is not complete. You should read this
description of the trust preferred securities and the amended and restated
declaration of trust and prospectus supplement relating to the applicable series
of the trust preferred securities before you buy any trust preferred securities.
The forms of amended and restated declarations of trust are filed as exhibits to
the registration statement.
GENERAL
Each trust may issue only one series of trust preferred securities having
terms described in the prospectus supplement. The declaration of trust of each
trust will authorize the administrative trustees, on behalf of the trust, to
issue the trust preferred securities of the trust. The trusts will use all of
the proceeds they receive from the sale of trust preferred securities and common
securities to purchase debt securities issued by MetLife, Inc. The debt
securities will be held in trust by the trust's property trustee for the benefit
of the holders of the trust preferred securities and common securities.
The trust preferred securities of each trust will have such terms as is set
forth in the trust's declaration of trust, including as relates to
distributions, redemption, voting, liquidation rights and the other preferred,
deferral and special rights and restrictions. A prospectus supplement relating
to the trust preferred securities being offered will include specific terms
relating to the offering. These terms will include some or all of the following:
- the distinctive designation of the trust preferred securities;
- the number of trust preferred securities issued by the trust;
- the annual distribution rate, or method of determining such rate, for
trust preferred securities of the trust;
- the date or dates on which distributions will be payable;
- whether distributions on the trust preferred securities will be
cumulative;
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- if the trust preferred securities have cumulative distribution rights,
the date or dates, or method of determining the date or dates, from which
distributions on the trust preferred securities will be cumulative;
- the amount or amounts that will be paid out of the assets of the trust to
the holders of the trust preferred securities of the trust upon voluntary
or involuntary dissolution, winding-up or termination of the trust;
- the obligation, if any, of the trust to purchase or redeem the trust
preferred securities;
- if the trust is to purchase or redeem the trust preferred securities:
- the price or prices at which the trust preferred securities will be
purchased or redeemed in whole or in part;
- the period or periods within which the trust preferred securities will
be purchased or redeemed, in whole or in part; and
- the terms and conditions upon which the trust preferred securities
will be purchased or redeemed, in whole or in part;
- the voting rights, if any, of the trust preferred securities in addition
to those required by law, including:
- the number of votes per trust preferred security; and
- any requirement for the approval by the holders of trust preferred
securities as a condition to specified action or amendments to the
trust's declaration of trust;
- the rights, if any, to defer distributions on the trust preferred
securities by extending the interest payment period on the related debt
securities;
- the terms upon which the debt securities may be distributed to holders of
trust preferred securities;
- if applicable, any securities exchange upon which the trust preferred
securities shall be listed; and
- any other relative rights, preferences, privileges, limitations or
restrictions of the trust preferred securities not inconsistent with the
trust's declaration of trust or applicable law.
The prospectus supplement relating to the trust preferred securities being
offered may specify that the trust preferred securities may be converted into
MetLife, Inc.'s common stock upon the terms set forth in the prospectus
supplement.
All trust preferred securities offered will be guaranteed by MetLife, Inc.
to the extent set forth under "Description of Guarantees." Any material United
States federal income tax considerations applicable to an offering of trust
preferred securities will be described in the applicable prospectus supplement.
In connection with the issuance of preferred securities, each trust will
issue one series of common securities. The declaration of each trust authorizes
the regular trustees to issue on behalf of such trust one series of common
securities having such terms including distributions, redemption, voting,
liquidation rights or such restrictions as shall be set forth therein. The terms
of the common securities issued by the trust will be substantially identical to
the terms of the preferred securities issued by such trust and the common
securities will rank equally, and payments will be made thereon pro rata, with
the preferred securities. However, upon an event of default under the
declaration of trust, the rights of the holders of the common securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the preferred
securities. Except in certain limited circumstances, the common securities will
also carry the right to vote, and appoint, remove or replace any of the trustees
of a trust. MetLife, Inc. will own, directly or indirectly, all of the common
securities of each trust.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If an event of default occurs, and is continuing, under the declaration of
trust of MetLife Capital Trust II or MetLife Capital Trust III, the holders of
the preferred securities of that trust would typically rely on the property
trustee to enforce its rights as a holder of the related debt securities against
MetLife, Inc. Additionally, those who together hold a majority of the
liquidation amount of the trust's preferred securities will have the right to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the property trustee; or
- direct the exercise of any trust or power that the property trustee holds
under the declaration of trust, including the right to direct the
property trustee to exercise the remedies available to it as a holder of
MetLife, Inc.'s debt securities.
If the property trustee fails to enforce its rights under the applicable series
of debt securities, a holder of trust preferred securities of such trust may
institute a legal proceeding directly against MetLife, Inc. to enforce the
property trustee's rights under the applicable series of debt securities without
first instituting any legal proceeding against the property trustee or any other
person or entity.
Notwithstanding the foregoing, if an event of default occurs and the event
is attributable to MetLife, Inc.'s failure to pay interest or principal on the
debt securities when due, including any payment on redemption, and this debt
payment failure is continuing, a preferred securities holder of the trust may
directly institute a proceeding for the enforcement of this payment. Such a
proceeding will be limited, however, to enforcing the payment of this principal
or interest only up to the value of the aggregate liquidation amount of the
holder's preferred securities as determined after the due date specified in the
applicable series of debt securities.
DESCRIPTION OF GUARANTEES
This section describes the general terms and provisions of the guarantees.
MetLife, Inc. will execute and deliver the guarantees for the benefit of the
holders of the trust preferred securities. The prospectus supplement will
describe the specific terms of the guarantees offered through that prospectus
supplement and any general terms outlined in this section that will not apply to
those guarantees.
Each guarantee will be qualified as an indenture under the Trust Indenture
Act. Bank One Trust Company, N.A. will act as indenture trustee under each
guarantee for purposes of the Trust Indenture Act.
This section summarizes specified terms and provisions of the guarantees.
The summary is not complete and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the form of guarantee, which
is filed as an exhibit to the registration statement which includes this
prospectus, and the Trust Indenture Act. Each guarantee will be held by the
guarantee trustee for the benefit of holders of the trust preferred securities
to which it relates.
GENERAL
Pursuant to each guarantee, MetLife, Inc. will irrevocably and
unconditionally agree, to the extent set forth in the guarantee, to pay in full,
to the holders of the related trust preferred securities, the following
guarantee payments, to the extent these guarantee payments are not paid by, or
on behalf of, the related trust, regardless of any defense, right of set-off or
counterclaim that MetLife, Inc. may have or assert against any person:
- any accrued and unpaid distributions required to be paid on the trust
preferred securities of the trust, but if and only if and to the extent
that the trust has funds legally and immediately available to make those
payments;
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- the redemption price, including all accrued and unpaid distributions to
the date of redemption, with respect to any trust preferred securities
called for redemption by the trust, but if and only to the extent the
trust has funds legally and immediately available to make that payment;
and
- upon a dissolution, winding-up or termination of the trust, other than in
connection with the distribution of debt securities to the holders of
trust preferred securities of the trust, the lesser of:
- the total of the liquidation amount and all accrued and unpaid
distributions on the trust preferred securities of the trust to the
date of payment, to the extent the trust has funds legally and
immediately available to make that payment; and
- the amount of assets of the trust remaining available for distribution
to holders of trust preferred securities of the trust in liquidation
of the trust.
MetLife, Inc. may satisfy its obligation to make a guarantee payment by
directly paying the required amounts to the holders of the related trust
preferred securities or by causing the related trust to pay such amounts to such
holders.
Each guarantee will constitute a guarantee of payments with respect to the
related trust preferred securities from the time of issuance of the trust
preferred securities. The guarantees will not apply to the payment of
distributions and other payments on the trust preferred securities when the
related trust does not have sufficient funds legally and immediately available
to make the distributions or other payments. If MetLife, Inc. does not make
interest payments on the debt securities purchased by a trust, such trust will
not pay distributions on the preferred securities issued by such trust and will
not have funds available therefor. The guarantee, when taken together with
MetLife, Inc.'s obligations under the debt securities, the Indentures, and the
declarations of trust will provide a full and unconditional guarantee by
MetLife, Inc. of payments due on the trust preferred securities.
MetLife, Inc. will also agree separately, through the guarantees of the
common securities, to irrevocably and unconditionally guarantee the obligations
of the trusts with respect to the common securities to the same extent as the
guarantees of the preferred securities. However, upon an event of default under
the Indentures, holders of preferred securities shall have priority over holders
of common securities with respect to distributions and payments on liquidation,
redemption or otherwise.
SUBORDINATION
MetLife, Inc.'s obligation under each guarantee to make the guarantee
payments will be an unsecured obligation of MetLife, Inc. and, if subordinated
debt securities are issued to the applicable trust and unless otherwise noted in
the prospectus supplement, will rank:
- subordinate and junior in right of payment to all of MetLife, Inc.'s
other liabilities, including the subordinated debt securities, except
those obligations or liabilities ranking equal to or subordinate to the
guarantees by their terms;
- equally with any other securities, liabilities or obligations that may
have equal ranking by their terms; and
- senior to all of MetLife, Inc.'s common stock.
If subordinated debt securities are issued to the applicable trust, the
terms of the trust preferred securities will provide that each holder of trust
preferred securities, by accepting the trust preferred securities, agrees to the
subordination provisions and other terms of the guarantee related to
subordination.
Each guarantee will constitute a guarantee of payment and not of
collection. This means that the holder of trust preferred securities may
institute a legal proceeding directly against MetLife, Inc. to enforce its
rights under the guarantee without first instituting a legal proceeding against
any other person or entity.
Each guarantee will be unsecured and, because MetLife, Inc. is principally
a holding company, will be effectively subordinated to all existing and future
liabilities of MetLife, Inc.'s subsidiaries, including liabilities
26
under contracts of insurance and annuities written by MetLife, Inc.'s insurance
subsidiaries. The guarantee does not limit the incurrence or issuance of other
secured or unsecured debt by MetLife, Inc.
AMENDMENTS AND ASSIGNMENT
For any changes that materially and adversely affect the rights of holders
of the related trust preferred securities, each guarantee may be amended only if
there is prior approval of the holders of more than 50% in liquidation amount of
the outstanding trust preferred securities issued by the applicable trust. All
guarantees and agreements contained in each guarantee will bind the successors,
assigns, receivers, trustees and representatives of MetLife, Inc. and will inure
to the benefit of the holders of the related trust preferred securities of the
applicable trust then outstanding.
TERMINATION
Each guarantee will terminate and will have no further force and effect as
to the related trust preferred securities upon:
- distribution of debt securities to the holders of all trust preferred
securities of the applicable trust; or
- full payment of the amounts payable upon liquidation of the applicable
trust.
Each guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of the related trust preferred securities
must restore payment of any sums paid with respect to the trust preferred
securities or under the guarantee.
EVENTS OF DEFAULT
Each guarantee provides that an event of default under a guarantee occurs
upon MetLife, Inc.'s failure to perform any of its obligations under the
applicable guarantee.
The holders of a majority or more in liquidation amount of the trust
preferred securities to which any guarantee relates may direct the time, method
and place of conducting any proceeding for any remedy available to the guarantee
trustee with respect to the guarantee or may direct the exercise of any trust or
power conferred upon the guarantee trustee in respect of the guarantee.
If the guarantee trustee fails to enforce the guarantee, any holder of the
related trust preferred securities may institute a legal proceeding directly
against MetLife, Inc. to enforce the holder's rights under such guarantee
without first instituting a legal proceeding against the trust, the guarantee
trustee or any other person or entity.
Notwithstanding the foregoing, if MetLife, Inc. fails to make a guarantee
payment, a holder of trust preferred securities may directly institute a
proceeding against MetLife, Inc. for enforcement of the preferred securities
guarantee for such payment.
The holders of a majority or more in liquidation amount of trust preferred
securities of any series may, by vote, on behalf of the holders of all the trust
preferred securities of the series, waive any past event of default and its
consequences.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
Prior to an event of default with respect to any guarantee and after the
curing or waiving of all events of default with respect to the guarantee, the
guarantee trustee may perform only the duties that are specifically set forth in
the guarantee.
Once a guarantee event of default has occurred and is continuing, the
guarantee trustee is to exercise, with respect to the holder of the trust
preferred securities of the series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Unless the
guarantee trustee is offered reasonable indemnity against the costs, expenses
and liabilities which may be incurred by the guarantee trustee by a holder of
the related trust preferred securities, the guarantee trustee is not required to
exercise any
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of its powers under any guarantee at the request of the holder. Additionally,
the guarantee trustee is not required to expend or risk its own funds or
otherwise incur any financial liability in the performance of its duties if the
guarantee trustee reasonably believes that it is not assured repayment or
adequate indemnity.
The guarantee trustee is Bank One Trust Company, N.A., which is one of a
number of banks and trust companies with which MetLife, Inc. and its
subsidiaries maintain ordinary banking and trust relationships.
GOVERNING LAW
Each guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York, without regard to its principles of
conflicts of laws.
PLAN OF DISTRIBUTION
MetLife, Inc. may sell the common stock, preferred stock and any series of
debt securities, and MetLife Capital Trust II and MetLife Capital Trust III may
sell any of the preferred securities, being offered hereby in one or more of the
following ways from time to time:
- to underwriters or dealers for resale to the public or to institutional
investors;
- directly to institutional investors; or
- through agents to the public or to institutional investors.
The prospectus supplement with respect to each series of securities will
state the terms of the offering of the securities, including:
- the name or names of any underwriters or agents;
- the purchase price of the securities and the proceeds to be received by
MetLife, Inc. or the applicable trust from the sale;
- any underwriting discounts or agency fees and other items constituting
underwriters' or agents' compensation;
- any initial public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any securities exchange on which the securities may be listed.
If MetLife, Inc. or the trusts use underwriters in the sale, the securities
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including:
- negotiated transactions;
- at a fixed public offering price or prices, which may be changed;
- at market prices prevailing at the time of sale;
- at prices related to prevailing market prices; or
- at negotiated prices.
The securities may also be offered and sold, if so indicated in the
prospectus supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more remarketing firms, acting as principals for their own accounts or
as agents for MetLife, Inc. or the trusts. The prospectus supplement will
identify any remarketing firm and will describe the terms of its agreement, if
any with MetLife, Inc. or the trusts and its compensation.
Unless otherwise stated in a prospectus supplement, the obligations of the
underwriters to purchase any securities will be conditioned on customary closing
conditions and the underwriters will be obligated to purchase all of such series
of securities, if any are purchased.
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Underwriters, dealers, agents and remarketing firms may be entitled under
agreements entered into with MetLife, Inc. and/or the applicable trust, or both,
to indemnification by MetLife, Inc. against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which the underwriters, dealers, agents and remarketing firms may be
required to make. Underwriters, dealers, agents and remarketing agents may be
customers of, engage in transactions with, or perform services for MetLife,
Inc., any trust and/or MetLife, Inc.'s affiliates in the ordinary course of
business.
Each series of securities will be a new issue of securities and will have
no established trading market other than the common stock which is listed on the
New York Stock Exchange. Any common stock sold will be listed on the New York
Stock Exchange, upon official notice of issuance. The securities, other than the
common stock, may or may not be listed on a national securities exchange. Any
underwriters to whom securities are sold by MetLife, Inc. or any trust for
public offering and sale may make a market in the securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice.
The maximum underwriting discounts or commissions to be received by any
underwriter for the sale of any securities pursuant to this shelf registration
shall not be greater than eight (8) percent.
Any offering of trust preferred securities will be made in compliance with
Rule 2810 of the NASD Conduct Rules.
LEGAL OPINIONS
Unless otherwise indicated in the applicable prospectus supplement, the
validity of any debt securities, preferred stock, common stock, trust preferred
securities or guarantees offered hereby will be passed upon for MetLife, Inc.
and MetLife Capital Trust II and/or MetLife Capital Trust III by Skadden, Arps,
Slate, Meagher & Flom LLP. Skadden, Arps, Slate, Meagher & Flom LLP maintains a
group life insurance policy with Metropolitan Life Insurance Company and
beneficially owns an aggregate of less than 0.01% of MetLife, Inc.'s outstanding
common stock. Helene L. Kaplan, a director of MetLife, Inc. and Metropolitan
Life Insurance Company, is of counsel to Skadden, Arps, Slate, Meagher & Flom
LLP.
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
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