<PAGE>
EXHIBIT 4.1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
Right to Purchase 727,273 Shares of
Common Stock, $0.001 par value
Date: August 15, 2000
VOXWARE, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, CASTLE CREEK TECHNOLOGY
PARTNERS LLC (the "Holder"), or its registered assigns, is entitled to purchase
------
from VOXWARE, INC., a Delaware corporation (the "Company"), at any time or from
-------
time to time during the period specified in Section 2 hereof, 727,273 fully paid
and non-assessable shares of the Company's Common Stock, $0.001 par value (the
"Common Stock"), at an exercise price (the "Exercise Price") of (i) $3.4375 per
------------ --------------
share for the period from the date hereof until 9:00 a.m., New York City Time on
October 15, 2001; and (ii) thereafter at the lesser of $3.4375 per share or the
Market Price (as defined in Section 4(k)(iv) below) on October 15, 2001. This
Warrant is the Common Stock Warrant being issued pursuant to that certain
Securities Purchase Agreement dated August 10, 2000 by and among the Company and
the signatories thereto (the "Securities Purchase Agreement"). The number of
-----------------------------
shares of Common Stock purchasable hereunder (the "Warrant Shares") and the
--------------
Exercise Price are subject to adjustment as provided in Section 4 hereof.
This Warrant is subject to the following terms, provisions, and
conditions:
1. Mechanics of Exercise. Subject to the provisions hereof,
---------------------
including, without limitation, the limitations contained in Section 8(f) hereof,
this Warrant may be exercised as follows:
1
<PAGE>
(a) Manner of Exercise by the Holder. This Warrant may be
--------------------------------
exercised by the Holder, in whole or in part, by the surrender of this Warrant
(or evidence of loss, theft, destruction or mutilation thereof in accordance
with Section 8(c) hereof), together with a completed exercise agreement in the
form of the Form of Exercise Agreement attached hereto as Exhibit 1 (the
---------
"Exercise Agreement"), to the Company at the Company's principal executive
------------------
offices (or such other office or agency of the Company as it may designate by
notice to the Holder), and upon (i) payment to the Company in cash, by certified
or official bank check or by wire transfer for the account of the Company, of
the Exercise Price for the Warrant Shares specified in the Exercise Agreement or
(ii) if the Holder elects to effect a Cashless Exercise (as defined in Section
12(c) below), delivery to the Company of a written notice of an election to
effect a Cashless Exercise for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
Holder or Holder's designees, as the record owner of such shares, as of the date
on which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment (or notice of an election to
effect a Cashless Exercise) shall have been made for such shares as set forth
above. Notwithstanding anything in the foregoing which may be to the contrary,
the effective date of the exercise of this Warrant by the Holder pursuant to
this Section 1(a) shall be the date on which the Exercise Agreement is delivered
together with payment in the case of a non-Cashless Exercise to the Company, so
long as this Warrant is delivered to the Company within three (3) Business Days
after such date.
(b) Issuance of Certificates. Subject to Section 1(c),
------------------------
certificates for the Warrant Shares so purchased, representing the aggregate
number of shares specified in the Exercise Agreement, shall be delivered to the
Holder within a reasonable time, not exceeding three (3) Business Days, after
this Warrant shall have been exercised by the Holder as provided in Section 1(a)
or, in the case of a Mandatory Exercise at the Company's Election under Section
5, within one (1) Business Day of the Holder's delivery of this Warrant and the
exercise price for the Warrant Shares specified in the Mandatory Exercise
Notice, as defined in Section 5(a) (the "Delivery Period"). The certificates so
---------------
delivered shall be in such denominations as may be requested by the Holder and
shall be registered in the name of Holder or such other name as shall be
designated by such Holder. If this Warrant shall have been exercised only in
part, then, unless this Warrant has expired, the Company shall, at its expense,
at the time of delivery of such certificates, deliver to the Holder a new
Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.
(c) Exercise Disputes. In the case of any dispute with
------------------
respect to an exercise, the Company shall promptly issue such number of shares
of Common Stock as are not disputed in accordance with this Section.
(d) Fractional Shares. No fractional shares of Common Stock
-----------------
are to be issued upon the exercise of this Warrant, but the Company shall pay a
cash adjustment in respect of any fractional share which would otherwise be
issuable in an amount based upon
2
<PAGE>
the Market Price of a share of Common Stock on exercise date as provided in
Section 1(a). Provided that in the event that sufficient funds are not legally
available for the payment of such cash adjustment, any fractional shares of
Common Stock shall be rounded up to the next whole number.
2. Period of Exercise. This Warrant is exercisable at any time and from
-------------------
time to time on or after the date hereof and before 5:00 P.M., New York City
Time on August 15, 2004 (the "Exercise Period").
---------------
3. Certain Agreements of the Company. The Company hereby covenants and
---------------------------------
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance
-----------------------
in accordance with the terms of this Warrant, be validly issued, fully paid, and
non-assessable and free from all taxes, liens, claims and encumbrances.
(b) Reservation of Shares. During the Exercise Period, the Company
---------------------
shall at all times have authorized and reserved for the purpose of issuance upon
exercise of this Warrant a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
(c) Listing. The Company shall promptly secure the listing of the
-------
shares of Common Stock issuable upon exercise of this Warrant upon the Nasdaq
National Market and upon each automated quotation system or national securities
exchange, if any, upon which shares of Common Stock become listed, and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant so long as any shares of Common Stock shall be listed
on such automated quotation system or national securities exchange.
(d) Certain Actions Prohibited. The Company will not, by amendment of
--------------------------
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such actions as may reasonably be requested by the Holder of this
Warrant in order to protect the exercise privilege of the Holder of this
Warrant, consistent with the tenor and purpose of this Warrant. Without limiting
the generality of the foregoing, the Company (i) will not increase the par value
of any shares of Common Stock receivable upon the exercise of this Warrant above
the Exercise Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may at all times validly and
legally issue fully paid and non-assessable shares of Common Stock upon the
exercise of this Warrant.
4. Antidilution Provisions. During the Exercise Period, the Exercise
-----------------------
Price shall be subject to adjustment from time to time as provided in this
Section 4. In the event that
3
<PAGE>
any adjustment of the Exercise Price as required herein results in a fraction of
a cent, such Exercise Price shall be rounded up or down to the nearest cent.
(a) Adjustments of Exercise Price.
-----------------------------
(i) Except as otherwise provided in Sections 4(b)(vi)(A) and
(B), 4(c) and 4(d) hereof, if and whenever after the initial issuance of this
Warrant, the Company issues or sells, or in accordance with Section 4(b) hereof
is deemed to have issued or sold, any shares of Common Stock for no
consideration or for a consideration per share less than the then current
Exercise Price on the date of issuance, then effective immediately upon such
issuance, the Exercise Price will be adjusted to be equal to the consideration
per share received, or deemed to be received pursuant to this Section 4, in such
issuance.
(ii) Except as otherwise provided in Section 4(a)(i), 4(c),
4(e) or 4(i) hereof, if and whenever after the initial issuance of this Warrant,
the Company issues or sells, or in accordance with Section 4(b) hereof is deemed
to have issued or sold, any shares of Common Stock for no consideration or for a
consideration per share less the then current Average Market Price (as defined
in Section 4(k)(vi)) per share (a "Dilutive Issuance"), then effective
immediately upon the Dilutive Issuance, the Exercise Price will be adjusted in
accordance with the following formula:
E' = (E) (O + P/M) / (CSDO)
where:
E' = the adjusted Exercise Price
E = the then current Exercise Price;
M = the greater of the then current Average
Market Price and the then current Exercise
Price
O = the number of shares of Common Stock
outstanding immediately prior to the
Dilutive Issuance;
P = the aggregate consideration, calculated as
set forth in Section 4(b) hereof, received
by the Company upon such Dilutive Issuance;
and
CSDO = the total number of shares of Common Stock
Deemed Outstanding (as herein defined)
immediately after the Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------
determining the adjusted Exercise Price under Section 4(a) hereof, the following
will be applicable:
(i) Issuance of Rights or Options. If the Company in any
-----------------------------
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or other
securities exercisable,
4
<PAGE>
convertible into or exchangeable for Common Stock ("Convertible Securities"),
----------------------
but not to include the grant or exercise of any stock or options which may
hereafter be granted or exercised under any employee or Director benefit plan of
the Company now existing or to be implemented in the future (so long as the
issuance of such stock or options is approved by a committee of independent
directors of the Company) (such warrants, rights and options to purchase Common
Stock or Convertible Securities are hereinafter referred to as "Options"), and
-------
the price per share for which Common Stock is issuable upon the exercise of such
Options is less than the greater of the Exercise Price or the Average Market
Price on the date of issuance ("Below Market Options"), then the maximum total
--------------------
number of shares of Common Stock issuable upon the exercise of all such Below
Market Options (assuming full exercise, conversion or exchange of Convertible
Securities, if applicable) will, as of the date of the issuance or grant of such
Below Market Options, be deemed to be outstanding and to have been issued and
sold by the Company for such price per share. For purposes of the preceding
sentence, the price per share for which Common Stock is issuable upon the
exercise of such Below Market Options is determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for the
issuance or granting of such Below Market Options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
exercise of all such Below Market Options, plus, in the case of Convertible
Securities issuable upon the exercise of such Below Market Options, the minimum
aggregate amount of additional consideration payable upon the exercise,
conversion or exchange thereof at the time such Convertible Securities first
become exercisable, convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise of all such Below
Market Options (assuming full conversion of Convertible Securities, if
applicable). No further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon the exercise of such Below Market
Options or upon the exercise, conversion or exchange of Convertible Securities
issuable upon exercise of such Below Market Options.
(ii) Issuance of Convertible Securities.
----------------------------------
(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than where
the same are issuable upon the exercise of Options) and the price per share for
which Common Stock is issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 4(b)(ii)(B) if applicable) is less than the
greater of the Average Market Price or the Exercise Price then in effect on the
date of issuance, then the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities will, as of the date of the issuance of such Convertible Securities,
be deemed to be outstanding and to have been issued and sold by the Company for
such price per share. For the purposes of the preceding sentence, the price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange is determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the issuance or sale of all such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise, conversion or
exchange thereof at the time such Convertible Securities first become
5
<PAGE>
exercisable, convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the exercise, conversion or exchange of all
such Convertible Securities. No further adjustment to the Exercise Price will be
made upon the actual issuances of such Common Stock upon exercise, conversion or
exchange of such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating conversion or exercise price or
exchange ratio (a "Variable Rate Convertible Security"), then the price per
----------------------------------
share for which Common Stock is issuable upon such exercise, conversion or
exchange for purposes of the calculation contemplated by Section 4(b)(ii)(A)
shall be deemed to be the lowest price per share which would be applicable
assuming that (1) all holding period and other conditions to any discounts
contained in such Convertible Security have been satisfied, and (2) the Average
Market Price on the date of issuance of such Convertible Security was seventy-
five percent (75%) of the Average Market Price on such date (the "Assumed
-------
Variable Market Price").
---------------------
(iii) Change in Option Price or Conversion Rate. Except for
--------------------------------------------
the grant or exercise of any stock or options which may hereafter be granted or
exercised under any employee or Director benefit plan of the Company now
existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a committee of independent directors of the
Company, if there is a change at any time in (A) the amount of additional
consideration payable to the Company upon the exercise of any Options; (B) the
amount of additional consideration, if any, payable to the Company upon the
exercise, conversion or exchange or any Convertible Securities; or (C) the rate
at which any Convertible Securities are convertible into or exchangeable for
Common Stock (other than under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such change will
be readjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. If, in any case, the total number of shares of Common Stock issuable
----------
upon exercise of any Options or upon exercise, conversion or exchange of any
Convertible Securities is not, in fact, issued and the rights to exercise such
option or to exercise, convert or exchange such Convertible Securities shall
have expired or terminated, the Exercise Price then in effect will be readjusted
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Options or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination (other
than in respect of the actual number of shares of Common Stock issued upon
exercise or conversion thereof), never been issued.
(v) Calculation of Consideration Received. If any Common
--------------------------------------
Stock, Options or Convertible Securities are issued, granted or sold for cash,
the consideration received therefor for purposes of this Warrant will be the
amount received by
6
<PAGE>
the Company therefor, before deduction of reasonable commissions, underwriting
discounts or allowances or other reasonable expenses paid or incurred by the
Company in connection with such issuance, grant or sale. In case any Common
Stock, Options or Convertible Securities are issued or sold for a consideration
part or all of which shall be other than cash, the amount of the consideration
other than cash received by the Company will be the fair market value of such
consideration except where such consideration consists of freely-tradeable
securities, in which case the amount of consideration received by the Company
will be the Average Market Price thereof as of the date of receipt. In case any
Common Stock, Options or Convertible Securities are issued in connection with
any merger or consolidation in which the Company is the surviving corporation,
the amount of consideration therefor will be deemed to be the fair market value
of such portion of the net assets and business of the non-surviving corporation
as is attributable to such Common Stock, Options or Convertible Securities, as
the case may be. The fair market value of any consideration other than cash or
securities will be determined in the good faith reasonable business judgment of
the Board of Directors. Notwithstanding anything else herein to the contrary, if
Common Stock, Options or Convertible Securities are issued, granted or sold in
conjunction with each other as part of a single transaction or series of
transactions, the amount of consideration received by the Company therefor shall
be reduced by the fair value of any such securities which were issued, granted
or sold for no material consideration.
(vi) Exceptions to Adjustment of Exercise Price. No
-------------------------------------------
adjustment to the Exercise Price will be made (A) upon the exercise of any
warrants, options or convertible securities issued and outstanding on the date
hereof in accordance with the terms of such securities as of such date, (B) upon
the issuance of the Conversion Shares (as defined in the Securities Purchase
Agreement) or the issuance of Common Stock upon the exercise of any Common Stock
Warrant, including this Warrant, or (C) upon the grant or exercise of any stock
or options which may hereafter be granted or exercised under any employee or
Director benefit plan of the Company now existing or to be implemented in the
future, so long as the issuance of such stock or options is approved by a
committee of independent directors of the Company.
(c) Subdivision or Combination of Common Stock. If the Company, at
------------------------------------------
any time after the initial issuance of this Warrant, subdivides (by any stock
split, stock dividend, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a greater number of shares, then,
after the date of record for effecting such subdivision, the Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced. If
the Company, at any time after the initial issuance of this Warrant, combines
(by reverse stock split, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a smaller number of shares, then,
after the date of record for effecting such combination, the Exercise Price in
effect immediately prior to such combination will be proportionately increased.
(d) Limitation on Exercise Price. To the extent that at the time of
----------------------------
exercise of this Warrant, the total number of shares of Common Stock previously
issued
7
<PAGE>
upon conversion of the Series A Preferred Stock at a Conversion Price (as
defined in the Certificate of Designations) less than $3.00 per share (subject
to adjustment as provided in Section VIII. A. of the Certificate of
Designations) and upon the exercise of this Warrant at an Exercise Price that is
less than $3.00 per share (subject to adjustment as provided in Section 4(c)
above) , when combined with the number of shares of Common Stock issuable upon
the then current exercise of this Warrant (at an exercise price less than $3.00
per share, subject to adjustment as provided in Section 4(c) above) exceeds the
Exchange Cap (as defined in the Certificate of Designations), the Exercise Price
of such excess shares of Common Stock shall be the greater of (i) $3.00 per
share (subject to adjustment as provided in Section 4(c) above) or (ii) the
Exercise Price determined without reference to this Section 4(d). The Company
and the Holder mutually acknowledge that the issuance of shares of Common Stock
upon the exercise of this Warrant may be subject to the Exchange Cap; provided
that as a result of the foregoing, to the extent that the Exercise Price is not
less than $3.00 (subject to adjustment as provided in Section 4(c) above), the
issuance of Common Stock upon the exercise of this Warrant shall not be limited
by the Exchange Cap.
(e) Major Transactions. If the Company shall with the approval of its
------------------
Board of Directors consolidate or merge with any other corporation or entity
(other than a consolidation or merger in which the Company is the surviving or
continuing entity and its capital stock is unchanged and unissued in such
transaction (except for issuances which do not exceed twenty percent (20%) of
the Common Stock)) or there shall occur any share exchange pursuant to which all
of the outstanding shares of Common Stock are converted into other securities or
property or any other such reclassification or change of the outstanding shares
of Common Stock or the Company shall sell all or substantially all of its assets
(each of the foregoing being a "Major Transaction"), then the holder of this
-----------------
Warrant may, at its option, either (i) in the event that the Common Stock
remains outstanding or holders of Common Stock receive any common stock or
substantially similar equity interest, in each of the foregoing cases which is
publicly traded, retain this Warrant and this Warrant shall continue to apply to
such Common Stock or shall apply, as nearly as practicable, to such other common
stock or equity interest, as the case may be, or (ii), receive consideration, in
exchange for this Warrant (without payment of any exercise price hereunder),
equal to the greater of, as determined in the sole discretion of such holder,
(A) the number of shares of stock or securities or property of the Company, or
of the entity resulting from such Major Transaction, to which a holder of the
number of shares of Common Stock delivered upon the exercise of this Warrant
(pursuant to the cashless exercise feature hereof) would have been entitled upon
such Major Transaction had such holder so exercised this Warrant (without regard
to any limitations on exercise herein or elsewhere contained) on the trading
date immediately preceding the public announcement of the transaction resulting
in such Major Transaction and had such Common Stock been issued and outstanding
and had such Holder been the holder of record of such Common Stock at the time
of the consummation of such Major Transaction (the "Major Transaction
-----------------
Consideration"), and (B) cash in an amount equal to the fair value of this
-------------
Warrant based on the exercise price then in effect. In any such case, the
Company will make appropriate provision to insure that the provisions of Section
4 hereof will thereafter be applicable as nearly as may be in relation to any
shares of stock or securities thereafter deliverable upon
8
<PAGE>
the exercise of this Warrant. The Company will not effect any Major Transaction
unless prior to the consummation thereof, the successor corporation (if other
than the Company) assumes by written instrument the obligations under this
Section 4 and the obligations to deliver to the holder of this Warrant such
shares of stock, securities, or assets as, in accordance with the foregoing
provisions, the holder may be entitled to acquire. Furthermore, the Company
shall, cause the issuer of any security in such transaction which constitutes
Registrable Securities under that certain Registration Rights Agreement dated
August 15, 2000 by and among the Company and the signatories thereto (the
"Registration Rights Agreement") to assume all of the Company's obligations
-----------------------------
under the Registration Rights Agreement. No sooner than fifteen (15) Business
Days nor later than five (5) Business Days prior to the consummation of the
Major Transaction, but not prior to the public announcement of such Major
Transaction, the Company shall deliver written notice ("Notice of Major
---------------
Transaction") to each holder of a Warrant, which Notice of Major Transaction
-----------
shall be deemed to have been delivered one (1) Business Day after the Company's
sending such notice by telecopy (provided that the Company sends a confirming
copy of such notice on the same day by overnight courier) of such Notice of
Major Transaction. Such Notice of Major Transaction shall indicate the amount
and type of the Major Transaction Consideration which such holder of a Warrant
would receive under this Section Notwithstanding anything in this Section 4(e)
to the contrary, the holder shall be deemed to have elected to receive the
consideration described in subclause (ii)(B) of this Section 4(e), if the
Company so specifies in a Notice of Major Transaction delivered to the holder at
least ten (10) Business Days prior to the consummation of the Major Transaction.
If all or a portion of the Major Transaction Consideration is cash and does
not consist entirely of United States currency, such holder may elect to receive
United States currency in an amount equal to the value of the Major Transaction
Consideration denominated in a foreign currency in lieu of the Major Transaction
Consideration denominated in a foreign currency by delivering notice of such
election to the Company within five (5) days of such holder's receipt of the
Notice of Major Transaction.
No election made or deemed to be made by the holder of this Warrant
pursuant to this Section 4(e) shall impair such holder's right to exercise all
or part of this Warrant on or prior to the consummation of the Major
Transaction.
(f) Distribution of Assets. In case the Company shall declare or make
-----------------------
any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise (including any dividend or distribution to the Company's shareholders
of cash or shares (or rights to acquire shares) of capital stock of a
subsidiary) (a "Distribution"), at any time after the initial issuance of this
------------
Warrant, then the Holder shall be entitled upon exercise of this Warrant for the
purchase of any or all of the shares of Common Stock subject hereto, to receive
the amount of such assets (or rights) which would have been payable to the
Holder had such Holder been the holder of such shares of Common Stock on the
record date for the determination of shareholders entitled to such Distribution.
9
<PAGE>
(g) Special Adjustment and Notices of Adjustment. Upon the occurrence
--------------------------------------------
of any event which requires any adjustment of the Exercise Price, then, and in
each such case, the Company shall give notice thereof to the Holder, which
notice shall state the Exercise Price resulting from such adjustment and the
increase or decrease in the number of Warrant Shares purchasable at such price
upon exercise, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based. Such calculation shall be
certified by the chief financial officer of the Company. If the Company takes
any actions (including under or by virtue of this Section 4) which would have a
dilutive effect on the Holder or which would materially and adversely affect the
Holder with respect to its investment in the Warrant, and if the provisions of
Section 4 of the Warrant are not strictly applicable to such actions or, if
applicable to such actions, would not operate to equitably protect the Holder
against such actions, then the Company shall promptly upon notice from Holder
appoint its independent certified public accountants to determine as promptly as
practicable an appropriate adjustment to the terms hereof, including without
limitation adjustments to the Exercise Price, or another appropriate action to
so equitably protect such Holder and prevent any such dilution and any such
material adverse effect, as the case may be. Following such determination, the
Company shall forthwith make the adjustments or take the other actions described
therein.
(h) Minimum Adjustment of Exercise Price. No adjustment of the
------------------------------------
Exercise Price shall be made in an amount of less than one percent (1%) of the
Exercise Price in effect at the time such adjustment is otherwise required to be
made, but any such lesser adjustment shall be carried forward and shall be made
at the time and together with the next subsequent adjustment which, together
with any adjustments so carried forward, shall amount to not less than one
percent (1%) of such Exercise Price.
(i) Further Exceptions to Adjustment of Exercise Price. No adjustment
--------------------------------------------------
of the Exercise Price shall be made under Section 4(a)(ii) if the consideration
received (determined as provided herein) is at least $15.00 per share (subject
to adjustment as provided in Section 4(c) above).
(j) Other Notices. In case at any time:
-------------
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other distribution to
the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or merger of
the Company with or into, or sale of all or substantially all of its assets to,
another corporation or entity; or
10
<PAGE>
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in each such case, the Company
shall give to the Holder (A) notice of the date on which the books of the
Company shall close or a record shall be taken for determining the holders of
Common Stock entitled to receive any such dividend, distribution or subscription
rights or for determining the holders of Common Stock entitled to vote in
respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up and (B) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable approximation thereof by the Company) when the same shall take place.
Such notice shall also specify the date on which the holders of Common Stock
shall be entitled to receive such dividend, distribution or subscription rights
or to exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, as the case may be. Such notice
shall be given at least fifteen (15) Business Days prior to the record date or
the date on which the Company's books are closed in respect thereto, but in no
event earlier than public announcement of such proposed transaction or event.
Failure to give any such notice or any defect therein shall not affect the
validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv)
above.
(k) Certain Definitions.
-------------------
(i) "Closing Bid Price" means, for any security as of any date,
-----------------
the closing bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
Financial Markets or a comparable reporting service of national reputation
selected by the Company and reasonably acceptable to the holder hereof (the
"Holder") if Bloomberg Financial Markets is not then reporting closing bid
------
prices of such security (collectively, "Bloomberg"), or if the foregoing does
---------
not apply, the last reported sale price of such security in the over-the-counter
market on the electronic bulletin board of such security as reported by
Bloomberg, or, if no sale price is reported for such security by Bloomberg, the
average of the bid prices of any market makers for such security as reported in
the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid
Price cannot be calculated for such security on such date on any of the
foregoing bases, the Closing Bid Price of such security on such date shall be
the fair market value as reasonably determined by an investment banking firm
selected by the Company and reasonably acceptable to the Holder with the costs
of such appraisal to be borne by the Company.
(ii) "Common Stock," for purposes of this Section 4, includes
------------
the Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only Common Stock in
respect of which this Warrant is exercisable, or shares resulting from any
subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(e) hereof, the stock or other securities or
property provided for in such Section.
11
<PAGE>
(iii) "Common Stock Deemed Outstanding" shall mean the number of
-------------------------------
shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (A) in case of any adjustment
required by Section 4(b)(i) resulting from the issuance of any Options, the
maximum total number of shares of Common Stock issuable upon the exercise of the
Options for which the adjustment is required (including any Common Stock
issuable upon the conversion of Convertible Securities issuable upon the
exercise of such Options), and (B) in the case of any adjustment required by
Section 4(b)(ii) resulting from the issuance of any Convertible Securities, the
maximum total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of the Convertible Securities for which the adjustment is
required, as of the date of issuance of such Convertible Securities, if any.
(iv) "Market Price," as of any date, means the lesser of (i) one
------------
hundred percent (100%) of the average of the Closing Bid Prices for the shares
of Common Stock on any five (5) Business Days which constitute the lowest five
(5) Business Day average Closing Bid Price of the Common Stock for the ten (10)
Business Days immediately preceding, but not including, such date or (ii) the
Closing Bid price on the Business Day immediately prior to the date of
determination. The manner of determining the Market Price of the Common Stock
set forth in the foregoing definition shall apply with respect to any other
security in respect of which a determination as to market value must be made
hereunder.
(v) "Business Day," means any day on which the principal market
------------
on which the Common Stock is traded at the relevant time is open.
(vi) "Average Market Price" means as of any date, one hundred
--------------------
(100%) of the average Closing Bid Prices for a share of Common Stock on the five
(5) Business Days immediately prior to the date of determination. The manner of
determining the Average Market Price of Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.
5. Mandatory Exercise.
------------------
(a) Mandatory Exercise. Subject to the limitations set forth in
------------------
Section 8(f), at any time after the first anniversary of Closing and provided
that (a) all of the Common Stock issuable upon exercise of the Warrant and
conversion of the Company's Series A Preferred Stock, par value $0.001 per share
(the "Series A Preferred Stock") was covered by an effective Registration
------------------------
Statement (as defined in the Registration Rights Agreement) for a period of at
least sixty (60) consecutive Business Days immediately prior to the date of
delivery of the Mandatory Exercise Notice and a period of at least sixty (60)
consecutive Business Days immediately prior to the Effective Time of the
Mandatory Exercise, (b) the Closing Bid Price of Common Stock was greater than
Twenty-Five Dollars ($25.00) per share (subject to equitable adjustment for
stock splits,
12
<PAGE>
stock dividends, reclassifications or similar events) for a period of at least
ten (10) consecutive Business Days immediately prior to the date of delivery of
the Mandatory Exercise Notice (if such notice is delivered at least ten (10)
Business Days after the anniversary of the issuance of this Warrant) and for a
period of at least ten (10) consecutive Business Days immediately prior to the
Effective Time of the Mandatory Exercise (c) the Common Stock is listed for
trading on the Nasdaq National Market or the New York Stock Exchange, and (d)
provided the Company is not as of the date of delivery of the Mandatory Exercise
Notice or as of the Effective Time of the Mandatory Exercise (and has not been
for the six (6) consecutive months immediately prior to the date of delivery of
the Mandatory Exercise Notice or the six (6) consecutive months immediately
prior to the Effective Time of the Mandatory Exercise) in violation of any of
its material obligations under the Investment Agreements, including this Warrant
and the Certificate of Designations (as defined in the Securities Purchase
Agreement), then the Company shall have the right pursuant to this section to
require the Holder to exercise (the "Mandatory Exercise at the Company's
-----------------------------------
Election") all, or any part of this Warrant as the Company shall specify, which
--------
right shall be exercisable by delivery of a Mandatory Exercise Notice (as
defined herein) in accordance with the procedures set forth in Section 5(b).
(b) Mechanics of Mandatory Exercise. The Company shall effect the
-------------------------------
Mandatory Exercise at Company's Election under Section 5(a) by delivering an
irrevocable written notice thereof (the "Mandatory Exercise Notice") on a
-------------------------
Business Day (the "Mandatory Exercise Notice Date") that is no earlier than
------------------------------
ten(10) Business Days after the first anniversary of the issuance of this
Warrant and no less than five (5) Business Days and no more than ten (10)
Business Days prior to the date on which such Mandatory Exercise is to become
effective (the "Effective Time of Mandatory Exercise") to the Holder at the
------------------------------------
facsimile number of each Holder appearing in the Company's register for the
Warrants, specifying the number of Warrant Shares that are subject to the
Mandatory Exercise at the Company's Election and the Effective Time of Mandatory
Exercise. The Mandatory Exercise Notice shall be deemed to have been delivered
to the Holder: (a) if such fax is received by such Holder on or prior to 3:00
p.m. New York City time, on the date of transmission of the Company's fax; and
(b) if such fax is received by the Holder after 3:00 p.m. New York City time, on
the next Business Day following the date of transmission provided that, for any
notice required under this subsection to be valid, a copy of such notice must be
sent to the Holder on the same day by overnight courier. No later than five (5)
Business Days after the Effective Time of the Mandatory Exercise, the Holder
shall deliver this Warrant to the Company, together with payment (and/or notice
of an election to effect a Cashless Exercise) for the Warrant Shares specified
in the Mandatory Exercise Notice and within one (1) Business Day thereafter, the
Company shall deliver to the Holder certificates representing the Warrant Shares
so purchased together with a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised.
6. Issue Tax. The issuance of certificates for Warrant Shares upon the
---------
exercise of this Warrant shall be made without charge to the Holder or such
shares for any issuance
13
<PAGE>
tax or other costs in respect thereof, provided that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other than the Holder.
7. No Rights or Liabilities as a Shareholder. This Warrant shall not
-----------------------------------------
entitle the Holder to any voting rights or other rights as a shareholder of the
Company. No provision of this Warrant, in the absence of affirmative action by
the Holder to purchase Warrant Shares, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the Exercise Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
8. Transfer, Exchange, Redemption and Replacement of Warrant.
---------------------------------------------------------
(a) Restriction on Transfer. This Warrant and the rights granted to
-----------------------
the Holder are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the form of the Form of
Assignment attached hereto as Exhibit 2, at the office or agency of the Company
---------
referred to in Section 8(e) below, provided, however, that any transfer or
assignment shall be subject to the provisions of Sections 5.1 and 5.2 of the
Securities Purchase Agreement. Until due presentment for registration of
transfer on the books of the Company, the Company may treat the registered
holder hereof as the owner and holder hereof for all purposes, and the Company
shall not be affected by any notice to the contrary. Notwithstanding anything to
the contrary contained herein, the registration rights described in Section 9
hereof are assignable only in accordance with the provisions of the Registration
Rights Agreement.
(b) Warrant Exchangeable for Different Denominations. This Warrant is
------------------------------------------------
exchangeable, upon the surrender hereof by the Holder at the office or agency of
the Company referred to in Section 8(e) below, for new Warrants, in the form
hereof, of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as shall be designated by the Holder of at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
----------------------
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant or, in the case of any such loss, theft, or destruction, upon
delivery, of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant, in the form hereof, in such
denominations as Holder may request.
(d) Cancellation; Payment of Expenses. Upon the surrender of this
---------------------------------
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 8, this Warrant shall be promptly canceled by the Company. The
Company shall pay all issuance taxes (other than securities transfer taxes) and
charges payable in
14
<PAGE>
connection with the preparation, execution, and delivery of Warrants pursuant to
this Section 8.
(e) Warrant Register. The Company shall maintain, at its principal
----------------
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder), a register for this Warrant, in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) Additional Restriction on Exercise or Transfer. Notwithstanding
----------------------------------------------
anything to the contrary contained herein, this Warrant shall not be exercisable
by the Holder or subject to a Mandatory Exercise by the Company to the extent
(but only to the extent) that, if exercisable by the Holder, the Holder would be
the beneficial owner of more than 4.99% (9.99% in the case of a Mandatory
Exercise at the Company's Election pursuant to Section 5) (the "Applicable
----------
Percentage") of the shares of Common Stock. For the purposes of this paragraph,
----------
beneficial ownership and all determinations and calculations, shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and all applicable rules and regulations thereunder. For
clarification, it is expressly a term of this security that the limitations
contained in this Section 8(f) shall apply to each successive Holder.
9. Registration Rights. The initial holder of this Warrant (and certain
-------------------
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement.
10. Notices. Any notice herein required or permitted to be given shall be
-------
in writing and may be personally served or delivered by courier or by confirmed
telecopy, and shall be deemed delivered at the time and date of receipt (which
shall include telephone line facsimile transmission). The addresses for such
communications shall be:
If to the Company:
Voxware, Inc.
Lawrenceville Office park
P.O. Box 5363
Princeton, New Jersey 08543
or
168 Franklin Corner Road
Suite 3
Lawrenceville, New Jersey 08648
Telecopy: (609) 514-4103
Attention: Nicholas Narlis
15
<PAGE>
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Telecopy: (212) 318-3400
Attention: Paul Jacobs, Esq.
and if to the Holder, at such address as Holder shall have provided in writing
to the Company, or at such other address as each such party furnishes by notice
given in accordance with this Section 10.
11. Governing Law; Jurisdiction. This Warrant shall be governed by and
---------------------------
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York without reference to
any conflict of law principles thereof. The Company irrevocably consents to the
jurisdiction of the United States federal courts located in the State of New
York in any suit or proceeding based on or arising under this Warrant and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
agrees that a final nonappealable 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.
12. Miscellaneous.
-------------
(a) Amendments. This Warrant and any provision hereof may only be
----------
amended by an instrument in writing signed by the Company and the Holder.
(b) Descriptive Headings. The descriptive headings of the several
---------------------
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(c) Cashless Exercise. Notwithstanding anything to the contrary
-----------------
contained in this Warrant, this Warrant may be exercised by presentation and
surrender of this Warrant to the Company at its principal executive offices with
a written notice of the Holder's intention to effect a cashless exercise,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
-----------------
In the event of a Cashless Exercise, in lieu of paying the Exercise Price in
cash, the Holder shall surrender this Warrant for the number of shares of Common
Stock determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the
difference between
16
<PAGE>
the Average Market Price applicable on the date of the Cashless Exercise and the
Exercise Price, and the denominator of which shall be the then current Average
Market Price per share of Common Stock.
(d) Assignability. This Warrant shall be binding upon the Company
-------------
and its successors and assigns and shall inure to the benefit of Holder and its
successors and assigns. The Holder shall notify the Company upon the assignment
in whole or in part of this Warrant, which assignment may only be effected in
accordance with all applicable laws.
* * *
17
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
VOXWARE, Inc.
By: /s/ Bathsheba J. Malsheen
-------------------------
Name: Bathsheba J. Malsheen
Title: President and Chief Executive
Officer
18
<PAGE>
EXHIBIT 1 TO STOCK PURCHASE WARRANT
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
To: Voxware, Inc.
Lawrenceville Office park
P.O. Box 5363
Princeton, New Jersey 08543
or
--
168 Franklin Corner Road
Suite 3
Lawrenceville, New Jersey 08648
Telecopy: (609) 514-4103
Attention: Nicholas Narlis
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of common stock of VOXWARE, Inc., a Delaware
corporation (the "Company"), evidenced by the attached Warrant, and [herewith
-------
makes payment of the Exercise Price with respect to such shares in full/ elects
to effect a Cashless Exercise pursuant to the terms of the Warrant, pursuant to
which the undersigned is surrendering the right to purchase __________ shares
for an Exercise Price of $__________, all in accordance with the conditions and
provisions of said Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
(ii) The undersigned requests that stock certificates for such shares be
issued, and a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the Holder (or such other person or
persons indicated below) and delivered to the undersigned (or designee(s) at the
address (or addresses) set forth below:
Date:_____________ _____________________________
Signature of Holder
_____________________________
Name of Holder (Print)
Address:_____________________
_____________________________
_____________________________
19
<PAGE>
EXHIBIT 2 TO THE STOCK PURCHASE WARRANT
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
---------------- ------- -------------
and hereby irrevocably constitutes and appoints ______________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Date:____________, _____,
In the presence of
________________________
Name: _________________________________________
Signature:_____________________________________
Title of Signing Officer or Agent (if any):
Address:_______________________________________
_______________________________________________
20
