EXHIBIT 10.40


 


CONDITIONAL WAIVER AGREEMENT
REGARDING EVENT OF DEFAULT


 


THIS CONDITIONAL WAIVER AGREEMENT REGARDING EVENT OF DEFAULT (this “Conditional
Waiver”) is entered into as of September 30, 2008, by and between AMERICAN
BUSINESS LENDING, INC., a Texas corporation (“Borrower”), and WELLS
FARGO FOOTHILL, LLC, a Delaware limited liability company (“Lender”),
with reference to the following facts, which shall be construed as part of this
Conditional Waiver:


 


RECITALS


 


A.            Borrower and Lender have entered into that
certain Loan Agreement dated as of December 15, 2006, as amended by that
certain First Amendment to Loan Agreement dated as of February 27, 2007,
and that certain Second Amendment to Loan Agreement entered into as of July 30,
2007 to be effective as of June 30, 2007 (as amended or modified from time
to time, the “Loan Agreement”), pursuant to which Lender is providing
financial accommodations to or for the benefit of Borrower upon the terms and
conditions contained therein. Unless otherwise defined herein, capitalized
terms or matters of construction defined or established in the Loan Agreement
shall be applied herein as defined or established therein.


 


B.            Borrower has requested that Lender waive an existing
Event of Default under the Loan Agreement, and Lender is willing to do so to
the extent provided in, and subject to the terms and conditions of, this Conditional
Waiver.


 


AGREEMENT


 


NOW, THEREFORE, in consideration of the continued performance by
Borrower of its promises and obligations under the Loan Agreement and the other
Loan Documents, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree
as follows:


 


1.             Ratification and Incorporation of Loan
Agreement and Other Loan Documents. Except to the extent waived under this Conditional Waiver, (a) Borrower
hereby acknowledges, confirms, and ratifies all of the terms and conditions set
forth in, and all of its obligations under, the Loan Agreement and the other
Loan Documents, and (b) all of terms and conditions set forth in the Loan
Agreement and the other Loan Documents are incorporated herein by this
reference as if set forth in full herein.


 


2.             Borrower’s Acknowledgement and Lender’s Conditional
Waiver of an Event of Default.
Borrower acknowledges that, immediately prior to the effectiveness of this Conditional
Waiver, an Event of Default has occurred and is continuing due to Borrower’s
failure to meet the minimum Tangible Net Worth test under Section 5.11(a) of
the Loan Agreement as of the end of its fiscal quarter ended September 30,
2008 (the “Applicable Default”). Lender hereby waives the Applicable
Default; provided, however, that an express condition precedent
to the effectiveness of such waiver is Borrower’s maintaining, on a
consolidated basis with Borrower’s Subsidiaries, Tangible Net Worth of not less
than $6,000,000 as of the end of such fiscal quarter after taking into account
any dividends paid or accrued.


 


1

















 


3.             Conditions Precedent. Notwithstanding any other provision of this
Conditional Waiver, this Conditional Waiver shall be of no force or effect, and
Lender shall not have any obligations hereunder, until the following conditions
have been satisfied:


 


3.1            Execution of Conditional Waiver. Lender shall have received this Conditional
Waiver, duly executed by Borrower and Lender.


 


3.2            No Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing, except for the Applicable Default.


 


4.             Representations and Warranties re Loan
Agreement. Borrower hereby
represents and warrants that the representations and warranties contained in
the Loan Agreement were true and correct in all material respects when made
and, except to the extent that (a) a particular representation or warranty
by its terms expressly applies only to an earlier date, or (b) Borrower
has previously advised Lender in writing as contemplated under the Loan
Agreement, are true and correct in all material respects as of the date hereof.
Borrower hereby further represents and warrants that no event has occurred and
is continuing, or would result from the transactions contemplated under this Conditional
Waiver, that constitutes or would constitute a Default or an Event of Default,
except for the Applicable Default.


 


5.             Miscellaneous.


 


5.1            Headings. The various headings of this Conditional Waiver are inserted for
convenience of reference only and shall not affect the meaning or
interpretation of this Conditional Waiver or any provisions hereof.


 


5.2            Counterparts. This Conditional Waiver may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which together shall be deemed to be one and the same
instrument. Delivery of an executed counterpart of a signature page to
this Conditional Waiver by facsimile transmission shall be effective as
delivery of a manually executed counterpart thereof.


 


5.3            Interpretation. No provision of this Conditional Waiver shall
be construed against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason of such party’s
having or being deemed to have structured, drafted or dictated such provision.


 


5.4            Complete Agreement. This Conditional Waiver constitutes the
complete agreement between the parties with respect to the subject matter
hereof, and supersedes any prior written or oral agreements, writings,
communications or understandings of the parties with respect thereto.


 


5.5            Governing Law. This Conditional Waiver shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York applicable to contracts made and performed in such state, without regard
to the principles thereof regarding conflict of laws.


 


5.6            Effect. Upon the effectiveness of this Conditional Waiver, each reference in
the Loan Agreement to “this Agreement,” “hereunder,” “hereof” or words of like
import shall mean and be a reference to the Loan Agreement as amended hereby
and each 


 


2

















 


reference
in the other Loan Documents to the Loan Agreement, “thereunder,” “thereof,” or
words of like import shall mean and be a reference to the Loan Agreement as affected
by the conditional waiver contained herein.


 


5.7            Conflict of Terms. In the event of any inconsistency between
the provisions of this Conditional Waiver and any provision of the Loan
Agreement, the terms and provisions of this Conditional Waiver shall govern and
control.


 


5.8            No Novation or Waiver. Except as specifically set forth in this Conditional
Waiver, the execution, delivery and effectiveness of this Conditional Waiver shall
not (a) limit, impair, constitute a waiver by, or otherwise affect any
right, power or remedy of, Lender under the Loan Agreement or any other Loan
Document, (b) constitute a waiver of any provision in the Loan Agreement
or in any of the other Loan Documents or of any Default or Event of Default
that may have occurred and be continuing, or (c) alter, modify, amend or
in any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Loan Agreement or in any of the other Loan
Documents, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.


 


[THE REMAINDER OF
THIS PAGE IS INTENTIONALLY BLANK]


 


3

















 


IN WITNESS WHEREOF, the parties hereto have executed
this Conditional Waiver Agreement Regarding Event Of Default as of the day and
year first above written.


 


	
   

  	
  AMERICAN BUSINESS LENDING, INC.,

  
	
   

  	
  a Texas corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Charles P. Bell, Jr.

  
	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO FOOTHILL, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Laurel L. Varney

  
	
   

  	
  Vice President

  
	
   

  	
   

  



 


[Signature Page to
Conditional Waiver Agreement Regarding Event Of Default]