SEPARATION AGREEMENT

 

This Separation Agreement (the “Agreement”) is entered into as of the Effective
Date by and among Mawae Rex Morton (“Executive”) and Cyanotech Corporation, a
Nevada corporation (the “Company” or “Cyanotech”), with Morton and the Company
together referred to herein as the “parties.”    

 

1.     Resignation and Separation of Employment. Pursuant to his formal written
resignation delivered to the Board of Directors of the Company on April 22,
2019, Executive’s final date of employment with the Company will be May 22, 2019
(the “Separation Date”).

 

(a)     Prior to or as of the Separation Date, Executive resigned from any
officer, director, or other legal position associated with Cyanotech including,
but not limited to, his position as President and Chief Executive Officer of
Cyanotech, his position as a Director of Cyanotech, and any position he may hold
with any subsidiary or affiliate of Cyanotech. Executive agrees that, as of the
Separation Date, he will cease to be an officer, director or employee of, or
have any connection with, or claims against, Cyanotech or its subsidiary, except
for payment of final wages and accrued and unused vacation as set forth below,
and the payments or benefits due hereunder.

 

(b)     Executive has been paid all compensation owed to Executive through the
Separation Date. Executive has submitted all outstanding expense reimbursement
requests as of the date signed below, and those expenses will be reimbursed in
accordance with Company policy.

 

(c)     By signing the Agreement below, Executive acknowledges and agrees that
this Agreement fully satisfies and supersedes all prior agreements with
Executive, including but not limited to the Executive Employment Agreement dated
July 14, 2017, as amended by the First Amendment to Executive Employment dated
January 10, 2018 (as so amended, the “Executive Employment Agreement”), and that
the Executive Employment Agreement is hereby terminated as of the Separation
Date; provided, however, that the provisions of the Executive Employment
Agreement set forth in Section 12 (Noncompetition), Section 13
(Non-Disparagement), Section 14 (Confidential Information), Section 15
(Intellectual Property), Section 20 (Governing Law), and Section 22
(Arbitration) (collectively, the “Surviving Provisions”) shall survive and
continue to be binding on Executive and the Company. Executive further
acknowledges and agrees that no further compensation or other benefits are due
Executive by the Company except as provided under this Agreement and, other than
the Surviving Provisions, this Agreement will exclusively govern the
relationship between Executive and Cyanotech from and after the Separation Date.

 

2.     Stock Awards. In connection with his employment with the Company,
Executive has previously been granted certain restricted stock units (“RSUs”)
and options to purchase common stock of the Company (“Stock Options”), in each
case pursuant to the Company’s 2016 Equity Incentive Plan. As of the Separation
Date, Executive has vested in 33 RSUs, for which he has been issued shares of
the Company’s common stock, 25,000 Stock Options with an exercise price of $3.35
per share, and 15,000 Stock Options with an exercise price of $3.83 per share.
In addition, Executive holds 1,993 unvested RSUs, 50,000 unvested Stock Options
with an exercise price of $3.35 per share and 30,000 unvested Stock Options with
an exercise price of $3.83 per share. Vesting for all unvested RSUs and Stock
Options held by Executive is hereby accelerated and such RSUs and Stock Options
shall be deemed vested as of the Separation Date. The exercise period for the
Stock Options held by Executive as of the Separation Date is hereby extended to
December 6, 2019. Immediately following such date, any remaining unexercised
Stock Options shall be automatically terminated and surrendered to the Company
and shall cease to be outstanding.

 

3.     Severance Benefits. In exchange for executing this Agreement, and abiding
by all terms, the Company will provide Executive with the following (the
“Severance Benefits”):

 

(a)     Severance payments in the total gross amount of $180,000.00 (One Hundred
and Eighty Thousand Dollars and Zero Cents) to be paid in equal installments
over twelve (12) months on normal payroll dates, with the first payment in the
gross amount of $7,500.00 (Seven Thousand Five Hundred Dollars) to be paid on
the later of (i) five days following the Effective Date; or (ii) June 6, 2019.
All severance payments shall be subject to all required taxes and withholdings.
The Company shall have the right to discontinue these payments if Executive
breaches any of his obligations under this Agreement or the Surviving
Provisions.

 

(b)     Executive shall be paid for four and one-half (4.5) weeks of accrued and
unused paid time off as follows: (i) $10,000.00 (Ten Thousand Dollars) in the
first calendar month following the Effective Date; (ii) $10,000.00 (Ten Thousand
Dollars) in the second calendar month following the Effective Date; and (iii)
the remaining $8,125.00 (Eight Thousand One Hundred Twenty Five Dollars and Zero
Cents) shall be paid in the third calendar month following the Effective Date.

 

(c)     The Company agrees to grant Executive an aggregate of Sixty-Eight
Thousand Four Hundred (68,400) shares of the Company’s common stock in equal
monthly installments of 5,700 shares over the 12-month period beginning on or
about the Effective Date (the “Share Grants”). Each monthly Share Grant will be
made within the first five (5) business days following the first day of the
month; provided that the Share Grants are expressly conditioned upon Executive’s
continued compliance with his obligations under this Agreement and the Surviving
Provisions, and the Company shall have the right to discontinue the Share Grants
if Executive breaches any of such obligations. Unless Executive has earlier
delivered cash to the Company in an amount equal to the Company’s aggregate
minimum statutory withholding for all applicable federal, state and local taxes
(the “Requisite Withholding Amount”) with respect to such Share Grants, then the
Company shall retain that portion of each Share Grant necessary for the Company
to remit the Requisite Holding Amount to the applicable taxing authorities. The
parties acknowledge and agree that the Requisite Withholding Amount cannot be
determined until the date of each Share Grant, but understand that it will
constitute approximately 36% of each such Share Grant.

 

(d)     Executive acknowledges and agrees that, but for Executive’s execution of
this Agreement, Executive would not otherwise be entitled to the Severance
Benefits. Executive acknowledges that the Severance Benefits are made in
consideration for the promises and obligations contained herein, and that such
Severance Benefits constitutes adequate legal consideration for such promises
and obligations.

 

4.     General Release. In consideration for the Severance Benefits, Executive
releases and waives any and all claims that Executive might possibly have
against the Company, whether Executive is aware of them or not. In legal terms,
this means that, individually and on behalf of his or her representatives,
successors, and assigns, Executive does hereby completely release and forever
discharge the Company, its parent, subsidiaries, divisions, affiliates, and
their respective predecessors in interest, members, partners, principals,
shareholders, directors, officers, agents, attorneys, employees, and
representatives, and the successors and assigns of each of them (each a “Company
Released Party”), from all claims, rights, demands, actions, obligations, and
causes of action of any and every kind, nature and character, known or unknown,
which Executive may now have, or has ever had, except as to the obligations
specified in this Agreement This Release covers all statutory, common law,
constitutional and other claims, including but not limited to:

 

(a)     Any and all claims for wrongful discharge, constructive discharge, or
wrongful demotion;

 

(b)     Any and all claims relating to any contracts of employment, express or
implied, or breach of the covenant of good faith and fair dealing, express or
implied;

 

(c)     Any and all tort claims of any nature, including but not limited to
claims for negligence, defamation, misrepresentation, fraud, or negligent or
intentional infliction of emotional distress;

 

(d)     Any and all claims for wages, compensation, bonuses, commissions,
penalties, and/or benefits under any statutory or common law theory whatsoever;

 

(e)     Any and all claims for discrimination or harassment based on sex, race,
age, national origin, religion, disability, medical condition, or any other
protected characteristic under federal, state or municipal statutes or
ordinances; any claims under Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, 42 U.S.C. Section 1981, the Age Discrimination in
Employment Act, the Older Workers’ Benefit Protection Act, the Americans With
Disabilities Act, the Employment Retirement Income Security Act, the Family and
Medical Leave Act, the Hawaii Discriminatory Practices law (Haw. Rev. Stat. §§
378-1 to 378-6); Hawaii Whistleblowers’ Protection Act (Haw. Rev. Stat. §§
378-61 to 378-68), and any other laws and regulations relating to employment;

 

(f)     Any and all claims for attorneys’ fees or costs; and

 

(g)     Any and all rights Executive may have to any continuing or future
employment with any Released Party.

 

This release is not intended to encompass any rights or claims that i) arise out
of the performance of this Agreement; or ii) cannot be released by Executive as
a matter of law, including, but not limited to, any claims for indemnity, or
claims for workers’ compensation or unemployment benefits. Nor is this release
intended to prevent Executive from filing a statutory claim concerning
employment with the Company or the termination thereof with the federal Equal
Employment Opportunity Commission, the National Labor Relations Board, or
similar state agencies. However, if Executive does so, or if any such claim is
prosecuted in his/her name before any court or administrative agency, Executive
waives and agrees not to take any award of money or other damages from such
suit.

 

5.     Waiver of Unknown Future Claims. Executive understands that Executive
hereby voluntarily waives all rights arising under known or unknown claims, and
elects to assume all risks for claims that now exist in his/her favor, known or
unknown, arising from the subject matter of this Agreement..

 

6.     No Claims. Executive represents and warrants that he has not instituted
any complaints, charges, lawsuits or other proceedings against any Company
Released Parties with any governmental agency, court, arbitration agency or
tribunal.

 

7.     Cooperation. In consideration of this Agreement, Executive will fully
cooperate with Cyanotech and its counsel as it relates, in any way, to any
foreign or domestic dispute (including, but not limited to, litigation,
arbitration, and federal, state or local administrative inquiry) arising out of
or related to any services he performed for Cyanotech and which occurred during
his employment with, or time providing other services to, Cyanotech. Full
cooperation shall include, but not be limited to, review of documents,
attendance at meetings, trial or administrative proceedings, depositions,
interviews, or production of documents to Cyanotech without the need of the
subpoena process. During the period Executive is receiving Severance Benefits,
such cooperation will be provided by Executive without further compensation,
other than reimbursement for reasonable out of pocket business expenses such as
transportation, lodging, parking and meals or as specifically agreed in advance
and in writing. After such period, such cooperation will be provided by
Executive; provided, the Company pays him a per diem determined using his base
salary as of his Separation Date, reimburses Executive for reasonable out of
pocket business expenses such as transportation, lodging, parking and meals, and
schedules his cooperation, to the extent reasonably practicable, so as not to
unreasonably interfere with Executive’s business or personal affairs. In
addition, as a condition to Cyanotech executing this Agreement and providing the
Severance Benefits hereunder, Executive agrees to cooperate in all matters
relating to the transition of his employment (including with respect to internal
and external communication plans) and other matters reasonably requested by
Cyanotech after the Separation Date, without further compensation.

 

8.     Non-Competition; Confidentiality.

 

(a)     Non-Competition. Section 12 (Noncompetition) of the Executive Employment
Agreement is incorporated herein by reference.

 

(b)     Confidential Information; Trade Secrets.

 

 

(i)

“Confidential Information” means all information and material which is
proprietary to the Company, whether or not marked as “confidential” or
“proprietary,” and which was disclosed to or obtained from the Company by
Executive, which relates to the past, present or future research, development or
business activities of the Company. Confidential Information is all information
or materials prepared by or for the Company and includes, without limitation,
all of the following: business records, intellectual property licensing
programs, licensing terms and conditions, strategic planning, business
acquisition planning, business development, joint venture planning, forward
planning, strategic initiatives, prospective patent portfolio information,
prospective investor information, prospective joint venture information,
designs, drawings, specifications, techniques, models, data, documentation,
diagrams, flow charts, research, development, processes, systems, methods,
machinery, procedures, “know-how,” new product or new technology information,
formulas, patents, patent applications, product prototypes, product copies, cost
of production, manufacturing, developing or marketing techniques and materials,
cost of production, development or marketing time tables, customer lists,
strategies related to customers, suppliers or personnel, contract forms, pricing
policies and financial information, volumes of sales, and other information of
similar nature, whether or not reduced to writing or other tangible form, and
any other non-public business information. Confidential Information does not
include any information which (A) is or becomes generally available to the
public by acts other than those of Executive after receiving it, or (B) has been
received lawfully and in good faith by Executive from a third party who did not
derive it from the Company in violation of a duty or obligation of
confidentiality.

 

 

(ii)

“Trade Secrets” shall mean any scientific or technical data, information,
design, process, procedure, formula or improvement that is commercially
available to any of the Company and is not generally known in the industry.

 

 

(iii)

From and after the Separation Date, neither Executive nor any of his agents or
representatives shall, directly or indirectly, publish or otherwise disclose, or
permit others to publish, divulge, disseminate copy or otherwise disclose the
Trade Secrets or Confidential Information of the Company.

 

 

(iv)

From and after the Separation Date, Executive will not engage in competition
with the Company while making use of the Trade Secrets of the Company.

 

(c)     Defend Trade Secrets Act of 2016. The obligations of this Section do not
apply to any Confidential Information Executive is affirmatively authorized to
disclose pursuant to any provision of applicable law. Pursuant to the Defend
Trade Secrets Act of 2016, Executive acknowledges that Executive shall not have
criminal or civil liability under any Federal or State trade secret law for the
disclosure of a trade secret that (A) is made (i) in confidence to a Federal,
State, or local government official, either directly or indirectly, or to an
attorney; and (ii) solely for the purpose of reporting or investigating a
suspected violation of law; or (B) is made in a complaint or other document
filed in a lawsuit or other proceeding, if such filing is made under seal. In
addition, if Executive files a lawsuit for retaliation by the Company for
reporting a suspected violation of law, Executive may disclose the trade secret
to his/her attorney and may use the trade secret information in the court
proceeding, if Executive or his/her attorney files any document containing the
trade secret under seal; and does not disclose the trade secret, except pursuant
to court order.

 

(d)     Incorporation by Reference. Executive further acknowledges and hereby
affirms Executive’s continuing obligations under the Sections 14 (Confidential
Information) and 15 (Intellectual Property) of the Executive Employment
Agreement, which Executive executed as a condition of employment, and which
terms are incorporated herein by reference to the extent such terms are not
inconsistent with this Agreement.

 

(e)     Remedies. Executive acknowledges that unfair competition,
misappropriation of Trade Secrets or violation of any of the provisions
contained in this Section, would cause irreparable injury to the Company, that
the remedy at law for any violation or threatened violation thereof would be
inadequate, and that the Company shall be entitled to temporary and permanent
injunctive or other equitable relief without the necessity of proving actual
damages.

 

9.     Section 409A.

 

(a)     Notwithstanding anything to the contrary in this Agreement, no Severance
Benefits to be paid or provided to Executive, if any, pursuant to this Agreement
that, when considered together with any other severance payments or separation
benefits, are considered deferred compensation not exempt under Section 409A
(together, the “Deferred Payments”) will be paid or otherwise provided until
Executive has a “separation from service” within the meaning of Section 409A.
For purposes of this Agreement and for determining what amounts are Deferred
Payments, Executive shall be deemed to have incurred an “involuntary separation
from service,” as such term is defined in Treasury Regulation Section
1.409A-1(n). Further, for purposes of this Agreement, any reference to
“termination of employment,” “termination” or any similar term shall be
construed to mean a “separation from service” within the meaning of Section
409A. No separation payable to Executive, if any, pursuant to this Agreement
that otherwise would be exempt from Section 409A pursuant to Treasury Regulation
Section 1.409A-1(b)(9) will be payable until Executive has a “separation from
service” within the meaning of Section 409A. For purposes of this Agreement,
“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as
amended, and the final regulations and any guidance promulgated thereunder or
any state law equivalent.

 

(b)     Notwithstanding anything to the contrary in this Agreement, if Executive
is a “specified employee” within the meaning of Section 409A at the time of
Executive’s termination of employment (other than due to death), then the
Deferred Payments, if any, that are payable within the first six months
following Executive’s separation from service, will become payable on the first
payroll date that occurs on or after the date six months and one day following
the date of Executive’s separation from service. All subsequent Deferred
Payments, if any, will be payable in accordance with the payment schedule
applicable to each payment or benefit without regard to such delay.
Notwithstanding anything herein to the contrary, if Executive dies following
Executive’s separation from service, but prior to the six month anniversary of
the separation from service, then any payments delayed in accordance with this
paragraph will be payable in a lump sum as soon as administratively practicable
after the date of Executive’s death and all other Deferred Payments will be
payable in accordance with the payment schedule applicable to each payment or
benefit without regard to such delay. Each payment, installment and benefit
payable under this Agreement is intended to constitute a separate payment for
purposes of Section 1.409A-2(b)(2) of the Treasury Regulations to the extent
permissible thereunder.

 

(c)     Notwithstanding any other provision of this Agreement to the contrary,
in no event shall any payment under this Agreement that constitutes
“nonqualified deferred compensation” for purposes of Code Section 409A be
subject to offset by any other amount unless otherwise permitted by Code Section
409A.

 

(d)     The foregoing provisions are intended to be exempt from or comply with
the requirements of Section 409A so that none of the severance payments and
benefits to be provided hereunder will be subject to the additional tax imposed
under Section 409A, and any ambiguities or ambiguous terms herein will be
interpreted to be exempt or so comply. Executive agrees to amend this Agreement
and to take such reasonable actions which are necessary, appropriate or
desirable to avoid imposition of any additional tax or income recognition to
Executive under Section 409A, so long as such amendment or action does not
reduce Executive’s benefits hereunder. Executive has had an opportunity to
review this Agreement with his own legal and tax advisors and understands that
Cyanotech does not guarantee any particular tax effect for income provided to
Executive pursuant to this Agreement. In any event, except for Cyanotech’s
responsibility to withhold any applicable income and employment taxes from
compensation paid or provided to Executive, Cyanotech shall not be responsible
for the payment of any applicable taxes, penalties or interest on compensation
paid or provided to Executive pursuant to this Agreement. In no event will the
Company reimburse Executive for any penalties, taxes or interest that may be
imposed on Executive as a result of Section 409A.

 

10.     Return of Property. Prior to the Separation Date, Executive agrees to
return all property of the Company, including keycards, computers, personal
communication devices, passwords, hard copy and electronic files. In addition,
prior to the Separation Date, Executive agrees to destroy or surrender and
deliver to Company all records, notes, materials, equipment, drawings, documents
and data of any nature pertaining to any Confidential Information and Executive
will not retain or take with him any tangible materials containing or pertaining
to any Confidential Information that Executive may have produced, acquired or
obtained access to during the course of his employment except for copies of
Executive’s own employment records. At the Company’s request, Executive will
certify in writing that Executive has destroyed or returned, as applicable, all
Confidential Information in Executive’s possession.

 

11.     Nonsolicitation. Employee agrees that for a period of twelve (12) months
immediately following the Effective Date of this Agreement, Employee shall not
directly or indirectly solicit any of the Company’s employees to leave their
employment at the Company.

 

12.     Consideration Period; Older Worker Benefit Protection Act Protections.
Pursuant to the Age Discrimination in Employment Act and the Older Workers’
Benefit Protection Act, the Company hereby advises Executive of the following:

 

 

(a)

Executive is advised to consult with an attorney prior to signing this
Agreement.

 

 

(b)

Executive has up to twenty-one (21) days within which to consider whether
Employee should sign this Agreement. Executive may sign this Agreement at any
time during this 21-day period. Modification to the Agreement will not extend
the consideration period.

 

 

(c)

If Executive signs the Agreement, Executive shall have seven (7) days thereafter
to revoke the Agreement. To revoke the Agreement, Executive must deliver written
notice of the revocation to Amy Nordin the Company’s Director of Human
Resources, so that it is received before the seven-day revocation period
expires. If Executive revokes the Agreement, Executive shall not be entitled to
any Severance Benefits.

 

 

(d)

If Executive does not revoke the Agreement, it becomes effective (the “Effective
Date”) eight days after Executive executes the Agreement below and returns it to
the Company (Attention: Amy Nordin).

 

 

(e)

In signing this Agreement, Executive is not releasing or waiving any claims
based on conduct or events that occur after the Agreement is signed.

 

13.     Non-Disparagement. Executive agrees and covenants that he will not at
any time make, publish or communicate to any person or entity or in any public
forum any defamatory or disparaging remarks, comments, or statements concerning
the Company, any products, services, or operations of the Company, or any of the
former, current, or future officers, directors, or employees of the Company.
Executive acknowledges and agrees that this prohibition extends to statements,
written or oral, made to anyone, including but not limited to, the news media,
investors, potential investors, any board of directors or advisory board or
directors, industry analysts, competitors, strategic partners, vendors,
employees (past and present), and clients, customers, or potential clients or
customers of the Company and its affiliates. This Paragraph does not, in any
way, restrict or impede Executive from exercising protected rights to the extent
that such rights cannot be waived by agreement or from complying with any
applicable law or regulation or a valid order of a court of competent
jurisdiction or an authorized government agency, provided that such compliance
does not exceed that required by the law, regulation, or order. Executive shall
promptly provide written notice of any such order to the Company Board of
Directors.    

 

14.     Consequences of Breach. Executive shall indemnify and hold each Company
Released Party harmless from any loss, cost, damage, or expense (including
attorneys’ fees) incurred by them arising out of Executive’s breach of any
portion of this Agreement. In addition, Executive agrees that if Executive
breaches any of Executive’s obligations under the Agreement: (a) the Share
Grants shall cease; (b) the Company may cease payments due to Executive, or
recover any payments previously made to Executive , under Paragraph 3, to the
extent permitted by law; and/or (c) the Company may obtain all other relief
provided by law or equity, including the right to recover as damages the amount
of any judgment recovered against it, reasonable attorney’s fees and other costs
and expenses of defending against any claim brought in breach of this Agreement.

 

15.     Securities Law Compliance.

 

(a)     In connection with the Share Grants provided herein, Executive hereby
represents and warrants to the Company as of the Separation Date, as follows:

 

 

(i)

As a result of Executive’s prior status as an officer of the Company, Executive
has a pre-existing business relationship with the Company and its officers,
directors and controlling persons and through such relationships can reasonably
be assumed by the Company to have the capacity to evaluate the merits and risks
of an investment in the Company and to protect Executive’s own interests in
connection with this transaction;

 

 

(ii)

Executive has heretofore discussed the Company and its plans, operations and
financial condition with the Company’s officers, knows that the Company
continues to be a highly speculative business and has heretofore received all
such information as Executive has deemed necessary and appropriate to enable
Executive to evaluate the financial risk inherent in making an investment in the
shares of common stock of the Company subject to the Share Grants (the
“Shares”), and Executive has received satisfactory and complete information
concerning the business and financial condition of the Company in response to
all inquiries in respect thereof;

 

 

(iii)

Executive understands that an investment in the Shares is speculative and that
any possible profits therefrom are uncertain;

 

 

(iv)

Executive is able to bear the economic risks of the investment in Shares for an
indefinite period of time; and

 

 

(v)

Executive is acquiring the Shares for his own account and not with a view to
their resale or distribution.

 

(b)     Executive acknowledges that the Shares have not been registered under
the Securities Act of 1933 (the “Securities Act”), and are being issued to him
in reliance upon the exemption from such registration provided by Regulation D
of the Securities Act and the corresponding state security law exemption
applicable to stock issuances to investors whose preexisting business
relationship with the issuing company provides the investor with enough
knowledge and experience regarding the financial and business matters of the
issuing company to reach an informed and knowledgeable decision regarding the
merits and risks of the investment.

 

(c)     Executive hereby confirms that he has been informed that the Shares
constitute restricted securities under the Securities Act and may not be resold
or transferred unless the Shares are first registered under the Federal
securities laws or unless an exemption from such registration is available.
Accordingly, Executive acknowledges that he is prepared to hold the Shares for
an indefinite period.

 

(d)     Executive agrees that he will make no disposition of the Shares unless
and until he has provided the Company with an opinion of counsel, in form and
substance reasonably satisfactory to the Company, that (i) the proposed
disposition does not require registration of the Shares under the Securities
Act, or (ii) all appropriate action necessary for compliance with the
registration requirements of the Securities Act or of any exemption from
registration available under the Securities Act has been taken.

 

(e)     In order to reflect the restrictions on disposition of the Shares, the
stock certificates for the Shares will be endorsed with a restrictive legend
substantially in the form of the following:

 

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE LAW, AND NO INTEREST THEREIN MAY
BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
(A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING THESE SECURITIES
OR (B) THIS CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF
THESE SECURITIES (CONCURRED IN BY LEGAL COUNSEL FOR THIS CORPORATION) STATING
THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION OR THIS CORPORATION OTHERWISE
SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.”

 

16.     Acknowledgment. Executive represents and agrees that in executing this
Agreement he is relying solely upon his own judgment, belief and knowledge, and
the advice and recommendations of any independently selected counsel, concerning
the nature, extent and duration of his rights and claims. Executive acknowledges
that he has executed this Agreement voluntarily, free of any duress of coercion.
Further, Executive acknowledges that he has a full understanding of the terms of
this Agreement and that he is not executing this Agreement in reliance on any
promise, representation, or warranty not contained in this Agreement.

 

17.     Miscellaneous

 

(a)     Notices. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered by a nationally recognized overnight mail courier, postage pre-paid.
In case of the Company, mailed notices shall be addressed to its corporate
headquarters as set forth in its most recent filing with the United States
Securities and Exchange Commission (the “SEC”), and all notices shall be
directed to the attention of its Chairman of the Board. In case of Executive,
mailed notices shall be addressed to Executive at the home address that
Executive most recently communicated to the Company in writing. Executive
understands that it may be recommended or required that Cyanotech file a copy of
this Agreement and/or a summary thereof with the SEC and Executive hereby
consents to any such filings with the SEC.

 

(b)     Binding on Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company and
shall inure to the benefit of and be binding upon Executive’s heirs, executors,
administrators, successors and assigns. This Agreement is specific to Executive
and may not be assigned by Executive.

 

(c)     Severability. If any term or provision of this Agreement is invalid,
illegal or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction. Upon such determination that any term or other provision is
invalid, illegal or unenforceable, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

 

(d)     Advice of Counsel. In executing this Agreement, Executive acknowledges
that he has had the opportunity to consult with, and be advised by, an
independent lawyer of his choice, and that he has executed this Agreement
voluntarily after independent investigation, and without fraud, duress, or undue
influence.

 

(e)     Entire Agreement. This Agreement and the Surviving Provisions and any
document(s) expressly incorporated herein contain the entire agreement and
understanding between Executive and the Company regarding the matters set forth
herein and replace all prior agreements, arrangements and understandings,
written or oral. This Agreement cannot be amended, modified, supplemented, or
altered, except by written amendment or supplement signed by Executive and the
Company.

 

(f)     Choice of Law. The parties agree that the formation, terms, and
construction of this Agreement are governed by the laws of the State of Hawaii,
and where applicable, of the United States.

 

(g)     Disputes. The parties intend that any claims under this Agreement be
subject to the same dispute resolution procedures as claims made under the
Surviving Provisions. Therefore the parties agree that any and all claims,
controversies or disputes arising out of or relating to this Agreement, or the
breach thereof, which remain unresolved after direct negotiations between the
parties, shall first be submitted to confidential mediation in Honolulu in
accordance with the Rules, Procedures and Protocols for Mediation of Disputes of
Dispute Prevention & Resolution, Inc. (“DPRI”) then in effect. If any issues,
claims or disputes remain unresolved after mediation concludes, the parties
agree to submit any such issues to binding arbitration in Honolulu before one or
three arbitrator(s) in accordance with the Rules, Procedures and Protocols for
Arbitration of Disputes of DPRI then in effect. However, the parties agree that
the foregoing shall not preclude either party from seeking any injunctive or
equitable relief from a court of competent jurisdiction pursuant to any
provision of this Agreement. The parties further agree that, subject to Chapter
658A, Hawaii Revised Statutes, as the same may hereafter be amended or
recodified, the award of the arbitrator(s) shall be binding upon each party and
that judgment upon the award rendered may be entered in any court of competent
jurisdiction.

 

(h)     Attorneys’ Fees and Costs. The parties will bear their own fees and
costs incurred in connection with negotiating and drafting this Agreement.

 

(i)     Headings; Interpretation. The various headings contained herein are for
reference purposes only and do not limit or otherwise affect any of the
provisions of this Agreement. It is the intent of the parties that this
Agreement not be construed more strictly with regard to one party than with
regard to any other party.

 

(j)     Counterparts. This Agreement may be executed in counterparts, including
facsimile counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be effective delivery of a manually executed counterpart to this
Agreement.

 

[Signature page follows]

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date indicated below.

 

 

Cyanotech Corporation:

 

By:       /s/Gerald R. Cysewski                      Date: June 3, 2019

       Name: Gerald R. Cysewski

       Title:  Chief Executive Officer

 

 

 

Executive:

 

 

By:      /s/Mawae Morton                            Date: June 3, 2019

       Mawae Morton, an individual