Document:

a6605307ex10-1.htm

Exhibit 10.1

 

EXCHANGE AGREEMENT

 

THIS EXCHANGE AGREEMENT (the “Agreement”), dated as of February 7, 2011, is entered into by and among ANTs software, inc., a Delaware corporation having an address at 71 Stevenson Street, Suite 400, San Francisco, CA 94105 (the “Company”), and Gemini Master Fund, Ltd., having an address at c/o Gemini Strategies, LLC, 135 Liverpool Drive, Suite C, Cardiff, CA 92007 (“Gemini”), and Manchester Securities Corp., having an address at 712 Fifth Avenue, New York, NY 10019 (“Manchester”, and collectively with Gemini, the “Holders”).

 

W I T N E S S E T H:

 

WHEREAS, the Company issued to William J. Healy, an individual (“WH”), that certain 10% Convertible Promissory Note (“WH Note”) on or about May 30, 2008 in the original principal amount of $1,000,000; and

 

WHEREAS, the Company issued to Robert T. Healey, an individual (“RH”, and together with WH, the “Sellers” and each of the Sellers individually a “Seller”), that certain 10% Convertible Promissory Note (“RH Note”, and together with the WH Note, the “Notes”) on or about May 30, 2008 in the original principal amount of $1,000,000; and

 

WHEREAS, contemporaneously herewith the Sellers and Holders are entering into those certain Securities Purchase Agreements pursuant to which Gemini is purchasing the WH Note and Manchester is purchasing the RH Note (“Securities Purchase Agreements”); and

 

WHEREAS, contemporaneously with such purchase of the Notes by such Holders, and as a condition to such purchase, the Company and the Holders desire to exchange the Notes for securities consisting of (i) new convertible notes in the form of Exhibit A attached hereto (“Exchange Notes”), and (ii) the Warrants, as herein defined, all on the terms set forth below;

 

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 and Warrants.  Upon the following terms and conditions, in exchange for the surrender and cancellation of the Notes, the Company shall issue to each Holder, and each Holder shall acquire from the Company (i) an Exchange Note dated and issued as of February 7, 2011 in the aggregate original principal amount equal to 120% of the principal amount of the Note surrendered by such Holder in exchange for the Exchange Note, and (ii) a warrant to purchase such number of shares of Common Stock (as defined in the Exchange Notes) of the Company as is equal to such principal amount of the Note surrendered by such Holder divided by 0.30, in the form of Exhibit B attached hereto (each a “Warrant” and collectively the “Warrants”).  The Exchange Notes and Warrants are being issued in substitution for and not in satisfaction of the Notes, provided, however, the Holders acknowledge and agree that upon the issuance and acceptance of the original Exchange Notes and Warrants issued pursuant to this Section, the original Notes will be deemed cancelled and will be promptly surrendered to the Company.

 

  

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b.      Promptly following execution hereof or as soon thereafter as is reasonably possible, the Company shall deliver the original Exchange Notes and Warrants to Gemini’s counsel, and the Holders shall cause the original Notes (or an affidavit of lost note in form and substance acceptable to the Company) to be delivered to Gemini’s counsel.  The execution and consummation of the Securities Purchase Agreements by the Holders and the Sellers shall be a condition precedent to the consummation of the transactions contemplated hereby, provided that the transactions contemplated hereunder and under the Securities Purchase Agreements shall occur simultaneously, such that Gemini’s counsel shall simultaneously release from escrow (1) the original Exchange Notes and Warrants to the Holders, (2) the surrendered Notes to the Company, and (3) the purchase price for the Notes to the Sellers.

 

c.      The date upon which the Exchange Notes and Warrants are released to the Holders shall be the “Closing Date”.

 

d.      The Exchange Notes shall be guaranteed by Inventa Technologies, Inc., a wholly-owned subsidiary of the Company.  The guaranty in the form of Exhibit C attached hereto shall be executed by such guarantor and delivered at Closing (“Guaranty”).

e.      Prior to the second Business Day following the Closing Date, the Company shall pay to the Sellers any and all accrued but unpaid interest due under the Notes through the Closing Date.

2.        Representations and Warranties. The Company hereby makes to the Holders 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 Notes and Warrants 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 Notes and Warrants 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.

 

  

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b.       No Conflicts.  The execution, delivery and performance of this Agreement and the Exchange Notes and Warrants 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.

 

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 Notes or Warrants.  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 Notes and Warrants or any shares of Common Stock issuable upon the conversion, exercise or exchange of, in payment of interest on, or otherwise pursuant to the Exchange Notes or Warrants (collectively, “Underlying Shares”).

d.      Issuance and Reservation of Securities.  The Exchange Notes, Warrants and Underlying Shares are duly authorized.  Any Underlying Shares, when issued in accordance with the terms of Exchange Notes and Warrants, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens, freely tradable and without any legends thereon (except that Underlying Shares issued pursuant to a cash exercise of the Warrants shall not be freely tradable upon issuance and shall be subject to restrictive 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 Notes and Warrants, at least such amount of shares of Common Stock as is equal to the amount of Underlying Shares into which the Exchange Notes and Warrants 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 is required for the issuance of the Exchange Notes, Warrants 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 any Holder 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 Notes.

 

  

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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 Notes and Warrants.  Pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (“Securities Act”), the holding period of the Exchange Notes, Warrants and the Underlying Shares (except Underlying Shares issued pursuant to a cash exercise of the Warrants) tack back to May 30, 2008 (the original issue date of the Notes).  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 the Holder (except Underlying Shares issued pursuant to a cash exercise of the Warrants).  The Company is not currently, and has never been, an issuer of the type described in Rule 144(i).  The Exchange Notes and Warrants are being issued in substitution and exchange for and not in satisfaction of the Notes.  The Exchange Notes shall not constitute a novation or satisfaction and accord of any of the Notes.  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).

 

j.      Balances.  As of the date hereof, the balance outstanding under the Notes, including principal and interest, are as follows, and no further amounts are due under the Notes:

 

	
Note

	
Principal

	
Interest

	
Balance

	 
	 	 	 	 	 
	
WH Note

	
$1,000,000

	
$0

	
$1,000,000

	 
	
RH Note

	
$1,000,000

	
$0

	
$1,000,000

	 
	  	  	  	  	 
	
Total

	
$2,000,000

	
$0

	
$2,000,000

	 

3.      Employees and Affiliates.

 

a.      Each Holder, severally and not jointly (and each Holder makes this representation as to itself only), represents and warrants that (i) such Holder 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 such Holder to any person to amend or consent to a waiver, modification, forbearance, exchange or otherwise of any provision of the Notes (other than the purchase of the Notes pursuant to the Securities Purchase Agreements), (iii) such Holder has not, directly or indirectly, controlled, been controlled by or been under common control with the Company, and (iv) such Holder has on or about the date hereof acquired a portion of the Notes without any restriction or limitation whatsoever and without any requirement to have such transaction registered under the Securities Act based on the representations contained in the Securities Purchase Agreements.  For purposes of this paragraph, “Holder” includes any person or entity that would be included with the Holder for purposes of Rule 144(a)(2).

 

  

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b.      The Company represents and warrants to each Holder that (i) such Holder 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 such Holder to amend or consent to a waiver, modification, forbearance, exchange or otherwise of any provision of the Notes, (iii) such Holder has not, directly or indirectly, controlled, been controlled by or been under common control with the Company, and (iv) the Notes have been outstanding for in excess of one year and the Notes have 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 the Holders and the Company’s Transfer Agent regarding this Agreement and the transactions contemplated hereby, in form and substance reasonably acceptable to the Holders, including an opinion that all shares issuable upon conversion of the Exchange Notes (or in payment of interest thereunder) or upon a cashless exercise of the Warrants 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 Agreement, the Exchange Notes and the Warrants, 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 Notes, nothing further is required for a Holder to obtain freely tradable and unlegended shares issuable upon conversion of the Exchange Notes (or in payment of interest thereunder) or upon a cashless exercise of the Warrants.

 

5.      Transfer Consent and Documentation.  The Company hereby consents to the transfer of the Notes from the Sellers to the Holders as contemplated in the Securities Purchase Agreements, an executed copy of which has been furnished to the Company.  The Company hereby waives any requirement for any legal opinion in connection with such transfer, and represents and warrants that no further consent of or action by any other person or entity is required in connection with such transfer.  The Company further represents, warrants and agrees that, other than the aforementioned delivery of a PDF copy of the fully executed Securities Purchase Agreements, no further documentation or action is necessary or required in order for the Company to effectuate the transfer of the Notes on its books and records and the issuance of the Exchange Notes and Warrants as contemplated hereunder in exchange for such Notes.  The Company also represents, warrants and agrees that no endorsement of any principal, interest or other payments on any of the Notes is required in connection with the transfers contemplated by the Securities Purchase Agreements.

 

  

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6.      Public Information.  So long as any Holder owns any Exchange Notes, Warrants 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 (“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).

7.      Conversion/Exercise Procedures.  The form of Conversion Notice included in the Exchange Notes sets forth the totality of the procedures required of a Holder in order to convert any such Exchange Notes.  The form of Exercise Notice included in the Warrants sets forth the totality of the procedures required of a Holder in order to exercise any such Warrants.  No additional legal opinion or other information or instructions shall be required of a Holder to convert such Exchange Notes or exercise such Warrants.  The Company shall honor all conversions of any Exchange Notes and exercises of any Warrants and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Exchange Notes and Warrants.

	
  

	
8.

	
Miscellaneous.

a.      If the transactions contemplated hereby are material to the Company or otherwise constitute material non-public information concerning the Company, then the Company shall, prior to 8:30AM on the trading day following the date hereof, issue 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 Notes and Warrants. The Company shall not at any time furnish any material non-public information to any Holder without such Holder’s prior written consent.

b.       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.

c.      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 Notes and Warrants.

d.       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).

 

  

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e.       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.

f.      Each Holder and the Company 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.

g.      The parties acknowledge and agree that the actions and obligations of each Holder hereunder are several and not joint with the actions and obligations of any other Holder and that no Holder shall be responsible in any way for the representations, warranties, agreements, acts or omissions, or the performance or non-performance of the obligations, of any other Holder hereunder.  Any and all rights granted to the Holders hereunder, at law or in equity shall be enforceable by each such Holder independently, and it shall not be necessary (but may be permissible) for any other Holder to be joined as an additional party in any action for such purpose.

h.      The parties acknowledge and agree that (i) the Holders are not are agents, affiliates or partners of each other, (ii) the Holders are not, under any circumstances, agreeing to act jointly, in concert or as a group with respect to the Notes, Exchange Notes, Warrants or any Underlying Shares, (iii) nothing contained in any document, and no action taken by any Holder pursuant thereto, constitutes or shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting or agreeing to act jointly, in concert or as a group with respect to the Notes, Exchange Notes, Warrants or any Underlying Shares, any transactions, or any of their actions or obligations under any documents (including without limitation the decision to acquire, dispose of or vote any securities), and (iv) the Company shall not assert any claim inconsistent with the foregoing.

i.      The Company acknowledges and agrees, and each Holder represents and agrees, that (i) such Holder has independently participated in the negotiation hereof with the advice of its own counsel and advisors, (ii) no other Holder has acted or will be acting as such Holder’s agent in connection with its acquisition, disposition or voting of any securities or monitoring its investment therein, (iii) such Holder’s decision to purchase and exchange the Notes has been made by such Holder independently of any other Holder and independently of any information, materials, statements or opinions regarding the Company which may have been made or given by any other Holder, and (iv) no Holder shall have any liability to any other Holder relating to or arising from any such information, materials, statements or opinions.  The Company represents and acknowledges that (A) for reasons of convenience of the Company only and not because it was required or requested to do so by any Holder, (1) each Holder and its counsel may have communicated and may continue to communicate with the Company through a lead counsel who represents one or more of the Holders independently, and (2) the Company has elected to provide all Holders with the same terms hereunder, and (B) such procedures with respect to this Agreement shall in no way create a presumption that the Holders are in any way acting jointly, in concert or as a group with respect to this Agreement or the Exchange Notes or Warrants or the transactions contemplated hereby.

 

  

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j.      Each Holder agrees that so long as such Holder holds any Exchange Notes, such Holder shall not engage in any Short Sale transaction which would cause such Holder 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 Exchange Notes and Warrants).

***********************

 

 

 

 

  

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IN WITNESS WHEREOF, this Agreement is executed as of the date first set forth above.

 

	
COMPANY:

	  	  
	
ANTS SOFTWARE, INC.

	  	  
	  	  
	
By:

	
/s/ David A. Buckel                    

	
Name:

	
David A. Buckel

	
Title:

	
CFO / Corporate Secretary

	  	  
	  	  
	
HOLDERS:

	  	  
	
GEMINI MASTER FUND, LTD.

	
By: GEMINI STRATEGIES, LLC, as investment manager

	  	  
	
By:

	
/s/ Steven Winters                     

	
Name:

	
Steven Winters

	
Title:

	
Managing Member

	  	  
	
MANCHESTER SECURITIES CORP.

	  	  
	  	  
	
By:

	
/s/ Elliot Greenberg                    

	
Name:

	
Elliot Greenberg

	
Title:

	
Vice President

9a6605307ex10-2.htm

Exhibit 10.2

 

GUARANTY

 

GUARANTY, dated as of February 7, 2011, made by Inventa Technologies, Inc. (the “Guarantor”), in favor of each of the Holders (as defined below).

 

W I T N E S S E T H:

 

Whereas, pursuant to that certain Exchange Agreement (the “Exchange Agreement”) dated on or about the date hereof by and among ANTS SOFTWARE, INC., a Delaware corporation (the “Company”), and the Holders named therein (the “Holders”), the Company issued to the Holders the Company’s Convertible Notes Due January 31, 2013 (the “Notes”); and

 

Whereas, the Guarantor is a wholly-owned subsidiary of the Company; and

 

Whereas, as a condition precedent to the Holders’ exchange for the Notes and in order to induce the Holders to exchange for the Notes, the Company agreed that the Guarantor would guaranty the obligations under the Notes in accordance with the terms set forth in this Guaranty and the Exchange Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the Holders to make and maintain the loans evidenced by the Notes, Guarantor hereby agrees with the Holders as follows:

 

SECTION 1.DEFINED TERMS

 

1.1                 Definitions

 

(a)      Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Notes or Exchange Agreement.

 

(b)      The following terms shall have the following meanings:

 

“Guaranty” means this Guaranty, as the same may be amended, supplemented or otherwise modified from time to time.

 

“Holders” mean all of the Holders (as identified in each Note) of the Notes.

 

“Obligations” mean the collective reference to the unpaid principal of and default interest on the Notes thereunder and all other obligations and liabilities of the Company to the Holders (including, without limitation, default interest accruing at the then applicable rate provided in the Notes after the maturity of the Notes and interest accruing at the then applicable rate after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company, if a claim for post-filing or post-petition interest is allowed in such proceeding, and including, without limitation, the conversion of Notes into Common Stock), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Exchange Agreement, the Notes, this Guaranty, or the other agreements, or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, fees, indemnities, costs, expenses or otherwise (including, without limitation, all reasonable fees and disbursements of counsel to the Holders that are required to be paid by the Company or the Guarantor pursuant to the terms of any of the foregoing agreements).

 

  

  

  

 

“Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.

 

1.2                 Other Definitional Provisions.

 

The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty, and Section references are to this Guaranty unless otherwise specified.  The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

SECTION 2.GUARANTY

 

2.1                 Guaranty.  The Guarantor hereby absolutely, unconditionally and irrevocably guarantees to the Holders and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Company when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.  For clarification, such maximum amount of guaranty hereunder shall not be reduced as a result of any conversions or payments under the Notes (i.e., the last dollars owing under the Notes shall remain subject to this Guaranty).

 

Nature of Guaranty.  Guarantor’s liability under this Guaranty shall be unlimited, open and continuous for so long as this Guaranty remains in force.  Guarantor intends to guaranty at all times the performance and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of all Obligations.  Accordingly, no payments made upon the Obligations will discharge or diminish the continuing liability of Guarantor in connection with any remaining portions of the Obligations or any of the Obligations which subsequently arises or is thereafter incurred or contracted.  No payment made by the Company, the Guarantor, any other guarantor or any other Person or received or collected by the Holders from the Company, the Guarantor, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder which shall, notwithstanding any such payment (other than payment and performance in full of the Obligations), remain liable for the Obligations until the Obligations are paid and performed in full.

 

  

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Duration of Guaranty.  This Guaranty will take effect when received by the Holders without the necessity of any acceptance by the Holders, or any notice to Guarantor or to the Company, and will continue in full force until all the Obligations incurred or contracted shall have been fully and finally paid and satisfied and all other obligations of Guarantor under this Guaranty shall have been performed in full.  All renewals, extensions, substitutions, and modifications of the Obligations, release of any other guarantor or termination of any other guaranty, of the Obligations shall not affect the liability of Guarantor under this Guaranty.  This Guaranty is irrevocable and is binding upon Guarantor and Guarantor’s successors and assigns so long as any of the guaranteed Obligations remain unpaid.

 

2.2                 No Subrogation.  Notwithstanding any payment made by the Guarantor hereunder or any set-off or application of funds of the Guarantor by the Holders, the Guarantor shall not be entitled to be subrogated to any of the rights of the Holders against the Company or any other guarantor or guaranty or right of offset held by the Holders for the payment of the Obligations, nor shall the Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other guarantor in respect of payments made by the Guarantor hereunder, until all amounts owing to the Holders by the Company on account of the Obligations are paid in full.  If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid and performed in full, such amount shall be held in trust for the benefit of the Holders, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to the Holders in the exact form received by such Guarantor (duly indorsed by the Guarantor to the Holders, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Holders may determine.

 

2.3                 Amendments, Etc. With Respect To The Obligations.  Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any of the Holders may be rescinded by such Holder and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or guaranty therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Holders, and the Exchange Agreement, the Notes and the other Agreements and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Holders may deem advisable from time to time, and any guaranty or right of offset at any time held by the Holders for the payment of the Obligations may be sold, exchanged, waived, surrendered or released.

 

  

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2.4                 Guaranty Absolute and Unconditional.  Guarantor hereby waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Holders upon the guaranty contained in this Section 2 or acceptance of the guaranty contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the Guaranty contained in this Section 2; and all dealings between the Company and the Guarantor, on the one hand, and the Holders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guaranty contained in this Section 2.  Guarantor hereby waives, to the extent permitted by law, diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company or the Guarantor with respect to the Obligations.  Guarantor understands and agrees that the guaranty contained in this Section 2 shall be construed as a continuing, absolute and unconditional Guaranty of payment and performance without regard to (a) the validity or enforceability of the Exchange Agreement, Notes or any of the other Agreements, any of the Obligations or any other guaranty or right of offset with respect thereto at any time or from time to time held by the Holders, (b) any defense, set-off or counterclaim (other than a defense of actual payment and performance of all Obligations) which may at any time be available to or be asserted by the Company or any other Person against the Holders, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Company or Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Company for the Obligations, or of Guarantor under the guaranty contained in this Section 2, in bankruptcy or in any other instance.  When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against Guarantor, the Holders may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as they may have against the Company or any other Person or against any other guaranty for the Obligations or any right of offset with respect thereto, and any failure by the Holders to make any such demand, to pursue such other rights or remedies or to collect any payments from the Company or any other Person or to realize upon any such other guaranty or to exercise any such right of offset, or any release of the Company or any other Person or any such other guaranty or right of offset, shall not relieve Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Holders against any Guarantor.

 

2.5                 Reinstatement.  The guaranty contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Holders upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company, Guarantor or any other guarantor of the Obligations, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company, Guarantor or any other guarantor of the Obligations or any substantial part of its property, or otherwise, all as though such payments had not been made.

 

2.6                 Payments.  Guarantor hereby guarantees that payments hereunder will be paid to the Holders without set-off or counterclaim in U.S. dollars at the addresses set forth or referred to on the signature pages to the Exchange Agreement (or as otherwise required by the Notes) or by wire transfer pursuant to instructions provided to the Guarantor by the Holders.

 

SECTION 3.REPRESENTATIONS AND WARRANTIES

 

Guarantor represents and warrants to the Holders that:

 

3.1                 Organization, Good Standing and Qualification.  The Guarantor is a corporation, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite corporate power and authority to carry on its business as now conducted and own its properties.  The Guarantor is duly qualified to do business as a corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or licensing necessary unless the failure to so qualify would not be reasonably likely to result in a material adverse effect.

 

  

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3.2                 Authorization.  The Guarantor has full power and authority and has taken all requisite action on the part of the Guarantor, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of this Guaranty, and (ii) authorization of the performance of all obligations of the Guarantor hereunder.  This Guaranty constitutes legal, valid and binding obligations of the Guarantor, enforceable against the Guarantor in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.

 

3.3                 Consents.  The execution, delivery and performance by the Company of this Guaranty require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official.

 

3.4                 No Conflict, Breach, Violation or Default; Compliance with Law.  The execution, delivery and performance of this Guaranty by the Guarantor will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) the Guarantor’s trust agreement or other organizational documents, or (ii) except where it would not have a material adverse effect, (A) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Guarantor or any of its properties, or (B) any agreement or instrument to which the Guarantor is a party or by which the Guarantor is bound or to which any of the properties of the Guarantor is subject.  Except where it would not have a material adverse effect, the Guarantor (i) is not in violation of any statute, rule or regulation applicable to the Guarantor or its assets, (ii) is not in violation of any judgment, order or decree applicable to the Guarantor or its assets, and (iii) is not in breach or violation of any agreement, note or instrument to which it or its assets are a party or are bound or subject.  The Guarantor has not received notice from any Person of any claim or investigation that, if adversely determined, would render the preceding sentence untrue or incomplete.

 

3.5                 No Limitation of Guaranty.  No representations, warranties or agreements of any kind have been made to or with Guarantor which would limit or qualify in any way the terms of this Guaranty.

 

3.7                 Company’s Request.  This Guaranty is executed at the Company’s request and not at the request of the Holders.

 

SECTION 4.COVENANTS

 

4.1      So long as any Notes remain outstanding, the Guarantor shall maintain its existence.  The Guarantor shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person.

 

  

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4.2           The Guarantor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Guaranty; and the Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any right herein granted to the Holders, but shall suffer and permit the execution of every such right as though no such law has been enacted.

 

SECTION 5.WAIVERS; SUBORDINATION

 

5.1                 Guarantor’s Waivers.

 

(a)      Holder’s Actions.  Notwithstanding any other waivers by the Guarantor pursuant to this Guaranty and except as prohibited by applicable law, the Guarantor waives any right to require a Holder to: (i) continue lending money or to extend other credit to the Company; (ii) resort for payment or to proceed directly or at once against any person, including the Company or any other guarantor; (iii) commit any act or omission of any kind at any time with respect to any matter whatsoever; or (iv) demand and/or enforce compliance with the terms of any agreement by any other party thereto.

 

(b)      Insolvency.  If now or hereafter the Company shall be or become insolvent and the Obligations under the Notes have not been paid and performed in full, Guarantor hereby waives and relinquishes in favor of the Holders and Company, and their respective successors and assigns, any claim or right to payment Guarantor may now have or hereafter have or acquire against the Company, by subrogation or otherwise, such that at no time shall Guarantor be or become a “creditor” of the Company within the meaning of 11 U.S.C. Section 547(b) or any successor provision of the United States Federal bankruptcy laws.

 

(c)      Guarantor’s Rights and Defenses.  Guarantor also waives any and all rights or defenses arising by reason of (i) any “one action” or “anti-deficiency” law or any other law which may prevent the Holders from bringing any action, including a claim for deficiency, against the Guarantor, before or after the commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (ii) any election of remedies by the Holders which destroys or otherwise adversely affects the Guarantor’s subrogation rights or the Guarantor’s rights to proceed against the Company for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Obligations; (iii) any disability or other defense of the Company, of any other guarantor, or of any other person, or by reason of the cessation of the Company’s liability from any cause whatsoever, other than payment in full in legal tender or by performance in full, of the Obligations; (iv) any statute of limitations, if at the time any action or suit brought by the Holders against the Guarantor is commenced there is outstanding Obligations which are not barred by any applicable statute of limitations; (v) any defenses given to guarantors at law or in equity other than actual payment and performance of the Obligations; or (vi) any act, omission, election or waiver by the Holders of the type set forth in this Guaranty.

 

  

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(d)      No Set-off, Counterclaim, Etc.  Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of set-off, counterclaim, counter demand, recoupment or similar right.

 

5.2                 Guarantor’s Understanding With Respect to Waivers.  Guarantor warrants and agrees that each of the waivers set forth herein is made with Guarantor’s full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law.  If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy.

 

5.3                 Subordination of the Company’s Debts to Guarantor.  Guarantor agrees that the Obligations of the Company to the Holders, whether now existing or hereafter created, shall be prior to any claim that the Guarantor may now have or hereafter acquire against the Company, whether or not the Company becomes insolvent.  Guarantor hereby expressly subordinates to the Obligations any claim Guarantor may have against the Company, upon any account whatsoever (including without limitation all intercompany obligations owing to Guarantor from the Company), to any claim that the Holders may now or hereafter have against the Company; provided, however, that the Company may make payments on such claims that represent bona fide claims for money lent or property transferred to the Company in the ordinary course of the business of the Guarantor and the Company unless and until an Event of Default (including without limitation any default under the Agreements which with notice or passage of time or both would become an Event of Default) shall have occurred under the Notes.  In the event of any dissolution, winding up, liquidation, readjustment, reorganization or similar proceedings, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of the Company applicable to the payment of the claims of both the Holders and the Guarantor shall be paid to the Holders.

 

SECTION 6.MISCELLANEOUS

 

6.1                 Amendments In Writing.  None of the terms or provisions of this Guaranty may be amended, supplemented or otherwise modified except by an instrument in writing signed by the Guarantor and 75% in interest of the Holders (based on outstanding principal amount of Notes), and no provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

 

6.2                 No Waiver By Course Of Conduct; Cumulative Remedies. The Holders shall not by any act (except by a written instrument pursuant to Section 6.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Event of Default.  No failure to exercise, nor any delay in exercising, on the part of the Holders, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by any Holder of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which such Holder would otherwise have on any future occasion.  The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

 

  

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6.3                 Enforcement Expenses.      Guarantor agrees to pay or reimburse the Holders for all their reasonable costs and expenses incurred in collecting against the Guarantor under the guaranty contained in Section 2 or otherwise enforcing or preserving any rights under this Guaranty and the other Agreements to which such Guarantor is a party, including, without limitation, the reasonable fees and disbursements of counsel to the Holders.

 

6.4                 Successors And Assigns.  This Guaranty shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of the Holders and their respective successors and assigns; provided that Guarantor may not assign, transfer or delegate any of its rights or obligations under this Guaranty without the prior written consent of the holders of 75% of the outstanding Principal Amount of Notes.

 

6.5                 Facsimile.  This Guaranty may be executed by facsimile or email of a PDF (or similar) image file of the executed signature page hereto.

 

6.6                 Severability.  Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

6.7      Governing Law; Jurisdiction.

 

(a)      Governing Law.  THIS GUARANTY WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

 

(b)      Jurisdiction.  The Guarantor irrevocably submits to the exclusive jurisdiction of any State or Federal Court sitting in the State of New York, County of New York, over any suit, action, or proceeding arising out of or relating to this Guaranty.  The Guarantor irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action, or proceeding brought in such a court and any claim that suit, action, or proceeding has been brought in an inconvenient forum.

 

The Guarantor agrees that the service of process upon it mailed by certified or registered mail (and service so made shall be deemed complete three days after the same has been posted as aforesaid) or by personal service shall be deemed in every respect effective service of process upon it in any such suit or proceeding.  Nothing herein shall affect Holder's right to serve process in any other manner permitted by law.  The Guarantor agrees that a final non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner.

 

  

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(c)      No Jury Trial.  The Guarantor and, by acceptance of the benefits hereof, each Holder, knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with, this Guaranty and for any counterclaim therein.

 

6.8      Acknowledgements.  Guarantor hereby acknowledges that:

 

(a)      it has been advised by counsel in the negotiation, execution and delivery of this Guaranty and the other Agreements to which it is a party;

 

(b)      the Holders have no fiduciary relationship with or duty to Guarantor arising out of or in connection with this Guaranty or any of the other Agreements, and the relationship between the Guarantor, on the one hand, and the Holders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

(c)      no joint venture is created hereby or by the other Agreements or otherwise exists by virtue of the transactions contemplated hereby among the Guarantors and the Holders.

 

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and delivered as of the date first above written.

 

	  	
GUARANTOR:

	  	  
	  	
INVENTA TECHNOLOGIES, INC.

	  	  
	  	  
	  	
By:  /s/ David A. Buckel                        

	  	
Name:  David A. Buckel

	  	
Title:    CFO and corporate Secretary

	  	
Address:

 

 

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