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EXHIBIT 10.40
October 16, 1997
Central Financial Acceptance Corporation
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx, Chief Executive Officer
Re: Proposed Junior Subordinated Deferrable Interest Debentures
Dear Xxxx:
Reference is made to (a) that certain Revolving Loan Agreement dated as
of June 13, 1997 among Central Financial Acceptance Corporation, a Delaware
corporation ("Borrower"), the Lenders party thereto, and Xxxxx Fargo Bank,
National Association, as the Agent (the "Loan Agreement") and (b) the draft
Amendment No. 1 to Loan Agreement attached hereto (the "Draft Amendment").
Capitalized terms used but not defined herein are used with the meanings
specified for such terms in the Loan Agreement or the Draft Amendment, as
applicable.
Xxxxxxxx has advised Sumitomo Bank of California ("Sumitomo") that it
has formed (or is about to form) a Delaware business trust ("CFAC Capital I")
for the purpose of facilitating a public subordinated debt offering (the
"Offering"). In connection with the proposed Offering, Xxxxxxxx has submitted to
the Agent and the Lenders, among other documents, drafts of an "Indenture,"
"CFAC Capital Trust Agreement" and "CFAC Guaranties" (as such terms are defined
in the Draft Amendment) (collectively, together with all other documents and
instruments relating thereto, the "Subordinated Debt Documents"). Xxxxxxxx has
requested that the Lenders consent to the transactions described in the
Subordinated Debt Documents and, specifically, to the issuance by Borrower and
CFAC Capital I of certain junior subordinated debt and trust securities as more
particularly described in the Subordinated Debt Documents (the "Junior
Subordinated Debt").
Xxxxx Fargo has advised Xxxxxxxx that it has conditioned its consent to
the transactions described in the Subordinated Debt Documents such that upon
Xxxxxxxx's receipt of any proceeds in connection with the Offering, (a) all
amounts owed to Xxxxx Fargo, as a Lender, under the Loan Agreement and the other
Loan Documents shall be repaid in full, and
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Central Financial Acceptance Corporation
October 16, 1997
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(b) Xxxxx Fargo's Pro Rata Share of the Commitment shall be reduced to 0.00% and
Xxxxx Fargo shall cease to be a Lender under and with respect to the Loan
Agreement and the other Loan Documents (collectively, the "Xxxxx Fargo
Conditions").
Subject to the conditions set forth below, this letter confirms that
Xxxxxxxx, in its capacity as a Lender under the Loan Agreement, consents to (a)
the Offering and to the issuance of the Junior Subordinated Debt and (b) the
Xxxxx Fargo Conditions, provided that (i) the terms related to the Junior
Subordinated Debt are not amended, modified or waived in any material manner
from the terms set forth with respect thereto in the draft Subordinated Debt
Documents dated as of September 17, 1997, and (ii) upon Xxxxxxxx's receipt of
any proceeds in connection with such Offering, Borrower, the Remaining Lenders
and the Agent shall have executed and entered into an amendment to the Loan
Agreement substantially in the form of the Draft Amendment, with all blanks
filled in and other conforming modifications made thereto.
Except as expressly provided herein, all terms and conditions of the
Loan Agreement and the other Loan Documents shall continue in full force and
effect, without waiver or modification, and Sumitomo reserves all of its rights,
privileges and remedies in connection therewith. Xxxxxxxx acknowledges and
agrees that Wells Fargo may continue to act as Agent until such time as it
resigns (whether voluntarily or at the request of the Requisite Lenders)
pursuant to the terms of Section 10.8 of the Loan Agreement.
SUMITOMO BANK OF CALIFORNIA
By: /s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
Vice Pesident
