<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 10, 1999
REGISTRATION NO. 333-77037
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FREMONT GENERAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEVADA 6331 95-2815260
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
2020 SANTA MONICA BOULEVARD
SANTA MONICA, CALIFORNIA 90404
(310) 315-5500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
LOUIS J. RAMPINO
PRESIDENT AND CHIEF OPERATING OFFICER
FREMONT GENERAL CORPORATION
2020 SANTA MONICA BOULEVARD
SANTA MONICA, CALIFORNIA 90404
(310) 315-5500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
ELIZABETH R. FLINT
JAMES C. CREIGH
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, 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, 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(d)
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. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PROSPECTUS
FREMONT LOGO
FREMONT GENERAL CORPORATION
OFFER TO EXCHANGE
<TABLE>
<S> <C>
$200,000,000 SERIES B $225,000,000 SERIES B
7.70% SENIOR NOTES DUE 2004 7.875% SENIOR NOTES DUE 2009
FOR FOR
$200,000,000 $225,000,000
7.70% SENIOR NOTES DUE 2004 7.875% SENIOR NOTES DUE 2009
</TABLE>
THE EXCHANGE NOTES
The terms of the new Series B 7.70% Senior Notes due 2004 and Series B
7.875% Senior Notes due 2009 that we are offering in this prospectus are
substantially identical to the terms of our already outstanding 7.70% Senior
Notes due 2004 and 7.875% Senior Notes due 2009. The difference between them is
that the exchange notes will be freely transferable and will not have any
covenants regarding registration rights or additional interest.
MATERIAL TERMS OF THE EXCHANGE OFFER
- - Expires 5 p.m., New York City time, on June 11, 1999, unless extended.
- - Subject to customary conditions, including the condition that the exchange
offer not violate applicable law or any applicable interpretation of the SEC
staff.
- - Tenders of initial notes may be withdrawn at any time prior to the expiration
of the exchange offer.
- - All initial notes that are validly tendered and not withdrawn will be
exchanged for exchange notes.
- - We will not receive any proceeds from the exchange offer.
- - All broker-dealers must comply with the registration and prospectus delivery
requirements of the Securities Act.
- - We do not intend to apply for listing of the exchange notes on any securities
exchange or to arrange for them to be quoted on any quotation system.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
-------------------------
INVESTING IN THE EXCHANGE NOTES INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 9.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE EXCHANGE NOTES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------
The date of this Prospectus is May 10, 1999
<PAGE> 3
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, DC 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. Our SEC filings are also available from the SEC's Website at
"http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference our annual report on Form 10-K for the fiscal year
ended December 31, 1998 and any future filings we will make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934.
We will provide you with a copy of these filings, at no cost, if you write
or telephone our Corporate Secretary at the following address:
Fremont General Corporation
2020 Santa Monica Boulevard
Santa Monica, California 90404
(310) 315-5500
YOU SHOULD RELY ONLY ON THE INFORMATION OR REPRESENTATIONS PROVIDED IN THIS
PROSPECTUS. WE HAVE AUTHORIZED NO ONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS
NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENT.
i
<PAGE> 4
SUMMARY
You should read the following summary together with the more detailed
information regarding our company and the exchange notes being offered in this
offering and our financial statements and notes thereto which are incorporated
by reference in this prospectus.
Unless otherwise indicated, all references in this prospectus to "the
Company," "Fremont General Corporation," "we," "us" and "our" are to Fremont
General Corporation and its subsidiaries, and all references to "Fremont
General" are to Fremont General Corporation as a stand-alone entity.
THE COMPANY
Fremont General Corporation is an insurance and financial services holding
company operating select businesses nationally in niche markets. Our reported
assets were $7.4 billion and $6.1 billion as of December 31, 1998 and 1997,
respectively. Our pre-tax earnings for 1998, 1997 and 1996 were $197 million,
$159 million and $128 million, respectively. Our business strategy includes
achieving income balance and geographic diversity among our business units in
order to limit our exposure to industry, market and regional concentrations. Our
business strategy also includes growing our business through new business
development and acquisitions. Our common stock is traded on the New York Stock
Exchange under the symbol "FMT."
Our workers' compensation operation currently has major market positions in
California, Illinois, Arizona, Idaho, Alaska, Indiana, Montana, Utah and
Wisconsin. As of December 31, 1998, we had premiums inforce in thirty-nine
states and the District of Columbia. We would have ranked as the seventh largest
writer, in direct premiums, of workers' compensation insurance in the United
States for the year ended December 31, 1997, according to A.M. Best, if the
results of our September 1, 1998 acquisition of UNICARE Specialty Services, Inc.
were included. For the years ended December 31, 1998, 1997 and 1996, we had
workers' compensation insurance net premiums earned of $551 million, $571
million and $457 million, respectively. Over the last four years, we have
focused on creating a broad national platform upon which to build our business,
while providing geographic diversity to mitigate potential fluctuations in
earnings from cyclical downturns in various regional economies. A.M. Best rates
our workers' compensation insurance subsidiaries on a consolidated basis as "A-"
(Excellent); this rating was reaffirmed on October 21, 1998. An "A-" rating is
A.M. Best's fourth highest rating category out of fifteen rating categories
ranging from "A++" (Superior) to "F" (In Liquidation).
Our financial services operation originates loans on a national basis and
provides commercial and residential real estate lending, commercial working
capital lines of credit and insurance premium financing. In addition, we make
investments in larger commercial loans originated and serviced by other
financial institutions. We also purchase pools of loans from time to time that
meet our new loan origination underwriting guidelines. Our lending is done
primarily on a senior and secured basis and we seek to minimize our credit
exposure through conservative loan underwriting and a comprehensive system of
collateral monitoring. We continue to focus on loan origination by broadening
our existing distribution channels and creating new distribution channels. The
outstanding loan portfolio of our financial services operation has grown from
$1.5 billion at December 31, 1994 to $3.0 billion at December 31, 1998.
1
<PAGE> 5
Our principal executive offices are located at 2020 Santa Monica Boulevard,
Santa Monica, California, 90404. Our telephone number at this location is (310)
315-5500.
RECENT DEVELOPMENTS
On April 29, 1999, we reported first quarter net income of $34.3 million
versus $31.7 million for the same quarter a year ago, up 8%; and basic earnings
per share of $.51, up 2% versus $.50 for the first quarter of 1998. Diluted
earnings per share were $.49 for the first quarter of 1999, up 9% versus $.45
for the same quarter a year ago.
Pre-tax income for the first quarter of 1999 was up 9% over the prior year
period at $51.2 million on revenue of $298.8 million. Our property and casualty
insurance operations earned $42.3 million on a pre-tax basis, while the
financial services operations posted $16.5 million in pre-tax earnings.
Our property and casualty insurance operations, represented primarily by
workers' compensation insurance, recorded pre-tax income of $42.3 million for
the first quarter of 1999, up 3% from $41.0 million for the first quarter of
1998. Additionally, the combined ratio was 96.3% for the first quarter for 1999,
as compared to 96.9% for the same quarter a year ago.
Our financial services operations recorded pre-tax income of $16.5 million
for the first quarter of 1999, up 26% from $13.1 million for the first quarter
of 1998. Loans receivable, which include commercial and residential real estate
loans, commercial finance and syndicated loans, and insurance premium notes
receivable, were approximately $3.3 billion at March 31, 1999, up 58% from $2.1
billion at March 31, 1998.
The foregoing information and the following table should be read in
conjunction with our consolidated financial statements and the notes thereto
incorporated by reference in this Prospectus, as well as "Summary Financial
Data." The financial and operating data discussed herein under "Recent
Developments" are not audited and are not necessarily indicative of results that
may be expected for future periods.
FREMONT GENERAL CORPORATION
RECENT CONSOLIDATED FINANCIAL RESULTS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Income Statement Data:
Property and casualty premiums earned..................... $170,343 $154,162
Loan interest income...................................... 77,549 51,026
Net investment income..................................... 45,320 46,978
Realized investment gains (losses)........................ 25 (458)
Other revenue............................................. 5,542 10,245
-------- --------
Total revenues.................................... $298,779 $261,953
======== ========
Property and casualty income.............................. $ 42,253 $ 41,009
Financial services income................................. 16,446 13,103
Other interest and corporate expense...................... (7,488) (6,979)
Income before taxes....................................... 51,211 47,133
Income tax expense........................................ (16,900) (15,481)
-------- --------
Net income........................................ $ 34,311 $ 31,652
======== ========
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Per Share Data:
Net income
Basic.................................................. $ 0.51 $ 0.50
Diluted................................................ 0.49 0.45
Cash dividends declared................................... 0.08 0.075
Stockholders' equity:
Including FASB 115..................................... 13.83 12.44
Excluding FASB 115..................................... 13.43 11.65
Weighted Average Shares Used to Calculate Per Share Data:*
Basic.................................................. 66,880 63,608
Diluted................................................ 69,821 70,051
Property and Casualty Operating Data:
Net premiums written...................................... $196,832 $156,391
Net premiums earned....................................... 170,343 154,162
Net investment income and other (a)....................... 35,888 36,202
Underwriting profit....................................... 6,365 4,807
Net income before taxes................................... 42,253 41,009
Loss ratio............................................. 57.3% 67.0%
Expense ratio.......................................... 35.3% 28.9%
Policyholders' dividend ratio.......................... 3.7% 1.0%
-------- --------
Total combined ratio.............................. 96.3% 96.9%
======== ========
(a) Includes:
Realized investment gains (losses)..................... $ 25 $ (458)
Other revenue.......................................... 394 0
Interest expense....................................... 5,618 5,385
</TABLE>
* Adjusted for a two-for-one stock split distributed December 10, 1998.
SUMMARY DESCRIPTION OF THE EXCHANGE NOTES
The exchange notes consist of $200,000,000 Series B 7.70% Senior Notes due
2004 and $225,000,000 Series B 7.875% Senior Notes Due 2009. The form and terms
of the exchange notes are substantially identical to the form and terms of the
initial notes, except that the exchange notes will be registered under the
Securities Act and, therefore, will not bear legends restricting their transfer
and will not be entitled to registration under the Securities Act. The exchange
notes will evidence the same debt as the initial notes and both the initial
notes and the exchange notes are governed by the same indenture.
Securities Offered........... $200,000,000 aggregate principal amount of
Series B 7.70% Senior Notes due March 17, 2004
and $225,000,000 aggregate principal amount of
Series B 7.875% Senior Notes due March 17, 2009.
Maturity Dates............... March 17, 2004 for the notes Due 2004 and March
17, 2009 for the notes Due 2009.
Interest Payment Dates....... Each March 17 and September 17, commencing
September 17, 1999.
3
<PAGE> 7
Form and Denominations of
Securities................. The exchange notes will be issued in
denominations of $1,000 and integral multiples
thereof. The exchange notes will be in book
entry form and will be represented by one or
more global notes (the "global notes") deposited
with, or on behalf of, The Depository Trust
Company. Interests in the global notes will be
shown on, and transfers will be effected only
though, records maintained by DTC and its
participants. See "Description of the
Notes -- General" and "-- Form, Denomination and
Registration."
Optional Redemption.......... We may redeem the notes, in whole or in part, at
our option at any time at a redemption price
equal to the greater of (i) 100% of the
principal amount of such notes or (ii) the sum
of the present values of the remaining scheduled
payments of principal and interest on the notes
discounted to the redemption date on a
semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the
Adjusted Treasury Rate, plus, in each case,
accrued interest thereon to the date of
redemption. See "Description of the Notes --
Optional Redemption."
Sinking Fund................. None.
Covenants.................... The notes will be subject to certain restrictive
covenants including limitations on liens,
limitations of dividend and other payment
restrictions affecting Significant Insurance
Subsidiaries and limitation on issuance and sale
of Capital Stock of Significant Insurance
Subsidiaries. See "Description of the
Notes -- Certain Covenants."
Ranking...................... The notes will be unsecured senior indebtedness
of Fremont General ranking equally with Fremont
General's existing and future unsubordinated
unsecured indebtedness and senior in right of
payment to all subordinated indebtedness of
Fremont General. The notes will be effectively
subordinated to all secured indebtedness of
Fremont General with respect to assets securing
such indebtedness and will be effectively
subordinated to all liabilities of Fremont
General's subsidiaries, including trade
payables. See "Risk Factors -- Our Operational
and Debt Structure Affects the Priority of the
Notes" and "Description of the Notes -- Ranking
and Holding Company Structure."
Trustee...................... The First National Bank of Chicago is the
trustee under the indenture pursuant to which
the initial notes and the exchange notes were
issued.
4
<PAGE> 8
Absence of Market for the
Notes...................... The exchange notes will be a new issue of
securities for which there currently is no
market. We cannot assure you that a trading
market will develop for the exchange notes. We
do not intend to apply for listing of the
exchange notes on any securities exchange or for
quotation through the Nasdaq Stock Market.
Risk Factors................. See Risk Factors beginning on page 9 for a
discussion of certain risks relating to an
investment in the notes.
SUMMARY OF THE EXCHANGE OFFER
Registration Rights
Agreement.................... We issued the initial notes on March 17, 1999 to
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Credit Suisse First Boston
Corporation, Goldman, Sachs & Co. and Warburg
Dillon Read LLC. These initial purchasers
subsequently resold the notes to institutional
investors in transactions exempt from the
registration requirements of the Securities Act
and applicable state securities laws. In
connection with this private placement, we
entered into the registration rights agreement
that provides for the exchange offer.
The Exchange Offer........... We are offering exchange notes in exchange for
an equal principal amount of initial notes. As
of this date, there are $425,000,000 aggregate
principal amount of initial notes outstanding.
Initial notes may be tendered only in integral
multiples of $1,000.
Resale of Exchange Notes..... We believe that the exchange notes issued in the
exchange offer may be resold by you without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that:
- you are acquiring the exchange notes in the
ordinary course of your business
- you have no arrangements or understandings
with any person to participate in the exchange
offer for the purpose of distributing the
exchange notes
- you are not an "affiliate" of ours.
If any of the statements above are not true and
you transfer any exchange note without
delivering a prospectus meeting the requirements
of the Securities Act or without an exemption
from registration of your exchange notes from
such requirements, you may incur liability under
the Securities Act. We will not assume or
indemnify you against such liability.
Each broker-dealer that receives exchange notes
for its own account in exchange for initial
notes which were
5
<PAGE> 9
acquired by such broker-dealer as a result of
market making or other trading activities may be
a statutory underwriter and must acknowledge
that it will deliver a prospectus meeting the
requirements of the Securities Act upon a resale
of the exchange notes. A broker-dealer may use
this prospectus for an offer to resell, resale
or other retransfer of the exchange notes. For
more information, see "Plan of Distribution." We
will take steps to ensure that the issuance of
the exchange notes will comply with state
securities or "blue sky" laws.
Consequences If You Do Not
Exchange Initial Notes..... If you do not exchange your initial notes for
exchange notes, you will no longer be able to
force us to register the initial notes under the
Securities Act. In addition, you will not be
able to offer or sell the initial notes unless
they are registered under the Securities Act and
we will have no obligation to register them,
except for some limited exceptions. This
instruction does not apply if you offer or sell
them under an exemption from the requirements of
the Securities Act.
Expiration Date.............. The exchange offer will expire at 5:00 p.m., New
York City Time, on June 11, 1999, unless we
decide to extend the expiration date.
Interest On the Exchange
Notes...................... The exchange notes will accrue interest at 7.70%
per year with respect to the notes due 2004 and
7.875% per year with respect to the notes due
2009, from either the last date we paid interest
on the initial notes you exchanged or, if you
surrendered your initial notes for exchange
after the applicable record date, the date we
paid interest on such initial notes. We will pay
interest on the exchange notes on March 17 and
September 17 of each year.
Conditions To The Exchange
Offer...................... The exchange offer is subject to customary
conditions, including that:
- the exchange offer does not violate any
applicable law or applicable interpretation of
law of the SEC staff;
- no litigation materially impairs our ability
to proceed with the exchange offer; and
Procedures For Tendering
Initial Notes.............. If you wish to accept the exchange offer, you
must complete, sign and date the letter of
transmittal and transmit it together with all
other documents required by the letter of
transmittal (including the initial notes to be
exchanged) to First Chicago Trust Company of New
York, as exchange agent, at the address
specified on the
6
<PAGE> 10
cover page of the letter of transmittal.
Alternatively, you can tender your initial notes
by following the procedures for book-entry
transfer, as described in this document.
Guaranteed Delivery
Procedures................... If you wish to tender your initial notes and you
cannot get your required documents to the
exchange agent by the expiration date, you may
tender your initial notes according to the
guaranteed delivery procedures described under
the heading "The Exchange Offer -- Guaranteed
Delivery Procedures."
Withdrawal Rights............ You may withdraw the tender of your initial
notes at any time prior to 5:00 p.m., New York
City time, on the expiration date. To withdraw,
you must send a written or facsimile
transmission notice of withdrawal to the
exchange agent at its address specified in the
section, "The Exchange Offer -- Exchange Agent"
by 5:00 p.m., New York City time, on the
expiration date.
Acceptance Of Initial Notes
And Delivery of Exchange
Notes...................... We will accept any and all initial notes that
are properly tendered in the exchange offer
prior to 5:00 p.m., New York City time, on the
expiration date as long as all of the conditions
are met. We will deliver the exchange notes
promptly after the expiration date.
Tax Considerations........... We believe that the exchange of initial notes
for exchange notes should not be a taxable
exchange for federal income tax purposes, but
you should consult your tax adviser about the
tax consequences of this exchange.
Exchange Agent............... First Chicago Trust Company of New York is
serving as exchange agent for the exchange
offer.
Fees And Expenses............ We will bear all expenses related to
consummating the exchange offer and complying
with the registration rights agreement, other
than underwriting discounts and commissions and
transfer taxes.
Use Of Proceeds.............. We will not receive any cash proceeds from the
issuance of the exchange notes. We used the
proceeds from the sale of the initial notes to
repay all indebtedness outstanding under Fremont
General's bank line of credit and for general
corporate purposes, including working capital.
7
<PAGE> 11
SUMMARY FINANCIAL AND OPERATING DATA
The following table sets forth our summary financial and other operating
data. The summary income statement data, balance sheet data and senior debt
ratios in the table are derived from our consolidated financial statements,
which have been audited by Ernst & Young LLP, our independent auditors. The
following summary financial data should be read in conjunction with our
consolidated financial statements, related notes thereto, and other financial
information incorporated by reference into this prospectus.
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1998(1) 1997(2) 1996 1995(3) 1994
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Property and casualty premiums earned........ $ 552,078 $ 601,183 $ 486,860 $ 606,917 $ 433,584
Loan interest................................ 234,828 194,412 163,765 162,992 113,382
Net investment income........................ 192,815 149,729 123,531 119,523 76,821
Realized investment gains (losses)........... (605) (1,964) (1,658) 1 (315)
Other revenues............................... 58,481 30,935 23,306 34,381 29,676
---------- ---------- ---------- ---------- ----------
Total revenues............................... $1,037,597 $ 974,295 $ 795,804 $ 923,814 $ 653,148
========== ========== ========== ========== ==========
Property and casualty income................. $ 169,235 $ 144,667 $ 117,593 $ 83,092 $ 61,265
Financial services income.................... 55,506 42,286 36,589 35,737 28,014
Other interest and corporate expense......... (28,029) (28,060) (25,873) (18,502) (7,708)
---------- ---------- ---------- ---------- ----------
Income before taxes.......................... 196,712 158,893 128,309 100,327 81,571
Income tax expense........................... (63,748) (50,601) (41,021) (32,305) (25,759)
---------- ---------- ---------- ---------- ----------
Net Income................................... $ 132,964 $ 108,292 $ 87,288 $ 68,022 $ 55,812
========== ========== ========== ========== ==========
GAAP RATIOS FOR PROPERTY AND CASUALTY
SUBSIDIARIES:
Loss ratio................................... 60.8% 64.7% 68.9% 76.0% 63.1%
Expense ratio................................ 34.5% 27.5% 25.9% 24.5% 23.4%
Policyholder dividends ratio................. 0.9% 0.8% -- -- 11.5%
---------- ---------- ---------- ---------- ----------
Combined ratio............................... 96.2% 93.0% 94.8% 100.5% 98.0%
========== ========== ========== ========== ==========
RATIO OF SENIOR DEBT TO TOTAL CAPITALIZATION:
(4)
Including FASB 115(5)........................ 22.4% 20.7% 2.7% 12.4% 5.0%
Excluding FASB 115(5)........................ 23.1% 21.7% 2.7% 12.7% 4.4%
BALANCE SHEET DATA:
Total assets................................. $7,369,612 $6,090,627 $4,307,512 $4,477,399 $3,134,390
Fixed income and other investments........... 2,386,757 2,442,813 1,484,310 1,937,890 888,918
Loans receivable............................. 2,958,176 1,983,687 1,688,040 1,499,043 1,440,774
Claims and policy liabilities................ 2,571,027 2,460,550 1,579,325 1,971,719 1,012,704
Short-term debt.............................. 165,702 26,290 16,896 72,191 176,325
Long-term debt............................... 913,006 691,068 636,456 693,276 468,390
Trust Originated Preferred
Securities(SM)(6).......................... 100,000 100,000 100,000 -- --
Stockholders' equity
Including FASB 115(5)...................... 950,912 832,815 559,117 498,090 351,013
Excluding FASB 115(5)...................... 912,010 779,906 556,488 476,491 416,378
</TABLE>
- -------------------------
(1) The Company acquired UNICARE Specialty Services, Inc. on September 1, 1998.
(2) The Company acquired Industrial Indemnity Holdings, Inc. on August 1, 1997.
(3) The Company acquired Casualty Insurance Company on February 22, 1995.
(4) The ratio of debt of Fremont General, on a nonconsolidated basis, that ranks
equally with or senior to the notes, to the sum of (a) stockholders' equity
of Fremont General; (b) debt of Fremont General, on a nonconsolidated basis,
that ranks equally with or senior to the notes; (c) debt of Fremont General,
on a nonconsolidated basis, that is subordinated to the notes by its terms;
and (d) the 9% Junior Subordinated Debentures due March 31, 2026 of Fremont
General issued in connection with the mandatorily redeemable preferred
securities of the subsidiary trust (the "TOPrS Trust") holding solely
Fremont General junior subordinated debentures or any other similar
securities issued from time to time in the future.
(5) 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.
(6) Fremont General-obligated mandatorily redeemable preferred securities of the
TOPrS Trust.
8
<PAGE> 12
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones that we may face. There may be additional risks and uncertainties not
presently known to us or that we currently do not believe are material that may
also impair our business operations.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of the exchange notes could decline and you may
lose all or part of your investment.
This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward looking statements as a result of certain factors, including
the risks described below and elsewhere in this prospectus.
FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE CONSEQUENCES
We issued the initial notes in a private offering exempt from the
registration requirements of the Securities Act. Accordingly, you may not offer,
sell or otherwise transfer your initial notes except in compliance with the
registration requirements of the Securities Act and applicable state securities
laws or pursuant to exemptions from such registration requirements. If you do
not exchange your initial notes for exchange notes in this exchange offer, your
initial notes will continue to be subject to these transfer restrictions after
the completion of this exchange offer.
After completion of this exchange offer, if you do not tender your initial
notes in this exchange offer, you will no longer be entitled to any registration
rights under the registration rights agreement, except under limited
circumstances.
To the extent initial notes are tendered and accepted in the exchange
offer, the liquidity of the trading market, if any, for the initial notes could
be adversely affected.
OUR OPERATING RESULTS AND FINANCIAL CONDITION MAY VARY
Our profitability can be affected significantly by many factors including
competition, the severity and frequency of claims, interest rates, legislation
and regulations, court decisions, the judicial climate and general economic
conditions and trends, all of which are outside of our control. In addition, our
results may be affected by our ability to assess and integrate successfully the
operations of companies we acquire. Any of these factors could contribute to
significant variation in our results of operations within the different aspects
of our business, or businesses taken as a whole, from quarter to quarter and
from year to year.
With respect to our 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. Changes in market interest rates can affect
the amount of interest income that we earn on our investment portfolio, as well
as the amount of realized and unrealized gains or losses on specific holdings
within our investment portfolio. Legislative and regulatory changes can also
cause the operating results of our workers' compensation insurance businesses to
vary.
During periods when economic conditions are unfavorable, our financial
services businesses may not be able to originate new loan products or maintain
credit quality at
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<PAGE> 13
previously attained levels. This may negatively affect our net finance income
and levels of non-performing assets and net charge-offs. Changes in market
interest rates, or in the relationships between various interest rates, could
cause our interest margins to vary and may result in significant changes in the
prepayment patterns of our finance receivables, which could adversely affect our
results of operations and financial condition.
OUR LOSS RESERVES MAY PROVE TO BE INADEQUATE
Our property and casualty insurance subsidiaries are required to maintain
reserves to cover their 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 instead are estimates involving actuarial
projections at a given time of what we expect the ultimate settlement and
administration of claims will cost. These projections are based on facts and
circumstances then known, predictions of future events, estimates of future
trends in claims frequency and severity, and judicial theories of liability, as
well as other factors. Establishment of appropriate reserves is an inherently
uncertain process and we cannot assure you that our currently established
reserves will prove to be adequate in light of subsequent actual experience. Our
future loss development could require us to increase loss reserves from prior
periods, which would adversely affect our earnings in future periods.
Our financial services businesses maintain reserves for credit losses on
their portfolio of finance receivables in amounts that we believe are sufficient
to provide adequate protection against potential losses. We attempt to minimize
the impact that adverse economic developments could have on our finance
receivables portfolio by concentrating primarily on lending on a senior and
secured basis and by carefully monitoring the underlying collateral that secures
these loans. Although we believe that our consolidated level of reserves is
sufficient to cover potential credit losses, our reserves could prove to be
inadequate due to unanticipated adverse changes in economic conditions or
discrete events that adversely affect specific borrowers, industries or markets.
Any of these changes could impair our ability to realize the expected value of
the collateral securing certain of our finance receivables.
COMPETITION MAY ADVERSELY AFFECT OUR MARKET SHARE AND OPERATING RESULTS
Our insurance services business competes in a market characterized by
competition on the basis of price and service. In addition, state regulatory
changes could affect competition in the states where we transact business.
Although we are one of the largest writers of workers' compensation insurance in
the nation, certain of our competitors are larger and have greater resources
than we do. We cannot assure you that we will continue to maintain our market
share in the future.
Our financial services businesses compete in markets that are highly
competitive and are characterized by factors that vary based upon product and
geographic region. The markets in which we compete are typically characterized
by a large number of competitors who compete based primarily upon price, terms
and loan structure. We primarily compete with banks and mortgage and finance
companies, many of which are larger and have greater financial resources than we
do. The competitive forces of these markets could adversely affect our net
finance income, loan origination volume or net credit losses.
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<PAGE> 14
REGULATORY DEVELOPMENTS COULD ADVERSELY AFFECT OUR OPERATIONS AND ABILITY TO
MAKE PAYMENTS ON THE NOTES
Our workers' compensation insurance operations are concentrated in
California and Illinois, with additional writings in 37 other states and the
District of Columbia. 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. Our multistate insurance operations
require, and will continue to require, us to devote significant resources to
comply with the regulations of each state in which we transact 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
(expected losses and expenses) or loss costs (expected losses only) which vary
by job classification. Each insurance company determines its own rates based in
part upon its particular loss experience and operating costs. Insurance
companies generally set their premium rates below such advisory premium 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 our
California workers' compensation policies due to increased price competition.
Our financial services businesses include a Federal Deposit Insurance
Corporation ("FDIC") insured thrift and loan subject to supervision and
regulation by the California Department of Financial Institutions and the FDIC.
Federal and state regulations prescribe certain minimum capital requirements
and, while our thrift and loan is currently in compliance with such
requirements, in the future we could be required to make additional
contributions to our thrift and loan 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 our thrift and loan. Future
changes in government regulation and policy could adversely affect the thrift
and loan industry, including our thrift and loan.
The payment of stockholder dividends and the advancement of loans to
Fremont General by our subsidiaries are, and may continue to be, subject to
certain statutory and regulatory restrictions and are contingent upon the
earnings and surplus of those subsidiaries.
OUR OPERATIONAL AND DEBT STRUCTURE AFFECTS THE PRIORITY OF THE NOTES
Our assets consist primarily of investments in our subsidiaries. Our
operations are currently conducted through our subsidiaries. Accordingly, our
cash flow and consequent ability to service our debt, including the notes, is
primarily dependent upon the earnings of our subsidiaries and the distribution
of those earnings to us or upon loans or other payments of funds by those
subsidiaries to us. Our subsidiaries are separate and distinct legal entities
and have no obligation, contingent or otherwise, to pay any amounts due pursuant
to the notes, whether by dividends, loans or other payments. In addition, the
payment of dividends and the making of loan advances to us by our subsidiaries
are and may continue to be subject to certain statutory and regulatory
restrictions and various agreements, principally loan agreements, of our
subsidiaries that restrict the ability of the respective subsidiaries to pay
cash dividends or advance loans and other payments to us.
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<PAGE> 15
Furthermore, our rights, and the rights of our 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 any subordinated debt and trade payables, of our
subsidiaries, except to the extent that Fremont General is itself recognized as
a creditor of such subsidiary, in which case the claims of Fremont General would
still be subordinate to any secured claims in the assets of such subsidiary and
any indebtedness of such subsidiary senior to that held by Fremont General.
The notes will constitute unsecured senior indebtedness of Fremont General
and will rank pari passu (equally) with all of our other existing and future
unsubordinated unsecured senior indebtedness for borrowed money. The notes will
be effectively subordinated to all of our secured indebtedness with respect to
the assets securing such indebtedness, and the notes will be effectively
subordinated to all liabilities of our subsidiaries, including trade payables.
See "Description of the Notes -- Ranking and Holding Company Structure."
THERE IS NO PUBLIC MARKET FOR THE SECURITIES
The exchange notes will be a new issue of securities for which there
currently is no market. We cannot assure you that a trading market will develop
for any of the exchange notes. The exchange notes may trade at a discount from
the initial offering price of the initial notes, depending upon prevailing
interest rates, the market for similar securities, our financial condition and
other factors beyond our control, including general economic conditions. We do
not intend to apply for listing of the exchange notes on any securities exchange
or for quotation through The Nasdaq Stock Market.
IF OUR CRITICAL COMPUTER SYSTEMS ARE NOT YEAR 2000 COMPLIANT, OUR FINANCIAL
RESULTS COULD BE ADVERSELY AFFECTED
Many existing computer programs use only two digits to identify a specific
year and therefore may not accurately recognize the upcoming change in the
century. If not corrected, many computer applications could fail or create
erroneous results by or at the year 2000. Due to the dependence of our insurance
services and financial services businesses on computer technology to operate
their businesses, and the dependence of the insurance and financial services
industries on computer technology, the nature and impact of Year 2000 processing
failures on our business could be material. We are currently modifying our
computer systems in order to enable our systems to process data and transactions
incorporating Year 2000 dates without material errors or interruptions. We
cannot assure you that our Year 2000 compliance efforts will be completed in a
timely manner or that our Year 2000 compliance efforts will be successful even
if they are completed in a timely manner.
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<PAGE> 16
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange offer. In
consideration for issuing the exchange notes as contemplated in this prospectus,
we will receive the initial notes in like principal amount. The initial notes
surrendered in exchange for the exchange notes will be retired and canceled and
cannot be reissued. The issuance of the exchange notes will not result in any
increase in our indebtedness.
Our net proceeds from the offering were $420,236,500, after deducting the
selling discounts and commissions but before deducting estimated offering
expenses. We used the net proceeds of the offering to repay all indebtedness
outstanding under the Fremont General's bank line of credit and for general
corporate purposes, including working capital. Fremont General may reborrow
under its bank line of credit, subject to certain conditions and limitations,
including as set forth under "Description of the Notes -- Certain Covenants." At
December 31, 1998, Fremont General had $300 million outstanding under its bank
line of credit, bearing interest at a weighted average rate of 5.76% per annum.
This line of credit matures on August 1, 2002.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges for
the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1).............. 2.17 2.07 2.07 1.94 2.29
</TABLE>
- -------------------------
(1) For purposes of computing the ratio of earnings to fixed charges, "earnings"
consists of net income plus fixed charges and income taxes. "Fixed charges"
consists of interest on indebtedness (including interest on thrift
deposits), the representative interest portion of operating leases (deemed
to be one-third of all rental expense) and the amortization of debt issuance
costs. Included in "interest on indebtedness" are the distributions on the
Fremont General-obligated mandatorily redeemable preferred securities of the
TOPrS Trust.
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<PAGE> 17
THE EXCHANGE OFFER
The following summary of certain provisions of the registration rights
agreement does not purport to be complete. The following discussion is qualified
in its entirety by reference to the registration rights agreement, which has
been filed as an exhibit to the registration statement.
PURPOSE OF THE EXCHANGE OFFER
Upon the issuance of the initial notes under the purchase agreement, the
initial purchasers and their respective assignees became entitled to the
benefits of the registration rights agreement. Under the registration rights
agreement, we are required to:
- use reasonable best efforts to cause the registration statement to
declared effective no later than 150 days after the date the initial
notes were issued,
- keep the exchange offer open for not less than 30 days (or longer if
required by applicable law) after we notify holders of the notes of the
exchange offer, and
- use reasonable best efforts to complete the exchange offer as soon as
practicable, but no later than 180 days after the date on which we issued
the initial notes.
The exchange offer being made by this prospectus is intended to satisfy our
obligations under the registration rights agreement. If we fail to fulfill such
obligations, you, as a holder of outstanding initial notes, are entitled to
receive "Additional Interest" until we have fulfilled such obligations, at the
rate of 0.25%, which rate will increase by an additional 0.25% at the beginning
of each 90-day period that we must pay Additional Interest, provided that any
such increase in the interest rate may not exceed 1.0%. All amounts of accrued
Additional Interest will be payable in cash on the same interest payment dates
as the notes.
EFFECT OF THE EXCHANGE OFFER
Based on interpretations by the SEC staff contained in no-action letters
issued to third parties, we believe that you may offer for resale, resell and
otherwise transfer the exchange notes issued to you under the exchange offer
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that you can represent that:
- you are acquiring the exchange notes in the ordinary course of your
business;
- you have no arrangements or understandings with any person to participate
in the exchange offer for the purpose of distributing the exchange notes;
and
- you are not an "affiliate" (as defined in Rule 405 of the Securities Act)
of ours.
If you are not able to make these representations, you are a "Restricted
Holder." As a Restricted Holder, you will not be able to participate in the
exchange offer, may not rely on the SEC staff positions set forth in the Exxon
Capital Holdings Corporation no-action letter and similar no-action letters and
may only sell your initial notes as part of a registration statement containing
the selling security holder information required by Item 507 of SEC Regulation
S-K, or under an exemption from the registration requirement of the Securities
Act.
In addition, each broker-dealer (other than a Restricted Holder) that
receives exchange notes for its own account in exchange for initial notes which
were acquired by such broker-dealer as a result of market-making or other
trading activities (a "Participating Broker-Dealer") may be a statutory
underwriter and must acknowledge in the letter of transmittal that it will
deliver a prospectus meeting the requirements of the Securities Act upon any
resale of such exchange notes. The letter of transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit
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<PAGE> 18
that it is an "underwriter" within the meaning of the Securities Act. Based upon
interpretations by the SEC staff, we believe that a Participating Broker-Dealer
may offer for resale, resell and otherwise transfer exchange notes issued under
the exchange offer upon compliance with the prospectus delivery requirements,
but without compliance with the registration requirements, of the Securities
Act. This prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer as part of their resales. We have
agreed that, for a period of 90 days after the completion of the exchange offer,
we will make this prospectus available to any broker-dealer for use by the
broker-dealer in any resale. By acceptance of this exchange offer, each
broker-dealer that receives exchange notes under the exchange offer agrees to
notify us prior to using this prospectus in a sale or transfer of exchange
notes. See "Plan of Distribution."
To the extent initial notes are tendered and accepted in the exchange
offer, the principal amount of outstanding initial notes will decrease with a
resulting decrease in the liquidity in the market for the initial notes. Initial
notes that are still outstanding following the completion of the exchange offer
will continue to be subject to transfer restrictions.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions contained in this prospectus
and in the letter of transmittal, we will accept any and all initial notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the expiration date. As of the date of this prospectus, an aggregate of $425
million principal amount of the initial notes is outstanding. We will issue
$1,000 principal amount at maturity of exchange notes in exchange for each
$1,000 principal amount at maturity of outstanding initial notes accepted in the
exchange offer. Holders may tender some or all of their initial notes under the
exchange offer. However, initial notes may be tendered only in integral
multiples of $1,000.
The form and terms of the exchange notes will be substantially identical to
the form and terms of the initial notes, except that:
- the offering of the exchange notes has been registered under the Act;
- the exchange notes will not be subject to transfer restrictions;
- the exchange notes will be issued free of any covenants regarding
registration rights and free of any provision for Additional Interest;
and
- the exchange notes will evidence the same debt as the initial notes and
will be entitled to the benefits of the indenture under which initial
notes were, and the exchange notes will be, issued.
You do not have any appraisal or dissenters rights under law or the
indenture in the exchange offer. We intend to conduct the exchange offer in
accordance with the applicable requirements of the Exchange Act.
We will be deemed to have accepted validly tendered initial notes when, as
and if we have given oral notice, promptly confirmed in writing, or written
notice of the acceptance to the exchange agent. The exchange agent will act as
agent for the tendering holders for the purpose of receiving the exchange notes
from us.
If we do not accept for exchange any tendered initial notes because of an
invalid tender, the occurrence of other events described in this prospectus or
otherwise, certificates for any such unaccepted initial notes will be returned
to you, without expense, as promptly as practicable after the expiration date.
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<PAGE> 19
If you tender initial notes in the exchange offer, you will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
letter of transmittal, transfer taxes relating to the exchange of initial notes
under the exchange offer. We will pay all charges and expenses, other than
underwriting discounts and commissions and transfer taxes, as part of the
exchange offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" means 5:00 p.m., New York City time, on June 11,
1999, unless we, in our sole discretion, extend the exchange offer, in which
case the term "expiration date" shall mean the latest date and time to which the
exchange offer is extended.
In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral notice (promptly confirmed in writing) or written notice
and will make a public announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date unless otherwise required by applicable law or regulation.
We have the right, in our reasonable discretion, (1) to delay accepting any
initial notes, to extend the exchange offer or, if any of the conditions set
forth below under "Conditions" shall not have been satisfied, to terminate the
exchange offer, by giving oral or written notice of such delay, extension or
termination to the exchange agent, or (2) to amend the terms of the exchange
offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by a public announcement.
If we believe that we have made a material amendment of the terms of the
exchange offer, we will promptly disclose such amendment in a manner reasonably
calculated to inform the holders of the notes of such amendment and we will
extend the exchange offer to the extent required by law.
Without limiting the manner in which we may choose to make public
announcement of any delay, extension, termination or amendment of the exchange
offer, we shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
PROCEDURES FOR TENDERING
Only a holder of initial notes may tender the initial notes in the exchange
offer. To tender in the exchange offer, a holder must complete, sign and date
the letter of transmittal, have the signatures thereon guaranteed if required by
the letter of transmittal, and mail or otherwise deliver such letter of
transmittal, together with the initial notes (or a confirmation of an
appropriate book-entry transfer into the exchange agent's account at The
Depository Trust Company ("DTC" or the "Depositary")) and any other required
documents, to the exchange agent prior to 5:00 p.m., New York City time, on the
expiration date. To be tendered effectively, the initial notes (or a timely
confirmation of a book-entry transfer of such initial notes into the exchange
agent's account at DTC as described below), letter of transmittal and other
required documents must be received by the exchange agent at the address listed
below under "Exchange Agent" prior to 5:00 p.m., New York City time, on the
expiration date.
The tender by a holder will constitute an agreement between such holder and
us in accordance with the terms and subject to the conditions described in this
prospectus and in the letter of transmittal.
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<PAGE> 20
Any financial institution which is a participant in DTC may make book-entry
delivery of the initial notes by causing DTC to transfer the initial notes into
the exchange agent's account and to deliver an Agent's Message (as defined
below) on or prior to the expiration date in accordance with DTC's procedure for
such transfer.
Although delivery of initial notes may be effected through book-entry
transfer into the exchange agent's account at DTC, the letter of transmittal,
with any required signature guarantees and any other required documents, must in
any case be transmitted to and received by the exchange agent prior to 5:00
p.m., New York City time, on the expiration date at one of its addresses listed
below under "Exchange Agent," or the guaranteed delivery procedure described
below must be complied with. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. All references in
this prospectus to deposit or delivery of initial notes shall be deemed to
include DTC's book-entry delivery method.
The method of delivery of initial notes and the letter of transmittal and
all other required documents to the exchange agent, including delivery through
DTC, is at the election and risk of the holder. Instead of delivery by mail, we
recommend that holders use an overnight or hand delivery service. If initial
notes are sent by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
assure delivery to the exchange agent before the expiration date. No letter of
transmittal or initial notes should be sent to us.
Holders may request their respective brokers, dealers, commercial banks,
trust companies or nominees to effect the above transactions for such holders.
Any beneficial owner whose initial notes are registered in the name of a
dealer, commercial bank, trust company or other nominee and who wishes to tender
initial notes should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the letter of transmittal and delivering such
owner's initial notes, either make appropriate arrangements to register
ownership of the initial notes in such owner's name or obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the initial notes are tendered (1) by a registered holder who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal or (2) for the account of an Eligible
Institution. In the event that signatures on a letter of transmittal or a notice
of withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be by a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act
(an "Eligible Institution").
If the letter of transmittal or any initial notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when
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<PAGE> 21
signing, and unless waived by us, proper evidence satisfactory to us of their
authority to so act must be submitted with the letter of transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered initial notes will be determined
by us in our sole discretion, which determination will be final and binding. We
reserve the absolute right to reject any and all initial notes not properly
tendered or any initial notes our acceptance of which would, in the opinion of
our counsel, be unlawful. We also reserve the right to waive any defects,
irregularities or conditions of tender as to particular initial notes. Our
interpretation of the terms and conditions of the exchange offer (including the
instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of initial notes must be cured within such time as we shall determine. Although
we intend to notify holders of defects or irregularities with respect to tenders
of initial notes, neither we nor the exchange agent nor any other person shall
incur any liability for failure to give such notification. Tenders of initial
notes will not be deemed to have been made until such defects or irregularities
have been cured or waived. Any initial notes received by the exchange agent that
are not properly tendered and as to which the defects or irregularities have not
been cured or waived will be returned by the exchange agent to the tendering
holders (or, in the case of initial notes delivered by book-entry transfer
within DTC, will be credited to the account maintained within DTC by the
participant in DTC which delivered such initial notes), unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
In addition, we reserve the right in our sole discretion (a) to purchase or
make offers for any initial notes that remain outstanding subsequent to the
expiration date, (b) as set forth below under "Conditions," to terminate the
exchange offer and (c) to the extent permitted by applicable law, purchase
initial notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the terms
of the exchange offer.
By tendering, each holder will represent to us that, among other things,
such holder is not a Restricted Holder. In addition, each Participating
Broker-Dealer must acknowledge that it will deliver a prospectus as part of any
resale of exchange notes.
BOOK-ENTRY TRANSFER
The exchange agent will establish a new account or utilize an existing
account with respect to the initial notes at DTC promptly after the date of this
prospectus, and any financial institution that is a participant in DTC and whose
name appears on a security position listing as the owner of initial notes may
make a book-entry tender of initial notes by causing DTC to transfer such
initial notes into the exchange agent's account in accordance with DTC's
procedures for such transfer. However, although tender of initial notes may be
effected through book-entry transfer at DTC, the letter of transmittal, properly
completed and validly executed, with any required signature guarantees, or an
Agent's Message in lieu of the letter of transmittal, and any other required
documents, must, in any case, be received by the exchange agent at its address
listed below under the caption "Exchange Agent" on or prior to the expiration
date, or the guaranteed delivery procedures described below must be complied
with. The confirmation of book-entry transfer of initial notes into the exchange
agent's account at DTC as described above is referred to in this prospectus as a
"Book-Entry Confirmation." Delivery of documents to
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<PAGE> 22
DTC in accordance with DTC's procedures does not constitute delivery to the
exchange agent.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the exchange agent and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering initial notes stating (1) the aggregate principal
amount of initial notes which have been tendered by such participant, (2) that
such participant has received and agrees to be bound by the terms of the letter
of transmittal and (3) that we may enforce such agreement against the
participant.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their initial notes and (1) whose initial notes
are not immediately available or (2) who cannot deliver their initial notes (or
a confirmation of book-entry transfer of initial notes into the exchange agent's
account at DTC), the letter of transmittal or any other required documents to
the exchange agent prior to the expiration date or (3) who cannot complete the
procedure for book-entry transfer on a timely basis, may effect a tender if:
- the tender is made by or through an Eligible Institution;
- prior to the expiration date, the exchange agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
listing the name and address of the holder of the initial notes and the
principal amount of initial notes tendered, stating that the tender is
being made thereby and guaranteeing that, within three New York Stock
Exchange, Inc. trading days after the expiration date, a duly executed
letter of transmittal together with the initial notes (or a confirmation
of book-entry transfer of such initial notes into the exchange agent's
account at DTC), and any other documents required by the letter of
transmittal and the instructions thereto, will be deposited by such
Eligible Institution with the exchange agent; and
- the properly completed and executed letter of transmittal, and all
tendered initial notes in proper form for transfer (or a confirmation of
book-entry transfer of such initial notes into the exchange agent's
account at DTC) and all other documents required by the letter of
transmittal are received by the exchange agent within three New York
Stock Exchange, Inc. trading days after the expiration date.
Upon request to the exchange agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their initial notes according to the
guaranteed delivery procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of initial notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration
date.
To withdraw a tender of initial notes in the exchange offer, a written or
facsimile transmission notice of withdrawal must be received by the exchange
agent at its address listed in this prospectus prior to 5:00 p.m., New York City
time, on the expiration date. Any notice of withdrawal must: (1) specify the
name of the person having deposited the initial notes to be withdrawn (the
"Depositor"), (2) identify the initial notes to be withdrawn (including the
certificate number or numbers and principal amount of such initial notes), (3)
be signed by the holder in the same manner as the original signature on
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the letter of transmittal by which the initial notes were tendered (including
any required signature guarantees) or be accompanied by documents of transfer
sufficient to have the trustee with respect to the initial notes register the
transfer of the initial notes into the name of the person withdrawing the tender
and (4) specify the name in which any initial notes are to be registered if
different from that of the Depositor. If the initial notes have been delivered
under the book-entry procedure set forth above under "-- Procedures for
Tendering," any notice of withdrawal must specify the name and number of the
participant's account at DTC to be credited with the withdrawn initial notes.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us in our sole discretion, which
determination shall be final and binding on all parties. Any initial notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
exchange offer and no exchange notes will be issued with respect thereto unless
the initial notes so withdrawn are validly retendered. Properly withdrawn
initial notes may be retendered by following one of the procedures described
above under "-- Procedures for Tendering" at any time prior to the expiration
date.
Any initial notes that are tendered but not accepted due to withdrawal,
rejection of tender or termination of the exchange offer will be returned as
soon as practicable to the holder without cost to the holder (or, in the case of
initial notes tendered by book-entry transfer into the exchange agent's account
at the book-entry transfer facility under the book-entry transfer procedures
described above, these initial notes will be credited to an account maintained
with such book-entry transfer facility for the initial notes).
CONDITIONS
Notwithstanding any other term of the exchange offer, we are not required
to accept for exchange any initial notes, and may terminate the exchange offer
as provided in this prospectus before the acceptance of any initial notes, if:
- the exchange offer will violate applicable law or any applicable
interpretation of the SEC Staff; or
- the initial notes or not tendered in accordance with the exchange offer;
or
- you do not represent that you are acquiring the exchange notes in the
ordinary course of your business, and that you have no arrangement or
understanding with any person to participate in a distribution of the
exchange notes; or
- any action or proceeding is instituted or threatened in any court or by
before any governmental agency with respect to the exchange offer which,
in our judgment, would reasonably be expected to impair our ability to
proceed with the exchange offer.
These conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our
reasonable discretion. Our failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of the right and each right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
If we determine in our reasonable judgment that any of the conditions are
not satisfied, we may (1) refuse to accept any initial notes and return all
tendered initial notes to the tendering holders (or, in the case of initial
notes delivered by book-entry transfer within DTC, credit any initial notes to
the account maintained within DTC by the
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participant in DTC which delivered the notes), (2) extend the exchange offer and
retain all initial notes tendered prior to the expiration of the exchange offer,
subject, however, to the rights of holders to withdraw the tenders of initial
notes (see "Withdrawal of Tenders" above) or (3) waive the unsatisfied
conditions with respect to the exchange offer and accept all properly tendered
initial notes which have not been withdrawn. If a waiver constitutes a material
change to the exchange offer, we will promptly disclose the waiver by means of a
prospectus supplement that will be distributed to the registered holders, and we
will extend the exchange offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the registered holders, if the exchange offer would otherwise expire during such
five to ten business day period.
EXCHANGE AGENT
First Chicago Trust Company of New York has been appointed as exchange
agent for the exchange offer. Questions and requests for assistance and
inquiries for additional copies of this prospectus or of the letter of
transmittal should be directed to the exchange agent addressed as follows:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY MAIL: BY FACSIMILE:
First Chicago Trust Company of New York (for eligible institutions only)
Corporate Actions Department (201) 222-4720
P.O. Box 2569 (201) 222-4721
Jersey City, NJ 07303 Confirm facsimile transmission by
(registered or certified mail telephone only
recommended) (201) 222-4707
BY OVERNIGHT DELIVERY: BY HAND DELIVERY:
First Chicago Trust Company of New York First Chicago Trust Company of New York
14 Wall Street c/o Securities Transfer and Reporting
8th Floor, Suite 4680 Services, Inc.
New York, NY 10005 100 William Street, Galleria
New York, NY 10038
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
We will pay expenses of soliciting tenders. The principal solicitation is
being made by mail; however, additional solicitation may be made by facsimile,
telephone or in person by our officers and regular employees.
We have not retained any dealer-manager as part of the exchange offer and
will not make any payments to brokers, dealers or others soliciting acceptance
of the exchange offer. We will, however, pay the exchange agent reasonable and
customary fees for services and will reimburse it for its reasonable
out-of-pocket expenses under the exchange offer. We will also pay the reasonable
fees and expenses of one firm acting as counsel for the initial purchasers.
Expenses include fees and expenses of the exchange agent and trustee, accounting
and legal fees and printing costs, among others.
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TRANSFER TAXES
You must pay all transfer taxes, if any, applicable to the exchange of
initial notes under the exchange offer. If satisfactory evidence of payment of
the taxes or exemption therefrom is not submitted with the letter of
transmittal, the amount of the transfer taxes will be billed directly to you.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
initial notes on the date of the exchange. Accordingly, we will recognize no
gain or loss for accounting purposes. The expenses of the exchange offer and the
unamortized expenses relating to the issuance of the initial notes will be
amortized over the term of the exchange notes.
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DESCRIPTION OF THE NOTES
The initial notes were issued under the indenture and the exchange notes
will be issued under the same indenture. The initial notes and the exchange
notes due 2004 have substantially identical terms and will constitute a single
series of debt securities under the indenture. The initial notes and the
exchange notes due 2009 also have substantially identical terms and will
constitute an additional series of debt securities under the indenture. If the
exchange offer is completed, holders of any remaining initial notes will vote
together with holders of the applicable exchange notes for all relevant purposes
under the indenture.
The following summary of certain provisions of the indenture does not
purport to be complete and is qualified in its entirety by reference to the
indenture, which is filed as an exhibit to the Registration Statement of which
this prospectus is a part. Capitalized terms used and not otherwise defined in
this prospectus shall have the meanings ascribed to such terms in the indenture.
GENERAL
The indenture does not limit the aggregate principal amount of senior debt
securities that may be issued thereunder and provides that senior debt
securities may be issued under the indenture from time to time in one or more
series. The senior debt securities that may be issued under the indenture
(including the notes) are collectively referred to in this prospectus as the
"Securities."
The notes due 2004 and the notes due 2009 constitute two series of
Securities under the indenture. The initial notes and the exchange notes are
collectively referred to in this prospectus as the "notes." If the exchange
offer is consummated, holders of initial notes who do not exchange their initial
notes for exchange notes will vote together with holders of the exchange notes
of such series as one series of Securities for all relevant purposes under the
indenture. In that regard, the indenture requires that certain actions by the
holders thereunder (including acceleration following an Event of Default) must
be taken, and certain rights must be exercised, by specified minimum percentages
of the aggregate principal amount of the outstanding debt securities of the
relevant series. In determining whether holders of the requisite percentage in
principal amount have given any notice, consent or waiver or taken any other
action permitted under the indenture, any initial notes which remain outstanding
after the exchange offer will be aggregated with the exchange notes of such
series and the holders of such initial notes and the exchange notes will vote
together as a single series for all such purposes. Accordingly, all references
in this section to specified percentages in aggregate principal amount of the
outstanding notes means, at any time after the exchange offer is consummated,
such percentages in aggregate principal amount of the initial notes and the
exchange notes of each series then outstanding.
The notes will be unsecured senior obligations of Fremont General and will
be initially limited to an aggregate principal amount of $425 million. Fremont
General may "reopen" any Note series and issue additional notes. The notes will
bear interest at the rate per annum shown on the cover of this prospectus from
the date of original issuance or from the most recent date to which interest has
been paid or duly provided for, payable semiannually on March 17 and September
17 of each year (each, an "Interest Payment Date"), commencing September 17,
1999, to the persons in whose names the notes are registered at the close of
business on the March 2 or September 2 next preceding such Interest Payment
Date. Interest payable at maturity (or upon any earlier date of redemption) will
be payable to the person to whom principal is payable on such date. Interest on
the notes will be calculated on the basis of a 360-day year of twelve 30-day
months. The notes Due 2004 and the notes Due 2009 will mature on March 17, 2004
and
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March 17, 2009, respectively (each a "Maturity Date"). If any Interest Payment
Date, redemption date or Maturity Date would otherwise be a day that is not a
business day, the related payment of principal and interest will be made on the
next succeeding business day as if it were made on the date such payment was
due, and no interest will accrue on the amounts so payable for the period from
and after such date to the next succeeding business day. The notes are not
subject to any sinking fund.
Other than as described below under "-- Certain Covenants," the indenture
does not contain any provision that would limit the ability of Fremont General
to incur indebtedness or to substantially reduce or eliminate Fremont General's
assets or that would afford the holders of the notes protection in the event of
a decline in Fremont General's credit quality or a takeover, recapitalization or
highly leveraged or similar transaction involving Fremont General. In addition,
subject to the limitations set forth under "-- Certain Covenants," Fremont
General may, in the future, enter into certain transactions, such as the sale of
substantially all of its assets or the merger or consolidation of Fremont
General, that would increase the amount of Fremont General's indebtedness or
substantially reduce or eliminate Fremont General's assets, which may have an
adverse effect on Fremont General's ability to service its indebtedness,
including the notes.
Each Note will be issued in book-entry form (a "book-entry note") or in
fully registered form (a "certificated note") in either case in minimum
denominations of $1,000 and integral multiples thereof. Each book-entry note
will be represented by one or more global notes in fully registered form (the
"global notes") registered in the name of The Depository Trust Company ("DTC" or
the "Depositary") or its nominee. Beneficial interest in the global notes will
be shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. See "-- Form, Denomination and
Registration." Except in the limited circumstances described herein, book-entry
notes will not be exchangeable for certificated notes.
Book-entry notes may be transferred or exchanged only through the
Depositary. See "-- Form, Denomination and Registration." Registration of
transfer or exchange of certificated notes will be made at the office or agency
maintained by the Company for such purpose in the Borough of Manhattan, The City
of New York, currently the office of the Trustee at 14 Wall Street, 8th Floor,
New York, New York 10005. No service charge will be made by Fremont General or
the Trustee for any such registration of transfer or exchange of notes, but
Fremont General may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith (other
than exchanges pursuant to the indenture not involving any transfer).
Payments of principal, and premium, if any, and interest, if any, on
book-entry notes will be made by the Company through the Trustee to the
Depositary. See "-- Form, Denomination and Registration." In the case of
certificated notes, payment of principal and premium, if any, due on the
Maturity Date will be made in immediately available funds upon presentation and
surrender thereof at the office or agency maintained by Fremont General for such
purpose at the Borough of Manhattan, The City of New York, currently the office
of the Trustee at 14 Wall Street, 8th Floor, New York, New York 10005. Payment
of interest, if any, due on the Maturity Date of a certificated note will be
made to the person to whom payment of the principal thereof and premium, if any,
thereon shall be made. Payment of interest, if any, due on a certificated note
on any Interest Payment Date other than the Maturity Date will be made by check
mailed to the address of the holder entitled thereto as such address shall
appear in the security register of Fremont General. Notwithstanding the
foregoing, a holder of $10 million or more in
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aggregate principal amount of certificated notes (whether having identical or
different terms and provisions) will be entitled to receive interest payments,
if any, on any Interest Payment Date other than the Maturity Date by wire
transfer of immediately available funds if appropriate wire transfer
instructions have been received in writing by the Trustee not less than 15
calendar days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such holder. Any interest not punctually paid or duly provided for on a
certificated note on any Interest Payment Date other than the Maturity Date will
forthwith cease to be payable to the holder thereof as of the close of business
on the related Record Date and may either be paid (i) to the person in whose
name such certificated note is registered at the close of business on a special
record date for the payment of such defaulted interest that is fixed by Fremont
General, written notice whereof shall be given to the holders of the notes not
less than 30 calendar days prior to such special record date, or (ii) at any
time in any other lawful manner.
All moneys paid by Fremont General to the Trustee or any Paying Agent for
the payment of principal of, and premium and interest on, any Note which remain
unclaimed for two years after such principal, premium or interest shall have
become due and payable may be repaid to Fremont General and thereafter the
holder of such Note shall look only to Fremont General for payment thereof.
RANKING AND HOLDING COMPANY STRUCTURE
The notes will be unsecured senior indebtedness of Fremont General ranking
equally with Fremont General's existing and future unsubordinated unsecured
indebtedness and senior in right of payment to all subordinated indebtedness of
Fremont General. The notes will be effectively subordinated to all secured
indebtedness of Fremont General with respect to the assets securing such
indebtedness and will be effectively subordinated to all liabilities of Fremont
General's subsidiaries, including trade payables. The indenture does not limit
the aggregate amount of indebtedness that may be incurred by Fremont General or
its subsidiaries. As of December 31, 1998, Fremont General had approximately
$331 million of indebtedness and other liabilities that would have been senior
or pari passu (equal) to the notes outstanding. As of the same date, there was
approximately $553 million of indebtedness and other liabilities (not including
thrift deposits, inter-company borrowings, insurance reserves or obligations or
liabilities incurred in connection with asset securitizations) of Fremont
General's subsidiaries that would be structurally senior to the notes. On a pro
forma basis, assuming that the net proceeds from the offering of the initial
notes had been applied on such date, Fremont General would have had
approximately $31 million of such indebtedness and other liabilities
outstanding, excluding the initial notes.
Fremont General's assets consist primarily of investments in its
subsidiaries. Fremont General's operations are currently conducted through its
subsidiaries. Accordingly, Fremont General's cash flow and consequent ability to
service its debt, including the notes, is primarily dependent upon the earnings
of its subsidiaries and the distribution of those earnings to Fremont General or
upon loans or other payments of funds by those subsidiaries to Fremont General.
Fremont General's subsidiaries are separate and distinct legal entities and have
no obligation, contingent or otherwise, to pay any amounts due pursuant to the
notes, whether by dividends, loans or other payments. In addition, the payment
of dividends and the making of loan advances to Fremont General by its
subsidiaries are and may continue to be subject to certain statutory and
regulatory restrictions and various agreements, principally loan agreements, of
Fremont General's
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subsidiaries that restrict the ability of the respective subsidiaries to pay
cash dividends or advance loans and other payments to Fremont General. One of
Fremont General's financial services subsidiaries has a credit facility that
presently permits borrowings of up to $438 million. Furthermore, our rights, and
the rights of Fremont General's 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 any subordinated debt and trade payables, of Fremont General's
subsidiaries, except to the extent that Fremont General is itself recognized as
a creditor of such subsidiary, in which case the claims of Fremont General would
still be subordinate to any secured claims in the assets of such subsidiary and
any indebtedness of such subsidiary senior to that held by Fremont General.
Fremont General's secured debt consists primarily of its indebtedness under
the Chase Credit Agreement (as defined below under "-- Certain Definitions").
Although the notes will rank equally in right of payment with indebtedness
outstanding under the Chase Credit Agreement, the indebtedness represented by
the Chase Credit Agreement is secured by a pledge of the stock of Fremont
General's principal insurance subsidiary. The notes are unsecured and therefore
do not have the benefit of such collateral. As described under "Use of
Proceeds," Fremont General used the net proceeds from the offering to repay all
outstanding borrowings under the Chase Credit Agreement, although Fremont
General may reborrow thereunder, subject to certain conditions and limitations,
including as set forth below under "-- Certain Covenants."
OPTIONAL REDEMPTION
Each of the notes will be redeemable at the option of Fremont General, in
whole at any time or in part from time to time, at a redemption price equal to
the greater of (i) 100% of their principal amount and (ii) the sum, as
determined by the Independent Investment Banker, of the present values of the
principal amount and the remaining scheduled payments of interest on the notes
to be redeemed, discounted from its scheduled payment dates to the redemption
date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate, plus accrued but unpaid interest thereon
to the redemption date.
NOTICE OF ANY REDEMPTION MUST BE GIVEN AT LEAST 30 DAYS BUT NOT MORE THAN
60 DAYS BEFORE THE REDEMPTION DATE TO EACH REGISTERED HOLDER OF NOTES TO BE
REDEEMED. IF MONEY SUFFICIENT TO PAY THE REDEMPTION PRICE OF AND ACCRUED
INTEREST ON ALL OF THE NOTES (OR PORTION THEREOF), TO BE REDEEMED ON THE
REDEMPTION DATE IS DEPOSITED WITH THE TRUSTEE OR A PAYING AGENT ON OR BEFORE THE
REDEMPTION DATE AND CERTAIN OTHER CONDITIONS ARE SATISFIED, THEN ON AND AFTER
SUCH DATE, INTEREST WILL CEASE TO ACCRUE ON SUCH NOTES (OR SUCH PORTION
THEREOF), CALLED FOR REDEMPTION.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, calculated on the third business day preceding such
redemption date using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date, plus 50 basis points in the case of both the notes due
2004 and notes due 2009.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in
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accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of such notes to be
redeemed.
"Comparable Treasury Price" means, with respect to any redemption date, the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or if the Trustee obtains fewer than four such Reference Treasury
Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with Fremont General.
"Reference Treasury Dealers" means Merrill Lynch Government Securities
Inc., Credit Suisse First Boston Corporation, Goldman, Sachs & Co., and Warburg
Dillon Read LLC and their respective affiliates and successors and any other
primary U.S. Government securities dealers in New York City (each a "Primary
Treasury Dealer") selected by Fremont General in addition to, or in substitution
for, such firms; provided, however, that if any of the foregoing shall cease to
be a Primary Treasury Dealer, Fremont General will substitute another Primary
Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.
FORM, DENOMINATION AND REGISTRATION
So long as the Depositary or its nominee is the registered owner of a
global note, the Depositary or its nominee, as the case may be, will be the sole
holder of the notes represented thereby for all purposes under the indenture.
Except as otherwise provided in this section, the beneficial owners of the
global notes representing the notes will not be entitled to receive physical
delivery of certificated notes and will not be considered the holders thereof
for any purpose under the indenture, and no global note representing the
book-entry notes shall be exchangeable or transferable. Accordingly, each
beneficial owner must rely on the procedures of the Depositary and, if such
beneficial owner is not a Participant (as hereinafter defined), then such
beneficial owner must rely on the procedures of the Participant through which
such beneficial owner owns its interest in order to exercise any rights of a
holder under such global note or the indenture. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in certificated form. Such limits and such laws may impair the
ability to transfer beneficial interests in a global note representing the
notes.
The global notes representing the notes will be exchangeable for
certificated notes of like tenor and terms and of differing authorized
denominations aggregating a like principal amount, only if (i) the Depositary
notifies Fremont General that it is unwilling or unable to continue as
Depositary for the global notes, (ii) the Depositary ceases to be a clearing
agency registered under the Securities Exchange Act, (iii) Fremont General in
its sole discretion determines that the global notes shall be exchangeable for
certificated notes or (iv) there shall have occurred and be continuing an Event
of Default under the indenture with respect to the notes. Upon any such
exchange, the certificated notes shall be registered in the names of the
beneficial owners of the global notes representing the notes,
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which names shall be provided by the Depositary's relevant Participants (as
identified by the Depositary) to the Trustee.
The following is based on information furnished by the Depositary:
The Depositary will act as the securities depositary for the notes.
The notes will be issued as fully registered securities registered in the
name of Cede & Co. (the Depositary's partnership nominee). Fully registered
global notes will be issued for the notes, in the aggregate principal
amount of such issue, and will be deposited with the Depositary.
The Depositary 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. The Depositary holds securities that its
participants ("Participants") deposit with the Depositary. The Depositary
also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes to Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants of the Depositary ("Direct Participants")
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other
organizations. The Depositary is owned by a number of its Direct
Participants, including the Initial Purchasers and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the Depositary's system
is also available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants
are on file with the SEC.
Purchases of notes under the Depositary's system must be made by or
through Direct Participants, which will receive a credit for such notes on
the Depositary's record. The ownership interest of each actual purchaser of
each Note represented by a global note ("Beneficial Owner") is in turn to
be recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from the Depositary of their
purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participants
through which such Beneficial Owner entered into the transaction. Transfers
of ownership interests in the global notes representing the notes are to be
accomplished by entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners of the global notes representing
the notes will not receive certificated notes representing their ownership
interests therein, except in the event that use of the book-entry system
for such notes is discontinued.
To facilitate subsequent transfers, all global notes representing the
notes which are deposited with, or on behalf of, the Depositary are
registered in the name of the Depositary's nominee, Cede & Co. The deposit
of global notes with, or on behalf of, the Depositary and their
registration in the name of Cede & Co. will effect no change in beneficial
ownership. The Depositary has no knowledge of the actual Beneficial Owners
of the global notes representing the notes; the Depositary's records
reflect only
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the identity of the Direct Participants to whose accounts such notes 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 the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with
respect to the global notes representing the notes. Under its usual
procedure, the Depositary mails an Omnibus Proxy to Fremont General as soon
as possible after the applicable record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the notes are credited on the applicable record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and/or interest, if any, payments on the
global notes representing the notes will be made to the Depositary. The
Depositary's practice is to credit Direct Participants' accounts on the
applicable payment date in accordance with their respective holdings shown
on the Depositary's records unless the Depositary has reason to believe
that it will not receive payment on such 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 accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of the Depositary, the Trustee
or Fremont General, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal, premium, if any,
and/or interest, if any, to the Depositary is the responsibility of Fremont
General or the Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of the Depositary, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
The Depositary may discontinue providing its services as securities
depositary with respect to the notes at any time by giving reasonable
notice to Fremont General or the Trustee. Under such circumstances, in the
event that a successor securities depositary is not obtained, certificated
notes are required to be printed and delivered.
Fremont General may decide to discontinue use of the system of
book-entry transfers through the Depositary (or a successor securities
depositary). In that event, certificated notes will be printed and
delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that Fremont General
believes to be reliable, but Fremont General takes no responsibility for
its accuracy.
The Depositary has further advised Fremont General that management of
the Depositary is aware that some computer applications, systems, and the
like for processing data ("Systems") that are dependent upon calendar
dates, including dates before, on, and after January 1, 2000, may encounter
"Year 2000 problems." The Depositary has informed its Participants and
other members of the financial community (the "Industry") that it has
developed and is implementing a program so that its Systems, as the same
relate to the timely payment of distributions (including principal and
income payments) to securityholders, book-entry deliveries, and
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settlement of trades within the Depositary ("Depositary Services"),
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
the Depositary's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, the Depositary's ability to perform properly its service is
also dependent upon other parties, including but not limited to issuers and
their agents, as well as the Depositary's Direct Participants and Indirect
Participants and third party vendors from whom the Depositary licenses
software and hardware, and third party vendors on whom the Depositary
relies for information or the provision of services, including
telecommunication and electrical utility service providers, among others.
The Depositary has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom the Depositary acquires
services to: (i) impress upon them the importance of such services being
Year 2000 compliance; and (ii) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, the Depositary is in the process of developing such contingency
plans as it deems appropriate.
According to the Depositary, the foregoing information with respect to the
Depositary has been provided to the Industry for informational purposes only and
is not intended to serve as a representation, warranty, or contract modification
of any kind.
CERTAIN COVENANTS
Limitations on Liens
For so long as the notes and any other applicable series of Securities are
outstanding, Fremont General will not, and will not permit any Significant
Subsidiary to, create, assume, incur or suffer to exist upon any property of
Fremont General or any Significant Subsidiaries of Fremont General any Liens to
secure Debt, without making effective provision whereby the notes and any other
applicable series of Securities then outstanding shall be secured equally and
ratably with (or prior to) such other Debt, so long as such other Debt remains
secured. This limitation shall not apply to:
(1) Liens securing Debt for borrowed money, including purchase money
Debt, that is incurred to finance the acquisition, construction or
improvement of the property subject to such Lien either before or within 90
days after such acquisition, construction or improvement; provided that the
principal amount of such Debt does not exceed 100% of the fair market value
of the property subject to such Lien;
(2) Liens securing Debt on property or shares of stock of a
corporation at the time the same becomes a Subsidiary of Fremont General or
merges into or consolidates with Fremont General or a Subsidiary of Fremont
General; provided that such Liens may not be assumed or permitted to exist
if they are incurred in anticipation of such corporation becoming a
Subsidiary of Fremont General or of such merger or consolidation;
(3) Liens securing Debt on property at the time Fremont General or a
Subsidiary of Fremont General acquires such property; provided that such
Liens may not extend to any other property of Fremont General or a
Subsidiary of Fremont General at the time such Liens are assumed;
(4) Liens in favor of Fremont General or any Subsidiary of Fremont
General;
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(5) Liens directly or indirectly in favor of, or required by,
governmental authorities, including Liens securing Debt owed by any
Subsidiary of Fremont General to the Federal Home Loan Bank or other
governmental authorities, and Liens related to appeal bonds, judgments,
actions at law or in equity and similar matters;
(6) Renewals, continuations, assignments and/or extensions of Liens
described in clauses (1) through (5) above, provided however, that (a) such
renewal, continuation, assignment and/or extension shall be limited to all
or a part of the same property or shares of stock that secured the Lien,
renewal, continuation, assignment and/or extension and (b) the Debt secured
by such Lien at such time is not so increased;
(7) Liens existing on the date of the issuance of the notes or any
other applicable series of Securities issued pursuant to the indenture, and
renewals, continuations, assignments and/or extensions thereof; provided
however, that (a) such renewal, continuation, assignment and/or extension
shall be limited to all or a part of the same property or shares of stock
that secured the Lien, renewal, continuation, assignment and/or extension
and (b) the Debt secured by such Lien at such time is not so increased; and
provided further that without making effective provision whereby the notes
and any other applicable series of such Securities then outstanding shall
be secured equally and ratably with (or prior to) the Debt of Fremont
General under the Chase Credit Agreement, Fremont General shall not incur
additional Debt under the Chase Credit Agreement at any time that both (a)
the Lien securing the Debt of Fremont General under the Chase Credit
Agreement on the capital stock of Fremont Compensation Insurance Group,
Inc. remains in effect and (b) after giving effect to the incurrence of
such Debt, the ratio of Senior Debt to Total Capitalization of Fremont
General, on a nonconsolidated basis, would exceed 0.32 to 1.0; or
(8) Liens not covered by clauses (1) through (7) securing Debt of
Fremont General or any of its Significant Subsidiaries, provided that the
aggregate principal amount of such Debt immediately after giving effect to
the occurrence thereof does not exceed 10% of Consolidated Net Tangible
Assets.
Limitation of Dividend and Other Payment Restrictions Affecting Significant
Insurance Subsidiaries
For so long as the notes and any other applicable series of Securities are
outstanding, Fremont General will not, and will not permit any Subsidiary of
Fremont General to create, cause or suffer to exist any encumbrance or
restriction on the ability of any Significant Insurance Subsidiary of Fremont
General to (i) pay dividends or make other distributions on its Capital Stock
owned by Fremont General or any Insurance Subsidiary of Fremont General; (ii)
pay Debt or other obligations owed to Fremont General or any Insurance
Subsidiary of Fremont General; (iii) make loans or advances to Fremont General
or any Insurance Subsidiary of Fremont General; or (iv) transfer any of its
properties or assets to Fremont General or any Insurance Subsidiary of Fremont
General.
The foregoing provisions shall not restrict any encumbrances or
restrictions (i) existing on March 17, 1999 and in any renewals of the
agreements containing such restrictions; provided that the encumbrances and
restrictions in any such renewals are no less favorable in any material respect
to the holders of the Securities of any series; (ii) existing under or by reason
of applicable law, rule or regulation, or any agreement or understanding with
any governmental entity that has jurisdiction over Fremont General or any of its
Subsidiaries; (iii) existing with respect to any Person, property or assets
acquired, existing at the time of such acquisition and not incurred in
contemplation
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thereof; (iv) in the case of clause (iv) of the immediately preceding paragraph,
(a) that restrict in a customary manner the subletting, assignment or transfer
of any property or asset that is a lease, license, conveyance or contract or
similar property or asset, (b) existing by virtue of any transfer of any
property or assets of Fremont General or any Insurance Subsidiary of Fremont
General not otherwise prohibited by the indenture and relating solely to such
assets or (c) arising or agreed to in the ordinary course of business, not
relating to any Debt, and that do not detract from the value of property or
assets of Fremont General or any Insurance Subsidiary of Fremont General in any
manner material to Fremont General or such Insurance Subsidiary; (v) with
respect to an Insurance Subsidiary of Fremont General and imposed pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock of, or property and assets of, such
Insurance Subsidiary; (vi) existing under customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practice; and (vii) existing under purchase money obligations for property
acquired in the ordinary course of business, so long as the incurrence of such
obligations is permitted under the indenture.
Limitation on the Issuance and Sale of Capital Stock of Significant Insurance
Subsidiaries
For so long as the notes and any other applicable series of Securities are
outstanding, Fremont General will not sell, and will not permit any Subsidiary
of Fremont General, directly or indirectly, to issue or sell any shares of
Capital Stock of a Significant Insurance Subsidiary of Fremont General except:
(i) to Fremont General or a wholly-owned subsidiary of Fremont General and (ii)
issuance of director's qualifying shares or sales to non-U.S. nationals of
shares of capital stock of non-U.S. Subsidiaries, to the extent required by
applicable law or regulatory authority.
Reporting Requirements
For so long as the notes and any other applicable series of Securities are
outstanding, the Company's audited annual consolidated financial statements and
unaudited quarterly consolidated financial statements will be furnished to the
holders of Securities or to the Trustee under the indenture for distribution to
holders. In addition, for so long as the notes and any other applicable series
of Securities are outstanding, Fremont General will make available upon request,
to any holder and any prospective purchaser of Securities, the information
required pursuant to Rule 144A(d)(4) under the Securities Act during any period
in which Fremont General is not subject to Section 13 or 15(d) of the Securities
Exchange Act.
CONSOLIDATION, MERGER AND SALE
Fremont General will not consolidate with any other corporation or accept a
merger of any other corporation into Fremont General or permit Fremont General
to be merged into any other corporation, or sell or lease all or substantially
all its assets to another corporation, or purchase all or substantially all the
assets of another corporation, unless (i) either Fremont General shall be the
continuing corporation, or the successor, transferee or lessee corporation (if
other than Fremont General) shall be organized under the laws of the United
States or any state thereof or the District of Columbia and shall expressly
assume, by indenture supplemental hereto, executed and delivered by such
corporation prior to or simultaneously with such consolidation, merger, sale or
lease, the due and punctual payment of the principal of and interest and
premium, if any, on all the
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Securities, according to their tenor, and the due and punctual performance and
observance of all the covenants and conditions of the indenture to be performed
or observed by Fremont General and (ii) immediately after such consolidation,
merger, sale, lease or purchase Fremont General or the successor, transferee or
lessee corporation (if other than Fremont General) would not be in default in
the performance of any covenant or condition of the indenture.
EVENTS OF DEFAULT
The term "Event of Default" means any one of the following events with
respect to any series of Securities, including the notes:
(1) default in the payment of any interest on any Security of such
series, or any Additional Amounts payable with respect thereto, when such
interest becomes or such Additional Amounts become due and payable, and
continuance of such default for a period of 30 days;
(2) default in the payment of the principal of or any premium on any
Security of such series, or any Additional Amounts payable with respect
thereto, when such principal or premium becomes or such Additional Amounts
become due and payable at their Maturity;
(3) default in the deposit of any sinking fund payment when and as due
by the terms of a Security of such series;
(4) default in the performance, or breach, of any covenant or warranty
of Fremont General in the indenture or the Securities (other than a
covenant or warranty a default in the performance or the breach of which is
elsewhere in the indenture specifically dealt with or which has been
expressly included in the indenture solely for the benefit of a series of
Securities other than such series), and continuance of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to Fremont General by the Trustee or to Fremont General and
the Trustee by the holders of at least 25% in principal amount of the
Outstanding Securities of such series, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default";
(5) if any event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be
secured or evidenced, any Debt of Fremont General or any of its Significant
Subsidiaries, whether such Debt now exists or shall hereafter be created,
shall happen and shall result in Debt in aggregate principal amount in
excess of $25 million becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, and such
acceleration shall not be rescinded or annulled within a period of 30 days
after there shall have been given, by registered or certified mail, to
Fremont General by the Trustee or to Fremont General and the Trustee by the
holders of at least 25% in principal amount of the outstanding Securities
of such series then outstanding a written notice specifying such default or
breaches and requiring it to be remedied and stating that such notice is a
"Notice of Default" or other such notice as prescribed in the indenture;
(6) Fremont General or any of its Significant Subsidiaries shall fail
within 60 days to pay, bond or otherwise discharge any uninsured judgment
or court order for the payment of money in excess of $25 million, which is
not stayed on appeal or is not otherwise being contested in good faith;
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(7) the entry by a court having competent jurisdiction of:
(a) a decree or order for relief in respect of Fremont General or
any of its Significant Subsidiaries in an involuntary proceeding under
any applicable bankruptcy, insolvency, reorganization or other similar
law and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days;
(b) a decree or order adjudging Fremont General or any of its
Significant Subsidiaries to be insolvent, or approving a petition
seeking reorganization, arrangement, adjustment or composition of
Fremont General or any of its Significant Subsidiaries and, except in
the case of any Regulated Insurance Subsidiary such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days;
or
(c) a final and non-appealable order appointing a custodian,
receiver, liquidator, assignee, trustee or other similar official of
Fremont General or any of its Significant Subsidiaries or of any
substantial part of the property of Fremont General or any of its
Significant Subsidiaries or ordering the winding up or liquidation of
the affairs of Fremont General;
(8) the commencement by Fremont General or any of its Significant
Subsidiaries of a voluntary proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law or of a voluntary
proceeding seeking to be adjudicated insolvent or the consent by Fremont
General or any of its Significant Subsidiaries to the entry of a decree or
order for relief in an involuntary proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any insolvency proceedings against it, or the filing by
Fremont General or any of its Significant Subsidiaries of a petition or
answer or consent seeking reorganization, arrangement, adjustment or
composition of Fremont General or any of its Significant Subsidiaries, as
the case may be, or relief under any applicable law, or the consent by
Fremont General or any of its Significant Subsidiaries to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or similar official of Fremont
General or any of its Significant Subsidiaries, as the case may be, or any
substantial part of the property of Fremont General or any of its
Significant Subsidiaries, as the case may be, or the making by Fremont
General or any of its Significant Subsidiaries of an assignment for the
benefit of creditors, or the taking of corporate action by Fremont General
or any of its Significant Subsidiaries in furtherance of any such action;
or
(9) any other Event of Default provided in or pursuant to the
indenture with respect to Securities of such series.
If an Event of Default with respect to Securities of any series at the time
Outstanding (other than an Event of Default with respect to Fremont General
specified in clause (7) or (8) above) occurs and is continuing, then the Trustee
or the holders of not less than 25% in principal amount of the Outstanding
Securities of such series may declare the principal of all the Securities of
such series, or such lesser amount as may be provided for in the Securities of
such series, to be due and payable immediately, by a notice in writing to
Fremont General (and to the Trustee if given by the holders), and upon any such
declaration such principal or such lesser amount shall become immediately due
and payable. If an Event of Default with respect to Fremont General specified in
clause (7) or (8) above occurs, all unpaid principal of and accrued interest on
the Outstanding
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Securities of that series (or such lesser amount as may be provided for in the
Securities of such series) shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
holder of any Security of that series.
At any time after a declaration of acceleration or automatic acceleration
with respect to the Securities of any series has been made and before a judgment
or decree for payment of the money due has been obtained by the Trustee, the
holders of not less than a majority in principal amount of the Outstanding
Securities of such series, by written notice to Fremont General and the Trustee,
may rescind and annul such declaration and its consequences if (a) Fremont
General has paid or deposited with the Trustee a sum of money sufficient to pay
all overdue installments of any interest on and Additional Amounts with respect
to all Securities of such series and the principal of and any premium on any
Securities of such series which have become due otherwise than by such
declaration of acceleration and interest thereon and (b) all Events of Default
with respect to Securities of such series, other than the non-payment of the
principal of, any premium and interest on, and any Additional Amounts with
respect to Securities of such series which shall have become due solely by such
acceleration, shall have been cured or waived. No such rescission shall affect
any subsequent default or impair any right consequent thereon.
CERTAIN DEFINITIONS
The term "Capital Stock" means (i) with respect to any Person organized as
a corporation, any and all shares, interests, rights to purchase, warrants,
options, participations or other equivalents of or interest in (however
designated) corporate stock, and (ii) with respect to any Person that is not
organized as a corporation, the partnership, membership or other equity
interests or participations in such Person.
The term "Chase Credit Agreement" means the $400 million Credit Agreement
dated as of August 1, 1997 among Fremont General, the lenders party thereto and
The Chase Manhattan Bank, as agent for such lenders, and any amendments,
modifications, supplements, extensions, renewals, replacements, refinancings or
refundings thereof.
The term "Consolidated Net Tangible Assets" means the total of all assets
reflected on a consolidated balance sheet of Fremont General and its
consolidated Subsidiaries, prepared in accordance with generally accepted
accounting principles, at their net book values (after deducting related
depreciation, depletion, amortization and all other valuation reserves which, in
accordance with such principles, should be set aside in connection with the
business conducted), but excluding goodwill, unamortized debt discount and all
other like intangible assets, all as determined in accordance with such
principles, less the aggregate of the current liabilities of Fremont General and
its consolidated Subsidiaries reflected on such balance sheet, all as determined
in accordance with such principles. For purposes of this definition, "current
liabilities" include all indebtedness for money borrowed, incurred, issued,
assumed or guaranteed by Fremont General and its consolidated Subsidiaries, and
other payables and accruals, in each case payable on demand or due within one
year of the date of determination of Consolidated Net Tangible Assets, but shall
exclude any portion of long-term debt maturing within one year of the date of
such determination, all as reflected on such consolidated balance sheet of
Fremont General and its consolidated Subsidiaries, prepared in accordance with
generally accepted accounting principles.
The term "Debt" means (a) any liability of Fremont General or any
Subsidiary (1) for borrowed money, or under any reimbursement obligation
relating to a letter of
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credit, or (2) evidenced by a bond, note, debenture or similar instrument, or
(3) for payment obligations arising under any conditional sale or other title
retention arrangement (including a purchase money obligation) given in
connection with the acquisition of any businesses, properties or assets of any
kind, or (4) consisting of the discounted rental stream properly classified in
accordance with generally accepted accounting principles on the balance sheet of
Fremont General or any Subsidiary, as lessee, as a capitalized lease obligation;
(b) any liability of others of a type described in the preceding clause (a) to
the extent that Fremont General or any Subsidiary has guaranteed or is otherwise
legally obligated in respect thereof; and (c) any amendment, supplement,
modification, deferral, renewal, extension or refunding of any liability of the
types referred to in clauses (a) and (b) above. "Debt" shall not be construed to
include (w) thrift deposits, (x) trade payables or credit on open account to
trade creditors incurred in the ordinary course of business, (y) obligations or
liabilities incurred in connection with the sale, transfer or other disposition
of property in connection with the securitization or other asset-based financing
thereof; provided however that any such sale, transfer or other disposition
shall be for valid consideration and shall not be to prefer directly or
indirectly any holder of any other obligation or Debt of Fremont General or any
Subsidiary of Fremont General as to any such other obligation or Debt that was
already outstanding and did not previously benefit from a Lien, or (z) any
contractual obligation, whether or not contingent, with respect to Debt of
another Person, to the extent made in the ordinary course of business in
connection with lending relationships between the Person and a Subsidiary of
Fremont General.
The term "Insurance Business" means one or more aspects of the business of
selling, issuing or underwriting insurance or reinsurance.
The term "Insurance Subsidiaries" means (i) Fremont Compensation Insurance
Group, Inc., a Delaware corporation ("FCIG"), (ii) each of FCIG's Subsidiaries
(whether currently in existence or created or acquired thereafter) and (iii)
each other Subsidiary of Fremont General created or acquired after the date of
the indenture that engages in property and casualty insurance operations,
workers' compensation insurance operations or the activities of which are
limited to holding the stock or other securities of another Subsidiary or
Subsidiaries engaged in property and casualty insurance operations and/or
workers' compensation insurance.
The term "Lien" means any lien, charge, claim, security interest, pledge,
hypothecation, right of another under any conditional sale or other title
retention agreement, or any other encumbrance affecting title to property.
Without limiting the generality of the foregoing, the sale of property used or
useful in the business of the seller with the intention of retaining the use
thereof under a lease, or other comparable arrangement commonly referred to as a
"sale and leaseback," shall be deemed to create a Lien on such property.
The term "Regulated Insurance Subsidiary" means any Subsidiary of Fremont
General, whether now owned or hereafter acquired, that is authorized or admitted
to carry on or transact Insurance Business in any jurisdiction and is regulated
by the insurance department or similar regulatory authority of such
jurisdiction.
The term "Senior Debt" means the Debt of Fremont General, on a
nonconsolidated basis, that ranks equally with or senior to the Securities.
The term "Significant Insurance Subsidiary" means any Insurance Subsidiary
that is a Significant Subsidiary.
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The term "Significant Subsidiary" has the meanings ascribed to such term in
Rule 1-02(w) of SEC Regulation S-X as in effect on the date of the indenture.
The term "Subsidiary" means any Corporation at least a majority of the
Voting Stock of which shall at the time be owned, directly or indirectly, by
Fremont General, or one or more Subsidiaries, or by Fremont General and one or
more Subsidiaries.
The term "Total Capitalization" means the sum of (a) stockholders' equity
of Fremont General; (b) Senior Debt; (c) Debt of Fremont General, on a
nonconsolidated basis, that is subordinated to the Securities by its terms, in
each case calculated in accordance with generally accepted accounting principles
applied on a consistent basis with Fremont General's financial reports; and (d)
the 9% Junior Subordinated Debentures due March 31, 2026 of Fremont General
issued in connection with the mandatorily redeemable preferred securities of the
TOPrS Trust or any other similar securities issued from time to time in the
future.
The term "Voting Stock" of any Person means stock of any class or classes
(however designated) having ordinary voting power for the election of a majority
of the members of the board of directors (or any governing body) of such Person,
other than Capital Stock having such power only by reason of the happening of a
contingency.
The term "Wholly-Owned Subsidiary" of any Person means any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in such Subsidiary, other than directors' or nominees' qualifying shares, is
owned directly or indirectly by such Person.
MODIFICATION AND WAIVER
Modification and amendments of the indenture may be made by Fremont General
and the Trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding Securities of each series affected
thereby; provided, however, that no such modification or amendment may, without
the consent of the holder of each outstanding Security affected thereby, (a)
change the Stated Maturity of the principal of, or any premium or installment of
interest on, or any Additional Amounts with respect to, any Security, (b) reduce
the principal amount of, or the rate (or modify the calculation of such rate) of
interest on, or any Additional Amounts with respect to, or any premium payable
upon the redemption of, any Security, (c) change the redemption provisions of
any Security or adversely affect the right of repayment at the option of any
holder of any Security, (d) change the place of payment or the coin or currency
in which the principal of, any premium or interest on or any Additional Amounts
with respect to any Security is payable, (e) impair the right to institute suit
for the enforcement of any payment on or after the Stated Maturity of any
Security (or, in the case of redemption, on or after the Redemption Date or, in
the case of repayment at the option of any holder, on or after the date for
repayment), (f) reduce the percentage in principal amount of the outstanding
Securities, the consent of whose holders is required in order to take certain
actions, (g) reduce the requirements for quorum or voting by holders of
Securities as provided in the indenture, (h) modify any of the provisions in the
indenture regarding the waiver of past defaults and the waiver of certain
covenants by the holders of Securities except to increase any percentage vote
required or to provide that certain other provisions of the indenture cannot be
modified or waived without the consent of the holder of each Security affected
thereby, or (i) modify any of the above provisions.
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The holders of at least a majority in aggregate principal amount of the
Securities of any series may, on behalf of the holders of all Securities of such
series, waive compliance by Fremont General with certain restrictive provisions
of the indenture. The holders of not less than a majority in aggregate principal
amount of the outstanding Securities of any series may, on behalf of the holders
of all Securities of such series, waive any past default and its consequences
under the indenture with respect to the Securities of such series, except a
default (a) in the payment of principal of (or premium, if any), or any interest
on or any Additional Amounts with respect to Securities of such series or (b) in
respect of a covenant or provision of the indenture that cannot be modified or
amended without the consent of the holder of each Security of any series.
Under the indenture, Fremont General is required to furnish the Trustee
annually a statement as to performance by Fremont General of certain of its
obligations under the indenture and as to any default in such performance.
Fremont General is also required to deliver to the Trustee, within five days
after becoming aware thereof, written notice of any Event of Default or any
event which after notice or lapse of time or both would constitute an Event of
Default.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Fremont General may discharge certain obligations to holders of any series
of Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
depositing with the Trustee, in trust, funds in U.S. dollars in an amount
sufficient to pay the entire indebtedness on such Securities with respect to
principal (and premium, if any) and interest to the date of such deposit (if
such Securities have become due and payable) or to the Maturity thereof, as the
case may be.
The indenture provides that, unless the provisions of Section 4.2 thereof
are made inapplicable to the Securities of or within any series pursuant to
Section 3.1 thereof, Fremont General may elect either (a) to defease and be
discharged from any and all obligations with respect to such Securities (except
for, among other things, the obligation to pay Additional Amounts, if any, upon
the occurrence of certain events of taxation, assessment or governmental charge
with respect to payments on such Securities and other obligations to register
the transfer or exchange of such Securities, to replace temporary or mutilated,
destroyed, lost or stolen Securities, to maintain an office or agency with
respect to such Securities and to hold moneys for payment in trust)
("defeasance") or (b) to be released from its obligations with respect to such
Securities under the covenants described under "Limitation on Liens,"
"Limitation of Dividend and Other Payment Restrictions Affecting Significant
Insurance Subsidiaries" and "Limitation on the Issuance and Sale of Capital
Stock of Significant Insurance Subsidiaries" above or, if provided pursuant to
Section 3.1 of the indenture, its obligations with respect to any other
covenant, and any omission to comply with such obligations shall not constitute
a default or an Event of Default with respect to such Securities ("covenant
defeasance"). Defeasance or covenant defeasance, as the case may be, shall be
conditioned upon the irrevocable deposit by Fremont General with the Trustee, in
trust, of an amount in U.S. dollars at Stated Maturity, or Government
Obligations (as defined below), or both, applicable to such Securities which
through the scheduled payment of principal and interest in accordance with their
terms will provide money in an amount sufficient to pay the principal of (and
premium, if any) and interest on such Securities on the scheduled due dates
therefor.
38
<PAGE> 42
Such a trust may only be established if, among other things, (i) the
applicable defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the indenture or any other material
agreement or instrument to which Fremont General is a party or by which it is
bound, and (ii) Fremont General has delivered to the Trustee an Opinion of
Counsel (as specified in the indenture) to the effect that the holders of such
Securities will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a letter ruling of the Internal
Revenue Service received by Fremont General, a Revenue Ruling published by the
Internal Revenue Service or a change in applicable U.S. federal income tax law
occurring after the date of the indenture.
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government or the governments in the
confederation which issued the Foreign Currency in which the Securities of a
particular series are payable, for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America, the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in the case of clauses (i)
and (ii), are not callable or redeemable at the option of the issuer or issuers
thereof, and shall also include a depositary receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of or any other amount with respect
to any such Government Obligation held by such custodian for the account of the
holder of such Depositary receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian with respect to the Government Obligation or the specific payment of
interest on or principal of or any other amount with respect to the Government
Obligation evidenced by such depositary receipt.
In the event Fremont General effects covenant defeasance with respect to
any Securities and such Securities are declared due and payable because of the
occurrence of any Event of Default other than an Event of Default with respect
to Sections 10.5 and 10.6 of the indenture (which Sections would no longer be
applicable to such Securities after such covenant defeasance) or with respect to
any other covenant as to which there has been covenant defeasance, the amount in
such Foreign Currency in which such Securities are payable, and Government
Obligations on deposit with the Trustee, will be sufficient to pay amounts due
on such Securities at the time of the Stated Maturity but may not be sufficient
to pay amounts due on such Securities at the time of the acceleration resulting
from such Event of Default. However, Fremont General would remain liable to make
payment of such amounts due at the time of acceleration.
GOVERNING LAW
The indenture and the exchange notes will be governed by the laws of the
State of New York.
39
<PAGE> 43
REGARDING THE TRUSTEE
The Trustee is permitted to engage in other transactions with Fremont
General and its subsidiaries from time to time, provided that if the Trustee
acquires any conflicting interest it must eliminate such conflict upon the
occurrence of an Event of Default, or else resign.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal income tax
consequences to holders of initial notes who exchange their initial notes for
exchange notes in the exchange offer. This discussion is based on currently
existing provisions of the Internal Revenue Code, existing, temporary and
proposed Treasury regulations promulgated under the Internal Revenue Code, and
administrative and judicial interpretations of the Internal Revenue Code, all as
in effect or proposed on the date of this prospectus and all of which are
subject to change or different interpretations, possibly with retroactive
effect. There can be no assurance that the Internal Revenue Service will not
challenge one or more of the conclusions described herein, and the Company has
not obtained, nor does it intend to obtain, a ruling from the Internal Revenue
Service or an opinion of counsel with respect to the United States federal
income tax consequences of the exchange of initial notes for exchange notes.
This discussion is limited to holders of initial notes who hold the notes as
capital assets, within the meaning of section 1221 of the Internal Revenue Code.
Moreover, this discussion is for general information only and does not address
all of the tax consequences that may be relevant to holders of initial notes and
exchange notes in light of their personal circumstances or to some types of
holders of initial notes and exchange notes including financial institutions,
insurance companies, tax-exempt entities, dealers in securities or persons who
have hedged the risk of owning a note. In addition, this discussion does not
address any tax consequences arising under the laws of any state, locality or
foreign jurisdiction, or any estate or gift tax considerations.
The exchange of initial notes for exchange notes under the exchange offer
should not be treated as a taxable exchange for United States Federal income tax
purposes. Accordingly, a holder should have the same adjusted tax basis and
holding period in the exchange notes as it had in the initial notes immediately
before the exchange.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account under
the exchange offer must acknowledge that it will deliver a prospectus as part of
any resale of the exchange notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer as part of
resales of exchange notes received in exchange for initial notes where the
initial notes were acquired as a result of market-making activities or other
trading activities. We have agreed that for a period of 90 days after the
expiration date, we will make this prospectus, as amended or supplemented,
available to any broker-dealer for use upon any such resale.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers or any other holder of exchange notes. Exchange notes received by
broker-dealers for their own account under the exchange offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the exchange notes or
a combination of these methods of resale, at market prices prevailing at the
time of resale, at prices related to the prevailing market prices or negotiated
prices. The resale may be made directly to purchasers or to or through brokers
40
<PAGE> 44
or dealers who may receive compensation in the form of commissions or
concessions from any of these broker-dealers and the purchasers of any such
exchange notes. Any broker-dealer that resells exchange notes that were received
by it for its own account in the exchange offer and any broker or dealer that
participates in a distribution of the exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on their
resale of exchange notes and any commissions or concessions received by them may
be deemed to be underwriting compensation under the Securities Act. The letter
of transmittal states that by acknowledging that it will deliver a prospectus
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the expiration date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests these documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer,
including the reasonable expenses of one counsel for the holders of the initial
notes, other than underwriting discounts and commissions and transfer taxes, if
any. In addition, we will indemnify the holders of the notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the exchange notes will be passed upon by Wilson Sonsini
Goodrich & Rosati, P.C., Palo Alto, California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedules included in our annual report on form 10-K
for the year ended December 31, 1998, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements and schedules are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
41
<PAGE> 45
- ------------------------------------------------------
- ------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS WITH
REGARD TO THE EXCHANGE NOTES. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. WE ARE
OFFERING TO EXCHANGE THE EXCHANGE NOTES ONLY IN JURISDICTIONS WHERE OFFERS AND
SALES ARE PERMITTED. THE INFORMATION CONTAINED IS THIS PROSPECTUS IS ACCURATE
ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF WHEN THIS PROSPECTUS IS
DELIVERED OR ANY NOTES ARE EXCHANGED.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More
Information....................... i
Summary............................. 1
Risk Factors........................ 9
Use Of Proceeds..................... 13
Ratio Of Earnings To Fixed
Charges........................... 13
The Exchange Offer.................. 14
Description Of The Notes............ 23
United States Federal Income Tax
Considerations.................... 40
Plan Of Distribution................ 40
Legal Matters....................... 41
Experts............................. 41
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$425,000,000
FREMONT LOGO
FREMONT GENERAL
CORPORATION
$200,000,000 SERIES B 7.70%
SENIOR NOTES DUE 2004
$225,000,000 SERIES B 7.875%
SENIOR NOTES DUE 2009
-------------------------
PROSPECTUS
-------------------------
MAY 10, 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 46
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Restated Certificate of Incorporation limits the monetary
liability of its directors to the Registrant or its stockholders for breach of
such directors' fiduciary duty to the fullest extent permitted by the law of the
State of Nevada ("Nevada Law"), as it is amended from time to time.
Under the Registrant's Bylaws, the Registrant is required, to the maximum
extent and in the manner permitted by Nevada law, to indemnify each of its
directors and officers against expenses, judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with any
proceeding, arising by reason of the fact that such person is or was an agent of
the corporation. For the purposes of the Bylaws, a "director" or "officer" of
the Registrant includes any person (i) who is or was a director or officer of
the Registrant, (ii) who is or was serving at the request of the Registrant as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, or (iii) who was a director or officer of a corporation which
was a predecessor corporation of the Registrant or of another enterprise at the
request of such predecessor corporation.
The Registrant is also required to pay all expenses incurred in defending
any civil or criminal action or proceeding for which indemnification is required
under the Bylaws in advance of the final disposition of such action or
proceeding upon receipt of an undertaking by or on behalf of the indemnified
party to repay such amount if it shall ultimately be determined that the
indemnified party is not entitled to be indemnified as authorized in the Bylaws.
The Bylaws further provide that the Registrant shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director or
officer of the Registrant against any liability asserted against or incurred by
such person in such capacity or arising out of such person's status as such,
whether or not the Registrant would have the power to indemnify such person
against such liability under the provisions of the Bylaws.
II-1
<PAGE> 47
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1 Indenture dated as of March 1, 1999 between the Registrant
and The First National Bank of Chicago (incorporated by
reference to exhibit 4.9 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1998 (File No.
1-8007))
4.2 Registration Rights Agreement dated as of March 17, 1999
among the Registrant and the Initial Purchasers.
(incorporated by reference to exhibit 4.10 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998 (File No. 1-8007))
*4.3 Specimen Series B 7.70% Senior Note due 2004
*4.4 Specimen Series B 7.875% Senior Note due 2009
*5 Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Consent of Ernst & Young LLP
23.2 Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 5)
*24 Power of Attorney
*25 Statement of Eligibility of Trustee
*99.1 Form of Letter of Transmittal with respect to Exchange Offer
*99.2 Form of Notice of Guaranteed Delivery
*99.3 Form of Depositary Agreement
</TABLE>
- ---------------
* Previously Filed
(b) Financial Statement Schedules
Schedules not listed above have been omitted because the information to be
set forth therein is not applicable or is shown in the financial statements or
notes thereto.
ITEM 22. UNDERTAKINGS
(a) The Registrant hereby undertakes that, for purposes of any liability under
the Securities Act, each filing of a registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act 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.
(b) The Registrant hereby undertakes to respond to requests for information that
is incorporated by reference into the prospectus pursuant to Item 4, 10(b),
11, or 13 of this form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The Registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-2
<PAGE> 48
(d) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, 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 Securities Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE> 49
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Santa Monica, State of California, on
this 10th day of May, 1999.
FREMONT GENERAL CORPORATION
By: /s/ WAYNE R. BAILEY
-----------------------------------
Wayne R. Bailey
Executive Vice President, Treasurer
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 has been signed by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
* Chairman of the Board, May 10, 1999
- ------------------------------------------------ Chief Executive Officer
James A. McIntyre and Director (Principal
Executive Officer)
* President, Chief Operating May 10, 1999
- ------------------------------------------------ Officer and Director
Louis J. Rampino
/s/ WAYNE R. BAILEY Executive Vice President, May 10, 1999
- ------------------------------------------------ Treasurer, Chief Financial
Wayne R. Bailey Officer (Principal
Financial Officer) and
Director
* Senior Vice President, May 10, 1999
- ------------------------------------------------ Controller and Chief
John A. Donaldson Accounting Officer
(Principal Accounting
Officer)
* Director May 10, 1999
- ------------------------------------------------
Houston I. Flournoy
* Director May 10, 1999
- ------------------------------------------------
C. Douglas Kranwinkle
* Director May 10, 1999
- ------------------------------------------------
David W. Morrisroe
* Director May 10, 1999
- ------------------------------------------------
Dickinson C. Ross
*By: /s/ WAYNE R. BAILEY
------------------------------------------
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 50
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
4.1 Indenture dated as of March 1, 1999 between the Registrant
and The First National Bank of Chicago (incorporated by
reference to exhibit 4.9 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1998 (File No.
1-8007))
4.2 Registration Rights Agreement dated as of March 17, 1999
among the Registrant and the Initial Purchasers.
(incorporated by reference to exhibit 4.10 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998 (File No. 1-8007))
*4.3 Specimen Series B 7.70% Senior Note due 2004
*4.4 Specimen Series B 7.875% Senior Note due 2009
*5 Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Consent of Ernst & Young LLP
23.2 Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 5)
*24 Power of Attorney
*25 Statement of Eligibility of Trustee
*99.1 Form of Letter of Transmittal with respect to Exchange Offer
*99.2 Form of Notice of Guaranteed Delivery
*99.3 Form of Depositary Agreement
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Summary Financial and Operating Data" in the Registration Statement
(Form S-4, No. 333-77037) and related prospectus of Fremont General
Corporation for the registration of $425 million of senior notes
and to the incorporation by reference therein of our report dated March 22,
1999, 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, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Los Angeles, California
May 10, 1999
