EMPLOYMENT AGREEMENT

Exhibit 10.3
Execution Copy

[PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST TO
THE SECURITIES AND EXCHANGE COMMISSION FOR CONFIDENTIAL TREATMENT.
THE INFORMATION HAS BEEN SEPARATELY FILED WITH THE COMMISSION]

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is dated November 9, 2007 (the “Effective Date”), and is entered into by and between David S. DePillo (“Executive”), Fremont General Corporation (the “Parent”) and Fremont Investment & Loan (the “Bank”), a wholly-owned subsidiary of Parent. (The Parent and the Bank will be referred to collectively herein as the “Company”).

RECITALS

      WHEREAS , the Company desires to secure the services and employment of Executive; and

      WHEREAS , Executive desires to be employed, upon the terms and conditions set forth in this Agreement.

AGREEMENT

      NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound hereby, agree as follows:

     This Agreement shall be executed and delivered by Executive to the Company and this Agreement shall become effective as of the Effective Date.

     The Executive agrees to be employed (a) as Vice Chairman of the Board and President of Parent, commencing as of the Effective Date, and (b) as Vice Chairman of the Board and President of the Bank upon approval of the Federal Deposit Insurance Corporation (“FDIC”) and the Commissioner of the Department of Financial Institutions for the state of California (“DFI”). The Executive shall be based at either the Parent’s headquarters in Santa Monica, California, the Bank’s headquarters in Brea, California or as otherwise determined by the parties. Notwithstanding the foregoing the Company understands and agrees that Executive may from time to time physically render services from an alternative location; provided , however , that the Executive will generally work out of the Company’s offices.

     During his employment with the Company, Executive will serve the Company and its affiliates faithfully, diligently and to the best of his ability and will devote as much of his business time, energy, experience and talents as is necessary to perform his duties hereunder. During his employment with the Company, Executive shall perform all duties and accept all responsibilities incident to his position as President of Parent as may be reasonably assigned to him from time to time by the Chief Executive Officer. Executive shall also be subject to and shall abide by all policies and procedures of the Company, except to the extent that such policies and procedures conflict with the other provisions of this Agreement, in which case this Agreement shall control.

     Executive shall be paid the following as compensation for all services to be rendered by Executive pursuant to this Agreement:

     (a)  Base Salary . During the Term (as defined in Section 5 hereof), the Company shall pay Executive a base salary (the “Base Salary”), payable in equal biweekly installments, according to the Bank’s normal payroll practices, at an annual rate of Nine Hundred Thousand dollars ($900,000), less all applicable federal, state and/or local taxes and all other authorized payroll deductions. Thereafter, Executive’s Base Salary will be subject to an approximately annual review, and increases (but not reductions, except for reductions made to the Company’s executives generally) may be made to Executive’s Base Salary at any time based upon the review by Parent’s Board of Directors (“Board”) of Executive’s performance and the performance of the Company.

     (b)  Annual Bonus . During the Term, the Bank may pay Executive a bonus or bonuses in such amount as and in such a manner as the Board, in its discretion determines is appropriate.

     (c)  Restricted Shares . As of the Effective Date, the Parent will grant the Executive an award of 909,091 restricted shares, pursuant to the Parent’s 2006 Performance Incentive Plan. The restricted shares, whether or not vested, will be entitled to dividends if and when such dividends are declared and paid to shareholders of Parent. Subject to acceleration of vesting of such restricted shares as provided in Sections 9 and 10 hereof, one-third of the restricted shares shall become vested on each of the first three anniversaries of the Effective Date; provided, that as of each such vesting date, Executive is employed hereunder and has neither given nor been given a notice of termination of Executive’s employment with Parent or the Bank.

     Subject to the terms of this Agreement (including, without limitation, Section 11 hereof), the term of this Agreement (the “Term”) shall commence on the Effective Date and unless earlier terminated pursuant to Sections 8 or 9 shall continue until the third (3 ^rd ) anniversary of the Effective Date. Subject to the notice provisions of this paragraph, on the first annual anniversary of the date first above written and each annual anniversary thereafter, the Term of this Agreement may be renewed or extended for one (1) additional year after review and approval by the Board or a duly authorized committee thereof. In the event the Company or the Executive gives written notice to the

other party or parties hereto of such party’s or parties’ election not to extend the Term, with such notice to be given not less than ninety (90) days prior to any such anniversary date, then this Agreement shall terminate at the conclusion of its remaining Term. References herein to the Term of this Agreement shall refer to both the initial Term and successive Terms.

     During the Term, the Bank shall reimburse the Executive for his reasonable expenses incurred in the course of Executive’s duties, in accordance with the procedures and to the extent allowed under applicable policies of the Bank. These expenses shall include transportation between the Executive’s home and the Company’s offices. The Bank shall also provide (or reimburse) the Executive for temporary accommodations while he is working at the Company’s offices.

     (a) The Executive shall be eligible to participate in the employee benefit plans and executive compensation programs maintained by the Bank or Parent of general applicability to other executives of the Company, including retirement plans, savings or profit-sharing plans, deferred compensation plans, supplemental retirement or excess-benefit plans, stock option, restricted stock programs, incentive or other bonus plans, life, disability, health, accident and other insurance programs, paid vacations, and similar plans or programs, if any, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the determination of the Board or any committee administering such plan or program.

     (b) Nothing in this Agreement shall preclude the Company from amending or terminating any employee benefit plan or practice.

     (a) In the event of Executive’s termination of employment by reason of “disability” (as defined from time to time in any applicable disability plan or program of the Company) during the Term, this Agreement shall terminate, subject to any applicable disability plan or program of the Company or federal or state disability or leave laws. Executive shall receive such compensation and benefits (if any) in connection with such termination consistent with the terms of such plans, programs or applicable laws.

     (b) In the event of the Executive’s death, the Bank shall pay to the Executive’s estate an amount, in cash, equal to (a) one hundred percent (100%) of his annual Base Salary at the rate in effect at the time of Executive’s death, payable in a lump sum within thirty (30) days of the Executive’s death, and (b) one hundred percent (100%) of the average Annual Bonus paid to the Executive during the last three (3) fiscal years (or such shorter period if applicable) payable in a lump sum within thirty (30) days of Executive’s death. The Bank will cause to be continued for the Executive’s previously covered dependents’ life, medical and dental coverage that is substantially equivalent to the coverage maintained by the Bank for Executive’s dependants prior to the Executive’s death at no cost to the Executive’s covered dependants. Such coverage shall cease upon the expiration of the remaining Term of this Agreement. If this coverage is not available, the Bank

will pay to the Executive’s covered dependants an amount equal to the remaining premiums paid to the carrier for the coverage that was in force prior to the date of Executive’s death for the remaining Term of this Agreement.

     (a)  General

     (i) Termination by the Company for Cause or by Executive other than for Good Reason . At any time during the Term, the Company may terminate Executive’s employment under this Agreement for “Cause” (as hereinafter defined), or Executive may terminate his employment with the Company other than for “Good Reason” (as hereinafter defined), after which the Company shall pay to the Executive the amount of his accrued but unpaid Base Salary and any unreimbursed reasonable expenses incurred in the performance of Executive’s duties in accordance with the Company’s policies, in each case accrued through such termination date (collectively, the “Accrued Obligations”). Except as set forth in the preceding sentence, the Company shall have no further obligation hereunder to Executive.

     (ii) Termination by the Company or by the Executive Upon Failure to Receive Approval from Regulators or Termination by the Executive Upon Failure of Six Members of the Incumbent Board to Tender their Resignation . If the employment of the Executive is not approved by the FDIC and the DFI (“Regulatory Approval”) by February 12, 2008 (the “Regulatory Deadline”), then (A) the Company may terminate the Executive’s employment hereunder and this Agreement at any time during the ninety (90) business day period immediately following the Regulatory Deadline and (B) the Executive may terminate his employment hereunder and this Agreement effective upon the ninetieth (90th) day following the Regulatory Deadline by giving no less than forty-five (45) days prior written notice to the Company following the Regulatory Deadline. If at least six (6) members of the Incumbent Board (as defined in Section 10 hereof) of Parent and all five (5) members of the Incumbent Board of the Bank have not tendered their resignations or have not otherwise left office by the earlier of (i) one business day following receipt of Regulatory Approval, or (ii) the expiration of the Regulatory Deadline (which shall be deemed to have been satisfied if any such resignation is delivered prior to the Regulatory Deadline but is effective not later than immediately following receipt of Regulatory Approval), then the Executive may terminate his employment hereunder and this Agreement effective upon the ninetieth (90th) day following the Regulatory Deadline by giving no less than forty-five (45) days prior written notice to the Company following the Regulatory Deadline. Upon termination of the Agreement in accordance with either of the prior two sentences, the Company shall pay to the Executive, within ten (10) days of such termination and in lieu of any other severance payment provided in this Agreement or under any other Company plan, policy or arrangement (less all applicable federal, state and/or local taxes and all other authorized payroll deductions): (A) the Accrued Obligations, and (B) subject to the Executive’s continued compliance with the restrictive covenants contained in Sections 11 (other than 11(a)) through 15 of this Agreement and further provided that the Executive signs and returns to the Company a Severance Agreement and General Release of All Claims that is reasonably acceptable (in form and substance) to the Company (“Release”) and such Release

has become irrevocable by Executive, then Parent shall vest in full 100,000 shares of the restricted stock grant provided to the Executive in Section 4(c) hereunder and shall pay to Executive a cash payment of $100,000; payable in equal biweekly installments over a twelve (12) calendar-month period, in accordance with the Company’s normal payroll practices.

     (iii) Termination by the Company other than for Death, Disability or Cause or by the Executive following a Qualifying Sale . If prior to the first anniversary of the date hereof, the Bank [*] (a “Qualifying Sale”), then the restricted share award granted to Executive pursuant to Section 4(c) of this Agreement shall vest in full upon the consummation of the Qualifying Sale transaction. If following the consummation of a Qualifying Sale and prior to the first anniversary of the Effective Date, the Executive’s employment is terminated by the Company other than on account of the Executive’s death, disability or for Cause, or the Executive provides written notice of his intent to terminate his employment, for any reason, upon ninety (90) days prior written notice, then in lieu of any other severance payment provided in this Agreement, or other Company plan, policy or arrangement, then the Bank shall make the following payments and benefits available to the Executive following his termination of employment (less all applicable federal, state and/or local taxes and all other authorized payroll deductions): (A) the Accrued Obligations, and (B) subject to the Executive’s continued compliance with the restrictive covenants contained in Sections 11 through 15 of this Agreement, provided, however, that the non-solicitation provisions of Section 11(a) shall remain in force for twelve (12) months following Executive’s termination of employment, and further provided that the Executive signs and returns to the Company the Release and such Release has become irrevocable by Executive, severance compensation equal to (I) the remaining portion of the Base Salary Executive would have received had he worked through the first anniversary of the Effective Date, or through the first fifteen (15) months of this Agreement, if the Qualifying Sale occurs in the 10 ^th , 11 ^th or 12 ^th month of this Agreement, payable in a lump sum within thirty (30) days following such termination date, provided, however, that if the Qualifying Sale does not constitute a change in control event for purposes of Code Section 409A, then the payment will be made in equal biweekly installments over a twelve (12) calendar-month period, in accordance with the Company’s normal payroll practices; and (II) continued health benefits for three (3) years following the Executive’s termination of employment; provided, however, that to the extent the applicable health plan does not permit Executive to continue to participate in the plan during all or a part of such period, the Company shall pay the premiums relating to such continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Except as set forth in this paragraph, the Company shall have no further obligation hereunder to Executive.

     (iv) T ermination by Executive for Good Reason or by the Company other than for Death, Disability or Cause . At any time during the Term, if Executive’s employment is

terminated by Executive for Good Reason, or by the Company for any reason other than Executive’s death, disability or for Cause, the Bank (and Parent with respect to (B)(I) below) shall make the following payments and benefits available to the Executive (less all applicable federal, state and/or local taxes and all other authorized payroll deductions): (A) the Accrued Obligations, and (B) subject to Executive’s continued compliance with the restrictive covenants contained in Sections 11 through 15 of this Agreement and further provided that Executive signs and returns to the Company the Release and such Release has become irrevocable by Executive, severance compensation equal to (I) three hundred percent (300%) of Executive’s annual Base Salary at the rate in effect at the time of termination, payable in equal biweekly installments over a twelve (12) calendar-month period, in accordance with the Company’s normal payroll practices; (II) three hundred percent (300%) of the average Annual Bonus paid to the Executive during the last three (3) fiscal years (or such shorter period if applicable), payable in equal biweekly installments over a twelve (12) calendar-month period, in accordance with the Company’s normal payroll practices; (III) full vesting of the restricted share award granted pursuant to Section 4(c) of this Agreement; (IV) an amount equal to three hundred percent (300%) of the Average Annual Equity Value (defined below) payable in equal biweekly installments over a twelve (12) calendar-month period, in accordance with the Company’s normal payroll practices; (V) in addition to the benefits to which the Executive is entitled under each defined contribution retirement plan of the Company (a “DC Retirement Plan”), the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of (i) the amount that would have been contributed thereto by the Company on the Executive’s behalf during the three (3) years immediately following the date of termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Retirement Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Retirement Plan made subsequent to a Change in Control Event and on or prior to the date of termination, which amendment adversely affects in any manner the computation of benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Retirement Plan as of the date of termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Retirement Plan; plus (VI) continued health benefits for three (3) years following the Executive’s termination of employment; provided, however, that to the extent the applicable health plan does not permit Executive to continue to participate in the plan during all or a part of such period, the Company shall pay the premiums relating to such continued coverage under COBRA. For purposes of this Agreement, “Average Annual Equity Value” shall mean the sum of (1) and (2), where (1) equals the average aggregate fair market value (based upon the closing price of the stock on the date of such award), determined as of the date of grant, of all stock, phantom stock or similar awards granted during the three years prior to Executive’s termination, and (2) equals the average fair value (determined as of the date of grant) utilizing the same assumptions as the Parent uses for financial accounting purposes under FAS 123R, of all stock option or similar awards granted to Executive during the three years prior to the termination date, provided , however , that Average Annual Equity Value shall not include the restricted stock

grant provided in Section 4(c) of this Agreement. Except as set forth in this paragraph, the Company shall have no further obligation hereunder to Executive.

     (v) Executive may terminate his employment with the Company, whether for Good Reason or not, only by giving the Company thirty (30) days’ advance notice in writing, in accordance with the notice provisions of this Agreement.

     (b)  Definitions . For purposes of this Agreement, the following definitions shall apply:

     (i) “Cause” shall mean any of the following: (A) Executive’s engaging in and/or failure to take all appropriate action in response to any acts of fraud, dishonesty, theft, embezzlement, or any other acts or omissions that are harmful or injurious to the Company and/or any of its affiliates; (B) Executive’s willful refusal to perform any of the duties or responsibilities: (I) reasonably assigned to Executive by the Board, (II) otherwise reasonably assigned to Executive through Board adopted policies or procedures of the Company; (C) Executive is removed, permanently prohibited, suspended and/or temporarily prohibited from participating in the conduct of the Parent’s or Bank’s affairs by a notice or order served under §8(e)(3), (e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3), (e)(4) and (g)(1)); (D) Executive’s commission of, indictment, or conviction for, any felony, including any plea of guilty or nolo contendere or placement in a pretrial diversion program; (E) Executive&