a5757825ex10_5.htm


    Exhibit
10.5

    


    


    10%
CONVERTIBLE PROMISSORY NOTE

    


    NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”).  THE SECURITIES ARE RESTRICTED AND MAY NOT BE
OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.

     

    
      
        	
                $1,000,000

              	
                Burlingame,
      California

              


      

    

     

    
      ANTs
software inc.

      


      May
30, 2008

      


      10%
CONVERTIBLE PROMISSORY NOTE

      


      FOR VALUE RECEIVED, ANTs software inc.,
a corporation organized and existing under the laws of the State of Delaware
(the “Company”) promises to pay [ redacted ] or permitted assigns (the
“Holder”), the principal sum of One Million US Dollars ($1,000,000) and to pay
interest on the principal sum outstanding from time to time at the rate of 10%
per annum simple interest, from the date of initial issuance (the “Note Issuance
Date”) and continuing until payment in full of the principal sum has been
made.  The principal amount shall be due and payable on January 31,
2011 (the “Maturity Date”), unless converted pursuant to Section 3
hereof.  Interest payments shall be due and payable quarterly on March
31, June 30, September 30 and December 31, until the principal amount hereof is
paid or converted in full.  If the Maturity Date is not a business day
in the State of California, then such payment shall be made on the next
succeeding business day.  Principal and accrued interest on this Note
is payable at the address of the Holder as designated in writing by the Holder
from time to time.  The Company will pay on the Maturity Date, the
principal and any accrued but unpaid interest due under this Note to the Holder
of this Note addressed to such Holder at the last address appearing on the Note
register.

      


      This Note
is subject to the following additional provisions:

      


      1. Investment Representations
and Transfer.  This Note has been issued subject to investment
representations of the original purchaser hereof and may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended (the
“Act”), and other applicable state and foreign securities laws.  The
Holder shall deliver written notice to the Company of any proposed transfer of
this Note.  In the event of any proposed transfer of this Note, the
Company may require, prior to issuance of a new Note in the name of such other
person, that it receive reasonable transfer documentation including legal
opinions that the transfer and issuance of the Note in such other name does not
and will not cause a violation of the Act or any applicable state or foreign
securities laws.  Prior to due presentment for transfer of this Note,
the Company and any agent of the Company may treat the person in whose name this
Note is duly registered on the Company’s Note register as the owner hereof for
the purpose of receiving payment as herein provided and for all other purposes,
whether or not this Note be overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary.  Capitalized terms used
and not otherwise defined herein shall have the meanings set forth for such
terms in the Subscription Agreement.  This Note shall be pari pasu with the
convertible promissory notes of the J Units issued by the Company.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    2.           Conversion
Price.  The Holder of this note may, at his or her option,
prior to repayment, convert the principal amount of this Note, in whole or in
part, hereof into shares of restricted Common Stock (the “Stock”) of the Company
(“Conversion Shares”).  The conversion price for each share of Common
Stock (“Conversion Price”) shall be equal to 80/100 Dollar
($0.80).  The Conversion Price shall be proportionately adjusted for
any stock splits, reverse stock splits or combinations, and for dividends paid
in the form of additional shares of Common Stock, each with a record date
subsequent to the Note Issuance Date.

     

    3.           Prepayment.  In
the event that the closing per share bid price for shares of the Company’s
common stock equals or exceeds $4.00 for ten (10) consecutive trading days, then
the Company may elect to prepay and redeem this Note and any accrued but unpaid
interest. If the Company does elect to redeem this Note, the Company can do so
without penalty, upon not less than twenty (20) trading days advance notice (the
“Notice Period”) of such intention to prepay. The Holder can convert this Note,
pursuant to the provisions of Section 5 of the Note, at any time before or
during the Notice Period.

     

    4.           Corporate
Event.  In the event of the consummation of a merger,
consolidation, reorganization or similar transaction in which the shareholders
of the Company before such transaction (and their Affiliates) own less than 50%
of the voting stock or voting power of the surviving entity immediately after
such transaction; or any “person,” as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than a group consisting of the Company’s
shareholders as of the Note Issuance Date, and their Affiliates) becomes the
“beneficial owner” (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more of the total
voting power represented by the Company’s then outstanding voting securities; or
the sale of more than 50% of the issued and outstanding shares of common stock
of the Company (each a “Corporate Event”), then this Note shall be convertible
in accordance with Section 2 hereof at the election of the Holder until the
later of (i) that date which is ten (10) trading days prior to the close of such
Corporate Event, and (ii) ten trading days following Holder’s receipt of notice
of such Corporate Event.

     

    5.           Mechanics of
Conversion.  This Note may be converted into shares of Common
Stock at the Conversion Price set forth in Section 2 at the election of the
Holder.  Conversion shall be effectuated by surrendering this Note to
the Company together with the form of conversion notice attached hereto as
Exhibit A (the “Notice of Conversion”), executed by the Holder of this Note
evidencing such Holder’s intention to convert this Note.  No fraction
of a share or scrip representing a fraction of a share will be issued on
conversion, but the number of shares issuable shall be rounded to the nearest
whole share, without compensation to the Holder or the Company for such
fraction.  Certificates representing the shares of Common Stock
issuable upon conversion will be delivered to the Holder within a reasonable
period of time following the date the Notice of Conversion is delivered to the
Company.  The Certificates shall bear any and all legends required to
be placed thereon by applicable state and federal securities
laws.  Delivery of shares upon conversion shall be made to the address
specified by the Holder in the Notice of Conversion.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.           Investment Purposes
Only.  The Holder of the Note, by acceptance hereof, agrees
that this Note is being acquired for investment purposes only and that such
Holder will not offer, sell or otherwise dispose of this Note or the Shares of
Common Stock issuable upon conversion hereof except under circumstances which
will not result in a violation of the Act or any applicable state so-called blue
sky or foreign laws or similar laws relating to the sale of
securities.

     

    7.           Governing Law and
Venue.  This Note shall be governed by and construed in
accordance with the laws of the State of California.  Each of the
parties consents to the jurisdiction of the state or federal courts having
subject matter jurisdiction located in the county of San Mateo in the state of
California in connection with any dispute arising under or concerning this Note
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions.

     

    8.           Event of
Default.  Each of the following events shall constitute an
Event of Default hereunder:


     

    (a)           If
the Company defaults in the payment of principal or interest on this Note,
whether upon the scheduled due date therefore or upon maturity as set forth
herein and the same shall continue for a period of ten days after the Holder
gives notice thereof; or

     

    (b)           If
the Company shall (i) file a petition seeking relief for itself under Title 11
of the United States Code, as now constituted or hereafter amended, or file an
answer consenting to, admitting the material allegations of, or otherwise not
controvert­ing, or shall fail timely to controvert, a petition filed against
it seeking relief under Title 11 of the United States Code, as now constituted
or hereafter amended, or (ii) file such a petition or such an answer with
respect to relief under the provisions of any other now existing or future
applicable bankruptcy, insolvency, or other similar law of the United States of
America, or any state thereof, or of any other country or jurisdiction providing
for the reorganization, winding-up or liquidation of corporations or an
arrangement, composition, extension or adjustment with its creditors;
or

     

    (c)           If
an order for relief shall be entered against the Company under Title 11 of the
United States Code, as now con­stituted or hereafter amended, which order is
not stayed within 60 days thereafter; or upon the entry of an order, judgment or
decree by operation of law, or by a court having jurisdiction in the premises
which is not stayed, adjudging the Company a bankrupt or insolvent under the
provisions of any other now existing or future applicable bankruptcy, insolvency
or other similar law of the United States of America or any state
thereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    9.           Effect of
Default.  In the event that an Event of Default has occurred
and is continuing then the Holder may declare this Note immediately due and
payable.

     

    10.           No Shareholder
Status.  Nothing contained in this Note shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent or receive notice as a shareholder in respect of any meeting of
shareholders or any rights whatsoever as a shareholder of the Company, unless
and to the extent converted in accordance with the terms hereof.

     

    11.           Notices.  Except
as specifically provided herein, any notice required or permitted under this
Note shall be given in writing and shall be deemed effectively given upon
personal delivery to the party to be notified.

     

    12.           Maximum Rate of
Interest.  In no event shall charges constituting interest
payable by Company to Holder exceed the maximum amount or rate permitted under
any applicable law or regulation, and if any part or provision of this Note is
in contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.

    


    IN WITNESS WHEREOF, the
Company has caused this instrument to be duly executed by an officer thereunto
duly authorized.

    


    
      
        	
                 

              	 	
                

                  ANTS
      SOFTWARE
      INC.,

                

              
	
              	 	

                a
      Delaware corporation

              
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	
                By:

              	 	
                __________/s/_____________________________

              
	
              	 	

                Kenneth
      Ruotolo, Secretary and

              
	
              	 	

                Chief
      Financial Officer

              
	 
      	 	 
      
	
                Address:

              	 	
                700
      Airport Boulevard, Suite 300

              
	
              	 	

                Burlingame,
      CA 94010

              


      

    

    
       

      Accepted
and Agreed:

       

      _________/s/___________________

    

    [ redacted ]

    

      Address:         
   _______________________________________

       

      _______________________________________

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
A

    


    NOTICE
OF CONVERSION

     

    (To be
Executed by the Registered Holder)

     

    The
undersigned hereby irrevocably elects to convert the principal amount of the
above Note into Shares of Common Stock of ANTs software inc. (the
“Company”) according to the conditions hereof, as of the date written
below.

     

     

    
      
        	 	
                Holder:

              	
                ___________________________

              
	 	 
      	 
      
	 	
                Signature:

              	
                ___________________________

              
	 	 
      	 
      
	 	
                Title
      if applicable:

              	
                ___________________________

              
	 	 
      	 
      
	 	
                Date:

              	
                ___________________________