<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 1995.
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C> <C>
FREMONT GENERAL CORPORATION NEVADA 95-2815260
FREMONT GENERAL FINANCING I DELAWARE TO BE APPLIED FOR
(Exact names of Registrants as (State or other jurisdiction of (I.R.S. Employer
specified in their charter) incorporation or organization) Identification Nos.)
</TABLE>
------------------------
2020 SANTA MONICA BOULEVARD, SUITE 600
SANTA MONICA, CALIFORNIA 90404
(310) 315-5500
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
------------------------
LOUIS J. RAMPINO
PRESIDENT AND CHIEF OPERATING OFFICER
FREMONT GENERAL CORPORATION
2020 SANTA MONICA BOULEVARD, SUITE 600
SANTA MONICA, CALIFORNIA 90404
(310) 315-5500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ALAN K. AUSTIN, ESQ.
TAMARA G. MATTISON, ESQ.
ELIZABETH M. KURR, ESQ. THOMAS C. JANSON, JR.
WILSON, SONSINI, GOODRICH & ROSATI SKADDEN, ARPS, SLATE, MEAGHER & FLOM
PROFESSIONAL CORPORATION 300 SOUTH GRAND AVENUE
650 PAGE MILL ROAD SUITE 3400
PALO ALTO, CALIFORNIA 94304 LOS ANGELES, CALIFORNIA 90071
(415) 493-9300 (213) 687-5000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
===============================================================================
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES TO BE TO BE OFFERING PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
% Trust Originated Preferred
Securities(SM)................................ 4,600,000 $25.00 $115,000,000 $39,656
- -----------------------------------------------------------------------------------------------------------------
% Junior Subordinated Debentures due
of Fremont General Corporation(3).............
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Guarantee of Fremont General Corporation with
respect to the % Trust Originated
Preferred Securities(SM)(4)...................
</TABLE>
================================================================================
(footnotes on following page)
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
(footnotes from preceding page)
SMService Mark of Merrill Lynch & Co., Inc.
(1) Includes 600,000 shares subject to an Underwriters' over-allotment option.
(2) Estimated in accordance with Rule 457 under the Securities Act of 1933
solely for purposes of computing the registration fee.
(3) The % Junior Subordinated Debentures will be purchased by Fremont
General Financing I with the proceeds of the sale of the % Trust
Originated Preferred Securities. No separate consideration will be received
for the issuance of the % Junior Subordinated Debentures. Pursuant to
Rule 457(a), no separate fee is payable with respect to the % Junior
Subordinated Debentures.
(4) No separate consideration will be received for the Fremont General
Corporation Guarantee. Pursuant to Rule 457(a), no separate fee is payable
with respect to the Fremont General Corporation Guarantee. Includes the
rights of holders of the Preferred Securities under the Fremont General
Corporation Guarantee and certain backup undertakings, comprised of the
obligations of Fremont General to pay certain costs, expenses, debts and
liabilities of the Trust as set forth in the Amended and Restated
Declaration of Trust, and the Indenture, in each case as further described
in the Registration Statement.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 5, 1995
PROSPECTUS
4,000,000 PREFERRED SECURITIES
FREMONT GENERAL FINANCING I
% TRUST ORIGINATED PREFERRED SECURITIESSM ("TOPRSSM")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
FREMONT GENERAL CORPORATION
------------------------
The % Trust Originated Preferred Securities (the "Preferred
Securities") offered hereby represent preferred undivided beneficial interests
in the assets of Fremont General Financing I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"). Fremont General
Corporation, a Nevada corporation ("Fremont General" or the "Company"), will
directly or indirectly own all the common securities (the "Common Securities"
and, together with the Preferred Securities, the "Trust Securities")
representing undivided beneficial interests in the assets of the Trust. The
Trust exists for the sole purpose of issuing the Preferred Securities and Common
Securities and investing the proceeds thereof in an equivalent amount of %
Junior Subordinated Debentures (the "Junior Subordinated Debentures") of Fremont
General.
(continued on next page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE
PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF ANY SUCH DEFERRAL.
Application has been made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "New York Stock Exchange"). If so approved, trading of
the Preferred Securities on the New York Stock Exchange is expected to commence
within a 30-day period after the initial delivery of the Preferred Securities.
See "Underwriting."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE(1) COMMISSION(2) TRUST(3)(4)
- ---------------------------------------------------------------------------------------------------------------------
Per Preferred Security.......................... $25.00 (3) $25.00
- ---------------------------------------------------------------------------------------------------------------------
Total (5)....................................... $ (3) $
</TABLE>
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- --------------------------------------------------------------------------------
(1) Plus accrued distributions, if any, from , 199 .
(2) The Trust and Fremont General have agreed to indemnify the several
Underwriters against, and to provide contribution with respect to, certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Junior Subordinated Debentures, Fremont
General has agreed to pay to the Underwriters as compensation (the
"Underwriters' Compensation") for their arranging the investment therein of
such proceeds $ per Preferred Security (or $ in the
aggregate); provided, that such compensation for sales of 10,000 or more
Preferred Securities to a single purchaser will be $ per Preferred
Security. Therefore, to the extent of such sales, the actual amount of
Underwriters' Compensation will be less than the aggregate amount specified
in the preceding sentence. See "Underwriting."
(4) Before estimated expenses of the offering of $525,000 which are payable by
Fremont General.
(5) The Trust and Fremont General have granted to the Underwriters an option
exercisable for 30 days to purchase up to an additional 600,000 Preferred
Securities at the initial public offering price per Preferred Security
solely to cover over-allotments, if any. Fremont General will pay to the
Underwriters, as Underwriters' Compensation, the commission set forth above
in footnote (3) with respect to such additional Preferred Securities. If
such option is exercised in full, the Initial Public Offering Price,
Underwriters' Compensation, and Proceeds to the Trust will be $ ,
$ and $ , respectively. See "Underwriting."
------------------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company, on or about ,
199 .
------------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED
------------------------
The date of this Prospectus is , 199 .
SM"TRUST ORIGINATED PREFERRED SECURITIES" AND "TOPRS" ARE SERVICE MARKS OF
MERRILL LYNCH & CO., INC.
LOGO
<PAGE> 4
(continued from preceding page)
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on , , and of each
year, commencing , 1996 ("distributions"). The payment of
distributions out of moneys held by the Trust and payments on liquidation of the
Trust or the redemption of Preferred Securities, as set forth below, are
guaranteed by Fremont General (the "Guarantee") to the extent the Trust has
funds available to make such payments. See "Risk Factors -- Rights Under the
Guarantee" and "Description of the Guarantee." The obligations of Fremont
General under the Guarantee are subordinate and junior in right of payment to
all other liabilities of Fremont General and pari passu with the most senior
preferred stock, if any, issued from time to time by Fremont General. The Junior
Subordinated Debentures when issued will be unsecured obligations of Fremont
General. The obligations of Fremont General under the Junior Subordinated
Debentures are subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined herein) of Fremont General, which
aggregated approximately $764 million at September 30, 1995 (excluding accrued
interest thereon). See "Capitalization of Fremont General." Upon an event of a
default under the Declaration (as defined herein), the holders of Preferred
Securities will have a preference over the holders of the Common Securities with
respect to payments in respect of distributions and payments upon redemption,
liquidation and otherwise. Upon the occurrence of certain events, the Junior
Subordinated Debentures purchased by the Trust may be subsequently distributed
pro rata to holders of the Preferred Securities and Common Securities in
connection with the dissolution of the Trust.
The distribution rate and the distribution payment date and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment date and other payment dates on the Junior Subordinated
Debentures, which will be the sole assets of the Trust. As a result, if
principal or interest is not paid on the Junior Subordinated Debentures, no
amounts will be paid on the Preferred Securities. If Fremont General does not
make principal or interest payments on the Junior Subordinated Debentures, the
Trust will not have sufficient funds to make distributions on the Preferred
Securities, in which event, the Guarantee will not apply to such distributions
until the Trust has sufficient funds available therefor.
Fremont General has the right to defer payments of interest on the Junior
Subordinated Debentures by extending the interest payment period on the Junior
Subordinated Debentures at any time for up to 20 consecutive quarters (each, an
"Extension Period"). If interest payments are so deferred, distributions will
also be deferred. During such Extension Period, distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at an
annual rate of % per annum, compounded quarterly, and during any Extension
Period holders of Preferred Securities will continue to include deferred
interest allocable to its Preferred Securities in income (as original issue
discount ("OID")) for United States federal income tax purposes even though no
current cash distribution will be made in respect of such income. There could be
multiple Extension Periods of varying lengths throughout the term of the Junior
Subordinated Debentures. See "Risk Factors -- Option to Extend Interest Payment
Period; Tax Impact of Extension," "Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Period" and "United States
Federal Income Taxation -- Original Issue Discount."
The Junior Subordinated Debentures are redeemable by Fremont General, in
whole or, from time to time in part, on or after , 200 , or at any
time in certain circumstances upon the occurrence of a Tax Event (as defined
herein). If Fremont General redeems Junior Subordinated Debentures, the Trust
must redeem Trust Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Junior Subordinated Debentures so redeemed at
a redemption price per Preferred Security of $25, plus accrued and unpaid
distributions thereon to the date fixed for redemption (the "Redemption Price").
See "Description of the Preferred Securities -- Mandatory Redemption." The
Preferred Securities will be redeemed upon maturity of the Junior Subordinated
Debentures. On , 202 , the maturity date of the Junior Subordinated
Debentures may be extended at the option of Fremont General only once for a
period of up to an additional 19 years, provided certain financial covenants and
conditions are met. See "Description of the Junior Subordinated
Debentures -- Option to Extend Maturity Date." Upon the occurrence of a Tax
Event (as defined herein) arising from a change after the issuance of the
Preferred Securities in law or in the
2
<PAGE> 5
legal interpretation regarding certain tax matters, unless the Junior
Subordinated Debentures are redeemed in the limited circumstances described
herein, the Trust will be dissolved, with the result that the Junior
Subordinated Debentures will be distributed to the holders of the Preferred
Securities, on a pro rata basis, in lieu of any cash distribution. See
"Description of the Preferred Securities -- Tax Event Redemption or
Distribution." In certain circumstances, Fremont General will have the right to
redeem the Junior Subordinated Debentures, which would result in the redemption
by the Trust of Trust Securities in the same amount on a pro rata basis. If the
Junior Subordinated Debentures are distributed to the holders of the Preferred
Securities, Fremont General will use its best efforts to have the Junior
Subordinated Debentures listed on the New York Stock Exchange or on such other
exchange as the Preferred Securities are then listed. See "Description of the
Preferred Securities -- Tax Event Redemption or Distribution" and "Description
of the Junior Subordinated Debentures."
In the event of the involuntary or voluntary dissolution, winding up or
termination of the Trust, the holders of the Preferred Securities will be
entitled to receive for each Preferred Security a liquidation amount of $25 plus
accrued and unpaid distributions thereon (including interest thereon) to the
date of payment, unless, in connection with such dissolution, the Junior
Subordinated Debentures are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities -- Liquidation
Distribution Upon Dissolution."
------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING
TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE OF THE STATE
OF NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING, NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
3
<PAGE> 6
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). The Registration Statement of which this
Prospectus is a part, the exhibits and schedules forming a part thereof and the
reports and other information filed by the Company with the Commission in
accordance with the Exchange Act may be inspected and copied at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048 and
Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
In addition, such material concerning the Company can also be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (of which this Prospectus is a part), under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Preferred Securities offered
hereby. Statements contained in this Prospectus as to the content of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference and the exhibits and schedules hereto. For
further information regarding the Company and the Preferred Securities offered
hereby, reference is hereby made to the Registration Statement and such exhibits
and schedules which may be obtained from the Commission at its principal office
in Washington, D.C. upon payment of the fees prescribed by the Commission.
No separate financial statements of the Trust are included herein. Fremont
General does not believe that such statements would be material to holders of
the Preferred Securities. The Trust is not currently subject to the
informational reporting requirements of the Exchange Act. The Trust will become
subject to such requirements upon the effectiveness of the Registration
Statement of which this Prospectus is a part, although it intends to seek and
expects to receive an exemption therefrom.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Except to the extent modified or superseded by information contained
herein, the Company's Annual Report on Form 10-K for the year ended December 31,
1994, the Quarterly Report on Form 10-Q for the quarter ended March 31, 1995,
the Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, the
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995, the
Current Reports on Form 8-K and 8-K/A, dated March 8, 1995 and April 27, 1995,
respectively, the Proxy Statement, dated May 11, 1995, as filed with the
Commission and the Registration Statement on Form 8-A dated December 4, 1995,
are hereby incorporated by reference in this Prospectus. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other document that is
subsequently filed under the Exchange Act and is incorporated, or deemed to be
incorporated, by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. All documents
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Prospectus and prior to the termination of the offering of the
Preferred Securities offered hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents referred to above which have been
incorporated into this Prospectus by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
the information that the Prospectus incorporates). Requests for such copies
should be directed to Wayne R. Bailey, Executive Vice President, Treasurer and
Chief Financial Officer, Fremont General Corporation, 2020 Santa Monica
Boulevard, Suite 600, Santa Monica, California 90404; Telephone: (310) 315-5500.
4
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements (including the notes
thereto) incorporated herein by reference. Except as set forth under
"Description of the Guarantee" and "Description of the Junior Subordinated
Debentures," unless the context otherwise requires, references in this
Prospectus to "Fremont General" or the "Company" shall mean Fremont General
Corporation and its consolidated subsidiaries viewed as a single entity and
include its predecessors. Investors should consider carefully the information
set forth under the heading "Risk Factors." All share information in this
Prospectus does not reflect the three-for-two stock split of the Common Stock of
Fremont General Corporation to be distributed on February 7, 1996 to
stockholders of record of the Company at close of business on January 8, 1996.
THE COMPANY
Fremont General is a diversified holding company, engaged through
subsidiaries in selected insurance and financial service businesses. The Company
is one of the largest mono-line workers' compensation insurers in the United
States, with major market positions in California and Illinois, and a presence
in Arizona, Indiana, Michigan and Wisconsin. For the first nine months of 1995,
the Company's workers' compensation insurance premiums were approximately evenly
distributed between the Western and the Midwestern regions. For the year ended
December 31, 1994 and the nine months ended September 30, 1995, the Company had
workers' compensation insurance premiums earned of $401 million and $433
million, respectively. The Company recently expanded its workers' compensation
operations through the acquisition on February 22, 1995 of Casualty Insurance
Company ("Casualty") and its wholly owned subsidiary Workers' Compensation and
Indemnity Company ("WCIC"). Casualty is the largest underwriter of workers'
compensation insurance in Illinois with additional operations directly or
indirectly in Indiana, Michigan and Wisconsin. Fremont General believes that
this acquisition provides the Company with a national platform upon which to
build its workers' compensation business, while providing greater geographic
diversification. A.M. Best rates the Company's workers' compensation insurance
subsidiaries on a consolidated basis as "A-" (Excellent).
The Company also has growing financial services operations engaged
primarily in commercial finance lending, principally to middle market companies
nationwide, and residential and commercial real estate lending in California.
The Company's financial services loan portfolio has grown from $536 million at
December 31, 1991 to $1.5 billion at September 30, 1995. By engaging in several
selected businesses which are geographically diverse the Company believes it can
achieve greater stability in its operating results. Over the five years ended
December 31, 1994, the Company's income before taxes grew at a compound annual
rate of approximately 20% to $82 million in 1994. The Company's book value
increased from $165 million at December 31, 1989 to $454 million at September
30, 1995. The Company's assets exceeded $4 billion at September 30, 1995.
FREMONT GENERAL FINANCING I
The Trust is a statutory business trust formed on December 4, 1995 under
the Delaware Business Trust Act (the "Business Trust Act") pursuant to a
declaration of trust among the Trustees and Fremont General and the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
December 1, 1995. Such declaration will be amended and restated in its entirety
(as so amended and restated, the "Declaration") substantially in the form filed
as an exhibit to the Registration Statement of which this Prospectus is a part,
as of the date the Preferred Securities are initially issued. The Declaration
will be qualified as an indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Upon issuance of the Preferred Securities,
the purchasers thereof will own all of the Preferred Securities. The Company
will acquire Common Securities in an amount equal to at least 3% of the total
capital of the Trust and will own, directly or indirectly, all of the issued and
outstanding Common Securities. The Trust exists solely for the purpose of (a)
issuing its Trust Securities for cash and investing the proceeds thereof in an
equivalent amount of Junior Subordinated Debentures and (b) engaging in such
other activities as are necessary and incidental thereto. The rights of the
holders of the Preferred Securities, including economic rights, rights to
information and voting rights, are set forth in the Declaration, the Business
Trust Act and the
5
<PAGE> 8
Trust Indenture Act. The Declaration does not permit the incurrence by the Trust
of any indebtedness for borrowed money or the making of any investment other
than in the Junior Subordinated Debentures. In the Indenture, Fremont General
has agreed to pay for all debts and obligations (other than with respect to the
Trust Securities) and all costs and expenses of the Trust, including the fees
and expenses of the Trustees and any income taxes, duties and other governmental
charges, and all costs and expenses with respect thereto, to which the Trust may
become subject, except for United States withholding taxes. See "Description of
the Preferred Securities."
The Trust's business and affairs will be conducted by the trustees (the
"Fremont Trustees") appointed by Fremont General, as holder of all of the Common
Securities. The duties and obligations of the Fremont Trustees shall be governed
by the Declaration. Pursuant to the Declaration, the number of Fremont Trustees
will initially be three. Two of the Fremont Trustees (the "Regular Trustees")
will be persons who are employees or officers of, or affiliated with, Fremont
General. The third trustee will be a financial institution unaffiliated with
Fremont General which maintains a principal place of business in the State of
Delaware and which will serve as property trustee under the Declaration and as
indenture trustee for purposes of the Trust Indenture Act (the "Institutional
Trustee"). The Chase Manhattan Bank, N.A., a national banking association, will
act as the Institutional Trustee until the Trust terminates or such trustee is
removed or replaced by the holder of the Common Securities. The Chase Manhattan
Bank, N.A., a national banking association, will also act as indenture trustee
under the Guarantee (the "Guarantee Trustee"). See "Description of the
Guarantee."
The Institutional Trustee will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities and will have
the power to exercise all rights, powers and privileges under the Indenture (as
defined herein) as the holder of all of the Junior Subordinated Debentures. In
addition, the Institutional Trustee will maintain exclusive control of a
segregated non-interest bearing bank account (the "Property Account") to hold
all payments made in respect of the Junior Subordinated Debentures for the
benefit of the holders of the Trust Securities. The Institutional Trustee will
make payments of distributions and payments on liquidation, redemption and
otherwise to the holders of the Trust Securities out of funds from the Property
Account. The Guarantee Trustee will hold the Guarantee for the benefit of the
holders of the Preferred Securities. Fremont General, as the holder of all the
Common Securities, will have the right to appoint, remove or replace any Fremont
Trustee and to increase the number of Fremont Trustees, provided that the number
of Fremont Trustees shall be at least three, a majority of which shall be
Regular Trustees. Fremont General will pay all fees and expenses related to the
Trust, the offering of the Trust Securities and the issuance of the Junior
Subordinated Debentures. See "Description of the Junior Subordinated Debentures
- -- Miscellaneous."
The trustee in the State of Delaware is The Chase Manhattan Bank, (USA), a
Delaware banking corporation, 802 Delaware Avenue, 13th Floor, Wilmington, DE
19801. The principal place of business of the Trust shall be c/o Fremont General
Corporation, 2020 Santa Monica Boulevard, Suite 600, Santa Monica, California
90404 (telephone number (310) 315-5500).
THE OFFERING
Preferred Securities Offered. 4,000,000 % Trust Originated Preferred
Securities evidencing preferred undivided beneficial interests in the assets of
the Trust. Holders of the Preferred Securities are entitled to receive
cumulative cash distributions at an annual rate of % of the liquidation amount
of $25 per Preferred Security, accruing from the date of original issuance and
payable quarterly in arrears on , , and
of each year commencing on , 1996. The distribution rate and the
distribution and other payment dates for the Preferred Securities will
correspond to the interest rate and interest and other payment dates on the
Junior Subordinated Debentures, which will be the sole assets of the Trust. As a
result, if principal or interest is not paid on the Junior Subordinated
Debentures, no amounts will be paid on the Preferred Securities. See
"Description of the Preferred Securities."
Junior Subordinated Debentures. The Trust will invest the proceeds from
the issuance of the Preferred Securities and Common Securities in an equivalent
amount of % Junior Subordinated Debentures of Fremont General. The Junior
Subordinated Debentures will be subordinate and junior in right of payment to
6
<PAGE> 9
all Senior Indebtedness of Fremont General. In addition, because Fremont General
is a holding company, its obligations under the Junior Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of its
subsidiaries. See "Description of the Junior Subordinated Debentures --
Subordination."
Guarantee. Payment of distributions out of moneys held by the Trust, and
payments on liquidation of the Trust or the redemption of Preferred Securities
are guaranteed by Fremont General to the extent the Trust has funds available
therefor. If Fremont General does not make principal or interest payments on the
Junior Subordinated Debentures, the Trust will not have sufficient funds to make
distributions on the Preferred Securities, in which event the guarantee shall
not apply to such distribution until the Trust has sufficient funds available
therefor. See "Description of the Guarantee" and "Effect of Obligations Under
the Junior Subordinated Debentures and the Guarantee." The obligations of
Fremont General under the Guarantee are subordinate and junior in right of
payment to all other liabilities of Fremont General and will be pari passu with
the most senior preferred stock issued by Fremont General. In addition, because
Fremont General is a holding company, its obligations under the Guarantee are
effectively subordinated to all existing and future liabilities of its
subsidiaries. See "Risk Factors -- Holding Company Structure; Ranking of
Subordinate Obligations Under the Guarantee and Junior Subordinated Debentures"
and "Description of the Guarantee."
Right to Defer Interest. Fremont General has the right to defer payments
of interest on the Junior Subordinated Debentures by extending the interest
payment period on the Junior Subordinated Debentures, at any time, for up to 20
consecutive quarters. If interest payments on the Junior Subordinated Debentures
are so deferred, distributions on the Preferred Securities will also be
deferred. During any deferral, distributions will continue to accrue with
interest thereon (to the extent permitted by law) as described herein. There
could be multiple Extension Periods of varying lengths throughout the term of
the Junior Subordinated Debentures. During an Extension Period, holders of
Preferred Securities will be required to include deferred interest income
allocated to their Preferred Securities in their gross income (as OID) in
advance of receipt of the cash interest payments attributable thereto. See
"Description of the Junior Subordinated Debentures -- Option to Extend Interest
Payment Period" and "United States Federal Income Taxation -- Original Issue
Discount."
Redemption. The Junior Subordinated Debentures are redeemable by Fremont
General (in whole, or from time to time in part) on or after , 200 ,
or at any time upon the occurrence of a Tax Event. If the Junior Subordinated
Debentures are redeemed, the Trust must redeem Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Debentures so redeemed. The Preferred Securities will be
redeemed upon maturity of the Junior Subordinated Debentures. See "Description
of the Preferred Securities -- Mandatory Redemption."
Option to Extend Maturity Date. The Junior Subordinated Debentures mature
on , 202 , but the maturity date may be extended once only for up to
an additional 19 years, provided certain financial covenants and conditions are
met. If the maturity of the Junior Subordinated Debentures is extended, the
maturity date of the Preferred Securities will also be extended for the same
time period. See "Description of the Junior Subordinated Debentures -- Option to
Extend Maturity Date."
7
<PAGE> 10
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- ----------------------
1990(1) 1991 1992 1993 1994 1994 1995(2)
-------- -------- -------- -------- -------- ----------- --------
(UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PERCENTS, RATIOS AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Property and casualty premiums earned........... $411,403 $413,156 $411,956 $455,765 $433,584 $ 329,343 $457,694
Net investment income........................... 82,992 73,796 70,820 77,198 76,821 58,962 85,842
Loan interest income............................ 50,191 60,685 73,310 87,244 113,382 77,405 120,928
Realized investment gains (losses).............. 92 5,290 16,208 2,165 (315) 120 8
Other revenue................................... 28,712 28,247 26,399 29,033 29,676 21,969 26,179
-------- -------- -------- -------- -------- -------- --------
Total revenues.................................. $573,390 $581,174 $598,693 $651,405 $653,148 $ 487,799 $690,651
======== ======== ======== ======== ======== ======== ========
Property and casualty income.................... $ 46,805 $ 37,946 $ 45,187 $ 52,092 $ 61,265 $ 45,671 $ 60,048
Financial services income....................... 1,001 9,340 14,878 21,456 28,014 21,033 25,838
Other interest and corporate expense............ (8,801) (6,277) (11,484) (9,200) (7,708) (5,380) (13,036)
-------- -------- -------- -------- -------- -------- --------
Income before taxes, discontinued operations,
extraordinary items and cumulative effect of
accounting change............................. 39,005 41,009 48,581 64,348 81,571 61,324 72,850
Income tax expense.............................. (12,888) (8,878) (13,381) (21,638) (25,759) (19,665) (23,512)
Discontinued operations and extraordinary
items......................................... 711 (964) -- -- -- -- --
Cumulative effect of accounting change for income
taxes........................................... -- -- 43,509 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income...................................... $ 26,828 $ 31,167 $ 78,709 $ 42,710 $ 55,812 $ 41,659 $ 49,338
======== ======== ======== ======== ======== ======== ========
PER COMMON SHARE DATA(3):
Cash dividends declared......................... $0.48.... $ 0.52 $ 0.60 $ 0.65 $ 0.68 $ 0.51 $ 0.57
Stockholders' equity:
Including FASB 115 for 1994 and 1995(4)....... N/A N/A N/A N/A 20.74 20.99 26.81
Excluding FASB 115 for 1994 and 1995(4)....... 12.79 14.68 20.08 21.83 24.60 23.93 27.23
Income before discontinued operations,
extraordinary items and cumulative effect of
accounting change:
Primary....................................... 1.92 2.35 2.57 2.78 3.25 2.42 2.85
Fully diluted................................. 1.80 2.15 2.30 2.48 2.73 2.04 2.38
Net income:
Primary....................................... 1.97 2.28 5.75 2.78 3.25 2.42 2.85
Fully diluted................................. 1.85 2.08 4.94 2.48 2.73 2.04 2.38
RATIO OF EARNINGS TO FIXED CHARGES(5):
Including interest on thrift deposits........... 2.02x 1.97x 2.03x 2.34x 2.29x 2.44x 1.95x
Excluding interest on thrift deposits........... 2.67x 2.72x 2.70x 3.34x 3.34x 3.49x 2.79x
GAAP RATIOS FOR PROPERTY AND
CASUALTY SUBSIDIARIES:
Combined ratio.................................. 105.0% 106.0% 105.4% 101.2% 98.0% 98.4% 100.7%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30,
1995
-------------
(UNAUDITED)
<S> <C>
BALANCE SHEET DATA:
Total assets.......................................................................................... $ 4,233,130
Fixed income and other investments.................................................................... 1,749,983
Loans receivable...................................................................................... 1,508,074
Claims and policy liabilities......................................................................... 1,915,464
Long-term debt........................................................................................ 746,308
Stockholders' equity:
Including FASB 115(4)............................................................................... 453,845
Excluding FASB 115(4)............................................................................... 460,905
</TABLE>
- ---------------
(1) Fremont General acquired Investors Bancor in 1990 and, in 1989, a majority
ownership in Fremont Pacific Capital Corporation, which owned two workers'
compensation insurance companies. This percentage ownership was increased to
100% at December 1, 1991.
(2) The Company acquired Casualty Insurance Company on February 22, 1995.
(3) Adjusted for a ten percent stock dividend distributed June 1995 and a
three-for-two split of the Common Stock effected June 1993.
(4) Effective January 1, 1994, the Financial Accounting Standards Board
Statement 115 ("FASB 115") changed the accounting treatment afforded the
Company's investment portfolio wherein unrealized gains and losses on
securities designated by the Company as available for sale are included, net
of deferred taxes, as a component of stockholders' equity.
(5) The ratio of earnings to fixed charges is expressed as the ratio of income
before income taxes, discontinued operations, extraordinary items,
cumulative effects of accounting changes and fixed charges to fixed charges.
Fixed charges consist principally of interest expense and the interest
component of rental expense.
8
<PAGE> 11
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere or incorporated by reference in this Prospectus
and should particularly consider the following matters:
VARIABILITY OF OPERATING RESULTS
The Company's profitability can be affected significantly by many factors
including competition, the severity and frequency of claims, interest rates,
regulations, court decisions, the judicial climate, and general economic
conditions and trends, all of which are outside of the Company's control. These
factors could contribute to significant variation of results of operations in
different aspects of the Company's business, or as a whole, from quarter to
quarter and year to year. With respect to the workers' compensation insurance
business, changes in economic conditions can lead to reduced premium levels due
to lower payrolls as well as increased claims due to the tendency of workers who
are laid off to submit workers' compensation claims. Legislative and regulatory
changes can also contribute to variable operating results for workers'
compensation insurance businesses. For example, in the nine months ended
September 30, 1995, the Company experienced lower premiums and profitability on
the Company's California workers' compensation business due to increased price
competition resulting from legislation enacted in California in July 1993 which,
among other things, repealed the minimum rate law effective January 1, 1995. The
Company anticipates that its workers' compensation premiums earned in California
will continue to decrease as a result of this increased price competition, which
could adversely affect the Company's results of operations and financial
condition. See "Recent Developments."
ADEQUACY OF LOSS RESERVES
The Company's property and casualty insurance subsidiaries are required to
maintain reserves to cover their estimated ultimate liability for losses and
loss adjustment expense ("LAE") with respect to reported and unreported claims
incurred as of the end of each accounting period. These reserves do not
represent an exact calculation of liabilities but rather are estimates involving
actuarial projections at a given time of what the Company expects the ultimate
settlement and administration of claims will cost based on facts and
circumstances then known, predictions of future events, estimates of future
trends in claims frequency and severity.
The Company regularly reviews its reserving techniques, overall reserve
position and reinsurance. In light of present facts and current legal
interpretations, management believes that adequate provisions have been made for
loss reserves. In making this determination, management has considered its
claims experience to date, loss development history for prior accident years,
estimates of future trends of claims frequency and severity. However,
establishment of appropriate reserves is an inherently uncertain process, and
there can be no certainty that currently established reserves will prove
adequate in light of subsequent actual experience. Subsequent actual experience
has resulted and could result in loss reserves being too high or too low. Future
loss development could require reserves for prior periods to be increased, which
would adversely impact earnings in future periods. See "Recent Developments."
LOAN PORTFOLIOS RISKS; EXPOSURE TO ECONOMIC CONDITIONS
The Company's financial service businesses are highly dependent on the
value of the collateral securing the loans. Loans provided by the Company's
thrift and loan subsidiary, Fremont Investment & Loan ("Fremont I&L"), are
collateralized by commercial and residential real estate. The proportion of
commercial real estate loans in Fremont I&L's loan portfolio has been
increasing. Commercial real estate loans generally have higher default risk than
residential real estate loans. The loan portfolio of the Company's commercial
finance subsidiary, Fremont Financial Corporation ("Fremont Financial"),
consists primarily of working capital loans to small and middle market
businesses which require careful monitoring of the underlying collateral by the
Company. Due to the leverage or operating performance of borrowers, the
potential default rate on these commercial finance loans is generally higher
relative to loans made to more creditworthy businesses.
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<PAGE> 12
Adverse economic developments can negatively affect the Company's business
and results of operations in a number of ways. Such developments can reduce the
demand for loans, impair the ability of borrowers to pay loans and impair the
value of the underlying collateral.
COMPETITION
The insurance and financial services industries are characterized by
competition on the basis of price and service. The Company believes that the
repeal of the California minimum rate law effective January 1, 1995 has resulted
in increased price competition which is adversely affecting the Company's
results of operations for its workers' compensation business in California. See
"Recent Developments." The Company recently expanded its workers' compensation
operation through the acquisition on February 22, 1995 of Casualty, which
underwrites workers' compensation insurance in several Midwestern states,
primarily in Illinois. Although Casualty is the largest underwriter of workers'
compensation insurance in the Illinois market, based on the competitive nature
of the insurance industry and the inherent risks associated with the Company
entering into a new geographic market, there can be no assurance that Casualty
will continue to maintain its market share in the future. In addition, advisory
premium rates established by the National Council on Compensation Insurance,
which workers' compensation insurance companies in Illinois generally tend to
follow, decreased in 1995. A further decrease in such advisory rates is proposed
for January 1996, primarily due to the overall improvement of loss experience
nationally. As a result, the Company anticipates price competition to continue
in Illinois. Furthermore, state regulatory changes could effect competition in
the states where the Company transacts insurance business. Although the Company
is one of the largest writers of workers' compensation insurance in California
and Illinois, certain of the Company's competitors are larger and have greater
resources than the Company. Fremont Financial primarily competes with commercial
finance companies and banks, most of whom are larger and have greater financial
resources than Fremont Financial. The lending market has become increasingly
competitive for small to middle market commercial borrowers. As a result,
Fremont Financial has experienced decreasing yields on its commercial finance
loans.
REGULATION
The Company's workers' compensation insurance operations are concentrated
in California and Illinois, with additional writings in Arizona, Indiana,
Michigan and Wisconsin. Insurance companies are subject to supervision and
regulation by the state insurance authority in each state in which they transact
business. Such supervision and regulation relate to the numerous aspects of an
insurance company's business and financial condition. The primary purpose of
such supervision and regulation is the protection of policyholders rather than
investors or stockholders of an issuer. The Company's multistate insurance
operations require, and will continue to require, significant resources of the
Company in its efforts to comply with the regulations of each state in which it
transacts business.
Illinois began operating under an open rating system in 1982 and California
began operating under such a system effective January 1, 1995. In an open rating
system, workers' compensation companies are provided with advisory rates by job
classification and each insurance company determines its own rates based in part
upon its particular operating and loss costs. Although insurance companies are
not required to adopt such advisory rates, companies in Illinois generally
follow such rates. However, insurance companies in California have, since the
adoption of an open rating system, generally set their premium rates below such
advisory rates. Before January 1, 1995, California operated under a minimum rate
law, whereby premium rates established by the California Department of Insurance
were the minimum rates which could be charged by an insurance carrier. The
repeal of the minimum rate law has resulted in lower premiums and profitability
on the Company's California workers' compensation policies due to increased
price competition.
The payment of stockholder dividends and the advancement of loans to the
Company by its subsidiaries are and may continue to be subject to certain
statutory and regulatory restrictions and are contingent upon the earnings of
those subsidiaries.
Fremont I&L is a FDIC insured California thrift and loan subject to
supervision and regulation by the California Department of Corporations and the
FDIC. Federal and state regulations prescribe certain
10
<PAGE> 13
minimum capital requirements and, while Fremont I&L is currently in compliance
with such requirements, Fremont General could in the future be required to make
additional investments in Fremont I&L in order to maintain compliance with such
requirements. Federal and state regulatory authorities have the power to
prohibit or limit the payment of dividends by Fremont I&L. Future changes in
government regulation and policy could adversely affect the thrift and loan
industry, including Fremont I&L.
In January 1995, Fremont I&L entered into a Memorandum of Understanding
("MOU") with the FDIC which requires, among other things, the FDIC's prior
consent for the payment of dividends by Fremont I&L, specified minimum capital
ratios to be maintained, and the implementation of certain procedural and
administrative changes. Management does not believe that the restrictions on
Fremont I&L's ability to pay dividends imposed by the MOU or by federal or state
law will adversely affect the ability of Fremont General to meet its
obligations, including its obligations under the Junior Subordinated Debentures
or the Guarantees. Management believes that Fremont I&L is currently in
substantial compliance with the requirements of the MOU, and will be able to
maintain such compliance during the time the MOU is in effect. However, no
assurances can be given as to when, or if, the MOU will be terminated. See
"Recent Developments."
HOLDING COMPANY STRUCTURE; RANKING OF SUBORDINATE OBLIGATIONS UNDER THE
GUARANTEE AND JUNIOR SUBORDINATED DEBENTURES
Fremont General's assets consist primarily of investments in its
subsidiaries. The operations of the Company are currently conducted through its
subsidiaries. Accordingly, the cash flow and the consequent ability to service
debt of the Company, including the Junior Subordinated Debentures, are primarily
dependent upon the earnings of its subsidiaries and the distribution of those
earnings to the Company or upon loans or other payments of funds by those
subsidiaries to the Company. The Company's subsidiaries are separate and
distinct legal entities and have no obligation, contingent or otherwise, to pay
any amounts due pursuant to the Junior Subordinated Debentures or to make any
funds available therefor, whether by dividends, loans or other payments. In
addition, the payment of dividends and the making of loan advances to the
Company by its subsidiaries are and may continue to be subject to certain
statutory and regulatory restrictions and various agreements, principally loan
agreements, of the subsidiaries that restrict the ability of the respective
subsidiaries to pay cash dividends or advance loans and other payments to the
Company. Furthermore, the Company's rights, and the rights of its creditors to
participate in the distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization will be effectively subordinated to
all existing and future liabilities, including trade payables, of the Company's
subsidiaries, except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security interests in the assets of such subsidiary and
any indebtedness of such subsidiary senior to that held by the Company.
Fremont General's obligations under the Guarantee are subordinate and
junior in right of payment to all other liabilities of Fremont General and pari
passu with the most senior preferred stock, if any, issued from time to time by
Fremont General. The obligations of Fremont General under the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined below) of Fremont General. As
of September 30, 1995, outstanding Senior Indebtedness of the Company aggregated
approximately $764 million (excluding accrued interest thereon). See
"Capitalization of Fremont General." There are no terms in the Preferred
Securities, the Junior Subordinated Debentures or the Guarantee that limit
Fremont General's ability to incur additional indebtedness, including
indebtedness senior to the Junior Subordinated Debentures and the Guarantee. See
"Description of Preferred Securities," "Description of the Guarantee -- Status
of the Guarantee" and "Description of the Junior Subordinated
Debentures -- Subordination."
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Chase Manhattan Bank, N.A. will act as indenture trustee under the
Guarantee for the purposes of compliance with the provisions of the Trust
Indenture Act (the "Guarantee Trustee"). The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Preferred Securities.
11
<PAGE> 14
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent the Trust has funds available
therefor, (ii) the Redemption Price, including all accrued and unpaid
distributions with respect to Preferred Securities called for redemption by the
Trust, to the extent the Trust has funds available therefor, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Junior Subordinated
Debentures to the holders of Preferred Securities or a redemption of all the
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Preferred Securities to the date
of the payment to the extent the Trust has funds available therefor or (b) the
amount of assets of the Trust remaining available, after satisfaction of higher
priority claims including expenses, for distribution to holders of the Preferred
Securities in liquidation of the Trust. The holders of a majority in liquidation
amount of the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails, following
any such direction from the requisite holders to enforce the Guarantee, any
holder of Preferred Securities may institute a legal proceeding directly against
Fremont General to enforce the Guarantee Trustee's rights under the Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity. If Fremont General were to default on its
obligation to pay amounts payable on the Junior Subordinated Debentures, the
Trust would lack available funds for the payment of distributions or amounts
payable on redemption of the Preferred Securities or otherwise, and, in such
event, holders of the Preferred Securities would not be able to rely upon the
Guarantee for payment of such amounts. Instead, holders of the Preferred
Securities would rely on the enforcement by the Institutional Trustee of its
rights as registered holder of the Junior Subordinated Debentures against
Fremont General pursuant to the terms of the Junior Subordinated Debentures. See
"Description of the Guarantee" and "Description of the Junior Subordinated
Debentures." The Declaration provides that each holder of Preferred Securities,
by acceptance thereof, agrees to the provisions of the Guarantee, including the
subordination provisions thereof, and the Indenture (as such term is defined in
"Description of Junior Subordinated Debentures."
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If (i) the Trust fails to pay distributions in full on the Preferred
Securities for six consecutive quarterly distribution periods or (ii) a
Declaration Event of Default (as defined herein) occurs and is continuing, then
the holders of Preferred Securities would rely on the enforcement by the
Institutional Trustee of its rights against Fremont General as a holder of the
Junior Subordinated Debentures. In addition, the holders of a majority in
liquidation amount of the Preferred Securities will have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the Institutional Trustee or to direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee to exercise the remedies available to
it as a holder of the Junior Subordinated Debentures. If an Event of Default
with respect to the Junior Subordinated Debentures (an "Indenture Event of
Default"), constituting the failure to pay interest or principal on the Junior
Subordinated Debentures on the date such interest or principal is otherwise
payable has occurred and is continuing, then a holder of Preferred Securities
may directly institute a proceeding for enforcement of payment to such holder
directly of the principal of or interest on the Junior Subordinated Debentures
with a principal amount equal to the aggregate liquidation amount of the
Preferred Securities of such holder on or after the respective due date
specified in the Junior Subordinated Debentures. The holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures unless the Institutional
Trustee fails to do so.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX IMPACT OF EXTENSION
Fremont General has the right under the Indenture to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment
period at any time, and from time to time, on the Junior Subordinated
Debentures. As a consequence of such an extension, quarterly distributions on
the Preferred Securities would be deferred (but despite such deferral would
continue to accrue with interest
12
<PAGE> 15
thereon compounded quarterly) by the Trust during any such extended interest
payment period. Such right to extend the interest payment period for the Junior
Subordinated Debentures is limited to a period not exceeding 20 consecutive
quarters or extending beyond the maturity of the Junior Subordinated Debentures.
In the event that Fremont General exercises this right to defer interest
payments, then (a) Fremont General shall not, and shall not allow any of its
subsidiaries (other than its wholly owned subsidiaries) to, declare or pay
dividends on, or make a distribution with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
(other than (i) repurchases or acquisitions of shares of the Common Stock of
Fremont General as contemplated by any employment arrangement, benefit plan or
other similar contract with or for the benefit of employees, officers or
directors entered into in the ordinary course of business), (ii) as a result of
an exchange or conversion of any class or series of Fremont General's capital
stock for Fremont General's Common Stock, (iii) the purchase of fractional
interests in shares of Fremont General's capital stock pursuant to the
conversion or exchange provisions of such Fremont General capital stock or the
security being converted or exchanged, or (iv) the payment of any stock dividend
by Fremont General payable in Fremont General's Common Stock) or make any
guarantee payments with respect to the foregoing and (b) Fremont General shall
not, and shall not allow any of its subsidiaries to, make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by Fremont General that rank pari passu with or junior to
the Junior Subordinated Debentures except as (i) required in accordance with the
terms thereof (including, in the case of junior debt, the subordination
provisions thereof), (ii) in connection with a contemporaneous refinancing of
such debt securities with the proceeds of a new issuance of debt securities
which have terms and provisions no more favorable to the holder than those of
the debt securities repurchased or refinanced or (iii) in connection with the
contemporaneous conversion or exchange of such debt securities for Common Stock
of Fremont General; provided, however, that in no event shall the amount to be
paid by Fremont General or any of its subsidiaries under (a) or (b) above exceed
in the aggregate $500,000 per year. Prior to the termination of any such
Extension Period, Fremont General may further extend the interest payment
period; provided, that no Extension Period may exceed 20 consecutive quarters or
extend beyond the maturity of the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due,
Fremont General may commence a new Extension Period, subject to the above
requirements. See "Description of the Preferred Securities -- Distributions" and
"Description of the Junior Subordinated Debentures -- Option to Extend Interest
Payment Period."
Should Fremont General exercise its right to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities will
be required to continue to include the deferred interest allocable to its
Preferred Securities in income (as OID) for United States federal income tax
purposes even though no current cash distribution will be made in respect of
such income. In addition, each such holder of Preferred Securities will not
receive the cash from the Trust related to such income if such holder disposes
of its Preferred Securities prior to the record date for the date on which
distributions of such amounts are made. Fremont General has no current intention
of exercising its right to defer payments of interest by extending the interest
payment period on the Junior Subordinated Debentures. However, should Fremont
General determine to exercise such right in the future, the market price of the
Preferred Securities is likely to be affected. A holder that disposes of its
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of Fremont
General's right to defer interest payments, the market price of the Preferred
Securities (which represent an undivided beneficial interest in the Junior
Subordinated Debentures) may be more volatile than other securities on which OID
accrues that do not have such rights. See "United States Federal Income
Taxation -- Original Issue Discount."
TAX EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Tax Event, the Trust would be dissolved, except in
the limited circumstance described below, with the result that the Junior
Subordinated Debentures would be distributed to the holders of the Trust
Securities in connection with the liquidation of the Trust. In certain
circumstances, Fremont General would have the right to redeem the Junior
Subordinated Debentures, in whole or in part, in lieu of a distribution of the
Junior Subordinated Debentures by the Trust, in which event the Trust would
redeem the
13
<PAGE> 16
Trust Securities on a pro rata basis to the same extent as the Junior
Subordinated Debentures are redeemed by Fremont General. See "Description of the
Preferred Securities -- Tax Event Redemption or Distribution."
Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of the Trust would not be a
taxable event to holders of the Preferred Securities. The distribution of cash
upon a dissolution of the Trust would be a taxable event to such holders. See
"United States Federal Income Taxation -- Receipt of Junior Subordinated
Debentures or Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of the Trust
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debentures that a holder of Preferred Securities may
receive on dissolution and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Junior Subordinated
Debentures upon the occurrence of a Tax Event, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein and in the
accompanying Prospectus. See "Description of the Preferred Securities -- Tax
Event Redemption or Distribution" and "Description of the Junior Subordinated
Debentures."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Fremont Trustees, which voting rights are vested
exclusively in the holder of the Common Securities. See "Description of the
Preferred Securities -- Voting Rights."
TRADING PRICE
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Junior Subordinated Debentures
through the date of disposition in income as ordinary income, and to add such
amount to his adjusted tax basis in his pro rata share of the underlying Junior
Subordinated Debentures deemed disposed of. To the extent the selling price is
less than the holder's adjusted tax basis (which will include, in the form of
OID, all accrued but unpaid interest), a holder will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"United States Federal Income Taxation -- Original Issue Discount."
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with the
Company's financial statements with the Preferred Securities accounted for and
captioned in the consolidated balance sheet directly above stockholders' equity
as "Company-obligated mandatorily redeemable preferred securities of a
subsidiary holding solely Company subordinated debentures."
USE OF PROCEEDS
The proceeds from the sale of the Preferred Securities will be invested by
the Trust in Junior Subordinated Debentures of Fremont General. The net proceeds
from the sale of the Junior Subordinated Debentures are expected to be used by
Fremont General for general corporate purposes, including repayment of
indebtedness of approximately $50 million, investments in the Company's
subsidiaries or the possible acquisition of or investment in complementary
businesses. The indebtedness repaid will consist of approxi-
14
<PAGE> 17
mately $50 million of the Company's variable rate bank debt, which was incurred
to finance the Casualty acquisition and is due in 2001. The interest rate
payable on this debt at September 30, 1995 was 6.33%. The Company routinely
reviews opportunities to make acquisitions or investments; however, the Company
currently has no commitments, agreements or understandings to acquire or invest
in any specific business. Pending such uses, the Company intends to invest the
net proceeds of this offering in short-term, interest-bearing, investment-grade
securities.
15
<PAGE> 18
CAPITALIZATION OF FREMONT GENERAL
The following table sets forth the consolidated capitalization of the
Company as of September 30, 1995 actual and as adjusted to give effect to the
issuance and sale of the Preferred Securities offered hereby and the application
of the net proceeds therefrom. See "Use of Proceeds."
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
--------------------------
AS
ACTUAL ADJUSTED(1)
---------- -----------
(UNAUDITED)
<S> <C> <C>
(THOUSANDS OF DOLLARS)
Long-term debt:
Variable Rate Asset Backed Certificates........................... $ 330,000 $ 330,000
$200 million Credit Facility due 2001............................. 70,000 20,000
$300 million Senior Revolving Credit Facility due 1998............ 190,000 190,000
$373,750,000 principal amount at maturity Liquid Yield Option(TM)
Notes
due 2013....................................................... 149,667 149,667
Other notes payable............................................... 6,641 6,641
---------- ----------
Total long-term debt........................................... 746,308 696,308
Company-obligated mandatorily redeemable preferred securities of a
subsidiary holding solely Company subordinated debentures(2)...... -- 100,000
Stockholders' equity:
Preferred stock, $.01 par value, 2,000,000 shares authorized, none
outstanding.................................................... -- --
Common stock, $1.00 par value, 30,000,000 shares authorized,
16,929,010 shares issued and outstanding(3).................... 16,929 16,929
Additional paid-in capital........................................ 118,280 118,280
Retained earnings................................................. 332,308 332,308
Unearned Employee Stock Ownership Plan shares..................... (6,612) (6,612)
Net unrealized loss on investments, net of deferred taxes......... (7,060) (7,060)
---------- ----------
Total stockholders' equity..................................... 453,845 453,845
---------- ----------
Total capitalization...................................... $1,200,153 $ 1,250,153
========== ==========
</TABLE>
- ---------------
(1) Reflects receipt and application of the estimated net proceeds from the sale
of the Preferred Securities offered hereby. See "Use of Proceeds."
(2) As described in this Prospectus, the sole assets of the Trust will be the
% Junior Subordinated Debentures due , 20 of Fremont
General with a principal amount of $ , and upon redemption of such
debt the Preferred Securities will be mandatorily redeemable.
(3) Excludes 1,217,269 shares of Common Stock reserved for issuance upon the
exercise of outstanding options pursuant to the Company's stock option plan
as of September 30, 1995 and 4,805,640 shares of Common Stock issuable upon
the conversion of the Company's $373,750,000 principal amount at maturity
Liquid Yield Option(TM) Notes due 2013 (the "LYONs").
16
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
Except as provided below, the following table sets forth certain selected
financial data for, and as of the end of, each of the years in the five-year
period ended December 31, 1994 as derived from the consolidated financial
statements of the Company and related notes thereto, which have been audited by
the Company's independent auditors. The table also sets forth certain selected
unaudited financial data for, and as of the end of, each of the nine months
ended September 30, 1994 and 1995 as derived from the unaudited consolidated
financial statements of the Company and related notes thereto. This selected
consolidated financial data should be read in conjunction with "Recent
Developments" and with the Consolidated Financial Statements and related notes
incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- -------------------
1990(1) 1991 1992 1993 1994 1994 1995(2)
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA, RATIOS AND PERCENTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Property and casualty premiums earned......... $411,403 $413,156 $411,956 $455,765 $433,584 $329,343 $457,694
Net investment income......................... 82,992 73,796 70,820 77,198 76,821 58,962 85,842
Loan interest income.......................... 50,191 60,685 73,310 87,244 113,382 77,405 120,928
Realized investment gains (losses)............ 92 5,290 16,208 2,165 (315) 120 8
Other revenue................................. 28,712 28,247 26,399 29,033 29,676 21,969 26,179
-------- -------- -------- -------- -------- -------- --------
Total revenues.......................... $573,390 $581,174 $598,693 $651,405 $653,148 $487,799 $690,651
======== ======== ======== ======== ======== ======== ========
Property and casualty income.................. $ 46,805 $ 37,946 $ 45,187 $ 52,092 $ 61,265 $ 45,671 $ 60,048
Financial services income..................... 1,001 9,340 14,878 21,456 28,014 21,033 25,838
Other interest and corporate expense.......... (8,801) (6,277) (11,484) (9,200) (7,708) (5,380) (13,036)
-------- -------- -------- -------- -------- -------- --------
Income before taxes, discontinued operations,
extraordinary items and cumulative effect of
accounting change........................... 39,005 41,009 48,581 64,348 81,571 61,324 72,850
Income tax expense............................ (12,888) (8,878) (13,381) (21,638) (25,759) (19,665) (23,512)
Discontinued operations and extraordinary
items....................................... 711 (964) -- -- -- -- --
Cumulative effect of accounting change for
income taxes................................ -- -- 43,509 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income.................................... $ 26,828 $ 31,167 $ 78,709 $ 42,710 $ 55,812 $ 41,659 $ 49,338
======== ======== ======== ======== ======== ======== ========
PER COMMON SHARE DATA(3):
Cash dividends declared....................... $ 0.48 $ 0.52 $ 0.60 $ 0.65 $ 0.68 $ 0.51 $ 0.57
Stockholders' equity:
Including FASB 115 for 1994 and 1995(4)..... N/A N/A N/A N/A 20.74 20.99 26.81
Excluding FASB 115 for 1994 and 1995(4)..... 12.79 14.68 20.08 21.83 24.60 23.93 27.23
Income before discontinued operations,
extraordinary items and cumulative effect of
accounting change:
Primary..................................... 1.92 2.35 2.57 2.78 3.25 2.42 2.85
Fully diluted............................... 1.80 2.15 2.30 2.48 2.73 2.04 2.38
Net income:
Primary..................................... 1.97 2.28 5.75 2.78 3.25 2.42 2.85
Fully diluted............................... 1.85 2.08 4.94 2.48 2.73 2.04 2.38
RATIO OF EARNINGS TO FIXED CHARGES(5):
Including interest on thrift deposits......... 2.02x 1.97x 2.03x 2.34x 2.29x 2.44x 1.95x
Excluding interest on thrift deposits......... 2.67x 2.72x 2.70x 3.34x 3.34x 3.49x 2.79x
GAAP RATIOS FOR PROPERTY AND CASUALTY
SUBSIDIARIES:
Combined ratio................................ 105.0% 106.0% 105.4% 101.2% 98.0% 98.4% 100.7%
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------------- SEPTEMBER 30,
1990(1) 1991 1992 1993 1994 1995(2)
---------- ---------- ---------- ---------- ---------- -------------
(THOUSANDS OF DOLLARS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets(6)............................ $1,969,347 $1,952,169 $2,070,533 $2,601,183 $3,067,394 $ 4,233,130
Fixed income and other investments......... 773,309 772,947 782,542 1,055,289 888,918 1,749,983
Loans receivable........................... 431,744 519,874 689,443 846,443 1,440,774 1,508,074
Claims and policy liabilities(6)........... 870,909 838,459 812,081 1,007,054 1,012,704 1,915,464
Long-term debt............................. 102,073 101,303 100,572 451,581 468,390 746,308
Stockholders' equity:
Including FASB 115 for 1994 and
1995(4)................................ N/A N/A N/A N/A 351,013 453,845
Excluding FASB 115 for 1994 and
1995(4)................................ 174,828 198,724 271,710 369,369 416,378 460,905
</TABLE>
- ---------------
(1) Fremont General acquired Investors Bancor in 1990 and, in 1989, a majority
ownership in Fremont Pacific Capital Corporation, which owned two workers'
compensation insurance companies. This percentage ownership was increased to
100% at December 1, 1991.
(2) The Company acquired Casualty Insurance Company on February 22, 1995.
(3) Adjusted for a ten percent stock dividend distributed June 1995 and a
three-for-two split of the Common Stock effected June 1993.
(4) Effective January 1994, FASB 115 changed the accounting treatment afforded
the Company's investment portfolio wherein unrealized gains and losses on
securities designated by the Company as available for sale are included, net
of deferred taxes, as a component of stockholders' equity.
(5) The ratio of earnings to fixed charges is expressed as the ratio of income
before income taxes, discontinued operations, extraordinary items,
cumulative effects of accounting changes and fixed charges to fixed charges.
Fixed charges consist principally of interest expense and the interest
component of rental expense.
(6) Reflects an increase of approximately $139 million at December 31, 1993 due
to a change in accounting principle.
18
<PAGE> 21
RECENT DEVELOPMENTS
OVERVIEW
Fremont General is a diversified holding company engaged through
subsidiaries in selected insurance and financial service businesses. The Company
is one of the largest mono-line workers' compensation insurer in the United
States, with major market positions in California and Illinois, and a presence
in Arizona, Indiana, Michigan and Wisconsin. For the first nine months of 1995,
the Company's workers' compensation insurance premiums were approximately evenly
distributed between the Western and the Midwestern regions. For the year ended
December 31, 1994 and the nine months ended September 30, 1995, the Company had
workers' compensation insurance premiums earned of $401 million and $433
million, respectively. The Company recently expanded its workers' compensation
operations through the acquisition on February 22, 1995 of Casualty and its
wholly owned subsidiary WCIC. Casualty is the largest underwriter of workers'
compensation insurance in Illinois with additional operations directly or
indirectly in Indiana, Michigan and Wisconsin. Fremont General believes that
this acquisition provides the Company with a national platform upon which to
build its workers' compensation business, while providing greater geographic
diversification. A.M. Best rates the Company's workers' compensation insurance
subsidiaries on a consolidated basis as "A-" (Excellent).
The Company also has growing financial services operations engaged
principally in commercial finance lending, principally to middle market
companies nationwide, and residential and commercial real estate lending in
California. The Company's financial services loan portfolio has grown from $536
million at December 31, 1991 to $1.5 billion at September 30, 1995. By engaging
in several selected businesses which are geographically diverse the Company
believes it can achieve greater stability in its operating results. Over the
five years ended December 31, 1994, the Company's income before taxes grew at
compound annual rates of approximately 20% to $82 million in 1994. The Company's
book value increased from $165 million at December 31, 1989 to $454 million at
September 30, 1995. The Company's assets exceeded $4 billion at September 30,
1995.
The Casualty acquisition has resulted in the Company's revenues approaching
parity between the Western and Midwestern regions, which the Company believes
mitigates potential fluctuations in earnings resulting from cyclical downturns
in various industries or regional economies. For the nine-months ended September
30, 1995, the Company's workers' compensation premiums earned in its Western
region, consisting primarily of California, accounted for $228 million, or 53%
of the Company's total workers' compensation premiums earned for such period,
representing a decrease of $77 million from the comparable period in 1994. This
decrease was due primarily to the increased price competition resulting from
California's adoption of an open rating system and the repeal of the minimum
rate law. This increased price competition has led to (i) lower premium rates
and (ii) a lower average policy size due to the Company's shift in focus to
smaller employers. The Company expects that the premiums earned in California
will continue to decrease, principally due to price competition. For the nine
months ended September 30, 1995, the Company's workers' compensation premiums
earned in its Midwestern region, consisting primarily of Illinois, accounted for
$205 million, or 47% of the Company's total workers' compensation premiums
earned.
The Company's balance sheet at September 30, 1995 has also been
significantly impacted by the acquisition of Casualty, which was treated as a
purchase for accounting purposes. The purchase price paid was $250 million,
comprised of $225 million in cash and $25 million in a note payable. The assets
acquired account for the significant increase in the Company's fixed maturity
and non-redeemable preferred stock portfolios at September 30, 1995 as compared
to December 31, 1994.
The Company's medical malpractice insurance operation predominantly writes
standard professional liability insurance for physicians and other healthcare
providers, primarily in California. The Company has been able to maintain its
premium volume and achieve favorable loss experience through selective
underwriting.
The Company manages its investments internally. As of September 30, 1995,
substantially all of the securities in the portfolio were rated investment
grade. Using Standard and Poor's Corporation, Moody's Investors Service, Inc.
and Fitch Investor Services rating services, approximately 65% were rated "A" or
higher, approximately 35% were rated "BBB" and less than 1% were rated "BB" as
of September 30, 1995. These investment securities had an approximate fair value
of $624 million and $1.5 billion at December 31,
19
<PAGE> 22
1994 and September 30, 1995, respectively, which was below amortized cost by
approximately $108 million and $11 million, respectively. The Company does not
currently intend to invest in securities rated below investment grade. Included
in the investment portfolio as of September 30, 1995 were inverse variable rate
collateralized mortgage obligations with a fair value of $64 million (amortized
cost of $78 million). These securities, which have a rating of "AAA," represent
4% of the Company's total investment portfolio at September 30, 1995.
Fremont Financial makes commercial finance loans to small and middle market
businesses nationwide. These commercial finance loans are primarily secured by
accounts receivable and inventory. Fremont Financial's total loan portfolio grew
from $189 million at December 31, 1991 to $625 million at September 30, 1995.
This growth has been achieved partly through development of Fremont Financial's
customer base and partly through purchases of loans originated by others. The
lending market has become increasingly competitive for small to middle market
commercial borrowers. As a result, Fremont Financial has experienced decreasing
yields on its commercial finance loans.
In 1990, the Company acquired Fremont I&L, a California thrift and loan
that now serves more than 22,000 customers through its 13 branches. The thrift
and loan operations are primarily engaged in commercial real estate loans with
principal amounts primarily between $1 to $5 million and residential real estate
loans with principal amounts below $300,000. Assets of the thrift and loan
operation grew from $278 million at December 31, 1991 to $957 million at
September 30, 1995, due to increased loan originations and to the purchase of
loans from other financial institutions. The ability of the Company to continue
to originate loans, and of borrowers to repay outstanding loans, may be impaired
by adverse changes in local or regional economic conditions which affect such
areas or by adverse changes in the real estate market in those areas. Such
events could also have a significant adverse impact on the value of such
collateral. If the Company's collateral were to prove inadequate, the Company's
results of operations could be adversely affected.
On December 4, 1995 the Company announced a three-for-two stock split of
its Common Stock for stockholders of record at January 8, 1996.
RESULTS OF OPERATIONS
The following table presents information for the nine months ended
September 30, 1994 and 1995 with respect to the Company's principal lines of
business.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1994 1995
-------- --------
<S> <C> <C>
(UNAUDITED)
(THOUSANDS OF
DOLLARS)
Revenues:
Workers' compensation........................................ $348,758 $504,068
Medical malpractice.......................................... 24,717 26,079
Property and casualty corporate and other.................... 3,379 2,174
-------- --------
Total property and casualty.......................... 376,854 532,321
Financial services........................................... 108,087 157,822
Corporate.................................................... 2,858 508
-------- --------
Total................................................ $487,799 $690,651
======== ========
Income (Loss) Before Taxes:
Workers' compensation........................................ $ 46,062 $ 61,556
Medical malpractice.......................................... 5,533 3,762
Property and casualty corporate and other.................... (5,924) (5,270)
-------- --------
Total property and casualty.......................... 45,671 60,048
Financial services........................................... 21,033 25,838
Corporate.................................................... (5,380) (13,036)
-------- --------
Total................................................ $ 61,324 $ 72,850
======== ========
</TABLE>
The Company generated revenues of approximately $691 million in the nine
months ended September 30, 1995, as compared to $488 million for the same period
in 1994. The 42% increase in revenues is due
20
<PAGE> 23
primarily to higher workers' compensation premiums and net investment income.
The higher workers' compensation premiums earned and net investment income are
due primarily to the acquisition of Casualty, partially offset by lower premiums
earned in California. Realized investment gains in the nine months ended
September 30, 1995 were $8,000, compared to $120,000 for the same period in
1994.
Net income for the nine months ended September 30, 1995 was $49.3 million
or $2.85 per share compared to $41.7 million or $2.42 per share for the same
period in 1994. For the nine months ended September 30, 1995, income before tax
was $72.9 million compared to $61.3 million for the same period in 1994,
representing an increase of 19% in the nine months ended September 30, 1995.
Workers' compensation insurance operations posted income before taxes of
$61.6 million for the nine months ended September 30, 1995 as compared to $46.1
million for the same period in 1994. The increase in income before taxes of 34%
for the nine month periods is due primarily to the acquisition of Casualty,
offset partially by lower income on the Company's California business. The GAAP
combined ratio for the nine months ended September 30, 1995 was 100.6% compared
to 98.2% for the same period in 1994.
Medical malpractice insurance operations recorded income before tax of $3.8
million for the nine months ended September 30, 1995 as compared to $5.5 million
for the same period in 1994. The lower pre-tax income in 1995 is due primarily
to an increase in the frequency of reported claims as compared to the same
period in 1994.
The financial services operations posted an increase in income before taxes
for the nine months ended September 30, 1995 of 23% as compared to the same
period in 1994. This segment, which primarily includes commercial finance and
thrift and loan operations, recorded income before taxes of $25.8 million for
the nine months ended September 30, 1995 as compared to $21.0 million for the
same period in 1994. These increases are due primarily to the significant growth
in the average loan portfolio from $1.0 billion at September 30, 1994, to $1.5
billion at September 30, 1995. Contributing to this growth in the loan portfolio
is the acquisition of approximately $120 million in commercial real estate loan
portfolios which were completed during the period from September 30, 1994 to
September 30, 1995.
The Company's property and casualty corporate and other segment is composed
of miscellaneous revenues and expenses associated with the Company's downstream
property and casualty insurance holding company. Since this segment's operations
consist primarily of interest expense and overhead expenses, management does not
expect this segment to operate at a profit.
Corporate revenues during the nine months ended September 30, 1995 and 1994
consisted primarily of investment income, while corporate expenses consisted
primarily of interest expense and general and administrative expense. The
increase in corporate loss before taxes for the nine months ended September 30,
1995 is due primarily to increased interest expense and decreased investment
income. The increase in interest expense is due primarily to additional debt
incurred in the acquisition of Casualty, along with modest increases in
administrative expenses.
Income tax expense of $23.5 million for the nine months ended September 30,
1995 represent an effective tax rate of 32.3% on pre-tax income of $72.9
million. The 1995 effective tax rate is similar to the effective tax rate of
32.1% for the same period in 1994. The Company's effective tax rate was lower
than the enacted federal income tax rate of 35%, due primarily to tax exempt
investment income which reduces the Company's taxable income.
LIQUIDITY AND CAPITAL RESOURCES
The property and casualty insurance operations must have cash and liquid
assets available to meet their obligations to policyholders in accordance with
contractual obligations, in addition to having the funds available to meet
ordinary operating costs. These operations have several sources of funds to meet
their obligations, including cash flow from operations, recoveries from
reinsurance contracts and investment securities. By statute, the majority of the
cash from these operations is required to be invested in investment grade
securities to provide protection for policyholders. The Company invests in fixed
income securities with an objective of providing a reasonable return while
limiting credit and liquidity risk. The Company's
21
<PAGE> 24
investment portfolio had a net unrealized loss of $108 million and $11 million
at December 31, 1994 and September 30, 1995, respectively.
The Company's commercial finance operation funds its lending activities
through an asset securitization program, an unsecured revolving line of credit
with a syndicated bank group and its capital. The securities issued in the asset
securitization program have scheduled maturities of three and four years with
the first scheduled maturity of $200 million in March 1996, but could mature
earlier depending on fluctuations in outstanding balances of loans in the
portfolio and other factors. As of September 30, 1995, $330 million was
outstanding and, up to $470 million in additional asset-backed certificates may
be issued pursuant to a shelf registration statement. The Company's commercial
finance operation has an unsecured revolving line of credit with a syndicated
bank group that presently permits borrowings of up to $300 million, of which
$190 million was outstanding as of September 30, 1995. This credit line is
primarily used to finance assets which are not included in the Company's asset
securitization program. This credit line expires August 1998.
The Company's thrift and loan operation finances its lending activities
primarily through customer deposits, which have grown from $747 million at
December 31, 1994 to $829 million at September 30, 1995. In January 1995,
Fremont I&L became eligible for financing through the Federal Home Loan Bank of
San Francisco ("FHLB"). This financing is available at varying rates and terms.
As of September 30, 1995, $109 million was available under the facility and no
borrowings were outstanding.
As a holding company, Fremont General pays its operating expenses, meets
its other obligations and pays stockholder dividends from its cash on hand,
management fees paid by its subsidiaries and dividends paid by its subsidiaries.
Several of the Company's subsidiaries are subject to California laws that
restrict their ability to distribute dividends. The Company expects that during
the next few years dividends from its subsidiaries will consist primarily of
dividends from its property and casualty subsidiaries and dividends on preferred
stock of its financial service subsidiaries. The maximum amount available for
payment of dividends by the property and casualty subsidiaries during 1995
without prior regulatory approval is approximately $24 million, of which $8
million was paid during the first nine months of 1995.
To facilitate general corporate operations, the Company has obtained a
revolving line of credit with a syndicated bank group that permits borrowings of
up to $200 million, of which $70 million was outstanding as of September 30,
1995. The Company's Employee Stock Ownership Plan has a term loan of up to $15
million of which $6.6 million was outstanding on September 30, 1995.
On February 22, 1995, the Company completed the acquisition of Casualty
which resulted in the disbursement of funds totaling $250 million, comprised
$225 million in cash and $25 million in a note payable. The cash used to fund
the acquisition included $55 million in borrowings under the Company's existing
line of credit and the remainder from internally generated funds.
The Company believes that its existing cash, bank lines of credit, revenues
from operations and other available sources of liquidity will be sufficient to
satisfy its liquidity needs for the next several years.
22
<PAGE> 25
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, The Chase Manhattan Bank, N.A., a
national banking association, will act as indenture trustee for the Preferred
Securities under the Declaration for purposes of compliance with the provisions
of the Trust Indenture Act. The terms of the Preferred Securities will include
those stated in the Declaration and those made part of the Declaration by the
Trust Indenture Act. The following summary of the principal terms and provisions
of the Preferred Securities does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the Declaration, a copy of which
is filed as an exhibit to the Registration Statement of which this Prospectus is
a part, the Delaware Trust Act and the Trust Indenture Act. As used in this
section, references to "Fremont General" or the "Company" refer to Fremont
General Corporation and not to any of its subsidiaries.
GENERAL
The Declaration authorizes the Regular Trustees to issue the Trust
Securities on behalf of the Trust, which securities represent undivided
beneficial interests in the assets of the Trust. All of the Common Securities
will be owned, directly or indirectly, by Fremont General. The Common Securities
rank pari passu, and payments will be made thereon on a pro rata basis, with the
Preferred Securities, except that upon the occurrence of a Declaration Event of
Default, the rights of the holders of the Common Securities to receive payment
of periodic distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. The Declaration does not permit the issuance by the Trust of any
securities other than the Trust Securities or the incurrence by the Trust of any
indebtedness. Pursuant to the Declaration, the Institutional Trustee will hold
the Junior Subordinated Debentures purchased by the Trust for the benefit of the
holders of the Trust Securities. The payment of distributions out of money held
by the Trust, and payments upon redemption of the Preferred Securities or
liquidation of the Trust, are guaranteed by Fremont General to the extent
described under "Description of the Guarantee." The Guarantee will be held by
The Chase Manhattan Bank, N.A., a national banking association, the Guarantee
Trustee, for the benefit of the holders of the Preferred Securities. The
Guarantee does not cover payment of distributions when the Trust does not have
sufficient available funds to pay such distributions. In such event, the remedy
of a holder of Preferred Securities is to vote to direct the Institutional
Trustee to enforce the Institutional Trustee's rights against Fremont General
under the Junior Subordinated Debentures. See "-- Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of % thereof, compounded quarterly. The term "distribution"
as used herein includes any such interest payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 199 , and will be payable quarterly in arrears on ,
, , and of each year, commencing , 1996,
when, as and if available for payment, distributions will be made by the
Institutional Trustee, except as otherwise described below.
Fremont General has the right under the Indenture to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment
period from time to time on the Junior Subordinated Debentures, which, if
exercised, would defer quarterly distributions on the Preferred Securities
(though such distributions would continue to accrue interest since interest
would continue to accrue on the Junior Subordinated Debentures) during any such
extended interest payment period. Such right to extend the interest payment
period for the Junior Subordinated Debentures is limited to a period not
exceeding 20 consecutive quarters or extending beyond the maturity of the Junior
Subordinated Debentures. In the event that Fremont General exercises this right,
then (a) Fremont General shall not, and shall not allow any of its subsidiaries
(other than its wholly owned subsidiaries) to, declare or pay dividends on, or
make a distribution
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with respect to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock (other than (i) repurchases or
acquisitions of shares of the Common Stock of Fremont General as contemplated by
any employment arrangement, benefit plan or other similar contract with or for
the benefit of employees, officers or directors entered into in the ordinary
course of business, (ii) as a result of an exchange or conversion of any class
or series of Fremont General's capital stock for Fremont General Common Stock,
(iii) the purchase of fractional interests in shares of Fremont General's
capital stock pursuant to the conversion or exchange provisions of such Fremont
General capital stock or the security being converted or exchanged, or (iv) the
payment of any stock dividend by Fremont General payable in Fremont General's
Common Stock) or make any guarantee payments with respect to the foregoing and
(b) Fremont General shall not, and shall not allow any of its subsidiaries to,
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by Fremont General that rank
pari passu with or junior to the Junior Subordinated Debentures except as (i)
required in accordance with the terms thereof (including, in the case of junior
debt, the subordination provisions thereof), (ii) in connection with a
contemporaneous refinancing of such debt securities with the proceeds of a new
issuance of debt securities which have terms and provisions no more favorable to
the holder than those of the debt securities repurchased or refinanced or (iii)
in connection with the contemporaneous conversion or exchange of such debt
securities for Common Stock of Fremont General; provided, however, that in no
event shall the amount to be paid by Fremont General or any of its subsidiaries
under (a) or (b) above exceed in the aggregate $500,000 per year. Prior to the
termination of any such Extension Period, Fremont General may further extend the
interest payment period; provided, that no Extension Period may exceed 20
consecutive quarters or extend beyond the maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, Fremont General may elect to commence a new Extension Period,
subject to the above requirements. See "-- Interest" and "-- Option to Extend
Interest Payment Period" below. If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid to holders of record of
the Preferred Securities as they appear on the books and records of the Trust on
the record date next following the termination of such deferral period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that no Extension Period is then in effect and the Trust has funds
available for the payment of such distributions in the Property Account (as
defined in the Declaration). The Trust's funds available for distribution to the
holders of the Preferred Securities will be limited to payments received from
Fremont General on the Junior Subordinated Debentures. The payment of
distributions out of moneys held by the Trust is guaranteed by Fremont General
to the extent set forth under "Description of the Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day prior to the relevant payment dates. Such
distributions will be paid through the Institutional Trustee who will hold
amounts received in respect of the Junior Subordinated Debentures in the
Property Account for the benefit of the holders of the Trust Securities. Subject
to any applicable laws and regulations and the provisions of the Declaration,
each such payment will be made as described under "--Book-Entry Only
Issuance -- The Depository Trust Company" below. In the event that the Preferred
Securities do not continue to remain in book-entry only form, the Regular
Trustee shall have the right to select relevant record dates, which shall be
more than one Business Day prior to the relevant payment dates. In the event
that any date on which distributions are to be made on the Preferred Securities
is not a Business Day, then payment of the distributions payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such distribution date. A "Business Day" shall mean any day
other than Saturday, Sunday or any other day on which banking institutions in
New York City are permitted or required by any applicable law to close.
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MANDATORY REDEMPTION
The Junior Subordinated Debentures will mature on , 20 , subject
to the election by Fremont General to extend the maturity thereof up to
, 20 , and may be redeemed, in whole or in part, at any time on or
after , 20 , or at any time in certain circumstances upon the
occurrence of a Tax Event. Upon the repayment of the Junior Subordinated
Debentures, whether at maturity or upon acceleration, redemption or otherwise,
the proceeds from such repayment or payment shall simultaneously be applied to
redeem Trust Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Junior Subordinated Debentures so repaid or
redeemed at the Redemption Price; provided that, except in the case of payments
upon maturity, holders of Trust Securities shall be given not less than 30 nor
more than 60 days notice of such redemption. See "Description of the Junior
Subordinated Debentures." In the event that fewer than all of the outstanding
Preferred Securities are to be redeemed, the Preferred Securities will be
redeemed pro rata as described under "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
TAX EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
from independent tax counsel experienced in such matters (a "Dissolution Tax
Opinion") to the effect that, on or after the date of this Prospectus, as a
result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein or (b) any
amendment to, or change in, an interpretation or application of such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after the date of this Prospectus,
there is more than an insubstantial risk that (i) the Trust would be subject to
United States federal income tax with respect to interest accrued or received on
the Junior Subordinated Debentures, (ii) interest payable to the Trust on the
Junior Subordinated Debentures would not be deductible in whole or in part by
Fremont General for United States federal income tax purposes or (iii) the Trust
would be subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
If, at any time, a Tax Event shall occur and be continuing, the Trust
shall, except in the circumstances described below, be dissolved with the result
that Junior Subordinated Debentures with an aggregate principal amount equal to
the aggregate stated liquidation amount of, with an interest rate identical to
the distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, the Trust Securities would be distributed to the
holders of the Trust Securities, in liquidation of such holders' interests in
the Trust on a pro rata basis, within 90 days following the occurrence of such
Tax Event; provided, however, that in the case of the occurrence of a Tax Event,
as a condition of such dissolution and distribution, the Regular Trustees shall
have received an opinion from independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the holders
of the Trust Securities will not recognize any gain or loss for United States
federal income tax purposes as a result of such dissolution of the Trust and the
distribution of the Junior Subordinated Debentures; and, provided, further,
that, if at the time there is available to the Trust the opportunity to
eliminate, within such 90-day period, the Tax Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some other
similar reasonable measure, which has no adverse effect on the Trust, Fremont
General or the holders of the Trust Securities, the Trust will pursue such
measure in lieu of dissolution. Furthermore, if in the case of the occurrence of
a Tax Event, (i) Fremont General has received an opinion (a "Redemption Tax
Opinion") from independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk that Fremont
General would be precluded from deducting the interest on the Junior
Subordinated Debentures for United States federal income tax purposes even after
the Junior Subordinated Debentures were distributed to the holders of Trust
Securities in liquidation of such holders' interests in the Trust as described
above or (ii) the Regular Trustees shall have been informed by such tax counsel
that a No Recognition Opinion cannot be delivered, Fremont General shall have
the right, upon not less than 30 nor more than 60 days notice, to redeem the
Junior Subordinated
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Debentures in whole or in part for cash within 90 days following the occurrence
of such Tax Event, and, following such redemption, Trust Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Debentures so redeemed shall be redeemed by the Trust at the
Redemption Price on a pro rata basis; provided, however, that, if at the time
there is available to Fremont General or the Trust the opportunity to eliminate,
within such 90-day period, the Tax Event by taking some ministerial action, such
as filing a form or making an election, or pursuing some other similar
reasonable measure which has no adverse effect on the Trust, Fremont General or
the holders of the Trust Securities, Fremont General or the Trust will pursue
such measure in lieu of redemption.
If Junior Subordinated Debentures are distributed to the holders of the
Preferred Securities, Fremont General will use its best efforts to have the
Junior Subordinated Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Debentures upon
dissolution of the Trust, (i) the Preferred Securities and Preferred Securities
Guarantee will no longer be deemed to be outstanding, (ii) the depositary or its
nominee, as the record holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution and (iii) any
certificates representing Preferred Securities and Preferred Securities
Guarantee not held by the depositary or its nominee will be deemed to represent
Junior Subordinated Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, such Preferred Securities, until such certificates are
presented to Fremont General or its agent for transfer or exchange.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Trust Securities for all quarterly distribution periods terminating on or prior
to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then by 12:00 noon, New York City
time, on the redemption date, provided that Fremont General has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Junior Subordinated Debentures, the Trust will
irrevocably deposit with the depositary funds sufficient to pay the applicable
Redemption Price and will give the depositary irrevocable instructions and
authority to pay the Redemption Price to the holders of the Preferred
Securities. Thereupon, distributions will cease to accrue on the Preferred
Securities to be redeemed. See "-- Book-Entry Only Issuance -- The Depository
Trust Company." If notice of redemption shall have been given and funds
deposited as required, then immediately prior to the close of business on the
date of such deposit, all rights of holders of such Preferred Securities so
called for redemption will cease, except the right of the holders of such
Preferred Securities to receive the Redemption Price, but without interest on
such Redemption Price. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day. In the event that
payment of the Redemption Price in respect of Preferred Securities is improperly
withheld or refused and not paid either by the Trust or by Fremont General
pursuant to the Preferred Securities Guarantee, distributions on such Preferred
Securities will continue to accrue, from the original redemption
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date to the actual date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed pro rata as
described under "-- Book-Entry Only Issuance -- The Depository Trust Company."
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Fremont General or its
affiliates may, at any time and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each, a "Liquidation"), the holders of
the Preferred Securities will be entitled to receive out of the assets of the
Trust, after satisfaction of liabilities to creditors and expenses of such
Liquidation, distributions in an amount equal to the aggregate of the stated
liquidation amount of $25 per Preferred Security plus accrued and unpaid
distributions thereon to the date of payment (the "Liquidation Distribution"),
unless, in connection with such Liquidation, Junior Subordinated Debentures in
an aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the distribution rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on, the Preferred
Securities have been distributed on a pro rata basis to the holders of the
Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any such
dissolution pro rata with the holders of the Preferred Securities, except that
if a Declaration Event of Default has occurred and is continuing, the Preferred
Securities shall have a preference over the Common Securities with regard to
such distributions.
TERMINATION
Pursuant to the Declaration, the Trust shall terminate upon the earliest of
(i) , 20 , (ii) the certain events of bankruptcy relating to Fremont
General, (iii) the filing of a certificate of dissolution or its equivalent with
respect to Fremont General, the filing of a certificate of cancellation with
respect to the Trust, or the revocation of the charter of Fremont General and
the expiration of 90 days after the date of revocation without a reinstatement
thereof, (iv) the distribution of Junior Subordinated Debentures upon the
occurrence of a Tax Event, (v) upon the redemption of all the Trust Securities
or (vi) upon the entry of a decree of a judicial dissolution of Fremont General
or the Trust.
DECLARATION EVENTS OF DEFAULT
An Indenture Event of Default also constitutes an event of default under
the Declaration with respect to the Trust Securities (a "Declaration Event of
Default"); provided, that pursuant to the Declaration, the holder of the Common
Securities will be deemed to have waived any Declaration Event of Default with
respect to the Common Securities until all Declaration Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated. Until such Declaration Events of Default with respect to the
Preferred Securities have been so cured, waived, or otherwise eliminated, the
Institutional Trustee will be deemed to be acting solely on behalf of the
holders of the Preferred Securities and only the holders of the appropriate
percentage of the Preferred Securities will have the right to direct the
Institutional Trustee with respect to certain matters under the Declaration, and
therefore the Indenture.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debentures will have the
right under the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. Fremont General and
the
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Trust are each required to file annually with the Institutional Trustee an
officer's certificate as to its compliance with all conditions and covenants
under the Declaration.
VOTING RIGHTS
Except as described herein, under the Delaware Trust Act, the Trust
Indenture Act and under "Description of the Guarantee -- Modification of the
Guarantee; Assignment," and as otherwise required by law and the Declaration,
the holders of the Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debentures, to (i) exercise the
remedies available under the Indenture with respect to the Junior Subordinated
Debentures, (ii) waive any past Indenture Event of Default that is waivable
under Section of the Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the Junior Subordinated Debentures
shall be due and payable. If the Institutional Trustee fails, after such
direction by the requisite percentage of the holders, to enforce its rights
under the Junior Subordinated Debentures, a record holder of Preferred
Securities may, after such holder's written request to the Institutional Trustee
to enforce such rights, institute a legal proceeding directly against Fremont
General to enforce the Institutional Trustee's rights under the Junior
Subordinated Debentures without first instituting any legal proceeding against
the Institutional Trustee or any other person or entity. The Institutional
Trustee shall notify all holders of the Preferred Securities of any notice of
default received from the Debt Trustee (as defined herein) with respect to the
Junior Subordinated Debentures. Such notice shall state that such Indenture
Event of Default also constitutes a Declaration Event of Default. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee shall not take any of the actions described in
clauses (i), (ii) or (iii) above unless the Institutional Trustee has obtained
an opinion of tax counsel to the effect that, as a result of such action, the
Trust will not fail to be classified as a grantor trust for United States
federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of the Trust Securities voting together as a single class.
The Institutional Trustee shall be under no obligation to take any such action
in accordance with the directions of the holders of the Trust Securities unless
the Institutional Trustee has obtained an opinion of tax counsel to the affect
that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of the holders of Trust Securities generally or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be mailed to each holder of record of Preferred Securities. Each such notice
will include a statement setting forth the following information: (i) the date
of such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents. No
vote or consent of the holders of Preferred Securities will be required for the
Trust to redeem and cancel Preferred Securities or distribute Junior
Subordinated Debentures in accordance with the Declaration.
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Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by Fremont General or any entity directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, Fremont General, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Preferred
Securities were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
Holders of the Preferred Securities will have no rights to appoint or
remove the Fremont Trustees, who may be appointed, removed or replaced solely by
Fremont General as the indirect or direct holder of all of the Common
Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees otherwise
propose to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities, whether by way of
amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or
termination of the Trust other than pursuant to the terms of the Declaration,
then the holders of the Trust Securities voting together as a single class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of at least a majority in
liquidation amount of the Trust Securities affected thereby; provided, that, if
any amendment or proposal referred to in clause (i) above would adversely affect
only the Preferred Securities or the Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of a majority in
liquidation amount of such class of securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the Investment Company Act of
1940, as amended (the "1940 Act").
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State; provided, that (i) such successor entity either (x)
expressly assumes all of the obligations of the Trust under the Trust Securities
or (y) substitutes for the Preferred Securities other securities having
substantially the same terms as the Trust Securities (the "Successor
Securities"), so long as the Successor Securities have a priority at least equal
to that of the Trust Securities rank with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) Fremont General expressly
acknowledges a trustee of such successor entity possessing the same powers and
duties as the Institutional Trustee as the holder of the Junior Subordinated
Debentures, (iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with another organization on
which the Preferred Securities are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization which has been requested
by the Company to rate the Preferred Securities, (v) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), (vi) such successor entity has a
purpose
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identical to that of the Trust, (vii) prior to such merger, consolidation,
amalgamation or replacement, Fremont General has received an opinion of a
nationally recognized independent counsel to the Trust experienced in such
matters (which may rely on an Officer's Certificate of Fremont General as to
matters of fact) to the effect that, (A) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), and (B) following such merger,
consolidation, amalgamation or replacement, neither the Trust nor such successor
entity will be required to register as an investment company under the 1940 Act
and (viii) Fremont General guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the Guarantee
and the Common Securities Guarantee (as defined herein). Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
liquidation amount of the Trust Securities, consolidate, amalgamate, merge with
or into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE-THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Preferred Securities certificates,
representing the total aggregate number of Preferred Securities, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer or pledge beneficial interests in the global
Preferred Securities as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others, such as
securities brokers and dealers, banks and trust companies ("Indirect
Participants") that clear transactions through or maintain a direct or indirect
custodial relationship with a Direct Participant. The rules applicable to DTC
and its Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for each purchase of
the Preferred Securities on DTC's records. The ownership interest of each actual
purchaser of each Preferred Security ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchases, 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 Participants through which the Beneficial Owners
purchased Preferred Securities. Transfers of ownership interests in the
Preferred Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in the Preferred
Securities, except in the event that use of the book-entry system for the
Preferred Securities is discontinued.
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To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred 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 Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities 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.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of each Direct Participant in such Preferred Securities in accordance
with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date for such vote or consent. The Omnibus Proxy assigns Cede &
Co. consenting or voting rights to those Direct Participants to whose accounts
the Preferred Securities are credited on the applicable record date (identified
in a listing attached to the Omnibus Proxy). Fremont General and the Trust
believe that the arrangements among DTC, Direct and Indirect Participants, and
Beneficial Owners will enable the Beneficial Owners to exercise rights
equivalent in substance to the rights that can be directly exercised by a holder
of a beneficial interest in the Trust.
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of DTC,
the Trust or Fremont General, subject to any statutory or regulatory
requirements to the contrary that may be in effect from time to time. Payment of
distributions to DTC is the responsibility of the Trust, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates would be required
to be printed and delivered. Additionally, the Regular Trustees (with the
consent of Fremont General) may decide to discontinue use of the system of
book-entry transfers through DTC (or any successor depositary) with respect to
the Preferred Securities. In that event, certificates for the Preferred
Securities will be printed and delivered.
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Fremont General and the Trust believe to be
reliable, but neither Fremont General nor the Trust takes responsibility for the
accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after default, shall
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exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Preferred Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The holders of Preferred Securities will not be
required to offer such indemnity in the event such holders, by exercising their
voting rights, direct the Institutional Trustee to take any action following a
Declaration Event of Default.
PAYING AGENT
In addition, in the event that the Preferred Securities do not remain in
book-entry only form, the following provisions would apply:
The Institutional Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or Fremont General may require) in respect of any tax or
other government charges that may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a grantor trust for
United States federal income tax purposes. Fremont General is authorized and
directed to conduct its affairs so that the Junior Subordinated Debentures will
be treated as indebtedness of Fremont General for United States federal income
tax purposes. In this connection, Fremont General and the Regular Trustees are
authorized to take any action, not inconsistent with applicable law, the
Declaration or the certificate of incorporation of Fremont General, that each of
Fremont General and the Regular Trustees determine in their discretion to be
necessary or desirable to achieve such end, as long as such action does not
adversely affect the interests of the holders of the Preferred Securities or
vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by Fremont General for the benefit of the holders
of Preferred Securities. The Guarantee will be qualified as an indenture under
the Trust Indenture Act. The Chase Manhattan Bank, N.A., a national banking
association, will act as indenture trustee under the Guarantee (the "Guarantee
Trustee"). The terms of the Guarantee will be those set forth in the Guarantee
and those made part of the Guarantee by the Trust Indenture Act. This summary
does not purport to be 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 of which this
Prospectus is a part, and the Trust Indenture Act. The Guarantee will be held by
the Guarantee Trustee for the benefit of the holders of the Preferred
Securities. The Guarantee does not cover payment of distributions when the Trust
does not have sufficient available funds to pay such distributions. In such
event, the remedy of a holder of Preferred Securities is to vote to direct the
Institutional Trustee to enforce the Institutional Trustee's rights against
Fremont General under the Junior Subordinated
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Debentures. As used in this section references to "Fremont General" or the
"Company" refer only to Fremont General Corporation and not to any of its
subsidiaries.
GENERAL
Pursuant to the Guarantee, Fremont General will irrevocably and
unconditionally agree, to the extent set forth herein, to pay in full to the
holders of the Preferred Securities, the Guarantee Payments (as defined herein)
(except to the extent paid by the Trust), as and when due, regardless of any
defense (other than payment), right or set-off or counterclaim that the Trust
may have or assert. The following amounts with respect to the Preferred
Securities (the "Guarantee Payments"), to the extent not paid by the Trust, will
be subject to the Guarantee (without duplication): (i) any accrued and unpaid
distributions that are required to be paid on the Preferred Securities, to the
extent the Trust shall have funds available therefor, which funds would exist
only to the extent Fremont General has made a payment of interest or principal
on the Junior Subordinated Debentures, (ii) the Redemption Price to the extent
the Trust has funds available therefor with respect to any Preferred Securities
called for redemption by the Trust, which funds would exist only to the extent
Fremont General has paid the redemption price for the Junior Subordinated
Debentures called for redemption and (iii) upon a voluntary or involuntary
liquidation, dissolution, winding-up termination of the Trust (other than in
connection with the distribution of Junior Subordinated Debentures of Fremont
General to the holders of Preferred Securities or the redemption of all the
Preferred Securities upon maturity or redemption of the Junior Subordinated
Debentures), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment to the extent the Trust has funds available therefor or (b) the amount
of assets of the Trust remaining available for distribution to holders of the
Preferred Securities in liquidation of the Trust. Fremont General's obligation
to make a Guarantee Payment may be satisfied by direct payment of the required
amounts by Fremont General to the holders of Preferred Securities or by causing
the Trust to pay such amounts to such holders.
The Guarantee will be a full and unconditional guarantee with respect to
the Preferred Securities from the time of issuance, but will not apply to any
payment of distributions except to the extent the Trust shall have funds
available therefor. If Fremont General does not make interest payments on the
Junior Subordinated Debentures purchased by the Trust, the Trust will not pay
distributions on the Preferred Securities and will not have funds available
therefor. See "Description of Junior Subordinated Debentures -- Certain
Covenants."
Fremont General and the Trust believe that the rights of the holders of the
Preferred Securities and the obligations of Fremont General under the
Declaration, the Guarantee, the Preferred Securities, the Indenture and the
Junior Subordinated Debentures will collectively provide the substantial
equivalent of a full and unconditional guarantee by Fremont General of payments
due on the Preferred Securities.
Fremont General has also agreed to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Common Securities
(the "Common Securities Guarantee") to the same extent as the Guarantee, except
that, upon an Indenture Event of Default, holders of Preferred Securities under
the Guarantee shall have priority over holders of Common Securities under the
Common Securities Guarantee.
CERTAIN COVENANTS OF FREMONT GENERAL
In the Guarantee, Fremont General will covenant that, so long as any
Preferred Securities issued by the Trust remain outstanding, if there shall have
occurred any event that would constitute an Indenture Event of Default or an
event of default under the Guarantee or the Declaration, then (a) Fremont
General shall not, and shall not allow any of its subsidiaries (other than its
wholly owned subsidiaries) to, declare or pay dividends on, or make a
distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
repurchases or acquisitions of shares of the Common Stock of Fremont General as
contemplated by any employment arrangement, benefit plan or other similar
contract with or for the benefit of employees, officers or directors entered
into in the ordinary course of business, (ii) as a result of an exchange or
conversion of any class or series of Fremont General's capital stock for Fremont
General's Common Stock, (iii) the purchase of fractional interests in shares of
Fremont General's capital stock pursuant to the conversion or exchange
provisions of such Fremont General capital
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stock or the security being converted or exchanged, or (iv) the payment of any
stock dividend by Fremont General with respect to which the dividend stock is
either the Common Stock) or make any guarantee payments with respect to the
foregoing and (b) Fremont General shall not, and shall not allow any of its
subsidiaries to, make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by Fremont General
that rank pari passu with or junior to the Junior Subordinated Debentures except
as (i) required in accordance with the terms thereof (including, in the case of
junior debt, the subordination provisions thereof), (ii) in connection with a
contemporaneous refinancing of such debt securities with the proceeds of a new
issuance of debt securities which have terms and provisions no more favorable to
the holder than those of the debt securities repurchased or refinanced or (iii)
in connection with the contemporaneous conversion or exchange of such debt
securities for Common Stock of Fremont General; provided, however, that in no
event shall the amount to be paid by Fremont General or any of its subsidiaries
under (a) or (b) above exceed in the aggregate $500,000 per year.
MODIFICATIONS OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of the Preferred Securities (in which case no vote will be required),
the Guarantee may be amended only with the prior approval of the holders of not
less than a majority in liquidation amount of the Preferred Securities then
outstanding. All guarantees and agreements contained in a Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of Fremont
General and shall inure to the benefit of the holders of the Preferred
Securities then outstanding.
EVENTS OF DEFAULT
An Event of Default under the Guarantee will occur upon the failure of
Fremont General to make any of the payments required by the Guarantee or to
perform its other obligations thereunder subject to the materiality limits and
grace periods set forth therein. The holders of a majority in liquidation amount
of the Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Fremont General will be required to provide annually to the Guarantee
Trustee a statement as to the performance by Fremont General of certain of its
obligations under the Guarantee and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after such default with respect to a Guarantee,
shall exercise the same degree of care a prudent person would exercise under the
circumstances in the conduct of his or her own affairs. Subject to such
provision, the Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by the Guarantee at the request of any holder of the
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to the Preferred Securities upon full
payment of the Redemption Price of all Preferred Securities, upon distribution
of the Junior Subordinated Debentures of Fremont General held by the Trust to
the holders of the Preferred Securities or upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Trust. The
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities must restore payment of
any sums paid under the Preferred Securities or the Guarantee.
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STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of Fremont General
and will rank (i) subordinate and junior in right of payment to all other
liabilities of Fremont General (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by Fremont General and with any
guarantee now or hereafter entered into by Fremont General in respect of any
preferred or preference stock of any affiliate of Fremont General and (iii)
senior to Fremont General's Common Stock. The terms of the Preferred Securities
provide that each holder of Preferred Securities by acceptance thereof agrees to
the subordination provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection
only (that is, the guaranteed party may institute a legal proceeding directly
against Fremont General as the guarantor to enforce its rights under the
Guarantee without instituting a legal proceeding against any other person or
entity).
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the
internal laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of the Trust Securities. The following description does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture, dated as of , 199 (the "Indenture"),
between Fremont General and First Interstate Bank of California, a California
banking corporation, as Trustee (the "Debt Trustee"), the form of which is filed
as an Exhibit to the Registration Statement of which this Prospectus is a part.
Certain capitalized terms used herein are defined in the Indenture. As used in
this section, references to "Fremont General" or the "Company" refer only to
Fremont General Corporation and not to any of its subsidiaries.
Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Tax Event, Junior Subordinated Debentures may be
distributed to the holders of the Trust Securities in liquidation of the Trust.
See "Description of the Preferred Securities -- Tax Event Redemption or
Distribution."
If the Junior Subordinated Debentures are distributed to the holders of the
Preferred Securities, Fremont General will use its best efforts to have the
Junior Subordinated Debentures listed on the New York Stock Exchange or on such
other national securities exchange or similar organization on which the
Preferred Securities are then listed or quoted.
GENERAL
The Junior Subordinated Debentures will be issued as unsecured debt under
the Indenture. The Junior Subordinated Debentures will be limited in aggregate
principal amount to approximately $ ,000,000 ($ ,000,000 if the
over-allotment option is exercised in full), such amount being the sum of the
aggregate stated liquidation of the Preferred Securities and the capital
contributed by Fremont General in exchange for the Common Securities (the
"Fremont Payment").
The Junior Subordinated Debentures are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and Additional
Interest (as defined herein), if any, on , 20 , subject to the
right of Fremont General to elect to extend the scheduled maturity date of the
Junior Subordinated Debentures to a date not later than , 20 ,
which election may be made only once and is subject to Fremont General's
satisfying certain financial covenants and conditions. See "-- Option to Extend
Maturity Date."
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, such Junior
Subordinated Debentures will initially be issued as a Global Security (as
defined herein). As described herein, under certain limited circumstances,
Junior Subordinated
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Debentures may be issued in certificated form in exchange for a Global Security.
See "--Book-Entry and Settlement" below. In the event that Junior Subordinated
Debentures are issued in certificated form, such Junior Subordinated Debentures
will be in denominations of $25 and integral multiples thereof and may be
transferred or exchanged at the offices described below. Payments on Junior
Subordinated Debentures issued as a Global Security will be made to DTC, a
successor depositary or, in the event that no depositary is used, to a Paying
Agent for the Junior Subordinated Debentures. In the event Junior Subordinated
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Junior Subordinated Debentures will be registrable
and Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures of other denominations of a like aggregate principal amount at the
corporate trust office of the Institutional Trustee in New York, New York;
provided, that payment of interest may be made at the option of Fremont General
by check mailed to the address of the persons entitled thereto.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinated and junior in right of payment to all Senior Indebtedness (as
defined below) of Fremont General. No payment of principal (including redemption
payments), premium, if any, or interest on the Junior Subordinated Debentures
may be made if (i) any Senior Indebtedness of Fremont General is not paid when
due, (ii) any applicable grace period with respect to any default under the
Senior Indebtedness has ended and such default has not been cured or waived or
ceased to exist or (iii) the maturity of any Senior Indebtedness of Fremont
General has been accelerated because of a default with respect to such Senior
Indebtedness. Upon any distribution of assets of Fremont General to creditors
upon any dissolution, winding-up, liquidation or reorganization, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership or other
proceedings, all principal, premium, if any, and interest due or to become due
on all Senior Indebtedness of Fremont General must be paid in full before the
holders of Junior Subordinated Debentures are entitled to receive or retain any
payment. Upon satisfaction of all claims of all Senior Indebtedness then
outstanding, the rights of the holders of the Junior Subordinated Debentures
will be subrogated to the rights of the holders of Senior Indebtedness of
Fremont General to receive, pro rata with any holders of indebtedness of Fremont
General ranking pari passu with the Junior Subordinated Debentures, payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Junior Subordinated Debentures are paid in full.
The term "Senior Indebtedness" means, with respect to Fremont General, (i)
the principal, premium, if any, and interest in respect of (A) indebtedness of
Fremont General, for money borrowed and (B) indebtedness evidenced by
securities, debentures, bonds or other similar instruments issued by Fremont
General, including, without limitation, all obligations under the Company's $200
million Credit Facility due 2001, $300 million Senior Revolving Credit Facility
due 1998, LYONs, Variable Rate Asset Backed Certificates, and certain other
notes payable, short term debt and open letters of credit of the Company
currently outstanding, (ii) all capital lease obligations of Fremont General,
(iii) all obligations of Fremont General issued or assumed as the deferred
purchase price of property, all conditional sale obligations of Fremont General
and all obligations of Fremont General under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business),
(iv) all obligations of Fremont General for the reimbursement on any letter of
credit, banker's acceptance, security purchase facility or similar credit
transaction, (v) all obligations arising under any rate or basis swap, forward
contract, commodity swap or option, equity or equity index swap or option, bond,
note or bill option, interest rate option, foreign currency exchange
transaction, crosscurrency rate swap, currency option, cap, collar or floor
transaction, swap option, synthetic trust product, synthetic lease or any
similar transaction or agreement, (vi) all obligations of the type referred to
in clauses (i) through (v) above of other persons for the payment of which
Fremont General is responsible or liable as obligor, guarantor or otherwise and
(vii) all obligations of the type referred to in clauses (i) through (vi) above
of other persons secured by any lien on any property or asset of Fremont General
(whether or not such obligation is assumed by such obligor), except for (1) any
such indebtedness that is by its terms subordinated to or pari passu with the
Junior Subordinated Debentures, and (2) any indebtedness between or among
Fremont General or its affiliates, including all other debt securities and
guarantees in respect of those debt securities, issued to any other trust, or a
trustee of such trust, partnership or other entity affiliated with Fremont
General that is a financing vehicle of Fremont General (a "financing
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entity") in connection with the issuance by such financial entity of Preferred
Securities or other securities that rank pari passu with, or junior to, the
Preferred Securities. Such Senior Indebtedness shall continue to be Senior
Indebtedness and be entitled to the benefits of the subordination provisions
irrespective of any amendment, modification, waiver, refinancing, whether by the
same creditor or group of creditors or a successor creditor or group or
restructuring of any Senior Indebtedness, including any of the foregoing which
increases the principal amount thereof, the interest rate thereon or other
amounts payable in respect thereof, shortens the term to maturity thereof,
enhances the relative priority thereof, requires or establishes sinking fund
payments, guaranties, collateral security or other credit support therefor or
otherwise renders the terms thereof more favorable to the holders thereof.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by Fremont General. As of September 30, 1995, Senior
Indebtedness of Fremont General aggregated approximately $613.9 million
(excluding accrued interest).
CERTAIN COVENANTS
If (i) there shall have occurred any event that would constitute an
Indenture Event of Default or (ii) Fremont General shall be in default with
respect to its payment of any obligations under the Guarantee or the Common
Securities Guarantee, then (a) Fremont General shall not, and shall not allow
any of its subsidiaries (other than its wholly owned subsidiaries) to, declare
or pay dividends on, or make a distribution with respect to, or redeem, purchase
or acquire, or make a liquidation payment with respect to, any of its capital
stock (other than (i) repurchases or acquisitions of shares of the Common Stock
of Fremont General as contemplated by any employment arrangement, benefit plan
or other similar contract with or for the benefit of employees, officers or
directors entered into in the ordinary course of business, (ii) as a result of
an exchange or conversion of any class or series of Fremont General's capital
stock for Fremont General Common Stock, (iii) the purchase of fractional
interests in shares of Fremont General's capital stock pursuant to the
conversion or exchange provisions of such Fremont General capital stock or the
security being converted or exchanged, or (iv) the payment of any stock dividend
by Fremont General payable in Fremont General's Common Stock or the same stock
as that on which the dividend is being paid) or make any guarantee payments with
respect to the foregoing and (b) Fremont General shall not, and shall not allow
any of its subsidiaries to, make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by Fremont
General that rank pari passu with or junior to the Junior Subordinated
Debentures except as (i) required in accordance with the terms thereof
(including, in the case of junior debt, the subordination provisions thereof),
(ii) in connection with a contemporaneous refinancing of such debt securities
with the proceeds of a new issuance of debt securities which have terms and
provisions no more favorable to the holder than those of the debt securities
repurchased or refinanced or (iii) in connection with the contemporaneous
conversion or exchange of such debt securities for Common Stock of Fremont
General; provided, however, that in no event shall the amount to be paid by
Fremont General or any of its subsidiaries under (a) or (b) above exceed in the
aggregate $500,000 per year.
For as long as the Trust Securities remain outstanding, Fremont General
will covenant (i) to directly or indirectly maintain 100% direct or indirect
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of Fremont General under the Indenture may succeed to
Fremont General's ownership of such Common Securities, (ii) not to cause, as
sponsor of the Trust, or to permit, as holder of the Common Securities, the
dissolution, winding-up or termination of the Trust, except in connection with
certain mergers, consolidations or amalgamations and (iii) to use its reasonable
efforts to cause the Trust (a) to remain a statutory business trust, except in
connection with the distribution of Junior Subordinated Debentures to the
holders of Trust Securities in liquidation of the Trust, the redemption of all
of the Trust Securities of the Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
purposes.
OPTIONAL REDEMPTION
Fremont General shall have the right to redeem the Junior Subordinated
Debentures, in whole or in part, from time to time, on or after ,
20 , or at any time in certain circumstances upon the occurrence
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of a Tax Event as described under "Description of the Preferred Securities--Tax
Event Redemption or Distribution," upon not less than 30 nor more than 60 days
notice, at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest, if
any, to the redemption date. If a partial redemption of the Preferred Securities
resulting from a partial redemption of the Junior Subordinated Debentures would
result in the delisting of the Preferred Securities, Fremont General may only
redeem the Junior Subordinated Debentures in whole.
INTEREST
Each Junior Subordinated Debenture shall bear interest at the rate of %
per annum from the original date of issuance, payable quarterly in arrears on
, , and of each year (each an "Interest
Payment Date"), commencing , 1996, to the person in whose name such
Junior Subordinated Debenture is registered, subject to certain exceptions, at
the close of business on the Business Day next preceding such Interest Payment
Date. In the event the Junior Subordinated Debentures shall not continue to
remain in book-entry only form, Fremont General shall have the right to select
record dates, which shall be more than one Business Day 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 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 per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
OPTION TO EXTEND MATURITY DATE
The maturity date of the Junior Subordinated Debentures is , 20
(the "Scheduled Maturity Date"). Fremont General, however, may, before the
Scheduled Maturity Date, extend such maturity date no more than one time for up
to an additional 19 years from the Scheduled Maturity Date; provided that (a)
Fremont General is not in bankruptcy or otherwise insolvent, (b) Fremont General
is not in default on any Junior Subordinated Debentures issued to the Trust or
to any trustee of the Trust in connection with an issuance of Trust Securities
by the Trust, (c) Fremont General has made timely payments on the Junior
Subordinated Debentures for the immediately preceding six quarters without
deferrals, (d) the Trust is not in arrears on payments of distributions on the
Preferred Securities, (e) the Junior Subordinated Debentures are rated
Investment Grade by any one of Standard & Poor's Corporation, Moody's Investors
Service, Inc. or Fitch Investor Services and (f) the final maturity of such
Junior Subordinated Debentures is not later than the 49th anniversary of the
issuance of the Preferred Securities. Pursuant to the Declaration, the Regular
Trustees are required to give notice of Fremont General's election to extend the
Scheduled Maturity Date to the holders of the Preferred Securities.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Fremont General shall have the right at any time, and from time to time,
during the term of the Junior Subordinated Debentures to defer payments of
interest by extending the interest payment period for a period not exceeding 20
consecutive quarters, at the end of which Extension Period, Fremont General
shall pay all interest then accrued and unpaid (including any Additional
Interest, as herein defined) together with interest thereon compounded quarterly
at the rate specified for the Junior Subordinated Debentures to the extent
permitted by applicable law ("Compound Interest"); provided, that during any
such Extension Period, (a) Fremont General shall not, and shall not allow any of
its subsidiaries (other than its wholly owned subsidiaries) to, declare or pay
dividends on, or make a distribution with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
(other than (i) repurchases or acquisitions of shares of the Common Stock of
Fremont General as contemplated by any employment arrangement, benefit plan or
other similar contract with or for the benefit of employees, officers or
directors
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entered into in the ordinary course of business, (ii) as a result of an exchange
or conversion of any class or series of Fremont General's capital stock for
Fremont General's Common Stock, (iii) the purchase of fractional interests in
shares of Fremont General's capital stock pursuant to the conversion or exchange
provisions of such Fremont General capital stock or the security being converted
or exchanged, or (iv) the payment of any stock dividend by Fremont General
payable in Fremont General's Common Stock or make any guarantee payments with
respect to the foregoing and (b) Fremont General shall not, and shall not allow
any of its subsidiaries to, make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by Fremont
General that rank pari passu with or junior to the Junior Subordinated
Debentures except as (i) required in accordance with the terms thereof
(including, in the case of junior debt, the subordination provisions thereof),
(ii) in connection with a contemporaneous refinancing of such debt securities
with the proceeds of a new issuance of debt securities which have terms and
provisions no more favorable to the holder than those of the debt securities
repurchased or refinanced or (iii) in connection with the contemporaneous
conversion or exchange of such debt securities for Common Stock of Fremont
General, provided, however, that in no event shall the amount to be paid by
Fremont General or any of its subsidiaries under (a) or (b) above exceed in the
aggregate $500,000 per year. Prior to the termination of any such Extension
Period, Fremont General may further defer payments of interest by extending the
interest payment period; provided, that no Extension Period may exceed 20
consecutive quarters or extend beyond the maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, Fremont General may commence a new Extension Period, subject
to the terms set forth in this section. No interest during an Extension Period,
except at the end thereof, shall be due and payable. Fremont General has no
present intention of exercising its right to defer payments of interest by
extending the interest payment period on the Junior Subordinated Debentures. If
the Institutional Trustee shall be the sole holder of the Junior Subordinated
Debentures, Fremont General shall give the Regular Trustees and the
Institutional Trustee notice of its selection of such Extension Period one
Business Day prior to the earlier of (i) the date distributions on the Preferred
Securities are payable or (ii) the date the Regular Trustees are required to
give notice to the New York Stock Exchange (or other applicable self-regulatory
organization) or to holders of the Preferred Securities of the record date or
the date such distribution is payable. The Regular Trustees shall give notice of
Fremont General's selection of such Extension Period to the holders of the
Preferred Securities. If the Institutional Trustee shall not be the sole holder
of the Junior Subordinated Debentures, Fremont General shall give the holders of
the Junior Subordinated Debentures notice of its selection of such Extension
Period ten Business Days prior to the earlier of (i) the Interest Payment Date
or (ii) the date upon which Fremont General is required to give notice to the
New York Stock Exchange (or other applicable self-regulatory organization) or to
holders of the Junior Subordinated Debentures of the record or payment date of
such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, Fremont General will pay as additional interest ("Additional
Interest") such additional amounts as shall be required so that the net amounts
received and retained by the Trust after paying any such taxes, duties,
assessments or other governmental charges will be not less than the amounts the
Trust would have received had no such taxes, duties, assessments or other
governmental charges been imposed.
PAYMENT AND PAYING AGENTS
Payment of principal of any Junior Subordinated Debentures will be made
only against surrender to the Paying Agent of the Junior Subordinated Debenture.
Principal of and interest on Junior Subordinated Debentures will be payable,
subject to any applicable laws and regulations, at the office of such Paying
Agent or Paying Agents as the Trust may designate from time to time, except that
at the option of the Trust payment of any interest may be made by check mailed
to the address of the person entitled thereto as such address shall appear in
the Debenture Register. Payment of interest on a Junior Subordinated Debenture
on any Interest Payment Date will be made to the person in whose name such
Junior Subordinated Debenture (or predecessor security) is registered at the
close of business on the Regular Record Date for such interest payment.
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will act as Paying Agent with respect to the Junior Subordinated
Debentures, Fremont General may at any time designate additional Paying Agents
or rescind the designation of any Paying Agents or approve a change in the
office through which any Paying Agent acts, except that Fremont General will be
required to maintain a Paying Agent at the place of payment.
All moneys paid by Fremont General to a Paying Agent for the payment of the
principal of or premium or interest, if any, on any Junior Subordinated
Debentures which remain unclaimed at the end of two years after such principal
or interest shall have become due and payable will be repaid to Fremont General
and the holder of such Junior Subordinated Debentures will thereafter look only
to Fremont General for payment thereof.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting Fremont General and the Debt
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Debentures, to modify the Indenture;
provided that no such modification may, without the consent of the holder of
each outstanding Junior Subordinated Debenture (or, if the Junior Subordinated
Debentures are held by the Trust, the holders of each of the Preferred
Securities) affected thereby, (i) extend the fixed maturity of any Junior
Subordinated Debentures, 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, or (ii) reduce the percentage of Junior
Subordinated Debenture, the holders of which are required to consent to any such
supplemental indenture.
In addition, Fremont General and the Debt Trustee may execute, without the
consent of the holders of the Junior Subordinated Debentures, any supplemental
indenture to cure any ambiguity, defect or inconsistency, to provide for the
assumption of Fremont General's obligations to holders of the Junior
Subordinated Debentures by a successor corporation, to comply with the Trust
Indenture Act or to effect any change that does not adversely affect the rights
of any holder of the Junior Subordinated Debentures.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events which has occurred and is continuing constitutes an Indenture Event of
Default with respect to the Junior Subordinated Debentures:
(a) failure for days to pay interest on the Junior Subordinated
Debentures, including any Additional Interest in respect thereof, when due;
provided, however, that, during the pendency of an Extension Period, no such
failure shall be deemed to exist with respect to interest payments due during
such Extension Period;
(b) failure to pay principal on the Junior Subordinated Debentures when due
whether at maturity, upon redemption by declaration or otherwise; provided,
however, that the Junior Subordinated Debentures shall not be deemed to have
matured solely by virtue of an extension of their maturity in accordance with
the terms of the Indenture;
(c) failure to observe or perform any other covenant contained in the
Indenture for 90 days after written notice to Fremont General from the Debt
Trustee or the holders of at least 25% in principal amount of the outstanding
Junior Subordinated Debentures;
(d) default under any bond, debenture or any other evidence relating to
indebtedness for money borrowed of Fremont General having an aggregate
outstanding principal amount in excess of $15 million, which default shall have
resulted in such indebtedness being accelerated, without such indebtedness being
discharged or such acceleration having been rescinded or annulled within 30 days
after receipt of notice thereof by Fremont General from the Debt Trustee or by
Fremont General and the Debt Trustee from the holders of not less than 25% in
aggregate principal amount at maturity of the Junior Subordinated Debentures
then outstanding;
(e) certain events in bankruptcy, insolvency or reorganization of Fremont
General; or
(f) the voluntary or involuntary dissolution, winding-up or termination of
the Trust, except in connection with the distribution of Junior Subordinated
Debentures to the holders of Trust Securities in liquidation of the
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Trust, the redemption of all of the Trust Securities of the Trust, or certain
mergers, consolidations or amalgamations, each as permitted by the Declaration.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Debt Trustee.
The Debt Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Debentures may declare the principal
thereof due and payable immediately on default, but the holders of a majority in
aggregate outstanding principal amount of such series may annul such declaration
and waive the default if the default has been cured and a sum sufficient to pay
all matured installments of interest and principal due otherwise than by
acceleration and any applicable premium has been deposited with the Debt
Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive any past default, except (i) a
default in the payment of principal or interest (unless such default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the Debt
Trustee) or (ii) a default in the covenants described in the first paragraph
under "-- Certain Covenants." and in "-- Option to Extend Interest Payment
Period."
In an Event of Default with respect to the Junior Subordinated Debentures
constituting the failure to pay interest or principal on the Junior Subordinated
Debentures on the date such interest or principal is otherwise payable has
occurred and is continuing, then a holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such holder directly of the
principal of or interest on the Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debentures. The holders of Preferred Securities will not be
able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debentures unless the Institutional Trustee fails to do so.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Trust as
a result of the occurrence of a Tax Event, the Junior Subordinated Debentures
will be issued in the form of one or more global certificates (each a "Global
Security") registered in the name of the depositary or its nominee. Except under
the limited circumstances described below, or at Fremont General's discretion
Junior Subordinated Debentures represented by the Global Security will not be
exchangeable for, and will not otherwise be issuable as, Junior Subordinated
Debentures in definitive form. 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.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer or pledge beneficial interests in such a
Global Security.
Except as provided below, unless Fremont General determines in its
discretion to the contrary owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated 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 the Depositary or if such person is not a Participant,
on the procedures of the Participant through which such person owns its interest
to exercise any rights of a holder under the Indenture.
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THE DEPOSITARY
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will act
as securities depositary for the Junior Subordinated Debentures. For a
description of DTC and the specific terms of the depositary arrangements, see
"Description of the Preferred Securities-Book-Entry Only Issuance-The Depository
Trust Company." As of the date of this Prospectus, the description therein of
DTC's book-entry system and DTC's practices as they relate to purchases,
transfers, notices and payments with respect to the Preferred Securities apply
in all material respects to any debt obligations represented by one or more
Global Securities held by Fremont General. Fremont General may appoint a
successor to DTC or any successor depositary in the event DTC or such successor
depositary is unable or unwilling to continue as a depository for the Global
Securities.
None of Fremont General, the Trust, the Institutional Trustee, any paying
agent and any other agent of Fremont General or the Debt Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Junior Subordinated Debentures or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the depositary notifies Fremont General that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, (ii) the depositary, at any time, ceases to be a
clearing agency registered under the Exchange Act at which time the depositary
is required to be so registered to act as such depositary and no successor
Depositary shall have been appointed, (iii) Fremont General, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default with respect to
such Junior Subordinated Debentures. Any Global Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for Junior Subordinated
Debentures registered in such names as the Depositary shall direct. It is
expected that such instructions will be based upon directions received by the
Depositary from its Participants with respect to ownership of beneficial
interests in such Global Security.
CONSOLIDATION, MERGER AND SALE
The Indenture does not contain any covenant which restricts the ability of
Fremont General or the Trust to merge or consolidate with or into any other
corporation, sell or convey all or substantially all of its assets to any
person, firm or corporation or otherwise engage in restructuring transactions.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, Fremont General and the Trust will be
discharged from any and all obligations in respect of the Junior Subordinated
Debentures (except in each case for certain obligations to register the transfer
or exchange of Junior Subordinated Debentures, replace stolen, lost or mutilated
Junior Subordinated Debentures, maintain paying agencies and hold moneys for
payment in trust) if Fremont General deposits with the Debt Trustee, in trust,
moneys or Government Obligations, in an amount sufficient to pay all the
principal of, and interest on, the Junior Subordinated Debentures on the dates
such payments are due in accordance with the terms of such Junior Subordinated
Debentures.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the internal laws of the State of New York.
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INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee, prior to default, undertakes to perform only such duties
as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Debt Trustee
is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Junior Subordinated Debentures, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Debt Trustee is not required to
expand or risk its own funds or otherwise incur personal financial liability in
the performance of its duties if the Debt Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
Fremont General and certain of its affiliates, including the Trust,
maintain a deposit account and banking relationship with the Debt Trustee. The
Debt Trustee serves as trustee under other indentures pursuant to which
unsecured debt securities of Fremont General are outstanding.
MISCELLANEOUS
The Indenture will provide that Fremont General will pay all fees and
expenses related to (i) the offering of the Trust Securities and the Junior
Subordinated Debentures, (ii) the organization, maintenance and dissolution of
the Trust, (iii) the retention of the Fremont Trustees and (iv) the enforcement
by the Institutional Trustee of the rights of the holders of the Preferred
Securities. The payment of such fees and expenses will be fully and
unconditionally guaranteed by Fremont General.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
the Trust, and to invest the proceeds from such issuance and sale in the Junior
Subordinated Debentures.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debentures
will be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii) Fremont
General shall pay all, and the Trust shall not be obligated to pay, directly or
indirectly, any, costs and expenses of the Trust; and (iv) the Declaration
further provides that the Fremont Trustees shall not cause or permit the Trust
to, among other things, engage in any activity that is not consistent with the
purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by Fremont General as and to the extent set forth
under "Description of the Guarantee." If Fremont General does not make interest
payments on the Junior Subordinated Debentures purchased by the Trust, it is
expected that the Trust will not have sufficient funds to pay distributions on
the Preferred Securities. The Guarantee is a full and unconditional guarantee
from the time of its issuance but does not apply to any payment of distributions
unless and until the Trust has sufficient funds for the payment of such
distributions.
If Fremont General fails to make interest or other payments on the Junior
Subordinated Debentures when due (taking account of any Extension Period), the
Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company" and
"-- Voting Rights," may direct the Institutional Trustee to enforce its rights
under the Junior Subordinated Debentures. If the Institutional Trustee fails to
enforce its rights under the Junior Subordinated Debentures, a holder of
Preferred
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Securities may institute a legal proceeding against Fremont General to enforce
the Institutional Trustee's rights under the Junior Subordinated Debentures
without first instituting any legal proceeding against the Institutional Trustee
or any other person or entity. Fremont General, under the Guarantee,
acknowledges that the Guarantee Trustee shall enforce the Guarantee on behalf of
the holders of the Preferred Securities. If Fremont General fails to make
payments under the Guarantee, the Guarantee provides a mechanism whereby the
holders of the Preferred Securities may direct the Guarantee Trustee to enforce
its rights thereunder. If the Guarantee Trustee fails to enforce the Guarantee,
any holder of Preferred Securities may institute a legal proceeding directly
against Fremont General to enforce the Guarantee Trustee's rights under the
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee, or any other person or entity.
Fremont General and the Trust believe that the above mechanisms and
obligations, taken together, provide a full and unconditional guarantee by
Fremont General of payments due on the Preferred Securities. See "Description of
the Guarantee -- General."
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of the
Preferred Securities. Unless otherwise stated, this summary deals only with the
Preferred Securities held as capital assets by holders who purchase the
Preferred Securities upon original issuance. The tax treatment of a holder of
the Preferred Securities may vary depending on his particular situation. This
summary does not address all the tax consequences that may be relevant to
holders who may be subject to special tax treatment such as, for example, banks,
real estate investments trusts, regulated investment companies, insurance
companies, dealers in securities or currencies, tax-exempt investors, or, except
as specifically described herein, foreign taxpayers. In addition, this summary
does not address any aspects of state, local, or foreign laws. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations promulgated thereunder and administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. Each holder should consult its tax
advisor as to the particular tax consequences of acquiring, holding, and
disposing of the Preferred Securities, including the tax consequences under
state, local, or foreign laws.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Junior Subordinated Debentures,
Wilson, Sonsini, Goodrich & Rosati, counsel to Fremont General, has rendered its
opinion generally to the effect that although not entirely free from doubt,
under the current United States federal income tax law and assuming full
compliance with the terms of the Indenture (and certain other documents), and
based on certain facts and assumptions contained in such opinion, the Junior
Subordinated Debentures held by the Trust will be classified for United States
federal income tax purposes as indebtedness of Fremont General. Accordingly,
corporate holders of Preferred Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Preferred Securities.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Preferred Securities, Wilson,
Sonsini, Goodrich & Rosati, counsel to Fremont General and the Trust, will
render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, the Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Preferred Securities will generally be considered the owner of an
undivided interest in the Junior Subordinated Debentures, and
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each holder will be required to include in its gross income any original issue
discount ("OID") accrued with respect to its allocable share of such Junior
Subordinated Debentures.
ORIGINAL ISSUE DISCOUNT
Because Fremont General has the option, under the terms of the Junior
Subordinated Debentures, to defer payments of interest by extending interest
payment periods for up to 20 quarters, all of the stated interests payments on
the Junior Subordinated Debentures will be treated as OID. Holders of debt
instruments issued with OID must include that discount in income on an economic
accrual basis before the receipt of cash attributable to the interest,
regardless of their method of tax accounting. Generally, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures will
be accounted for as OID, and actual distributions of stated interest will not be
separately reported as taxable income. The amount of OID that accrues in any
quarter will approximately equal the amount of the interest that accrues on the
Junior Subordinated Debentures in that quarter at the stated interest rate. In
the event that the interest payment period is extended, holders will continue to
accrue OID approximately equal to the amount of the interest payment due at the
end of the extended interest payment period on an economic accrual basis over
the length of the extended interest period.
MARKET DISCOUNT AND BOND PREMIUM
Holders of Preferred Securities other than a holder who purchased the
Preferred Securities upon original issuance may be considered to have acquired
their undivided interest in the Junior Subordinated Debentures with market
discount or acquisition premium as such terms are defined for United States
federal income tax purposes. Such holders are advised to consult their tax
advisors as to the income tax consequences of the acquisition, ownership and
disposition of the Preferred Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Tax Event Redemption or Distribution," Junior
Subordinated Debentures may be distributed to holders in exchange for the
Preferred Securities and in liquidation of the Trust. Under current United
States federal income tax law, such a distribution would be treated as a
non-taxable event to each holder, and each holder would receive an aggregate tax
basis in the Junior Subordinated Debenture equal to such holder's aggregate tax
basis in its Preferred Securities. A holder's holding period in the Junior
Subordinated Debentures so received in liquidation of the Trust would include
the period during which the Preferred Securities were held by such holder.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Under current United States federal income tax law,
such a redemption would constitute a taxable disposition of the redeemed
Preferred Securities, and a holder would recognize gain or loss as if it sold
such redeemed Preferred Securities for cash. See "-- Sales of Preferred
Securities.
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the Preferred Securities and
the amount realized on the sale of such Preferred Securities. A holder's
adjusted tax basis in the Preferred Securities will generally be its initial
purchase price increased by OID previously includible in such holder's gross
income to the date of disposition and decreased by payments received on the
Preferred Securities. Such gain or loss will generally be a capital gain or loss
and will generally be a long-term capital gain or loss if the Preferred
Securities have been held for more than one year.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who disposes of his Preferred
Securities between record dates for payments of distributions thereon will be
required to include
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accrued but unpaid interest on the Junior Subordinated Debentures through the
date of disposition in income as ordinary income, and to add such amount to his
adjusted tax basis in his pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent that the selling price is less than
the holder's adjusted tax basis (which will include, in the form of OID, all
accrued but unpaid interest) a holder will recognize a capital loss. Subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a nonresident alien individual, a foreign
partnership, or a nonresident fiduciary of a foreign estate or trust.
Under current United States federal income tax law, (i) payments by the
Trust or any of its paying agents to any holder of a Preferred Security who or
which is a United States Alien Holder will not be subject to withholding of
United States federal income tax; provided that, (a) the beneficial owner of the
Preferred Security does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of Fremont General entitled
to vote, (b) the beneficial owner of the Preferred Security is not a controlled
foreign corporation that is related to Fremont General through stock ownership,
and (c) either (A) the beneficial owner of the Preferred Security certifies in a
written statement to the Trust or its agent, under penalties of perjury, that it
is not a United States holder and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"Financial Institution"), and holds the Preferred Securities in such capacity,
certifies to the Trust or its agent, under penalties of perjury, that such
written statement has been received from the beneficial owner by it or by a
financial institution between it and the beneficial owner and furnishes the
Trust or its agent with a copy thereof, and (ii) a United States Alien Holder of
a Preferred Security will not be subject to withholding of United States federal
income tax on any gain realized upon the sale or other disposition of a
Preferred Security.
INFORMATION REPORTING TO HOLDERS
Income on the Preferred Securities will be reported to holders on Forms
1099, which forms should be mailed to holders of Preferred Securities by January
31 following each calendar year.
46
<PAGE> 49
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Dean Witter Reynolds Inc., Goldman, Sachs &
Co., and PaineWebber Incorporated are acting as representatives (the
"Representatives"), has severally agreed to purchase the number of Preferred
Securities set forth opposite its name below. In the Underwriting Agreement, the
several Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all the Preferred Securities offered hereby if any of the
Preferred Securities are purchased. In the event of default by an Underwriter,
the Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of the nondefaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER PREFERRED SECURITIES
-------------------------------------------------------------------- --------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...........................................
Dean Witter Reynolds Inc............................................
Goldman, Sachs & Co.................................................
PaineWebber Incorporated............................................
----------
Total.................................................. 4,000,000
==========
</TABLE>
The Underwriters propose to offer the Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and, in part, to certain securities dealers at
such price less a concession of $ per Preferred Security, provided that
such concession for sales of 10,000 or more Preferred Securities to any single
purchaser will be $ per Preferred Security. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $ per
Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representatives.
In view of the fact that the proceeds from the sale of the Preferred
Securities will ultimately be used to purchase the Junior Subordinated
Debentures, the Underwriting Agreement provides that Fremont General will pay as
compensation ("Underwriters' Compensation") to the Underwriters' arranging the
investment therein of such proceeds, an amount in New York Clearing House (next
day) funds of $ per Preferred Security (or $ in the aggregate)
($ in the aggregate if the Underwriters' over-allotment option is
exercised in full) for the accounts of the several Underwriters; provided that,
such compensation for sales of 10,000 or more Preferred Securities to any single
purchaser will be $ per Preferred Security. Therefore, to the extent of
such sales, the actual amount of Underwriters' Compensation will be less than
the aggregate amount specified in the preceding sentence.
Pursuant to the Underwriting Agreement, the Trust and Fremont General have
granted to the Underwriters an option exercisable for 30 days to purchase up to
an additional 600,000 Preferred Securities at the offering price per Preferred
Security set forth on the cover page hereof, solely to cover over-allotments, if
any, in the sale of the Preferred Securities. Fremont General will pay
Underwriters' Compensation in the amounts per Preferred Security set forth above
with respect to such additional Preferred Securities. To the extent such option
is exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
Preferred Securities as the number set forth
47
<PAGE> 50
next to such Underwriter's name in the preceding table bears to the total number
of Preferred Securities offered by the Underwriters hereby.
During a period of 30 days from the date of this Prospectus, neither
Fremont General nor the Trust will, without the prior written consent of the
Representatives, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any Preferred Securities, any security
convertible into or exchangeable into or exercisable for Preferred Securities or
Junior Subordinated Debentures or any debt securities substantially similar to
the Junior Subordinated Debentures or equity securities substantially similar to
the Preferred Securities (except for the Junior Subordinated Debentures and the
Preferred Securities offered hereby).
Application has been made to list the Preferred Securities on the New York
Stock Exchange. If so approved, trading of the Preferred Securities on the New
York Stock Exchange is expected to commence within a 30-day period after the
initial delivery of the Preferred Securities. The Representatives have advised
the Trust that they intend to make a market in the Preferred Securities prior to
the commencement of trading on the New York Stock Exchange. The Representatives
will have no obligation to make a market in the Preferred Securities, however,
and may cease market making activities, if commenced, at any time.
Prior to this offering there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial
holders.
The Trust and Fremont General have agreed to indemnify the Underwriters
against, or contribute to payments that the Underwriters may be required to make
in respect of, certain liabilities, including liabilities under the Securities
Act of 1933.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, Fremont General and its subsidiaries in the
ordinary course of business.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Certain legal matters will be passed upon for the Underwriters
by Skadden, Arps, Slate, Meagher & Flom, Los Angeles, California.
EXPERTS
The consolidated financial statements of Fremont General at December 31,
1994 and 1993, and for each of the three years in the period ended December 31,
1994, included in Fremont General's Annual Report (Form 10-K) have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. The special purpose
Statement of Assets to be Acquired and Liabilities to be Assumed of the
Specialty Workers' Compensation Business Unit of The Continental Corporation as
of December 31, 1994, and the related special purpose Statement of Underwriting
Gains and Losses for the year then ended appearing in Fremont General's Current
Report on Form 8-K/A have been audited by Ernst & Young LLP, as set forth in
their report included therein and incorporated herein by reference. Such
consolidated financial statements and special purpose financial information
referred to above are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
48
<PAGE> 51
GLOSSARY OF INSURANCE TERMS
The following terms used in this Prospectus have the meanings set forth
below:
Combined ratio............. The sum of the loss ratio, the expense ratio and,
with respect to participating policies of workers'
compensation insurance, the policyholder dividend
ratio, expressed as a percentage. Generally, a
combined ratio below 100% indicates an underwriting
profit and above 100% an underwriting loss.
Expense ratio.............. Policy acquisition costs and other underwriting
expenses, divided by net premiums earned under GAAP
accounting or by net premiums written under
statutory accounting, expressed as a percentage.
GAAP....................... United States generally accepted accounting
principles.
Loss adjustment expenses
("LAE").................. The expenses of investigating and settling claims,
including legal fees and other general expenses of
administrating the claims adjustment process.
Loss ratio................. The ratio of net incurred losses and loss
adjustment expenses to net premiums earned. Net
incurred losses include an estimated provision for
IBNR.
Loss reserves.............. The estimated liability, at a given point in time,
needed to pay reported claims, loss adjustment
expenses and IBNR.
Net premiums earned........ The portion of premiums written applicable to the
expired period of policies after the assumption and
cession of reinsurance.
Net premiums written....... Premiums retained by an insurer, after the
assumption and cession of reinsurance.
Participating policy....... An insurance policy under which the policyholder
may receive a dividend, which is a partial return
of premium after the policy period, subject to
declaration by an insurance company's board of
directors, if, among other factors, the insured had
a favorable loss history during the policy period.
Policy acquisition costs... Agents' and brokers' commissions, premium taxes,
marketing, underwriting, and other expenses
associated with acquiring and retained business.
Policyholder dividend
ratio...................... The ratio of policyholder dividends accrued to net
premiums earned, expressed as a percentage.
Statutory accounting
practices ("SAP").......... Recording transactions and preparing financial
statements in accordance with the rules and
procedures adopted by insurance regulatory
authorities, generally emphasizing solvency
considerations rather than a going concern concept
of accounting.
Underwriting............... The process whereby an insurer reviews applications
submitted for insurance coverage and determines
whether it will provide all or part of the coverage
being requested and at what premium.
Underwriting expense....... The aggregate of policy acquisition costs and the
portion of administrative, general, and other
expenses attributable to insurance underwriting
operations.
Underwriting profit
(loss)..................... The amount of pre-tax income (loss) from insurance
operations, before net investment income and
realized gains (losses).
49
<PAGE> 52
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE TRUST OR
THE UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THE TRUST SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 4
Incorporation of Certain Documents
by Reference........................ 4
Prospectus Summary.................... 5
Risk Factors.......................... 9
Accounting Treatment.................. 14
Use of Proceeds....................... 14
Capitalization of Fremont General..... 16
Selected Consolidated Financial and
Operating Data...................... 17
Recent Developments................... 19
Description of the Preferred
Securities.......................... 23
Description of the Guarantee.......... 32
Description of the Junior Subordinated
Debentures.......................... 35
Effect of Obligations under the Junior
Subordinated Debentures and the
Guarantee........................... 43
United States Federal Income
Taxation............................ 44
Underwriting.......................... 47
Legal Matters......................... 48
Experts............................... 48
Glossary of Insurance Terms........... 49
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
4,000,000
PREFERRED SECURITIES
FREMONT GENERAL
FINANCING I
% TRUST ORIGINATED
PREFERRED SECURITIESSM ("TOPRSSM")
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
FREMONT GENERAL CORPORATION
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED
, 199
------------------------------------------------------
------------------------------------------------------
<PAGE> 53
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than the
underwriting commission, payable by the Registrant in connection with the sale
of Preferred Securities being registered. All amounts are estimates except the
SEC registration fee and the NASD filing fee.
<TABLE>
<CAPTION>
AMOUNT TO BE PAID
-----------------
<S> <C>
SEC registration fee................................................ $ 39,656
NASD filing fee..................................................... 12,000
New York Stock Exchange Additional Listing Fee...................... 45,000
Blue Sky fees and expenses.......................................... 10,000
Printing and engraving expenses..................................... 150,000
Legal fees and expenses............................................. 175,000
Accounting fees and expenses........................................ 50,000
Transfer agent and registrar fees................................... 15,000
Miscellaneous expenses.............................................. 28,344
--------
Total..................................................... $ 525,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada General Corporation Law ("Nevada Law")
provides generally and in pertinent part that a Nevada corporation may indemnify
its directors and officers against expenses, judgments, fines, and settlements
actually and reasonably incurred by them in connection with any civil suit or
action, except actions by or in the right of the corporation, or any
administrative or investigative proceeding if, in connection with the matters in
issue, they acted in good faith and in a manner they reasonably believed to be
in, or not opposed to, the best interests of the corporation, and in connection
with any criminal suit or proceeding, if in connection with the matters in
issue, they had no reasonable cause to believe their conduct was unlawful.
Section 78.751 further provides that, in connection with the defense or
settlement of any action by or in the right of the corporation, a Nevada
corporation may indemnify its directors and officers against expenses actually
and reasonably incurred by them if, in connection with the matters in issue,
they acted in good faith, in a manner they reasonably believed to be in, or not
opposed to, the best interests of the corporation. Section 78.751 further
permits a Nevada corporation to grant its directors and officers additional
rights of indemnification through bylaw provisions or otherwise, provided, that
indemnification may not be made for any claim or matter as to which an officer
or director has been finally adjudged liable unless a court of competent
jurisdiction determines that such person is fairly and reasonably entitled to
indemnity for such expenses.
Section 78.037 of the Nevada Law provides that the articles of
incorporation may contain a provision eliminating or limiting the personal
liability of a director or officer to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director or officer provided
that such provision shall not eliminate or limit the liability of a director or
officer (i) for acts or omission which involve intentional misconduct, fraud, or
a knowing violation of law, or (ii) under Section 78.300 of the Nevada Law
(relating to liability for unauthorized acquisitions or redemptions of, or
dividends on, capital stock).
The Registrant has a policy of directors and officers liability insurance
which insures directors and officers against the cost of defense, settlement or
payment of a judgment under certain circumstances.
Section of the Purchase Agreement (Exhibit 1.1 hereto) provides for
indemnification of directors and officers by the Underwriter in certain
circumstances.
II-1
<PAGE> 54
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1* Form of Purchase Agreement
2.1 Stock Purchase Agreement among Fremont Compensation Insurance Company, the
Registrant, the Buckeye Union Insurance Company, The Continental Corporation and
Casualty Insurance Company, Dated as of December 16, 1994. (Filed as Exhibit No.
2.1 to Current Report on Form 8-K, as of February 22, 1995, Commission File Number
1-8007, and incorporated herein by reference)
2.2 Amendment No. 1 to Stock Purchase Agreement among Fremont Compensation Insurance
Company, the Registrant, the Buckeye Union Insurance Company, The Continental
Corporation and Casualty Insurance Company, Dated as of December 16, 1994. (Filed
as Exhibit No. 2.2 to Current Report on Form 8-K, as of February 22, 1995,
Commission File Number 1-8007, and incorporated herein by reference)
4.1 Form of Indenture among the Registrant, the Trust and First Interstate Bank of
California, a California banking corporation, as trustee
4.2 Form of Declaration of Trust among the Registrant, the Regular Trustees and The
Chase Manhattan Bank (USA), a Delaware banking corporation, as Delaware trustee
4.3 Form of Amended and Restated Declaration of Trust among the Registrant, the
Regular Trustees, The Chase Manhattan Bank (USA), a Delaware banking corporation,
as Delaware trustee, and The Chase Manhattan Bank, N.A., a national banking
association, as Institutional Trustee
4.4 Form of Preferred Securities Guarantee Agreement between the Registrant and The
Chase Manhattan Bank, N.A., a national banking association, as Preferred Guarantee
Trustee
4.5 Form of Common Securities Guarantee Agreement by the Registrant
4.6 Form of Preferred Securities (included in Exhibit 4.3)
4.7 Form of % Junior Subordinated Debenture (included in Exhibit 4.1)
5.1* Opinion of Wilson, Sonsini, Goodrich & Rosati, P.C.
8.1 Opinion of Wilson, Sonsini, Goodrich & Rosati, P.C., with respect to certain tax
matters
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-4)
26.1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The
Chase Manhattan Bank, N.A. as Institutional Trustee, Guarantee Trustee and
Delaware Trustee
26.2 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
First Interstate Bank of California, a California banking corporation, as
Indenture Trustee
28.1 Information from reports provided to state insurance authorities (Filed as an
exhibit to the Registrant's Registration Statement on Form S-3 (File No.
33-59900), and incorporated herein by reference)
</TABLE>
- ---------------
* To be filed by amendment.
II-2
<PAGE> 55
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of the registration statement
in reliance upon Rule 430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of the registration statement as of the time it was
declared effective; (2) for the purpose of determining any liability under the
Securities Act of 1933, each posteffective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 56
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California, on this 1st
day of December, 1995.
FREMONT GENERAL CORPORATION
By: /s/ LOUIS J. RAMPINO
------------------------------------
Louis J. Rampino
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints James A. McIntyre, Louis J.
Rampino and Wayne R. Bailey, and each of them, their true and lawful attorneys
and agents, with full power of substitution, each with power to act alone, to
sign and execute on behalf of the undersigned any and all amendments (including
without limitation any post-effective amendments and amendments thereto) to this
Registration Statement on Form S-3 requests to accelerate this Registration
Statement, and any registration statement for the same offering that is to be
effective under Rule 462(b) of the Securities Act, and to perform any acts
necessary in order to file the same, with all exhibits thereto and other
documents in connection with the Securities and Exchange Commission and each of
the undersigned does hereby ratify and confirm all that said attorneys and
agents, or their or his or her substitutes, shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAMES A> MCINTYRE Chairman of the Board, and Chief December 1, 1995
- ------------------------------ Executive Officer (Principal Executive
James A. McIntyre Officer)
/s/ LOUIS J. RAMPINO President, Chief Operating Officer and December 1, 1995
- ------------------------------ Director
Louis J. Rampino
/s/ WAYNE R. BAILEY Executive Vice President, Treasurer December 1, 1995
- ------------------------------ and Chief Financial Officer (Principal
Wayne R. Bailey Financial Officer)
/s/ JOHN A. DONALDSON Controller (Principal Accounting December 1, 1995
- ------------------------------ Officer)
John A. Donaldson
</TABLE>
II-4
<PAGE> 57
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ HOUSTON I. FLOURNOY Director December 1, 1995
- ------------------------------
Houston I. Flournoy
/s/ C. DOUGLAS KRANWINKLE Director December 1, 1995
- ------------------------------
C. Douglas Kranwinkle
/s/ DAVID W. MORRISROE Director December 1, 1995
- ------------------------------
David W. Morrisroe
/s/ DICKINSON C. ROSS Director December 1, 1995
- ------------------------------
Dickinson C. Ross
/s/ KENNETH L. TREFFTZS Director December 1, 1995
- ------------------------------
Kenneth L. Trefftzs
</TABLE>
II-5
<PAGE> 58
SIGNATURES
Pursuant to the requirements of the Securities Act, Fremont General
Financing I certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on this 1st day of December, 1995.
FREMONT GENERAL FINANCING I
By: Fremont General Corporation, as
Sponsor
By: /s/ LOUIS J. RAMPINO
--------------------------------------
Louis J. Rampino
President
By: Its Regular Trustees
/s/ LOUIS J. RAMPINO
--------------------------------------
Louis J. Rampino, as Trustee
/s/ WAYNE R. BAILEY
--------------------------------------
Wayne R. Bailey, as Trustee
II-6
<PAGE> 59
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------ -------------
<C> <S> <C>
1.1* Form of Purchase Agreement..............................................
2.1 Stock Purchase Agreement among Fremont Compensation Insurance Company,
the Registrant, the Buckeye Union Insurance Company, The Continental
Corporation and Casualty Insurance Company, Dated as of December 16,
1994. (Filed as Exhibit No. 2.1 to Current Report on Form 8-K, as of
February 22, 1995, Commission File Number 1-8007, and incorporated
herein by reference)....................................................
2.2 Amendment No. 1 to Stock Purchase Agreement among Fremont Compensation
Insurance Company, the Registrant, the Buckeye Union Insurance Company,
The Continental Corporation and Casualty Insurance Company, Dated as of
December 16, 1994. (Filed as Exhibit No. 2.2 to Current Report on Form
8-K, as of February 22, 1995, Commission File Number 1-8007, and
incorporated herein by reference).......................................
4.1 Form of Indenture among the Registrant, the Trust and First Interstate
Bank of California, a California banking corporation, as trustee........
4.2 Form of Declaration of Trust among the Registrant, the Regular Trustees
and The Chase Manhattan Bank (USA), a Delaware banking corporation, as
Delaware trustee........................................................
4.3 Form of Amended and Restated Declaration of Trust among the Registrant,
the Regular Trustees, The Chase Manhattan Bank (USA), a Delaware banking
corporation, as Delaware trustee, and The Chase Manhattan Bank, N.A., a
national banking association, as Institutional Trustee..................
4.4 Form of Preferred Securities Guarantee Agreement between the Registrant
and The Chase Manhattan Bank, N.A., a national banking association, as
Preferred Guarantee Trustee.............................................
4.5 Form of Common Securities Guarantee Agreement by the Registrant.........
4.6 Form of Preferred Securities (included in Exhibit 4.3)..................
4.7 Form of % Junior Subordinated Debenture (included in Exhibit
4.1)....................................................................
5.1* Opinion of Wilson, Sonsini, Goodrich & Rosati, P.C......................
8.1 Opinion of Wilson, Sonsini, Goodrich & Rosati, P.C., with respect to
certain tax matters.....................................................
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges..........
23.1 Consent of Ernst & Young LLP............................................
23.2 Consent of KPMG Peat Marwick LLP........................................
23.3 Consent of Counsel (included in Exhibit 5.1)............................
24.1 Power of Attorney (see page II-4).......................................
26.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, N.A. as Institutional Trustee,
Guarantee Trustee and Delaware Trustee..................................
26.2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of First Interstate Bank of California, a California banking
corporation, as Indenture Trustee.......................................
28.1 Information from reports provided to state insurance authorities (Filed
as an exhibit to the Registrant's Registration Statement on Form S-3
(File No. 33-59900), and incorporated herein by reference)..............
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 4.1
FREMONT GENERAL CORPORATION
TO
FIRST INTERSTATE BANK OF CALIFORNIA
a California banking corporation, Trustee
___________________
Indenture
Dated as of December __, 1995
$100,000,000
___% Junior Subordinated Debentures
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Expense Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Extension Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Fremont Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
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<S> <C>
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Parent Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Security Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tax Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . 9
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . 9
SECTION 104. Acts of Holders; Record Dates . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 105. Notices, Etc. to Trustee and the Company . . . . . . . . . . . . . . . . . 11
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . 12
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . 12
SECTION 109. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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SECTION 110. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 111. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 112. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 203. Form of Reverse of Security. . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 204. Form of Trustee's Certificate of Authentication. . . . . . . . . . . . . . 20
ARTICLE THREE
The Securities
SECTION 301. Title and Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . 22
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 305. Registration; Registration of Transfer and Exchange . . . . . . . . . . . . 24
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . 25
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . 26
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 311. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 312. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 313. Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . 30
SECTION 402. Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 403. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 404. Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . . 33
SECTION 405. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 406. Indemnity for U.S. Government Obligations . . . . . . . . . . . . . . . . . 34
ARTICLE FIVE
Remedies
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . 36
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . 37
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . 38
SECTION 505. Trustee May Enforce Claims Without Possession of Securities . . . . . . . . 38
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 508. Unconditional Right of Holders to Receive Principal and Interest . . . . . 39
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . 40
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . 42
SECTION 516. Preferred Security Holders Rights . . . . . . . . . . . . . . . . . . . . . 42
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ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . 42
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . 44
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 607. Compensation; Reimbursement; and Indemnity . . . . . . . . . . . . . . . . 44
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . 45
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . 45
SECTION 610. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . 46
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . 47
SECTION 612. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . 47
SECTION 613. Preferential Collection of Claims Against Company . . . . . . . . . . . . . 48
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . 48
SECTION 702. Preservation of Information; Communications to Holders . . . . . . . . . . 48
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . 50
SECTION 902. Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . . 50
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . 51
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . 52
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . 52
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . 52
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. Payment of Principal and Interest. . . . . . . . . . . . . . . . . . . . . 52
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 1003. Money for Security Payments to Be Held in Trust . . . . . . . . . . . . . . 53
SECTION 1004. Statement by Officers as to Default . . . . . . . . . . . . . . . . . . . . 54
SECTION 1005. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 1006. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 1007. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . 55
SECTION 1008. Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 1009. Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 1010. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE ELEVEN
Subordination of Securities
SECTION 1101. Securities Subordinate to Senior Indebtedness . . . . . . . . . . . . . . . 57
SECTION 1102. Default on Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 1103. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . . . . . . . . 58
SECTION 1104. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1105. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . 60
SECTION 1106. Notice by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
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SECTION 1107. Rights of the Trustee; Holders of Senior Indebtedness . . . . . . . . . . . 61
SECTION 1108. Subordination May Not be Impaired . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE TWELVE
Redemption of Securities
SECTION 1201. Optional Redemption; Conditions to Optional Redemption . . . . . . . . . . 62
SECTION 1202. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1203. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . 63
SECTION 1204. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . . . 63
SECTION 1205. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1206. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1207. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . 64
SECTION 1208. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
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Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- ----------------- -----------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101, 1004
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(b)
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502
512
(a)(1)(B) 513
(a)(2) Not Applicable
(b) 508
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(c) 104(c)
Section 317(a)(1) 503
(a)(2) 504
(b) 1003
Section 318(a) 107
</TABLE>
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INDENTURE, dated as of December __, 1995, between Fremont General
Corporation, a corporation duly organized and existing under the laws of the
State of Nevada (herein called the "Company"), having its principal office at
2020 Santa Monica Boulevard, Suite 600, Santa Monica, California 90404, and
First Interstate Bank of California, a California banking corporation, as
Trustee (herein called the "Trustee"). Unless otherwise defined herein, all
capitalized items used herein shall have the meanings ascribed to them in the
Amended and Restated Declaration of Trust between the Company, as Depositor, and
The Chase Manhattan Bank, N.A., The Chase Manhattan Bank (USA), Louis J.
Rampino and Wayne R. Bailey as trustees, dated as of December __, 1995 (the
"Declaration"), as in effect on the date hereof, and which is incorporated by
reference hereto.
RECITALS OF THE COMPANY
WHEREAS, Fremont Financing (as defined herein) will pursuant
to the Purchase Agreement dated _______, 1995 among the Company, Fremont
Financing and the Underwriters named therein issue $100,000,000 aggregate
liquidation preference of its __% Trust Originated Preferred Securities (the
"Preferred Securities") with a liquidation preference of $25 per Preferred
Security;
WHEREAS, this Indenture is subject to the provisions of the
Trust Indenture Act of 1939, as amended, that are required to be part of this
Indenture and shall, to the extent applicable, be governed by such provisions;
WHEREAS, the Company is guaranteeing the payment of
distributions on the Preferred Securities and the Common Securities,
liquidation preference $25 per Common Security (together with the Preferred
Securities, the "Trust Securities"), of Fremont Financing and payment of the
Redemption Price and payments on liquidation with respect to the Trust
Securities, to the extent provided in the Preferred Securities Guarantee
Agreement and the Common Securities Guarantee Agreement, both dated __________,
1995, by the Company and The Chase Manhattan Bank, N.A., as guarantee trustee
(collectively the "Parent Guarantees") for the benefit of the holders of the
Trust Securities;
WHEREAS, the Company wishes to sell to Fremont Financing, and
Fremont Financing wishes to purchase from the Company, Securities (as defined
below) in an aggregate principal amount of $100,000,000 and in satisfaction of
the purchase price for such Securities, the trustees of Fremont Financing, on
behalf of Fremont Financing, wish to (i) execute and deliver to the Company
Common Securities certificates evidencing an ownership interest in Fremont
Financing, registered in the name of the Company, in an aggregate amount of
___________ Common Securities having an aggregate liquidation amount of up to
$____________, and (ii) deliver to the Company the sum of $_____________;
<PAGE> 12
WHEREAS, the Company has duly authorized the creation of an
issue of its ___% Junior Subordinated Debentures due __ __, 20__ (the
"Securities"), of substantially the tenor and amount hereinafter set forth and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture; and
WHEREAS, all things necessary to make the Securities, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, and to make this
Indenture a valid agreement of the Company, in accordance with their and its
terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holder thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
accepted accounting principles;
(4) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision;
(5) a reference to any Person shall include its
successors and assigns;
(6) a reference to any agreement or instrument shall
mean such agreement or instrument as supplemented, modified, amended
or amended and restated and in effect from time to time;
(7) a reference to any statute, law, rule or regulation,
shall include any amendments thereto applicable to the relevant
Person, and any successor statute, law, rule or regulation; and
(8) a reference to any particular rating category shall
be deemed to include any corresponding successor category, or any
corresponding rating category issued by a successor or subsequent
rating agency.
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"Act," when used with respect to any Holder, has the meaning
specified in Section 104.
"Additional Interest" has the meaning specified in Section
1008.
"Additional Taxes" means the sum of any additional taxes,
duties and other governmental charges to which Fremont Financing has become
subject from time to time as a result of a Tax Event.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate Securities.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board as the context
requires.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday or Sunday
or a day on which banking institutions in The City of New York are authorized
or required by law or executive order to remain closed or a day on which the
Corporate Trust Office of the Trustee, or the principal office of the Property
Trustee, under the Trust Agreement, is closed for business.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
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"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
Vice Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Corporate Trust Office" means the principal office of the
Trustee in the City of New York, at which at any particular time its corporate
trust business shall be administered and which at the date of this Indenture is
________________.
"Covenant Defeasance" has the meaning specified in Section 403.
"Declaration" has the meaning specified in the Recitals.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 402.
"Depositary" means, with respect to Securities issuable in
whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as
Depositary for such Securities.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor legislation.
"Expense Agreement" means the Expense Agreement contemplated
by Section 607.
"Extension Period" has the meaning specified in Section 301.
"Fremont Financing" means the statutory business trust Fremont
General Financing I declared and established pursuant to the Delaware Business
Trust Act by the Trust Agreement.
"Global Security" means a Security that evidences all or part
of the Securities and is authenticated and delivered to, and registered in the
name of, the Depositary for such Securities or a nominee thereof.
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"Holder" means a Person in whose name a Security is registered
in the Security Register.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Institutional Trustee" has the meaning set forth in the
Declaration.
"Interest Payment Date," when used with respect to any
installment of interest on a Security, means the date specified in such
Security as the fixed date on which an installment of interest with respect to
the Securities is due and payable.
"Maturity," when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 1004 shall
be the principal executive, financial or accounting officer of the Company.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
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"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company (and who may be an employee of the Company), and
who shall be reasonably acceptable to the Trustee. An opinion of counsel may
rely on certificates as to matters of fact.
"Outstanding," when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except: (i) Securities theretofore cancelled
by the Trustee or delivered to the Trustee for cancellation; (ii) Securities
for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of such Securities;
provided that, if such Securities are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and (iii) Securities which have been
paid pursuant to Section 306, or in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this Indenture,
other than any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Securities are held
by a bona fide purchaser in whose hands such Securities are valid obligations
of the Company.
"Parent Guarantees" has the meaning specified in the Recitals
to this instrument.
"Paying Agent" means any Person authorized by the Company to
pay the principal of or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Preferred Securities" has the meaning specified in the
Recitals to this instrument.
"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
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<PAGE> 17
"Regular Record Date" for the interest payable on any Interest
Payment Date means the Business Day next preceding such Interest Payment Date.
"Responsible Officer," when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the chairman
or any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of his knowledge of and familiarity
with the particular subject.
"Securities" has the meaning specified in the Recitals to this
instrument.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Senior Indebtedness" means, with respect to the Company,
(i) the principal, premium, if any, and interest in respect of
(A) indebtedness of the Company, for money borrowed and (B) indebtedness
evidenced by securities, debentures, bonds or other similar instruments issued
by the Company, including, without limitation, in the case of the Company,
all obligations under the Company's $200 million Credit Facility due 2001, $300
million Senior Revolving Credit Facility due 1998, LYONs, and Variable Rate
Asset Backed Certificates, and certain other notes payable, short term debt and
open letters of credit of the Company currently outstanding, (ii) all capital
lease obligations of the Company, (iii) all obligations of the Company issued
or assumed as the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of the Company for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction, (v) all obligations of the type
referred to in clauses (i) through (iv) above of other persons for the payment
of which the Company is responsible or liable as obligor, guarantor or
otherwise and (vi) all obligations of the type referred to in clauses (i)
through (v) above of other persons secured by any lien on any property or
asset of the Company (whether or not such obligation is assumed by the
Company), except for (1) any such indebtedness that is by its terms
subordinated to or pari passu with the Securities and (2) any indebtedness
between or among the Company or its affiliates, including all other debt
securities and guarantees in respect of those debt securities, issued to
any other trust, or a trustee of such trust, partnership or other entity
affiliated with the Company that is a financing vehicle of the Company (a
"financing entity") in connection with the issuance by such financial entity
of Preferred Securities or other securities that rank pari passu with, or
junior to, the Preferred Securities. Such Senior Indebtedness shall continue
to be Senior
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<PAGE> 18
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.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or
any installment of interest thereon, means the date specified in such Security
as the date on which the principal, together with any accrued and unpaid
interest (including Additional Interest), of such Security or such installment
of interest is due and payable (whether the initial such date or, if pursuant
to Section 301 the Company elects to extend the Stated Maturity, such later
date as is chosen by the Company pursuant to Section 301).
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
"Tax Event" means the receipt by Fremont Financing of an
Opinion of Counsel experienced in such matters to the effect that, as a result
of (a) any amendment to, or change (including any announced prospective change)
in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or (b) as a
result of any amendment to, or change in an interpretation or application of
such laws or regulations by any legislative body, court, governmental agency
or regulatory authority which amendment or change is enacted, promulgated,
issued or announced or which interpretation or pronouncement is issued or
announced or which action is taken, in each case on or after the date of
issuance of the Preferred Securities), there is more than an insubstantial
risk that (i) Fremont Financing is, or will be within 90 days of the date
thereof, subject to United States Federal income tax with respect to interest
received on the Securities, (ii) interest payable by the Company on the
Securities is not, or within 90 days of the date thereof will not be,
deductible, in whole or in part, for United States Federal income tax
purposes or (iii) Fremont Financing is, or will be within 90 days of the date
thereof, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Trust Securities" has the meaning specified in the Recitals
to this Indenture.
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"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"U.S. Government Obligations" has the meaning specified in
Section 404.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act. Each such certificate or opinion shall be given in
the form of an Officers' Certificate, if to be given by an officer of the
Company, or an Opinion of Counsel, if to be given by counsel, and shall comply
with the requirements of the Trust Indenture Act and any other requirement set
forth in this Indenture.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
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<PAGE> 20
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee at the address specified in Section 105 and, where it
is hereby expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Section 601) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof. Where such execution is by a signer acting in a capacity other than
his individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by
the Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote
on any action, authorized or permitted to be given or taken by Holders. If not
set by the Company prior to the first solicitation of a Holder made by any
Person in respect of any such action, or, in the case of any such vote, prior
to such vote, the record date for any such action or vote shall be the 30th day
(or, if later, the date of the most recent list of Holders required to be
provided pursuant to Section 701) prior to such first solicitation or vote, as
the case may be.
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With regard to any record date, only the Holders on such date (or their duly
designated proxies) shall be entitled to give or take, or vote on, the relevant
action.
(d) The ownership of Securities shall be proved by the
Security Register.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every Security
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
SECTION 105. Notices, Etc. to Trustee and the Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Institutional Trust Group; or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this instrument
or at any other address previously furnished in writing to the Trustee
by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at his address as it appears in the
Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the
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Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 109. Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
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SECTION 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the holders of Senior Indebtedness, the holders of
Preferred Securities (to the extent provided herein) and the Holders of
Securities, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 111. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAW PRINCIPLES THEREOF. THIS INDENTURE IS SUBJECT TO THE
PROVISIONS OF THE TRUST INDENTURE ACT OF 1939, AS AMENDED, THAT ARE REQUIRED TO
BE PART OF THIS INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY
SUCH PROVISIONS.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal of the Securities need not be made on such
date, but may be made on the next succeeding Business Day (except that, if such
Business Day is in the next succeeding calendar year, such Interest Payment
Date, Redemption Date or Stated Maturity, as the case may be, shall be the
immediately preceding Business Day) with the same force and effect as if made
on the Interest Payment Date or Redemption Date, or at the Stated Maturity,
provided that no interest shall accrue for the period from and after such
Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
The Securities and the Trustee's certificates of
authentication shall be in substantially the forms set forth in this Article,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently
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herewith, be determined by the officers executing such Securities, as evidenced
by their execution of the Securities.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these or other methods, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
SECTION 202. Form of Face of Security.
FREMONT GENERAL CORPORATION
__% Junior Subordinated Debenture, Due ____ __, 20__
$_________
No.______
CUSIP No. _________
FREMONT GENERAL CORPORATION, a corporation duly organized and
existing under the laws of the State of Nevada (herein called the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
______________________________, or registered assigns, the principal sum of
________ DOLLARS ($_____) on ____ __, 20__, provided that the Company may
extend the maturity date subject to certain conditions specified in Section 301
of the Indenture, which extended maturity date shall in no case be later than
____ __, 20__, and to pay interest on said principal sum from December __, 1995
or from the most recent interest payment date (each such date, an "Interest
Payment Date") to which interest has been paid or duly provided for, quarterly
(subject to deferral as set forth herein) in arrears on ____ __, ____ __, ____
__ and ____ __ of each year, commencing ____ __, 199_, at the rate of __% per
annum plus Additional Interest, if any, until the principal hereof shall have
become due and payable, and on any overdue principal and (without duplication
and to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the same rate per annum. The
amount of interest payable for any period will be computed on the basis of
twelve 30-day months and a 360-day year. 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 actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on this
Security is not a Business Day, then a payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date the payment was
originally payable. A "Business Day" shall mean any day other than a day on
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which banking institutions in the City of New York are authorized or required
by law or executive order to remain closed or a day on which the Corporate
Trust Office of the Trustee, or the principal office of the Property Trustee
under the Trust Agreement, is closed for business. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities, as defined in the Indenture)
is registered at the close of business on the Regular Record Date for such
interest installment, which shall be the close of business on the Business Day
next preceding such Interest Payment Date. Any such interest installment not
so punctually paid or duly provided for shall forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities not less than 10 days prior to such Special Record Date,
or be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
The Company shall have the right at any time during the term
of this Security, from time to time, to extend the interest payment period of
such Security for up to 20 consecutive quarters (an "Extension Period"),
during which periods interest will compound quarterly and the Company shall
have the right to make partial payments of interest on any Interest Payment
Date, and at the end of which Extension Period the Company shall pay all
interest then accrued and unpaid (including any Additional Interest), together
with interest thereon at the rate specified for the Securities to the extent
that payment of such interest is permitted by applicable law; provided that
during any such Extension Period, the Company shall not, and shall cause any
Subsidiary of the Company (other than its wholly owned Subsidiaries) not to,
(i) declare or pay any dividends on, or make a distribution with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect to, any
of its capital stock (other than (i) repurchases or acquisitions of shares of
the Common Stock of the Company as contemplated by any employment arrangement,
benefit plan or other similar contract with or for the benefit of employees,
officers or directors entered into in the ordinary course of business, (ii) as
a result of an exchange or conversion of any class or series of the Company's
capital stock for the Company's Common Sstock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such Company capital stock or the security being
converted or exchanged, or (iv) the payment of any stock dividend by the
Company payable in the Company's Common Stock) or make any guarantee payments
with respect to the foregoing and (b) the Company shall not, and shall not
allow any of its subsidiaries to, make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued
by the Company that rank pari passu with or junior to the Security except as
(i) required in accordance with the terms thereof (including, in the case of
junior debt, the subordination provisions thereof), (ii) in connection with a
contemporaneous refinancing of such debt securities with the proceeds of a new
issuance of debt securities which have terms and provisions no more favorable
to the holder than those of the debt securities repurchased or refinanced
(iii) in connection with the contemporaneous conversion or exchange of such
debt securities for Common Stock of the Company; provided, however, that in no
event shall the amount to be paid by the Company or any of its subsidiaries
under (a) or (b) above exceed in the aggregate $500,000 per year. Prior to
the termination of any such Extension Period, the Company may further extend
the interest payment period, provided that such Extension Period together with
all such previous and further extensions thereof shall not exceed 20
consecutive quarters or extend beyond the Maturity of this Security. Upon the
termination of any such Extension Period and upon the payment of all accrued
and unpaid interest and any Additional Interest then due, the Company may
select a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end
thereof. The Company shall give the Trustee notice of its selection of an
Extension Period at least one Business Day prior to the earlier of
(i) the Interest Payment
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<PAGE> 26
Date or (ii) the date Fremont Financing is required to give notice to the New
York Stock Exchange (or other applicable self-regulatory organization) or to
holders of the Preferred Securities of the record date or the date such
distributions are payable, but in any event not less than one Business Day
prior to such record date.
Payment of the principal of and interest on this Security will
be made at the office or agency of the Paying Agent maintained for that purpose
in the United States, 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 at the option of the Company, payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer in immediately available funds at such place and to such account as
may be designated by the Person entitled thereto as specified in the Security
Register.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder
of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
so provided and (c) appoints the Trustee his attorney-in-fact for any and all
such purposes. Each Holder hereof, by his acceptance hereof, waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
Reference is hereby made to the further provisions of the
Indenture summarized on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
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<PAGE> 27
IN WITNESS WHEREOF, Fremont General Corporation has caused
this instrument to be duly executed under its corporate seal.
Dated:____________, 1995
FREMONT GENERAL CORPORATION
By:_______________________________
Name:
Title:
Attest:
____________________
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities
of the "Company", designated as its __% Junior Subordinated Debentures, due ____
__, 20__ (herein called the "Securities"), limited in aggregate principal amount
to $___________ issued under an Indenture, dated as of __________, 1995 (herein
called the "Indenture"), between the Company and First Interstate Bank of
California, a California banking corporation, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
All terms used in this Security which are defined in the
Indenture or in the Declaration attached as Annex A thereto shall have the
meanings assigned to them in the Indenture or the Declaration, as the case may
be.
At any time on or after ____ __, ____, the Company shall have
the right, subject to the terms and conditions of Article Twelve of the
Indenture, to redeem this Security at the option of the Company, without
premium or penalty, in whole or in
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<PAGE> 28
part, at a Redemption Price equal to 100% of the principal amount to be
redeemed plus accrued but unpaid interest, including any Additional Interest,
if any, to the Redemption Date. If a Tax Event as defined in Article Twelve of
the Indenture shall occur and be continuing, the Company shall have the right,
subject to the terms and conditions of Article Twelve of the Indenture, to
redeem this Security at the option of the Company, without premium or penalty,
in whole but not in part, at a Redemption Price equal to 100% of the principal
amount thereof plus accrued but unpaid interest, including any Additional
Interest, if any, to the Redemption Date. Any redemption pursuant to this
paragraph will be made upon not less than 30 nor more than 60 days' notice, at
the Redemption Price. If the Securities are only partially redeemed by the
Company, the Securities will be redeemed pro rata. If a partial redemption of
the Preferred Securities resulting from a partial redemption of the Securities
would result in the delisting of the Preferred Securities, the Company may only
redeem the Securities in whole.
In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
If an Event of Default with respect to the Securities shall
occur and be continuing, the principal of the Securities may be declared due
and payable in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions for satisfaction and
discharge at any time of the entire indebtedness of this Security upon
compliance by the Company with certain conditions set forth in the Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of Holders of not less than a majority in
principal amount of the Outstanding Securities affected by such modification,
to modify the Indenture in a manner affecting the rights of the Holders of the
Securities; provided that no such modification may, without the consent of the
Holder of each Outstanding Security affected thereby, (i) change the fixed
maturity of the Securities, or reduce the principal amount thereof, or reduce
the rate or, except as described below, extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof,
or (ii) reduce the percentage of principal amount of the Securities, the
Holders of which are required to consent to any such modification of the
Indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this
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<PAGE> 29
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in New York, New York, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Securities are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of Securities
of a different authorized denomination, as requested by the Holder surrendering
the same.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
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<PAGE> 30
SECTION 204. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the
within-mentioned Indenture.
_____________________, N.A.,
as Trustee
By: _______________________
Authorized Officer
ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $____________
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section
304, 305, 306, 906 or 1208.
The Securities shall be known and designated as the "__%
Junior Subordinated Debentures, Due ____ __, ____" of the Company. Their
initial Stated Maturity shall be December 31, 2025. Not more than one year or
less than one month prior to the initial Stated Maturity, the Company may, in
its sole discretion, extend the Stated Maturity no more than one time for up to
an additional 19 years from the initial Maturity Date, provided that all of the
following conditions are satisfied at the time the Company elects to extend the
stated maturity: (i) the Company is not in bankruptcy, insolvent or
in liquidation, (ii) the Company is not in default in the payment of any
interest or principal under this Indenture, (iii) The Company has made timely
payments on the Securities for the immediately preceding six quarters without
deferrals or extensions of the interest payment period, (iv) Fremont Financing
is not in arrears on payments of distributions on the Preferred Securities,
(v) the Securities are rated not less than BBB or better by Standard & Poors
Ratings Services or Baa2 or better by Moody's
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<PAGE> 31
Investors Service, Inc. or the equivalent by any other nationally recognized
statistical rating organization, and (vi) the extended Stated Maturity is no
later than the 49th anniversary of the issuance of the Preferred Securities.
The Securities shall bear interest at the rate of __% per
annum, from _______, 1995 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, as the case may be, payable
quarterly (subject to deferral as set forth herein), in arrears, on _____ __,
_____ __, _____ __ and ____ __ of each year, commencing ____ __, ____ until the
principal thereof is paid or made available for payment. Interest will
compound quarterly and will accrue at the rate of __% per annum on any interest
installment in arrears for more than one quarter or during an extension of an
interest payment period as set forth below in this Section 301. In the event
that any date on which interest is payable on the Securities is not a Business
Day, then a payment of the interest payable on such date will be made on the
next succeeding day which is a Business Day (except that, if such Business Day
is in the next succeeding calendar year, such Interest Payment Date shall be
the immediately preceding Business Day) (and without any interest or other
payment in respect of any such delay).
The Company shall have the right, at any time during the term
of the Securities, to extend the interest payment period, from time to time,
for up to 20 consecutive quarters (the "Extension Period") during which period
interest will compound quarterly and the Company shall have the right to make
partial payments of interest on any Interest Payment Date, and at the end of
which Extension Period the Company shall pay all interest then accrued and
unpaid thereon (together with Additional Interest at the rate specified for
the Securities to the extent permitted by applicable law), provided, however,
that during any such Extension Period, the Company shall not, and shall cause
any Subsidiary (other than its wholly owned Subsidiaries) not to, (i) declare
or pay any dividends on or make a distribution with respect to, or redeem,
purchase or acquire, or make a liquidation payment with respect to, any of its
Capital Stock (other than (i) repurchases or acquisitions of shares of the
Common Stock of the Company as contemplated by any employment arrangement,
benefit plan or other similar contract with or for the benefit of employees,
officers or directors entered into in the ordinary course of business, (ii) as
a result of an exchange or conversion of any class or series of the Company's
capital stock for the Company's Common Stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such Company capital stock or the security being
converted or exchanged, or (iv) the payment of any stock dividend by the
Company payable in the Company's Common Stock) or make any guarantee payments
with respect to the foregoing and (b) the Company shall not, and shall not
allow any of its subsidiaries to, make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued
by the Company that rank pari passu with or junior to the Security except as
(i) required in accordance with the terms thereof (including, in the case of
junior debt, the subordination provisions thereof), (ii) in connection with a
contemporaneous refinancing of such debt securities with the proceeds of a new
issuance of debt securities which have terms and provisions no more favorable
to the holder than those of the debt securities repurchased or refinanced (iii)
in connection with the contemporaneous conversion or exchange of such debt
securities for Common Stock of the Company; provided, however, that in no
event shall the amount to be paid by the Company or any of its subsidiaries
under (a) or (b) above exceed in the aggregate $500,000 per year. Prior to the
termination of any such Extension Period, the Company may further extend the
interest payment period, provided that such Extension Period together with
all such previous and further extensions thereof shall not exceed 20
consecutive quarters or extend beyond the Maturity of the Securities.
Upon termination of any Extension Period and upon the payment of all accrued
and unpaid interest and any Additional Interest then due, the Company may
select a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension
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<PAGE> 32
Period, except at the end thereof. The Company shall give the Property Trustee
and the Administrative Trustees (as defined in the Declaration) and the Trustee
notice of its selection of such Extension Period at least one Business Day
prior to the earlier of (i) the Interest Payment Date or (ii) the date the
Administrative Trustees are required to give notice to the New York Stock
Exchange or other applicable self-regulatory organization or to holders of the
Preferred Securities of the record date or the date such distributions are
payable, but in any event not less than one Business Day prior to such record
date.
The Trustee shall promptly give notice of the Company's
selection of such Extension Period to the holders of the Preferred Securities.
The principal of and interest on the Securities shall be
payable at the office or agency of the Paying Agent in the United States
maintained for such purpose and at any other office or agency maintained by the
Company for such purpose 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 at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer in immediately available funds at such place and to such account as
may be designated by the Person entitled thereto as specified in the Security
Register.
The Securities shall be subordinated in right of payment to
Senior Indebtedness as provided in Article Eleven.
The Securities shall be redeemable as provided in Article
Twelve.
SECTION 302. Denominations.
The Securities shall be issuable only in registered form,
without coupons, and only in denominations of $25 and any integral multiple
thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its President or one
of its Vice Presidents, under its corporate seal reproduced thereon attested by
its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Securities may be manual or facsimile.
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<PAGE> 33
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities; and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Securities as in this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to
Section 1002, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
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<PAGE> 34
SECTION 305. Registration; Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at
an office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate
principal amount.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denominations and of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906 or 1208 not
involving any transfer.
If the Securities are to be redeemed in part, the Company
shall not be required (A) to issue, register the transfer of or exchange any
Securities during a period beginning at the
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<PAGE> 35
opening of business 15 days before the day of the mailing of a notice of
redemption of any such Securities selected for redemption under Section 1203
and ending at the close of business on the day of such mailing, or (B) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of like tenor and principal amount and bearing
a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
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<PAGE> 36
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities (or
their respective Predecessor Securities) are registered at the close
of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix
a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to
each Holder at his address as it appears in the Security Register, not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to
the following clause (2).
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be
listed, and, if so listed, upon such notice as may be required by such
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<PAGE> 37
exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall
be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue (including in each such case
Additional Interest), which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
shall treat the Person in whose name such Security is registered as the owner
of such Security for the purpose of receiving payment of principal of and
(subject to Section 307) interest (including Additional Interest) on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled
by it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as
provided in this Section, except as expressly permitted by this Indenture. All
cancelled Securities held by the Trustee shall be disposed of as directed by a
Company Order.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year 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 actual number of days elapsed per 30-day
month.
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SECTION 311. Right of Set-Off.
Notwithstanding anything to the contrary in the Indenture, the
Company shall have the right to set-off any payment it is otherwise required to
make thereunder to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the Parent
Guarantees.
SECTION 312. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers
in notices of redemption as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.
SECTION 313. Global Securities.
If the Securities are distributed to holders of Preferred
Securities in liquidation of such holder's interests in Fremont Financing, such
Securities will initially be issued as a Global Security. If the Company shall
establish that the Securities are to be issued in the form of one or more
Global Securities, then the Company shall execute and the Trustee shall, in
accordance with Section 303 and the Company Order, authenticate and deliver one
or more Global Securities that (i) shall represent and shall be denominated in
an amount equal to the aggregate principal amount of all of the Securities to
be issued in the form of Global Securities and not yet cancelled, (ii) shall be
registered in the name of the Depositary for such Global Security or Securities
or the nominee of such Depositary, and (iii) shall be delivered by the Trustee
to such Depositary or pursuant to such Depositary's instructions.
Global Securities shall bear a legend substantially to the
following effect:
This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Global Security is
exchangeable for Securities registered in the name of a Person other
than the Depositary or its nominee only in the limited circumstances
described in the Indenture, and no transfer of this Security (other
than a transfer of this Security as a whole 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) may be registered
except in such limited circumstances. Every Security delivered upon
registration of transfer of, or in exchange
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for, or in lieu of, this Global Security shall be a Global Security
subject to the foregoing, except in the limited circumstances
described above.
Unless this certificate is presented by an authorized
representative of The Depositary Trust Company, a New York corporation
("DTC"), to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is to be made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
Notwithstanding the provisions of Section 305, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a part of the Securities
may not be transferred in the manner provided in Section 305 except as a whole
by the Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
If at any time the Depositary for any Securities represented
by one or more Global Securities notifies the Company that it is unwilling or
unable to continue as Depositary for such Securities or if at any time the
Depositary for such Securities shall no longer be eligible under this Section
313, the Company shall appoint a successor Depositary with respect to such
Securities. If a successor Depositary for such Securities is not appointed by
the Company within 90 days after the Company receives such notice or becomes
aware of such ineligibility, the Company's election that such Securities be
represented by one or more Global Securities shall no longer be effective and
the Company shall execute, and the Trustee, upon receipt of a Company Order for
the authentication and delivery of definitive Securities, will authenticate and
deliver Securities in definitive registered form, in any authorized
denominations, in an aggregate principal amount equal to the principal amount
of the Global Security or Securities representing such Securities in exchange
for such Global Security or Securities.
The Company may at any time and in its sole discretion
determine that the Securities issued in the form of one or more Global
Securities shall no longer be represented by a Global Security or Securities.
In such event the Company shall execute, and the Trustee, upon receipt of a
Company Order or an Officers' Certificate for the authentication and delivery
of definitive Securities, shall authenticate and deliver, Securities in
definitive registered form, in any authorized denominations, in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities representing such Securities, in exchange for such Global Security
or Securities.
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If specified by the Company with respect to Securities
represented by a Global Security, the Depositary for such Global Security may
surrender such Global Security in exchange in whole or in part for Securities
in definitive registered form on such terms as are acceptable to the Company
and such Depositary. Thereupon, the Company shall execute, and the Trustee
shall authenticate and deliver, without service charge,
(i) to the Person specified by such Depositary, a new
Security or Securities, of any authorized denominations as requested
by such Person, in an aggregate principal amount equal to and in
exchange for such Person's beneficial interest in the Global Security;
and
(ii) to such Depositary a new Global Security in a
denomination equal to the difference, if any, between the principal
amount of the surrendered Global Security and the aggregate principal
amount of Securities authenticated and delivered pursuant to clause
(i) above.
Upon the exchange of a Global Security for Securities in
definitive registered form in authorized denominations, such Global Security
shall be cancelled by the Trustee or an agent of the Company or the Trustee.
Securities in definitive registered form issued in exchange for a Global
Security pursuant to this Section 313 shall be registered in such names and in
such authorized denominations as the Depositary for such Global Security,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee or an agent of the Company or the Trustee. The
Trustee or such agent shall deliver at its office such Securities to or as
directed by the Persons in whose names such Securities are so registered.
ARTICLE FOUR
Satisfaction and Discharge; Defeasance
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for), and the Trustee, on written demand of and at
the expense of the Company, shall execute instruments supplied by the Company
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced
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or paid as provided in Section 306 and (ii) Securities for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the
Trustee for cancellation; or
(B) all such Securities not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) if redeemable at the option of the Company,
are to be called for redemption within one
year under arrangements satisfactory to the
Trustee for the giving of notice of
redemption by the Trustee in the name, and at
the expense, of the Company
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal and interest (including Additional Interest) to the
date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
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SECTION 402. Defeasance and Discharge.
The following provisions shall apply to the Securities unless
specifically otherwise provided in a Board Resolution, Officers' Certificate or
indenture supplemental hereto provided pursuant to Section 301. In addition to
discharge of this Indenture pursuant to Sections 401 and 403, in the case of
any Securities with respect to which the exact amount described in subparagraph
(a) of Section 404 can be determined at the time of making the deposit referred
to in such subparagraph (a), the Company shall be deemed to have paid and
discharged the entire indebtedness on all the Securities as provided in this
Section on and after the date the conditions set forth in Section 404 are
satisfied, and the provisions of this Indenture with respect to the Securities
shall no longer be in effect (except as to (i) rights of registration of
transfer and exchange of Securities, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Securities, (iii) rights of Holders of Securities to
receive, solely from the trust fund described in subparagraph (a) of Section
404, payments of principal thereof and interest, if any, thereon upon the
original stated due dates therefor (but not upon acceleration), (iv) the
rights, obligations, duties and immunities of the Trustee hereunder, (v) this
Section 402 and (vi) the rights of the Holders of Securities as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to
all or any of them) (hereinafter called "Defeasance"), and the Trustee at the
cost and expense of the Company, shall execute proper instruments acknowledging
the same.
SECTION 403. Covenant Defeasance.
In the case of any Securities with respect to which the exact
amount described in subparagraph (a) of Section 404 can be determined at the
time of making the deposit referred to in such subparagraph (a), (i) the
Company shall be released from its obligations under any covenants specified in
or pursuant to this Indenture (except as to (i) rights of registration of
transfer and exchange of Securities, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Securities, (iii) rights of Holders of Securities to
receive, from the Company pursuant to Section 1001, payments of principal
thereof and interest, if any, thereon upon the original stated due dates
therefor (but not upon acceleration), (iv) the rights, obligations, duties and
immunities of the Trustee hereunder and (v) the rights of the Holders of
Securities as beneficiaries hereof with respect to the property so deposited
with the Trustee payable to all or any of them), and (ii) the occurrence of any
event specified in Section 501(3) (with respect to any of the covenants
specified in or pursuant to this Indenture) shall be deemed not to be or result
in an Event of Default, in each case with respect to the Outstanding Securities
as provided in this Section on and after the date the conditions set forth in
Section 404 are satisfied (hereinafter called "Covenant Defeasance"), and the
Trustee, at the cost and expense of the Company, shall execute proper
instruments acknowledging the same. For this purpose, such Covenant Defeasance
means that the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant (to
the extent so specified in the case of Section 501(4)), whether directly or
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indirectly by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein
or in any other document, but the remainder of this Indenture and the
Securities shall be unaffected thereby.
SECTION 404 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 402 or 403 to the Outstanding Securities:
(a) with reference to Section 402 or 403, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of Securities (i) cash
in an amount, or (ii) direct obligations of the United States of
America, backed by its full faith and credit ("U.S. Government
Obligations"), maturing as to principal and interest, if any, at such
times and in such amounts as will insure the availability of cash, or
(iii) a combination thereof, in each case sufficient, in the opinion
of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee,
to pay and discharge (A) the principal of and interest, if any, on all
Securities on each date that such principal or interest, if any, is
due and payable, and (B) any mandatory sinking fund payments on the
dates on which such payments are due and payable in accordance with
the terms of this Indenture and the Securities;
(b) in the case of Defeasance under Section 402, the
Company has delivered to the Trustee an Opinion of Counsel based on
the fact that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (y), since the
date hereof, there has been a change in the applicable United States
federal income tax law, in either case to the effect that, and such
opinion shall confirm that, the Holders of the Securities of such
series will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit, Defeasance and discharge and
will be subject to federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such
deposit, Defeasance and discharge had not occurred;
(c) in the case of Covenant Defeasance under Section 403,
the Company has delivered to the Trustee an Opinion of Counsel to the
effect that, and such opinion shall confirm that, the Holders of the
Securities will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit and Covenant Defeasance and
will be subject to federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such
deposit and Covenant Defeasance had not occurred;
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(d) such Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default under, any
agreement or instrument to which the Company is a party or by which it
is bound; and
(e) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent contemplated by this provision have been complied
with.
SECTION 405. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations deposited with the Trustee
pursuant to Section 401 shall be held in trust and such money and all money
from such U.S. Government Obligations shall be applied by it, in accordance
with the provisions of the Securities and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
its own Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal and interest for whose payment such money and U.S.
Government Obligations has been deposited with the Trustee.
SECTION 406. Indemnity for U.S. Government Obligations.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 404 or the principal or interest
received in respect of such obligations other than any such tax, fee or other
charge that by law is for the account of the Holders of Outstanding Securities.
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events that has occurred and is continuing (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of
Article Eleven or 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) failure for __ days to pay any interest on the
Securities, including any Additional Interest in respect thereof, when
due (subject to the deferral of any due date in the case of an
Extension Period); or
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(2) failure to pay any principal on the Securities when
due whether at Stated Maturity, following notice of redemption, by
declaration or otherwise; or
(3) failure to observe or perform in any material respect
any other covenant herein for 90 days after written notice to the
Company from the Trustee or the holders of at least 25% in principal
amount of the outstanding Securities; or
(4) default under any bond, debenture or any other
evidence of Indebtedness for money borrowed by the Company having an
aggregate outstanding principal amount in excess of $15 million, which
default shall have resulted in such Indebtedness being accelerated,
without such Indebtedness being discharged or such acceleration having
been rescinded or annulled within 30 days after receipt of notice
thereof by the Company from the Trustee or by the Company and the
Trustee from the holders of not less than 25% in aggregate principal
amount at Maturity of the Securities then outstanding; or
(5) the voluntary or involuntary dissolution, winding-up
or other termination of the existence of Fremont Financing except in
connection with the distribution of Securities to the holders of
Preferred Securities in liquidation of Fremont Financing, the
redemption of all of the Trust Securities of Fremont Financing or
certain mergers, consolidations or amalgamations, each as permitted by
the Declaration; or
(6) entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of substantially all of the property of the
Company, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 90
consecutive days; or
(7) (A) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or (B) the
consent by the Company or to the entry of a decree or order for relief
in respect of itself in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against the Company, or (C) the filing
by the Company of a
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petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or (D) the consent by the Company
to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of all or
substantially all of the property of the Company, or (E) the making by
the Company of an assignment for the benefit of creditors.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities shall have the right to
declare the principal of and the interest on all the Securities
(including any Additional Interest) and any other amounts payable
hereunder to be due and payable immediately, provided, however, that
if upon an Event of Default, the Trustee or the Holders of at least
25% in aggregate principal amount of the outstanding Securities fail
to declare the payment of all amounts on the Securities to be
immediately due and payable, the holders of at least 50% in aggregate
liquidation preference of Preferred Securities then outstanding shall
have such right, by a notice in writing to the Company (and to the
Trustee if given by Holders or the holders of Preferred Securities)
and upon any such declaration such principal and all accrued interest
shall become immediately due and payable.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter provided in this Article,
the Holders of a majority in principal amount of the Outstanding
Securities, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a
sum sufficient to pay
(A) all overdue interest (including any
Additional Interest) on all Securities,
(B) the principal of (and premium, if any, on)
any Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
borne by the Securities,
(C) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate borne by
the Securities, and
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(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
(2) all Events of Default, other than the non-payment of
the principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any interest
(including any Additional Interest) on any Security when such interest
becomes due and payable and such default continues for a period of 30
days, or
(2) default is made in the payment of the principal of
any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest (including any Additional Interest), and,
to the extent that payment thereof shall be legally enforceable, interest on
any overdue principal and on any overdue interest (including any Additional
Interest), at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
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SECTION 504. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company (or any other obligor upon the
Securities), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise, to take any and all
actions authorized under the Trust Indenture Act in order to have claims of the
Holders and the Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 506. Application of Money Collected.
Subject to Article Eleven, any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date
or dates fixed by the Trustee and, in case of the distribution of such money on
account of principal upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
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SECOND: To the payment of the amounts then due and unpaid for
principal of and interest (including any Additional Interest) on the
Securities in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Securities for
principal and interest (including any Additional Interest),
respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount
of the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal and
Interest.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and (subject to Section
307) interest (including any Additional Interest) on such Security on the
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respective Stated Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement
of any such payment, and such rights shall not be impaired without the consent
of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the
Outstanding Securities shall have the right to 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, provided that
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(1) such direction shall not be in conflict with any rule
of law or with this Indenture; and
(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
Subject to Sections 902 and 1010 hereof, the Holders of not
less than a majority in principal amount of the Outstanding Securities may on
behalf of the Holders of all the Securities waive any past default hereunder
and its consequences, except a default
(1) in the payment of the principal of or interest
(including any Additional Interest) on any Security (unless such
default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by
acceleration has been deposited with the Trustee); or
(2) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the consent
of the Holder of each Outstanding Security affected;
provided, however, that such waiver or modification to such waiver shall not be
effective until the holders of a majority in liquidation preference of Trust
Securities shall have consented to such waiver or modification to such waiver;
provided further, that if the consent of the Holder of each of the Outstanding
Securities is required, such waiver shall not be effective until each Holder of
the Trust Securities shall have consented to such waiver.
Upon any such waiver, such default shall cease to exist,
effective as of the date specified in such waiver (and effective retroactively
to the date of default, if so specified) and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, a court may require any party litigant in
such suit to file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent provided
in the Trust Indenture Act; provided, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit
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instituted by the Company or the Trustee or in any suit for the enforcement of
the right to receive the principal of and interest (including any Additional
Interest) on any Security.
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
SECTION 516. Preferred Security Holders Rights.
If an Event of Default constituting the failure to pay
interest or principal on the Securities on the date such interest or principal
is otherwise payable has occurred and is continuing, then a holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such holder directly of the principal of or interest on the Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities or such holder on or after the respective due date specified in the
Securities.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default
hereunder as and to the extent provided by the Trust Indenture Act; provided,
however, that except in the case of a default in the payment of the principal
of or interest on any Security, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee
or a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Holders of Securities; provided, further, that in the case of any default
of the character specified in Section 501(3), no such notice to Holders shall
be given until at least 30 days after the occurrence thereof. For the purpose
of this Section, the term "default" means any event which is, or after notice
or lapse of time or both would become,
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an Event of Default. For purposes of this Section, the Trustee shall not be
deemed to have knowledge of a default unless the Trustee has actual knowledge
of such default or has received written notice of such default in the manner
contemplated by Section 105.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel of its choice
and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall
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determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar, or any
other agent of the Company, in its individual or any other capacity, may become
the owner or pledgee of Securities and, subject to Sections 608 and 613, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar, or such other agent. Money held
by the Trustee in trust hereunder shall not be invested by the Trustee pending
distribution thereof to the holders of the Securities.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
SECTION 607. Compensation; Reimbursement; and Indemnity.
The Company agrees
(1) to pay to the Trustee from time to time such
reasonable compensation as the Company and the Trustee shall from time
to time agree in writing for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
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(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor
Trustee for, and to hold it harmless against, any and all loss,
damage, claim, liability or expense, including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance
or administration of this trust or the trusts hereunder, including the
costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder.
The obligations of the Company under this Section to
compensate the Trustee, to pay or reimburse the Trustee for expenses,
disbursements and advances and to indemnify and hold harmless the Trustee shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture. As security for the performance of such
obligations of the Company, the Trustee shall have a claim prior to the
Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the payment of principal of (and premium,
if any, on) or interest on particular Securities.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $50,000,000 and has its
Corporate Trust Office in New York, New York. If such Person publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be
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eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 611.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608
after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section
609 and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of
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the Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; provided that, on
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder. Upon request
of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any
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successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the collection
of claims against the Company (or any such other obligor).
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the
Trustee
(a) semiannually, not later than February 15 and August
15 in each year, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders to the extent the
Company has knowledge thereof as of a date not more than 15 days
prior to the delivery thereof, and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 701 supplied
to the Trustee by the Depository at the Trustee's request, and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other
Holders with respect to their rights under this Indenture or under the
Securities, and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.
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(c) Every Holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any agent of either of them shall be held accountable by reason
of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Successor Substituted.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety, the
successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and the Securities.
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ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company; or
(3) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture,provided that such action
pursuant to this clause (3) shall not adversely affect the interests
of the Holders of the Securities or, so long as any of the Preferred
Securities shall remain outstanding, the holders of the Preferred
Securities; or
(4) to comply with the requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the Trust Indenture Act.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) except to the extent permitted and subject to the
conditions set forth in Section 301 with respect to the extension of
the Stated Maturity of the Securities, change
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the Stated Maturity of, the principal of, or any installment of
interest (including any Additional Interest) on, any Security, or
reduce the principal amount thereof or the rate of interest thereon,
or change the place of payment where, or the coin or currency in
which, any Security or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on
or after the Redemption Date), or modify the provisions of this
Indenture with respect to the subordination of the Securities in a
manner adverse to the Holders,
(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section
513 or Section 1010, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby;
provided, that, so long as any of the Preferred Securities remains outstanding,
no such amendment shall be made that adversely affects the holders of the
Preferred Securities, and no termination of this Indenture shall occur, and no
waiver of any Event of Default or compliance with any covenant under this
Indenture shall be effective, without the prior consent of the holders of at
least a majority of the aggregate liquidation preference of the outstanding
Preferred Securities unless and until the principal of and any premium on the
Securities and all accrued and unpaid interest (including any Additional
Interest) thereon have been paid in full, provided further, that any amendment
or modification of the terms of this Indenture shall require the prior approval
of the California Insurance Commissioner.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated
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to, enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of and
interest on the Securities in accordance with the terms of the Securities and
this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in The City of New York an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange, where
Securities may be surrendered for conversion and where notices and demands to
or upon the Company in respect of the Securities and this Indenture
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may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more
other offices or agencies (in the United States) where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in the United States for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 1003. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent,
it will, on or at the option of the Company on or before each due date of the
principal of or interest on any of the Securities, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum sufficient to pay the
principal or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify
the Trustee of its action or failure so to act. In such case the Company shall
not invest the amount so segregated and held in trust pending the distribution
thereof.
Whenever the Company shall have one or more Paying Agents, it
will, on or prior to each due date of the principal of or interest on any
Securities, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held as provided by the Trust Indenture Act, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of
its action or failure so to act; provided, however, that any such deposit on a
due date shall be initiated prior to 1:00 p.m. (New York time) in same-day
funds.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will (i) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
Securities) in the making of any payment in respect of the Securities, upon the
written request of the Trustee, forthwith pay to the Trustee all sums held in
trust by such Paying Agent as such.
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The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of or
interest on any Security and remaining unclaimed for two years after such
principal or interest has become due and payable shall be paid to the Company
on Company Request, or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the material terms, provisions and conditions of this Indenture (without
regard to any period of grace or requirement of notice provided hereunder) and,
if the Company shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.
SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the
loss thereof is not disadvantageous in any material respect to the Holders and,
while any Preferred Securities are outstanding, the holders of the Preferred
Securities.
SECTION 1006. Maintenance of Properties.
The Company will cause all properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained and
kept in good condition, repair and working
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order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company from discontinuing the operation or maintenance of any of
such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary and
not disadvantageous in any material respect to the Holders.
SECTION 1007. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary
or upon the income, profits or property of the Company or any Subsidiary, and
(2) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon the property of the Company or any Subsidiary that
comprise more than 10% of the assets of the Company and its Subsidiaries taken
as a whole; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings.
SECTION 1008. Additional Interest.
In the event that (i) Fremont Financing is the Holder of all
of the Outstanding Securities, (ii) a Tax Event shall have occurred and be
continuing and (iii) the Company shall have elected to pay Additional Interest
(as defined below) and shall not have revoked any such election, the Company
shall pay to Fremont Financing (and its permitted successors or assigns under
the Declaration) for so long as Fremont Financing (or its permitted successor
or assignee) is the registered holder of any Securities such additional amounts
as may be necessary in order that the amount of distributions (including any
Additional Amounts) then due and payable by Fremont Financing on the Preferred
Securities that at any time remain outstanding in accordance with the terms
thereof shall not be reduced as a result of any Additional Taxes (the
"Additional Interest"). Whenever in this Indenture there is a reference in any
context to the payment of principal of or interest on the Securities, such
mention shall be deemed to include mention of the payment of the Additional
Interest provided for in this paragraph to the extent that, in such context,
Additional Interest is, was or would be payable in respect thereof pursuant to
the provisions of this paragraph and express mention of the payment of
Additional Interest (if applicable) in any provisions hereof shall not be
construed as excluding Additional Interest in those provisions hereof where
such express mention is not made.
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SECTION 1009. Additional Covenants.
The Company covenants and agrees that it shall not, and shall
cause any Subsidiary of the Company not to, (a) declare or pay any dividends
on or make a distribution with respect to, or redeem, purchase or acquire, or
make a liquidation payment with respect to, any of its capital stock (other
than (i) repurchases or acquisitions of shares of the Common Stock of the
Company as contemplated by any employment arrangement, benefit plan or other
similar contract with or for the benefit of employees, officers or directors
entered into in the ordinary course of business, (ii) as a result of an
exchange or conversion of any class or series of the Company's capital stock
for the Company's Common Stock, (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such Company capital stock or the security being converted or
exchanged, or (iv) the payment of any stock dividend by the Company payable in
the Company's Common Stock) or make any guarantee payments with respect to the
foregoing and (b) the Company shall not, and shall not allow any of its
subsidiaries to, make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by the Company that
rank pari passu with or junior to the Security except as (i) required in
accordance with the terms thereof (including, in the case of junior debt, the
subordination provisions thereof), (ii) in connection with a contemporaneous
refinancing of such debt securities with the proceeds of a new issuance of debt
securities which have terms and provisions no more favorable to the holder than
those of the debt securities repurchased or refinanced (iii) in connection
with the contemporaneous conversion or exchange of such debt securities for
Common Stock of the Company; provided, however, that in no event shall the
amount to be paid by the Company or any of its subsidiaries under (a) or (b)
above exceed in the aggregate $500,000 per year if at such time (i) there
shall have occurred and be continuing any event that (a) with the giving of
notice or the lapse of time or both, would constitute an Event of Default
hereunder and (b) in respect of which the Company shall not have taken
reasonable steps to cure, (ii) the Company shall be in default with respect to
its payment of any obligations under the Common Securities Guarantee or
(iii) the Company shall have given notice of its selection of an Extension
Period as provided herein and such period, or any extension thereof, shall be
continuing.
The Company also covenants (i) to maintain 100% ownership of
the Common Securities of Fremont Financing; provided, however, that any
permitted successor of the Company hereunder may succeed to the Company's
ownership of such Common Securities, (ii) not to voluntarily dissolve, wind-up
or terminate Fremont Financing, except in connection with a distribution of the
Securities to the holders of Preferred Securities in liquidation of Fremont
Financing and (iii) to use its reasonable efforts, consistent with the terms
and provisions of the Trust Agreement, to cause Fremont Financing to remain a
business trust and to be classified as a grantor trust and not to be classified
as an association taxable as a corporation for United States federal income tax
purposes, except in connection with a distribution of the Securities to the
holders of Preferred Securities in liquidation of Fremont Financing.
SECTION 1010. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301
for Securities, the Company may, with respect to the Securities, omit in any
particular instance to comply with any term, provision or condition set forth
in any covenant provided pursuant to Section 901(2) for the benefit of the
Holders if before the time for such compliance the Holders of at least a
majority in principal amount of the Outstanding Securities shall, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
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ARTICLE ELEVEN
Subordination of Securities
SECTION 1101. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and agrees, that, to
the extent and in the manner hereinafter set forth in this Article (subject to
Article Four), the payment of the principal of and interest (including any
Additional Interest) on each and all of the Securities are hereby expressly
made subordinate and subject in right of payment to the prior payment in full
in cash of all Senior Indebtedness.
This Article Eleven shall constitute a continuing offer to all
persons who become holders of, or continue to hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness
and such holders are made obligees hereunder and any one or more of them may
enforce such provisions. Holders of Senior Indebtedness need not prove
reliance on the subordination provisions hereof.
SECTION 1102. Default on Senior Indebtedness.
In the event and during the continuation of any default in the
payment of principal, premium, interest or any other payment due on any Senior
Indebtedness (and any applicable grace period with respect to such default has
ended and such default has not been cured or waived) or in the event that the
maturity of any Senior Indebtedness has been accelerated because of a default,
then, in either case, no payment shall be made by the Company with respect to
the principal (including redemption payments) of, or interest on, the
Securities.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by the preceding paragraph of this Section 1102, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders
of Senior Indebtedness or their respective representatives, or to the trustee
or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear,
but only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee within 90
days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
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SECTION 1103. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company, or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all principal of,
and premium, if any, and interest due or to become due upon all Senior
Indebtedness shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made on account of
the principal or interest on the Securities; and upon any such dissolution or
winding-up or liquidation or reorganization any payment by the Company, or
distribution of substantially all of the assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders of the
Security or the Trustee would be entitled, except for the provisions of this
Article Eleven, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Securities or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts
of Senior Indebtedness held by such holders, as calculated by the Company) or
their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing any Senior
Indebtedness may have been issued, as their respective interests may appear, to
the extent necessary to pay all Senior Indebtedness in full or to provide for
such payment in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the Holders of
Securities or to the Trustee.
In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee or the Holders of the Securities before all Senior Indebtedness is
paid in full, or provision is made for such payment in money in accordance with
its terms, such payment or distribution shall be held in trust for the benefit
of and shall be paid over or delivered to the holders of Senior Indebtedness or
their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing any Senior
Indebtedness may have been issued, as their respective interests may appear, as
calculated by the Company, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Indebtedness.
Any holder of Senior Indebtedness may file any proof of claim
or similar instrument on behalf of the Trustee and the Holders if such
instrument has not been filed by the date which is 30 days prior to the date
specified for filing thereof.
For purposes of this Article Eleven, the words "cash, property
or securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or
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readjustment, the payment of which is subordinated at least to the extent
provided in this Article Eleven with respect to the Securities to the payment
of all Senior Indebtedness that may at the time be outstanding, provided,
however, that (i) the Senior Indebtedness is assumed by the new corporation, if
any, resulting from any such reorganization or readjustment, and (ii) the
rights of the holders of the Senior Indebtedness are not, without the consent
of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in
Article Eight hereof shall not be deemed a dissolution, winding-up, liquidation
or reorganization for the purposes of this Section 1103 if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Eight hereof. Nothing
in Section 1102 or in this Section 1103 shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 607.
SECTION 1104. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the
rights of the Holders of the Securities shall be subrogated to the rights of
the holders of Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company applicable to the Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Securities shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article Eleven, and
no payment over pursuant to the provisions of this Article Eleven, to or for
the benefit of the holders of Senior Indebtedness by Holders of the Securities
or the Trustee, shall, as between the Company, its creditors other than holders
of Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment by the Company to or on account of the Senior Indebtedness. It is
understood that the provisions of this Article Eleven are and are intended
solely for the purposes of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of the Senior Indebtedness on the
other hand.
Nothing contained in this Article Eleven or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Securities and creditors
of the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or the Holder of any
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Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article Eleven of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article Eleven, the Trustee, subject to the provisions of
Section 601, and the Holders of the Securities, shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purposes of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Indebtedness and other indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article Eleven.
SECTION 1105. Trustee to Effectuate Subordination.
Each Holder of a Security by acceptance thereof authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Eleven and appoints the Trustee such Holder's attorney-in-fact for any
and all such purposes.
SECTION 1106. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article Eleven. Notwithstanding
the provisions of this Article Eleven or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
that would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article Eleven,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office of the Trustee from the
Company or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Trustee,
subject to the provisions of Section 601, shall be entitled in all respects to
assume that no such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section 1106 at least two
Business Days prior to the date upon which by the terms hereof any money may
become payable for any purpose (including, without limitation, the payment of
the principal of (or premium, if any) or interest on any Security), then,
anything herein contained to the contrary notwithstanding, the
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Trustee shall have full power and authority to receive such money and to apply
the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within two
Business Days prior to such date.
The Trustee, subject to the provisions of Section 601, shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness or a trustee on behalf of any such holder or holders.
In the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article Eleven, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article Eleven, and if such evidence is not furnished
the Trustee may defer any payment to such Person pending judicial determination
as to the right of such Person to receive such payment.
SECTION 1107. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article Eleven in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Eleven, and no
implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and, subject to the provisions of Section 601, the Trustee shall
not be liable to any holder of Senior Indebtedness if it shall pay over or
deliver to holders of Securities, the Company or any other Person money or
assets to which any holder of Senior Indebtedness shall be entitled by virtue
of this Article Eleven or otherwise.
SECTION 1108. Subordination May Not be Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
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of this Indenture, regardless of any knowledge thereof that any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
ARTICLE TWELVE
Redemption of Securities
SECTION 1201. Optional Redemption; Conditions to Optional Redemption.
At any time on or after December 29, 2000, the Company shall
have the right, subject to the last paragraph of this Section 1201, to redeem
the Securities, in whole or in part, from time to time, at a Redemption Price
equal to 100% of the principal amount of Securities to be redeemed plus any
accrued but unpaid interest, including Additional Interest, if any, to the
Redemption Date.
If a Tax Event shall occur and be continuing, the Company
shall have the right, subject to the last paragraph of this Section 1201,
either (i) to redeem the Securities in whole but not in part, at a Redemption
Price equal to 100% of the principal amount of Securities then outstanding plus
accrued but unpaid interest, including Additional Interest, if any, to the
Redemption Date or (ii) to direct the Trustees of Fremont Financing to dissolve
Fremont Financing and distribute the Securities to the holders of the Preferred
Securities and Common Securities.
For so long as Fremont Financing is the Holder of all
Securities Outstanding, the proceeds of any redemption described in this
Section 1201 shall be used by Fremont Financing to redeem Preferred Securities
in accordance with their terms. The Company shall not redeem the Securities in
part unless all accrued and unpaid interest (including any Additional Interest)
has been
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paid in full on all Securities Outstanding for all quarterly interest periods
terminating on or prior to the Redemption Date.
SECTION 1202. Applicability of Article.
Redemption of Securities at the election of the Company, as
permitted by Section 1201, shall be made in accordance with such provision and
this Article.
SECTION 1203. Election to Redeem; Notice to Trustee.
The election of the Company to redeem Securities pursuant to
Section 1201 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, at least 30 days
and no more than 60 days prior to the Redemption Date fixed by the Company,
notify the Trustee of such Redemption Date and of the principal amount of
Securities to be redeemed and provide a copy of the notice of redemption given
to Holders of Securities to be redeemed pursuant to Section 1204.
SECTION 1204. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed (unless
such redemption affects only a single Security), the particular Securities to
be redeemed shall be selected on a pro rata basis (or such other method of
selection as the Trustee may customarily employ) not more than 60 days prior
to the Redemption Date by the Trustee, from the Outstanding Securities not
previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption as aforesaid and, in case of any
Securities selected for partial redemption as aforesaid, the principal amount
thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply
with respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
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SECTION 1205. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall identify the Securities to be
redeemed (including CUSIP number) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and that
interest thereon will cease to accrue on and after said date, and
(4) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
SECTION 1206. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date; provided, however, that any
such deposit on a Redemption Date shall be initiated prior to 1:00 p.m. (New
York time) in same-day funds.
SECTION 1207. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall
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be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered
as such at the close of business on the relevant Record Dates according to
their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.
SECTION 1208. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at a place of payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
_______________________
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
FREMONT GENERAL CORPORATION
By:_________________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
______________________, N.A.
By:____________________________
Name:
Title:
Attest:
________________________
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STATE OF _________________)
) ss.:
COUNTY OF ________________)
On the __ day of December 1995, before me personally came
__________, to me known, who, being by me duly sworn, did depose and say that
he/she is the __________ of Fremont General Corporation, one of the
corporations described in and which executed the foregoing instrument; and that
he/she signed his/her name thereto by authority of the Board of Directors of
such corporation.
____________________________________
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STATE OF _________________)
) ss.:
COUNTY OF ________________)
On the __ day of __________, 1995, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he/she is a ______________________ of _________, N.A., a national banking
association described in and which executed the foregoing instrument; and that
he/she signed his/her name thereto by authority of the Board of Directors of
such corporation.
____________________________________
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EXHIBIT 4.2
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DECLARATION OF TRUST
Fremont General Financing I
Dated as of _______ __, 199_
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ORGANIZATION
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.6 Powers of the Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.7 Filing of Certificate of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.8 Duration of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.9 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.10 Declaration Binding on Securities Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.3 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.4 Not Responsible for Recitals or Sufficiency of Declaration. . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.2 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.4 Outside Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.6 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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DECLARATION OF TRUST
OF
FREMONT GENERAL FINANCING I
_______ __, 199_
DECLARATION OF TRUST ("Declaration") dated and effective as of
_______ __, 199_ by the Trustees (as defined herein), the Sponsor (as defined
herein), and by the holders, from time to time, of undivided beneficial
interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Delaware Business Trust Act for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer; and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration of Trust as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and Sections
are to Articles and Sections of this Declaration unless
otherwise specified; and
<PAGE> 4
(e) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing an undivided
beneficial interest in the assets of the Trust with such terms as may be set
out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates and (b) any holder of Securities.
"Debenture Issuer" means the Parent in its capacity as the
issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means First Interstate Bank of California,
a California banking corporation, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 4.3(b).
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Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the indenture to be entered into between the
Parent and the Debenture Trustee and any indenture supplemental thereto
pursuant to which the Debentures are to be issued.
"Parent" means Fremont General Corporation, a Nevada
corporation or any successor entity in a merger.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security" means a security representing an
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Regular Trustee" means any Trustee other than the Delaware
Trustee and the Institutional Trustee (as hereinafter defined).
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means the Parent in its capacity as sponsor of the
Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "Fremont
General Financing I." The Trust's activities may be conducted
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<PAGE> 6
under the name of the Trust or any other name deemed advisable by the Regular
Trustees.
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o
Fremont General Corporation, 2020 Santa Monica Boulevard, Suite 600, Santa
Monica, California 90404. At any time, the Regular Trustees may designate
another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust. In
dealing with the Regular Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Regular Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Regular Trustees as set forth in this
Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustees.
The Regular Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided,
however, that the Trust may issue no more than one series of Preferred
Securities and no more than one series of Common Securities,
and, provided further, that there
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shall be no interests in the Trust other than the Securities and the
issuance of the Securities shall be limited to a one- time,
simultaneous issuance of both Preferred Securities and Common
Securities;
(b) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission a
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto in relation to the Preferred
Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to
be necessary in order to qualify or register all or part of
the Preferred Securities in any State in which the Sponsor has
determined to qualify or register such Preferred Securities
for sale;
(iii) execute and file an application, prepared
by the Sponsor, to the New York Stock Exchange or any other
national stock exchange or the Nasdaq Stock Market's National
Market for listing upon notice of issuance of any Preferred
Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor relating to the registration
of the Preferred Securities under Section 12(b) of the
Exchange Act; and
(v) execute and enter into an underwriting
agreement and pricing agreement providing for the sale of the
Preferred Securities;
(c) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and provide for reasonable
compensation for such services;
(d) to incur expenses which are necessary or incidental
to carry out any of the purposes of this Declaration; and
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in
all matters necessary or incidental to the foregoing.
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SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in
the form attached hereto as Exhibit A with the Secretary of State of the State
of Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for fifty-five (55) years from the date
hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to the
Preferred Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and to do any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must
take, and prepare for execution and filing any documents to be
executed and filed by the Trust, as the Sponsor deems necessary or
advisable in order to comply with the applicable laws of any such
States;
(c) to prepare for filing by the Trust an application to
the New York Stock Exchange or any other national stock exchange or
the Nasdaq National Market for listing upon notice of issuance of any
Preferred Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the
registration of the class of Preferred Securities under Section 12(b)
of the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of an underwriting agreement
and pricing agreement providing for the sale of the Preferred
Securities.
Section 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a holder of a Security
or any interest therein in accordance with the terms of
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this Declaration, shall be deemed to have expressly assented and agreed to the
terms of, and shall be bound by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however, that the number of Trustees shall in no event be less than two (2);
provided further that one Trustee, in the case of a natural person, shall be a
person who is a resident of the State of Delaware or that, if not a natural
person, is an entity which has its principal place of business in the State of
Delaware (the "Delaware Trustee"); provided further that there shall be at
least one trustee who is an employee or officer of, or is affiliated with the
Parent (a "Regular Trustee").
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be:
Louis J. Rampino
Wayne R. Bailey
(a) Except as expressly set forth in this Declaration, any
power of the Regular Trustees may be exercised by, or with the consent of, any
one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees,
and except as otherwise required by the Business Trust Act, any Regular Trustee
is authorized to execute on behalf of the Trust any documents which the Regular
Trustees have the power and authority to cause the Trust to execute pursuant to
Section 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by a majority of
the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be:
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The Chase Manhattan Bank, (USA)
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of Section 3807
of the Business Trust Act. Notwithstanding anything herein to the contrary, the
Delaware Trustee shall not be liable for the acts or omissions to act of the
Trust or of the Regular Trustees except such acts as the Delaware Trustee is
expressly obligated or authorized to undertake under this Declaration and except
for the gross negligence or willful misconduct of the Delaware Trustee.
SECTION 3.4 Property Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint another trustee (the "Institutional
Trustee") meeting the requirements of an eligible trustee of the Trust
Indenture Act of 1939, as amended, by the execution of an amendment to this
Declaration executed by the Regular Trustees, the Sponsor, the Institutional
Trustee and the Delaware Trustee.
Section 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be
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<PAGE> 11
liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's gross negligence or willful misconduct with respect to
such acts or omissions; and
(b) an Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which distributions to holders of Securities might properly be
paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity, are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between Covered Persons; or
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or provides
terms that are, fair and reasonable to the Trust or any holder
of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement
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contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another
express standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other or
different standard imposed by this Declaration or by
applicable law.
SECTION 4.3 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the
full extent permitted by law, any Company Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Trust) by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Company Indemnified Person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually
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and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall
be made in respect of any claim, issue or matter as to which such
Company Indemnified Person shall have been adjudged to be liable to
the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 4.3(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 4.3(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 4.3(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by
the Debenture Issuer as authorized in this Section 4.3(a).
Notwithstanding the foregoing, no advance
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shall be made by the Debenture Issuer if a determination is reasonably
and promptly made (i) by the Regular Trustees by a majority vote of a
quorum of disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 4.3(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All rights
to indemnification under this Section 4.3(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 4.3(a) is in effect. Any repeal or modification of this
Section 4.3(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 4.3(a).
(viii) For purposes of this Section 4.3(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent
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entity, or is or was serving at the request of such constituent entity
as a director, trustee, officer, employee or agent of another entity,
shall stand in the same position under the provisions of this Section
4.3(a) with respect to the resulting or surviving entity as he would
have with respect to such constituent entity if its separate existence
had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 4.3(a) shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i) the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee, and (iii) any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Delaware Trustee (each of the Persons in
(i) through (iii) being referred to as a "Fiduciary Indemnified Person") for,
and to hold each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without gross negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 4.3(b) shall survive the termination of
this Declaration.
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the holders of Securities shall have
no rights by virtue of this Declaration in and to such independent ventures or
the income or profits derived therefrom and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed
wrongful or improper. No Covered Person, the Sponsor or the Delaware Trustee
shall be obligated to present any particular investment or other opportunity to
the Trust even if such opportunity is of a character that, if presented to the
Trust, could be taken by the Trust, and any Covered Person, the Sponsor and the
Delaware Trustee shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person and the Delaware Trustee
may engage or be interested in any financial or other transaction
13
<PAGE> 16
with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for,
trustee or agent for or may act on any committee or body of holders of,
securities or other obligations of the Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by
all of the Trustees and the Sponsor.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force
or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or
the revocation of the Sponsor's charter or of the Trust's
certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with
the consent of all of the Regular Trustees and the Sponsor;
and
(b) as soon as is practicable after the occurrence of an
event referred to in Section 5.2(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
14
<PAGE> 17
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
15
<PAGE> 18
IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
___________________________________
Name: Louis J. Rampino
Title: Regular Trustee
___________________________________
Name: Wayne R. Bailey
Title: Regular Trustee
FREMONT GENERAL CORPORATION,
as Sponsor
By:________________________________
Name:
Title:
<PAGE> 19
EXHIBIT A
CERTIFICATE OF TRUST
The undersigned, the trustees of Fremont General Financing I,
desiring to form a business trust pursuant to Delaware Business Trust Act, 12
Del. C. Section 3810, hereby certify as follows:
(a) The name of the business trust being formed hereby
(the "Trust") is "Fremont General Financing I."
(b) The name and business address of the trustee of the
Trust which has its principal place of business in
the State of Delaware is as follows:
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
(c) This Certificate of Trust shall be effective as of
the date of filing.
Dated: ______ __, 1995
___________________________________
Name: Louis J. Rampino
Title: Trustee
___________________________________
Name: Wayne R. Bailey
Title: Trustee
The Chase Manhattan Bank, N.A.,
as Trustee
By:________________________________
Name:
Title:
17
<PAGE> 1
EXHIBIT 4.3
====================================
AMENDED AND RESTATED DECLARATION
OF TRUST
FREMONT GENERAL FINANCING I
Dated as of ________ __, 1995
====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.3 Reports by the Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.4 Periodic Reports to Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.6 Powers and Duties of the Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.8 Powers and Duties of the Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee . . . . . . . . . . . . . . . . . 19
SECTION 3.10 Certain Rights of Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.2 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
TRUSTEES
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 5.1 Number of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.3 Institutional Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware Trustee Generally . . . . . . . . . . . . 29
SECTION 5.5 Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.6 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.7 Appointment, Removal and Resignation of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.8 Vacancies among Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.9 Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.10 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.11 Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.12 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.2 Paying Agent and Conversion Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.2 Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.3 Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.4 Book Entry Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.5 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.6 Appointment of Successor Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.7 Definitive Preferred Security Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 10.1 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 10.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.5 Outside Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 11.2 Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent . . . . . . . . . . . . . . . . . 48
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee . . . . . . . . . . . . . . . . . . . . . 50
SECTION 13.2 Representations and Warranties of Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 14.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 14.3 Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 14.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 14.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 14.6 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 14.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ANNEX I TERMS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2-1
EXHIBIT B SPECIMEN OF DEBENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C UNDERWRITING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
iii
<PAGE> 5
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
<S> <C>
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annex I
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
</TABLE>
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
iv
<PAGE> 6
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
FREMONT GENERAL FINANCING I
____________, 1995
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of ________ __, 1995, by the Trustees (as defined
herein), the Sponsor (as defined herein) and by the holders, from time to time,
of undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Trustees and the Sponsor established Fremont
General Financing I (the "Trust"), a trust under the Delaware Business Trust
Act pursuant to a Declaration of Trust dated as of ________ __, 1995 (the
"Original Declaration") and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on _______ __, 1995 for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debentures of the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE> 7
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of and
Annexes and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in
this Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
2
<PAGE> 8
"Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" means [the "Closing Time" and each "Date of
Delivery" under the Underwriting Agreement].
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to
be dated as of ___________, 1995 of the Sponsor in respect of the Common
Securities.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any officer, employee or agent of the Trust or its
Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at 1 Chase
Manhattan Plaza, New York, New York.
3
<PAGE> 9
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Fremont General Corporation, in its
capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means First Interstate Bank of California,
a California banking corporation, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer under the Indenture to be held by the Institutional
Trustee, a specimen certificate for such series of Debentures being Exhibit B.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Definitive Preferred Security Certificates" has the meaning
set forth in Section 9.4.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of _______, 1995,
among the Debenture Issuer and the Debenture Trustee, and
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any indenture supplemental thereto pursuant to which the Debentures are to be
issued.
"Institutional Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in
Section 3.8(c).
"Investment Company" means an investment company as defined
in the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Preferred
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all outstanding Securities
of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed
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opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement
to be dated as of ______, 1995, of the Sponsor in respect of the Preferred
Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A-1.
"Pricing Agreement" means the pricing agreement between the
Trust, the Debenture Issuer, and the underwriters designated by the Regular
Trustees with respect to the offer and sale of the Preferred Securities.
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Regular Trustee" has the meaning set forth in Section 5.1
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
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"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those per- formed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"Sponsor" means Fremont General Corporation, a Nevada
corporation, or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of 10% or more of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant
class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and
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all other Persons who may from time to time be duly appointed, qualified and
serving as Trustees in accordance with the provisions hereof, and references
herein to a Trustee or the Trustees shall refer to such Person or Persons
solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
"Underwriting Agreement" means the Underwriting Agreement for
the offering and sale of Preferred Securities in the form of Exhibit C.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of
the Trust Indenture Act that are required to be part of this Declaration and
shall, to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Section
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on
behalf of the Trust shall provide the Institutional Trustee (i) within 14 days
after each record date for payment of Distributions, a list, in such form as
the Institutional Trustee may reasonably require, of the names and addresses of
the Holders of the Securities ("List of Holders") as of such record date,
provided that neither the Sponsor nor the Regular Trustees on behalf of the
Trust shall be obligated to provide such List of Holders at any time the List
of Holders does not differ from the most recent List of Holders given to the
Institutional Trustee by the Sponsor and the Regular Trustees on behalf of the
Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a
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written request for a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Institutional Trustee. The Institutional
Trustee shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity) provided that the
Institutional Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Institutional Trustee shall comply with its
obligations under Section Section 311(a), 311(b) and 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after May 1 of each year, the Institutional
Trustee shall provide to the Holders of the Preferred Securities such reports
as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Institutional Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Institutional Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Declaration that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant
to Section 314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Preferred Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default in respect of the
Preferred Securities and its consequences, provided that, if the underlying
Event of Default under the Indenture:
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(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the
Preferred Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Event of Default with respect to
the Preferred Securities arising therefrom shall be deemed to have been cured,
for every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the
Preferred Securities or impair any right consequent thereon. Any waiver by the
Holders of the Preferred Securities of an Event of Default with respect to the
Preferred Securities shall also be deemed to constitute a waiver by the Holders
of the Common Securities of any such Event of Default with respect to the
Common Securities for all purposes of this Declaration without any further act,
vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration shall also
not be waivable; or
(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Common Securities that the
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relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated,
and until such Events of Default have been so cured, waived or otherwise
eliminated, the Institutional Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Institutional Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of Section Section 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Section Section 316(a)(1)(A)
and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon such waiver,
any such default shall cease to exist and any Event of Default with respect to
the Common Securities arising therefrom shall be deemed to have been cured for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture
by the Institutional Trustee at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default under
this Declaration. The foregoing provisions of this Section 2.6(c) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Institutional Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Securities, notices of all defaults with
respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving
of such notice (the term "defaults" for the purposes of this Section 2.7(a)
being hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein); provided that, except for a default in
the payment of principal of (or premium, if any) or interest on any of the
Debentures or in the payment of any sinking fund installment estab-
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lished for the Debentures, the Institutional Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the
Institutional Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of the Securities.
(b) The Institutional Trustee shall not be deemed to
have knowledge of any default except:
(i) a default under Sections ____ and ____ of the
Indenture; or
(ii) any default as to which the Institutional Trustee
shall have received written notice or of which a Responsible Officer
of the Institutional Trustee charged with the administration of the
Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Fremont General Financing I," as such name
may be modified from time to time by the Regular Trustees following written
notice to the Holders of Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the Regular
Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o
Fremont General Corporation, Fremont General Corporation, 2020 Santa Monica
Boulevard, Suite 600, Santa Monica, California 90404. On ten Business
Days written notice to the Holders of Securities, the Regular Trustees may
designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
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SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Institutional Trustee, the Regular Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers
shall constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Institutional Trustee Account or as otherwise provided in
this Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided,
howeve, that the Trust may issue no more than one series of Preferred
Securities and no more than one series of Common Securities, and,
provided further, that there shall be no interests in the Trust other
than the Securities, and the issuance of Securities shall be limited
to a simultaneous issuance of both Preferred Securities and Common
Securities on each Closing Date;
(b) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto, pertaining to the Preferred
Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to
be necessary in order to qualify or register
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all or part of the Preferred Securities in any State in which
the Sponsor has determined to qualify or register such
Preferred Securities for sale;
(iii) execute and file an application, prepared
by the Sponsor, to the New York Stock Exchange, Inc. or any
other national stock exchange or the Nasdaq Stock Market's
National Market for listing upon notice of issuance of any
Preferred Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor, relating to the registration
of the Preferred Securities under Section 12(b) of the
Exchange Act; and
(v) execute and enter into the Underwriting
Agreement and Pricing Agreement providing for the sale of the
Preferred Securities;
(c) to acquire the Debentures with the proceeds of the
sale of the Preferred Securities and the Common Securities; provided,
however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional
Trustee for the benefit of the Holders of the Preferred Securities and
the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee
prompt written notice of the occurrence of a Tax Event; provided
that the Regular Trustees shall consult with the Sponsor and the
Institutional Trustee before taking or refraining from taking any
Ministerial Action in relation to a Tax Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including and with respect to, for the purposes of
Section 316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices to
the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may
be required of the Regular Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"),
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unless pursuant to Section 3.8(e), the Institutional Trustee has the
exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable compensation
for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by Section
314(a)(4) of the Trust Indenture Act to the Institutional Trustee,
which certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental
to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its
election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to execute all documents or instruments, perform
all duties and powers, and do all things for and on behalf of the
Trust in all matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's
valid existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and of each
other jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Preferred Securities or to
enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this
Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in carrying
out the activities of the Trust as set out in this Section 3.6,
including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
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(ii) causing the Trust to be classified for
United States federal income tax purposes as a grantor trust;
and
(iii) cooperating with the Debenture Issuer to
ensure that the Debentures will be treated as indebtedness of
the Debenture Issuer for United States federal income tax
purposes,
provided that such action does not adversely affect the interests of
Holders; and
(q) to take all action necessary to cause all
applicable tax returns and tax information reports that are required
to be filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust.
The Regular Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Regular Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust
set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Institutional Trustee set forth in
Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including
the Institutional Trustee) shall not, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Institutional Trustee) shall cause the Trust
not to:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to
Holders of Securities pursuant to the terms of this Declaration and of
the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust
purpose;
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(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the Trust other
than the Securities; or
(vii) other than as provided in this Amended and Restated
Declaration or Annex I, (A) direct the time, method and place
of exercising any trust or power conferred upon the Debenture Trustee
with respect to the Debentures, (B) waive any past default that is
waivable under the Indenture, (C) exercise any right to rescind or
annul any declaration that the principal of all the Debentures shall
be due and payable, or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent
shall be required unless the Trust shall have received an opinion of
counsel to the effect that such modification will not cause more than
an insubstantial risk that for United States federal income tax
purposes the Trust will not be classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by
and held of record in the name of the Institutional Trustee in trust for the
benefit of the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 5.6. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its
right, title and interest in the Debentures to the Regular Trustees or to the
Delaware Trustee (if the Institutional Trustee does not also act as Delaware
Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Institutional Trustee Account") in the
name of and under the exclusive control of the Institutional Trustee
on behalf of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by the
Institutional Trustee, deposit such funds into the Institutional
Trustee Account and make payments to the Holders of the Preferred
Securities and
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Holders of the Common Securities from the Institutional Trustee
Account in accordance with Section 6.1. Funds in the Institutional
Trustee Account shall be held uninvested until disbursed in accordance
with this Declaration. The Institutional Trustee Account shall be an
account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness is at least equal to the rating
assigned to the Preferred Securities by a "nationally recognized
statistical rating organization", as that term is defined for purposes
of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Preferred
Securities and the Common Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain special events (as may be
defined in the terms of the Securities) arising from a change in law
or a change in legal interpretation or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions
and perform such duties as may be specifically required of the Institutional
Trustee pursuant to the terms of the Securities.
(e) The Institutional Trustee shall take any Legal
Action which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Institutional Trustee has actual knowledge or the
Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a
Trustee unless either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been
appointed and has accepted that appointment in accordance with Section
5.6.
(g) The Institutional Trustee shall have the legal
power to exercise all of the rights, powers and privileges of a holder of
Debentures under the Indenture and, if an Event of
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Default actually known to a Responsible Officer of the Institutional Trustee
occurs and is continuing, the Institutional Trustee shall, for the benefit of
Holders of the Securities, enforce its rights as holder of the Debentures
subject to the rights of the Holders pursuant to the terms of such Securities.
(h) The Institutional Trustee may authorize one or more
Persons (each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all securities and
any such Paying Agent shall comply with Section 317(b) of the Trust Indenture
Act. Any Paying Agent may be removed by the Institutional Trustee at any time
and a successor Paying Agent or additional Paying Agents may be appointed at
any time by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional
Trustee shall have none of the duties, liabilities, powers or the authority of
the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth
in this Section 3.8 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Institutional Trustee
shall not take any action that is inconsistent with the purposes and functions
of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee.
(a) The Institutional Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed
to relieve the Institutional Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
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(A) the duties and obligations of the
Institutional Trustee shall be determined solely by the
express provisions of this Declaration and the Institutional
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations shall be
read into this Declaration against the Institutional Trustee;
and
(B) in the absence of bad faith on the part of
the Institutional Trustee, the Institutional Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Institutional
Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Institutional Trustee, the
Institutional Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of
the Institutional Trustee, unless it shall be proved that the
Institutional Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Institutional Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Institutional
Trustee against such risk or liability is not reasonably assured to
it;
(v) the Institutional Trustee's sole duty with respect
to the custody, safe keeping and physical preservation
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of the Debentures and the Institutional Trustee Account shall be to
deal with such property in a similar manner as the Institutional
Trustee deals with similar property for its own account, subject to
the protections and limitations on liability afforded to the
Institutional Trustee under this Declaration and the Trust Indenture
Act;
(vi) the Institutional Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for
any interest on any money received by it except as it may otherwise
agree with the Sponsor. Money held by the Institutional Trustee need
not be segregated from other funds held by it except in relation to
the Institutional Trustee Account maintained by the Institutional
Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and
shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by a Direction or an Officers' Certificate;
(iii) whenever in the administration of this Declaration,
the Institutional Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed)
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may, in the absence of bad faith on its part, request and conclusively
rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Institutional Trustee shall have no duty to see
to any recording, filing or registration of any instrument (including
any financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel
or other experts and the advice or opinion of such counsel and experts
with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion, such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Institutional
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Institutional Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Declaration at the request or direction of any Holder, unless
such Holder shall have provided to the Institutional Trustee security
and indemnity, reasonably satisfactory to the Institutional Trustee,
against the costs, expenses (including attorneys' fees and expenses
and the expenses of the Institutional Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as
may be requested by the Institutional Trustee provided, that, nothing
contained in this Section 3.10(a)(vi) shall be taken to relieve the
Institutional Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Institutional Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Institutional Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
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either directly or by or through agents, custodians, nominees or
attorneys and the Institutional Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or
its agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Institutional Trustee or its
agents alone shall be sufficient and effective to perform any such
action and no third party shall be required to inquire as to the
authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration
the Institutional Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Institutional Trustee (i) may request
instructions from the Holders of the Securities which instructions may
only be given by the Holders of the same proportion in liquidation
amount of the Securities as would be entitled to direct the
Institutional Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received, and (iii) shall be protected in conclusively relying on
or acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Institutional Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Institutional Trustee to perform any act
or acts or exercise any right, power, duty or obligation conferred or imposed
on it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts, or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Institutional Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be enti-
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tled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities of the Regular Trustees or the Institutional
Trustee described in this Declaration. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, a majority of or, if
there are only two, any Regular Trustee or, if there is only one, such Regular
Trustee is authorized to execute on behalf of the Trust any documents that the
Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided that, the registration statement referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence for fifty-five (55) years from the
Closing Date.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge
with or into, or be replaced by, or convey, transfer or lease its properties
and assets substantially as an entirety to any corporation or other body,
except as described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular
Trustees or, if there are more than two, a majority of the Regular Trustees and
without the consent of the Holders of the Securities, the Delaware Trustee or
the Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:
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(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Preferred
Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a
trustee of the Successor Entity that possesses the same powers and
duties as the Institutional Trustee as the Holder of the Debentures;
(iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or with
an other organization on which the Preferred Securities are then
listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any Successor
Securities) in any material respect (other than with respect to any
dilution of such Holders' interests in the Preferred Securities as a
result of such merger, consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation
or replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences
and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the new
entity); and
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(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company;
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for
United States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall
not, except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the
Common Securities issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to the
Preferred Securities, including any amendments thereto;
(b) to determine the States in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than
actions which must be taken by the Trust, and advise the Trust of
actions it must take, and prepare for execution and filing any
documents to be executed and filed
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by the Trust, as the Sponsor deems necessary or advisable in order to
comply with the applicable laws of any such States;
(c) to prepare for filing by the Trust an application
to the New York Stock Exchange or any other national stock exchange or
the Nasdaq National Market for listing upon notice of issuance of any
Preferred Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the
registration of the Preferred Securities under Section 12(b) of the
Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Underwriting
Agreement and Pricing Agreement providing for the sale of the
Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be three(3), and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the
number of Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; provided,
however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a
natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its
principal place of business in the State of Delaware (the "Delaware
Trustee"); (2) there shall be at least one Trustee who is an employee
or officer of, or is affiliated with the Parent (a "Regular Trustee");
and (3) one Trustee shall be the Institutional Trustee for so long as
this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware
Trustee if it meets the applicable requirements.
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SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law,
provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable
law, then the Institutional Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall
act as Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of this Section 5.3(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Institutional Trustee shall
cease to be eligible to so act under Section 5.3(a), the Institu- tional
Trustee shall immediately resign in the manner and with the effect set forth in
Section 5.6(c).
(c) If the Institutional Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Institutional Trustee and the Holder of the Common
Securities (as if it were the obligor
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referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Preferred Securities Guarantee shall be deemed
to be specifically described in this Declaration for purposes of clause (i) of
the first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be:
The Chase Manhattan Bank, N.A.
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Regular Trustees.
The initial Regular Trustees shall be:
Louis J. Rampino
Wayne R. Bailey
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Regular Trustees is called with respect to any
matter over which the Regular Trustees have power to act, any power of the
Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
(b) Unless otherwise determined by the Regular
Trustees, and except as otherwise required by the Business Trust Act or
applicable law, any Regular Trustee is authorized to execute on behalf of the
Trust any documents which the Regular Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6, provided, that, the
registration statement referred to in Section 3.6, including any amendments
thereto, shall be signed by a majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6 Delaware Trustee.
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The initial Delaware Trustee shall be:
The Chase Manhattan Bank (USA)
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be
appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of
the Holders of a Majority in liquidation amount of the Common
Securities voting as a class at a meeting of the Holders of the Common
Securities.
(b)(i) The Trustee that acts as Institutional Trustee shall
not be removed in accordance with Section 5.6(a) until a Successor
Institutional Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Institutional Trustee and
delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with this Section 5.6(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office
until his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:
(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
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(A) until a Successor Institutional Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Institutional Trustee and delivered
to the Trust, the Sponsor and the resigning Institutional
Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use
their best efforts to promptly appoint a Successor Delaware Trustee or
Successor Institutional Trustee as the case may be if the Institutional Trustee
or the Delaware Trustee delivers an instrument of resignation in accordance
with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 5.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Institutional Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Institutional
Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall
be liable for the acts or omissions to act of any Successor Institutional
Trustee or successor Delaware Trustee, as the case may be.
SECTION 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Regular Trustees or,
if there are more than two, a majority of the Regular Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.6.
SECTION 5.9 Effect of Vacancies.
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The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declara- tion.
SECTION 5.10 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any telephonic meetings of
the Regular Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of a Regular Trustee
at a meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting by the unanimous written consent of the Regular
Trustees. In the event there is only one Regular Trustee, any and all action
of such Regular Trustee shall be evidenced by a written consent of such Regular
Trustee.
SECTION 5.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate
from time to time to such of their number or to officers of
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the Trust the doing of such things and the execution of such instruments either
in the name of the Trust or the names of the Regular Trustees or otherwise as
the Regular Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.
Section 5.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Institutional Trustee or the Delaware Trustee, as
the case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or principal on
the Debentures held by the Institutional Trustee (the amount of any such
payment being a "Payment Amount"), the Institutional Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust
issue one class of preferred securities representing
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undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Preferred Securities") and one class of common
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "Common Securities.")
The Trust shall issue no securities or other interests in the assets of the
Trust other than the Preferred Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the
Trust by a Regular Trustee. Such signature shall be the manual signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be the Regular Trustees of the
Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with any law or with any rule or
regulation of any stock exchange on which Securities may be listed, or to
conform to usage.
(c) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the capital of
the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder
or a Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 7.2 Paying Agent.
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In the event that the Preferred Securities are not in
book-entry only form, the Trust shall maintain in the Borough of Manhattan,
City of New York, State of New York, an office or agency where the Preferred
Securities may be presented for payment ("Paying Agent). The Trust may appoint
the Paying Agent and may appoint one or more additional paying agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent. The Trust may change any Paying Agent without prior
notice to any Holder. The Trust shall notify the Institutional Trustee of the
name and address of any Agent not a party to this Declaration. If the Trust
fails to appoint or maintain another entity as Paying Agent, the Institutional
Trustee shall act as such. The Trust or any of its Affiliates may act as
Paying Agent. The Trust shall initially act as Paying Agent for the Preferred
Securities and the Common Securities.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the Common
Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or
its equivalent with respect to the Holder of the Common Securities or
the Sponsor; the filing of a certificate of cancellation with respect
to the Trust or the revocation of the Holder of the Common Securities
or the Sponsor's charter and the expiration of 90 days after the date
of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution
of the Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called
for redemption and the amounts necessary for redemption thereof shall
have been paid to the Holders in accordance with the terms of the
Securities;
(v) upon the occurrence and continuation of a Tax Event
pursuant to which the Trust shall have been dissolved in accordance
with the terms of the Securities and all of the Debentures endorsed
thereon shall have been distributed to the Holders of Securities in
exchange for all of the Securities; or
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(vi) before the issuance of any Securities, with the
consent of all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of
an event referred to in Section 8.1(a), the Trustees shall file a certificate
of cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities
shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any
Related Party may only transfer Common Securities to the Sponsor or a Related
Party of the Sponsor; provided that, any such transfer is subject to the
condition precedent that the transferor obtain the written opinion of
nationally recognized independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer
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in form satisfactory to the Regular Trustees duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Certificate. By acceptance of a Certificate, each transferee
shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities represented
by such Certificate on the part of any Person, whether or not the Trust shall
have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred
Securities, the Preferred Securities Certificates, on original issuance, will
be issued in the form of one or more, fully registered, global Preferred
Security Certificates (each a "Global Certificate"), to be delivered to DTC,
the initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificates shall initially be registered on the books and records of the
Trust in the name of Cede & Co., the nominee of DTC, and no Preferred Security
Beneficial Owner will receive a definitive Preferred Security Certificate
representing such Preferred Security Beneficial Owner's interests in such
Global Certificates, except as provided in Section 9.7. Unless and until
definitive, fully registered Preferred Security Certificates (the "Definitive
Preferred Security Certificates") have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global Certificates and
receiving approvals, votes or consents hereunder) as the Holder of the
Preferred Securities and the sole holder of the Global Certificates
and shall have no obligation to the Preferred Security Beneficial
Owners;
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(c) to the extent that the provisions of this Section
9.4 conflict with any other provisions of this Declaration, the
provisions of this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial
Owners shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants. DTC will make book entry transfers among the Clearing
Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, unless and until
Definitive Preferred Security Certificates shall have been issued to the
Preferred Security Beneficial Owners pursuant to Section 9.7, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Preferred Security Holders to the Clearing Agency, and shall have
no notice obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Preferred Securities.
SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its
services as securities depositary with respect to the Preferred
Securities and a successor Clearing Agency is not appointed within 90
days after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with
the Sponsor to terminate the book entry system through the Clearing
Agency with respect to the Preferred Securities,
then:
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(c) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect
to such Preferred Securities; and
(d) upon surrender of the Global Certificates by the
Clearing Agency, accompanied by registration instructions, the Regular
Trustees shall cause Definitive Certificates to be delivered to
Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the
Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in
relying on, said instructions of the Clearing Agency. The Definitive
Preferred Security Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which Preferred
Securities may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to
the Regular Trustees, or if the Regular Trustees shall receive
evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees
such security or indemnity as may be required by them to keep each of
them harmless.
then, in the absence of notice that such Certificate shall have been acquired
by a bona fide purchaser, any Regular Trustee on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like denomination.
In connection with the issuance of any new Certificate under this Section 9.8,
the Regular Trustees may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the relevant Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
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ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration,
the Securities Guarantees and the terms of the Securities, the Sponsor shall
not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of
the Securities which shall be made solely from assets of the Trust;
and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable
for all of the debts and obligations of the Trust (other than with respect to
the Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders of the Preferred Securities shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible
or accountable in damages or otherwise to the Trust or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the Trust and
in a manner such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opin-
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ions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Securities might
properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity (other than the duties imposed on the Institutional Trustee
under the Trust Indenture Act), are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person
is permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to
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give any consideration to any interest of or factors affecting the
Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason
of the fact that he is or was a Company Indemnified Person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification
shall be made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circum
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stances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other
court shall deem proper.
(iii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including dismissal of
an action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii)
of this Section 10.4(a) (unless ordered by a court) shall be made by
the Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by
the Debenture Issuer in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Company Indemnified Person to repay such amount if it
shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section
10.4(a). Notwithstanding the foregoing, no advance shall be made by
the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or
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not opposed to the best interests of the Trust, or, with respect to
any criminal proceeding, that such Company Indemnified Person believed
or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the Regular
Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty
to the Trust or its Common or Preferred Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All rights
to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 10.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall,
unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a Company
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Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i)
Institutional Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the
Institutional Trustee and the Delaware Trustee, and (iv) any officers,
directors, shareholders, members, partners, employees, representatives,
custodians, nominees or agents of the Institutional Trustee and the Delaware
Trustee (each of the Persons in (i) through (iv) being referred to as a
"Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified
Person harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration or the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
obligation to indemnify as set forth in this Section 10.4(b) shall survive the
satisfaction and discharge of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated
to present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Institutional Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Institutional Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
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ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail,
each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss;
(c) The Regular Trustees shall cause to be duly
prepared and delivered to each of the Holders of Securities, any annual United
States federal income tax information statement, required by the Code,
containing such information with regard to the Securities held by each Holder
as is required by the Code and the Treasury Regulations. Notwithstanding any
right under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after the
end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual United
States federal income tax return, on a Form 1041 or such other form required by
United States federal income tax law, and any other annual income tax returns
required to be filed by the Regular Trustees on behalf of the Trust with any
state or local taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, howev-
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er, that all payments of funds in respect of the Debentures held by the
Institutional Trustee shall be made directly to the Institutional Trustee
Account and no other funds of the Trust shall be deposited in the Institutional
Trustee Account. The sole signatories for such accounts shall be designated by
the Regular Trustees; provided, however, that the Institutional Trustee shall
designate the signatories for the Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder. In the event of any claimed over withholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or
by any applicable terms of the Securities, this Declaration may only be amended
by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than
two Regular Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Institutional Trustee, the
Institutional Trustee; and
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(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the
Delaware Trustee;
(b) no amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that such amendment
is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Institutional Trustee, the Institutional Trustee shall have first
received:
(A) an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel
to the Sponsor or the Trust) that such amendment is permitted
by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(iii) to the extent the result of such amendment would be
to:
(A) cause the trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the
powers of the Institutional Trustee in contravention of the
Trust Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(c) at such time after the Trust has issued any
Securities that remain outstanding, any amendment that would adversely affect
the rights, privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth in the
terms of such Securities;
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(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent
of the Holders of a Majority in liquidation amount of the Common Securities
and;
(f) the rights of the holders of the Common Securities
under Article V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration
may be amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or obligations
of the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory authority
which amendment does not have a material adverse effect on the right,
preferences or privileges of the Holders; and
(v) to modify, eliminate and add to any provision of
the Amended Declaration to such extent as may be necessary.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities
may be called at any time by the Regular Trustees (or as provided in the terms
of the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration,
the terms of the Securities or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading. The Regular Trustees
shall call a meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such class of Securities.
Such direction shall be given by delivering to the Regular Trustees one or more
calls in a writing stating that the signing Holders of Securities wish to
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call a meeting and indicating the general or specific purpose for which the
meeting is to be called. Any Holders of Securities calling a meeting shall
specify in writing the Security Certificates held by the Holders of Securities
exercising the right to call a meeting and only those Securities specified
shall be counted for purposes of determining whether the required percentage
set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the
terms of the Securities, the following provisions shall apply to meetings of
Holders of Securities:
(i) notice of any such meeting shall be given to all
the Holders of Securities having a right to vote thereat at least 7
days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any stock
exchange on which the Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of
the Holders of Securities. Any action that may be taken at a meeting
of the Holders of Securities may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by the
Holders of Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to authorize
or take such action at a meeting at which all Holders of Securities
having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written ballot
submitted to the Security Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the time
specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person
to act for it by proxy on all matters in which a Holder of Securities
is entitled to participate, including waiving notice of any meeting,
or voting or participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Holder of Securities executing it. Except as
otherwise provided herein, all matters relating to the giving, voting
or validity of proxies shall be governed by the General Corporation
Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
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(iii) each meeting of the Holders of the Securities shall
be conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration,
the terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Preferred Securities are then
listed or trading, otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
The Trustee that acts as initial Institutional Trustee
represents and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Institutional Trustee represents and warrants
to the Trust and the Sponsor at the time of the Successor Institutional
Trustee's acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a national banking
association with trust powers, duly organized, validly existing and in
good standing under the laws of the United States, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;
(b) the execution, delivery and performance by the
Institutional Trustee of the Declaration has been duly authorized by
all necessary corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed and delivered by the
Institutional Trustee, and it constitutes a legal, valid and binding
obligation of the Institutional Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless
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of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) the execution, delivery and performance of the
Declaration by the Institutional Trustee does not conflict with or
constitute a breach of the Articles of Organization or By-laws of the
Institutional Trustee; and
(d) no consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the
Institutional Trustee, of the Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking
corporation with trust powers, duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration.
(b) The Delaware Trustee has been authorized to perform
its obligations under the Certificate of Trust and the Declaration.
The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity
or at law).
(c) No consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration.
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth below (or such other
address as the Trust may give notice of to the Holders of the
Securities):
Fremont General Financing I
2020 Santa Monica Boulevard
Suite 600
Santa Monica, California 90404
Attention:
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware Trustee may
give notice of to the Holders of the Securities):
The Chase Manhattan Bank (USA)
802 Delaware Avenue
13th Floor
Wilmington, Delaware 19801
(c) if given to the Institutional Trustee, at its
Corporate Trust Office to the attention of ______________ (or such
other address as the Institutional Trustee may give notice of to the
Holders of the Securities):
(d) if given to the Holder of the Common Securities, at
the mailing address of the Sponsor set forth below (or such other
address as the Holder of the Common Securities may give notice to the
Trust):
Fremont General Corporation
2020 Santa Monica Boulevard
Suite 600
Santa Monica, California 90404
Attention:
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be deliv-
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ered because of a changed address of which no notice was given, such notice or
other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
____________________________________
Louis J. Rampino, as Regular Trustee
____________________________________
Wayne R. Bailey, as Regular Trustee
The Chase Manhattan Bank (USA)
as Delaware Trustee
By:______________________________
Name:
Title:
The Chase Manhattan Bank, N.A., as
Institutional Trustee
By:______________________________
Name:
Title:
FREMONT GENERAL CORPORATION, as
Sponsor
By:____________________________
Name:
Title:
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ANNEX I
TERMS OF
___% TRUST ORIGINATED PREFERRED SECURITIES
___% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of _______, 1995 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. Four million (4,000,000)
Preferred Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of one hundred million dollars
($100,000,000) and a liquidation amount with respect to the assets of the Trust
of $25 per preferred security, are hereby designated for the purposes of
identification only as "_____% Trust Originated Preferred Securities(SM)
('TOPrS'(SM)" (the "Preferred Securities"). The Preferred Security Certificates
evidencing the Preferred Securities shall be substantially in the form of
Exhibit A-1 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice or
to conform to the rules of any stock exchange on which the Preferred Securities
are listed.
(b) Common Securities. [ ] Common
Securities of the Trust with an aggregate liquidation amount with respect to
the assets of the Trust of [ ] dollars ($[ ]) and a
liquidation amount with respect to the assets of the Trust of $25 per common
security, are hereby designated for the purposes of identification only as
"______% Trust Originated Common Securities" (the "Common Securities"). The
Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
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2. Distributions.
(a) Distributions payable on each Security will be fixed
at a rate per annum of ______% (the "Coupon Rate") of the stated liquidation
amount of $25 per Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarter will bear interest thereon compounded quarterly at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative,
will accrue from ________, 1995, and will be payable quarterly in arrears, on
_______ __, _______ __, _______ __, and _______ __ of each year, commencing on
__________, 1995, except as otherwise described below. The Debenture Issuer
has the right under the Indenture to defer payments of interest by extending
the interest payment period from time to time on the Debentures for a period
not exceeding 20 consecutive quarters (each an "Extension Period"), during
which Extension Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall last beyond the date of maturity of the
Debentures. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at the
Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
relevant record dates. While the Preferred
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Securities remain in book-entry only form, the relevant record dates shall be
one Business Day prior to the relevant payment dates which payment dates
correspond to the interest payment dates on the Debentures. Subject to any
applicable laws and regulations and the provisions of the Declaration, each
such payment in respect of the Preferred Securities will be made as described
under the heading "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company" in the Prospectus dated______, 1995
(the "Prospectus") of the Trust included in the Registration Statement on Form
S-3 of the Sponsor, the Trust, certain other business trusts and a certain
partnership. The relevant record dates for the Common Securities shall be the
same record date as for the Preferred Securities. If the Preferred Securities
shall not continue to remain in book-entry only form, the relevant record dates
for the Preferred Securities, shall conform to the rules of any securities
exchange on which the securities are listed and, if none, shall be selected by
the Regular Trustees, which dates shall be at least one Business Day but less
than 60 Business Days before the relevant payment dates, which payment dates
correspond to the interest payment dates on the Debentures. Distributions
payable on any Securities that are not punctually paid on any Distribution
payment date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, will cease to be payable to the Person in whose
name such Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(d) In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders of
the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the dissolution, winding-up or termination, as the case may be, will be
entitled to receive out of the assets of the Trust available for distribution
to Holders of Securities after satisfaction of liabilities of creditors an
amount equal to the aggregate of the stated liquidation amount of
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$25 per Security plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, winding-up or termination, Debentures in an
aggregate principal amount equal to the aggregate stated liquidation amount of
such Securities, with an interest rate equal to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in
part, whether at maturity or upon redemption (either at the option of the
Debenture Issuer or pursuant to a Tax Event as described below), the proceeds
from such repayment or payment shall be simultaneously applied to redeem
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed at a redemption price
of $25 per Security plus an amount equal to accrued and unpaid Distributions
thereon at the date of the redemption, payable in cash (the "Redemption
Price"). Holders will be given not less than 30 nor more than 60 days notice
of such redemption.
(b) If fewer than all the outstanding Securities are to
be so redeemed, the Common Securities and the Preferred Securities will be
redeemed Pro Rata and the Preferred Securities to be redeemed will be as
described in Section 4(f)(ii) below.
(c) If a Tax Event shall occur and be continuing the
Regular Trustees shall, except in certain limited circumstances in relation to
a Tax Event described in this Section 4(c), dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Institutional Trustee,
having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and accrued
and unpaid interest equal to accrued and unpaid Distributions on, and having
the same record date for payment as the Securities, to be distributed to the
Holders of the Securities in liquidation of such Holders' interests in the
Trust on a Pro Rata basis, within 90 days following the occurrence of such Tax
Event (the "90 Day Period"); provided, however, that, as a condition of such
dissolution and distribution, the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opin-
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ion"), which opinion may rely on published revenue rulings of the Internal
Revenue Service, to the effect that the Holders of the Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of the dissolution of the Trust and the distribution of Debentures, and
provided, further, that, if at the time there is available to the Trust the
opportunity to eliminate, within the 90 Day Period, the Tax Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure that has no adverse effect on
the Trust, the Debenture Issuer, the Sponsor or the Holders of the Securities
("Ministerial Action"), the Trust will pursue such Ministerial Action in lieu
of dissolution.
If (i) in the event of a Tax Event, after receipt of a Tax
Event Opinion (as defined hereinafter) by the Regular Trustees, the Debenture
Issuer has received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk that the
Debenture Issuer would be precluded from deducting the interest on the
Debentures for United States federal income tax purposes even if the Debentures
were distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), or (ii) in the event
of any Tax Event, after receipt of a Tax Event Opinion the Regular Trustees
shall have been informed by such tax counsel that a No Recognition Opinion
cannot be delivered to the Trust, the Debenture Issuer shall have the right at
any time, upon not less than 30 nor more than 60 days notice, to redeem the
Debentures in whole or in part for cash within 90 days following the occurrence
of such Tax Event, and, following such redemption, Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed shall be redeemed by the Trust at the Redemption Price on a Pro Rata
basis; provided, however, that, if at the time there is available to the Trust
the opportunity to eliminate, within such 90 day period, the Tax Event by
taking some Ministerial Action, the Trust or the Debenture Issuer will pursue
such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent tax counsel
experienced in such matters (a "Tax Event Opinion") to the effect that on or
after the date of the Prospectus Supplement, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority therefor or therein, or (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any
legislative body, court, governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced or which
interpreta-
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tion or pronouncement is issued or announced or which action is taken, in each
case on or after the date of the Prospectus Supplement, there is more than an
insubstantial risk that (i) the Trust is or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to interest
accrued or received on the Debentures, (ii) the Trust is, or will be within 90
days of the date thereof, subject to more than a de minimis amount of taxes,
duties or other governmental charges, or (iii) interest payable by the
Debenture Issuer to the Trust on the Debentures is not, or within 90 days of
the date thereof will not be, deductible, in whole or in part, by the Debenture
Issuer for United States federal income tax purposes.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust Company
(the "Depository") or its nominee (or any successor Clearing Agency or its
nominee), as the record Holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Debentures to be
delivered upon such distribution and any certificates representing Securities,
except for certificates representing Preferred Securities held by the
Depository or its nominee (or any successor Clearing Agency or its nominee),
will be deemed to represent beneficial interests in the Debentures having an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the Coupon Rate of, and accrued and unpaid
interest equal to accrued and unpaid Distributions on such Securities until
such certificates are presented to the Debenture Issuer or its agent for
transfer or reissue.
(d) The Trust may not redeem fewer than all the
outstanding Securities unless all accrued and unpaid Distributions have been
paid on all Securities for all quarterly Distribution periods terminating on or
before the date of redemption.
(e) If the Debentures are distributed to holders of the
Securities, pursuant to the terms of the Indenture, the Debenture Issuer will
use its best efforts to have the Debentures listed on the New York Stock
Exchange or on such other exchange as the Preferred Securities were listed
immediately prior to the distribution of the Debentures.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail
to each Holder of Securities to be redeemed or exchanged not fewer
than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the
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case of a redemption, will be the date fixed for redemption of the
Debentures. For purposes of the calculation of the date of redemption
or exchange and the dates on which notices are given pursuant to this
Section 4(f)(i), a Redemption/ Distribution Notice shall be deemed to
be given on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders of Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of
Securities at the address of each such Holder appearing in the books
and records of the Trust. No defect in the Redemption/Distribution
Notice or in the mailing of either thereof with respect to any Holder
shall affect the validity of the redemption or exchange proceedings
with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Preferred Securities, it being
understood that, in respect of Preferred Securities registered in the
name of and held of record by the Depository or its nominee (or any
successor Clearing Agency or its nominee) or any nominee, the
distribution of the proceeds of such redemption will be made to each
Clearing Agency Participant (or Person on whose behalf such nominee
holds such securities) in accordance with the procedures applied by
such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives
a Redemption/Distribution Notice, which notice may only be issued if
the Debentures are redeemed as set out in this Section 4 (which notice
will be irrevocable), then (A) while the Preferred Securities are in
book-entry only form, with respect to the Preferred Securities, by
12:00 noon, New York City time, on the redemption date, provided that
the Debenture Issuer has paid the Institutional Trustee a sufficient
amount of cash in connection with the related redemption or maturity
of the Debentures, the Institutional Trustee will deposit irrevocably
with the Depository or its nominee (or successor Clearing Agency or
its nominee) funds sufficient to pay the applicable Redemption Price
with respect to the Preferred Securities and will give the Depository
irrevocable instructions and authority to pay the Redemption Price to
the Holders of the Preferred Securities, and (B) with respect to
Preferred Securities issued in definitive form and Common Securities,
provided that the Debenture Issuer has paid the Institutional Trustee
a sufficient amount of cash in connection with the related redemption
or maturity of the Debentures, the Institutional Trustee will pay the
relevant Redemption Price to the Holders of such Securities by check
mailed to the address of the relevant Holder appearing on the books
and records of the Trust on the redemption date. If a
Redemption/Distribution Notice
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<PAGE> 68
shall have been given and funds deposited as required, if applicable,
then immediately prior to the close of business on the date of such
deposit, or on the redemption date, as applicable, distributions will
cease to accrue on the Securities so called for redemption and all
rights of Holders of such Securities so called for redemption will
cease, except the right of the Holders of such Securities to receive
the Redemption Price, but without interest on such Redemption Price.
Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that
have been so called for redemption. If any date fixed for redemption
of Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day falls in
the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as
if made on such date fixed for redemption. If payment of the
Redemption Price in respect of any Securities is improperly withheld
or refused and not paid either by the Institutional Trustee or by the
Sponsor as guarantor pursuant to the relevant Securities Guarantee,
Distributions on such Securities will continue to accrue from the
original redemption date to the actual date of payment, in which case
the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (A) in respect of the
Preferred Securities, the Depository or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been
issued or, if Definitive Preferred Security Certificates have been
issued, to the Holder thereof, and (B) in respect of the Common
Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities
laws), provided the acquiror is not the Holder of the Common
Securities or the obligor under the Indenture, the Sponsor or any of
its subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
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<PAGE> 69
(b) Subject to the requirements set forth in this
paragraph, the Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class may direct the time, method, and place
of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including (i) directing the time, method, place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture Trustee with
respect to the Debentures, (ii) waive any past default and its consequences
that is waivable under Section ___ of the Indenture, or (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable, provided, however, that, where a consent
under the Indenture would require the consent or act of the Holders of greater
than a majority of the Holders in principal amount of Debentures affected
thereby (a "Super Majority"), the Institutional Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in liquidation amount of the Preferred Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. The Institutional Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of the Preferred
Securities. Other than with respect to directing the time, method and place of
conducting any remedy available to the Institutional Trustee or the Debenture
Trustee as set forth above, the Institutional Trustee shall not take any action
in accordance with the directions of the Holders of the Preferred Securities
under this paragraph unless the Institutional Trustee has obtained an opinion
of tax counsel to the effect that for the purposes of United States federal
income tax the Trust will not be classified as other than a grantor trust on
account of such action. If the Institutional Trustee fails to enforce its
rights under the Declaration, any Holder of Preferred Securities may institute
a legal proceeding directly against any Person to enforce the Institutional
Trustee's rights under the Declaration without first instituting a legal
proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Regular Trustees will cause a notice of
any meeting at which Holders of Preferred Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Preferred Securities. Each
such notice will include a statement setting forth (i) the date of such meeting
or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
64
<PAGE> 70
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities
will be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Sponsor or any Affiliate of
the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and 7 as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only
after the Event of Default with respect to the Preferred Securities has been
cured, waived, or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is waivable under Section ____ of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable, provided that,
where a consent or action under the Indenture would require the consent or act
of the Holders of greater than a majority in principal amount of Debentures
affected thereby (a "Super Majority"), the Institutional Trustee may only give
such consent or take such action at the written direction of the Holders of at
least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. Pursuant to this Section 6(c), the
65
<PAGE> 71
Institutional Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities. Other than with
respect to directing the time, method and place of conducting any remedy
available to the Institutional Trustee or the Debenture Trustee as set forth
above, the Institutional Trustee shall not take any action in accordance with
the directions of the Holders of the Common Securities under this paragraph
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will
not be classified as other than a grantor trust on account of such action. If
the Institutional Trustee fails to enforce its rights under the Declaration,
any Holder of Common Securities may institute a legal proceeding directly
against any Person to enforce the Institutional Trustee's rights under the
Declaration, without first instituting a legal proceeding against the
Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of
the Declaration, if any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective
66
<PAGE> 72
except with the approval of the Holders of at least a Majority in liquidation
amount of the Securities, voting together as a single class; provided, however,
if any amendment or proposal referred to in clause (i) above would adversely
affect only the Preferred Securities or only the Common Securities, then only
the affected class will be entitled to vote on such amendment or proposal and
such amendment or proposal shall not be effective except with the approval of a
Majority in liquidation amount of such class of Securities.
(b) In the event the consent of the Institutional Trustee
as the holder of the Debentures is required under the Indenture with respect to
any amendment, modification or termination on the Indenture or the Debentures,
the Institutional Trustee shall request the written direction of the Holders of
the Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require the consent of the holders of greater than a majority in
aggregate principal amount of the Debentures (a "Super Majority"), the
Institutional Trustee may only give such consent at the direction of the
Holders of at least the proportion in liquidation amount of the Securities
which the relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding; provided, further, that the Institutional
Trustee shall not take any action in accordance with the directions of the
Holders of the Securities under this Section 7(b) unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities outstanding unless, in relation to a payment, an Event
of Default under the Declaration has occurred and is continuing, in which case
any funds available to make such payment shall be paid first to each Holder of
the Preferred Securities pro rata according to the aggregate liquidation amount
of Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the
67
<PAGE> 73
relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event
of Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Institutional Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange,
Inc.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights
to subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request
to the Sponsor at its principal place of business.
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<PAGE> 74
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
This Preferred Security is a Global Certificate within the
meaning of the Declaration hereinafter referred to and is registered in the name
of The Depository Trust Company (the "Depositary") or a nominee of the
Depositary. This Preferred Security is exchangeable for Preferred Securities
registered in the name of a person other than the Depositary or its nominee only
in the limited circumstances described in the Declaration and no transfer of
this Preferred Security (other than a transfer of this Preferred Security as a
whole 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) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.
Certificate Number Number of Preferred Securities
CUSIP NO. [ ]
Certificate Evidencing Preferred Securities
of
FREMONT GENERAL FINANCING I
____% Trust Originated Preferred SecuritiesSM ("TOPrS"SM)
(liquidation amount $25 per Preferred Security)
FREMONT GENERAL FINANCING I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of preferred securities
of the Trust representing undivided beneficial interests in the assets of the
Trust desig-
A1-1
<PAGE> 75
nated the _____% Trust Originated Preferred SecuritiesSM (liquidation amount
$25 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities represented hereby are issued and shall in all respects be subject
to the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of _______, 1995, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Preferred Securities Guarantee to
the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this ___ day of ____________, 199__.
FREMONT GENERAL FINANCING I
By:________________________________
Name: Louis J. Rampino
Title: Regular Trustee
A1-2
<PAGE> 76
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be
fixed at a rate per annum of ______% (the "Coupon Rate") of the stated
liquidation amount of $__ per Preferred Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears for more than one quarter will bear interest thereon
compounded quarterly at the Coupon Rate (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any
period will be computed for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed per 90-day quarter.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on _______ __, _______ __,
_______ __ and _______ __ of each year, commencing on ______ __, 1995, [to
Holders of record as of the preceding Business Day][to Holders of record
fifteen (15) days prior to such payment dates, which payment dates shall
correspond to the interest payment dates on the Debentures]. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "Extension Period") and,
as a consequence of such deferral, Distributions will also be deferred.
Despite such deferral, quarterly Distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Extension Period. Prior to the termination
of any such Extension Period, the Debenture Issuer may further extend such
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 20 consecutive quarters
or extend beyond the maturity of the Debentures. Payments of accrued
Distributions will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
The Preferred Securities shall be redeemable as provided in
the Declaration.
A1-3
<PAGE> 77
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
______________________________________________________________________________
______________________________________________________________________________
___________________________________________________________ agent to transfer
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: ____________________________
Signature: _______________________
(Sign exactly as your name appears
on the other side of this
Preferred Security Certificate)
A1-4
<PAGE> 78
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
FREMONT GENERAL FINANCING I
______% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
FREMONT GENERAL FINANCING I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
_________________ (the "Holder") is the registered owner of common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the ______% Trust Originated Common Securities (liquidation
amount $25 per Common Security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject
to the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of _______, 1995, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder
is entitled to the benefits of the Common Securities Guarantee to the extent
provided therein. The Sponsor will provide a copy of the Declaration, the
Common Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
A2-1
<PAGE> 79
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day of
_________________, 199__.
FREMONT GENERAL FINANCING I
By:________________________________
Name: Louis J. Rampino
Title: Regular Trustee
A2-2
<PAGE> 80
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common
Security will be fixed at a rate per annum of ______% (the "Coupon Rate") of
the stated liquidation amount of $__ per Common Security, such rate being the
rate of interest payable on the Debentures to be held by the Institutional
Trustee. Distributions in arrears for more than one quarter will bear interest
thereon compounded quarterly at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions" as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 90-day quarter.
Except as otherwise described below,
distributions on the Common Securities will be cumulative, will accrue from the
date of original issuance and will be payable quarterly in arrears, on ________,
___________, _________, __________ of each year, commencing on _______________
__, 1995,][to Holders of record as of the preceding Business Day][to Holders of
record fifteen (15) days prior to such payment dates, which payment dates shall
correspond to the interest payment dates on the Debentures]. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "Extension Period") and,
as a consequence of such deferral, Distributions will also be deferred.
Despite such deferral, quarterly Distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Extension Period. Prior to the termination
of any such Extension Period, the Debenture Issuer may further extend such
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 20 consecutive quarters.
Payments of accrued Distributions will be payable to Holders as they appear on
the books and records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Common Securities shall be
redeemable as provided in the Declaration.
A2-3
<PAGE> 81
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _____________________________________________________
______________________________________________________________________________
_______________________________________ agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date: ____________________________
Signature: _______________________
(Sign exactly as your name appears
on the other side of this
Common Security Certificate)
A2-4
<PAGE> 82
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 83
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
EXHIBIT 4.4
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
Fremont General Financing I
Dated as of ________ __, 199_
====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.3 Reports by the Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees . . . . . . . . . . . . . . 12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.2 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.4 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.7 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.4 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of _______ __, 199_, is executed and delivered by Fremont
General Corporation, a Nevada corporation (the "Guarantor"), and The Chase
Manhattan Bank, N.A., as trustee (the "Preferred Guarantee Trustee"),
for the benefit of the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of Fremont General Financing I, a
Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of ________, 199_, among the trustees of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof 4,000,000 preferred securities, having an
aggregate liquidation amount of $100,000,000 (plus up to an additional 600,000
preferred securities, having an aggregate liquidation amount of $15,000,000, to
cover over-allotments), designated the _____% Trust Originated Preferred
Securities(sm) (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Preferred Securities Guarantee, to pay
to the Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein.
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Preferred Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event
of Default (as defined in the Indenture), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.
<PAGE> 5
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have
the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(c) all references to "the Preferred Securities
Guarantee" or "this Preferred Securities Guarantee"
are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee
to Articles and Sections are to Articles and Sections
of this Preferred Securities Guarantee, unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Preferred Securities
Guarantee, unless otherwise defined in this Preferred
Securities Guarantee or unless the context otherwise
requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Business Day" means any day other than a day on which banking
institutions in the City of New York, New York are authorized or required by
any applicable law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time,
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<PAGE> 6
be principally administered, which office at the date of execution of this
Agreement is located at 1 Chase Manhattan Plaza, New York, New York 10081.
"Covered Person" means any Holder or beneficial owner of
Preferred Securities.
"Debentures" means the ___% Junior Subordinated Deferrable
Interest Debentures due ______, __ 20__ of the Issuer held by the Institutional
Trustee (as defined in the Declaration).
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer shall have funds available
therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price") to the extent
the Issuer has funds available therefor, with respect to any Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, to the extent the Issuer shall
have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer
(in either case, the "Liquidation Distribution"). If an event of default under
the Indenture has occurred and is continuing, the rights of holders of the
Common Securities to receive payments under the Common Securities Guarantee
Agreement are subordinated to the rights of Holders of Preferred Securities to
receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee,
any Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
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<PAGE> 7
"Indenture" means the Indenture dated as of _______, 199 ,
among the Guarantor (the "Debenture Issuer") and First Interstate Bank of
California, a California banking corporation ____________________, as
trustee, pursuant to which the Debentures are to be issued to the Property
Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means The Chase Manhattan Bank,
N.A., until a Successor Preferred Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Preferred
Securities Guarantee and thereafter means each such Successor Preferred
Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate
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<PAGE> 8
Trust Office of the Preferred Guarantee Trustee, including any vice-president,
any assistant vice-president, any assistant secretary, the treasurer, any
assistant treasurer or other officer of the Corporate Trust Office of the
Preferred Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter
is referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this
Preferred Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the Preferred Securities
("List of Holders") as of such date, (i) within one Business Day after January
1 and June 30 of each year, and (ii) at any other time within 30 days of
receipt by the Guarantor of a written request for a List of Holders as of a
date no more than 14 days before such List of Holders is given to the Preferred
Guarantee Trustee provided, that the Guarantor shall not be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Preferred Guarantee Trustee
by the Guarantor. The Preferred Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
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<PAGE> 9
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after May 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Events of Default actually known to a Responsible Officer of the Preferred
Guarantee Trust-
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<PAGE> 10
ee, unless such defaults have been cured before the giving of such notice,
provided, that, the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Preferred Guarantee
Trustee shall have received written notice, or of which a Responsible Officer
of the Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by
the Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee
shall automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee has occurred and is
continuing, the Preferred Guarantee Trustee shall enforce this Preferred
Securities Guarantee for the benefit of the Holders of the Preferred
Securities.
(c) The Preferred Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to
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<PAGE> 11
perform only such duties as are specifically set forth in this Preferred
Securities Guarantee, and no implied covenants shall be read into this
Preferred Securities Guarantee against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof,
as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(d) No provision of this Preferred Securities Guarantee
shall be construed to relieve the Preferred Guarantee Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Preferred Securities Guarantee, and the
Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this
Preferred Securities Guarantee against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Preferred Guarantee
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Preferred Guarantee Trustee and conforming to the requirements
of this Preferred Securities Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Preferred Securities
Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer
of the Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee
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<PAGE> 12
Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the Holders of not
less than a Majority in liquidation amount of the Preferred Securities
relating to the time, method and place of conducting any proceeding
for any remedy available to the Preferred Guarantee Trustee, or
exercising any trust or power conferred upon the Preferred Guarantee
Trustee under this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee
shall require the Preferred Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Preferred Securities Guarantee or indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting
upon, any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently evidenced by
a Direction or an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Preferred Guarantee
Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
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(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel, and the written advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court
of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Preferred Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Preferred Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Preferred Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Preferred Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
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(ix) Any action taken by the Preferred Guarantee Trustee
or its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the
authority of the Preferred Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Preferred
Securities Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such
instructions.
(b) No provision of this Preferred Securities Guarantee
shall be deemed to impose any duty or obligation on the Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Preferred Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power
or authority available to the Preferred Guarantee Trustee shall be construed to
be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness. The Preferred Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee
Trustee which shall:
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(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed
in accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.
(c) The Preferred Guarantee Trustee appointed to office
shall hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been
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appointed and has accepted such appointment by instrument in writing executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor
and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of resignation,
the resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities
Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant
to this Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee
all amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
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The obligations, covenants, agreements and duties of the
Guarantor under this Preferred Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred Securities (other
than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
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SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of
the Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities Guarantee or
exercising any trust or power conferred upon the Preferred Guarantee Trustee
under this Preferred Securities Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce
this Preferred Securities Guarantee, any Holder of Preferred Securities may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Preferred Securities Guarantee, without first instituting a
legal proceeding against the Issuer, the Preferred Guarantee Trustee or any
other Person.
(c) If an Event of Default with respect to the
Debentures (an "Indenture Event of Default''), constituting the failure to
pay interest or principal on the Debentures on the date such interest or
principal is otherwise payable has occurred and is continuing, then a holder
of Preferred Securities may directly institute a proceeding for enforcement of
payment to such holder directly of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation
amount of the Preferred Securities of such holder on or after the respective
due date specified in the Debentures. The holders of Preferred Securities
will not be able to exercise directly any other remedy available to the
holders of the Debentures unless the Institutional Trustee fails to do so.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Preferred Securities
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
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LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if
there shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, (b) the
Guarantor shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities (including guarantees)
issued by the Guarantor which rank pari passu with or junior to the Debentures
or (c) the Guarantor shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Preferred Securities Guarantee
Agreement); provided, however, the Guarantor may declare and pay a stock
dividend where the dividend stock is the same stock as that on which the
dividend is being paid.
SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Guarantor and with any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Affiliate of
the Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Preferred Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Preferred
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing,
this Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
16
<PAGE> 20
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon such
information, opinions, reports or statements presented to the Guarantor by any
Person as to matters the Indemnified Person reasonably believes are within such
other Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
8.2 shall survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and
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<PAGE> 21
shall inure to the benefit of the Holders of the Preferred Securities then
outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all the outstanding Preferred Securities.
The provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as
follows:
(a) If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the Holders
of the Preferred Securities):
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Timothy E. Burke
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):
Fremont General Corporation
2020 Santa Monica Boulevard
Suite 600
Santa Monica, California 90404
Attention: Louis J. Rampino,
President and Chief Operating Officer
(c) If given to any Holder of Preferred Securities, at
the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given,
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<PAGE> 22
such notice or other document shall be deemed to have been delivered on the
date of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit
of the Holders of the Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
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<PAGE> 23
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
FREMONT GENERAL CORPORATION,
as Guarantor
By:_________________________________
Name:
Title:
The Chase Manhattan Bank, N.A.,
as Preferred Guarantee Trustee
By:_________________________________
Name:
Title:
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<PAGE> 1
EXHIBIT 4.5
====================================
COMMON SECURITIES GUARANTEE AGREEMENT
Fremont General Financing I
Dated as of ________ __, 199_
====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.2. Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.3. Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.4. Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5. Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.7. Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.2. Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
TERMINATION
SECTION 4.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 5.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5.4. Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
<PAGE> 3
COMMON SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Common Securities Guarantee"),
dated as of ________ __, 199_, is executed and delivered by Fremont General
Corporation, a Nevada corporation (the "Guarantor"), for the benefit of the
Holders (as defined herein) from time to time of the Common Securities (as
defined herein) of Fremont General Financing I, a Delaware business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of _______, 199_, among the Trustees of the
Issuer named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof [ ] common securities, having an aggregate
stated liquidation amount of $[ ] (plus up to an additional [
] common securities, having an aggregate liquidation amount of $[ ],
to meet the capital requirements of the Trust in the event of an issuance of
Additional Preferred Securities (as such term is defined in the Declaration)),
designated the [ ]% Trust Originated Common Securities (the "Common
Securities");
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
of the Common Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Preferred Securities Guarantee") in substantially
identical terms to this Common Securities Guarantee for the benefit of the
holders of the Preferred Securities (as defined herein), except that if an
Event of Default (as defined in the Indenture), has occurred and is continuing,
the rights of Holders of the Common Securities to receive Guarantee Payments
under this Common Securities Guarantee are subordinated to the rights of
holders of Preferred Securities to receive Guarantee Payments under the
Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Common Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Common
Securities Guarantee for the benefit of the Holders.
<PAGE> 4
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions Interpretation
In this Common Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Common Securities
Guarantee but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of
execution of this Common Securities Guarantee have the same meaning
when used in this Common Securities Guarantee unless otherwise defined
in this Common Securities Guarantee;
(c) a term defined anywhere in this Common Securities
Guarantee has the same meaning throughout;
(d) all references to "the Common Securities Guarantee"
or "this Common Securities Guarantee" are to this Common Securities
Guarantees modified, supplemented or amended from time to time;
(e) all references in this Common Securities Guarantee to
Articles and Sections are to Articles and Sections of this Common
Securities Guarantee unless otherwise specified; and
(f) a reference to the singular includes the plural and
vice versa.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions which are required to be paid on such Common Securities to the
extent the Issuer shall have funds available therefor, (ii) the redemption
price, including all accrued and unpaid Distributions to the date of redemption
(the "Redemption Price") to the extent the Issuer has funds available therefor,
with respect to any Common Securities called for redemption by the Issuer, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Issuer (other than in connection with the distribution of Debentures to the
Holders in exchange for Common Securities as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid Distributions on the Common Securities to the date of payment, to the
extent the Issuer has funds available therefor, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of
the Issuer (in either case, the "Liquidation Distribu-
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<PAGE> 5
tion"). If an Event of Default (as defined in the Indenture), has occurred
and is continuing, the rights of Holders of the Common Securities to receive
Guarantee Payments under this Common Securities Guarantee are subordinated to
the rights of holder of Preferred Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Common Securities.
"Preferred Securities" mean the securities representing
preferred undivided beneficial interests in the assets of the Issuer.
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 2.2. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Common Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 2.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Common Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Common
Securities to be performed or observed by the Issuer;
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<PAGE> 6
(b) the extension of time for the payment by the Issuer of
all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Common
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Common
Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures or any extension of the maturity date of the
Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Common Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other similar
proceedings affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Common Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 2.3 that the
obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 2.4. Rights of Holders
The Guarantor expressly acknowledges that any Holder of Common
Securities may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Common Securities Guarantee, without first
instituting a legal proceeding against the Issuer or any other Person.
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<PAGE> 7
SECTION 2.5. Guarantee of Payment
This Common Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 2.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Common Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Common Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
which it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Common
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Common Securities Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees
to hold such amount in trust for the Holders and to pay over such amount to the
Holders.
SECTION 2.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions
So long as any Common Securities remain outstanding, if (i) the
Guarantor shall be in default with respect to its Guarantee Payments or other
obligations hereunder, or (ii) there shall have occurred any Event of Default
under the Indenture, then (a) the Guarantor shall not, and shall not allow any
of its subsidiaries (other than its wholly owned subsidiaries) to, declare or
pay dividends on, or make a distribution with respect to, or redeem, purchase
or acquire, or make a liquidation payment with respect to, any of its capital
stock (other than (i) repurchases or acquisitions of shares of the common
stock of the Guarantor as contemplated by any employment arrangement, benefit
plan or other similar contract with or for the benefit of employees, officers
or directors entered into in the ordinary course of business), (ii) as a
result of an exchange or conversion of any class or series of the Guarantor's
capital stock for the Guarantor's common stock, (iii) the purchase of
fractional interests in shares of the Guarantor's capital stock pursuant to the
conversion or exchange provisions of such Guarantor capital stock or the
security being converted or exchanged, or (iv) the payment of any stock
dividend by the Guarantor payable in the Guarantor's common stock) or make any
guarantee payments with respect to the foregoing and (b) the Guarantor shall
not, and shall not allow any of its subsidiaries to, make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Guarantor that rank pari passu with or junior to
the Junior Subordinated Debentures except as (i) required in accordance with
the terms thereof (including, in the case of junior debt, the subordination
provisions thereof), (ii) in connection with a contemporaneous refinancing of
such debt securities with the proceeds of a new issuance of debt securities
which have terms and provisions no more favorable to the holder than those of
the debt securities repurchased or refinanced (iii) in connection with the
contemporaneous conversion or exchange of such debt securities for common stock
of the Guarantor; provided, however, that in no event shall the amount to be
paid by the Guarantor or any of its subsidiaries under (a) or (b) above exceed
in the aggregate $500,000 per year.
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<PAGE> 8
SECTION 3.2. Ranking
This Common Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Guarantor, (ii) pari passu with the
most senior preferred or preference stock now or hereafter issued by the
Guarantor and with any guarantee now or hereafter entered into by the Guarantor
in respect of any preferred or preference stock of any Affiliate of the
Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE IV
TERMINATION
SECTION 4.1. Termination
This Common Securities Guarantee shall terminate upon full
payment of the Redemption Price of all Common Securities, upon the distribution
of the Debentures to the Holders of all of the Common Securities or upon full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Common
Securities Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder of Common Securities must restore
payment of any sums paid under the Common Securities or under this Common
Securities Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns
All guarantees and agreements contained in this Common
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Common Securities then outstanding.
SECTION 5.2. Amendments
Except with respect to any changes which do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Common Securities Guarantee may only be amended with the prior
approval of the Holders of at least a majority in liquidation amount of all the
outstanding Common Securities. The provisions of Section 12.2 of the
Decla-
6
<PAGE> 9
ration with respect to meetings of Holders of the Securities apply to the
giving of such approval.
SECTION 5.3. Notices
All notices provided for in this Common Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Issuer, in care of the Regular
Trustee at the Issuer's mailing address set forth below (or such other
address as the Issuer may give notice of to the Holders of the Common
Securities):
Fremont General Financing I
2020 Santa Monica Boulevard
Suite 600
Santa Monica, California 90404
Attention: Louis J. Rampino, President
(b) if given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may
give notice of to the Holders of the Common Securities):
Fremont General Corporation
2020 Santa Monica Boulevard
Suite 600
Santa Monica, California 90404
Attention: Louis J. Rampino, President
(c) if given to any Holder of Common Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 5.4. Benefit
This Common Securities Guarantee is solely for the benefit of
the Holders of the Common Securities and is not separately transferable from
the Common Securities.
SECTION 5.5. Governing Law
7
<PAGE> 10
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
8
<PAGE> 11
THIS COMMON SECURITIES GUARANTEE is executed as of the day and
year first above written.
FREMONT GENERAL CORPORATION
By:__________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 8.1
[WSGR LETTERHEAD]
December 4, 1995
Fremont General Corporation
2020 Santa Monica Boulevard
Suite 600
Santa Monica, California 90404
Fremont General Funding I
c/o Fremont General Corporation
2020 Santa Monica Boulevard
Suite 600
Santa Monica, California 90404
Re: Fremont General Corporation/Fremont General Funding
I -- Registration Statement on Form S-3 relating to
% Trust Originated Preferred Securities(SM)
---------------------------------------------------
Ladies and Gentlemen:
We have acted as special tax counsel for Fremont General
Corporation, a Nevada corporation (the "Company"), and Fremont General
Funding I, a statutory business trust organized under the Business Trust Act of
the State of Delaware (12 Del. Code Ann., tit. 12, Section 3801, et seq.) (the
"Trust" and, together with the Company, the "Offerors"), in connection with the
proposed issuance and sale by the Trust of up to 4,600,000 shares (including
over-allotments) of __% Trust Originated Preferred Securities(SM) (liquidation
amount $25 per preferred security) of the Trust (the "Preferred Securities"),
representing undivided beneficial interests in the assets of the Trust.
The Preferred Securities are guaranteed (the "Securities
Guarantee") by the Company with respect to distributions and payments upon
liquidation, redemption and otherwise pursuant to the Preferred Securities
Guarantee Agreement, to be dated as of the date of closing (the "Guarantee
Agreement"), between the Company and The Chase Manhattan Bank, N.A., as
trustee, for the benefit of the holders of the Preferred Securities.
In connection with the issuance and sale of the Preferred
Securities, the Trust is also issuing _______ shares of its __% Common
Securities (liquidation amount of $25 per common security) (the "Common
Securities"), representing undivided beneficial interests in the assets of
the Trust. The Common Securities will be owned, directly or indirectly, by the
Company and will also be guaranteed by the Company with respect to
distributions and payments upon
(SM) "Trust Originated Preferred Securities" is a service mark of Merrill
Lynch & Co., Inc.
<PAGE> 2
Fremont General Corporation
December 4, 1995
Page 2
liquidation, redemption and otherwise pursuant to the Common Securities
Guarantee Agreement by Fremont General, for the benefit of the holders of the
Common Securities.
The entire proceeds from the sale of the Preferred Securities and
the Common Securities are to be used by the Trust to purchase an aggregate
principal amount of up to $115,000,000 of __% Junior Subordinated Debentures
(the "Junior Subordinated Debentures"), to be issued by the Company. The
Preferred Securities and the Common Securities are to be issued pursuant to
the Amended and Restated Declaration of Trust of the Trust, to be dated as of
the date of closing (the "Declaration"), among the Company, as depositor,
certain named persons as the regular trustees (collectively, the "Regular
Trustees"), and The Chase Manhattan Bank, N.A., as the institutional trustee
(the "Institutional Trustee"). The Junior Subordinated Debentures are to be
issued pursuant to an indenture, to be dated as of the date of closing (the
"Indenture"), between the Company and First Interstate Bank of California, a
California banking corporation, as trustee (the "Indenture Trustee").
This opinion is being furnished in accordance with the requirements
of Item 601(b)(8) of Regulation S-K under the Securities Act of 1933, as
amended (the "Act"). Capitalized terms used but not otherwise defined herein
shall have the respective meanings set forth in the Registration Statement (as
defined below).
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement on Form S-3 to be filed by the Offerors with the
Securities and Exchange Commission (the "Commission") on December 4, 1995 under
the Securities Act of 1933, as amended (the "Act"), (the "Registration
Statement"); (ii) the form of the certificate of trust (the "Certificate of
Trust") to be filed by the Regular Trustees and the Institutional Trustee with
the Secretary of State of the State of Delaware on or before the date of
closing; (iii) the form of the Declaration of Trust and Form of Amended and
Restated Declaration of Trust; (iv) the form of the Preferred Securities and
designation of the terms thereof; (v) the form of the Guarantee Agreement; (vi)
the form of the Common Securities Guarantee Agreement; (vii) the form of the
Common Securities and designation of the terms thereof; and (viii) the form of
the Indenture; (ix) the form of Junior Subordinated Debentures; and (x)
the form of the Purchase Agreement (collectively, the documents in items
(i)-(x) are referred to as the "Operative Documents"). We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such records of the Company and the Trust and such agreements, certificates of
public officials, certificates of officers, trustees or other representatives
of the Company, the Trust and others, as applicable, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, comformed or photostatic copies and
the authenticity of the originals of such latter documents. In making our
examination of documents executed or to be executed by parties other than the
Company or the
<PAGE> 3
Fremont General Corporation
December 4, 1995
Page 3
Trust, we have assumed that such parties had, or will have the power, corporate
or other, to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or other, and
execution and delivery by such parties of such documents and that such
documents constitute, or will constitute, valid and binding obligations of such
parties. As to any facts material to the opinions expressed herein which were
not independently established or verified, we have relied upon oral or written
statements and representations of officers, trustees and other representatives
of the Company, the Trust and others.
In rendering our opinion, we have participated in the preparation
of the Registration Statement, including the Prospectus included therein. Our
opinion is conditioned on, among other things, the initial, and continuing
accuracy of the facts, information, covenants and representations set forth in
the documents referred to above and the statements and representations made by
the Company and the Trust.
Our opinion is also conditioned on the descriptions that (i) there
will be no material changes to the Operative Documents, (ii) the Operative
Documents that have yet to be executed will be executed in the form that we
have reviewed them, (iii) the Junior Subordinated Debentures have been, or
will prior to issuance be, rated as investment-grade securities by all rating
agencies with which rating applications have been filed, (iv) the Operative
Documents constitute all the agreements, arrangements and understandings
between or among the parties thereto with respect to the transactions
contemplated therein and to the Trust Securities and the Junior Subordinated
Debentures, and (v) there will be timely and full compliance by all parties to
the Operative Documents with the terms thereof (without waiver or amendment of
any of the terms thereof). This opinion is furnished with the understanding
that it will be a condition of the closing of the sale of the Preferred
Securities that this opinion will have been reconfirmed and not withdrawn.
In rendering our opinion, we have considered the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
(proposed, temporary and final) promulgated thereunder, judicial decisions and
Internal Revenue Service rulings all as of the date hereof, and all of which
are subject to change, which changes may be retroactively applied. A change in
the authorities upon which our opinion is based could affect our conclusions.
There can be no assurance, moreover, that any of the opinions expressed herein
will be accepted by the Internal Revenue Service or, if challenged, by a court.
Based solely upon the foregoing, we are of the opinion that under
current United States federal income tax law:
(1) The Trust will be classified as a grantor trust and not as an
association taxable as a corporation. Accordingly, for United States federal
income tax purposes, each holder of Preferred Securities will generally be
considered the owner of an
<PAGE> 4
Fremont General Corporation
December 4, 1995
Page 4
undivided interest in the Junior Subordinated Debentures, and each
holder will be required to include in its gross income any original
issue discount accrued with respect to its allocable share of these
Junior Subordinated Debentures.
(2) Although not entirely free from doubt, the Junior Subordinated
Debentures held by the Trust will be classified for United States
federal income tax purposes as indebtedness of the Company.
(3) Although the discussion set forth in the Prospectus under the
heading "UNITED STATES FEDERAL INCOME TAXATION" does not purport to
discuss all possible United States federal income tax consequences
of the acquisition, ownership and disposition of Preferred
Securities, in our opinion, such discussion constitutes, in all
material respects, a fair and accurate summary of the United States
federal income tax consequences of the acquisition, ownership and
disposition of Preferred Securities under current law.
Except as set forth above, we express no opinion to any person as
to the tax consequences, whether federal, state, local or foreign, of the
issuance of the Junior Subordinated Debentures, the Preferred Securities, the
Common Securities or any transactions related to or contemplated by any such
issuances.
We hereby consent to the filing of this opinion with the Commission
as an Exhibit to the Registration Statement. We also consent to the use of our
name under the headings "LEGAL MATTERS" and "UNITED STATES FEDERAL INCOME
TAXATION" in the Prospectus forming a part of the Registration Statement
(without admitting that we are "experts" under the Securities Act or the rules
and regulations of the Commission issued thereunder with respect to any part of
the Registration Statement). This opinion may not be used for any other purpose
and may not otherwise be disclosed to or relied upon by any other person
without our prior written consent. This opinion is expressed as of the date
hereof unless otherwise expressly stated and we disclaim any undertaking to
advise you of any subsequent changes of the facts stated or assumed herein or
any changes in applicable law after the date hereof.
Very truly yours,
/s/ WILSON, SONSINI, GOODRICH &
ROSATI
<PAGE> 1
EXHIBIT 12.1
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FREMONT GENERAL CORPORATION
THOUSANDS OF DOLLARS, EXCEPT RATIOS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
--------------------------------------------------------- ---------------------
1990 1991 1992 1993 1994 1994 1995
------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPUTATION OF FIXED CHARGES:
Rental expense....................... $ 9,897 $11,798 $ 9,705 $ 8,926 $ 9,115 $ 6,613 $ 8,065
Assumed Interest..................... 33% 33% 33% 33% 33% 33% 33%
------- ------- ------- -------- -------- -------- --------
Rental interest............. 3,266 3,893 3,203 2,946 3,008 2,182 2,661
Interest expense..................... 34,923 38,135 43,760 44,378 59,276 39,941 72,757
Amortization of debt expense......... 146 183 288 736 923 601 1,104
------- ------- ------- -------- -------- -------- --------
FIXED CHARGES............... $38,335 $42,211 $47,251 $ 48,060 $ 63,207 $ 42,724 $ 76,522
======= ======= ======= ======== ======== ======== ========
COMPUTATION OF EARNINGS:
Income before taxes, discontinued
operations extraordinary items and
cumulative effect of
accounting change.................. $39,005 $41,009 $48,581 $ 64,348 $ 81,571 $ 61,324 $ 72,850
Rental interest...................... 3,266 3,893 3,203 2,946 3,008 2,182 2,661
Interest expense..................... 34,923 38,135 43,760 44,378 59,276 39,941 72,757
Amortization of debt expense......... 146 183 288 736 923 601 1,104
------- ------- ------- -------- -------- -------- --------
$77,340 $83,220 $95,832 $112,408 $144,778 $104,048 $149,372
======= ======= ======= ======== ======== ======== ========
COMPUTATION OF RATIO:
Earnings............................. 77,340 83,220 95,832 112,408 144,778 104,048 149,372
Fixed charges........................ 38,335 42,211 47,251 48,060 63,207 42,724 76,522
Ratio............................ 2.02 1.97 2.03 2.34 2.29 2.44 1.95
======= ======= ======= ======== ======== ======== ========
</TABLE>
EXCLUDING THRIFT AND LOAN INTEREST EXPENSE
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
COMPUTATION OF FIXED CHARGES:
Rental expense....................... $ 9,897 $11,798 $ 9,705 $ 8,926 $ 9,115 $ 6,613 $ 8,065
Assumed interest..................... 33% 33% 33% 33% 33% 33% 33%
------- -------- -------- -------- -------- -------- --------
Rental interest............. 3,266 3,893 3,203 2,946 3,008 2,182 2,661
Interest expense..................... 34,923 38,135 43,760 44,378 59,276 39,941 72,757
Less: Thrift and loan interest
expense............................ (14,948) (18,433) (18,731) (20,576) (28,277) (18,089) (35,715)
------- ------- -------- -------- -------- -------- --------
Adjusted interest expense.......... 19,975 19,702 25,029 23,802 30,999 21,852 37,042
Amortization of debt expense......... 146 183 288 736 923 601 1,104
------- ------- ------- -------- -------- -------- --------
FIXED CHARGES............... $23,387 $23,778 $28,520 $ 27,484 $ 34,930 $ 24,635 $ 40,807
======= ======= ======= ======== ======== ======== ========
COMPUTATION OF EARNINGS:
Income before taxes, discontinued
operations, extraordinary items and
cumulative effect of
accounting change.................. $39,005 $41,009 $48,581 $ 64,348 $ 81,571 $ 61,324 $ 72,850
Rental interest...................... 3,266 3,893 3,203 2,946 3,008 2,182 2,661
Interest expense..................... 19,975 19,702 25,029 23,802 30,999 21,852 37,042
Amortization of debt expense......... 146 183 288 736 923 601 1,104
------- ------- ------- -------- -------- -------- --------
$62,392 $64,787 $77,101 $ 91,832 $116,501 $ 85,959 $113,657
======= ======= ======= ======== ======== ======== ========
COMPUTATION OF RATIO:
Earnings............................. 62,392 64,787 77,101 91,832 116,501 85,959 113,657
Fixed charges........................ 23,387 23,778 28,520 27,484 34,930 24,635 40,807
Ratio....................... 2.67 2.72 2.70 3.34 3.34 3.49 2.79
======= ======= ======= ======== ======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 33- ) and related Prospectus of
Fremont General Corporation for the registration of 4,600,000 shares of %
Trust Originated Preferred SecuritiesSM of Fremont General Financing I, %
Junior Subordinated Debentures due of Fremont General Corporation
and Guarantee of Fremont General Corporation with respect to the % Trust
Originated Preferred SecuritiesSM, and to the incorporation by reference therein
of our report dated March 10, 1995, with respect to the consolidated financial
statements and schedules of Fremont General Corporation included in its Annual
Report (Form 10-K) for the year ended December 31, 1994 and our report dated
March 23, 1995, with respect to the special purpose Statement of Assets to be
Acquired and Liabilities to be Assumed of the Specialty Workers' Compensation
Business Unit of The Continental Corporation as of December 31, 1994, and the
related special purpose Statement of Underwriting Gains and Losses for the year
then ended included in its Current Report on Form 8-K/A dated April 27, 1995,
both filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Los Angeles, California
December 1, 1995
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Fremont General Corporation:
We consent to the incorporation by reference in the registration statement on
Form S-3 of Fremont General Corporation to be filed on or about December 4, 1995
of our report dated March 23, 1995 with respect to the special purpose Statement
of Assets to be Acquired and Liabilities to be Assumed of the Specialty Workers'
Compensation Business Unit of The Continental Corporation as of December 31,
1993 and the related special purpose Statement of Underwriting Gains and Losses
for the year then ended, which report appears in Fremont General Corporation's
Current Report -- Amendment No. 1 on Form 8-K/A dated April 27, 1995.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
December 1, 1995
<PAGE> 1
EXHIBIT 26.1
Securities Act of 1933 File No. _________
(If application to determine eligibility of trustee
for delayed offering pursuant to Section 305 (b) (2))
-------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)___________
------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
(Exact name of trustee as specified in its charter)
13-2633612
(I.R.S. Employer Identification Number)
1 CHASE MANHATTAN PLAZA, NEW YORK, NEW YORK
(Address of principal executive offices)
10081
(Zip Code)
----------------
FREMONT GENERAL CORPORATION
(Exact name of co-registrant as specified in its charter)
NEVADA 95-2815260
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2020 SANTA MONICA BOULEVARD, SUITE 600 90404
SANTA MONICA, CALIFORNIA (Zip Code)
(Address of principal executive offices)
--------------------------------------------------------
FREMONT GENERAL FINANCING I
(Exact name of co-registrant as specified in its charter)
DELAWARE TO BE APPLIED FOR
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2020 SANTA MONICA BOULEVARD, SUITE 600 90404
SANTA MONICA, CALIFORNIA (Zip Code)
(Address of principal executive offices)
-------------------
______% TRUST ORIGINATED PREFERRED SECURITIES(SM) OF FREMONT GENERAL FINANCING I
GUARANTEE OF FREMONT GENERAL CORPORATION WITH RESPECT TO THE _______%
TRUST ORIGINATED PREFERRED SECURITIES SM
(Title of the indenture securities)
-------------------------------------------------------------------------
(SM) Service Mark of Merrill Lynch & Co., Inc.
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of The Federal Reserve System,
Washington, D. C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
The Trustee is not the obligor, nor is the Trustee directly or
indirectly controlling, controlled by, or under common control
with the obligor.
(See Note on Page 2.)
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of
eligibility.
*1. -- A copy of the articles of association of the trustee as now
in effect . (See Exhibit T-1 (Item 12), Registration No.
33-55626.)
*2. -- Copies of the respective authorizations of The Chase
Manhattan Bank (National Association) and The Chase Bank of New
York (National Association) to commence business and a copy of
approval of merger of said corporations, all of which documents
are still in effect. (See Exhibit T-1 (Item 12), Registration
No. 2-67437.)
*3. -- Copies of authorizations of The Chase Manhattan Bank
(National Association) to exercise corporate trust powers, both
of which documents are still in effect. (See Exhibit T-1 (Item
12), Registration No. 2-67437.)
*4. -- A copy of the existing by-laws of the trustee. (See Exhibit
T-1 (Item 16) (25.1), Registration No. 33-60809.)
*5. -- A copy of each indenture referred to in Item 4, if the
obligor is in default. (Not applicable.)
*6. -- The consents of United States institutional trustees
required by Section 321(b) of the Act. (See Exhibit T-1, (Item
12), Registration No. 22-19019.)
7. -- A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
- -------------------
*The Exhibits thus designated are incorporated herein by reference.
Following the description of such Exhibits is a reference to the copy of the
Exhibit heretofore filed with the Securities and Exchange Commission, to which
there have been no amendments or changes.
-------------------
1.
<PAGE> 3
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base a responsive answer to Item 2 the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, The Chase Manhattan Bank (National Association), a corporation
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of New York, and the
State of New York, on the 1st day of December, 1995.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
Timothy E. Burke
------------------------------------
By: Second Vice President
2.
<PAGE> 4
EXHIBIT 7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
THE CHASE MANHATTAN BANK, N.A.
of New York in the State of New York, at the close of business on September 30,
1995, published in response to call made by Comptroller of the Currency, under
title 12, United States Code, Section 161.
<TABLE>
<CAPTION>
CHARTER NUMBER 2370 COMPTROLLER OF THE CURRENCY NORTHEASTERN DISTRICT
STATEMENT OF RESOURCES AND LIABILITIES
THOUSANDS
ASSETS OF DOLLARS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.................................... $ 5,081,000
Interest-bearing balances............................................................. 5,957,000
Held to maturity securities............................................................... 1,678,000
Available-for-sale securities............................................................. 5,303,000
Federal funds sold and securities purchased under agreements to resell in
domestic offices of the bank and of its Edge and Agreement subsidiaries,
and in IBFs:
Federal funds sold.................................................................... 1,806,000
Securities purchased under agreements to resell....................................... 23,000
Loans and lease financing receivable:
Loans and leases, net of unearned income........................... $ 55,682,000
LESS: Allowance for loan and lease losses.......................... 1,112,000
LESS: Allocated transfer risk reserve............................. 0
------------
Loans and leases, net of unearned income, allowance, and reserve.................... 54,570,000
Assets held in trading accounts....................................................... 12,551,000
Premises and fixed assets (including capitalized leases).............................. 1,755,000
Other real estate owned............................................................... 400,000
Investments in unconsolidated subsidiaries and associated companies................... 30,000
Customers' liability to this bank on acceptances outstanding.......................... 1,091,000
Intangible assets..................................................................... 1,344,000
Other assets.......................................................................... 6,322,000
-----------
TOTAL ASSETS.......................................................................... $97,911,000
===========
LIABILITIES
Deposits:
In domestic offices................................................................. $31,007,000
Noninterest-bearing.............................................. $ 12,166,000
Interest-bearing................................................. 18,841,000
------------
In foreign offices, Edge and Agreement subsidiaries, and IBFs....................... 36,015,000
Noninterest-bearing.............................................. $ 3,258,000
Interest-bearing................................................. 32,757,000
------------
Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement subsidiaries,
and in IBFs:
Federal funds purchased............................................................. 1,673,000
Securities sold under agreements to repurchase...................................... 233,000
Demand notes issued to the U.S. Treasury.............................................. 25,000
Trading liabilities................................................................... 9,105,000
Other borrowed money:
With original maturity of one year or less.......................................... 2,783,000
With original maturity of more than one year........................................ 395,000
Mortgage indebtedness and obligations under capitalized leases........................ 40,000
Bank's liability on acceptances executed and outstanding.............................. 1,100,000
Subordinated notes and debentures..................................................... 1,960,000
Other liabilities..................................................................... 5,747,000
-----------
TOTAL LIABILITIES..................................................................... 90,083,000
-----------
Limited-life preferred stock and related surplus...................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus......................................... 0
Common stock.......................................................................... 921,000
Surplus............................................................................... 5,244,000
Undivided profits and capital reserves................................................ 1,695,000
Net unrealized holding gains (losses) on available-for-sale securities............... . (43,000)
Cumulative foreign currency translation adjustments.................................... 11,000
-----------
TOTAL EQUITY CAPITAL................................................................... 7,828,000
-----------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK,
AND EQUITY CAPITAL................................................................... $97,911,000
===========
</TABLE>
I, Lester J. Stephens, Jr., Senior Vice President and Controller of the above
named bank do hereby declare that this Report of Condition is true and correct
to the best of my knowledge and belief. (Signed) Lester J. Stephens, Jr.
We the undersigned directors, attest to the correctness of this statement of
resources and liabilities. We declare that it has been examined by us, and to
the best of our knowledge and belief has been prepared in conformance with the
instructions and is true and correct.
<PAGE> 5
(Signed) Thomas G. Labrecque
(Signed) Donald Trautlein Directors
(Signed) Richard J. Boyle
<PAGE> 1
EXHIBIT 26.2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) ________________________
FIRST INTERSTATE BANK OF CALIFORNIA
(Exact name of trustee as specified in its charter)
California 95-0593085
(Jurisdiction of Incorporation (I.R.S. Employer
or organization Identification No.)
if not a U.S. national bank)
707 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA 90017
(Address of principal executive offices) (Zip Code)
William Souza, First Interstate Bancorp General Counsel
633 West Fifth Street, Los Angeles, California 90071 (213) 614-3337
(Name address and telephone number of agent for service)
FREMONT GENERAL CORPORATION
(Exact name of obligor as specified in its charter)
NEVADA 95-2815260
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2020 SANTA MONICA BOULEVARD, SUITE 600, SANTA MONICA, CA 90404
(Address of principal executive offices) (Zip Code)
_____% JUNIOR SUBORDINATED DEBENTURES DUE _______
OF FREMONT GENERAL CORPORATION
(Title of the indenture securities)
<PAGE> 2
FORM T-1
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
STATE BANKING DEPARTMENT
235 Montgomery Street, San Francisco, California
94104
FEDERAL RESERVE BANK OF SAN FRANCISCO
101 Market Street, San Francisco, California
94105
FEDERAL DEPOSIT INSURANCE CORPORATION
Washington, D.C. 20429
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE
TRUST POWERS.
Trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF
THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
No such affiliation.
ITEM 3 THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
*EXHIBIT 1. A copy of the Restated Articles of Incorporation of the
Trustee as presently in effect (incorporated by reference to Exhibit
T-1A on Form T-1, Securities and Exchange Commission File No.
2-91947).
*EXHIBIT 2. A copy of the certificate of the Superintendent of
Banks, State of California, authorizing First Interstate Bank of
California to commence business of banking (incorporated by reference
to Exhibit T-1a(b) on Form T-1, Securities and Exchange Commission
File No. 2-41187).
*EXHIBIT 3. A copy of the certificate of the Superintendent of
Banks, State of California, authorizing First Interstate Bank of
California to transact trust banking business (incorporated by
reference to Exhibit T-1A(b) on Form T-1, Securities and Exchange
Commission File No. 2-41187).
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<PAGE> 3
A copy of the Certificate as to Merger of First Western Bank and Trust
Company, San Francisco, California, into California Bank, Los Angeles,
California (United California Bank after said Merger), and as to Purchase
by First Western Bank and Trust Company, Los Angeles, California (New
Bank) from said United California Bank of the Business of Certain Branches
of the Former First Western Bank and Trust Company, San Francisco,
California (incorporated by reference to Exhibit T-1A(c) on Form T-1,
Securities and Exchange Commission File No. 2-41187).
EXHIBIT 4. The By-Laws of the Trustee as presently in effect.
*EXHIBIT 6. The consent of the Trustee required by Section 321(b)
of the Trust Indenture Act of 1939 (incorporated by reference to
Exhibit 6 on Form T-1, Securities and Exchange Commission File No.
2-41187).
EXHIBIT 7. A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its supervising or
examining authority.
* Exhibits thus designated are incorporated herein by reference. These
exhibits were previously filed by the Trustee with the Securities and
Exchange Commission and are incorporated with the same respective
designations in this statement by specific reference thereto.
-2-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
First Interstate Bank of California, a corporation organized and existing under
the laws of the state of California, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Los Angeles, State of California, on December 4,
1995.
FIRST INTERSTATE BANK OF CALIFORNIA
By: /s/ Vicki L. Herrick
--------------------------------
Vicki L. Herrick
Assistant Vice President
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<PAGE> 5
EXHIBIT 4
B Y - L A W S
OF
FIRST INTERSTATE BANK OF CALIFORNIA
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1. SHAREHOLDERS' ANNUAL MEETING: Annual meetings of Shareholders shall
be held at the First Interstate World Center, 633 West Fifth Street, Los
Angeles, California, or at such other California location as the shareholders or
this Board shall direct. Annual meetings shall take place at one-fifteen on the
third Monday in April of each year, if not a legal holiday, and if a legal
holiday, then on the next succeeding day not a legal holiday.
SECTION 2. NOTICE OF SHAREHOLDERS' ANNUAL MEETING: The notice of the annual
meeting of the Shareholders shall be given by the Secretary, or in the event of
his absence, refusal or failure to act, by an Assistant Secretary, or a
Secretary Pro Tem appointed for that purpose by the Chairman of the Board, the
President, or by any Vice President, or by the Executive Committee. Said notice
shall be given in the manner and for the time required by law.
SECTION 3. SPECIAL SHAREHOLDERS' MEETINGS: Special meetings of the shareholders
shall be held at the principal executive office of the Corporation and may be
called by order of the Chairman of the Board, the President, or by the Board of
Directors, or at the request of the holders at the meeting which represent not
less than one-tenth in amount of the shares of the capital stock of the
Corporation issued and outstanding. Notice of special meetings of the
shareholders shall be given by the Secretary, or in the case of his absence,
refusal, or failure to act, by an Assistant Secretary, or Secretary Pro Tem
appointed for that purpose by the Chairman of the Board, the President, or by
any Vice President, or by the Executive Committee; such notice shall be given by
mailing through the United States mails, postage prepaid, a written or printed
notice thereof stating the time, place and general nature of the business to be
transacted at the meeting, addressed to each shareholder of record entitled to
vote at such meeting at the address of such shareholder appearing on the books
of the Corporation, or given by the shareholder to the Corporation for the
purpose of notice, or if no such address appears or is given, at the place where
the principal executive office of the Corporation is located. Said notice shall
be mailed by placing the same in any regular place of deposit for United States
mail not less than ten (10) nor more than sixty (60) days before the day on
which the meeting is to be held.
SECTION 4. ADJOURNMENT OF SHAREHOLDERS' MEETINGS: Any meeting of the
shareholders may be adjourned from time to time by the vote of a majority of the
shares, the Sholders of which are either present in person or represented by
proxy.
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ARTICLE II
MEETINGS OF DIRECTORS
SECTION 1. ANNUAL MEETING: The Board of Directors shall meet for the purpose
of organization, the election of officers, and the transaction of other
business, immediately after each annual election of directors on the same day on
which the shareholders' meeting at which they have been elected has been held.
Notice of such meeting need not be given.
SECTION 2. REGULAR MEETINGS OF DIRECTORS: The regular meetings of the Board
shall be held at least once each calendar quarter at such hour and on such day
during such month as shall from time to time be fixed by standing resolution of
the Board, except during the month of April when the annual meeting shall
constitute the regular meeting and shall be held immediately after the annual
election of directors. In the event that the day fixed for a regular meeting of
directors shall fall on a legal holiday, then such regular meeting shall be held
at the same hour upon such day as the Board of Directors may previously
designate by resolution, and if no such day be designated, the said meeting
shall be held on the next succeeding day not a holiday. No notice of regular
meetings of directors is required.
SECTION 3. SPECIAL MEETINGS OF THE DIRECTORS: Special meetings of the Board may
be called by the Chairman of the Board, the President, the Secretary or any two
(2) directors. Notice of special meetings of the Board shall state the time and
place of the meeting but need not state the purpose thereof. Such notice may be
in writing and shall be sufficient if given by United States mail, telegraph,
personal service or by telephone; if by mail then the notice shall be deposited,
postage prepaid, in any regular place of deposit for United States mail in the
City of Los Angeles at least four (4) days before the time of the meeting,
addressed to the director at his last post office address as known to the
officer giving the notice; if by telegraph then the telegram containing the
notice shall be delivered to a telegraph office in the City of Los Angeles,
transmission charges prepaid, at least twenty-four (24) hours before the time of
the meeting, addressed to the director at his last post office address as known
to the officer giving the notice; if by personal service or by telephonic means
at least twenty-four (24) hours before the time of the meeting. A record of
such notice, by whom given and the manner in which given shall be entered upon
the minutes of any special meeting of the Board, and the said minutes on being
read and approved at any subsequent meeting of the Board shall be presumptive
upon the question of service. The attendance of any director at any meeting of
the Board, without protest of lack of notice to him, either prior to or at the
commencement of the meeting shall constitute a waiver of any such notice. A
director may execute a waiver of notice of any meeting of the Board either
before or after such meeting.
SECTION 4. PLACE AND TIME OF MEETINGS OF DIRECTORS: Regular meetings of the
Board shall be held without call or notice at such time and place as shall from
time to time be fixed by standing resolution of the Board. Special meetings of
the Board shall be held at the time and place stated in the notice of such
meeting.
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SECTION 5. ACTION WITHOUT MEETING: Any action by the Board may be taken
without a meeting if all members of the Board shall individually or collectively
consent in writing to such action. Such written consent or consents shall be
filed with the minutes of the proceedings of the Board.
SECTION 6. TELEPHONIC MEETINGS: A meeting of the Board of Directors or of any
Committee thereof may be held through the use of conference telephone or similar
communications equipment, so long as all members participating in such meeting
can hear one another. Participation in such a meeting shall constitute presence
at such meeting.
ARTICLE III
DIRECTORS
SECTION 1. Wherever in these By-Laws the term "BOARD" is used, the same is
intended to designate the Board of Directors of the Corporation. Subject to
limitations of the Articles of Incorporation, of these By-Laws, of the
California General Corporation Law, and of the California Financial Code as to
action to be authorized or approved by the shareholders, and subject to the
duties of Directors as prescribed by these By-Laws, all corporate powers shall
be exercised by or subject to the direction of, and business and affairs of the
Corporation shall be managed by or under the direction of, the Board. Without
prejudice to such general powers, but subject to the same limitations, it is
hereby expressly declared that the Board shall have the following powers:
a. To control the election, the appointment, the authority, responsibility
and the qualifications of all persons in charge of the business and
the affairs of the Corporation.
b. To cause to be kept a record of all their meetings and proceedings and of
all the meetings of the shareholders, and to cause to be presented at
the annual meeting of the shareholders a statement showing the assets
and liabilities of the Corporation.
c. To require from the officers and from other persons in charge of the
business and affairs of the Corporation respectively, such bond or
security as it may see fit for the faithful performance of their
duties.
d. To appoint such committees and members thereof as it may deem proper and
to define the powers and duties of such committees, and to determine
their compensation.
e. Make any distribution to its shareholders at a rate or in a periodic
amount or within a price range as it may deem proper and in a manner
provided by law.
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f. To cause to be issued to the shareholders, in proportion to their several
interests, certificates of stock not to exceed in the aggregate the
authorized capital.
g. To fix by general and uniform resolution or resolutions the compensation
of each director for serving as director and to make such changes
therein from time to time as it may deem proper.
SECTION 2. The authorized number of Directors of this Corporation shall not be
less than eight (8) nor more than fifteen (15). The exact number of Directors
shall be fixed, within these limits, by approval of the Board of Directors or
the Shareholders, within the limits and in the manner prescribed by law.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER AND TITLES: The Corporation shall have (a) a Chairman of the
Board, (b) a President, and (c) a Secretary. The Corporation may also have one
or more Vice Chairmen, one or more Executive Vice Presidents, one or more Senior
Vice Presidents, one or more Vice Presidents, one or more Assistant Vice
Presidents, one or more Assistant Cashiers, one or more Assistant Secretaries, a
General Counsel, one or more Assistant General Counsel, one or more Managing
Counsel, one or more Senior Counsel, one or more Counsel, one of more Assistant
Counsel, two or more Trust Officers of whom one or more may be designated Senior
Trust Officer, a General Auditor, one or more Audit Officers, a Chief Financial
Officer, a Comptroller, one or more Financial Analysis Officers, one or more
Accounting Officers, one or more Managers, one or more Assistant Managers, one
or more Operations Officers, one or more Corporate Banking Officers, one or more
Banking Officers, and one or more International Banking Officers.
There may also be such other officers as may from time to time be designated by
resolution of the Board of Directors.
SECTION 2. APPOINTMENT AND TERM OF OFFICE: The Chairman of the Board, the
President, the Vice Chairmen, the Executive Vice Presidents, the Senior Vice
Presidents, the Secretary, the General Counsel, the Assistant General Counsel,
the Senior Trust Officers, the General Auditor, the Chief Financial Officer and
the Comptroller shall be chosen by the Board at the first meeting after the
election of the Board and shall hold office at the pleasure of the Board. The
Board may also appoint such officers from time to time at any regular or special
meeting of the Board. All other officers designated by resolution of the Board
as provided in Section 1, may be appointed by the Chairman of the Board or the
President. All persons authorized to sign on behalf of the Corporation, other
than officers, may be appointed by the Chairman of the Board, or the President.
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<PAGE> 9
SECTION 3. CHAIRMAN OF THE BOARD: The Chairman of the Board shall preside at
all meetings of the shareholders and all meetings of the Board and of the
Executive Committee. He shall be the chief executive officer of the Corporation
with general executive supervision of its business and affairs. He shall act as
Chairman of all committees of which he is a member, except as may be provided in
the resolution or order appointing such committee or committees. In the absence
or disability of the Chairman of the Board, the following officers in the
following order shall act in his stead: the President, an officer designated by
the Chairman of the Board, an officer designated by the Board of Directors or
Executive Committee. In the absence or disability of the Chairman of the Board,
the President, and all officers so designated, if any, the Board of Directors
shall elect a temporary Chairman of the Board to act during such absence or
disability of said officers. The Chairman of the Board shall at all times have
on file with the Secretary his written designation of the officer from time to
time so designated by him to act as the chief executive officer in his absence
or disability and in the absence or disability of the President.
SECTION 4. PRESIDENT: The President shall have such powers and duties as may
be prescribed by these By-Laws, the Board, the Executive Committee or the
Chairman of the Board. Subject to the authority of the Chairman of the Board,
the President shall have general executive supervision of the business and
affairs of the Corporation and shall be senior in authority to all officers
other than the Chairman of the Board. In the absence or disability of the
Chairman of the Board, the President shall exercise the powers and perform the
duties of the Chairman of the Board.
SECTION 5. VICE CHAIRMEN: The Vice Chairmen shall perform the duties imposed
upon them by the By-Laws, the Board of Directors, the Executive Committee, the
Chairman of the Board or the President.
SECTION 6. EXECUTIVE VICE PRESIDENTS: The Executive Vice Presidents shall
perform the duties imposed upon them by the By-Laws, the Board, the Executive
Committee, the Chairman of the Board or the President.
SECTION 7. SENIOR VICE PRESIDENTS: The Senior Vice Presidents shall perform
the duties imposed upon them by the By-Laws, the Board, the Executive Committee,
the Chairman of the Board or the President.
SECTION 8. SECRETARY: The Secretary shall keep full and complete minutes of
each meeting of the Board, of the Executive Committee and of the shareholders
and give notice, as required, of all such meetings. He shall maintain custody
of and keep such other records of the Corporation as are required by the Board
and, generally, perform all duties which pertain to his office and which are
required by the Board.
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SECTION 9. GENERAL AUDITOR: The General Auditor shall be responsible to the
Board, through the Audit Committee, for the systems of internal audit and for
testing and evaluating the systems of protective controls. The office of the
General Auditor shall make such examinations and reports as the General Auditor
deems advisable or as may be required by the Audit Committee. The General
Auditor shall have the duty to report to the Chairman of the Board on all
matters concerning which the General Auditor deems advisable or which the
Chairman of the Board may request and shall perform such other duties as the
Chairman of the Board may prescribe. Additionally, the General Auditor shall
have the duty of reporting independently of all officers of the Corporation to
the Audit Committee at least quarterly on all matters concerning which the
General Auditor deems advisable or which the Audit Committee may request.
SECTION 10. CHIEF FINANCIAL OFFICER: The Chief Financial Officer shall keep
and maintain, or cause to be kept and maintained, adequate and correct accounts
of the properties and business transactions of the Corporation, including
accounts of its assets, liabilities, receipts, disbursements, gains, losses,
capital, surplus and shares. He shall be responsible for all the money, funds
and valuables belonging to the Corporation. He shall deposit all money and
other valuables in the name of and to the credit of the Corporation with such
depositories as are authorized by law. He shall render to the Chairman of the
Board, the President and Board, whenever they request it, an account of all of
his transactions as Chief Financial Officer and of the financial condition of
the Corporation, and shall have such other powers and perform such other duties
as are prescribed by the Board, the Executive Committee, the By-Laws, the
Chairman of the Board or the President.
SECTION 11. OTHER OFFICERS: Each other officer shall have such authority and
perform such duties as are prescribed by the By-Laws, the Board, the Executive
Committee, the Chairman of the Board or the President.
ARTICLE V
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. EXECUTIVE COMMITTEE: There shall be an Executive Committee
consisting of the Chairman of the Board, the President and at least three
non-officer directors to be appointed for respective terms to be fixed by the
Board. A majority of the members of the Committee shall constitute a quorum for
the transaction of business. The Board may from time to time appoint an
additional director or directors as an alternate member or members of the
Committee to serve only at a meeting if there otherwise may not be a quorum
present at such meeting. The alternate member or members so appointed shall act
in the place and stead of any regular member or members who may be absent from
such meeting.
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The Executive Committee shall have all of the powers and authority of the Board
in the management of the business and affairs of the Corporation during the
intervals between meetings of the Board, except the power to declare dividends
and to adopt, amend or repeal By-Laws or as otherwise prohibited by law. The
Executive Committee may establish and appoint such other committees not
otherwise provided for by these By-Laws or the Board of Directors as it may deem
advisable and may prescribe the powers and duties of such committees.
The Chairman of the Board or a member of the Committee designated by the
Chairman of the Board, shall preside over meetings of the Committee. Meetings
of the Committee may be held at the call of the Chairman of the Board or the
President or any two other members of the Committee at the time and place stated
in the notice of such meeting.
The transactions of any meetings of the Executive Committee however called or
noticed or wherever held shall be as valid as though had at a meeting duly held
after the regular call and notice, if a quorum be present and if, either before
or after the meeting each of the members of the Committee not present sign a
written waiver of notice or a consent to the holding of such meeting or an
approval of the minutes thereof. All such waivers, consents or approvals shall
be filed with the records of the Committee or made a part of the minutes of the
meeting.
SECTION 2. OTHER COMMITTEES: The Board of Directors may designate one or more
committees from time to time, each consisting of two or more directors to serve
at the pleasure of the Board. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent
member at any meeting of the committee. Any such committee, to the extent
provided in the resolution of the Board of Directors shall have all the
authority of the Board, except with respect to:
a. The approval of any action for which shareholder approval is also
required.
b. The filling of vacancies on the Board or in any Committee.
c. The fixing of compensation of the directors for serving on the Board or
on any committee.
d. The amendment or repeal of By-Laws or the adoption of new By-Laws.
e. The amendment or repeal of any resolution of the Board which by its
express terms is not so amendable or repealable.
f. A distribution to the shareholders of the corporation as defined in
Section 166 of the California Corporations Code, except at a rate or
in a periodic amount or within a price range determined by the Board.
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g. The appointment of other committees of the Board or the members thereof.
h. The approval of any action for which the entire Board is required.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
(a) INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES. Each person who was
or is a party or is threatened to be made a party or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director, officer or employee of the Corporation, or of any
predecessor corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or other agent of another corporation or of a
partnership, joint venture, trust or other enterprise (including service with
respect to employee benefit plans), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer or employee or in
any other capacity while serving as a director, officer or employee, shall be
indemnified and held harmless by the Corporation to the fullest extent
permissible under California law and the Corporation's Articles of
Incorporation, against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) actually and reasonably incurred or suffered by such person in
connection therewith. Such indemnification shall continue as to a person who
has ceased to be a director, officer or employee and shall inure to the benefit
of his or her heirs, executors and administrators. Notwithstanding the
foregoing, the Corporation shall indemnify any such person in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Article shall include the right
to be paid by the Corporation the expenses incurred in defending any proceeding
in advance of final disposition to the fullest extent permitted by law;
provided, however, that the payment under this Article of such expenses in
advance of the final disposition of a proceeding may be conditioned upon the
delivery to the Corporation of such undertakings by or on behalf of such
director, officer or employee to repay all amounts so advanced as may be
required or permitted by law.
(b) EXCLUSIONS. Notwithstanding the foregoing or any other provisions under
this Article, the Corporation shall not be liable under this Article to
indemnify a director, officer or employee against, or make any advances or other
payments in connection with, any proceeding against a director, officer or
employee based upon, arising out of, resulting from, relating to or in
consequence of (1) transactions or activities in which such person gained or
sought to gain, any improper personal profit or advantage, or (2) the
intentional misconduct of such person which such person knew, or reasonably
should have known, would violate the law or any policy of the Corporation or (3)
the knowing fraud or deliberately dishonest actions of such person.
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(c) SUCCESSFUL DEFENSE. To the extent that a director, officer or employee has
been successful on the merits in defense of any proceeding referred to in
paragraph (a) or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
(d) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification provided by this
Article shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, by-law, agreement, vote of shareholders or
disinterested directors, or otherwise.
ARTICLE VII
CERTIFICATE OF STOCK
Certificates for shares of the capital stock of the Corporation shall be of such
form as the Board may prescribe and shall be signed by the President or a Vice
President and the Secretary or an Assistant Secretary, or be authenticated by
facsimiles of the signatures of the President and the Secretary, or by a
facsimile of the signature of the President and the written signature of the
Secretary or an Assistant Secretary. Every certificate authenticated by a
facsimile of a signature must be countersigned by a transfer agent or transfer
clerk, and be registered by an incorporated bank or trust company as registrar
of transfers, before issuance.
ARTICLE VIII
TRANSFER OF STOCK
SECTION 1. Shares of the capital stock of the Corporation may be transferred by
the holders thereof, or by attorney legally constituted, or by their legal
representatives, by endorsement on the certificates of stock, but no such
transfer shall be valid until the certificate is surrendered and acknowledgment
made on the books of the Corporation.
SECTION 2. No new certificates shall be issued for the surrendered certificates
unless the surrendered certificates have been duly canceled. If a certificate
shall be lost or destroyed, the Board or the Executive Committee may order a new
certificate in lieu thereof issued upon such guaranty or indemnity of the person
claiming the same as the Board or the Executive Committee may deem proper and
satisfactory.
SECTION 3. The Board may fix a time in the future as a record date for the
determination of the shareholders entitled to notice of and to vote at any
meeting of shareholders or entitled to receive any dividend or distribution, or
any allotment of rights, or to exercise rights in respect to any change,
conversion, or exchange of shares. The record date so fixed shall be not more
than sixty (60) nor less than ten (10) days prior to the date of the meeting or
event for the purposes of which it is fixed. When a record date is so fixed,
only shareholders of record on that date are entitled to notice of and to vote
at the meeting or to receive the dividend, distribution, or
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allotment of rights, or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
the record date. At any meeting of shareholders as to which the Board has not
fixed a record date for the determination of the shareholders entitled to notice
of and to vote at such meeting, only shareholders of record at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held shall be entitled to vote thereat.
ARTICLE IX
DEPOSITS
SECTION 1. All deposits made by the shareholders shall be entitled to the same
rights, privileges and benefits as those of other depositors.
ARTICLE X
SEAL
SECTION 1. The seal of the Corporation shall be in such form as the Board may
prescribe. In the execution on behalf of this Corporation of any instrument,
document, writing, notice or paper it shall not be necessary to affix the
corporate seal of this Corporation thereon, and any such instrument, document,
writing, notice or paper when executed without said seal affixed thereon shall
be of the same force and effect and as binding on this Corporation as if said
corporate seal had been affixed thereon in each instance. Said seal, if
required, may be affixed, imprinted or reproduced by facsimile on any instrument
or document, including certificates for shares of the stock of this Corporation.
ARTICLE XI
AMENDMENT TO BY-LAWS
SECTION 1. Subject to the right of shareholders to adopt, amend or repeal
By-Laws, as provided in Section 211 of the Corporations Code of California,
By-Laws may be adopted, amended or repealed by the Board, except that a By-Law
or amendment thereof changing the authorized number of directors may be adopted,
amended or repealed by the Board only pursuant to Section 212 of said
Corporations Code.
I, Vicki L. Herrick, Assistant Vice President of FIRST INTERSTATE BANK OF
CALIFORNIA, a California corporation, hereby certify that the foregoing ten (10)
pages represent a full, true and correct copy of the Code of By-Laws of First
Interstate Bank of California as amended, and that the same is in full force and
effect as of April 26, 1994.
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WITNESS my hand and the seal of said Corporation this 4th day of December, 1995.
/s/ VICKI L. HERRICK
------------------------
Assistant Vice President
of
FIRST INTERSTATE BANK OF CALIFORNIA
BYLAWS
<PAGE> 16
EXHIBIT 7
First Interstate Bank of California Call Date: 09/30/95 ST-BK: 66-6 FFIEC: 031
1200 W. 7th St. Page RC-1
Los Angeles, CA 90017 Vendor ID: D Cert: 01226
11
Transit Number: 12200021
Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for September 30, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
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C400
Dollar Amounts in Thousands
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Assets
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin(1) 0081 2,760,708 1.a
b. Interest-bearing balances(2) 0071 24,408 1.b
2. Securities
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 4,345,714 2.a
b. Available-for-sale securities(from Schedule RC-B, column D) 1773 33,912 2.b
3. Federal funds sold and securities purchased under agreements to resell in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's:
a. Federal funds sold 0276 1,818,670 3.a
b. Securities purchased under agreements to resell 0277 0 3.b
4. Loans and Lease financing receivables:
a. Loans and Leases, net of unearned income RCFD
----
(from Schedule RC-C) 2122 14,965,922 4.a
b. LESS: Allowance for Loans and Lease losses 3123 395,169 4.b
c. LESS: Allocated transfer risk reserve 3128 0 4.c
d. Loans and Leases, net of unearned income,
allowance, and reserve(Item 4.a minus 4.b and 4.c) 2125 14,570,753 4.d
5. Trading Assets (from Schedule RC-D) 3545 0 5.
6. Premises and fixed assets (including capitalized leases) 2145 419,954 6.
7. Other real estate owned (from Schedule RC-M) 2150 50,701 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 2130 21,881 8.
9. Customers' liability to this bank on acceptances outstanding 2155 16,218 9.
10. Intangible assets (from Schedule RC-M) 2143 345,920 10.
11. Other assets (from Schedule RC-F) 2160 573,897 11.
12. Total assets (sum of items 1 through 11) 2170 24,982,736 12.
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(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE> 17
First Interstate Bank of California Call Date: 09/30/95 ST-BK: 66-6 FFIEC: 031
1200 W. 7th St. Page RC-2
Los Angeles, CA 90017 Vendor ID: D Cert: 01226
12
Transit Number: 12200021
Schedule RC - Continued
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<CAPTION>
Dollar Amounts in Thousands
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LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C RCON
----
from Schedule RC-E, Part I) 2200 21,038,434 13.a
(1) Noninterest-bearing(1) 6631 8,754,272 13.a.1
(2) Interest-bearing 6636 12,284,162 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and RCFN
----
IBFs (from Schedule RC-E, part II) 2200 324,800 13.b
(1) Noninterest-bearing 6631 0 13.b.1
(2) Interest-bearing 6636 324,800 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its Edge
and Agreement subsidiaries, and in IBFs: RCFD
----
a. Federal funds purchased 0278 732,970 14.a
b. Securities sold under agreements to repurchase 0279 381,621 14.b
15. a. Demand notes issued to the RCON
----
U.S. Treasury 2840 0 15.a
RCFD
----
b. Trading Liabilities 3548 0 15.b
16. Other borrowed money:
a. With original maturity of one year or less 2332 251 16.a
b. With original maturity of more than one year 2333 0 16.b
17. Mortgage indebtedness and obligations under capitalized
Leases 2910 89,128 17.
18. Bank's Liability on acceptances executed and outstanding 2920 16,218 18.
19. Subordinated notes and debentures 3200 75,000 19.
20. Other Liabilities (from Schedule RC-G) 2930 292,531 20.
21. Total Liabilities (sum of items 13 through 20) 2948 22,950,953 21.
22. Limited-Life preferred stock and related surplus 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus 3838 0 23.
24. Common stock 3230 428,182 24.
25. Surplus (excluded all surplus related to preferred stock) 3839 664,694 25.
26. a. Undivided profits and capital reserve 3632 938,327 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities 8434 580 26.b
27. Cumulative foreign currency translation adjustments 3284 0 27.
28. Total equity capital (sum of items 23 through 27) 3210 2,031,783 28.
29. Total Liabilities, Limited-Life preferred stock, and equity
capital (sum of items 21, 22, and 28) 3300 24,982,736 29.
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Memorandum
To be reported only with the March Report of Condition.
<PAGE> 18
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1. Indicate in the box at the right the number of the
statement below that best describes the most
comprehensive level of auditing work performed for the bank RFCD NUMBER
---- ------
by Independent external auditors as of any date during 1994 6724 N/A M.1
1=Independent audit of the bank conducted in accordance 4=Director's examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2=Independent audit of the bank's parent holding company 5=Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accountant firm which
submits a report on the consolidated holding company (but 6=Compilation of the bank's financial statements by
not on the bank separately) external auditors
3=Directors' examination of the bank conducted in accordance 7=Other audit procedures (excluding tax preparation work)
with generally accepted auditing standards by a certified
public accounting firm (may be required by state charter- 8=No External audit work
ing authority)
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(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
