FREMONT GENERAL CORPORATION
 
                                 1997 STOCK PLAN
 
 
      1.    PURPOSES OF THE PLAN.  The purposes of this Stock Plan are:
 
            -  to attract and retain the best available personnel for positions
               of substantial responsibility,
 
            -  to provide additional incentive to Employees, Directors and
               Consultants, and
 
            -  to promote the success of the Company's business.
 
 
      Options  granted  under  the  Plan  may  be  Incentive  Stock  Options  or
Nonstatutory  Stock Options,  as determined by the  Administrator at the time of
grant. Stock Rights may also be granted under the Plan.
 
      2.    DEFINITIONS.  As used herein, the following definitions shall apply:
 
            (a)  "ADMINISTRATOR"  means  the Board or any of its  Committees  as
shall be administering the Plan, in accordance with Section 4 of the Plan.
 
            (b)  "APPLICABLE  LAWS"  means  the  requirements  relating  to  the
administration  of stock option  plans under U. S. state  corporate  laws,  U.S.
federal and state  securities  laws,  the Code,  any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable  laws of
any foreign country or  jurisdiction  where Options or Stock Rights are, or will
be, granted under the Plan.
 
            (c)   "BOARD" means the Board of Directors of the Company.
 
            (d)   "CODE" means the Internal Revenue Code of 1986, as amended.
 
            (e)  "COMMITTEE"  means a committee  of  Directors  appointed by the
Board in accordance with Section 4 of the Plan.
 
            (f)   "COMMON STOCK" means the common stock of the Company.
 
            (g)   "COMPANY" means Fremont General Corporation, a Nevada
corporation.
 
            (h) "CONSULTANT" means any person,  including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.
 
            (i)   "DIRECTOR" means a member of the Board.
 
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            (j)   "DISABILITY" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
 
            (k) "EMPLOYEE" means any person,  including  Officers and Directors,
employed by the Company or any Parent or  Subsidiary  of the Company.  A Service
Provider  shall  not  cease to be an  Employee  in the case of (i) any  leave of
absence  approved  by the Company or (ii)  transfers  between  locations  of the
Company or between the Company,  its Parent,  any Subsidiary,  or any successor.
For purposes of Incentive  Stock Options,  no such leave may exceed ninety days,
unless  reemployment  upon  expiration of such leave is guaranteed by statute or
contract.  If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option  held by the  Optionee  shall cease to be treated as an  Incentive  Stock
Option and shall be treated for tax  purposes as a  Nonstatutory  Stock  Option.
Neither  service as a Director  nor payment of a  director's  fee by the Company
shall be sufficient to constitute "employment" by the Company.
 
            (l)   "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
 
            (m) "FAIR MARKET VALUE" means,  as of any date,  the value of Common
Stock determined as follows:
 
                  (i) If the  Common  Stock is listed on any  established  stock
exchange or a national market system,  including  without  limitation the Nasdaq
National Market or The Nasdaq  SmallCap  Market of The Nasdaq Stock Market,  its
Fair  Market  Value  shall be the  closing  sales  price for such  stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of  determination,  as reported in
THE  WALL  STREET  JOURNAL  or such  other  source  as the  Administrator  deems
reliable;
 
                 (ii) If the Common  Stock is  regularly  quoted by a recognized
securities dealer but selling prices are not reported,  the Fair Market Value of
a Share of Common  Stock  shall be the mean  between  the high bid and low asked
prices for the Common  Stock on the last market  trading day prior to the day of
determination,  as reported in THE WALL STREET  JOURNAL or such other  source as
the Administrator deems reliable; or
 
                (iii) In the  absence  of an  established  market for the Common
Stock,  the  Fair  Market  Value  shall  be  determined  in  good  faith  by the
Administrator.
 
            (n) "INCENTIVE  STOCK OPTION" means an Option intended to qualify as
an incentive  stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
 
            (o)  "NONSTATUTORY  STOCK  OPTION"  means an Option not  intended to
qualify as an Incentive Stock Option.
 
            (p)  "NOTICE  OF  GRANT"  means  a  written  or  electronic   notice
evidencing  certain terms and conditions of an individual  Option or Stock Right
grant.
 
 
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            (q) "OFFICER" means a person who is an officer of the Company within
the  meaning  of Section 16 of the  Exchange  Act and the rules and  regulations
promulgated thereunder.
 
            (r)   "OPTION" means a stock option granted pursuant to the Plan.
 
            (s)   "OPTION AGREEMENT" means an agreement between the Company and
an Optionee  evidencing the terms and conditions of an individual  Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
 
            (t) "OPTION  EXCHANGE  PROGRAM" means a program whereby  outstanding
Options are surrendered in exchange for Options with a lower exercise price.
 
            (u)   "OPTIONED STOCK" means the Common Stock subject to an Option
or Stock Right.
 
            (v) "OPTIONEE"  means the holder of an  outstanding  Option or Stock
Right granted under the Plan.
 
            (w) "PARENT" means a "parent  corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
 
            (x)   "PLAN" means this 1997 Stock Plan.
 
            (y)  "RESTRICTED  STOCK"  means  shares  of  Common  Stock  acquired
pursuant to a grant of a Stock Right under Section 11 of the Plan.
 
            (z) "RESTRICTED  STOCK AGREEMENT" means a written  agreement between
the Company and the Optionee  evidencing the terms and restrictions  applying to
stock received under a Stock Right. The Restricted Stock Agreement is subject to
the terms and conditions of the Plan and the Notice of Grant.
 
            (aa)  "RULE  16B-3"  means  Rule  16b-3 of the  Exchange  Act or any
successor rule or provision.
 
            (bb)  "SECTION 16(B)" means Section 16(b) of the Exchange Act.
 
            (cc)  "SERVICE PROVIDER" means an Employee, Director or Consultant.
 
            (dd)  "SHARE"  means a share of the Common  Stock,  as  adjusted  in
accordance with Section 13 of the Plan.
 
 
 
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            (ee) "STOCK RIGHT" means a right to acquire Common Stock pursuant to
Section 11 of the Plan, as evidenced by a Notice of Grant.
 
            (ff) "SUBSIDIARY" means a "subsidiary  corporation",  whether now or
hereafter existing, as defined in Section 424(f) of the Code.
 
      3. STOCK SUBJECT TO THE PLAN.  Subject to the  provisions of Section 13 of
the Plan, the maximum  aggregate number of Shares which may be optioned and sold
under the Plan is 1,350,000 Shares, plus (a) any Shares which have been reserved
but not issued under the Company's  Amended  Non-Qualified  Stock Option Plan of
1989 (the "1989 Plan") as of the date of shareholder  approval of this Plan, (b)
any Shares returned to the 1989 Plan as a result of termination of options under
the 1989 Plan and (c) an annual increase to be added on each anniversary date of
the adoption of the Plan equal to the lesser of (i) the number of Shares subject
to  Options  and Stock  Rights  granted in the  preceding  year or (ii) a lesser
amount determined by the Board. The Shares may be authorized,  but unissued,  or
reacquired Common Stock.
 
      If an Option or Stock  Right  expires  or  becomes  unexercisable  without
having been exercised in full, or is surrendered  pursuant to an Option Exchange
Program,  the  unpurchased  Shares  which  were  subject  thereto  shall  become
available  for  future  grant  or sale  under  the  Plan  (unless  the  Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan,  whether  upon  exercise  of an Option  or Stock  Right,  shall not be
returned  to the Plan and shall not become  available  for  future  distribution
under the Plan,  except that if Shares of Restricted Stock are reacquired by the
Company at their  original  purchase  price (if any),  such Shares  shall become
available for future grant under the Plan.
 
      4.    ADMINISTRATION OF THE PLAN.
 
            (a)   PROCEDURE.
 
                  (i)   MULTIPLE ADMINISTRATIVE BODIES.  The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
 
                 (ii)  SECTION  162(m).  To the  extent  that the  Administrator
determines  it  to  be  desirable  to  qualify  Options  granted   hereunder  as
"performance-based  compensation"  within the  meaning of Section  162(m) of the
Code,  the Plan shall be  administered  by a Committee  of two or more  "outside
directors" within the meaning of Section 162(m) of the Code.
 
                (iii)  RULE   16B-3.   To  the  extent   desirable   to  qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder  shall be structured to satisfy the  requirements  for exemption under
Rule 16b-3.
 
 
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                 (iv)   OTHER ADMINISTRATION.  Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
 
            (b) POWERS OF THE  ADMINISTRATOR.  Subject to the  provisions of the
Plan, and in the case of a Committee,  subject to the specific duties  delegated
by the Board to such Committee,  the Administrator shall have the authority,  in
its discretion:
 
                  (i)   to determine the Fair Market Value;
 
                 (ii)   to select the Service Providers to whom Options and
Stock Rights may be granted hereunder;
 
                (iii)   to determine the number of shares of Common Stock to be
covered by each Option and Stock Right granted hereunder;
 
                 (iv)   to approve forms of agreement for use under the Plan;
 
                  (v) to determine the terms and  conditions,  not  inconsistent
with the terms of the Plan, of any Option or Stock Right granted hereunder. Such
terms and conditions  include,  but are not limited to, the exercise price,  the
time or times when Options or Stock Rights may be exercised  (which may be based
on  performance  criteria),  any vesting  acceleration  or waiver of  forfeiture
restrictions,  and any  restriction or limitation  regarding any Option or Stock
Right of the shares of Common Stock relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall determine;
 
                 (vi) to reduce the exercise  price of any Option or Stock Right
to the then  current  Fair Market  Value if the Fair Market  Value of the Common
Stock covered by such Option or Stock Right shall have  declined  since the date
the Option or Stock Right was granted;
 
                (vii)   to institute an Option Exchange Program;
 
               (viii)   to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
 
                 (ix) to  prescribe,  amend and  rescind  rules and  regulations
relating to the Plan,  including  rules and  regulations  relating to  sub-plans
established  for the purpose of qualifying  for  preferred  tax treatment  under
foreign tax laws;
 
                  (x) to modify or amend each Option or Stock Right  (subject to
Section 15(c) of the Plan), including the discretionary  authority to extend the
post-termination  exercisability  period of  Options  longer  than is  otherwise
provided for in the Plan;
 
 
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                 (xi) to allow Optionees to satisfy  withholding tax obligations
by  electing  to have the  Company  withhold  from the Shares to be issued  upon
exercise of an Option or Stock Right that number of Shares  having a Fair Market
Value equal to the amount required to be withheld.  The Fair Market Value of the
Shares to be withheld  shall be determined on the date that the amount of tax to
be withheld is to be  determined.  All  elections  by an Optionee to have Shares
withheld for this purpose  shall be made in such form and under such  conditions
as the Administrator may deem necessary or advisable;
 
                (xii) to  authorize  any  person  to  execute  on  behalf of the
Company any instrument  required to effect the grant of an Option or Stock Right
previously granted by the Administrator;
 
               (xiii)   to make all other determinations deemed necessary or
advisable for administering the Plan.
 
            (c)  EFFECT  OF  ADMINISTRATOR'S   DECISION.   The   Administrator's
decisions,  determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Rights.
 
      5.    ELIGIBILITY.  Nonstatutory Stock Options and Stock Rights may be
granted to Service Providers.  Incentive Stock Options may be granted only to
Employees.
 
      6.    LIMITATIONS.
 
            (a) Each  Option  shall be  designated  in the Option  Agreement  as
either an  Incentive  Stock  Option or a  Nonstatutory  Stock  Option.  However,
notwithstanding  such designation,  to the extent that the aggregate Fair Market
Value  of  the  Shares  with  respect  to  which  Incentive  Stock  Options  are
exercisable  for the first time by the Optionee  during any calendar year (under
all plans of the Company and any Parent or Subsidiary)  exceeds  $100,000,  such
Options shall be treated as  Nonstatutory  Stock  Options.  For purposes of this
Section 6(a),  Incentive  Stock Options shall be taken into account in the order
in which  they  were  granted.  The Fair  Market  Value of the  Shares  shall be
determined as of the time the Option with respect to such Shares is granted.
 
            (b) Neither the Plan nor any Option or Stock Right shall confer upon
an Optionee any right with respect to continuing the Optionee's  relationship as
a Service  Provider with the Company,  nor shall they  interfere in any way with
the Optionee's  right or the Company's  right to terminate such  relationship at
any time, with or without cause.
 
            (c)   The following limitations shall apply to grants of Options:
 
                  (i) No Service  Provider shall be granted,  in any fiscal year
of the Company, Options to purchase more than 350,000 Shares.
 
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<PAGE>
 
                 (ii) In connection with his or her initial  service,  a Service
Provider may be granted  Options to purchase up to an  additional  50,000 Shares
which shall not count against the limit set forth in subsection (i) above.
 
                (iii)   The    foregoing    limitations    shall   be   adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
 
                 (iv) If an Option is  cancelled  in the same fiscal year of the
Company in which it was granted  (other than in  connection  with a  transaction
described  in Section  13),  the  cancelled  Option will be counted  against the
limits set forth in  subsections  (i) and (ii) above.  For this purpose,  if the
exercise  price of an Option is reduced,  the  transaction  will be treated as a
cancellation of the Option and the grant of a new Option.
 
      7. TERM OF PLAN.  Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 15 of the Plan.
 
      8. TERM OF OPTION.  The term of each Option  shall be stated in the Option
Agreement.  In the case of an Incentive Stock Option, the term shall be ten (10)
years  from the date of grant or such  shorter  term as may be  provided  in the
Option Agreement.  Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive  Stock Option is granted,  owns stock
representing  more than ten percent (10%) of the total combined  voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive  Stock  Option  shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
 
      9.    OPTION EXERCISE PRICE AND CONSIDERATION.
 
            (a)   EXERCISE PRICE.  The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
 
                  (i)   In the case of an Incentive Stock Option
 
                        (A)   granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting  power of all  classes of stock of the Company or any Parent
or  Subsidiary,  the per Share  exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
 
                        (B)   granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
 
 
                                       7
 
 
<PAGE>
 
                 (ii) In the case of a Nonstatutory  Stock Option, the per Share
exercise  price  shall  be  determined  by the  Administrator.  In the case of a
Nonstatutory   Stock   Option   intended   to  qualify   as   "performance-based
compensation"  within the meaning of Section  162(m) of the Code,  the per Share
exercise  price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
 
                (iii) Notwithstanding the foregoing, Options may be granted with
a per Share  exercise price of less than 100% of the Fair Market Value per Share
on the date of grant pursuant to a merger or other corporate transaction.
 
            (b)  WAITING  PERIOD AND  EXERCISE  DATES.  At the time an Option is
granted,  the Administrator  shall fix the period within which the Option may be
exercised and shall determine any conditions  which must be satisfied before the
Option may be exercised.
 
            (c)   FORM OF CONSIDERATION.  The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment.  In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant.  Such
consideration may consist entirely of:
 
                  (i)   cash;
 
                 (ii)   check;
 
                (iii)   promissory note;
 
                 (iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option,  have been owned by the Optionee for more than six months
on the  date of  surrender,  and (B)  have a Fair  Market  Value  on the date of
surrender  equal to the aggregate  exercise price of the Shares as to which said
Option shall be exercised;
 
                  (v)   consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
 
                 (vi) a reduction in the amount of any Company  liability to the
Optionee,  including any liability attributable to the Optionee's  participation
in any Company-sponsored deferred compensation program or arrangement;
 
                (vii)   any combination of the foregoing methods of payment; or
 
               (viii)  such other  consideration  and method of payment  for the
issuance of Shares to the extent permitted by Applicable Laws.
 
 
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<PAGE>
 
      10.   EXERCISE OF OPTION.
 
            (a)  PROCEDURE  FOR EXERCISE;  RIGHTS AS A  SHAREHOLDER.  Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the  Administrator and set
forth in the Option  Agreement.  Unless the  Administrator  provides  otherwise,
vesting of Options granted  hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
 
                  An Option shall be deemed exercised when the Company receives:
(i) written or  electronic  notice of exercise  (in  accordance  with the Option
Agreement)  from the person  entitled  to  exercise  the  Option,  and (ii) full
payment  for the Shares  with  respect to which the  Option is  exercised.  Full
payment may consist of any consideration and method of payment authorized by the
Administrator  and permitted by the Option Agreement and the Plan. Shares issued
upon  exercise of an Option  shall be issued in the name of the  Optionee or, if
requested  by the  Optionee,  in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate  entry on the books
of the Company or of a duly authorized transfer agent of the Company),  no right
to vote or receive  dividends or any other rights as a  shareholder  shall exist
with respect to the Optioned Stock,  notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares  promptly  after the
Option is exercised.  No  adjustment  will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued,  except as
provided in Section 13 of the Plan.
 
                  Exercising  an Option in any manner shall  decrease the number
of Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
 
            (b)  TERMINATION  OF  RELATIONSHIP  AS A  SERVICE  PROVIDER.  If  an
Optionee ceases to be a Service  Provider,  other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is  specified  in the Option  Agreement to the extent that the Option is
vested on the date of termination  (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option  Agreement,  the Option shall remain  exercisable
for three (3) months  following the Optionee's  termination.  If, on the date of
termination,  the  Optionee  is not vested as to his or her entire  Option,  the
Shares  covered by the unvested  portion of the Option shall revert to the Plan.
If, after  termination,  the Optionee does not exercise his or her Option within
the time specified by the  Administrator,  the Option shall  terminate,  and the
Shares covered by such Option shall revert to the Plan.
 
            (c)  DISABILITY OF OPTIONEE.  If an Optionee  ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of  termination  (but in no event
later than the  expiration of the term of such Option as set forth in the Option
Agreement).  In the absence of a  specified  time in the Option  Agreement,  the
Option shall
 
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<PAGE>
 
remain exercisable for twelve (12) months following the Optionee's  termination.
If, on the date of  termination,  the  Optionee  is not  vested as to his or her
entire Option,  the Shares  covered by the unvested  portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
 
            (d) DEATH OF OPTIONEE. If an Optionee dies while a Service Provider,
the Option may be  exercised  within such period of time as is  specified in the
Option  Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant),  by the  Optionee's  estate or by a
person who acquires the right to exercise the Option by bequest or  inheritance,
but only to the extent  that the  Option is vested on the date of death.  In the
absence of a specified  time in the Option  Agreement,  the Option  shall remain
exercisable for twelve (12) months following the Optionee's termination.  If, at
the time of death,  the  Optionee is not vested as to his or her entire  Option,
the Shares  covered by the  unvested  portion  of the Option  shall  immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s)  entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution.  If the
Option is not so exercised  within the time specified  herein,  the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
 
            (e) BUYOUT  PROVISIONS.  The  Administrator may at any time offer to
buy out for a payment in cash or Shares an Option  previously  granted  based on
such terms and conditions as the  Administrator  shall establish and communicate
to the Optionee at the time that such offer is made.
 
      11.   STOCK RIGHTS.
 
            (a) GRANT.  Stock Rights may be issued either alone, in addition to,
or in tandem with other  awards  granted  under the Plan and/or cash awards made
outside of the Plan. After the Administrator determines that it will offer Stock
Rights under the Plan, it shall advise the offeree in writing or electronically,
by means of a Notice of Grant, of the terms, conditions and restrictions related
to the offer,  including  the number of Shares  subject to the Stock Right,  the
price to be paid (if any),  and the time within  which the  offeree  must accept
such  offer.  The offer shall be accepted by  execution  of a  Restricted  Stock
Agreement in such form as is determined by the Administrator.
 
            (b)  REACQUISITION  OPTION.  Unless  the  Administrator   determines
otherwise,   the  Restricted   Stock   Agreement   shall  grant  the  Company  a
reacquisition  option exercisable upon the voluntary or involuntary  termination
of the recipient's  status as a Service Provider for any reason (including death
or Disability) . The reacquisition price (if any) for Shares reacquired pursuant
to the Restricted Stock Agreement shall be determined by the  Administrator  and
may be paid by cancellation of any indebtedness of the recipient to the Company.
The reacquisition option shall lapse at a rate determined by the Administrator.
 
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<PAGE>
 
            (c)   OTHER PROVISIONS.  The Restricted Stock Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
 
            (d)  RIGHTS AS A  SHAREHOLDER.  Once  Restricted  Stock is  acquired
pursuant to a Stock Right,  the recipient shall have rights  equivalent to those
of a  shareholder,  and shall be a shareholder  when his or her  acquisition  is
entered upon the records of the duly  authorized  transfer agent of the Company.
No  adjustment  will be made for a dividend  or other right for which the record
date is prior to the date of issuance of Common Stock pursuant to a Stock Right,
except as provided in Section 13 of the Plan.
 
      12.  NON-TRANSFERABILITY  OF OPTIONS AND STOCK RIGHTS.  Unless  determined
otherwise  by the  Administrator,  an  Option  or Stock  Right  may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent  or  distribution  and may be  exercised,
during the lifetime of the Optionee,  only by the Optionee. If the Administrator
makes an Option or Stock  Right  transferable,  such Option or Stock Right shall
contain  such  additional  terms  and  conditions  as  the  Administrator  deems
appropriate.
 
      13.   ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
            ASSET SALE.
 
            (a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders  of the Company,  the number of shares of Common  Stock  covered by
each  outstanding  Option  and Stock  Right,  and the number of shares of Common
Stock which have been  authorized for issuance under the Plan but as to which no
Options or Stock Rights have yet been granted or which have been returned to the
Plan upon cancellation or expiration of an Option or Stock Right, as well as the
price per share of Common Stock covered by each such outstanding Option or Stock
Right,  shall be  proportionately  adjusted  for any increase or decrease in the
number of issued shares of Common Stock  resulting  from a stock split,  reverse
stock split,  stock  dividend,  combination  or  reclassification  of the Common
Stock,  or any other  increase  or  decrease  in the number of issued  shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible  securities of the Company shall not
be  deemed  to have been  "effected  without  receipt  of  consideration."  Such
adjustment shall be made by the Board, whose determination in that respect shall
be final,  binding and  conclusive.  Except as  expressly  provided  herein,  no
issuance  by the  Company  of  shares  of  stock  of any  class,  or  securities
convertible into shares of stock of any class,  shall affect,  and no adjustment
by reason  thereof  shall be made with respect to, the number or price of shares
of Common Stock subject to an Option or Stock Right.
 
            (b)  DISSOLUTION  OR  LIQUIDATION.  In the  event  of  the  proposed
dissolution or liquidation of the Company,  the Administrator  shall notify each
Optionee as soon as  practicable  prior to the  effective  date of such proposed
transaction.  The Administrator in its discretion may provide for an Optionee to
have the right to exercise  his or her Option  until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the  Option  would not  otherwise  be  exercisable.  In  addition,  the
Administrator  may provide that any Company  
 
                                       11
 
<PAGE>
 
 
reacquisition  option  applicable  to any Shares  acquired  upon  exercise of an
Option or Stock Right shall lapse as to all such  Shares,  provided the proposed
dissolution  or  liquidation   takes  place  at  the  time  and  in  the  manner
contemplated.  To the extent it has not been previously exercised,  an Option or
Stock  Right  will  terminate  immediately  prior  to the  consummation  of such
proposed action.
 
            (c) MERGER OR ASSET SALE.  Subject to Section 13(d), in the event of
a  merger  of the  Company  with or into  another  corporation,  or the  sale of
substantially  all of the assets of the  Company,  each  outstanding  Option and
Stock Right shall be assumed or an equivalent option or right substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the
Option or Stock Right,  the  Optionee  shall fully vest in and have the right to
exercise  the Option or Stock Right as to all of the Optioned  Stock,  including
Shares as to which it would not  otherwise  be  vested or  exercisable,  and any
Company  reacquisition option applicable to any Shares acquired upon exercise of
an Option or Stock  Right  shall  lapse as to all such  Shares.  If an Option or
Stock Right  becomes  fully  vested and  exercisable  in lieu of  assumption  or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee in writing or electronically  that the Option or Stock Right
shall be fully vested and exercisable for a period of fifteen (15) days from the
date of such  notice,  and the Option or Stock  Right shall  terminate  upon the
expiration  of such period.  For the purposes of this  paragraph,  the Option or
Stock Right shall be  considered  assumed  if,  following  the merger or sale of
assets,  the option or right confers the right to purchase or receive,  for each
Share of Optioned Stock subject to the Option or Stock Right  immediately  prior
to the merger or sale of assets,  the  consideration  (whether  stock,  cash, or
other  securities  or  property)  received  in the  merger  or sale of assets by
holders  of  Common  Stock  for each  Share  held on the  effective  date of the
transaction (and if holders were offered a choice of consideration,  the type of
consideration  chosen by the holders of a majority of the  outstanding  Shares);
provided,  however, that if such consideration received in the merger or sale of
assets is not solely  common stock of the successor  corporation  or its Parent,
the Administrator  may, with the consent of the successor  corporation,  provide
for the  consideration  to be received  upon the exercise of the Option or Stock
Right, for each Share of Optioned Stock subject to the Option or Stock Right, to
be solely common stock of the successor  corporation or its Parent equal in fair
market value to the per share consideration  received by holders of Common Stock
in the merger or sale of assets.
 
            (d)  CHANGE OF  CONTROL.  In the event of a Change  of  Control  (as
defined below),  the Optionee shall fully vest in and have the right to exercise
the Option or Stock Right as to all of the Optioned Stock,  including  Shares as
to which it would  not  otherwise  be  vested or  exercisable,  and any  Company
reacquisition  option  applicable  to any Shares  acquired  upon  exercise of an
Option or Stock Right shall lapse as to all such  Shares.  If an Option or Stock
Right becomes fully vested and exercisable as the result of a Change of Control,
the Administrator  shall notify the Optionee in writing or electronically  prior
to the Change of Control  that the Option or Stock Right  shall be fully  vested
and  exercisable for a period of fifteen (15) days from the date of such notice,
and the  Option or Stock  Right  shall  terminate  upon the  expiration  of such
period.  For  purposes  of this  Agreement,  a  "Change  of  Control"  means the
happening of any of the following events:
 
 
                                       12
 
<PAGE>
 
                  (i) When any "person," as such term is used in Sections  13(d)
and 14(d) of the  Securities  Exchange Act of 1934,  as amended  (the  "Exchange
Act"), other than the Company, a subsidiary of the Company or a Company employee
benefit  plan,  including  any  trustee of such plan  acting as  trustee,  is or
becomes the  "beneficial  owner" (as  defined in Rule 13d-3  under the  Exchange
Act),  directly or indirectly,  of securities of the Company  representing fifty
percent  (50%)  or more of the  combined  voting  power  of the  Company's  then
outstanding  securities entitled to vote generally in the election of directors;
or
 
                 (ii) The  shareholders  of the  Company  approve  a  merger  or
consolidation of the Company with any other corporation,  other than a merger or
consolidation  which  would  result  in the  voting  securities  of the  Company
outstanding  immediately  prior  thereto  continuing  to  represent  (either  by
remaining  outstanding  or by being  converted  into  voting  securities  of the
surviving  entity)  more than  fifty  percent  (50%) of the total  voting  power
represented  by the voting  securities of the Company or such  surviving  entity
outstanding immediately after such merger or consolidation,  or the shareholders
of the Company  approve an agreement for the sale or  disposition by the Company
of all or substantially all the Company's assets; or
 
                (iii) A change in the  composition  of the Board of Directors of
the  Company,  as a result of which fewer than a majority of the  directors  are
Incumbent Directors.  "Incumbent  Directors" shall mean directors who either (A)
are  directors  of the  Company  as of the  date  the  Plan is  approved  by the
shareholders,  or (B) are elected,  or nominated for  election,  to the Board of
Directors  of the Company with the  affirmative  votes of at least a majority of
the Incumbent  Directors at the time of such  election or nomination  (but shall
not include an individual  whose election or nomination is in connection with an
actual or threatened  proxy contest relating to the election of directors to the
Company).
 
      14. DATE OF GRANT. The date of grant of an Option or Stock Right shall be,
for all purposes,  the date on which the  Administrator  makes the determination
granting  such Option or Stock Right,  or such other later date as is determined
by the  Administrator.  Notice of the  determination  shall be  provided to each
Optionee within a reasonable time after the date of such grant.
 
      15.   AMENDMENT AND TERMINATION OF THE PLAN.
 
            (a)   AMENDMENT AND TERMINATION.  The Board may at any time amend,
alter, suspend or terminate the Plan.
 
            (b)   SHAREHOLDER APPROVAL.  The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
 
            (c) EFFECT OF AMENDMENT OR  TERMINATION.  No amendment,  alteration,
suspension or  termination  of the Plan shall impair the rights of any Optionee,
unless mutually  agreed  otherwise  between the Optionee and the  Administrator,
which  agreement  must be in writing and signed by the 
 
                                       13
 
<PAGE>
 
Optionee  and  the  Company.  Termination  of the  Plan  shall  not  affect  the
Administrator's  ability to exercise  the powers  granted to it  hereunder  with
respect to Options granted under the Plan prior to the date of such termination.
 
      16.   CONDITIONS UPON ISSUANCE OF SHARES.
 
            (a) LEGAL  COMPLIANCE.  Shares  shall not be issued  pursuant to the
exercise of an Option or Stock Right unless the exercise of such Option or Stock
Right and the issuance and delivery of such Shares shall comply with  Applicable
Laws and shall be further  subject to the  approval  of counsel  for the Company
with respect to such compliance.
 
            (b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option or Stock Right, the Company may require the person exercising such Option
or Stock Right to represent  and warrant at the time of any such  exercise  that
the Shares are being  acquired  only for  investment  and  without  any  present
intention  to sell or  distribute  such Shares if, in the opinion of counsel for
the Company, such a representation is required.
 
      17. INABILITY TO OBTAIN AUTHORITY.  The inability of the Company to obtain
authority  from any  regulatory  body having  jurisdiction,  which  authority is
deemed by the Company's  counsel to be necessary to the lawful issuance and sale
of any Shares  hereunder,  shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
 
      18. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all  times  reserve  and keep  available  such  number  of Shares as shall be
sufficient to satisfy the requirements of the Plan.
 
      19.   SHAREHOLDER APPROVAL.  The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted.  Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
 
 
 
                                       14
 
<PAGE>
 
 
                           FREMONT GENERAL CORPORATION
                                 1997 STOCK PLAN
 
                             STOCK OPTION AGREEMENT
 
 
      Unless otherwise defined herein,  the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
 
I.    NOTICE OF STOCK OPTION GRANT
 
      [Optionee's Name and Address and Social Security Number]
 
      You have been  granted an option to purchase  Common Stock of the Company,
subject to the terms and  conditions of the Plan and this Option  Agreement,  as
follows:
 
      Grant Number                              _________________________
 
      Date of Grant                             _________________________
 
      Vesting Commencement Date                 _________________________
 
      Exercise Price per Share                  $________________________
 
      Total Number of Shares Granted            _________________________
 
      Total Exercise Price                      $_________________________
 
      Type of Option:                     ___   Incentive Stock Option
 
                                          ___   Nonstatutory Stock Option
 
      Term/Expiration Date:               _________________________
 
 
      VESTING SCHEDULE:
 
      This Option may be exercised,  in whole or in part, in accordance with the
following  schedule:  25% OF THE SHARES  SUBJECT TO THE OPTION SHALL VEST TWELVE
MONTHS AFTER THE VESTING COMMENCEMENT DATE, AND 25% OF THE SHARES SUBJECT TO THE
OPTION SHALL VEST EACH YEAR THEREAFTER UNTIL THE OPTION IS FULLY VESTED, SUBJECT
TO THE OPTIONEE CONTINUING TO BE A SERVICE PROVIDER ON SUCH DATES.
 
 
<PAGE>
 
     TERMINATION PERIOD:
     
      This  Option  may be  exercised  for ninety  (90) days (if this  Option is
designated  as a  nonstatutory  stock  option) or for thirty  (30) days (if this
Option is designated as an incentive stock option) after Optionee ceases to be a
Service Provider.  Upon the death or Disability of the Optionee, this Option may
be exercised  for such longer  period as provided in the Plan. In no event shall
this Option be exercised later than the Term/Expiration Date as provided above.
 
II.   AGREEMENT
 
      1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants to
the Optionee  named in the Notice of Grant  attached as Part I of this Agreement
(the  "Optionee") an option (the "Option") to purchase the number of Shares,  as
set forth in the Notice of Grant,  at the exercise  price per share set forth in
the Notice of Grant (the "Exercise Price"),  subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 15(c)
of the Plan, in the event of a conflict  between the terms and conditions of the
Plan and the  terms  and  conditions  of this  Option  Agreement,  the terms and
conditions of the Plan shall prevail.
 
            If  designated  in the Notice of Grant as an Incentive  Stock Option
("ISO"),  this Option is intended to qualify as an Incentive  Stock Option under
Section 422 of the Code.  However, if this Option is intended to be an Incentive
Stock  Option,  to the extent that it exceeds the $100,000  rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
 
      2.    EXERCISE OF OPTION.
 
            (a)   RIGHT TO EXERCISE.  This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
 
            (b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise  notice,  in the form  attached as Exhibit A (the  "Exercise  Notice"),
which shall state the election to exercise  the Option,  the number of Shares in
respect of which the Option is being  exercised (the  "Exercised  Shares"),  and
such other  representations  and  agreements  as may be  required by the Company
pursuant to the provisions of the Plan.  The Exercise  Notice shall be completed
by the Optionee and delivered to the Director of Corporate  Compliance or to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment of
the aggregate  Exercise Price as to all Exercised  Shares.  This Option shall be
deemed to be  exercised  upon  receipt by the  Company  of such  fully  executed
Exercise Notice accompanied by such aggregate Exercise Price.
 
            No Shares  shall be issued  pursuant to the  exercise of this Option
unless such issuance and exercise  complies with Applicable Laws.  Assuming such
compliance,  for income tax purposes the  Exercised  Shares shall be  considered
transferred  to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
 
 
<PAGE>
 
      3.    METHOD OF PAYMENT.  Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
 
            (a)   cash; or
 
            (b)   check; or
 
            (c)   consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan; or
 
            (d)  surrender  of other  Shares  which  (i) in the  case of  Shares
acquired  upon  exercise of an option,  have been owned by the Optionee for more
than six (6) months on the date of surrender,  AND (ii) have a Fair Market Value
on the date of surrender equal to the aggregate  Exercise Price of the Exercised
Shares; or
 
      4.  NON-TRANSFERABILITY  OF OPTION.  This Option may not be transferred in
any manner  otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this  Option  Agreement  shall be  binding  upon the  executors,
administrators, heirs, successors and assigns of the Optionee.
 
      5.    TERM OF OPTION.  This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
 
      6.    TAX CONSEQUENCES.  Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below.  THIS SUMMARY
IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE.  THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.
 
            (a)   EXERCISING THE OPTION.
 
                  (i) NONSTATUTORY  STOCK OPTION. The Optionee may incur regular
federal  income tax  liability  upon  exercise of a NSO.  The  Optionee  will be
treated as having received  compensation  income (taxable at ordinary income tax
rates) equal to the excess,  if any, of the Fair Market  Value of the  Exercised
Shares on the date of  exercise  over their  aggregate  Exercise  Price.  If the
Optionee is an Employee or a former  Employee,  the Company  will be required to
withhold  from his or her  compensation  or collect from Optionee and pay to the
applicable  taxing  authorities  an amount in cash equal to a percentage of this
compensation  income  at the time of  exercise,  and may  refuse  to  honor  the
exercise  and  refuse to  deliver  Shares if such  withholding  amounts  are not
delivered at the time of exercise.
 
 
<PAGE>
 
                 (ii)  INCENTIVE  STOCK OPTION.  If this Option  qualifies as an
ISO, the Optionee will have no regular  federal  income tax  liability  upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of  exercise  over  their  aggregate  Exercise  Price will be
treated as an adjustment to alternative  minimum  taxable income for federal tax
purposes and may subject the Optionee to alternative  minimum tax in the year of
exercise.  In the event that the Optionee ceases to be an Employee but remains a
Service  Provider,  any  Incentive  Stock  Option of the  Optionee  that remains
unexercised  shall  cease to qualify as an  Incentive  Stock  Option and will be
treated for tax  purposes as a  Nonstatutory  Stock Option on the date three (3)
months and one (1) day following such change of status.
 
            (b)   DISPOSITION OF SHARES.
 
                  (i) NSO.  If the  Optionee  holds NSO  Shares for at least one
year,  any gain  realized  on  disposition  of the  Shares  will be  treated  as
long-term capital gain for federal income tax purposes.
 
                 (ii) ISO.  If the  Optionee  holds ISO  Shares for at least one
year after  exercise  and two years after the grant date,  any gain  realized on
disposition of the Shares will be treated as long-term  capital gain for federal
income tax  purposes.  If the  Optionee  disposes of ISO Shares  within one year
after  exercise  or two years after the grant  date,  any gain  realized on such
disposition  will be treated as compensation  income (taxable at ordinary income
rates) to the extent of the excess,  if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate  Exercise Price,  or (B) the difference  between the sale price of
such Shares and the aggregate  Exercise Price. Any additional gain will be taxed
as capital gain,  short-term  or long-term  depending on the period that the ISO
Shares were held.
 
            (c)  NOTICE  OF  DISQUALIFYING  DISPOSITION  OF ISO  SHARES.  If the
Optionee sells or otherwise  disposes of any of the Shares acquired  pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately  notify the Company
in  writing  of such  disposition.  The  Optionee  agrees  that he or she may be
subject to income tax  withholding  by the  Company on the  compensation  income
recognized  from such early  disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
 
      7. ENTIRE  AGREEMENT;  GOVERNING LAW. The Plan is  incorporated  herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with  respect to the subject  matter  hereof and  supersede in their
entirety all prior  undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof,  and may not be modified  adversely to the
Optionee's  interest  except by means of a writing  signed  by the  Company  and
Optionee.  This agreement is governed by the internal  substantive laws, but not
the choice of law rules, of California.
 
      8. NO GUARANTEE OF CONTINUED  SERVICE.  OPTIONEE  ACKNOWLEDGES  AND AGREES
THAT THE VESTING OF SHARES  PURSUANT TO THE  VESTING
 
 
<PAGE>
 
SCHEDULE  HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE  PROVIDER AT THE WILL
OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED,  BEING GRANTED AN OPTION
OR PURCHASING SHARES HEREUNDER).  OPTIONEE FURTHER  ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT  CONSTITUTE  AN EXPRESS OR IMPLIED  PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD,  FOR ANY PERIOD,  OR AT
ALL, AND SHALL NOT INTERFERE  WITH  OPTIONEE'S  RIGHT OR THE COMPANY'S  RIGHT TO
TERMINATE  OPTIONEE'S  RELATIONSHIP  AS A SERVICE  PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
 
      By your signature and the signature of the Company's representative below,
you and the Company  agree that this Option is granted under and governed by the
terms  and  conditions  of the Plan  and this  Option  Agreement.  Optionee  has
reviewed  the Plan and  this  Option  Agreement  in their  entirety,  has had an
opportunity  to obtain the  advice of counsel  prior to  executing  this  Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding,  conclusive and final all decisions
or  interpretations of the Administrator upon any questions relating to the Plan
and Option  Agreement.  Optionee  further  agrees to notify the Company upon any
change in the residence address indicated below.
 
 
OPTIONEE:                                 FREMONT GENERAL CORPORATION
 
 
 
- -----------------------------------       --------------------------------------
Signature                                 By:
 
- ------------------------------------
Social Security Number                    Title:
 
- ------------------------------------
Printed Name
 
- ------------------------------------
Residence Address
 
 
 

 

AMENDMENT TO THE
FREMONT GENERAL CORPORATION
1997 STOCK PLAN

     WHEREAS, Fremont General Corporation (the “Company”) maintains the Fremont General Corporation 1997 Stock Plan, as amended (the “Plan”);

     WHEREAS, pursuant to Section 15(a) of the Plan, the Board of Directors of the Company may amend the Plan at any time; and

     WHEREAS, the Company wishes to amend the Plan to provide for grants of stock units to Service Providers.

     NOW, THEREFORE, the Plan is hereby amended, effective January 1, 2005 as follows:

SECTION 2

DEFINITIONS

     1. Subsection (p) of Section 2 is amended in its entirety to read as follows:

     “(p) ‘Notice of Grant’ means a written or electronic notice evidencing certain terms and conditions of an individual Option, Stock Right or Restricted Stock Unit grant.”

     2. Section 2 is amended by adding the following definitions as subsections (aa) and (bb), respectively, and by redesignating the former subsections (aa) through (ee) as subsections (cc) through (gg), respectively:

     “(aa) ‘Restricted Stock Unit’ or ‘RSU’ means a Stock Unit subject to such conditions on vesting and payout as the Administrator may determine.

     (bb) ‘Restricted Stock Unit Agreement’ or ‘RSU Agreement’ means a written award agreement between the Company and a recipient of an RSU grant evidencing the terms and conditions of such RSU grant. The RSU Agreement is subject to the terms and conditions of the Plan and the Notice of Grant.”

     3. Section 2 is further amended by adding the following definition as subsection (hh) and redesignating the former subsection (ff) as subsection (ii):

     “(hh) ‘Stock Unit’ means a bookkeeping entry that serves as a unit of measurement relative to a share of Common Stock for purposes of determining the payment of the Stock Unit grant. Stock Units are not outstanding shares of Common Stock and do not entitle a grantee to any

 


 

dividend, voting or other rights in respect of any Common Stock. Stock Units may, however, by express provision in the applicable award agreement, entitle a Participant to dividend equivalent rights, credited in the form of cash or additional Stock Units, as determined by the Administrator.”

SECTION 3

STOCK SUBJECT TO THE PLAN

     4. The first paragraph of Section 3 is amended by changing the phrase “maximum aggregate number of Shares that may be optioned or sold under the Plan” to “maximum aggregate number of Shares that may be delivered under the Plan.”

     5. The second paragraph of Section 3 is amended in its entirety to read as follows:

     “If any Option or Stock Right shall expire or be cancelled or terminated without having been exercised in full, or any Common Stock subject to a Restricted Stock Award or Stock Unit Award shall not vest or be delivered, or any Shares of Restricted Stock shall be reacquired by the Company at their original purchase price, the unpurchased, unvested, undelivered or reacquired shares subject thereto shall again be available for purposes of the Plan, subject to any applicable limitations under Section 162(m) of the Code. Notwithstanding the foregoing provisions, Stock Units payable solely in cash shall not reduce the number of Shares available for awards under this Plan and any charges to the maximum number of Shares deliverable under this Plan pursuant to Stock Units payable in Shares or cash shall be reversed to the extent the Stock Units are actually paid in cash.”

SECTION 4

ADMINISTRATION OF THE PLAN

     6. Section 4(b) is amended (a) by changing the phrase “Options and Stock Rights” to “Options, Stock Rights and Stock Units” in paragraph (ii) thereof, (b) by changing the phrase “each Option and Stock Right” to “each Option, Stock Right and Stock Unit award” in paragraph (iii) thereof, (c) by changing the two phrases “any Option or Stock Right” to “any Option, Stock Right or Stock Units” in paragraph (v) thereof, (d) by changing the phrase “each Option or Stock Right” to “each Option, Stock Right or Stock Unit award” in paragraph (x) thereof, (e) by changing the phrase “exercise of an Option or Stock Right” to “exercise of an Option or Stock Right or payment with respect to a Stock Unit” in paragraph (xi) thereof and (f) by changing the phrase “an Option or Stock Right” to “an Option, Stock Right or Stock Unit award” in paragraph (xii) thereof.

2


 

     7. Section 4(c) is amended by changing the phrase “holders of Options or Stock Rights” to “holders of Options or Stock Rights or recipients of Stock Unit awards.”

SECTION 5

ELIGIBILITY

     8. The first sentence of Section 5 is amended in its entirety to read as follows:

     “Nonstatutory Stock Options, Stock Rights and Stock Units may be granted to Service Providers.”

SECTION 6

LIMITATIONS

     9. Section 6(b) is amended in its entirety to read as follows:

     “Neither the Plan nor any Option, Stock Right or Stock Unit award shall confer upon an Optionee or Service Provider to whom a Stock Right or a Stock Unit has been granted any right with respect to continuing his or her relationship as a Service Provider with the Company, nor shall they interfere in any way with such individual’s right or the Company’s right to terminate such relationship at any time, with or without cause.”

SECTION 11A

STOCK UNITS

     10. A new Section 11A is added to the Plan to read as follows:

     “11A. Stock Units.

     (a) Grant. The Administrator may, in its discretion, authorize and grant any Service Provider a Stock Unit award or the crediting of Stock Units for services rendered or to be rendered or in lieu of other compensation, consistent with other applicable terms of this Plan, may permit a Service Provider to irrevocably elect to defer by means of Stock Units. The specific terms, conditions, and provisions relating to each Stock Unit grant or election, including applicable vesting and payout provisions of the Stock Units and the form of payment to be made at or following the vesting thereof, shall be set forth in or pursuant to the applicable agreement and any relevant Company bonus, performance or other service or deferred compensation plan, in form substantially as approved by the Administrator.

3


 

     (b) Payouts. The Administrator in the applicable Restricted Stock Unit Agreement or other award agreement or the relevant Company deferred compensation plan may permit the Participant to elect the form and time of payout of vested Stock Units on such conditions or subject to such procedures as the Administrator may impose, and may permit Stock Unit offsets or other provision for payment of any applicable taxes that may be due on the crediting, vesting or payment in respect of the Stock Units.

     (c) Non-Transferability. Rights in respect of Stock Unit awards may not be sold, pledged, assigned, hypothecated, transferred, or otherwise disposed of or encumbered, either voluntarily or involuntarily, other than by will or the laws of descent or distribution, until any restrictions have lapsed and the shares issuable pursuant to the Stock Unit award have been issued.

     (d) Dividend Equivalent Rights. In its discretion, the Administrator may grant to any Service Provider “Dividend Equivalent Rights” concurrently with the grant of any Stock Unit award, on such terms as set forth by the Administrator in the Restricted Stock Unit Agreement or other applicable award agreement. Dividend Equivalent Rights shall be based on all or part of the amount of dividends declared on Shares of Common Stock and shall be credited as of dividend payment dates, during the period between the date of grant (or such later date as the Administrator may set) and the date the Stock Unit award expires (or such earlier date as the Administrator may set), as determined by the Administrator. Dividend Equivalent Rights shall be payable in cash or Shares, and may be subject to such conditions, as may be determined by the Administrator.

     (e) Cancellation of Restricted Stock Units. Unless the Administrator otherwise expressly provides, Restricted Stock Units that remain subject to conditions to vesting at the time of termination of employment or service or are subject to other conditions to vesting that have not been satisfied by the time specified in the applicable Restricted Stock Unit Agreement shall not vest and shall be cancelled, unless the Administrator otherwise provides in or by amendment to the applicable terms of the Award.”

4


 

SECTION 13

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION,
DISSOLUTION, MERGER OR ASSET SALE

     11. Section 13 is amended by restating subsections (a), (b) and (c) and the first two sentences of (d) to read as follows:

     “13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

     (a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option, Stock Right and Stock Unit award, and the number of             shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options or Stock Rights or Stock Units have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, Stock Right, or Stock Unit award, as well as the price per share of Common Stock covered by each such outstanding Option or Stock Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued             shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option, Stock Right or Stock Unit award.

     (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company reacquisition option applicable to any Shares acquired upon exercise of an Option or Stock Right and any restrictions applicable to such Shares and any restrictions applicable to any Restricted Stock Units shall lapse, and all Restricted Stock Unit Awards and any other Stock Unit

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awards shall become payable, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option or Stock Right will terminate immediately prior to the consummation of such proposed action.

     (c) Merger or Asset Sale. Subject to Section 13(d), in the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option, Stock Right and Stock Unit award shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, Stock Right or Stock Unit award, the Optionee shall fully vest in and have the right to exercise the Option or Stock Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable, and any Company reacquisition option applicable to any Shares acquired upon exercise of an Option or Stock Right and any restrictions applicable to any Restricted Stock Units shall lapse, and all Restricted Stock Unit awards and any other Stock Unit awards shall become payable. If an Option or Stock Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option or Stock Right shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Right award shall terminate upon the expiration of such period. For the purposes of this paragraph, an Option, Stock Right or Stock Unit shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share subject to the Option, Stock Right or Stock Unit immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger of sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Right, for each Share of Optioned Stock subject to the Option or Stock Right, or the payment of any Restricted Stock Unit or other Stock Unit award to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger of sale of assets.

     (d) Change of Control. In the event of a Change of Control (as defined below), the Optionee shall fully vest in and have the right to

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exercise the Option or Stock Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable, and any Company reacquisition option applicable to any Shares acquired upon exercise of an Option or Stock Right and any restrictions applicable to any Restricted Stock Units shall lapse, and all Restricted Stock Unit awards and any other Stock Unit awards shall become payable. If an Option or Stock Right becomes fully vested and exercisable as the result of a Change of Control, the Administrator shall notify the Optionee in writing or electronically prior to the Change of Control that the Option or Stock Right shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Right shall terminate upon the expiration of such period.”

SECTION 14

DATE OF GRANT

     12. Section 14 is amended by changing the two phrases “Option or Stock Right” to “Option, Stock Right or Stock Unit award” in the first sentence thereof.

SECTION 15

AMENDMENT AND TERMINATION OF THE PLAN

     13. Section 15 is amended by restating subsection (c) thereof to read as follows:

     “(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee or recipient of any Stock Unit award, unless mutually agreed otherwise between such individual and the Administrator, which agreement must be in writing and signed by such individual and the Company. Termination of a plan shall not affect the Administrator’s ability to exercise the powers granted hereunder with respect to Options and Stock Units granted under the Plan prior to the date of such termination.”

SECTION 16

CONDITIONS UPON ISSUANCE OF SHARES

     14. Section 16 is amended by adding the following sentence the end of subsection (a) thereof:

“Shares shall not be issued in payment of any Stock Units unless the issuance and delivery of such Shares shall comply with Applicable Laws

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and shall be further subject to approval of counsel for the Company with respect to such compliance.”

     15. Section 16 is further amended by adding the following sentence to the end of subsection (b) thereof:

“As a condition to the delivery of Shares in payment of any Stock Unit award, the Company may require the person to whom such award has been granted to represent and warrant at the time that such Stock Unit award becomes payable that the Shares are being acquired only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company such a representation is required.”

     IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this amendment this ___day of ___, 2004.

 

 

 

 

 

 

FREMONT GENERAL CORPORATION
 

 

 

  

 

 

 

 

Name:  

Raymond G. Meyers 

 

 

 

Title:  

Senior Vice President and
Chief Administrative Officer 

 

 

Approved by the Compensation Committee and the Board of Directors of Fremont General Corporation on November 18, 2004.

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