Document:

2010 letter agreement relating to Registration Rights Agreement

 Exhibit 4.2(b) 

 
 

 
 John H. Weber 

President and 
 Chief Executive Officer

 Mr. John Irish 
 Ore Hill Partners
LLC 
 650 Fifth Avenue, 9th Floor 
 New
York, New York 10019 
 jirish@orehill.com 
 (212) 389-2327 
 Reference is made to the Registration Rights Agreement by and among the Issuer
and the holders party thereto dated as of December 6, 2007 (the “Registration Rights Agreement”). Capitalized terms used and not defined herein have the respective meanings set forth in the Registration Rights Agreement. 

The Issuer has acknowledged and agreed that (i) Ore Hill Hub Fund Ltd. (“Ore Hill”) has all of the rights of a Common Stockholder under the
Registration Rights Agreement and (ii) the Common Stock of the Issuer owned by Ore Hill, on the date hereof or subsequently, including after giving effect to any exchange of preferred stock held by Ore Hill for Common Stock or Common Stock issued to
Ore Hill pursuant to a rights offering, are and will be Registrable Securities under and as defined in the Registration Rights Agreement. The Issuer agrees that Ore Hill and each of its affiliates (including, without limitation, controlling persons)
and the directors, officers, employees, shareholders, principals and any advisors and agents of the foregoing (each, an “Indemnified Person”) will have no liability for, and hereby indemnifies and holds harmless from and against, any and
all losses, claims, costs, expenses, damages or liabilities (or actions or other proceedings commenced or threatened in respect thereof) that arise out of or in connection with any claim, action, suit or proceeding whereby any person asserts or any
court determines (i) that Ore Hill is not a Common Stockholder under the Registration Rights Agreement, (ii) that the shares of Common Stock held by Ore Hill on the date hereof or subsequently, including after giving effect to any exchange of
preferred stock held by Ore Hill for Common Stock or Common Stock issued to Ore Hill pursuant to a rights offering, are not Registrable Securities under the Registration Rights Agreement or (iii) under any theory, that Ore Hill does not have all the
rights under the Registration Rights Agreement as set forth therein to participate in or make a Demand Request, to be a Requesting Holder and, subject to the limitations and qualifications set forth in the Registration Rights Agreement, to have any
Common Stock held by Ore Hill included in any registration thereunder as Registrable Securities, to have such securities distributed by means of an underwriting as set forth in the Registration Rights Agreement and to enforce all related rights
under the Registration Rights Agreement of a holder of Registrable Securities with respect to all of the shares of Common Stock held by Ore Hill, now or in the future, and to reimburse each Indemnified Person promptly upon its written demand for any
legal or other expenses incurred in connection with investigating, preparing to defend or defending against, or participating in, any such loss, claim, cost, expense, damage, liability or action or other proceeding; provided that any such
obligation to indemnify, hold harmless and reimburse an Indemnified Person shall not be applicable to the extent such damages resulted solely from the gross negligence or willful misconduct of relevant Indemnified Person. 

Sincerely, 
  

									
	REMY INTERNATIONAL, INC.	 		 	ORE HILL HUB FUND LTD.
		 		 		 	By:	 	Ore Hill Partners LLC
		 		 		 	Its:	 	Investment Advisor
					
		 	 /s/ John H. Weber
	 		 		 	 /s/ Claude A. Baum

	By:	 	John H. Weber	 		 	By:	 	Claude A. Baum, Esq.
	Title:	 	President and CEO	 		 	Title:	 	 GENERAL COUNSEL
 ORE HILL PARTNERS LLCExhibit 4.1 

CERTIFICATE OF
DESIGNATION

OF THE SERIES A PREFERRED STOCK

(Pursuant to Section 151 of
the
General Corporation Law of the State of Delaware) 

     Lyris, Inc, a
Delaware corporation (the “Corporation”), does hereby certify
that, pursuant to the authority contained in Article Fourth, Section B of its
Amended and Restated Certificate of Incorporation, as amended (the
“Certificate”), and in accordance with the provisions of Section 151 of the Delaware
General Corporation Law, the Corporation's Board of Directors has duly adopted
the following resolution creating a series of Preferred Stock designated as
Series A Preferred Stock:

    
RESOLVED, that the Corporation hereby designates and creates a series of
the authorized Preferred Stock designated as Series A Preferred Stock as
follows:

    
A. Designation. Of the 4,000,000 shares of Preferred Stock, par value $0.01
per share, authorized to be issued by the Corporation, 2,000,000 shares are
hereby designated as “Series A Preferred
Stock.”

    
B. Rights, Preferences, Privileges and
Restrictions. The rights, preferences,
privileges and restrictions granted to and imposed on the Series A Preferred
Stock are as follows: 

    
1.
Dividends. The holders of shares of Series A Preferred Stock shall not be entitled
to receive any dividends except as declared by the Corporation at the discretion
of the Corporation’s Board of Directors.

    
2.
Liquidation, Dissolution or Winding Up;
Certain Mergers, Consolidations
and Asset Sales. 

         
2.1 Payments to Holders of Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation or any Deemed Liquidation Event (as defined
below), before any payment shall be made to the holders of Common Stock by
reason of their ownership thereof, the holders of any shares of Series A
Preferred Stock then outstanding shall be entitled to be paid out of the funds
and assets available for distribution to its stockholders, an amount per share
equal to the greater of (a) the Original Issue Price (as defined below) for the
Series A Preferred Stock, plus any dividends declared but unpaid thereon, or (b)
such amount per share as would have been payable had all shares of Series A
Preferred Stock been converted into Common Stock pursuant to Sections 4 and 5
immediately prior to such liquidation, dissolution, winding up or Deemed
Liquidation Event. If upon any such liquidation, dissolution, winding up or
Deemed Liquidation Event of the Corporation, the funds and assets available for
distribution to the stockholders of the Corporation shall be insufficient to pay
the holders of shares of Series A Preferred Stock the full amounts to which they
are entitled under this Section 2.1, the holders of shares of Series A Preferred
Stock shall share ratably in any distribution of the funds and assets available
for distribution in proportion to the respective amounts that would otherwise be
payable in respect of the shares of Series A Preferred Stock held by them upon
such distribution if all amounts payable on or with respect to such shares were
paid in full. In the case of the Series A Preferred Stock, the “Original Issue
Price” for the Series A Preferred Stock shall mean $2.50 per share, subject to
appropriate adjustment in the event of any stock splits
and combinations of shares and for dividends paid on the Series A Preferred
Stock in shares of such stock. 

          2.2 Remaining Assets. After the payment to
the holders of Series A Preferred Stock of the full amount set forth in Section
2.1, any remaining assets of the Corporation shall be distributed with equal
priority and pro rata among the holders of the Corporation’s Common Stock based
on the number of shares of Common Stock held by each holder. 

         
2.3 Deemed Liquidation Events.

              
2.3.1 Definition. Each of the
following events shall be considered a “Deemed Liquidation Event” unless
the holders of at least a majority of the outstanding shares of Series A
Preferred Stock (voting together as a single class on an as-converted basis)
elect otherwise by written notice sent to the Corporation at least five days
prior to the effective date of any such event:

                   
(a) a
merger or consolidation (each a “Combination”) in which (i) the
Corporation is a constituent party or (ii) a subsidiary of the Corporation is a
constituent party and the Corporation issues shares of its capital stock
pursuant to such Combination, except any such Combination involving the
Corporation or a subsidiary in which the shares of capital stock of the
Corporation outstanding immediately prior to such Combination continue to
represent, or are converted into or exchanged for equity securities that
represent, immediately following such Combination, at least a majority, by
voting power, of the equity securities of (1) the surviving or resulting party
or (2) if the surviving or resulting party is a wholly owned subsidiary of
another party immediately following such Combination, the parent of such
surviving or resulting party; provided that, for the purpose of
this Section 2.3.1, all shares of Common Stock issuable upon the exercise of
Options (as defined below) outstanding immediately prior to such Combination or
upon conversion of Convertible Securities (as defined below) outstanding
immediately prior to such Combination shall be deemed to be outstanding
immediately prior to such Combination and, if applicable, deemed to be converted
or exchanged in such Combination on the same terms as the actual outstanding
shares of Common Stock are converted or exchanged; or 

                   
(b) the
sale, lease, transfer or other disposition, in a single transaction or series of
related transactions, by the Corporation or any subsidiary or subsidiaries of
the Corporation, of all or substantially all the assets of the Corporation and
its subsidiaries taken as a whole, (or, if substantially all of the assets of
the Corporation and its subsidiaries taken as a whole are held by one or more
subsidiaries, the sale or disposition (whether by consolidation, merger,
conversion or otherwise) of such subsidiaries of the Corporation), except where
such sale, lease, transfer or other disposition is made to the Corporation or
one or more wholly owned subsidiaries of the Corporation (an “Asset Disposition”).

2 

                   
(c) As used in this Section 2.3.1 the definitions below shall apply: 

                             
(i) “Option” shall mean any right,
option or warrant to subscribe for, purchase or otherwise acquire Common Stock
or Convertible Securities from the Corporation. 

                             
(ii) “Convertible
Securities” shall mean any evidences of
indebtedness, shares or other securities issued by the Corporation that are
directly or indirectly convertible into or exchangeable for Common Stock, but
excluding Options. 

               2.3.2 Amount Deemed Paid or
Distributed. The funds and assets deemed paid
or distributed to the holders of capital stock of the Corporation upon any such
Combination or Asset Distribution shall be the cash or the value of the
property, rights or securities paid or distributed to such holders by the
Corporation or the acquiring person, firm or other entity. If the amount deemed
paid or distributed under this Section 2.3.1(c) is made in property other than
in cash, the value of such distribution shall be the fair market value of such
property, as determined in good faith by the Board; provided,
however, that for securities not subject to investment letters or other similar
restrictions on free transferability: 

          (i) if traded on a securities exchange, the value shall be
deemed to be the average of the closing prices of the securities on such
exchange over the 30-day period ending three days prior to the closing of such
transaction; 

          (ii) if actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid prices over the 30-day period ending
three days prior to the closing of such transaction; or 

          (iii) if there is no active public market, the value shall be
the fair market value thereof, as determined in good faith by the Board of
Directors of the Corporation. 

The method of valuation of securities
subject to investment letters or other similar restrictions on free
marketability (other than restrictions arising solely by virtue of a
stockholder’s status as an affiliate or former affiliate) shall take into
account an appropriate discount (as determined in good faith by the Board of
Directors of the Corporation) from the market value as determined pursuant to
clause (i) above so as to reflect the approximate fair market value thereof.

    
The foregoing methods for valuing non-cash consideration to be
distributed in connection with a Combination or Asset Distribution shall, with
the appropriate approval of the definitive agreements governing such Combination
or Asset Distribution by the stockholders under the General Corporation Law and
Section 2.3, be superseded by the determination of such value set forth in the
definitive agreements governing such Combination or Asset Distribution.

    
3.
Voting.

         
3.1 General. On any matter presented to
the stockholders of the Corporation for their action or consideration at any
meeting of stockholders of the Corporation (or by written consent of
stockholders in lieu of meeting), each holder of outstanding shares of Series A
Preferred Stock shall be entitled to cast the number of votes equal to the
number of whole shares of Common Stock into which the shares of Series A
Preferred Stock held by such holder are convertible as
of the record date for determining stockholders entitled to vote on such matter.
Fractional votes shall not be permitted and any fractional voting rights
available on an as-converted basis (after aggregating all shares into which
shares of Series A Preferred Stock held by each holder could be converted) shall
be rounded to the nearest whole number (with one-half being rounded upward).
Except as provided by law or by the other provisions of the Certificate and
Certificate of Designation, holders of Series A Preferred Stock shall vote
together with the holders of Common Stock as a single class on an as-converted
basis, shall have full voting rights and powers equal to the voting rights and
powers of the holders of Common Stock, and shall be entitled, notwithstanding
any provision hereof, to notice of any stockholders’ meeting in accordance with
the Bylaws of the Corporation.

3 

          3.2 Preferred Stock Protective Provisions.
For so long as 500,000 shares of Series A Preferred Stock remain outstanding (as
such number is adjusted for stock splits and combinations of shares and for
dividends paid on the Series A Preferred Stock in shares of such stock), the
Corporation shall not, either directly or indirectly by amendment, merger,
consolidation or otherwise, do any of the following without the written consent,
or affirmative vote at a meeting and evidenced in writing, of the holders of at
least a majority of the then outstanding shares of Series A Preferred Stock,
consenting or voting together as a single class on an as-converted basis (in
addition to any other vote required by law or the Certificate or this
Certificate of Designation):

                   
(a) alter or change the rights, powers or preferences of the
Series A Preferred Stock set forth in the certificate of incorporation or bylaws
of the Corporation, as then in effect, in a way that adversely affects the
Series A Preferred Stock; or 

                   
(b) increase or decrease the authorized number of shares of Series A
Preferred Stock (or any series thereof); or 

                   
(c) authorize or create (by reclassification or otherwise) any new class or
series of capital stock having rights, powers or preferences set forth in this
Certificate of Designation, as then in effect, that are senior to or on a parity
with any series of Series A Preferred Stock or authorize or create (by
reclassification or otherwise) any security convertible into or exercisable for
any such new class or series of capital stock; or 

                   
(d) liquidate, dissolve or wind-up the business and affairs of the
Corporation, effect any Deemed Liquidation Event, or consent, agree or commit to
any of the foregoing without conditioning such consent, agreement or commitment
upon obtaining the approval required by this Section 33.2; or 

                   
(e) amend
this Section 3.2. 

4 

     4. Conversion Rights. The
holders of Series A Preferred Stock shall have conversion rights as follows (the
“Conversion Rights”): 

          4.1 Right to Convert.

              
4.1.1 Conversion Ratio. Each share of Series
A Preferred Stock shall be convertible, at the option of the holder thereof, at
any time, and without the payment of additional consideration by the holder
thereof, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing the Original Issue Price for the Series A Preferred
Stock by the Conversion Price (as defined below) for Series A Preferred Stock in
effect at the time of conversion. The “Conversion Price” for Series A
Preferred Stock shall initially mean the Original Issue Price for Series A
Preferred Stock. Such initial Conversion Price, and the rate at which shares of
Series A Preferred Stock may be converted into shares of Common Stock, shall be
subject to adjustment as provided in Section 5. 

              
4.1.2 Notice of Conversion. In order for a
holder of Series A Preferred Stock to voluntarily convert shares of Series A
Preferred Stock into shares of Common Stock, such holder shall surrender the
certificate or certificates for such shares of Series A Preferred Stock (or, if
such registered holder alleges that any such certificate has been lost, stolen
or destroyed, a lost certificate affidavit and agreement reasonably acceptable
to the Corporation to indemnify the Corporation against any claim that may be
made against the Corporation on account of the alleged loss, theft or
destruction of such certificate), at the office of the transfer agent for the
Series A Preferred Stock (or at the principal office of the Corporation if the
Corporation serves as its own transfer agent), together with written notice that
such holder elects to convert all or any number of the shares of the Series A
Preferred Stock represented by such certificate or certificates and, if
applicable, any event on which such conversion is contingent (a
“Contingency Event”). Such notice shall state such holder’s name or the names of
the nominees in which such holder wishes the certificate or certificates for
shares of Common Stock to be issued. If required by the Corporation,
certificates surrendered for conversion shall be endorsed or accompanied by a
written instrument or instruments of transfer, in form reasonably satisfactory
to the Corporation, duly executed by the registered holder or such holder’s
attorney duly authorized in writing. The close of business on the date of
receipt by the transfer agent (or by the Corporation if the Corporation serves
as its own transfer agent) of such certificates (or lost certificate affidavit
and agreement) and notice (or, if later, the date on which all Contingency
Events have occurred) shall be the time of conversion (the “Conversion Time”), and
the shares of Common Stock issuable upon conversion of the shares represented by
such certificate shall be deemed to be outstanding of record as of such time.
The Corporation shall, as soon as practicable after the Conversion Time, (a)
issue and deliver to such holder of Series A Preferred Stock, or to such
holder’s nominee(s), a certificate or certificates for the number of full shares
of Common Stock issuable upon such conversion in accordance with the provisions
hereof and a certificate for the number (if any) of the shares of Series A
Preferred Stock represented by the surrendered certificate that were not
converted into Common Stock, (b) pay in cash such amount as provided in Section
5.6.3 in lieu of any fraction of a share of Common Stock otherwise issuable upon
such conversion and (c) pay all declared but unpaid dividends on the shares of
Series A Preferred Stock converted. 

              
4.1.3 Effect of Voluntary Conversion. All
shares of Series A Preferred Stock that shall have been surrendered for
conversion as herein provided shall no longer be deemed to be outstanding and
all rights with respect to such shares shall immediately cease and terminate at
the Conversion Time, except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor, to receive
payment in lieu of any fraction of a share otherwise issuable upon such
conversion as provided in Section 5.6.3 and to receive payment of any dividends
declared but unpaid thereon. Any shares of Series A Preferred Stock so converted
shall be retired and cancelled and may not be reissued.

5 

          4.2 Mandatory Conversion.

              
4.2.1 Automatic Conversion. Upon the date
and time, or the occurrence of an event, specified by vote or written consent of
the holders of at least a majority of the outstanding shares of Series A
Preferred Stock at the time of such vote or consent, voting together as a single
class on an as-converted basis (the time of such closing or the date and time
specified or the time of the event specified in such vote or written consent is
referred to herein as the “Mandatory
Conversion Time”), (i) all outstanding
shares of Series A Preferred Stock shall automatically be converted into shares
of Common Stock, at the applicable ratio described in Section 4.1.1 as the same
may be adjusted from time to time in accordance with Section 5 and (ii) such
shares may not be reissued by the Corporation.

              
4.2.2 Mandatory Conversion Procedural Requirements.

                    (a) All holders of record of
shares of Series A Preferred Stock shall be sent written notice of the Mandatory
Conversion Time and the place designated for mandatory conversion of all such
shares of Series A Preferred Stock pursuant to Sections 4.2.1 and 10. Unless
otherwise provided in the Certificate or this Certificate of Designation, such
notice need not be sent in advance of the occurrence of the Mandatory Conversion
Time. Upon receipt of such notice, each holder of shares of Series A Preferred
Stock shall surrender such holder’s certificate or certificates for all such
shares (or, if such holder alleges that such certificate has been lost, stolen
or destroyed, a lost certificate affidavit and agreement reasonably acceptable
to the Corporation to indemnify the Corporation against any claim that may be
made against the Corporation on account of the alleged loss, theft or
destruction of such certificate) to the Corporation at the place designated in
such notice, and shall thereafter receive certificates for the number of shares
of Common Stock to which such holder is entitled pursuant to this Section 4.2.

                    (b) If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form reasonably
satisfactory to the Corporation, duly executed by the registered holder or by
such holder’s attorney duly authorized in writing. All rights with respect to
the Series A Preferred Stock converted pursuant to this Section 4.2, including
the rights, if any, to receive notices and vote (other than as a holder of
Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding
the failure of the holder or holders thereof to surrender the certificates at or
prior to such time), except only the rights of the holders thereof, upon
surrender of their certificate or certificates (or lost certificate affidavit
and agreement) therefor, to receive the items provided for in the next sentence
of this Section 4.2.2(b). As soon as practicable after the Mandatory Conversion
Time and the surrender of the certificate or certificates (or lost certificate
affidavit and agreement) for Series A Preferred Stock, the Corporation shall
issue and deliver to such holder, or to such holder’s nominee(s), a certificate
or certificates for the number of full shares of Common Stock issuable on such
conversion in accordance with the provisions hereof,
together with cash as provided in Section 5.6.3 in lieu of any fraction of a
share of Common Stock otherwise issuable upon such conversion and the payment of
any declared but unpaid dividends on the shares of Preferred Stock converted.
Such converted Series A Preferred Stock shall be retired and cancelled and may
not be reissued as shares of such series, and the Corporation may thereafter
take such appropriate action (without the need for stockholder action) as may be
necessary to reduce the authorized number of shares of Series A Preferred Stock
(and the applicable series thereof) accordingly.

6 

     5. Adjustments to Conversion Price. 

         
5.1 Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the
Original Issue Date (as defined below) the Series A Preferred Stock effect a
subdivision of the outstanding Common Stock, the Conversion Price for the Series
A Preferred Stock in effect immediately before that subdivision shall be
proportionately decreased so that the number of shares of Common Stock issuable
on conversion of each share of such series shall be increased in proportion to
such increase in the aggregate number of shares of Common Stock outstanding. If
the Corporation shall at any time or from time to time after the Original Issue
Date for the Series A Preferred Stock combine the outstanding shares of Common
Stock, the Conversion Price for the Series A Preferred Stock in effect
immediately before the combination shall be proportionately increased so that
the number of shares of Common Stock issuable on conversion of each share of
such series shall be decreased in proportion to such decrease in the aggregate
number of shares of Common Stock outstanding. Any adjustment under this Section
5.1 shall become effective at the close of business on the date the subdivision
or combination becomes effective. In the case of the Series A Preferred Stock,
the “Original Issue
Date” for the Series A Preferred Stock
shall mean October 17, 2012. 

         
5.2 Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to
time after the Original Issue Date for the Series A Preferred Stock shall make
or issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable on the Common
Stock in additional shares of Common Stock, then and in each such event the
Conversion Price for the Series A Preferred Stock in effect immediately before
such event shall be decreased as of the time of such issuance or, in the event
such a record date shall have been fixed, as of the close of business on such
record date, by multiplying such Conversion Price then in effect by a fraction:

          (a)
the numerator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date, and 

          (b) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution.

     Notwithstanding the foregoing, (i) if such record date shall have been
fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, such Conversion Price
shall be recomputed accordingly as of the close of business on such record date
and thereafter such Conversion Price shall be adjusted pursuant to this Section
5.2 as of the time of actual payment of such dividends or distributions; and
(ii) no such adjustment shall be made if the holders of the Series A Preferred
Stock simultaneously receive a dividend or other distribution of shares of
Common Stock in a number equal to the number of shares of Common Stock as they
would have received if all outstanding shares of Series A Preferred Stock had
been converted into Common Stock on the date of such event. 

7 

          5.3 Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to
time after the Original Issue Date for the Series A Preferred Stock shall make
or issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Corporation (other than a distribution of shares of Common Stock in respect
of outstanding shares of Common Stock), then and in each such event the holders
of Series A Preferred Stock shall receive, simultaneously with the distribution
to the holders of Common Stock, a dividend or other distribution of such
securities in an amount equal to the amount of such securities as they would
have received if all outstanding shares of Series A Preferred Stock had been
converted into Common Stock on the date of such event. 

         
5.4 Adjustment for Reclassification, Exchange and
Substitution. If, at any time or from time to
time after the Original Issue Date for Series A Preferred Stock, the Common
Stock issuable upon the conversion of Series A Preferred Stock is changed into
the same or a different number of shares of any class or classes of stock of the
Corporation, whether by recapitalization, reclassification or otherwise
(other
than by a
stock split or combination, dividend, distribution, merger or consolidation
covered by Sections 5.1, 5.2, 5.3 or 5.5 or by Section 2.3 regarding a Deemed
Liquidation Event), then in any such event each holder of Series A Preferred
Stock shall have the right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other change by holders of the number of
shares of Common Stock into which such shares of Series A Preferred Stock could
have been converted immediately prior to such recapitalization, reclassification
or change.

         
5.5 Adjustment for Merger or Consolidation. Subject to the provisions of Section 2.2, if there shall occur any
consolidation or merger involving the Corporation in which the Common Stock (but
not the Series A Preferred Stock) is converted into or exchanged for securities,
cash or other property (other than a transaction covered by Sections 5.2, 5.3 or
5.4), then, following any such consolidation or merger, provision shall be made
that each share of Series A Preferred Stock shall thereafter be convertible in
lieu of the Common Stock into which it was convertible prior to such event into
the kind and amount of securities, cash or other property which a holder of the
number of shares of Common Stock of the Corporation issuable upon conversion of
one share of Series A Preferred Stock immediately prior to such consolidation or
merger would have been entitled to receive pursuant to such transaction; and, in
such case, appropriate adjustment (as determined in good faith by the Board)
shall be made in the application of the provisions in Section 4 and this Section
5 with respect to the rights and interests thereafter of the holders of Series A
Preferred Stock, to the end that the provisions set forth in Section 4 and this
Section 5 shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter
deliverable upon the conversion of Series A Preferred Stock. 

8 

          5.6 General Conversion Provisions.

              
5.6.1 Certificate as to Adjustments. Upon
the occurrence of each adjustment or readjustment of the Conversion Price of
Series A Preferred Stock pursuant to this Section 5, the Corporation at its
expense shall, as promptly as reasonably practicable but in any event not later
than 15 days thereafter, compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each holder of Series A Preferred Stock a
certificate setting forth such adjustment or readjustment (including the kind
and amount of securities, cash or other property into which Series A Preferred
Stock is convertible) and showing in detail the facts upon which such adjustment
or readjustment is based. The Corporation shall, as promptly as reasonably
practicable after the written request at any time of any holder of Series A
Preferred Stock (but in any event not later than 10 days thereafter), furnish or
cause to be furnished to such holder a certificate setting forth (a) the
Conversion Price of Series A Preferred Stock then in effect and (b) the number
of shares of Common Stock and the amount, if any, of other securities, cash or
property which then would be received upon the conversion of Series A Preferred
Stock. 

              
5.6.2 Reservation of Shares. The Corporation
shall at all times while any share of Series A Preferred Stock shall be
outstanding, reserve and keep available out of its authorized but unissued
capital stock, for the purpose of effecting the conversion of the Series A
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Series A Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series A Preferred Stock,
the Corporation shall take such corporate action as may be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes, including, without limitation, engaging
in best efforts to obtain the requisite stockholder approval of any necessary
amendment to this Certificate of Designation or the Certificate. Before taking
any action that would cause an adjustment reducing the Conversion Price of
Series A Preferred Stock below the then par value of the shares of Common Stock
issuable upon conversion of Series A Preferred Stock, the Corporation will take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Conversion Price.

              
5.6.3 Fractional Shares. No fractional
shares of Common Stock shall be issued upon conversion of the Series A Preferred
Stock. In lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the fair value of a share of Common Stock as determined in good faith by the
Board. Whether or not fractional shares would be issuable upon such conversion
shall be determined on the basis of the total number of shares of Series A
Preferred Stock the holder is at the time converting into Common Stock and the
aggregate number of shares of Common Stock issuable upon such conversion.

9 

              
5.6.4 No Further Adjustment after Conversion. Upon any conversion of shares of Series A Preferred Stock
into Common Stock, no adjustment to the Conversion Price of Series A
Preferred Stock shall be made with respect to the converted shares for any
declared but unpaid dividends on Series A Preferred Stock or on the Common Stock
delivered upon conversion.

    
6.
Mandatory Redemption at the Option of the
Holders. 

         
6.1 Request for Redemption. Subject to the
terms and conditions of this Section 6.1 and the provisions of applicable law,
the Corporation shall, upon receiving a written request at any time after the
third anniversary of the Original Issue Date of the Series A Preferred Stock,
signed by the holders of at least a majority of the then outstanding shares of
Series A Preferred Stock, redeem, on the date three months following the
Corporation’s receipt of such written redemption request (the
“Redemption Date”), a number of shares of Series A Preferred Stock that is
equal to all of the shares Series A Preferred Stock that are outstanding on the
date the Corporation receives such written redemption request to the extent that
outstanding shares of Series A Preferred Stock have not been previously redeemed
or converted into Common Stock at least three days prior to the applicable
Redemption Date; provided that (a) immediately
following any such redemption, the Corporation shall have outstanding one or
more shares of one or more classes or series of stock, which share, or shares
together, shall have full voting rights and (b) no right of redemption shall be
invoked pursuant to this Section 6 if the following shall have occurred:

     (i) a Deemed Liquidation Event shall have occurred, and the
occurrence of which shall not have been waived pursuant to the first sentence of
Section 2.3.1; or

     (ii) a sale by the Corporation’s
stockholders, in one transaction or series of related transactions, of capital
stock of the Corporation representing at least a majority, by voting power, of
the equity securities of the Corporation to one or more acquirers pursuant to an
agreement between the Corporation and such acquirers or among the Corporation,
such acquirers and one or more third parties. 

The Series A Preferred Stock called for
redemption as provided above shall be redeemed in cash at the Redemption Price
of the Series A Preferred Stock that is specified in Section 6.3 and such
Redemption Price shall be paid from any source of funds legally available
therefor, until (a) all outstanding shares of Series A Preferred Stock to be
redeemed have been redeemed or have been converted to Common Stock as provided
in Section 4 or (b) the request for redemption has been withdrawn or terminated
as provided below.

         
6.2 Withdrawal or Termination
of Request.
A redemption request may be withdrawn or terminated upon the request of the
holders of at least a majority of the issued and outstanding shares of Series A
Preferred Stock subject to such request on the date of the request for
withdrawal or termination, but only with respect to the shares of Series A
Preferred Stock that had not been redeemed in full in cash as of the date such
request for withdrawal or termination is made. After any such withdrawn or
terminated redemption request, the shares of Series A Preferred Stock subject
thereto shall again be subject to redemption pursuant to this Section 6 upon the
request of the holders of Series A Preferred Stock as provided above.

10 

          6.3 Redemption Price. The redemption price
for each share of Series A Preferred Stock shall equal an amount in cash equal
to 100% of the Original Issue Price for the Series A Preferred Stock plus the
amount of all declared but unpaid dividends thereon (the “Redemption Price”).

         
6.4 Insufficient Legally Available Funds.
Notwithstanding any other provision set forth in this Section 6, if upon any
Redemption Date scheduled for the redemption of Series A Preferred Stock, the
funds and assets of the Corporation legally available to redeem such stock shall
be insufficient to redeem all shares of Series A Preferred Stock then scheduled
to be redeemed, then: 

          (a) the holders of shares of Series A Preferred Stock to be
redeemed shall share ratably in any redemption in proportion to the respective
Redemption Prices that would otherwise be payable in respect of such shares of
Series A Preferred Stock held by them upon such redemption if all amounts
payable on or with respect to such shares were paid in full; and

          (b) any unredeemed shares shall be carried forward and shall
be redeemed (together with any other shares of Series A Preferred Stock then
scheduled to be redeemed) at the next such scheduled Redemption Date to the full
extent of legally available funds of the Corporation at such time.

Any such unredeemed shares shall
continue to be so carried forward until redeemed. Shares of Series A Preferred
Stock that are subject to redemption hereunder but have not been redeemed due to
insufficient legally available funds and assets of the Corporation shall
continue to be outstanding and entitled to all dividend, liquidation, conversion
and other rights, powers and preferences of the Series A Preferred Stock
respectively until three days prior to the Redemption Date upon which such
shares have been converted or redeemed. 

         
6.5 Redemption Notice. At least 20 but no
more than 60 days prior to the initial Redemption Date for the Series A
Preferred Stock, written notice in accordance with the provisions of Section 9
shall be mailed by the Corporation to each holder of record (at the close of
business on the business day next preceding the day on which notice is given) of
Series A Preferred Stock to be redeemed, notifying such holder of (a) the
redemption to be effected, (b) specifying the Redemption Date(s), the applicable
Redemption Price, the number of such holder’s shares of Series A Preferred Stock
to be redeemed, the place at which payment may be obtained and the date on which
such holder’s conversion rights set forth in Section 4 as to such shares
terminate (which date shall be three days prior to each Redemption Date with
respect to the Series A Preferred Stock to be redeemed on that date) and (c)
calling upon such holder to surrender to the Corporation, in the manner and at
the place designated, the certificate or certificates representing the shares to
be redeemed (the “Redemption
Notice”). For purposes of this Section
6.5, a “business day” means a weekday on which banks are open for general banking
business in San Francisco, California. 

         
6.6 Surrender of Certificates. On or
before each designated Redemption Date, each holder of Series A Preferred Stock
to be redeemed shall (unless such holder has previously exercised such holder’s
right to convert such shares of Series A Preferred Stock into Common Stock as
provided in Section 4), surrender the certificate(s) representing such shares of
Series A Preferred Stock to be redeemed to the
Corporation (or, if such holder alleges that such certificate has been lost,
stolen or destroyed, a lost certificate affidavit and agreement reasonably
acceptable to the Corporation to indemnify the Corporation against any claim
that may be made against the Corporation on account of the alleged loss, theft
or destruction of such certificate), in the manner and at the place designated
in the Redemption Notice, and thereupon the Redemption Price for such shares of
Series A Preferred Stock shall be payable to the order of the person whose name
appears on such certificate(s) as the owner thereof, and each surrendered
certificate shall be cancelled and retired. If less than all of the shares
represented by such certificate are redeemed, then the Corporation shall
promptly issue a new certificate representing the unredeemed shares.

11 

          6.7 Effect of Redemption. If the
Redemption Notice shall have been duly given for a Series A Preferred Stock, and
if on any Redemption Date the Redemption Price for Series A Preferred Stock to
be redeemed thereon is either paid or made available for payment through the
deposit arrangements specified in Section 6.8, then notwithstanding that the
certificates evidencing any of the shares of Series A Preferred Stock so called
for redemption on such Redemption Date shall not have been surrendered, such
shares shall not thereafter be transferred on the Corporation’s books and the
rights of all of the holders of such shares with respect to such shares shall
terminate on such Redemption Date, except only the right of the holders to
receive the Redemption Price from the Corporation or the payment agent, without
interest, upon surrender of their certificate(s) therefor (or the a lost
certificate affidavit or agreement as specified above). 

         
6.8 Deposit of Redemption Price. On or
prior to the Redemption Date for any shares of Series A Preferred Stock, the
Corporation may, at its option, deposit with an independent payment agent, a sum
equal to the aggregate Redemption Price for all shares of Series A Preferred
Stock called for redemption on that Redemption Date and not yet redeemed, with
irrevocable instructions and authority to the payment agent to pay, on or after
the Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates (or the a lost certificate affidavit or
agreement as specified above). The deposit shall constitute full payment of the
shares to their holders, and from and after the such Redemption Date, the shares
called for redemption on that Redemption Date shall be deemed to be redeemed and
no longer outstanding. Any funds so deposited and unclaimed at the end of one
year from such Redemption Date shall be released or repaid to the Corporation,
after which time the holders of shares called for redemption who have not
claimed such funds shall be entitled to receive payment of the Redemption Price
only from the Corporation.

    
7.
No Reissuance of Redeemed or Otherwise
Acquired Preferred Stock. Any shares
of Series A Preferred Stock that are redeemed or otherwise
acquired by the Corporation or any of its subsidiaries shall be automatically
and immediately retired and shall not be reissued, sold or transferred. Neither
the Corporation nor any of its subsidiaries may exercise any voting or other
rights, powers and preferences granted to the holders of Series A Preferred
Stock following the close of business on the third day preceding the Redemption
Date for such shares. 

    
8.
Waiver. Any of the rights, powers, preferences and other terms of Series A
Preferred Stock that are set forth herein may be waived on behalf of all holders
of Series A Preferred Stock by the affirmative written consent or vote of the
holders of at least a majority of the shares of Series A
Preferred Stock that are then outstanding, treating any convertible Series A
Preferred Stock as-if converted to Common Stock.

12 

     9. Notice of Record Date.
In the event:

     (a) the Corporation shall
set a record of the holders of its Common Stock (or other capital stock or
securities at the time issuable upon conversion of the Series a Preferred Stock)
for the purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares of
capital stock of any class or any other securities, or to receive any other
security; or 

     (b) of any capital reorganization of the Corporation, any
reclassification of the Common Stock of the Corporation, or any Deemed
Liquidation Event; or 

     (c) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Corporation,

then, and in each such case, the
Corporation will send or cause to be sent to the holders of Series A Preferred
Stock a notice specifying, as the case may be, (i) the record date for such
dividend, distribution or subscription right, and the amount and character of
such dividend, distribution or subscription right, or (ii) the effective date on
which such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is proposed to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
such other capital stock or securities at the time issuable upon the conversion
of Series A Preferred Stock) shall be entitled to exchange their shares of
Common Stock (or such other capital stock or securities) for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, transfer, dissolution, liquidation or winding-up, and the amount per
share and character of such exchange applicable to the Series A Preferred Stock
and the Common Stock. Such notice shall be sent (A) at least 20 days prior to
the earlier of the record date or effective date for the event specified in such
notice or (B) such fewer number of days as may be approved the holders of at
least a majority of the outstanding shares of Series A Preferred Stock acting as
a single class on an as-converted basis. 

     10. Notices. Except as
otherwise provided herein, any notice required or permitted by the provisions of
this Article IV to be given to a holder of shares of Series A Preferred Stock
shall be mailed, postage prepaid, to the post office address last shown on the
records of the Corporation for such holder, given by the holder to the
Corporation for the purpose of notice or given by electronic communication in
compliance with the provisions of the General Corporation Law, and shall be
deemed sent upon such mailing or electronic transmission. If no such address
appears or is given, notice shall be deemed given at the place where the
principal executive office of the Corporation is located.

* * * * * * * * * * * 

13 

IN WITNESS WHEREOF, said corporation has caused this Certificate of Designation
to be signed by its duly authorized officer this 17th day of October, 2012 and
the foregoing facts stated herein are true and correct. 

	 	LYRIS,
  INC.
	 	 
	 	By:	/s/ Wolfgang
      Maasberg	 
		Name:    	Wolfgang Maasberg
		Title:	Chief Executive
  Officer

14

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