EXHIBIT 10.1
 
EXCHANGE AGREEMENT
 
THIS EXCHANGE AGREEMENT (the “Agreement”), dated as of April 28, 2011, is
entered into between ANTs software, inc., a Delaware corporation having an
address at 71 Stevenson Street, Suite 400, San Francisco, CA 94105 (the
“Company”) and Manchester Securities Corp., a New York corporation having an
address at 712 Fifth Avenue, New York, NY 10019 (“Manchester”).
 
W I T N E S S E T H:
 
WHEREAS, the Company issued to Robert T. Healey, an individual (the “Seller”),
that certain 10% Convertible Promissory Note (the “RH Note”) on or about May 30,
2008, in the original principal amount of $1,000,000;
 
WHEREAS, on February 7, 2011, pursuant to a Securities Purchase Agreement,
Manchester purchased the RH Note from the Seller (the “Securities Purchase
Agreement”);
 
WHEREAS, contemporaneously with such purchase, the Company, Manchester, and
Gemini Master Fund, Ltd., entered into an Exchange Agreement by which Manchester
exchanged the RH Note for securities consisting of (i) a convertible note dated
and issued as of February 7, 2011 by the Company to Manchester in the original
principal amount of $1,200,000 (the “RH Exchange Note”) (ii) a warrant, dated
February 7, 2011, issued to Manchester (the “Warrant”) to purchase 3,333,333
shares of the Company’s Common Stock, $.0001 par value per share (the “Common
Stock”) on the terms set forth in the Warrant; and
 
WHEREAS, pursuant to this Agreement, the Company and Manchester desire to cancel
the RH Exchange Note and have a new note issued to Manchester with an original
principal amount of $794,857.98 (the “Exchange Note”) in exchange for the RH
Exchange Note and claims for certain unpaid amounts thereunder.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
 
1.   Exchange of Notes.
 
a.   Issuance of Exchange Notes.  Upon the following terms and conditions, in
exchange for the surrender and cancellation of the RH Exchange Note, the Company
shall issue to Manchester, and Manchester shall acquire from the Company, the
Exchange Note dated and issued as of April 28, 2011, in the aggregate original
principal amount equal to $794,857.98.  The Exchange Note is being issued in
substitution for and not in satisfaction of the RH Exchange Note, provided,
however, Manchester acknowledges and agrees that upon the issuance and
acceptance of the original Exchange Note, the RH Exchange Note will be deemed
cancelled and will be promptly surrendered to the Company.
 
b.   Promptly following execution hereof or as soon thereafter as is reasonably
possible, the Company shall deliver the original Exchange Note to Manchester’s
counsel and Manchester shall cause the RH Exchange Note (or an affidavit of lost
note in form and substance acceptable to the Company) to be delivered to the
Company’s counsel.
 
 
 

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c.           The date upon which the Exchange Note is to be released to
Manchester shall be the “Closing Date”.
 
d.          The Exchange Note shall be guaranteed by Inventa Technologies, Inc.,
a wholly-owned subsidiary of the Company.  The guaranty in the form of Exhibit A
attached hereto shall be executed by such guarantor and delivered at Closing
(the “Guaranty”).
 
2.   Representations and Warranties.  The Company hereby makes to the Manchester
the following representations and warranties:
 
a.   Authorization; Enforcement.  The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder and
thereunder.  The execution and delivery of this Agreement and the Exchange Note
by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the part
of the Company and no further action is required by the Company, its board of
directors or its stockholders in connection therewith.  This Agreement and the
Exchange Note have been duly executed by the Company and, when delivered in
accordance with the terms hereof will constitute the valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
 
b.   No Conflicts.  The execution, delivery and performance of this Agreement
and the Exchange Note by the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not: (i) conflict with or
violate any provision of the Company’s or any of its subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of
any lien or encumbrance upon any of the properties or assets of the Company or
any subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility, debt or other material instrument
(evidencing a Company or subsidiary debt or otherwise) or other material
understanding to which the Company or any subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a material adverse effect.
 
 
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c.   Filings, Consents and Approvals.  Other than applicable anti-dilution
notices to be delivered to existing investors in the Company on or prior to the
due date therefor, the Company is not required to obtain any approval, consent,
waiver, authorization or order of, give any notice to, or make any filing,
qualification or registration with, any court or other federal, state, local,
foreign or other governmental authority or other person or entity in connection
with the execution, delivery and performance by the Company of this Agreement or
the Exchange Note.  No further approval or authorization of any stockholder, the
Board of Directors or others is required for the exchange for and the issuance
of the Exchange Note or any Underlying Shares (as defined in the Exchange Note).
 
d.   Issuance and Reservation of Securities.  The Exchange Note is duly
authorized.  Any Underlying Shares, when issued in accordance with the terms of
Exchange Note, will be duly and validly issued, fully paid and nonassessable,
free and clear of all liens, freely tradable and without any legends
thereon.  The Company has reserved, and shall at all times hereafter reserve,
from its duly authorized capital stock for issuance upon conversion and exercise
pursuant to the Exchange Note, at least such amount of shares of Common Stock as
is equal to the amount of Underlying Shares into which the Exchange Note are
fully convertible and exercisable, respectively (without regard to any
limitations on ownership or conversion or exercise set forth therein).
 
e.   Private Placement.  No registration under the Securities Act of 1933, as
amended (the “Securities Act”), is required for the issuance of the Exchange
Note or any Underlying Shares in accordance with the terms hereof and thereof.
 
f.   No Inside Information.  Neither the Company nor any person acting on its
behalf has provided Manchester or its counsel with any information that
constitutes or might constitute material, non-public information concerning the
Company.
 
g.   Equal Consideration.  Except as otherwise set forth herein, no
consideration has been offered or paid to any person to amend or consent to a
waiver, modification, forbearance, exchange or otherwise of any provision of the
RH Exchange Note.
 
h.   Survival.  All of the Company’s warranties and representations contained in
this Agreement shall survive the execution, delivery and acceptance of this
Agreement by the parties hereto.
 
i.   Holding Period for Exchange Note.  Pursuant to Rule 144 promulgated under
the Securities Act, the holding period of the Exchange Note and the Underlying
Shares tack back to May 30, 2008 (the original issue date of the RH Note).  The
Company agrees not to take a position contrary to this paragraph.  The Company
agrees to take all actions, including, without limitation, the issuance by its
legal counsel of any necessary legal opinions, necessary to issue the Underlying
Shares without restriction and not containing any restrictive legend without the
need for any action by Manchester.  The Company is not currently, and has never
been, an issuer of the type described in Rule 144(i).  The Exchange Note is
being issued in substitution and exchange for and not in satisfaction of the RH
Exchange Note.  The Exchange Note shall not constitute a novation or
satisfaction and accord of the RH Exchange Note.  Without limiting any of the
terms, conditions or covenants contained in this Agreement or other documents,
if at any time it is determined that any Underlying Shares are not freely
tradable without restriction or limitation pursuant to Rule 144, then the
Company shall promptly register the resale of all Underlying Shares under the
Securities Act by filing a registration statement with the SEC as soon as
practicable (but in no event later than 30 days) and causing such registration
statement to be declared effective as soon as practicable (but in no event later
than 90 days).
 
 
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j.   Balances.  As of the date hereof, the balance outstanding under the RH
Exchange Note, including principal and interest and other amounts due, is
$794,857.98 and no further amounts are due under the RH Exchange Note.
 
3.   Employees and Affiliates.
 
a.   Manchester represents and warrants that (i) it is not, as of the date of
this representation, and has not been for the last one hundred twenty (120)
days, an employee, officer, director or direct or indirect beneficial owner of
more than ten percent (10%) of any class of equity security of the Company, or
of any entity, directly or indirectly, controlling, controlled by or under
common control with the Company, or otherwise been an “affiliate” as that term
is used in Rule 144 promulgated under the Securities Act, (ii) no consideration
has been offered or paid by Manchester to any person to amend or consent to a
waiver, modification, forbearance, exchange or otherwise of any provision of the
RH Exchange Note, (iii) Manchester has not, directly or indirectly, controlled,
been controlled by or been under common control with the Company.  For purposes
of this paragraph, “Manchester” includes any person or entity that would be
included with Manchester for purposes of Rule 144(a)(2).
 
b.   The Company represents and warrants to Manchester that (i) Manchester is
not, as of the date of this representation, and has not been for the last one
hundred twenty (120) days, an employee, officer, director or direct beneficial
owner of more than ten percent (10%) of any class of equity security of the
Company, or otherwise been an “affiliate” as that term is used in Rule 144
promulgated under the Securities Act, (ii) no consideration has been offered or
paid by Manchester to amend or consent to a waiver, modification, forbearance,
exchange or otherwise of any provision of the RH Exchange Note, (iii) Manchester
has not, directly or indirectly, controlled, been controlled by or been under
common control with the Company; and the RH Note has been outstanding for in
excess of one year and the RH Note has not been amended since the issuance date
thereof.
 
4.   Legal Opinion.  The Company hereby agrees to cause its legal counsel to
issue a legal opinion to Manchester and the Company’s Transfer Agent regarding
this Agreement and the transactions contemplated hereby, that all shares
issuable upon conversion of the Exchange Note (or in payment of interest
thereunder may be sold pursuant to Rule 144 without volume restrictions or
manner of sale limitations and that certificates representing any such shares
may be issued without a restrictive legend as required pursuant to the Agreement
and the Exchange Note, as the case may be.  Delivery of such legal opinion shall
be a condition to the consummation of the transactions contemplated hereby.  The
Company acknowledges and agrees that, other than delivery of a conversion notice
in the form set forth as an exhibit to the Exchange Note, nothing further is
required for Manchester to obtain freely tradable and unlegended shares issuable
upon conversion of the Exchange Note (or in payment of interest thereunder).
 
 
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5.   Public Information.  So long as any Manchester owns the Exchange Note
and/or Underlying Shares, the Company shall timely file (or timely obtain
extensions in respect thereof and file within the applicable grace period) all
reports and definitive proxy or information statements required to be filed by
the Company under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and shall not terminate its status as an issuer required to file reports
under the Exchange Act (even if the Exchange Act or the rules and regulations
promulgated thereunder would otherwise permit such termination).
 
6.   Conversion/Exercise Procedures.  The form of Conversion Notice included in
the Exchange Note sets forth the totality of the procedures required of
Manchester in order to convert the Exchange Note.  No additional legal opinion
or other information or instructions shall be required of Manchester to convert
the Exchange Note.  The Company shall honor all conversions of the Exchange Note
and shall deliver Underlying Shares in accordance with the terms, conditions and
time periods set forth in the Exchange Note.
 
7.   Miscellaneous.
 
a.   The Company must execute and deliver this Agreement to Manchester prior to
5:00PM New York City time on Friday, April 29, 2011 (the “Cut Off Time”), and
announce the transactions contemplated hereby prior to 8:30AM New York City time
on Friday, April 29, 2011 (the “Announcement Time”), by issuing a Current Report
on Form 8-K disclosing the material terms of the transactions contemplated
hereby and attaching this Agreement and all other related agreements thereto,
including without limitation the Exchange Note.  To the extent that the Company
has not executed and delivered this Agreement to Manchester by the Cut Off Time,
then Manchester’s offer to enter into the transactions contemplated hereby shall
be automatically withdrawn.
 
b.   The Company shall not at any time furnish any material non-public
information to Manchester without Manchester’s prior written consent.  Following
the Announcement Time (whether or not the Company files the required Form 8-K)
Manchester shall not be deemed to have any obligation of confidentiality or
other duty with respect to (i) any non-public information of the Company
disclosed to Manchester in breach of the preceding sentence, (ii) the fact that
Manchester has exercised any of its rights and/or remedies hereunder or under
the Exchange Note or (iii) any information obtained by Manchester as a result of
exercising any of its rights and/or remedies under the hereunder or under the
Exchange Note.
 
c.   This Agreement may be executed in two or more counterparts and by facsimile
signature, delivery of PDF images of executed signature pages by email or
otherwise, and each of such counterparts shall be deemed an original and all of
such counterparts together shall constitute one and the same agreement.
 
d.   Each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.  The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Exchange Note.
 
 
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e.   If any provision of this Agreement is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be valid and
enforceable, and the invalidity or unenforceability of such provision shall not
affect the validity of the remaining provisions of this Agreement so long as
this Agreement as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties.  The parties will endeavor in
good faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).
 
f.   This Agreement shall be governed by and interpreted in accordance with laws
of the State of New York, excluding its choice of law rules.  The parties hereto
hereby waive the right to a jury trial in any litigation resulting from or
related to this Agreement.  The parties hereto consent to exclusive jurisdiction
and venue in the federal courts sitting in the southern district of New York,
unless no federal subject matter jurisdiction exists, in which case the parties
hereto consent to exclusive jurisdiction and venue in the New York state courts
in the borough of Manhattan, New York.  Each party waives all defenses of lack
of personal jurisdiction and forum non conveniens.  Process may be served on any
party hereto in the manner authorized by applicable law or court rule.
 
g.   Manchester and the Company each hereby agrees and provides further
assurances that it will, in the future, execute and deliver any and all further
agreements, certificates, instruments and documents and do and perform or cause
to be done and performed, all acts and things as may be necessary or appropriate
to carry out the intent and accomplish the purposes of this Agreement.
 
h.   Manchester agrees that so long as Manchester holds the Exchange Note,
Manchester shall not engage in any Short Sale transaction which would cause
Manchester to have a Net Short Position, where (1) “Short Sale” shall have the
meaning set forth in Rule 200 of Regulation SHO promulgated under the Securities
Act, and (2) “Net Short Position” shall mean having a contractual obligation to
deliver a greater number of shares of Common Stock than such purchaser
beneficially owns long, which includes without limitation shares of Common Stock
held long and shares of Common Stock issuable upon exercise, conversion or
exchange of Company securities held by such purchaser (whether or not then
convertible, exercisable or exchangeable, and including the Exchange Note).
 

[Signature Page Follows]
 
 
 
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IN WITNESS WHEREOF, this Agreement is executed as of the date first set forth
above.
 

 
ANTS SOFTWARE, INC.
 
 
By:
/s/ David A.  Buckel   
Name:
David A.  Buckel  
Title:
CFO / Corporate Secretary  

 

 
MANCHESTER SECURITIES CORP.
 
 
By:
/s/ Elliot Greenberg  
Name:
Elliot Greenberg
 
Title:
Vice President
 

 
 
 
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Exhibit A
 
Form of Guaranty
 
See attached.
 
 
 
 
 

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