Exhibit 10.1

 

 

FIRST AMENDMENT TO
EXECUTIVE EMPLOYMENT AGREEMENT

 

This First Amendment to Executive Employment (this “January 2018 Amendment”)
amends certain provisions of the Executive Employment Agreement entered into
between Mawae Rex Morton (“Executive”) and Cyanotech Corporation (the “Company”)
on July 14, 2017 (the “2017 Employment Agreement”), and will be effective as of
the date signed by both parties below (the “Effective Date”). All capitalized
terms used but not defined herein shall have the same meaning given them in the
2017 Employment Agreement.

 

1.          Amendments.

 

1.1      Amendment to Section 1 (Position; Commencement Date). Section 1 of the
2017 Employment Agreement is hereby amended in its entirety and replaced with
the following:

 

“Executive will be employed by the Company in the position of Chief Executive
Officer (CEO). Executive will commence employment in this new position on
January 24, 2018 (the “CEO Commencement Date”). It is anticipated that Executive
will be appointed to serve on the Board of Directors of the Company shortly
after the Effective Date, and that Executive will be formally nominated for
election to the Board at the next Annual Meeting of Stockholders.”

 

1.2      Amendment to Section 2 (Duties). Section 2 of the 2017 Employment
Agreement is hereby amended in its entirety and replaced with the following:

 

“As the Company’s CEO, the Executive shall perform such duties and functions as
are determined from time to time by the Company’s Board of Directors. In the
performance of his duties with the Company, Executive shall at all times comply
with the written policies of the Company and be subject to the reasonable
direction of the Board.”

 

1.3      Amendment to Section 3 (Term of Employment). The first sentence of
Section 3 of the 2017 Employment Agreement is hereby amended in its entirety and
replaced with the following:

 

“The Company shall continue to employ Executive for a period of up to thirty-six
(36) months, commencing on the CEO Commencement Date and ending on January 24,
2021 (the “Contract Term”), subject to earlier termination as set forth in
Section 16 (“Termination of Employment”). After the initial 36-month period,
this Agreement shall continue for successive one-year periods thereafter,
subject to the provisions of Paragraph 16 below, and upon the same terms and
conditions, except as they may be modified by the parties in writing from time
to time, and unless and until written Notice shall be given by either party
forty-five (45) days in advance of the end of the initial term or any successive
one-year period of the intention not to continue this Agreement (the “Notice
Period”) followed by the continued performance of this Agreement for the Notice
Period by both parties. The Contract Term of this Agreement shall include all
such extensions. For the avoidance of doubt, the decision of any party not to
renew this Agreement at any time after the initial 36-month period shall not be
considered a termination of this Agreement giving rise to severance
obligations.”

 

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1.4      Amendment to Section 4 (Base Salary). Section 4 of the 2017 Employment
Agreement is hereby amended in its entirety and replaced with the following:

 

“Effective on the CEO Commencement Date, Executive’s annual base salary will be
$300,000.00 (Three Hundred Thousand Dollars and No Cents), and shall be paid in
accordance with the regular payroll practices of the Company, subject to
withholdings required by law or authorized by Executive. Six months after the
CEO Commencement Date, Executive’s annual base salary will increase to
$325,000.00 (Three Hundred Twenty Five Thousand Dollars and No Cents).
Thereafter, Executive’s salary will be subject to review annually by the
Compensation Committee, provided, however, that the Executive’s base salary
shall not be reduced except in circumstances where the Company is making
proportional reductions in the salaries of all of its executives.”

 

1.5      Amendment to Section 6 (Executive Bonus Program). Section 6 of the 2017
Employment Agreement is hereby amended in its entirety and replaced with the
following:

 

“For each full fiscal year during which Executive remains employed under this
Agreement, Executive will have an opportunity to earn a fiscal year-end bonus of
up to 50% of Executive’s annual base salary then in effect, based upon
performance and earnings targets and other standards to be established by the
Board or the Compensation Committee for each such year and based upon the
Compensation Committee’s and the Board’s evaluations of Executive’s fiscal year
results. Bonuses will be determined and awarded in the Board’s discretion
following completion of the Company’s annual audit by independent auditors. To
the extent any bonuses are paid to Company employees for the 2018 fiscal year,
the Compensation Committee intends to make Executive eligible for a bonus based
on the portion of the fiscal year during which Executive was President or Chief
Executive Officer of the Company, taking into account different bonus targets
applicable to each position held by Executive during the fiscal year. In
recognition that the Contract Term under this Agreement ends in January whereas
the Company’s fiscal year runs through March 31, if the Contract Term expires
without extension prior to the end of any given fiscal year, Executive will
remain eligible for a bonus in such fiscal year to be calculated based upon the
portion of the Contract Term during which he was so employed.”

 

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1.6      Amendment to Section 7 (Stock Option Grants). Section 7 of the 2017
Employment Agreement is hereby amended in its entirety and replaced with the
following:

 

“In addition to the 75,000 (Seventy Five Thousand) stock options awarded under
the 2017 Employment Agreement, the parties agree herein that the Board will
grant Executive an additional 45,000 (Forty Five Thousand) stock options
exercisable for shares of common stock of the Company under the Company’s 2016
Equity Incentive Plan (the “Plan”). The exercise price for this additional stock
option award will be the closing market price on the date of grant. All stock
option grants hereunder will be evidenced by and subject to the terms of the
Plan and a Stock Option Grant Notice and Option Agreement. The vesting schedule
and terms for the stock options will be set forth in the Stock Option Grant
Notice and Option Agreement.”

 

1.7      Amendment to Section 13 (Non-Disparagement). The last sentence of
Section 13 of the 2017 Employment Agreement is hereby amended in its entirety
and replaced with the following:

 

“Executive shall promptly provide written notice of any such order to the
Chairman of the Board of Directors.”

 

1.8      Amendment to Section 15 (Intellectual Property). The third sentence of
the second paragraph of Section 15 of the 2017 Employment Agreement is hereby
amended in its entirety and replaced with the following:

 

“Executive will take reasonable steps to promptly disclose such Work Product to
the chairman of the Board of Directors and perform all actions reasonably
requested by the Company (whether during or after the employment) to establish
and confirm such ownership (including the execution and delivery of assignments,
consents, powers of attorney and other instruments) and to provide reasonable
assistance to the Company in connection with the prosecution of any applications
for patents, trademarks, trade names, service marks or reissues thereof or in
the prosecution or defense of interferences relating to any Work Product.”

 

1.9      Amendments to Section 16 (Termination of Employment).

 

(a)     Severance Benefits. The 2017 Employment Agreement provided that, if the
Company terminates Executive’s employment without Cause, as that term is defined
in Section 16(b) of the 2017 Employment Agreement, or if Executive resigns his
employment for Good Reason, as that term is defined in Section 16(c) of the 2017
Employment Agreement, Executive will receive an amount equal to his base salary
for six (6) months or for the remainder of the Contract Term, whichever is less,
together with (a) any other earned but unpaid amounts due under the terms of
this Agreement and (b) employee benefits for the applicable severance benefit
period. The parties agree herein that, effective six (6) months after the CEO
Commencement Date, such Severance Benefits will be increased to Executive’s base
salary for twelve (12) months, irrespective of the remaining length of the term
of this Agreement, together with (a) any other earned but unpaid amounts due
under the terms of this Agreement and (b) employee benefits for the applicable
severance benefit period. Except as expressly stated in this paragraph, all
other provisions of Section 16 of the 2017 Employment Agreement remain in full
force and effect.”

 

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(b)     Resignation as Director. A new paragraph (g) shall be added to Section
immediately following paragraph (f), and it shall read in its entirety as
follows:

 

“(g)    Resignation as Director. In the event of Executive’s termination of
employment for any reason, Executive shall resign any director positions then
held with the Company, and Executive hereby presently and irrevocably tenders
his resignation as a director of the Company and of any subsidiary of the
Company in which Executive may become a director effective upon the date of your
termination of employment with the Company.”

 

1.10    Amendment to Section 19 (Entire Agreement). Section 19 of the 2017
Employment Agreement is hereby amended in its entirety and replaced with the
following:

 

“The January 2018 Amendment, and the remaining portions of the 2017 Employment
Agreement which have not been expressly revised and amended herein, set forth
the entire agreement and understanding between the Company and Executive
relating to the subject matters herein and supersede all prior or
contemporaneous discussions and agreements between the parties, whether oral or
written, with respect to the terms of Executive’s employment during the Contract
Term.”

 

2.          Full Force and Effect. Except as otherwise specifically and
expressly provided in this January 2018 Amendment, the 2017 Employment Agreement
will remain in full force and effect without change. All references in the 2017
Employment Agreement to “this Agreement” or similar references to the 2017
Employment Agreement shall mean the 2017 Employment Agreement as amended hereby.
In the event of any conflict or inconsistency between the provisions of this
January 2018 Amendment and the 2017 Employment Agreement, the provisions of this
January 2018 Amendment shall prevail.

 

3.          Counterparts. This January 2018 Amendment may be executed by
facsimile and in counterparts with the same effect as if the parties hereto had
signed the same document, and each such counterpart hereof will be deemed to be
an original instrument, but all such counterparts together will constitute but
one agreement.

 

[Signature page follows]

 

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The directors of Cyanotech Corporation, as well as its Compensation Committee,
which have approved the terms of this January 2018 Amendment, are very
enthusiastic about the prospects for the Company under your leadership as CEO.
Please acknowledge your agreement with, and acceptance of, the foregoing terms
by signing below where indicated. A copy of this January 2018 Amendment will be
filed with the Securities and Exchange Commission as a public document.

 

 

 

Cyanotech Corporation

 

By:       /s/ Gerald R. Cysewski                  

 

Name:  Gerald R. Cysewski                       

 

Title:    CEO                                                 

 

Date:    1/10/2018                                                 

Executive

 

   /s/ Mawae Morton                                 

Mawae Rex Morton

 

Date:    1/10/2018                                      

 

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