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                                                                    EXHIBIT 4.03


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                  METROPOLITAN MORTGAGE & SECURITIES CO., INC.


                                       AND


                          SEATTLE-FIRST NATIONAL BANK,


                                                        Trustee


                                   ----------


                          FIRST SUPPLEMENTAL INDENTURE

                           Dated as of October 3, 1980


                                   ----------


            Relating to an issue of Investment Debentures, Series II


                                   ----------

               Supplemental to Indenture dated as of July 6, 1979





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         THIS FIRST SUPPLEMENTAL INDENTURE, dated as of September 15, 1980 is
between Metropolitan Mortgage & Securities Co., Inc., a Washington corporation
(hereinafter called the "Company"), having its principal office at West 929
Sprague Avenue, Spokane, Washington 99204, and Seattle-First National Bank, a
national banking association (hereinafter called the "Trustee"), having offices
at 1001 Fourth Avenue, Seattle, Washington 98154, and is supplemental to an
Indenture, dated as of July 6, 1979 (the "Indenture"), between the Company and
the Trustee.

                             RECITALS OF THE COMPANY

         The Company previously executed and delivered to the Trustee the
Indenture that provides for the issuance in one or more series of the Company's
Investment Debentures (hereinafter called the "Debentures"), in accordance with
the Indenture. The initial series of Debentures issued under the Indenture is
known as the Company's Investment Debentures, Series I, limited to the aggregate
principal amount of $20,000,000.

         The Board of Directors of the Company has established a new series of
Debentures to be designated "Investment Debentures, Series II," not limited in
aggregate principal amount, and has authorized an initial issue of $15,000,000
principal amount thereof. The Company has complied or will comply with all
provisions required to issue additional Debentures under the Indenture.

         The Company desires to execute and deliver this First Supplemental
Indenture, in accordance with the provisions of the Indenture, for the purpose
of providing for the creation of a new series of Debentures, designating the
series to be created and specifying the form and provisions of the Debentures of
such series.

         All things necessary to make the Investment Debentures, Series II, when
executed by the Company, authenticated by the Trustee, delivered as authorized
by the Company and duly issued by the Company, the valid obligations of the
Company, and to make this First Supplemental Indenture a valid agreement of the
Company, in accordance with their or its terms, have been done.

         NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH that, for
and in consideration of the premises and the purchase of the Investment
Debentures, Series II, by the Holders thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the Investment
Debentures, Series II, as follows:

                                   ARTICLE ONE

                      Investment Debentures, Series II and
                       Certain Provisions Relating Thereto

         Section 1-1. Terms of Investment Debentures, Series II.

         There shall be hereby established a series of Debentures to be
designated "Investment Debentures, Series II." The aggregate principal amount of
Investment Debentures, Series II, at any one time Outstanding shall not be
limited. The initial Investment Debentures, Series II, shall



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be issued in the maturities and denominations with proposed interest rates upon
the unpaid principal amounts thereof as follows:

<Table>
<Caption>
                                                                 Minimum                    Increments Over
         Maturity                 Interest Rate                Denomination                     Minimum
         --------                 -------------                ------------                 ---------------
<S>                               <C>                          <C>                          <C>
      6 to 10 years                     10%                      $  100.00                       $1.00
       2 to 5 years                     12%                      $  100.00                       $1.00
          1 year                     9-1/2%                      $  100.00                       $1.00
         6 months                    9-1/2%                      $5,000.00                       $1.00
</Table>

The maturities, interest rates, minimum denominations and increments over the
minimum denominations of Investment Debentures, Series II, may be changed at any
time by the Company, but no such change will affect any Investment Debentures,
Series II, issued prior to such change. Holders of Investment Debentures, Series
II, may select a monthly, quarterly, semiannual or annual Interest Payment Date
or may elect to allow interest to be compounded and paid as set forth in the
form of the Investment Debentures, Series II, in Section 1-2 hereof. The
"Regular Record Date" for the interest payable on any Interest Payment Date
means, with respect to Investment Debentures, Series II, the 15th day (whether
or not a Business Day) of the calendar month next preceding the Interest Payment
Date as specified on each Investment Debenture, Series II. Payment of the
principal of and interest on Investment Debentures, Series II will be made at
the office or agency of the Company maintained for that purpose in Spokane,
Washington. All such payments shall be made in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the address of the Person
entitled thereto as such address shall appear on the Debenture Register. In the
event of the death of any registered owner of an Investment Debenture, Series
II, any party entitled to receive some or all of the proceeds of such Investment
Debenture, Series II, may elect to have his or her share of such Investment
Debenture, Series II prepaid under the terms set out in the form of the
Investment Debentures, Series II in Section 1-2 hereof.

         Section 1-2. Form of Investment Debentures, Series II.

                  METROPOLITAN MORTGAGE & SECURITIES CO., INC.
                W. 929 Sprague Avenue, Spokane, Washington 99204
                         Investment Debenture, Series II

Issued To
          ------------------------
Principal Amount
                 -----------------
Issue Date
           -----------------------
Maturity Date
              --------------------
Interest Rate
              --------------------
Certificate Number
                   ---------------
Interest Payable
                 -----------------



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         The Debenture

         This is a duly authorized Debenture of Metropolitan Mortgage &
Securities Co., Inc. ("Metropolitan"). This Debenture is issued under an
Indenture dated July 6, 1979 (the "Indenture") between Metropolitan and
Seattle-First National Bank as Trustee (the "Trustee"). The Indenture permits
Metropolitan to issue an unlimited amount of Debentures, the terms of which may
vary according to series. This Debenture is of the series stated above; that
series is limited in aggregate principal amount as stated in the Indenture (or
supplemental indentures). The Indenture (and supplemental indentures) contains
statements of the rights of the Debentureholders, Metropolitan and the Trustee
and provisions concerning authentication and delivery of the Debentures.
Definitions of certain terms used in this Debenture are also found in the
Indenture (and supplemental indentures).

         Payment of Principal

         For value received, Metropolitan promises to pay the principal amount
of this Debenture at the maturity date stated above. Payment will be made to the
Person to whom this Debenture is issued, or registered assigns.

         Payment of Interest

         Metropolitan promises to pay interest on the principal amount of this
Debenture from the issue date until the principal amount is paid or made
available for payment. Interest will be computed at the annual interest rate
stated above. Interest will be payable or compounded as stated above or as
otherwise elected by the Person entitled to payment of interest. Metropolitan
will pay interest to the Person in whose name this Debenture (or one or more
Predecessor Debentures) is registered at the close of business on the Regular
Record Date for the payment of interest. The Regular Record Date is the 15th day
of the calendar month immediately preceding an Interest Payment Date.

         Compounding of Interest

         If the Person entitled to payment of interest so elects, Metropolitan
will compound interest rather than pay interest in installments. Interest will
be compounded on a semiannual basis at the interest rate stated above from the
Interest Payment Date immediately preceding receipt by Metropolitan of the
compounding election. Interest will be compounded from the issue date of the
Debenture if Metropolitan receives the compounding election prior to the first
Interest Payment Date. Interest will be compounded until the maturity date
stated above and will be paid on such date. Prior to Maturity, however,
Metropolitan will pay at the Debentureholder's request the interest accumulated
in the last two semiannual compounding periods before Metropolitan receives the
request, together with the interest accrued from the end of the last such
semiannual period. Interest compounded prior to the last two semiannual
compounding periods is payable only on the maturity date stated above.

         Prepayment on Death

         In the event of a Debentureholder's death, any Person entitled to
receive some or all of the proceeds of this Debenture may elect to have his or
her share of the principal and any unpaid



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interest prepaid in full in five consecutive equal monthly installments.
Interest on the declining principal balance of that share will continue to
accrue at the interest rate stated above. Any request for prepayment must be
made in writing to Metropolitan. The request must be accompanied by the
Debenture and evidence, satisfactory to Metropolitan, of the Debentureholder's
death. Before Metropolitan prepays the Debenture, it may require additional
documents or other material it considers necessary to establish the Persons
entitled to receive some or all of the proceeds of the Debenture. Metropolitan
may also require proof of other facts relevant to its obligation to prepay the
Debenture in the event of death.

         Miscellaneous

         The provisions on the reverse are part of this Debenture.

         This Debenture is not entitled to any benefit under the Indenture nor
is this Debenture valid or obligatory for any purpose unless the certificate of
authentication below has been executed by the Trustee by manual signature.

         This Debenture is not insured by the United States government, the
State of Washington nor any agency thereof.

         IN WITNESS WHEREOF, Metropolitan has caused this Debenture to be duly
executed under its corporate seal.

                                            METROPOLITAN MORTGAGE & SECURITIES
                                            CO., INC.
(Corporate Seal)


                                            By
                                              ----------------------------------
                                              Chairman of the Board,
                                              President or Vice President
Attest:
       --------------------------------
       Secretary or Assistant Secretary



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Debentures referred to in the within-mentioned
Indenture.

                                            SEATTLE-FIRST NATIONAL BANK, as
                                            Trustee



                                            By
                                              ----------------------------------
                                              Authorized Officer



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              [FORM OF REVERSE OF INVESTMENT DEBENTURE, SERIES II]

         Transfer and Exchange

         Transfer and exchange of this Debenture are conditioned by certain
provisions in the Indenture. To effect a transfer, the Holder must surrender
this Debenture at Metropolitan's office or agency in Spokane, Washington. This
Debenture must be duly endorsed or accompanied by a written instrument of
transfer satisfactory to Metropolitan. Upon transfer, one or more new Debentures
of the same series, of authorized denominations and for the same aggregate
principal amount will be issued to the designated transferee or transferees.
Prior to due presentment for registration of transfer, Metropolitan, the Trustee
or any of their agents may treat any Person in whose name this Debenture is
registered as the owner of this Debenture, regardless of notice to the contrary
or whether this Debenture might be overdue.

         This Debenture is issuable only as a registered Debenture; it does not
bear coupons. As provided in the Indenture, this Debenture is exchangeable for
other Debentures of the same series of authorized denominations with the same
aggregate principal amount. To effect an exchange, the Holder must surrender
this Debenture at Metropolitan's office or agency in Spokane, Washington. The
Debenture must be duly endorsed or accompanied by a written instrument of
exchange satisfactory to Metropolitan.

         No service charge will be made for a transfer or exchange, but
Metropolitan may require payment of a sum sufficient to cover any governmental
charge payable in connection with such transaction.

         Amendment of the Indenture; Waiver of Rights

         With certain exceptions, the Indenture may be amended, the obligations
and rights of Metropolitan may be modified and the rights of the
Debentureholders may be modified by Metropolitan at any time with the consent of
the Holders of 66-2/3% in aggregate principal amount of the Debentures at the
time Outstanding. The Indenture allows the Holders of specified percentages in
aggregate principal amount of the Debentures of a particular series to waive
compliance by Metropolitan with certain Indenture provisions and to waive past
defaults and their consequences on behalf of all the Holders of Debentures of
that series. Any such consent or waiver by the Holder of this Debenture will be
binding upon that Holder. The consent or waiver will also be binding upon all
future Holders of this Debenture and of any Debenture issued upon the transfer
of, or in exchange for or in lieu of this Debenture, whether or not that consent
or waiver is noted upon the Debenture.

         Failure to Pay Interest; Events of Default

         If interest is not punctually paid or duly provided for, it shall cease
to be payable to the registered Holder of this Debenture on the applicable
Regular Record Date. Instead, the Trustee will fix a Special Record Date for
payment of the Defaulted Interest. The Trustee will give the Debentureholders
notice of the Special Record Date at least 10 days prior to the Special Record
Date. The Person in whose name this Debenture (or one or more Predecessor
Debentures) is registered at the close of business on the Special Record Date
will be entitled to payment of the



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Defaulted Interest. If the Debentures are listed on a securities exchange,
however, the Defaulted Interest may be paid at any time and in any lawful manner
consistent with the requirements of the exchange.

         If an Event of Default occurs, the principal of all the Debentures may
be declared due and payable as provided in the Indenture.

         Form of Payment

         Payment of principal and interest will be made at the office or agency
of Metropolitan maintained for that purpose in Spokane, Washington. Payment will
be made in coin or currency of the United States of America that is legal tender
for payment of public and private debts at the time of payment. At
Metropolitan's option, however, payment of interest may be made by check mailed
to the Person entitled to the interest at that Person's address as it appears in
the Debenture Register.

         Business Days

         Whenever any Interest Payment Date, the Stated Maturity of this
Debenture or any date on which any Defaulted Interest is proposed to be paid is
not a Business Day, the appropriate payment or compounding of interest or
principal may be made on the next succeeding Business Day without accrual of
additional interest.

         Certain Definitions

         Metropolitan is a Washington corporation. The term "Metropolitan"
includes any successor corporation under the Indenture. The term "Trustee"
includes any successor trustee under the Indenture.

         Section 1-3. Events of Default.

         "Event of Default," with respect to the Investment Debentures, Series
II, means any one of the events specified below in this Section 1-3 (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law, or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

                  (1) default in the payment of any interest upon any Investment
         Debenture, Series II, when such interest becomes due and payable, and
         continuance of such default for a period of 30 days; or

                  (2) default in the payment of the principal of (or premium, if
         any, on) any Investment Debenture, Series II, at its Maturity; or

                  (3) default in the performance, or breach, of any covenant or
         warranty of the Company with respect to Investment Debentures, Series
         II, in the Indenture or this First Supplemental Indenture (other than a
         covenant or warranty a default in whose breach is elsewhere in this
         Section specifically dealt with), and continuance of such default or



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         breach for a period of 60 days after there has been given, by
         registered or certified mail, to the Company by the Trustee or to the
         Company and the Trustee by the Holders of at least 10% in principal
         amount of the Outstanding Investment Debentures, Series II, a written
         notice specifying such default or breach and requiring it to be
         remedied and stating that such notice is a "Notice of Default"
         hereunder; or

                  (4) the entry of a decree or order by a court having
         jurisdiction in the premises adjudging the Company a bankrupt or an
         insolvent, or approving as properly filed a petition seeking
         reorganization, arrangement, adjustment or composition of or in respect
         of the Company under any Federal bankruptcy laws or any other
         applicable Federal or State law, or appointing a receiver, liquidator,
         assignee, trustee, sequestrator (or other similar official) of the
         Company or of any substantial part of its property, or ordering the
         winding up or liquidation of its affairs, and the continuance of any
         such decree or order unstayed and in effect for a period of 60
         consecutive days; or

                  (5) the institution by the Company of proceedings to be
         adjudicated a bankrupt or an insolvent, or the consent by it to the
         institution of bankruptcy or insolvency proceedings against it, or the
         filing by it of a petition or answer or consent seeking reorganization
         or relief under any Federal bankruptcy laws or any other applicable
         Federal or State law, or the consent by it to the filing of any such
         petition or to the appointment of a receiver, liquidator, assignee,
         trustee, sequestrator (or other similar official) of the Company or of
         any substantial part of its property, or the making by it of an
         assignment for the benefit of creditors, or the admission by it in
         writing of its inability to pay its debts generally as they become due,
         or the taking of corporate action by the Company in furtherance of any
         such action.

         Section 1-4. Right of Redemption.

         Notwithstanding anything to the contrary contained in the Indenture or
this First Supplemental Indenture, the Investment Debentures, Series II are not
redeemable prior to Maturity; the Company may, however, pay principal and
premium, if any, and interest on such Debentures either upon mutual agreement
between the Holders of an Investment Debenture, Series II, and the Company or as
provided in the Indenture or this First Supplemental Indenture in the event of
the death of any registered owner or any registered joint owner without such
payment constituting a redemption.

                                   ARTICLE TWO

                                  Miscellaneous

         Section 2-1. Supplemental Indenture.

         This First Supplemental Indenture is executed and shall be construed as
an indenture supplemental to the Indenture, and shall form a part thereof, and
the Indenture, as hereby supplemented and modified, is hereby confirmed. Except
to the extent inconsistent with the express terms hereof, all of the provisions,
terms, covenants and conditions of the Indenture shall be applicable to the
Investment Debentures, Series II, to the same extent as if specifically set



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forth herein. All terms used in this First Supplemental Indenture shall be taken
to have the same meaning as in the Indenture, except in cases where the context
herein clearly indicates otherwise.

         Section 2-2. Regulation of Interest Rates.

         The Company hereby agrees that it will actively resist any attempts to
claim and will not voluntarily claim, the benefit of any interest rate
regulation law against any Debentureholder.

         IN WITNESS WHEREOF, METROPOLITAN MORTGAGE & SECURITIES CO., INC. has
caused this First Supplemental Indenture to be signed in its corporate name by
its Chairman of the Board, its President or a Vice-President and its corporate
seal to be affixed hereunto, and the same to be attested by the signature of its
Secretary or an Assistant Secretary; and SEATTLE-FIRST NATIONAL BANK, in
evidence of its acceptance of the trust hereby created, has caused this First
Supplemental Indenture to be signed in its corporate name by one of its Trust
Officers, and its corporate seal to be affixed hereunto, and the same to be
attested by one of its Trust Officers. Executed and delivered as of the date
first above written.

                                            METROPOLITAN MORTGAGE & SECURITIES
                                            CO., INC.



                                            By /s/ C. Paul Sandifur
                                              ----------------------------------
                                              Chairman of the Board
Attest:



/s/ Reuel Swanson
---------------------------------------
Secretary or Assistant Secretary

(Corporate Seal)

                                            SEATTLE-FIRST NATIONAL BANK



                                            By /s/ Alan B. Reed
                                              ----------------------------------
                                              Alan B. Reed, Assistant Vice
                                              President and Manager



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Attest:



Signature Illegible
----------------------------------
Trust Officer


STATE OF WASHINGTON          )
                             ) ss.
COUNTY OF SPOKANE            )

         On this 13th day of October, 1980, before me personally appeared C.
Paul Sandifur, to me known to be the Chairman of the Board of Metropolitan
Mortgage & Securities Co., Inc., the corporation that executed the within and
foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute said instrument
and that the seal affixed is the corporate seal of said corporation.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.


                                            /s/ Mildred Manning
                                            ------------------------------------
                                            NOTARY PUBLIC in and for the State
                                            of Washington, residing at Spokane

STATE OF WASHINGTON          )
                             ) ss.
COUNTY OF KING               )

         On this 7th day of October, 1980, before me personally appeared Alan B.
Reed, to me known to be the Assistant Vice President and Manager of
Seattle-First National Bank, the corporation that executed the within and
foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute said instrument
and that the seal affixed is the corporate seal of said corporation.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.

                                            Signature Illegible
                                            ------------------------------------
                                            NOTARY PUBLIC in and for the State
                                            of Washington, residing at Seattle



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