LYRIS, INC.
ANNUAL INCENTIVE BONUS PLAN

     1. Objectives.
The objectives of the Lyris, Inc. (the
“Company”) Annual Incentive Bonus Plan (the “Plan”) are: (a) to communicate and
focus employees’ attention on significant business goals; (b) to achieve strong
business performance; (c) to maintain high quality employees; (d) to identify
and reward superior performance; and (e) to provide a competitive compensation
package to attract and retain high quality key employees. The Plan is intended
to encourage key employees to achieve and surpass company and individual
objectives through the establishment of a mechanism whereby individual
performance goals and quarterly and annual Company performance goals are
established, such performance goals are reviewed, and cash bonuses are awarded
based on the achievement of such goals. 

     2. Administration.

          (a) The Plan shall be administered under the direction of the Compensation
Committee (the “Committee”) of the board of
directors of the Company (the “Board”). If the Board elects to
administer this Plan instead of delegating it to the Committee, references
herein to the “Committee” shall be deemed to be references to the “Board.”


          (b) The responsibility for ensuring that administrative procedures are
established for Plan operation, that the Plan is managed in a timely and
effective manner and that periodic analyses of the Plan’s effectiveness are
undertaken shall be the duty of a plan administrator (the “Plan Administrator”)
appointed by the Committee, who need not be a member of the Committee. The Plan
Administrator shall report his findings, conclusions and recommendations
regarding the Plan’s operation and effectiveness to the Committee from time to
time. 

          (c) Subject to the express provisions of the Plan, the Committee shall have
the authority, in its sole and absolute discretion, to (i) adopt, amend, and
rescind administrative and interpretive rules and regulations relating to the
Plan; (ii) determine the eligible persons to whom, and the time or times at
which, bonuses shall be granted; (iii) determine the amount of cash that shall
be the subject of each bonus; (iv) construe the Plan; (v) delegate its duties
under the Plan to such agents as it may appoint from time to time; (vi) subject
to ratification by the Board, terminate, modify, or amend the Plan; and (vii)
make all other determinations, perform all other acts, and exercise all other
powers and authority necessary or advisable for administering the Plan,
including the delegation of those ministerial acts and responsibilities as the
Committee deems appropriate. The Committee may correct any defect, supply any
omission, or reconcile any inconsistency in the Plan, in the manner and to the
extent it deems necessary or desirable to carry the Plan into effect, and the
Committee shall be the sole and final judge of that necessity or desirability.
Although it is the present intention of the Company to continue the Plan in
effect for an indefinite period of time, the Company reserves the right,
pursuant to Section 11, to terminate the Plan in its entirety at any time or to
modify the Plan as it exists from time to time. 





          (d) The Plan year for the Plan shall be the Company’s fiscal year (the
“Plan Year”). Bonuses may accrue annually each Plan Year and during each of the
four quarters of a Plan Year (“Bonus
Cycles”). The Bonus Cycles for the Plan
shall be:

          (i) July 1 – September 30;


          (ii) October 1 – December 31;


          (iii) January 1 – March 31; and


          (iv) April 1 – June 30.

     3. Eligibility.
Employees eligible to receive bonuses under
the Plan are those key employees of the Company and its affiliates who may have
a substantial impact on the operating performance of the Company and its
affiliates and who are designated by the Committee (each, a “Participant”).

     4. Bonus Opportunities.
The bonus opportunities under the Plan with respect to each Participant shall be
designed to reflect the overall impact of the Participant on Company
performance. For each Plan Year, a Participant will be eligible to receive a
bonus (each, an “Annual
Bonus”), all or a portion of which may be
based on the Participant’s attainment of specified individual quarterly or
annual performance objectives (an “Individual Incentive Bonus”) and
all or a portion of which may be based on the attainment of Company performance
objectives achieved in each Bonus Cycle (each a “Bonus Cycle Performance Award”)
and in each Plan Year (an “Additional Bonus
Award” and, together with the four Bonus
Cycle Performance Award with respect to a Plan Year, a “Performance Bonus”).
For each Plan Year, the Committee will specify in writing a percentage of the
Participant’s total Annual Bonus that will be an Individual Incentive Bonus and
a percentage of the Participant’s total Annual Bonus that will be a Performance
Bonus.

     5. Performance Criteria and
Bonus Award Amounts.

          (a) Individual Incentive Bonuses. The
right of a Participant to receive payment of an Individual Incentive Bonus for a
Plan Year or Bonus Cycle will be subject to individual performance criteria and
the attainment of a targeted level or levels of performance with respect to such
criteria as determined by the Committee in its sole discretion. Such performance
criteria and targets need not be uniform with respect to all Participants. With
respect to each Bonus Cycle, a Participant will be eligible to earn up to
one-fourth of the total Individual Incentive Bonus for a Plan Year (each a
“Bonus Cycle Individual Incentive
Award”). 

          (b) Performance Bonuses. Performance
Bonuses will be based upon the following performance criteria: (A) net new
monthly rate of revenue (the “MRR
Criteria”), (B) total revenue (the
“Revenue Criteria”), and (C) corporate earnings before interest, taxes,
depreciation and amortization (the “EBITDA
Criteria,” and together with the MRR
Criteria and the Revenue Criteria, the “Performance Criteria”). In
addition, the Committee may select additional performance criteria, including,
but not limited to, the performance criteria set forth in the Company’s 2005
Equity Based Compensation Plan (or other equity compensation plan maintained by
the Company as may be in effect from time to time) and such additional criteria will be Performance Criteria for
purposes of the Plan.

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With respect to each Bonus Cycle and Plan Year, the
Committee will establish in writing the target level or levels that must be
achieved with respect to each Performance Criteria in order for the Performance
Bonus to be earned in full for such Plan Year. With respect to each Performance
Bonus amount for a Plan Year the Committee will establish in writing the portion
of the Performance Bonus that is contingent upon achievement of the applicable
target level(s) with respect to each Performance Criteria (e.g., 50% contingent upon
achievement of the MRR Criteria, 30% contingent upon achievement of the Revenue
Criteria, and 20% contingent upon achievement of the EBITDA
Criteria).

          (i) Bonus Cycle Awards. With respect to
each Bonus Cycle, a Participant will be eligible to earn a Bonus Cycle
Performance Award. The target amount a Participant is eligible to earn with
respect to each of the four Bonus Cycle Performance Awards for a Plan Year will
be established by the Committee. A Participant will receive payment of a Bonus
Cycle Award (A) to the extent the applicable targets are satisfied with respect
to each of the Performance Criteria for the Bonus Cycle, and (B) provided the
Participant is employed by the Company through the end of the Bonus Cycle and
from the end of the Bonus Cycle until the date the Bonus Cycle Award is
paid.

          (ii) Additional Bonus Awards. Participants
shall be eligible for an Additional Bonus Award with respect to a Plan Year (A)
to the extent the applicable targets are satisfied or exceeded with respect to
each of the Performance Criteria for the Plan Year, and (B) provided the
Participant is employed by the Company through the end of the Plan Year and from
the end of the Plan Year until the date of the Additional Bonus Award payment
applicable to the Plan Year.

     6. Review and
Modifications. 

          (a) Performance will be revised at appropriate intervals as financial and
operating results are available. All financial and operating results will be
revised by the controller of the Company and the achievement of all objectives
shall be approved by the Committee prior to the payment of awards by the Plan
Administrator.

          (b) At the discretion of the Committee, an Individual Incentive Bonus or a
Performance Bonus, either individually or collectively, may be increased,
decreased, or completely eliminated at any time before payment on the basis of
the following considerations: (i) Company performance relative to its
competitors; (ii) balancing of long-term versus short-term considerations; (iii)
handling of unforeseen opportunities and obstacles; or (iv) individual
professional conduct. 

     7. Bonus Award
Payments.

          (a) Payment of earned Bonus Cycle Individual Incentive Awards and Bonus Cycle
Performance Awards (collectively, “Bonus
Cycle Awards”) will be made as soon as
possible after the close of each Bonus Cycle upon the approval of the Committee
but in no event later than September 15 of the year following the end of the
Plan Year to which the Bonus Cycle Award relates.

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          (b) Individual Incentive Bonuses and Additional Bonus Awards earned will be
paid as soon as possible after the close of the applicable Plan Year upon
approval of the Committee but in no event later than September 15 of the year
following the end of the Plan Year to which such bonuses relate.

          (c) The Company is authorized to withhold from any bonus granted, or any
payment relating to a bonus under this Plan, amounts of withholding and other
taxes due or potentially payable in connection with such payment, and to take
such other action as the Committee may deem advisable to enable the Company and
Participant to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any payment under the Plan. The Company may
also withhold from such amounts any loans or other amounts due to the Company by
the Participant. 

          (d) If, due to mistake or for any other reason, a person receives benefits
under the Plan in excess of what the Plan provides, that person shall repay the
overpayment to the Company in a lump sum within thirty (30) days of notice of
the amount of overpayment. If that person fails to repay the overpayment, then
without limiting any other remedies available to the Company, the Company may
deduct the amount, to the extent allowable by law, of the overpayment from any
other amounts payable to the person.

     8. Notices. Any notice
required or permitted to be given by the Company or the Committee pursuant to
the Plan shall be deemed given when personally delivered or deposited in the
United States mail, registered or certified, postage prepaid, addressed to the
Participant, his heirs, executors, administrators, successors, assigns or
transferees, at the last address shown for the Participant on the records of the
Company or subsequently provided in writing to the Company. 

     9. Limitation of
Liability.

          (a) The Plan Administrator and the Committee and each member thereof shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him/her by any officer or employee of the Company or a subsidiary
thereof, the Company’s legal counsel, independent auditors, consultants or any
other agents assisting in the administration of this Plan. The Plan
Administrator and members of the Committee and any officer or employee of the
Company or a subsidiary acting at the direction or on behalf of the Committee
shall not be personally liable for any action or determination taken or made in
good faith with respect to this Plan, and shall, to the fullest extent permitted
by law, be indemnified and held harmless by the Company with respect to any such
action or determination. 

          (b) Neither this Plan nor any action taken hereunder shall be construed as
(i) giving any Participant or employee the right to continue in the employ or
service of the Company or a subsidiary, (ii) interfering in any way with the
right of the Company or a subsidiary to terminate any Participant’s or
employee’s employment or service at any time, or (iii) giving a Participant or
employee any claim to be granted any bonus under this Plan or to be treated
uniformly with other Participants and employees, or in any way preventing the
Company from dealing with any employee without regard to the existence of the
Plan. 

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          (c) The Plan shall at all times be entirely unfunded and no provision shall
at any time be made with respect to segregating assets of the Company or any
subsidiary thereof for payment of any bonuses hereunder. No Participant or any
other person shall have any interest in any particular assets of the Company or
any subsidiary thereof by reason of the right to receive a bonus under the Plan
and any such participant or any other person shall have only the rights of a
general unsecured creditor of the Company or any subsidiary thereof with respect
to any rights under the Plan. 

     10. Termination or Amendment. The Board
may amend, alter, suspend, discontinue or terminate this Plan or the Committee’s
authority to grant bonuses under this Plan without the consent of employees who
may be eligible to receive bonuses. The Committee may waive any conditions or
rights under, or amend, alter, suspend, discontinue or terminate any bonus which
has not been paid. If the Plan is terminated before the end of a Bonus Cycle or
Plan Year or before a Bonus Cycle Award is paid, no Annual Bonus for such Plan
Year shall be distributed to Participants unless the Board determines otherwise,
in which case the applicable bonus amounts may be distributed pro rata according
to a formula chosen in the sole discretion of the Committee; provided, however,
that to the extent any Bonus Cycle Award has previously been paid during the
Plan Year in which such termination occurs, Participants shall be entitled to
retain the amounts previously paid.

     11. Company Powers. The adoption of this
Plan by the Board shall not be construed as creating any limitations on the
power of the Board or a committee thereof to adopt such other incentive
arrangements as it may deem desirable. Nothing contained in this Plan shall be
construed to prevent the Company or any subsidiary from taking any corporate
action which is deemed by the Company or such subsidiary to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
this Plan or any bonus award made under this Plan. 

     12. Severability and Governing Law. If any
provision of this Plan is held to be illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining provisions hereof, but
such provision shall be fully severable and the Plan shall be construed and
enforced as if the illegal or invalid provision had never been included herein.
All questions arising with respect to the provisions of the Plan shall be
determined by application of the laws of the State of Texas, without giving
effect to any conflict of law provisions thereof, except to the extent Texas law
is preempted by federal law. 

     13. Effective Date. This Plan is effective as of July
1, 2008. 

	 	LYRIS, INC.  
	 		
		By: 	/s/ Luis Rivera 
	 	 	 
		Name: 	Luis Rivera 
	 	 	 
		Title: 	Chief Executive
  Officer 



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APPENDIX A 

LYRIS, INC.
ANNUAL INCENTIVE BONUS PLAN
ANNUAL PERFORMANCE CRITERIA


	[EXECUTIVE]  	  	  	  	  	
	PLAN
      YEAR  	_____________ 		$___________ 	
	 	  	  	  		
	  	
	  	
	  	
	Total
      Target  	  	  	Key variables 	  	
	Compensation (TTC)  	  	  	  	  	
	(All currency in USD unless otherwise described)  	  	  	  	
	  	
	Base
      Pay: 	$_________  	  	  	  	
	Target
      Incentive: 	$_________  	annualized 	  	  	
	TTC  	$___________ 	  	Target 	  	
	  	  	  	Incentive 	  	
	Incentive Split: 	Net New MRR 	               ____%
    	$_________ 	  	
	  	Total Revenue 	____% 	$_________ 	  	
	  	EBITDA 	____% 	$_________ 	  	
	  	
	Incentive Plan Details  	  	  	  	  	
	  	
	1. Net New
      MRR - $000s  	Potential
      Award 	$_________ 
    	   Net New MRR = new MRR
      minus churn 	
	  	@ 100% = 	  	  	  	
	 	 	 	 	 	 
	Plan Year Total 	% achievement 
    	Target Payout 	Payout
      ($US) 	  	
	  	  	% 	  	  	
	$_________ 	_____%  	_____% 	$_________ 	  	
	$_________ 	_____%  	_____% 	$_________ 	  	
	$_________ 	_____%  	_____% 	$_________ 	  	
	$_________ 	_____%  	_____% 	$_________ 	  	
	$_________ 	_____%  	_____% 	$_________ 	  	
	 	 	 	 	 	
	Quarter  	Target
      Revenue 	Target 	Revenue 	Incentive 	
	  	($000) 	Incentive 	Attained 	Paid
      ($US) 	
	  	  	($US) 	($000) 	  	
	Q1  	$_________ 	$_________ 	  	 	 
	Q2  	$_________ 	$_________ 	 	 	
	Q3  	$_________ 	$_________ 	 	  	
	Q4  	$_________ 	$_________ 	  	  





A-1 





	2. Total
      Revenue - $M 	Potential
      Award 	$_________ 	 	 	
	  	@ 100% = 	  	  	  	
	  	 	  	 	 	
	Plan Year
      Total 	%
      achievement 	Target
      Payout 	Payout
      ($US) 	  	
	  	  	% 	  	  	
	$_________ 	 _____%  	 _____%  	$_________ 	  	
	$_________ 	 _____%  	 _____%  	$_________ 	  	
	$_________ 	 _____%  	 _____%  	$_________ 	  	
	$_________ 	 _____%  	 _____%  	$_________ 	  	
	$_________ 	 _____%  	 _____%  	$_________ 	  	
	  	
	Quarter 	Target
      Revenue 	Target 	Revenue 	Incentive 	
	  	($M) 	Incentive 	Attained ($M) 	Paid ($US) 	
	  	  	($US) 	  	  	
	Q1 	 $_________ 	 $_________ 	  	  	
	Q2 	 $_________ 	 $_________ 	  	  	
	Q3 	 $_________ 	 $_________ 	  	  	
	Q4 	 $_________ 	 $_________ 	  	  	
	  	
	  	
	3. CORP
      EBITDA - $000 	Potential
      Award 	$_________ 	  	  	
	  	@ 100% = 	  	  	  	
	  	 	  	 	 	
	Plan Year
      Total 	%
      achievement 	Target
      Payout 	Payout
      ($US) 	Incentive 	
	  	  	% 	  	Paid
      ($US) 	
	$_________ 	 _____%  	 _____% 	 $_________ 	  	
	$_________ 	 _____%  	 _____% 	 $_________ 	  	
	$_________ 	 _____%  	 _____% 	 $_________ 	  	
	$_________ 	 _____%  	 _____% 	 $_________ 	  	
	$_________ 	 _____%  	 _____% 	 $_________ 	  	
	  	
	Quarter 	Target
      Revenue 	Target 	Revenue 	Incentive 	
	  	($000) 	Incentive 	Attained 	Paid ($US) 	
	  	  	($US) 	($000) 	  	
	Q1 	 $_________ 	 $_________ 	  	  	
	Q2 	 $_________
    	 $_________ 	  	  	
	Q3 	 $_________
    	 $_________ 	  	  	
	Q4 	 $_________
    	 $_________ 	  	  	



Calculation and Payment of
Incentive 

Incentive payments will be calculated
and paid quarterly to a maximum of 100% achievement per quarter. Unless
otherwise specified, incentive payments in excess of 100% will be calculated and
presented to the Board of Directors at the end of the fiscal year and will be
paid to the Executive pursuant to the terms of the Annual Incentive Bonus Plan.
This award is subject to the terms and conditions of and will be construed and
interpreted in accordance with the terms of the Annual Incentive Bonus Plan.


2 





	Signature:  
	 
	 	 



	Date:  
	 
	 	 
	 	



	Quarter 	Target
      Revenue 	Prior
      Rev 	Diff 	Target 	Revenue 	Incentive 
	  	($M) 	  	  	Incentive 	Attained 	Paid 
	  	  	  	  	($US) 	($M) 	($US) 
	Q1 	$_________  	$_________  	$_________  	$_________  	  	  
	Q2 	$_________  	$_________  	$_________  	$_________  	 	 
	Q3 	$_________  	$_________  	$_________  	$_________  	  	  
	Q4 	$_________  	$_________  	$_________  	$_________  	  	  



3