A dioxane solution of N-(2-mercaptoethyl)-3-carboxy-2-hydroxybenzylideneimine, LH(3) (I) on reacting with chloroacetyl chloride in the presence of triethylamine, undergoes cyclization to form N-(2-mercaptoethyl)-4-(3'-carboxy-2'-hydroxypheny1)-2-azetidinone, L'H(3) (II). A MeOH solution of L'H(3) reacts with Mn(II), Co(II), Ni(II), Cu(II), Zn(II), Cd(II), Zr(IV), MoO(2)(2+) and UO(2)(2+) ions to form the complexes [M(L'H)center dot MeOH](2) (where M = Mn(II), Co(II) or Ni(II)), [Cu(L'H)](2), (M'(L'H)] (where M' = Zn(II), Cd(II), MoO(2)(2+) or UO(2)(2+)) and [Zr(OH)(2)(L'H)](2). The compounds have been characterized on the basis of elemental analyses, molar conductance, molecular weight, spectral (IR, UV-Visible) studies and magnetic susceptibility measurements. L'H(3) behaves as a dibasic tridentate OON donor ligand in [Cu(L'H)](2), while it acts as a dibasic tetradentate OONS donor ligand in rest of the compounds. The complexes [M(L'H)center dot MeOH](2) (where M = Mn(II), Co(II) or Ni(II)), [Cu(L'H)](2) and [Zr(OH)(2)(L'H)](2) are dimers, and the complexes [M'(L'H)] (where M' = Zn(II), Cd(II), MoO(2)(2+) or UO(2)(2+)) are monomers. The dimeric complex [Cu(L'H)](2) exhibits subnormal magnetic moment and is involved in antiferromagnetic exchange, while all other complexes are magnetically dilute. The octahedral structure for Mn(II), Co(II), Ni(II) MoO(2)(2+) and UO(2)(2+) complexes, square planar structure for Cu(II) complex, tetrahedral structure for Zn(II) and Cd(II) complexes, and pentagonal bipyramidal structure for Zr(IV) complex have been suggested.