GE Capital
Equity Capital Group
General Electric Capital Corporation
260 Long Ridge Road, Stamford, CT 05927
203-357-3100
October 3, 1996
Nova Star Financial, Inc.
1900 W. 47th Place
West wood, Kansas 66205
Stifel, Nicolaus& Company, Incorporated
500 North Broadway
St. Louis, Missouri 63102
Gentlemen:
You have advised General Electric Capital Corporation ("GE Capital") that Nova Star Financial, Inc. (the "Company") is seeking to consummate a transaction to raise $15 million to $45 million of equity capital. We have reviewed the information provided by you in connection with this proposed investment. Based on the information that you have provided to date, and our understanding of the transaction, GE Capital is pleased to issue its commitment to invest $10 million in the Company, subject to the terms and conditions contained in the term sheet attached hereto as Annex A (the "Term Sheet") and included herein by reference and the following additional terms and conditions:
(i) The Company will provide evidence satisfactory to GE Capital as to its legal, capital and tax structure and ownership, and copies of all documents, as GE Capital may reasonably request;
(ii) The Company will be in compliance with all applicable federal, state and local laws and regulations;
(iii) All governmental consents and regulatory approvals and third party consents, if any, necessary to consummate the proposed transaction shall have been obtained in form satisfactory to GE Capital; and
(iv) There will exist no litigation which could reasonably be expected to have a material adverse effect on the financial condition, business, assets, operations or prospects of the Company, or that challenges the transaction contemplated hereby.
This Commitment Letter is being delivered to you on the understanding and on the condition that neither this Commitment Letter nor its substance shall be disclosed publicly or privately by either Stifel, Nicolaus& Company, Incorporated or the Company, except that this Commitment Letter may be disclosed to those individuals who are, or upon consummation of the transaction contemplated hereby will be, officers, employees or advisors of the Company
who have a need to know of it as a result of their being specifically involved int he transaction contemplated hereby and then only on the condition that such matters may not, except as required by law, be further disclosed. Except as specifically permitted by the foregoing sentence, none of such persons shall, except as required by law, use the name of or refer to GE Capital or any of its affiliates, in any disclosure made in connection with the transaction contemplated hereby without the prior written consent of GE Capital. Following your acceptance of this Commitment Letter, reference may be made to this Commitment Letter in the Private Placement Memorandum for the transactions contemplated hereby provided that GE Capital reasonably approves of such disclosure of this letter.
The Company agrees to indemnify and hold harmless GE Capital, its affiliates and their respective officers, directors, employees, attorneys and agents, and all persons controlling any of them or any of their affiliates within the meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934 (all such persons being hereinafter referred to as "Indemnified Persons"), whether or not the transaction contemplated hereby is consummated, from and against all claims, losses, damages, liabilities or expenses of any kind or nature whatsoever that may be incurred by or asserted against or involve any Indemnified Person in any and all actions, suits, proceedings (including any investigations or inquiries) or claims with respect to this Commitment Letter or the transaction contemplated hereby (whether or not consummated), or the preparation, execution and delivery of this Commitment Letter and the documentation contemplated hereby, subject to the limitation on the reimbursement of legal fees in connection with such documentation as provided int he Term Sheet and exclusive of any loss resulting solely from a decline in value of the Units purchased by GE Capital; and, upon demand by GE Capital, to pay or reimburse any such Indemnified Person for any reasonable legal or other expenses incurred in connection with investigating, defending or preparing to defend or participating in any such action, suit, proceeding (including any inquiry or investigation) or claim, whether commenced or threatened, it being understood that GE Capital shall have the right to select its own counsel in connection with such matters; provided, that the Company shall not be responsible to any such Indemnified Person to the extent that any such losses, damages, liabilities or expenses are determined by a final judgment of a court of competent jurisdiction to be attributable solely to the gross negligence or willful misconduct of such Indemnified Person. Under no circumstances shall......
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