1
Exhibit 10.10
STOCKHOLDERS' AGREEMENT dated as
of May 12, 1997, among MOBIUS
MANAGEMENT SYSTEMS, INC., a Delaware
corporation (the "Corporation"), and
the undersigned stockholders of the
Corporation (collectively, the
"Stockholders").
The Corporation is a corporation duly organized and existing under the
laws of the State of Delaware with an authorized capitalization of 400,000
shares of common stock, $.01 par value per share (the "Common Stock"), 50,000
shares of Class A non-voting common stock, $.01 par value per share (the "Class
A Non-Voting Common Stock"), and 200,000 shares of Preferred Stock, $.01 par
value per share (the "Preferred Stock"), of which 40,910 shares have been
designated as Series A Convertible Preferred Stock (the "Series A Preferred
Stock"). It is deemed to be in the best interests of the Corporation and the
Stockholders that provision be made for the continuity and stability of the
business and policies of the Corporation and, to that end, the Corporation and
the Stockholders hereby set forth their agreement with respect to the shares of
Stock (as hereinafter defined) owned by the Stockholders.
NOW, THEREFORE, in consideration of the premises and of the mutual
consents and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
SECTION 1. Definitions. As used herein, the following terms shall have the
following respective meanings:
"Affiliate", with respect to any Stockholder, shall mean any individual,
partnership, corporation, group or trust that directly or indirectly controls,
is controlled by or is under common control with such Stockholder, with
"control" being the power to direct or cause the direction of management and
policies, whether through ownership of voting securities, by contract or
otherwise.
"Designated Public Offering" shall mean a firm commitment underwritten
public offering of shares of Common Stock of the Corporation under the
Securities Act of 1933, as amended, which results in aggregate net cash proceeds
of not less than $20,000,000 to the Corporation at an offering price per share
of not less than $586.66 (as constituted on the date hereof).
"Group" shall mean:
(i) in the case of any Stockholder who is an individual, (A) such
Stockholder, (B) the spouse and lineal descendants of such Stockholder,
(C) a trust for the benefit
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of any of the foregoing and (D) a not-for-profit entity of the type
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended, that is controlled by such Stockholder;
(ii) in the case of any Stockholder that is a partnership, (A) such
partnership and any of its limited or general partners, (B) any
corporation or other business organization to which such partnership shall
sell all or substantially all of its assets or with which it shall be
merged and (C) any Affiliate of such partnership; and
(iii) in the case of any Stockholder that is a corporation, (A) such
corporation, (B) any corporation or other business organization to which
such corporation shall sell or transfer all or substantially all of its
assets or with which it shall be merged and (C) any Affiliate of such
corporation;
it being understood that (x) Oak Investment Partners VI, Limited Partnership and
Oak VI Affiliates Fund, Limited Partnership shall be deemed to be members of the
same Group and (y) the Management Shareholders shall be deemed to be members of
the same Group.
"Investors" shall mean Oak Investment Partners VI, Limited Partnership and
Oak VI Affiliates Fund, Limited Partnership (collectively, "Oak"), and XXX
Xxxxxxxx 0000, XXX President's Fund L.P., New Enterprise Associates VII, L.P.,
New Venture Partners III L.P. and Xxxxx Ventures III, L.P. (collectively, "NEA")
and shall include any successor to, or permitted assignee of, any of the
Investors who or which agree in writing to be treated as an Investor and to be
bound by the terms and comply with the provisions hereof.
"Management Stockholders" shall mean Xxxxxxxx Xxxxx ("Gross") and Xxxxxx
X. Xxxxxxxx ("Xxxxxxxx").
"Non-Selling Stockholders" shall mean, in the case of Section 3 hereof,
all Stockholders other than the Selling Group(s).
"Proportionate Percentage" shall mean the pro rata percentage of Stock
being offered by a Selling Group pursuant to Section 3 hereof that each of the
Non-Selling Stockholders shall be entitled to purchase, as the case may be; such
pro rata percentage, as to each such Non-Selling Stockholder, being equal to the
percentage figure which expresses the ratio, based upon Common Stock
equivalents, between the number of shares of Stock owned by such Non-Selling
Stockholder and the aggregate number of shares of Stock owned by all Non-Selling
Stockholders.
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"Purchase Agreement" shall mean the Stock Purchase Agreement dated as of
the date hereof, among the Corporation, the Management Stockholders and the
Investors.
"Sell", as to any Stock, shall mean to sell, or in any other way directly
or indirectly transfer, assign, distribute, encumber or otherwise dispose of,
either voluntarily or involuntarily.
"Selling Group" shall mean a Stockholder or member of the Group of a
Stockholder proposing to Sell its Stock, or who has delivered a notice of
intention to Sell, pursuant to Section 3 hereof.
"Stock" shall mean (i) the presently issued and outstanding shares of
capital stock of the Corporation and any stock options or stock subscription
warrants exercisable therefor (which options and warrants shall be deemed to be
that number of outstanding shares of Stock for which they are exercisable), (ii)
any additional shares of capital stock hereafter issued and outstanding and
(iii) any shares of capital stock of the Corporation into which such shares may
be converted or for which they may be exchanged or exercised.
"Stockholders" shall mean those persons identified on Schedule I attached
hereto as the holders of Stock and shall include any other person who agrees in
writing with the parties hereto to be bound by and to comply with all applicable
provisions of this Agreement.
SECTION 2. Limitations on Sales of Stock by Stockholders. (a) Anything
contained in this Agreement to the contrary notwithstanding, for a period of one
year from the date hereof, each Stockholder and each member of the Group of a
Stockholder hereby agrees that she, he or it shall not Sell any Stock except
with the consent of all Stockholders or by transfer to another member of the
Group to which such Stockholder belongs or, in the case of the Management
Stockholders, by transfer of not more than an aggregate of 15,000 shares of
Common Stock (as constituted on the date hereof) at any time after the date
hereof to a charitable remainder unitrust or similar entity established by
either of the Management Stockholders or any member of their Group; provided
that the recipient of such Stock shall agree in writing with the parties hereto
to be bound by and to comply with all applicable provisions of this Agreement
and to be deemed a Stockholder for all purposes of this Agreement.
(b) Anything contained in this Agreement to the contrary notwithstanding,
each Stockholder and each member of the Group of a Stockholder hereby agrees
that she, he or it shall not at any time beginning with the first anniversary of
the date
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hereof and for the remainder of the term of this Agreement Sell any Stock
except:
(i) by sale in accordance with Section 3 hereof; or
(ii) by transfer to another member of the Group to which such
Stockholder belongs; or
(iii) in the case of the Management Stockholders, by transfer of not
more than an aggregate of 15,000 shares of Common Stock (as constituted on
the date hereof) at any time after the date hereof to a charitable
remainder unitrust or similar entity established by either of the
Management Stockholders or any member of their Group;
provided that, in either case, the recipient of such Stock shall agree in
writing with the parties hereto to be bound by and to comply with all applicable
provisions of this Agreement and to be deemed a Stockholder for all purposes of
this Agreement.
(c) Anything contained in this Agreement to the contrary notwithstanding,
in no event shall any Stockholder Sell any Stock to any competitor of the
Corporation without the express written consent of each of the Management
Stockholders. The good faith determination of the Management Stockholders as to
who is a competitor of the Corporation shall be final and binding on each of the
Stockholders.
SECTION 3. Procedures on Sale of Stock to Third Parties. Except as
otherwise expressly provided herein, each Stockholder and each member of the
Group of a Stockholder hereby agrees that she, he or it shall not Sell any
Stock, except in accordance with the following procedures:
(a) The Selling Group shall first deliver to the Corporation and the
Non-Selling Stockholders a written notice (the "Section 3 Offer Notice"),
which shall be irrevocable for a period of 75 days after delivery thereof,
offering all or any part of the Stock owned by the Selling Group at the
purchase price and on the terms specified therein, whereupon the
Corporation shall have the right and option, for a period of 45 days after
the delivery of the Section 3 Offer Notice (the "Section 3 Corporation
Option Period"), to accept all or any part of the Stock so offered at the
purchase price and on the terms specified therein, and the Non-Selling
Stockholders shall have the right and option, for a period of 30 days
after the expiration of the Section 3 Corporation Option Period (the
"Section 3 Investor Option Period"), to accept all or part of their
respective Proportionate Percentages of the shares of Stock so offered and
not accepted by the Corporation at the purchase price
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and on the terms specified therein, subject to Section 3(d) hereof, and to
offer, in any written notice of acceptance, to purchase any of such Stock
not accepted by the other Non-Selling Stockholders (in which case such
Stock not accepted by the other Non-Selling Stockholders shall be deemed
to have been offered to and accepted by the Non-Selling Stockholders which
exercised the aforesaid option pro rata in accordance with their
respective Proportionate Percentages (computed without including the
Non-Selling Stockholders which have not accepted all of their
Proportionate Percentages of the Stock not accepted by the Corporation).
Such acceptance shall be made by delivering a written notice to the
Selling Group within said period.
(b) Sales of Stock under the terms of Section 3(a) above shall be
made at the offices of the Corporation on a mutually satisfactory business
day within 30 days after the expiration of the applicable period. Delivery
of certificates or other instruments evidencing such Stock duly endorsed
for transfer shall be made on such date against payment of the purchase
price therefor.
(c) If effective acceptance shall not be received pursuant to
Section 3(a) above with respect to all Stock offered for sale pursuant to
the Section 3 Offer Notice, then the Selling Group may Sell the remaining
Stock not purchased by the Corporation and/or the Non-Selling Stockholders
at a price not less than the price, and on terms not more favorable to the
purchaser thereof than the terms, stated in the Section 3 Offer Notice at
any time within 90 days after the expiration of the offer required by
Section 3(a) above. In the event that the Stock is not sold by the Selling
Group during such 90-day period, the right of the Selling Group to Sell
such Stock shall expire and the obligations of this Section 3 shall be
reinstated; provided, however, that in the event that the Selling Group
determines, at any time during such 90-day period, that the sale of all or
any part of the remaining Stock on the terms set forth in the Section 3
Offer Notice is impractical, the Selling Group can terminate the offer and
reinstate the procedure provided in this Section 3 by delivering a new
Section 3 Offer Notice without waiting for the expiration of such 90-day
period.
(d) The Selling Group may specify in the Section 3 Offer Notice that
all Stock mentioned therein must be sold, in which case any acceptance
received pursuant to Section 3(a) hereof shall be deemed conditioned upon
(i) receipt of written notices of acceptance with respect to all Stock
mentioned in such Section 3 Offer Notice and/or (ii) the sale of the
remaining Stock, if any, pursuant to Section 3(c) above.
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(e) Anything contained herein to the contrary notwithstanding, any
purchaser of Stock pursuant to Section 3 who is not a Stockholder shall
agree in writing in advance with the parties hereto to be bound by and
comply with all applicable provisions of this Agreement and shall be
deemed to be a Stockholder for all purposes of this Agreement.
SECTION 4. Election of Directors. At each annual meeting of the
stockholders of the Corporation, and at each special meeting of the stockholders
of the Corporation called for the purpose of electing directors of the
Corporation, and at any time at which stockholders of the Corporation shall have
the right to, or shall, vote for or consent in writing to the election of
directors of the Corporation, then, and in each such event, the Stockholders
shall vote all shares of Stock owned by them for, or consent in writing with
respect to such shares in favor of, the election of a Board of Directors
consisting of up to seven persons, as follows:
(i) a designee of Gross, for so long as he or his Group continues to
own Stock, who shall initially be Gross;
(ii) a designee of Xxxxxxxx, for so long as he or his Group
continues to own Stock, who shall initially be Xxxxxxxx;
(iii) a designee of the Management Stockholders, for as long as they
continue to own Stock, who shall initially be Xxxxxxx X. Xxxxxxxx;
(iv) a designee of Oak, for so long as Oak continues to own Stock,
who shall initially be Xxxxxx X. Xxxxxxxxxx;
(v) a designee of NEA, for so long as NEA continues to own Stock,
who shall initially be Xxxxx X. Xxxxxx; and
(vi) up to two independent directors who shall be acceptable to at
least a majority of the other directors;
provided, however, that in the event that any of the above listed parties,
together with their respective Groups, owns less than one-third of the Series A
Preferred Stock (or shares of Common Stock issued upon conversion thereof) or
Common Stock, as the case may be, owned by such party on the date hereof
(subject to adjustment to reflect stock splits, stock dividends, stock
combinations, recapitalizations and like occurrences), such party shall no
longer be bound by the terms of this Section 4, nor shall such party be entitled
pursuant to this Section 4 to designate for election a member of the Board of
Directors.
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SECTION 5. Corporate Matters. (a) The Stockholders agree that they shall
refrain from taking or causing the Corporation to take, and the Corporation
agrees that it shall not take, any of the following types of action without the
prior written consent of each of the Management Stockholders:
(i) issue or dispose of any capital stock or other security or
create or assume any liability for borrowed money other than obligations
to trade creditors incurred in the ordinary course of business;
(ii) declare or pay any dividend or authorize or make any
distribution on any stock of the Corporation now or hereafter outstanding,
or apply any property or assets to the purchase, acquisition, redemption
or other retirement of any shares of such stock, directly or indirectly;
(iii) create, assume or suffer to exist any mortgage, pledge or
other encumbrance upon any of its properties or assets now owned or
hereafter acquired;
(iv) assume, guaranty, endorse or otherwise become liable upon the
obligation of any person, firm or corporation, except by the endorsement
of negotiable instruments for deposit or collection in the ordinary course
of business;
(v) purchase or acquire, except in the ordinary course of business,
any property or assets or obligations or stock of or interest in, make any
capital contributions to, or otherwise invest directly or indirectly in,
or make loans or advances to, any person, firm or corporation;
(vi) make any change in the character of its business or undertake
any new ventures or transactions or engage in any type of business not
incidental and directly related to its present business;
(vii) pay or incur any obligation for the payment of salaries, fees
or other remuneration, or change the rate of compensation or other
remuneration, or pay any debts claimed to be owing, directly or
indirectly, to any Stockholder or director of officer of the Corporation;
(viii) amend or change its certificate of incorporation or by-laws,
dissolve or merge or consolidate with or into any other corporation;
(ix) sell, lease, transfer or otherwise dispose of any of its assets
or properties, except in the ordinary course of business;
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(x) enter into any transaction, contract or commitment other than in
the ordinary course of business; or
(xi) convene a meeting of the Board of Directors of the Corporation
without the presence of at least one of the Management Stockholders or
their written consent to convene in their absence.
(b) The Stockholders recognize that at some future time it may be
desirable to vote or Sell their shares of Stock or otherwise act unanimously in
order to effectuate (i) a sale of all of substantially all of the assets of the
Corporation at an aggregate purchase price of not less than $100,000,000 during
the period beginning with the date hereof until the first anniversary of the
date hereof, $125,000,000 during the period beginning with the day after the
first anniversary of the date hereof until the second anniversary of the date
hereof and $150,000,000 during the period beginning with the day after the
second anniversary of the date hereof; (ii) a merger or consolidation of the
Corporation with or into another Corporation in which the Stockholders receive
aggregate consideration having a value of not less than $100,000,000 during the
period beginning with the date hereof until the first anniversary of the date
hereof, $125,000,000 during the period beginning with the day after the first
anniversary of the date hereof until the second anniversary of the date hereof
and $150,000,000 during the period beginning with the day after the second
anniversary of the date hereof; (iii) a Designated Public Offering; (iv) a
private sale by the Stockholders of all or substantially all of the Stock at a
price per share of Stock of not less than $586.66 during the period beginning
with the date hereof until the first anniversary of the date hereof, $733.33
during the period beginning with the day after the first anniversary of the date
hereof until the second anniversary of the date hereof and $879.99 during the
period beginning with the day after the second anniversary of the date hereof.
Accordingly, the Stockholders agree that, at any time on or prior to the fifth
anniversary of the date hereof, they shall each vote or Sell their shares of
Stock or otherwise act in conformity with any decision with respect to any such
sale of assets, merger or consolidation, Designated Public Offering or private
sale of Stock which is recommended and approved by the Management Stockholders
and shall not exercise any statutory appraisal rights in connection with any
such transaction.
SECTION 6. Legend on Stock Certificates. Each certificate representing
shares of Stock shall bear a legend containing the following words:
"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE AND/OR THE RIGHTS OF THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IN RESPECT OF THE ELECTION OF
DIRECTORS ARE
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SUBJECT TO THE TERMS AND CONDITIONS OF A STOCKHOLDERS' AGREEMENT DATED AS
OF MAY 12, 1997, AMONG MOBIUS MANAGEMENT SYSTEMS, INC. AND CERTAIN HOLDERS
OF THE OUTSTANDING CAPITAL STOCK OF SUCH CORPORATION. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF MOBIUS MANAGEMENT
SYSTEMS, INC.
SECTION 7. Duration of Agreement. The rights and obligations of each
Stockholder under this Agreement shall terminate as to such Stockholder upon the
earlier to occur of (a) the transfer of all Stock owned by such Stockholder and
(b) the occurrence of a Designated Public Offering.
SECTION 8. Severability; Governing Law. If any provisions of this
Agreement shall be determined to be illegal and unenforceable by any court of
law, the remaining provisions shall be severable and enforceable in accordance
with their terms. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts made
and to be performed wholly therein and with respect to corporations organized
thereunder.
SECTION 9. Successors and Assigns. This Agreement shall bind and inure to
the benefit of the parties and their respective successors and assigns, legal
representatives and heirs.
SECTION 10. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or at such other address as may hereafter be designated
in writing by such party to the other parties:
(i) if to the Corporation or the Management Stockholders, to them at:
Mobius Management Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxx Xxxxxxxx, Xxx Xxxx 00000
Attention: President or such Management
Stockholder, as the case may be;
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with a copy to:
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.; and
(ii) if to the Investors, to their respective addresses set forth on
Schedule I hereto;
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of dispatch by nationally-recognized overnight
courier, on the next business day following such dispatch and (c) in the case of
mailing, on the third business day after the posting thereof.
SECTION 11. Modification. Except as otherwise provided herein, neither
this Agreement nor any provisions hereof can be modified, changed, discharged or
terminated except by an instrument in writing signed by the party against whom
the enforcement of any modification, change, discharge or termination is sought
or by the agreement of Stockholders holding at least 51% of the Stock then held
by all Stockholders; provided, however, that no modification or amendment shall
be effective to reduce the percentage of the shares of Stock the consent of the
holders of which is required under this Section 10.
SECTION 12. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
SECTION 13. Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
SECTION 14. Entire Agreement. This Agreement, the Purchase Agreement and
the other writings referred to therein or delivered pursuant thereto contain the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersede all prior and contemporaneous agreements and understandings
with respect thereto, including, without
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limitation, the Stockholders' Agreement dated August 14, 1981, as amended, among
the Corporation's predecessor and the Management Stockholders.
SECTION 15. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement as of the date first above written.
MOBIUS MANAGEMENT SYSTEMS, INC.
By:________________________________
Name:
Title:
OAK INVESTMENT PARTNERS VI,
LIMITED PARTNERSHIP
By:________________________________
OAK ASSOCIATES VI, L.L.C., AS
GENERAL PARTNER
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By:________________________________
A Managing Member
OAK VI AFFILIATES FUND, LIMITED
PARTNERSHIP
By: OAK VI AFFILIATES, L.L.C.,
ITS GENERAL PARTNER
By:________________________________
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A Managing Member
NEA VENTURES 1997
By:________________________________
Xxxxx Xxxxxx
Vice President
NEA PRESIDENT'S FUND L.P.
By New President's Partners L.P.
By:________________________________
Name:
Title:
NEW ENTERPRISE ASSOCIATES VII L.P.
By New Enterprise Partners VII L.P.
By:________________________________
Name:
Title:
NEW VENTURE PARTNERS III L.P.
By:________________________________
General Partner
XXXXX VENTURES III, L.P.
By:________________________________
General Partner
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___________________________________
Xxxxxxxx Xxxxx
___________________________________
Xxxxxx X. Xxxxxxxx
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SCHEDULE I
STOCKHOLDERS
Name and Address of Stockholder
-------------------------------
OAK INVESTMENT PARTNERS VI, LIMITED PARTNERSHIP
One Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
OAK VI AFFILIATES FUND, LIMITED PARTNERSHIP
Xxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
NEA VENTURES 1997
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
NEA PRESIDENT'S FUND L.P.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
NEW ENTERPRISE ASSOCIATES VII L.P.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
NEW VENTURE PARTNERS III L.P.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
XXXXX VENTURES III, L.P.
Xxxxxxxx 0, Xxxxx 000
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Xx.
Xxxxxxxx Xxxxx
c/o Mobius Management Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxx Xxxxxxxx, Xxx Xxxx 00000
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Xxxxxx X. Xxxxxxxx
c/o Mobius Management Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxx Xxxxxxxx, Xxx Xxxx 00000
