EXHIBIT 7
SECURED PARTY CONSENT
This SECURED PARTY CONSENT (this "Consent") is made as of September 5,
2003, by and among, SCP Private Equity Investors II, L.P. (the "Secured
Creditor"); the Diablo Management Group, a California corporation, solely in its
capacity as assignee for the benefit of creditors of WebWare Corporation
(referred to hereinafter as the "Assignee" or the "Seller"); WebWare
Corporation, a Nevada Corporation (the "Company"); and WCORP, Inc., a Delaware
corporation (the "Buyer").
RECITALS
A. WHEREAS, Secured Creditor holds those certain Demand Promissory Notes
listed on the Schedule of Secured Creditor Promissory Notes, annexed hereto as
Exhibit A (collectively, the "Secured Notes"), for payment of the original
principal amount as set forth on the schedule, along with interest and other
fees and expenses, secured by a first priority lien in all of the Company's
tangible and intangible personal property, including, but not limited to all:
(i) accounts; (ii) chattel paper, including without limitation tangible chattel
paper and electronic chattel paper; (iii) deposit accounts; (iv) documents; (v)
general intangibles, including without limitation, payment intangibles and
software; (vi) goods, including without limitation, equipment, inventory,
fixtures and all accessions, additions, replacements, attachments, accretions,
components and substitutes to or for any goods; (vii) and instruments, including
without limitation, the promissory notes (collectively, the "Collateral").
B. WHEREAS, the Buyer has purchased from the Secured Creditor certain
demand promissory notes listed on the Schedule of Acquired Secured Promissory
Notes, attached hereto as Exhibit B (collectively, the "Acquired Secured
Notes"), each secured by a first priority lien in the Collateral.
C. WHEREAS, the Company has determined that a general assignment (the
"General Assignment") of all of its assets, including the Collateral, as allowed
by California statute and applicable law (the "Assigned Assets") to the Assignee
for the benefit of the Company's creditors is in the best interest of its
creditors and the Assignee has agreed to take the Assigned Assets pursuant to
the General Assignment.
D. WHEREAS, the Buyer has made a proposal for the purchase of substantially
all of the Assigned Assets (collectively, the "Purchased Assets") from the
Assignee pursuant to the proposed Asset Purchase Agreement dated as of September
5, 2003 by and between the Seller and the Buyer (the "Purchase Agreement").
E. WHEREAS, the Assignee is willing to sell the Purchased Assets to the
Buyer pursuant to the Purchase Agreement, subject to certain conditions set
forth in the Purchase Agreement, including the consent of the Secured Creditor
to such sale free and clear of its liens, claims and encumbrances in the
Collateral and of the Buyer's waiver and release of its lien, arising from the
Acquired Secured Notes, in any proceeds of the Collateral by the Assignee,
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including any proceeds from the sale of the Purchased Assets and the waiver and
release of any claim in the proceeds from the sale of any of the Collateral.
F. WHEREAS, for valuable consideration received as set forth herein and
subject to the terms and conditions for effectiveness of this Consent, the
Secured Creditor agrees to offer its consent to the General Assignment and to
the sale of the Purchased Assets free and clear of its liens, claims and
encumbrances in the Collateral and the Buyer agrees to offer its consent to the
General Assignment and to the sale of the Purchased Assets and to waive and
release an lien in and claim against the Collateral.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals and of the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Secured Creditor, the Assignee, the Company and the Buyer hereby agree as
follows:
I. GENERAL ASSIGNMENT
1.1 Consent to General Assignment. The Secured Creditor as holder of the
Secured Notes and the Buyer, as holder of the Acquired Secured Notes, hereby
consent to the Company's execution and delivery of the Assigned Assets to the
Assignee pursuant to the General Assignment for the benefit of creditors of the
Company, including the Company's interests in the Collateral, subject to the
terms and conditions in this Consent.
1.2 Reservation of Rights. Neither this Consent with respect to the General
Assignment or the General Assignment shall void, release, terminate,
subordinate, or disallow the Secured Creditor's or the Buyer's continuing lien
upon and security interest in all of the Collateral and the proceeds thereof,
which secures the Secured Debt (as defined below) or the Acquired Secured Debt
(as defined below), all of which the Secured Creditor and the Buyer, each,
expressly reserves and retains with respect to their respective secured debts.
The Secured Creditor's and the Buyer's consent to the General Assignment does
not waive, release, reduce, or terminate, the Secured Debt or the Acquired
Secured Debt or any lien upon or security interest in the Collateral and the
proceeds thereof, all of which shall continue in full force and effect
notwithstanding the General Assignment.
1.3 Acknowledgment of Lien and Secured Debt. The Assignee and its counsel
have reviewed the documents and public filings evidencing the Secured Creditor's
and the Buyer's liens upon and security interests in the Collateral and proceeds
thereof. The Assignee under the General Assignment and the Company, each, hereby
acknowledge and agree that the Secured Creditor and the Buyer, each, have a
valid, perfected and non-avoidable lien upon and security interest in the
Collateral and the proceeds thereof, proportionate to the amounts of the Secured
Debt and Acquired Secured Debt in relation to the aggregate thereof.
(a) The Assignee, the Company and the Secured Creditor agree that the
obligations evidenced by the Secured Notes and secured by the Collateral (the
"Secured Debt") of the Secured Creditor shall total as of September 2, 2003 as
set forth on Exhibit A, hereto.
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(b) The Secured Creditor shall continue to accrue after September, 2
2003 interest, fees, and costs on the Secured Debt, until paid in full, pursuant
to the terms and conditions set forth in the Secured Notes and related loan and
security agreements and other agreements by and between the Secured Creditor and
the Company.
(c) The Assignee, the Company and the Buyer agree that the obligations
evidenced by the Acquired Secured Notes and each secured by the Collateral (the
"Acquired Secured Debt") of the Buyer shall total as of September 2, 2003 as set
forth on Exhibit B, hereto.
(d) The Buyer shall continue to accrue after September 2, 2003
interest, fees, and costs on the Acquired Secured Debt, until paid in full,
pursuant to the terms and conditions set forth in the Acquired Secured Notes and
related loan and security agreements and other agreements by and between the
Secured Creditor and the Company.
1.4 Assignee Fees. Notwithstanding any provisions of the General Assignment
concerning fees, expenses, or commissions for the Assignee, it is agreed that
the Assignee will not be entitled to charge the Secured Creditor or the Buyer
for purposes of paying the Assignee's fees or expenses under the General
Assignment. In the event that the Collateral is either purchased by a buyer or
returned to the Secured Creditor, the Assignee shall promptly remit and deliver
any of the Collateral or proceeds of the Collateral to the Secured Creditor
without any deduction or set off.
II. SALE OF ASSETS
2.1 Consent to Sale of Assets. The Secured Creditor and the Buyer have
reviewed (i) the proposed Purchase Agreement for the sale by the Seller to the
Buyer of the Purchased Assets, (ii) the proposed schedule of documents for the
transaction contemplated by and related to the Purchase Agreement, and (iii) the
other related documents, schedules and agreements (collectively, the "Purchase
Agreement Documents") describing the transaction whereby the Assignee will sell
the Purchased Assets (including the Collateral) to the Buyer, subject to, among
other things, this Consent (the "Proposed Sale").
(a) The Secured Creditor consents to the sale of the Purchased Assets,
including the Collateral, subject to its liens, and the Secured Creditor further
agrees that its liens, claims and encumbrances in the Collateral sold to the
Buyer pursuant to the Purchase Agreement will be waived and released as of the
date that all conditions in Section 4.2 are fulfilled, unless otherwise waived
in writing by the Secured Creditor.
(b) The Secured Creditor does not consent, and reserves the right to
object to, any sale, lease, or disposition of the Collateral to any person other
than the Buyer or on terms other than the terms substantially set forth in the
Purchase Agreement Documents.
(c) The Buyer, as holder of the Acquired Secured Notes, consents to
the Proposed Sale of the Collateral to the Buyer on the terms substantially set
forth in the Purchase Agreement Documents, subject to the terms and conditions
set forth in this Consent.
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2.2 Consideration. In consideration for the Secured Creditors' consent to
the sale of the Collateral free and clear of its liens, claims and encumbrances
and for the treatment of its secured claim on account of the Secured Debt (the
"Secured Creditor Claim"), subject to the terms and conditions of this Consent,
on or before the date of consummation of the Purchase Agreement the Secured
Creditor will receive: (a) payment of $521,291 in cash (the "Cash
Consideration") from the Assignee; and (b) delivery of 4,476,276 certificated
common shares of Insci Corp. (INSS.OB) (the "Secured Creditor Shares") from the
Assignee.
2.3 Reservation of Rights. Neither this Consent with respect to the
Purchase Agreement or the Purchase Agreement Documents shall void, release,
terminate, subordinate, or disallow the Secured Creditor's or the Buyer's
continuing lien upon and security interest in all of the proceeds of the
Collateral, which secures the Secured Debt or the Acquired Secured Debt, all of
which the Secured Creditor and the Buyer, each, expressly reserves and retains
with respect to their respective secured debts. The Secured Creditor's and the
Buyer's consent to the Purchase Agreement does not waive, release, reduce, or
terminate, the Secured Debt or the Acquired Secured Debt or any lien upon or
security interest in the proceeds of the Collateral, all of which shall continue
in full force and effect notwithstanding the sale of the Collateral.
III. TREATMENT OF SECURED CLAIMS
3.1 Payment and Subordination of Secured Creditor's Claim. Subject to the
conditions for effectiveness set forth below, the Secured Creditor and the
Assignee agree that the Secured Creditor Claim will be treated as follows:
(a) A portion of the Secured Creditor Claim equal in amount to (i) the
attributed value of the Secured Creditor Shares delivered to the Secured
Creditor and (ii) the Cash Consideration will be deemed satisfied and the
Secured Creditor will agree that such portion of the Secured Creditor Claim will
be reduced accordingly; and
(b) The remaining outstanding and unpaid portion of the Secured
Creditor Claim will be subordinated to all allowed claims of unsecured creditors
of the Company. Notwithstanding the foregoing or any other provision of this
Consent, the Secured Creditor retains its lien in cash (exclusive of cash
proceeds of Collateral received in connection with the Purchase Agreement)
except to the extent that $75,000, which is retained by the Assignee, is
required to pay the administrative costs incurred by the Assignee, including
fees and costs of the Assignee and its professionals.
3.2 Waiver of Acquired Secured Claim. Subject to the terms and conditions
of this Consent, the Buyer, as holder of the Acquired Secured Notes, and the
Assignee agree that the claim of the Buyer on account of the Acquired Secured
Debt (the "Acquired Secured Claim") will be waived and released with respect to
all proceeds of the Collateral paid to the Assignee in connection with the sale
of Purchased Assets under the Purchase Agreement Documents. The Buyer further
agrees that it will have no claim, right or title in the proceeds from the sale
of any of the Collateral received by the Assignee, including the proceeds
received in connection with the sale of the Purchased Assets, provided that each
and all of the conditions for effectiveness of this Consent are fulfilled.
Notwithstanding the foregoing, nothing in this Consent shall void,
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release, terminate, subordinate, or disallow the Buyer's continuing lien upon
and security interest in all of the Collateral acquired by the Buyer pursuant to
the Purchase Agreement.
IV. CONDITIONS TO EFFECTIVENESS
4.1 Conditions to Consent to General Assignment. The effectiveness of the
consents to the General Assignment and the provisions in Article I are
conditioned upon, unless waived by the Secured Creditor in writing, that no
preliminary or permanent injunction, stay pending appeal or other order or
decree by any federal or state court which prevents the liquidation of the
claims of the Secured Debtor or the Acquired Secured Debtor (each party agreeing
to use commercially reasonable efforts to have any such injunction, order or
decree lifted) and no statute, rule or regulation shall have been enacted by any
governmental authority which prohibits the liquidation of the Secured Debt and
the Acquired Secured Debt and treatment of the Secured Creditor Claim and the
Acquired Secured Claim.
4.2 Conditions to Consent to Sale and Treatment of Claims. The
effectiveness of the consents to the sale of assets pursuant to the Purchase
Agreement free and clear of the Secured Creditor's liens in the Collateral and
the provisions in Article II and the treatment of secured claims and the
provisions in Article III are subject to the fulfillment of the following
conditions, unless waived by the Secured Creditor in writing:
(a) Before the 151st day after the General Assignment, no preliminary
or permanent injunction, stay pending appeal or other order or decree by any
federal or state court which prevents the liquidation of the claims of the
Secured Debt or the Acquired Secured Debt or the treatment of claims in Article
III has been issued and remains in effect (each party agreeing to use
commercially reasonable efforts to have any such injunction, order or decree
lifted) and no statute, rule or regulation shall have been enacted by any
governmental authority which prohibits the liquidation and treatment of claims;
(b) Receipt of duly executed Purchase Agreement Documents in form and
substance satisfactory to the Secured Creditor;
(c) As of the 151st day after the General Assignment neither:
(i) a voluntary or involuntary petition for relief under the
United States Bankruptcy Code has been filed with respect to the
Company, its assigns or successors; or
(ii) any litigation has been commenced by any of the creditors of
the Company against the Secured Creditor, the Assignee, the Company,
or the Buyer;
(d) The Buyer or the Assignee has delivered the Secured Creditor
Shares to the Secured Creditor promptly upon the consummation of the Purchase
Agreement; and
(e) The Assignee has used its best efforts to transfer to the Secured
Creditor the Cash Consideration pursuant to the wire transfer instructions
attached hereto as Exhibit C, on
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the same day such consideration is received by the Assignee pursuant to the
Purchase Agreement, or in any event, within one business day from receipt of
such funds.
4.3 Waiver of Conditions. Any condition specified in Sections 4.1 and 4.2
may be waived by the Secured Creditor, provided that no such waiver shall be
effective unless it is set forth in a writing executed by the Secured Creditor.
V. MISCELLANEOUS
5.1 Right to Credit Bid. In any sale, lease, or other disposition of the
Collateral by the Assignee, other than the Proposed Sale to the Buyer on terms
substantially as described in the Asset Purchase Documents, the Secured Creditor
reserves its right to credit bid the amount of its Secured Debt, by bidding at
any sale or disposition of the Collateral and offsetting the Secured Debt
against the purchase price of the Collateral, which right to credit bid the
Assignee expressly acknowledge and consent to.
(a) The Assignee agrees that each sale of the Collateral by the
Assignee, including the Proposed Sale to the Buyer, shall be and shall be deemed
to constitute a public disposition of the Collateral in accordance with Section
9610(c)(1) of the California Commercial Code.
(b) The Secured Party's exercise of its right to credit bid for the
Collateral under this Section 5.1 will not be or be deemed to constitute
acceptance of the Collateral in satisfaction of the Secured Debt, under Sections
9620, 9621 or 9622 of the California Commercial Code, or otherwise.
5.2 Redemption of Collateral. Nothing herein shall waive the Assignee's
right to redeem the Collateral upon payment in full of the Secured Debt and the
Acquired Secured Debt
5.3 Notice. Except as otherwise provided herein, any notice, demand,
request, consent, approval, declaration, service of process or other
communication (including the delivery of financial statements) that is required,
contemplated, or permitted under this Consent or with respect to the subject
matter hereof shall be in writing, and shall be deemed to have been validly
served, given, delivered, and received upon the earlier of: (a) the first
business day after transmission by facsimile or hand delivery or deposit with an
overnight express service or overnight mail delivery service; or (b) the third
calendar day after deposit in the United States mail, with proper first class
postage prepaid, and shall be addressed to the party to be notified as follows:
a. If to the Secured Creditor:
SCP PRIVATE EQUITY PARTNERS II, L.P.
000 Xxxxx Xxxx Xxxxx
Xxxxxxxx 000
Xxxxx, XX 00000
Telephone: (000) 000-0000
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Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
b. If to the Assignee:
THE DIABLO MANAGEMENT GROUP
0000 Xxxx Xxxxxx Xxxxx
Xxxxx 000
X.X. Xxx 0000
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
XXXXXX & XXXXXX, P.C.
00000 Xxxxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
c. If to the Company:
WEBWARE CORPORATION
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx
With a copy to:
WINSTON & XXXXXX LLP
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. XxXxxxxxx, Esq.
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d. If to the Buyer:
WCORP, Inc.
Two Westborough Business Park
000 Xxxxxxx Xxxxxxx,
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
with a copy to:
XXXXXXX & XXXXXXXXX
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
5.4 Waiver. The failure of any party to enforce at any time, or for any
period of time, any provision of this Consent shall not be construed to be a
waiver of such provision or of the right of such party to enforce such provision
or each and every other provision of this Consent.
5.5 Applicable Law; Jurisdiction. This Consent shall be governed by and
construed and enforced in accordance with the laws of the state of California,
excluding conflict of law rules and principles. All parties hereby waive
personal service of the summons, complaint and other process issued in any
action or suit and agrees that service of such summons, complaint and other
process may be made by registered or certified mail addressed to such party at
the address as designated in accordance with this Consent.
5.6 Waiver of Jury Trial. Each party to this Consent waives the right to
trial by jury in any action, suit, proceeding, or counterclaim of any kind
arising out of or related to this Consent or the transactions contemplated by
this Consent. Each such party represents and warrants that it has reviewed the
foregoing waivers with its legal counsel and has knowingly and voluntarily
waived its jury trial rights following consultation with legal counsel. In the
event of litigation, this Consent may be filed as a written consent to a trial
by the court.
5.7 Severability. If any provision of this Consent shall be judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
5.8 Entire Agreement. This Consent constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof, and supersedes any and all proposals, offers, and understandings
with respect to such subject matter. Each party
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understands and agrees that this Consent shall not be altered, amended, modified
or otherwise changed in any respect whatsoever except by a writing duly executed
by authorized representatives of each party.
5.9 Interpretation.
(a) Section or paragraph headings used in this Consent are for
reference purposes only and will not be used in the interpretation of this
Consent. In construing or interpreting this Consent, the word "or" shall not be
construed as exclusive, and the word "including" shall not be limiting.
(b) The parties agree that this Consent shall be fairly interpreted in
accordance with its terms without any strict construction in favor of or against
either party and that ambiguities shall not be interpreted against the drafting
party. The parties expressly waive the provisions of Section 1654 of the
California Civil Code and the provisions of any similar statute or common law of
any applicable jurisdiction that create a presumption of interpretation against
a drafter.
5.10 Recitals. The parties hereto confirm the accuracy of the recitals
hereto, which recitals are hereby incorporated herein and deemed to be a
material part of this Consent.
5.11 Binding on Successors. This Consent is intended by the parties to be
binding upon their successors, agents and assigns, including bankruptcy trustees
and estate representatives and any parent, subsidiary and affiliated entity of
each party.
5.12 Survival. All of the agreements, consents, representations, warranties
and obligations of the parties set forth in this Consent shall survive the
execution of this Consent.
5.13 Representation by Counsel. Each party hereto acknowledges and
represents to the other that it has had the advice of attorneys of its own
choosing in connection with the evaluation of the dispute and the negotiation
and execution of this Consent.
5.14 Counterparts. This Consent may be executed in identical counterpart
copies, each of which shall be an original, but all of which shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature
page to this Consent by facsimile transmission shall be effective as delivery of
a manually executed counterpart thereof.
5.15 Expenses. Each party shall be liable for his, her or its own expenses
in connection with the preparation and negotiation of this Consent and all
related documents and notices, including, without limitation, all fees and
expenses for the employment of attorneys, accountants and other professionals.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Consent has been duly executed as of the date
first above written.
SCP PRIVATE EQUITY PARTNERS II, L.P.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
THE DIABLO MANAGEMENT GROUP
Solely, in its Capacity as Assignee for the
Benefit of Creditors of WebWare Corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
WEBWARE CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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WCORP, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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EXHIBIT A
to Secured Party Consent
SCHEDULE OF SECURED CREDITOR PROMISSORY NOTES
(Attached)
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EXHIBIT B
to Secured Party Consent
SCHEDULE OF ACQUIRED SECURED PROMISSORY NOTES
(Attached)
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EXHIBIT C
to Secured Party Consent
WIRE TRANSFER INSTRUCTIONS
ABA # 031 000 053
PNC Bank
Philadelphia, PA
Acct. # 86 0580 5801
SCP Private Equity Partners II, L.P.
Attn: Xxxxxx X. Xxxxx: 000-000-0000
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