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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
| In re IRIDEX CORP. | ) | C.A. No. 2023 __________ |
| ) |
VERIFIED PETITION FOR RELIEF PURSUANT TO 8 DEL.
IRIDEX Corporation ("IRIDEX" or the "Company"), by and through its undersigned counsel, petitions the Court pursuant
to 8 Del. C. 205 as follows:
NATURE OF THE ACTION
IRIDEX seeks a declaration that its Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State in February
1996 (the "Operative Charter")1 is the valid charter of the Company, despite an allegation by one of IRIDEX's
putative stockholders that its adoption and approval nearly 30 years ago was potentially defective and because the Company lacks sufficient
documentation to prove otherwise.
November 1995, IRIDEX was incorporated in Delaware to effect the reincorporation of a California entity into the state of Delaware.
IRIDEX's original Certificate of Incorporation was filed with the Delaware Secretary of State in November 1995 and was amended
twice before the Operative Charter was filed.
1996, IRIDEX went public through an initial public offering ("IPO") and the Operative Charter was filed with the Delaware
Secretary of State shortly thereafter. The Operative Charter was intended to amend and restate the Company's Certificate of Incorporation
in compliance with the Delaware General Corporation Law ("DGCL"). The Company has treated the Operative Charter as the governing
charter for the past nearly 30 years.
however, it was brought to the Company's attention by counsel to one of its putative stockholders that the February 1996 amendment
and restatement may have been defective. Despite an exhaustive search, the Company has been unable to locate records of certain required
approvals by the Company's stockholders and the board of directors (the "Board" or the "IRIDEX Board").
discovery has created a cloud of uncertainty with respect to the prior corporate acts taken by the Company pursuant to the Operative Charter,
including the composition of the Board. In the future, such uncertainty could affect, among other actions, the Company's ability
to raise capital, issue additional securities, and engage in other potentially beneficial transactions and could call into question the
validity of director elections.
the Company asks this Court to validate the Operative Charter, retroactive to its February 22, 1996 filing date with the Delaware Secretary
of State, and to grant such other relief as the Court deems appropriate.
IRIDEX Corporation is an ophthalmic medical technology company focused on the development and commercialization of breakthrough products
and procedures to treat sight-threatening eye conditions such as glaucoma and retinal diseases. It merged with a pre-existing California
entity through a reincorporation merger into Delaware in 1995 (the "Reincorporation") and went public through an IPO in 1996.
IRIDEX's predecessor, IRIS Medical Instruments, Inc. ("IRIDEX California"),
was incorporated in California in February 1989.2 On October 17, 1995, the board of directors of IRIDEX California (the
"California Board") adopted resolutions approving the incorporation of IRIDEX as a Delaware corporation to become a
wholly-owned subsidiary of IRIDEX California.3 In those resolutions, the California Board also approved a Certificate of
Incorporation for IRIDEX (the "Original Charter") and approved the merger of IRIDEX California
California changed its name several times, first to Prospero Surgical, Inc. in 1994, then to Trilogy Medical Systems, Inc. in
1995, and finally to IRIDEX Corporation on January 10, 1996.
with and into IRIDEX,
with IRIDEX continuing as the surviving entity following the merger.4
On November 21, 1995, the Original Charter was filed with the Delaware Secretary of State.5
The Original Charter authorized 33,783,330 total shares: 30,000,000 shares of common stock, par value $0.01 per share (the "Common
Stock") and 3,783,330 shares of preferred stock, par value $0.01 per share (the "Preferred Stock"). The Preferred Stock
was further divided into eight series: Series A, Series A1, Series B, Series B1, Series C, Series C1, Series D, and Series D1.6
On January 3, 1996, the Company filed an amendment to the Original Charter with the Delaware Secretary of State to change the name of
the Company to "IRIDEX Corporation" (the "First Amendment").7 In addition, the First Amendment changed
Article FOURTH, Section 6(a)(1) of the Original Charter governing the right of the Preferred Stock to convert into shares of Common
First Amendment recited that "[t]he corporation has not received any payment for any of its stock."8
January 10, 1996, the Company filed a second amendment to the Original Charter with the Delaware Secretary
of State (the "Second Amendment").9 The Second Amendment made another unrelated change to Article FOURTH,
Section 6(a)(1), and it similarly recited that "[t]he corporation has not received any payment for any of its stock."10
On January 9, 1996, IRIDEX's Board signed a unanimous written consent to approve the sale of
the Company's Common Stock to IRIDEX California, with the Company becoming IRIDEX California's wholly-owned subsidiary, and
also to approve the merger with IRIDEX California to effect the Reincorporation.11 The IRIDEX Board also approved the
election of officers of the Company and approved the IPO.12
11 Ex. 6 at 13, 4-8.
Also on January 9, 1996, IRIDEX California, in its new capacity as sole stockholder of the Company,
executed a written consent approving the merger of IRIDEX California with and into the Company for the purpose of the Reincorporation
and also approved an Amended and Restated Certificate of Incorporation for IRIDEX, which the Company believes is the Operative Charter.13
The stockholder consent referred to an amended and restated certificate of incorporation
attached to the consent as Exhibit A;14 however, the Company recently investigated its corporate history and has been
unable to recover a copy of the consent that includes the referenced exhibit. It therefore cannot confirm that the Operative Charter
filed with the Secretary of State on February 22, 199615 is the same as the version of the amended charter approved by
the stockholder consent on January 9, 1996.
Ex. 7 at 3. Though the stockholder consent was effective as of January 9, 1996, the Secretary's certificate attached to the
Agreement and Plan of Merger between IRIDEX California and the Company executed on February 9, 1996 states that the merger was approved
by written consent of the Company's sole stockholder on February 9, 1996. See Ex. 8 at 1; Ex. 9 at 1. It is possible
that the February 9 date listed on the Secretary's certificate is a typo.
30, 1996, IRIDEX California began soliciting written consents from its stockholders to approve the Reincorporation, IPO, and Operative
An Agreement and Plan of Merger between IRIDEX California and the Company was executed on February
9, 1996 (the "Merger Agreement").16 The Merger Agreement provided that the merger would be effected through the
conversion of common and preferred shares of IRIDEX California into an equivalent number of shares of Common Stock and Preferred Stock
of the Company.17 The Merger Agreement recited that the requisite board approvals had been obtained and that the Merger Agreement
would be submitted to the stockholders of both companies for approval as well.18 Importantly, the Merger Agreement provided
that the Original Charter, as amended, would be the effective charter for the surviving
Ex. 8 (filing the Merger Agreement, among other documents, with the Delaware Secretary of State); see also Ex. 9 (filing
the Merger Agreement, among other documents, with the California Secretary of State). The Merger Agreement is reproduced on one through
eight of each document. Citations in the form "Merger Agr." refer to that portion of both documents.
See Merger Agr. 3.1-3.5.
Id. at 2 ("The respective Boards of Directors of IRIDEX-Delaware and IRIDEX- California have approved [the Merger
Agreement] and have directed that [the Merger Agreement] be submitted to a vote of their respective stockholders and executed by the
undersigned officers.").
corporation (IRIDEX)
"until duly amended in accordance with the provisions thereof and of applicable law."19
On February 9, 1996, IRIDEX California filed the following with the California Secretary of State:
a Certificate of Approval of Agreement and Plan of Merger, indicating that the Merger Agreement had been approved by the California Board
and a majority of its stockholders; the Merger Agreement; and a Certificate of Secretary, certifying on behalf of IRIDEX Delaware that
the Merger Agreement was "duly approved and adopted by a unanimous vote of the outstanding stock entitled to vote thereon by written
consent of the sole stockholder of the Corporation."20 That same day, the Company filed the same documents with the
Delaware Secretary of State.21
February 16, 1996, the Company went public through the IPO, by selling 2.55 million shares of Common Stock
at a price of $9.00 per share.22
On February 22, 1996, the Company filed the Operative Charter with the Delaware Secretary of State.23
The Operative Charter was intended to replace the Original Charter, as amended, as the governing document for the new post- Reincorporation,
The Operative Charter states that it was approved under Section 241 of the DGCL, which allows an
amendment to a certificate of incorporation to "be adopted by a majority of the incorporators, if directors were not named in the
original certificate of incorporation or have not yet been elected, or, if directors were named in the original certificate of incorporation
or have been elected and have qualified, by a majority of the directors."24
But approval under Section 241 of the DGCL is only available "[b]efore a
corporation has received any payment for any of its stock."25 Because the Operative Charter may have been adopted after
the Company had issued stock to the predecessor corporation, the streamlined amendment process afforded by Section 241 may
not have been available.