Exhibit 10.5
EXECUTION COPY
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (the "Settlement Agreement"),
is entered into this 16th day of April, 2003 by and between Voxware, Inc.
("Voxware"), a Delaware corporation having offices at 000 Xxxxxxxx Xxxxxx Xxxx,
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000, and Castle Creek Technology Partners, LLC
("Castle Creek"), having offices at 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxxxx,
Xxxxxxxx 00000. Voxware and Castle Creek are referred to herein each,
individually, as a "Party" and collectively, as the "Parties".
W I T N E S S E T H:
WHEREAS, on August 15, 2000, Voxware issued and sold to Castle Creek 4,000
shares of Series A Convertible Preferred Stock, par value $0.001 per share
("Series A Stock"); and
WHEREAS, on August 29, 2001, Voxware issued to Castle Creek 3,365 shares of
Series B Convertible Preferred Stock, par value $0.001 per share ("Series B
Stock"), in exchange for all of the issued and outstanding Series A Stock held
by Castle Creek pursuant to the terms of an Exchange Agreement dated as of
August 29, 2001 between Voxware and Castle Creek (the "Exchange Agreement"); and
WHEREAS, the Company was required to redeem the Series B Stock on February
10, 2003 for an amount equal to $1,000 per share plus any accrued and unpaid
dividends; and
WHEREAS, Voxware believes that, as a result of its current financial
condition, funds are not legally available for the redemption of the Series B
Stock; and
WHEREAS, on February 13, 0000, Xxxxxx Xxxxx filed a civil action against
Voxware in the United States District Court for the District of Delaware, Civil
Action No. 03-196 (the "Litigation") with respect to Voxware's failure to redeem
the Series B Stock; and
WHEREAS, the Parties agree that they are entering into this Settlement
Agreement solely for the purposes of settling all disagreements between them and
to avoid further costs and liabilities with respect to these disagreements. This
Settlement Agreement is the product of informed negotiations and compromises of
previously stated legal positions.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties do stipulate and agree
as follows:
1. Settlement of the Litigation: In full and final settlement of the
Litigation, the following transactions will have occurred for the benefit of
Castle Creek:
a. Voxware shall have consummated a financing (the "Financing")
through the sale of its Series D Convertible Preferred Stock, par value $0.001
per share ("Series D Stock") substantially on the terms set forth in the Series
D Convertible Preferred Stock Purchase Agreement dated as of April 16, 2003 (the
"Series D Purchase Agreement") between Voxware and the Purchaser listed therein,
which agreement is attached hereto as Exhibit A; and
b. Castle Creek and Voxware shall have amended the Exchange
Agreement to limit conversions of Series B Stock so that the aggregate number of
shares of Common Stock, par value $0.001 per share ("Common Stock"), issued upon
such conversions does not exceed an aggregate of 17,250,000, which conversions
shall be subject in all events to the rights, preferences, privileges and other
terms of the Series B Stock as stated in Voxware's Amended and Restated
Certificate of Incorporation, the form of which is attached hereto as Exhibit B
(the "Amended and Restated Charter").
c. Castle Creek shall have received the payments contemplated by
Section 1.1 of the Exchange Agreement dated as of April 16, 2003 between Castle
Creek and Voxware.
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Voxware and Castle Creek acknowledge that the terms of settlement described
in paragraphs 1(a), 1(b) and 1(c) above are conditions precedent to the
effectiveness of the other provisions of this Settlement Agreement, except as
specifically otherwise provided for herein.
2. Stipulated Judgment: Upon execution of this agreement, Voxware shall
execute and deliver to Castle Creek the Stipulated Judgment in the litigation
attached hereto as Exhibit C, which Stipulated Judgment shall be held in escrow
by Castle Creek's counsel in accordance with the terms of this Settlement
Agreement. Notwithstanding anything herein to the contrary, in no event shall
Castle Creek file the Stipulated Judgment, except upon the occurrence of an
Event of Default (as defined in Section 4 below).
3. Closing: The "Closing" of this Settlement Agreement shall be deemed to
have occurred when the complete execution of this Settlement Agreement has
occurred and the conditions precedent to the settlement in paragraphs 1(a), 1(b)
and 1(c) have been satisfied.
4. Termination of Settlement Agreement: Castle Creek may, in its sole
discretion, terminate this Settlement Agreement, including, inter alia, the
release provisions herein, upon the following events (collectively, the "Events
of Default):
(a) Closing does not occur on or before June 30, 2003;
(b) The Series D Purchase Agreement is terminated; or
(c) Voxware shall have committed any material breach or event of
default after the date of this Settlement Agreement and prior to the Closing,
under any agreement between Voxware and Castle Creek which breach or event of
default remains unremedied for three (3) business days after notice to Voxware
from Castle Creek.
5. Dismissal of the Litigation: Within five (5) business days of Closing,
Castle Creek shall cause to be filed the stipulation of voluntary dismissal with
prejudice attached hereto
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as Exhibit D.
6. Stay Of Litigation: From the date of this Agreement until (a) Closing
or (b) termination of this Settlement Agreement, Castle Creek shall obtain,
subject to Court approval as may be necessary, a stay of all proceedings in the
Litigation, including, but not limited to, an extension of Voxware's answer
date.
7. Release by Voxware. Upon the date of Closing, Voxware, on its own
behalf and on behalf of all persons and entities acting through or under, in
control of it or controlled by it, does hereby expressly fully release and
forever discharge Castle Creek and Castle Creek's employees, subsidiaries,
affiliates, owners, officers, directors, Board of Directors, managers,
administrators, attorneys, agents, representatives, successors (including
successors to the business by way of asset purchase), assigns, and all persons
acting by, through, or in concert with them (collectively, the "Castle Creek
Releasees") from any and all past, present or future claim, demand, order,
directive, action, suit, cause of action, request for declaratory relief,
cross-claim, third-party action, arbitration or mediation, demand, loss of
services, compensation, charges, complaints, debts, obligations, promises or
agreements, any and all costs, losses (including actual, alleged, threatened or
potential loss of profit or business), damages (including all consequential,
punitive and exemplary damages), and expenses (including all attorneys' fees and
other professional fees), and any and all known or unknown bodily injuries or
personal injuries (whether sounding in tort, contract, equity, nuisance,
trespass, negligence, or strict liability), loss of quality of life, property
damage (including but not limited to injury to property) or liabilities of any
kind, whether at law or in equity, whether presently known, unknown or
unknowable, or any other statutory, regulatory, administrative or common law
cause of action of any sort or nature from the beginning of the world to the
date hereof, which Voxware may have or claim to
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have against the Castle Creek Releasees arising out of, from or relating in any
way to any occurrence up to and including the date of execution of this
Settlement Agreement (the "Voxware Claims").
Upon the date of Closing, Voxware forever waives, surrenders and abandons
any and all Voxware Claims, on its own behalf and on behalf of all persons and
entities acting through or under, in control of it or controlled by it. Voxware
hereby expressly assumes the risk that there may be Voxware Claims against
Castle Creek or other Castle Creek Releasees that are unknown or unknowable to
it and that the damages or costs sustained by them as a result of any released
Voxware Claims may be greater than each currently realizes, that the damages may
increase in amount or in severity over time, that the injuries, damages, and/or
claims may be progressive, cumulative, unknown and/or unforeseeable, and that
there may be hidden, unknown and unknowable damages or costs. Voxware hereby
acknowledges that it is aware that it may hereafter discover facts in addition
to or different from those it now knows or believes to be true with respect to
the subject matter of the Voxware Claims, but that it is its intention hereby to
fully, finally and forever to settle and release any and all matters, disputes
and differences, known or unknown, suspected or unsuspected, which do now or may
in the future exist and that, in furtherance of such intention, releases hereby
given shall be and remain in effect as full and complete general releases,
notwithstanding the discovery or existence of any such additional or different
facts.
Voxware warrants and represents that it has not filed any Voxware Claims
(by means of any individual or group charges or complaints or in any other
manner) against Castle Creek or any other Castle Creek Releasees before any
court or other agency of federal, state or local government, or any other forum.
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Voxware warrants and represents to the best of Voxware's knowledge that no
Voxware Claim has been asserted or filed against Castle Creek or any other
Castle Creek Releasees by any person or entity acting through or under, in
control of or controlled by Voxware.
8. Release by Castle Creek. Upon the date of Closing, Castle Creek, on its
own behalf and on behalf of all persons and entities acting through or under, in
control of it or controlled by it, does hereby expressly fully release and
forever discharge (a) Voxware, and Voxware's employees, subsidiaries,
affiliates, owners (other than Voxware Investor Releasees (as defined below)),
officers, directors, Board of Directors, managers, administrators, attorneys,
agents, representatives, successors (including successors to the business by way
of asset purchase), assigns, and all persons acting by, through, or in concert
with them (collectively, the "Voxware Company Releasees") and (b) each of the
Purchasers under the Series D Purchase Agreement, as listed on Exhibit 1.01
thereto, together with such Purchasers' respective employees, subsidiaries,
affiliates, shareholders, investors, owners, officers, directors, Board of
Directors, managers, administrators, attorneys, agents, representatives,
successors (including successors to the business by way of asset purchase),
assigns, and all persons acting by, through, or in concert with them
(collectively, the "Voxware Investor Releasees" and, together with the Voxware
Company Releasees, the "Voxware Releasees") from any and all past, present or
future claim, demand, order, directive, action, suit, cause of action, request
for declaratory relief, cross-claim, third-party action, arbitration or
mediation, demand, loss of services, compensation, charges, complaints, debts,
obligations, promises or agreements, any and all costs, losses (including
actual, alleged, threatened or potential loss of profit or business), damages
(including all consequential, punitive and exemplary damages), and expenses
(including all attorneys' fees and other professional fees), and any and all
known or unknown bodily injuries or personal
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injuries (whether sounding in tort, contract, equity, nuisance, trespass,
negligence, or strict liability), loss of quality of life, property damage
(including but not limited to injury to property) or liabilities of any kind,
whether at law or in equity, whether presently known, unknown or unknowable, or
any other statutory, regulatory, administrative or common law cause of action of
any sort or nature from the beginning of the world to the date hereof, which
Castle Creek may have or claim to have against the Voxware Releasees as follows,
(i) in the case of the Voxware Company Releasees, arising out of, from or
relating in any way to any occurrence up to and including the date of execution
of this Settlement Agreement (the "Castle Creek Company Claims"), including
without limitation any claims relating to the terms of the Series B Stock, the
Series D Stock or the Financing, and, (ii) in the case of Voxware Investor
Releasees, arising out of, from or relating in any way to the terms of the
Series B Stock or the Series D Stock or any occurrence otherwise arising out of,
from or relating in any way to the Financing (the "Castle Creek Investor
Claims", collectively with the Castle Creek Company Claims, shall be referred to
as the "Castle Creek Claims"); provided, however, that nothing herein shall be
deemed to limit (a) Castle Creek's rights or claims under the Series D Stock
Purchase Agreement arising out of, from or relating in any way to any occurrence
after the date of execution of this Settlement Agreement or (b) Castle Creek's
rights or claims under the other transaction documents related to the Financing
to which Voxware is a party or otherwise bound, including without limitation the
Amended and Restated Charter, arising out of, from or relating in any way to any
occurrence after the Closing.
Upon the date of Closing, Castle Creek forever waives, surrenders and
abandons any and all Castle Creek Claims, on its own behalf and on behalf of all
persons and entities acting through or under, or in control of it or controlled
by it. Castle Creek hereby expressly assumes
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the risk that there may be Castle Creek Claims against Voxware or other Voxware
Releasees that are unknown or unknowable to it and that the damages or costs
sustained by them as a result of any released Castle Creek Claims may be greater
than each currently realizes, that the damages may increase in amount or in
severity over time, that the injuries, damages, and/or claims may be
progressive, cumulative, unknown and/or unforeseeable, and that there may be
hidden, unknown and unknowable damages or costs. Castle Creek hereby
acknowledges that it is aware that it may hereafter discover facts in addition
to or different from those it now knows or believes to be true with respect to
the subject matter of the Castle Creek Claims, but that it is its intention
hereby to fully, finally and forever to settle and release any and all matters,
disputes and differences, known or unknown, suspected or unsuspected, which do
now or may in the future exist and that, in furtherance of such intention,
releases hereby given shall be and remain in effect as full and complete general
releases, notwithstanding the discovery or existence of any such additional or
different facts.
Castle Creek warrants and represents that, other than the Litigation, it
has not filed any Castle Creek Claims (by means of any individual or group
charges or complaints or in any other manner) against Voxware or any other
Voxware Releasees before any court or other agency of federal, state or local
government, or any other forum.
Castle Creek warrants and represents that, to the best of Castle Creek's
knowledge, other than the Litigation, no Castle Creek Claim has been asserted or
filed against Voxware or any other Voxware Releasees by any person or entity
acting through or under, in control of or controlled by Castle Creek.
9. Covenant Not to Xxx. The actions to be taken in furtherance of this
Settlement Agreement shall resolve any and all Voxware Claims and Castle Creek
Claims. Upon the
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Closing: (a) Voxware covenants that neither Voxware, nor any entity who controls
it or is controlled by it, shall xxx, or take any civil or administrative
action, or bring any other proceeding against Castle Creek or any other Castle
Creek Releasees to seek relief with respect to any Voxware Claims; and (b)
Castle Creek covenants that neither Castle Creek nor any entity who controls it
or is controlled by it shall xxx, or take any civil or administrative action, or
bring any other proceeding against Voxware or any other Voxware Releasees to
seek relief with respect to any Castle Creek Claims. The Parties further
expressly covenant and agree that they will not participate in any charge or
complaint that may be made by and person or organization on their respective
behalf.
10. Foreclosure from Claims Against Third Parties. Except as specifically
set forth herein, the Parties, each on its own behalf and on behalf of all
persons and entities acting through or under, in control of it or controlled by
it, do hereby agree: (a) that this Settlement Agreement affirmatively and
expressly forecloses Voxware and all persons and entities acting through or
under, in control of it or controlled by it from prosecuting Voxware Claims
against other third persons or entities, including all Castle Creek Releasees;
and (b) that this Settlement Agreement affirmatively and expressly forecloses
Castle Creek and all persons and entities acting through or under, in control of
or controlled by it, from prosecuting Castle Creek Claims against other third
persons or entities, including all Voxware Releasees. Except as specifically set
forth herein, the Parties further expressly covenant and agree forever to
refrain from bringing any suit or proceeding at law or in equity against third
parties or entities relating to any Voxware Claims or Castle Creek Claims.
Notwithstanding the foregoing or any other provision of this Settlement
Agreement, any Party shall have the right to assert a Voxware Claim or a Castle
Creek Claim against any Castle Creek Releasee or Voxware Releasee, respectively,
solely in the event that
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such Castle Creek Releasee or Voxware Releasee asserts a Castle Creek Claim or a
Voxware Claim against such Party in a court of competent jurisdiction.
11. Enforcement. Each of the Parties acknowledge and agree that
irreparable damage would occur if any of the provisions of this Settlement
Agreement were not performed in accordance with their specific terms or were
otherwise breached and that monetary damages would be an inadequate remedy
therefore. Accordingly, each of the Parties will be entitled to seek an
injunction or injunctions to prevent breaches of this Settlement Agreement and
to enforce specifically its provisions in any foreign court, court of the United
States or any state court having jurisdiction, this being in addition to any
other remedy to which the Parties may be entitled at law or in equity.
12. Assignment. Voxware and Castle Creek each represent and warrant that,
as of the date hereof and the Closing, neither Party has or will have assigned,
transferred, conveyed, or purported to assign, transfer or convey any Voxware
Claims or Castle Creek Claims, respectively, to any other person or entity, nor
shall they hereafter do so.
13. No Admission. By entering into this Settlement Agreement, the Parties
do not intend to make, nor shall they be deemed to have made, any admission of
any kind. Nothing contained in this Settlement Agreement shall be construed as
an admission by any Party as to the merit or lack of merit of any particular
theory relating to the payment of Voxware Claims or Castle Creek Claims, as
applicable. Statements made in the course of negotiations have been and shall be
without prejudice to the rights of the Parties in any disputes or transactions
with any other persons or entities not a party to this Settlement Agreement.
14. Protection Afforded. In addition to any confidentiality provisions
contained herein and not by way of limitation thereof, this Settlement Agreement
shall be deemed to fall
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within the protection afforded compromises and offers to compromise by Rule 408
of the Federal Rules of Evidence and any similar law provision.
15. Notices. Any statements, communications or notices to be provided
pursuant to this Settlement Agreement shall be in writing and shall be sent by
certified mail, return receipt requested, postage prepaid, to the attention of
the Parties at the addresses indicated below, until such time as notice of any
change of person to be notified or change of address is forwarded to all
Parties:
If to Voxware: Xxxxxxxx Xxxxxx, with a copy to: Xxxx and Xxxx LLP
Senior Vice President and Chief 000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx Xxxxxxx Xxxxxxxxx, XX 00000
Voxware, Inc. Attn: Xxxxxxx X. Xxxxxx, Esq.
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
If to Castle Creek: Xxxxxx X. Xxxx with a copy to: Xxxxxxx X. Xxxx, Esquire
Castle Creek Technology Partners, LLC Klehr, Harrison, Xxxxxx,
000 Xxxx Xxxxxxx Xxxxxxxxx Xxxxxxxxx & Xxxxxx LLP
Xxxxxxx, Xxxxxxxx 00000 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
Or to such other addresses as the Parties hereto may from time to time
designate in writing by notice to the other.
16. Other Assurances. Each Party shall provide such further and other
written assurances reasonably necessary to effectuate the terms and intent
hereof.
17. Entire Agreement. This Settlement Agreement is the complete and entire
agreement between the Parties and may not be modified, changed, contradicted,
added to or altered in any way by any previous or concurrent written or oral
agreements or any subsequent oral agreements. All prior negotiations, oral or
written, are merged in this Settlement Agreement. All modifications and
amendments to this Settlement Agreement must be made in
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writing and signed by each of the Parties hereto.
18. Severability. No determination by any court, governmental body,
arbitration or other judicial body that any provision of this Settlement
Agreement or amendment is invalid or unenforceable in any instance shall effect
the validity or enforceability of any other provision of this Settlement
Agreement. Each provision shall be valid and enforceable to the fullest extent
permitted by, and shall be construed where and whenever possible as being
consistent with, applicable law.
19. No Waiver. No failure or delay on the part of any Party to exercise
any power, right or privilege under this Settlement Agreement shall impair any
such power, right or privilege, or be construed to be a waiver of any default or
an acquiescence therein, nor shall any single or partial exercise of such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.
20. Successors and Assigns; Third Party Rights. This Settlement Agreement
shall bind the successors and assigns of the Parties, and inure to the benefit
of any successor or assign of any of the Parties; provided, however, that no
Party may assign this Settlement Agreement, other than by merger, consolidation,
sale of substantially all of its stock or assts, or a similar transaction,
without the consent of each of the other Parties. Subject to the last sentence
of Section 10 hereof, each Castle Creek Releasee and each Voxware Releasee shall
have the right to enforce this Settlement Agreement, in accordance with the
terms hereof, against any Party (and any person or entity acting through or
under, in control of or controlled by, any Party) in the event that any Voxware
Claim or Castle Creek Claim is asserted against such Voxware Releasee or Castle
Creek Releasee.
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21. Governing Law. This Settlement Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware without regard to
the principles of conflict of laws.
22. Consent to Jurisdiction; Waiver of Jury Trial. Each of the Parties
hereto: (a) except as provided in Section 11 hereof, accepts, generally and
unconditionally, the exclusive jurisdiction of the state or federal courts
located in the State of Delaware and any related appellate courts and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with any claim arising under or related to this Settlement Agreement or the
breach or enforcement thereof (a "Release Related Claim"); and (b) irrevocably
waives any objection it may now or hereafter have as to the venue of any such
proceeding brought in such a court or that such a court is an inconvenient
forum. Each of the Parties hereto waives personal service of process and
consents that service of process upon it may be made by certified mail, return
receipt requested, at the addresses specified or determined in accordance with
the provisions of Section 15, and service so made shall be deemed completed on
the third business day after such service is deposited in the mail. Nothing
herein shall affect the right of any Person to serve process in any other manner
permitted by law or shall limit the right of any Person to bring proceedings in
the courts of any other jurisdiction. For purposes of this Section 22, "Person"
means any natural person, corporation, partnership, joint venture, limited
liability company, association, joint stock company, trust, unincorporated
organization, governmental body, or any other entity whatsoever. The Parties
shall independently bear their own costs related to any dispute brought to the
attention of the Court, including attorneys' fees and costs. EACH OF THE PARTIES
HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY RELEASE
RELATED CLAIM.
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23. Authorship. The Parties agree that this Settlement Agreement reflects
the joint drafting efforts of all Parties. In the event any dispute,
disagreement or controversy arises regarding this Settlement Agreement, the
Parties shall be considered joint authors and no provision shall be interpreted
against any Party because of authorship. Each Party also agrees that it is fully
informed as to the meaning and intent of this Settlement Agreement and has been
advised by independent counsel of its choosing in that regard.
24. Execution. This Settlement Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
25. Facsimile Execution. Delivery of an executed counterpart of this
Settlement Agreement by facsimile shall be equally as effective as delivery of a
manually executed counterpart of this Settlement Agreement. Any Party delivering
an executed counterpart of this Settlement Agreement by facsimile also shall
deliver a manually executed counterpart of this Settlement Agreement, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability or binding effect of this Settlement Agreement.
26. Authority to Sign Settlement Agreement. The individuals signing this
Settlement Agreement hereby represent and warrant that they are empowered and
authorized to sign on behalf of and bind the Parties for whom they have signed.
[Signature page follows]
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EXECUTION COPY
IN WITNESS WHEREOF, the Parties have caused this Settlement Agreement
to be duly executed under seal as of and on the date written below.
VOXWARE, INC.
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------
Date: 4/17/03 Name: Xxxxxxxx Xxxxxx
----------------------------- --------------------------------
Title: Senior Vice President and CEO
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CASTLE CREEK TECHNOLOGY PARTNERS, LLC
By: /s/ Xxxxxx X. Xxxx
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Date: 4/17/03 Name: /s/ Xxxxxx X. Xxxx
----------------------------- --------------------------------
Title: Managing Director
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State of New Jersey
County of Xxxxxx
Before me, a notary public, personally appeared Xxxxxxxx Xxxxxx, who, being
duly sworn, stated that he has executed the foregoing Settlement Agreement, on
behalf of Voxware, Inc. and is duly authorized to do so.
Witness my hand and notarial seal this 17/th/ day of April, 2003.
/s/ Xxxxx Xxxxxxx
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Notary Public
My Commission expires: May 5, 2008
---------------------
State of Illinois
County of Xxxx
Before me, a notary public, personally appeared Xxxxxx X. Xxxx, who,
being duly sworn, stated that he has executed the foregoing Settlement
Agreement, on behalf of Castle Creek Technology Partners, LLC and is duly
authorized to do so.
Witness my hand and notarial seal this 17/th/ day of April, 2003.
Xxxx Xxxxxxxxx
------------------------------
Notary Public
/SEAL/
My Commission expires: 8/11/06
