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.
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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