UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

September 25, 2020

Date of Report: (Date of earliest event reported)

 Cyanotech Corporation

(Exact name of registrant as specified in its charter)

73-4460 Queen Kaahumanu Highway, Suite #102, Kailua Kona, HI 96740

(Address of principal executive offices)

(808) 326-1353

(Registrant’s telephone number)

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.

On September 28, 2020, Cyanotech Corporation, a Nevada corporation (the “Company”), named Felicia Ladin as its Chief Financial Officer (“CFO”), Vice President (“VP”) of Finance and Administration, and Treasurer. In connection with the foregoing appointment, on September 25, 2020, Brian Orlopp resigned and entered into a Separation Agreement (the “Separation Agreement”) with the Company pursuant to which he will receive severance payments equal to two months of his then current base salary, payments representing additional monthly housing and travel allowance and payments of premiums for continuing health coverage for two months in exchange for, among other matters, a general release of claims in favor of the Company and its affiliates and an agreement to not solicit any employee of the Company to leave their employment at the Company for a period of twelve months. The foregoing description of the Separation Agreement is qualified in its entirety by reference to the Separation Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

In connection with her appointment, the Company and Ms. Ladin entered into an Executive Employment Agreement, dated as of September 28, 2020 (the “Employment Agreement”). Ms. Ladin’s first day of part-time work will be September 28, 2020, and her first day of full-time work will be on or about November 2, 2020. Under the terms of the Employment Agreement, during the part-time schedule, Ms. Ladin will receive an annual base salary of $95,000. Upon the start of the regular full-time schedule, Ms. Ladin will receive an annual base salary of $190,000. Ms. Ladin will be eligible to receive a fiscal year-end bonus of up to 35% of her then-current annual salary based on performance and earnings targets and other standards to be established by the Board of Directors. Ms. Ladin will receive options to purchase 25,000 shares of the Company’s common stock (the “Options”) under the Company’s 2016 Equity Incentive Plan (the “Plan”), subject to the terms of the Plan and a Stock Option Grant Notice and Option Agreement. The exercise price per share of the Options is $2.57, which was the closing market price on the date of grant. The Options are scheduled to vest over three years at 8,333 shares per year for the first two years and the remainder of 8,334 shares in the third year. Ms. Ladin will be eligible to participate in all other employee benefit plans and compensation programs that the Company maintains for salaried employees and executive officers. The foregoing description of the Employment Agreement is qualified in its entirety by reference to the Employment Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.

Since 2018, Ms. Ladin has been volunteering with various organizations and is a part-time faculty member at the University of Hawaii at Manoa in the Shidler School of Business. From February 2015 to January 2018, Ms. Ladin served as Senior Vice President, CFO and Treasurer for Albany Molecular Research, Inc. From 2002 to 2015, Ms. Ladin worked at Teva Pharmaceuticals USA, Inc (“Teva”). Her last position with Teva was Senior Vice President, CFO, Global Specialty Medicines. Prior to that role, she had positions of increasing responsibility directing Teva’s financial planning and analysis operations and was tax director. Ms. Ladin received her M.S. in Taxation from Seton Hall University and a B.S. in Accounting from the University of Delaware.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

Exhibit 10.1

SEPARATION AGREEMENT

This Separation Agreement (the “Agreement”) is entered as of the Effective Date by and among Brian Orlopp (“Employee”) and Cyanotech Corporation, a Nevada corporation (the “Company”).

1.           Separation of Employment.

(a)     Employee’s final date of employment with the Company will be September 25, 2020 (the “Separation Date”). By signing the Agreement below, Employee will acknowledge that, on or before the Separation Date, Employee was paid in full for any and all outstanding salary, wages, bonuses, commissions, and equity incentives, and no further compensation is due Employee by the Company except as provided under this Agreement. A copy of Employee’s final pay calculation will be provided on the Separation Date. Employee’s accrued paid time off in the gross amount of $22,376.25 (Twenty-Two Thousand Three Hundred Seventy-Six Dollars and Twenty-Five Cents) (“Accrued PTO”) shall be paid out on or before the Separation Date.

(b)     To the extent Employee has unexercised and vested Incentive Stock Options as of the Separation Date, he may exercise those vested options in accordance with the current terms of the Cyanotech Corporation 2016 Equity Incentive Plan (“Plan”), and this termination shall not be taken for “Cause” as defined in the applicable Plan. All unvested options shall automatically expire as of the Separation Date.

2.           Company’s Consideration for Agreement. In exchange for executing this Agreement, and abiding by all terms, the Company will provide Employee with the following:

(a)     Payments equal to two months of current base wages, in the gross amount of $26,000.00 (Twenty-Six Thousand Dollars);

(b)     Payments representing additional monthly amounts paid to Employee for housing and travel allowance in the total amount of $3,000.00 (Three Thousand Dollars); and

(c)     Payment of premiums for Employee’s health care continuation coverage under COBRA for two months commencing October 1, 2020, should Employee elect COBRA coverage, which has a value of $2,078.76 (Two Thousand Seventy-Eight Dollars and Seventy-Six Cents).

Such payments will be made in regular installments on the Company’s regular payroll dates commencing to the extent practicable within 10 days following the Effective Date and shall be subject to all required taxes and withholdings. Employee acknowledges and agrees that, but for Employee’s execution of this Agreement, Employee would not otherwise be entitled to the benefits described in this paragraph (the “Severance Benefits”).

3.           Employee’s Consideration for Agreement. In consideration for the payments and undertakings described in this Agreement, Employee releases and waives any and all claims that Employee might possibly have against the Company, whether Employee is aware of them or not. In legal terms, this means that, individually and on behalf of his or her representatives, successors, and assigns, Employee 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 Employee may now have, or has ever had. 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 Employee may have to any continuing or future employment with any Released Party.

This release is not intended to encompass any rights or claims to Employee’s vested equity interests, or to claims that cannot be released by Employee 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 Employee 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 Employee does so, or if any such claim is prosecuted in his/her name before any court or administrative agency, Employee waives and agrees not to take any award of money or other damages from such suit.

4.           Waiver of Unknown Future Claims. Employee understands that Employee 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.

5.           No Claims. Employee 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.

6.           Return of Property and Preservation of Proprietary Information.

(a)     Prior to the Effective Date of this Agreement, Employee agrees to return all property of the Company, including keycards, computers, personal communication devices, passwords, hard copy and electronic files, and any other proprietary material in Employee’s possession or control. Employee acknowledges that in the course of his or her employment with the Company, certain factual and strategic information specifically related to the Company and its affiliates has been disclosed to Employee in confidence (“Company Information”). Employee agrees to keep such Company Information confidential, not to make use of such information on his or her own behalf or for any other purpose, and to return all tangible forms of such information to the Company no later than the Separation Date. This obligation does not apply to any Company Information Employee is affirmatively authorized to disclose pursuant to any provision of applicable law.

(b)     Employee further acknowledges and hereby affirms Employee’s continuing obligations under the Company’s Confidentiality and Invention Assignment Agreement, which Employee executed as a condition of employment, which terms, are incorporated herein by reference. Pursuant to the Defend Trade Secrets Act of 2016, Employee acknowledges that Employee 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 Employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Employee may disclose the trade secret to his/her attorney and may use the trade secret information in the court proceeding, if Employee 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.

7.           Confidentiality of Agreement. Employee agrees that the terms and conditions of this Agreement are strictly confidential. Employee shall not disclose, discuss or reveal the existence or the terms of this Agreement to any persons, entities or organizations except as follows: (a) as required by court order; (b) to Employee’s spouse; or (c) to Employee’s attorneys or accountants.

8.           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.

9.           Non-Competition. Employee agrees that for two (2) years from the Separation Date, Employee will not, alone or as a member, employee, or agent of any individual or partnership, or as an officer, agent, employee, director, stockholder, or investor of any corporation, directly or indirectly, own, manage, operate, join, control, or participate in the ownership or management, operation, or control of, or work for or permit the use of Employee’s name by, or be connected in any manner with any business or activity which produces, distributes, sells, markets, or has plans to produce, distribute, sell or market, any products from Spirulina or Haermatococcus.

10.         Non-Disparagement. Employee shall not make any statements, written or oral, or cause or encourage others to make any statements, written or oral, that defame, disparage or in any way criticize the personal or business reputation, practices, or conduct of the Company. Employee 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. Notwithstanding the foregoing, this provision does not prohibit disclosures that Employee is required to make to comply with applicable laws or regulations nor does it preclude the Employee from making truthful disclosures that Employee is affirmatively authorized to make pursuant to any provision of applicable law.

11.         Cooperation; Third Party Disputes.

(a)     Transition Assistance. The parties agree that during the two-month period commencing with the Separation Date Employee will make himself available and provide assistance to the Company via phone, email or other remote means by answering questions and providing information, and so long as such assistance does not exceed twenty (20) hours in total, Employee shall not be entitled to additional compensation for such assistance.

(b)     Third Party Disputes. The parties agree that certain matters involving third parties which Employee has been involved during Employee’s employment may require Employee’s assistance and cooperation with the Company and/or its representative and legal advisors in the future. Accordingly, to the extent reasonably requested by the Company, Employee shall cooperate with and make himself available to the Company in connection with any existing or future claims, dispute, investigations, administrative proceedings, litigation, and other legal and business matters, as reasonably requested by the Company; provided that the Company shall make reasonable efforts to minimize disruption to Employee’s other professional and personal activities. The Company shall reimburse Employee for reasonable expenses and time (at an hourly rate consistent with Employee’s final base salary) incurred in connection with this cooperation.

12.         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 Employee of the following:

13.         Consequences of Breach. Employee 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 Employee’s breach of any portion of this Agreement. In addition, Employee agrees that if the Employee breaches any of Employee’s obligations under the Agreement the Company may cease payments due to Employee, or recover any payments made to Employee, under paragraph 2 to the extent permitted by law, and 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.

14.         Acknowledgment.      Employee represents and agrees that in executing this Agreement he is relying solely upon his or her own judgment, belief and knowledge, and the advice and recommendations of any independently selected counsel, concerning the nature, extent and duration of his or her rights and claims. Employee acknowledges that he has executed this Agreement voluntarily, free of any duress of coercion. Further, Employee 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.

15.         Miscellaneous

(a)     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 Employee’s heirs, executors, administrators, successors and assigns. This Agreement is specific to Employee and may not be assigned by Employee.

(b)     Arbitration. Any controversy, dispute or claim arising out of or relating to this Agreement, the formation, breach, interpretation or enforceability of this Agreement, including the employment relationship between the parties or the termination of the employment relationship between the parties, shall be settled through final and binding arbitration in Kona, Hawaii, Honolulu Hawaii, or such other location as agreed to by the parties, under the applicable rules of the American Arbitration Association (“AAA”) or, if the parties mutually agree, under the applicable rules of JAMS. The arbitrator selected shall have the authority to grant Employee or the Company or both all remedies otherwise available by law.

  Notwithstanding anything to the contrary in the AAA or JAMS rules, the arbitration shall (i) provide for reasonable written discovery and depositions; and (ii) provide for a written decision by the arbitrator that includes the essential findings and conclusions upon which the decision is based. Each party shall bear its or his own costs and expenses (including without limitation attorneys' fees) in connection with alternative dispute resolution procedures set forth in this paragraph, except as required by the applicable AAA or JAMS rules and except that the Company shall bear the arbitrator’s and AAA’s or JAMS’ fees and expenses. Judgment upon any award rendered may be entered in any court of competent jurisdiction. Hawaiian law shall apply to this Agreement and the arbitration proceeding but excluding any principles of conflicts of laws that would invoke the laws of another jurisdiction.

(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)     Entire Agreement. This Agreement and the document(s) expressly incorporated herein contain the entire agreement and understanding between Employee 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 Employee and the Company.

(e)     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.

(f)     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.

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

Cyanotech Corporation

EMPLOYEE

Exhibit 10.2

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (the “Agreement”) entered into between Felicia Ladin (“Executive”), and Cyanotech Corporation (the “Company”), will be effective upon execution by both parties of the date signed by Executive and Company below (the “Effective Date”).

Executive will be employed by the Company under this Agreement in the position of CFO, VP of Finance and Administration, Treasurer. Executive shall report to Gerald Cysewski, the Chief Executive Officer of the Company (“CEO”). Executive’s primary work location will be Oahu, Hawaii. Work will be remote with occasional on-site Kailua-Kona, Hawaii work, based on the needs of the business. Executive’s employment is contingent upon Executive’s successful completion of any pre-employment testing, including a background check and drug screen, and Executive’s ability to demonstrate the lawful right to work in the United States. Executive’s first day of part-time work schedule will be September 28, 2020 or such other date mutually agreed upon by the parties. Executive’s first day of full-time work will be November 2, 2020 or such other date mutually agreed upon by the parties.

As the Company’s Chief Financial Officer, VP of Finance and Administration, Treasurer, the Executive shall perform such duties and functions as are determined from time to time by the company’s CEO. In the performance of Executive’s 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 CEO.

Executive’s employment is “at will.” Executive or the Company may terminate Executive’s employment or modify it, at any time for any reason or for no reason, with or without notice.

During the part-time schedule, the Executive will receive an annual base salary of $95,000.00 (Ninety-Five Thousand Dollars and No Cents). Upon the start of the regular full-time schedule, the Executive will receive an annual base salary of $190,000.00 (One Hundred Ninety Thousand Dollars and No Cents). The Executive will be paid in accordance with the Company’s regular payroll practices, subject to withholdings required by law or authorized by Executive. Executive’s annual base salary will be subject to review annually at the end of each calendar year, to determine whether, in the Company’s sole discretion, the annual base salary should be increased.

Executive shall be eligible to participate in the Cyanotech Management Bonus Plan and the Cyanotech Corporation Equity Incentive Plan, subject to the terms and conditions of those plans. At the time of this agreement, according to the Cyanotech Management Bonus Plan, the CFO position is included in the 35% (Thirty Five percent) tier. The Cyanotech Corporation Equity Incentive Plan annually grants restricted stock units (RSU’s) to all eligible employees. In addition, the Board will grant Executive 25,000 (Twenty-five Thousand) stock options exercisable for shares of common stock of the Company under the Company’s 2016 Equity Incentive Plan (the “Plan”) at the date of hire, which will vest over three (3) years at 8,333 (Eight Thousand Three Hundred Thirty Three) shares per year for the first two years and the remainder of 8,334 (Eight Thousand Three Hundred Thirty Four) shares the third year. The exercise price for the 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.

Executive will be eligible to participate in, and be covered by, the Company’s employee benefit programs, subject to any preconditions in those programs, upon Executive’s Commencement Date. Specific programs currently in place include; health (physician, prescription, dental, vision) insurance for Executive and her family; a short term and long-term disability insurance plan; and group or individual life insurance. In addition, Executive will be entitled to two (2) weeks (80 hours) of paid personal time off immediately upon hire and will accrue paid personal time off (“PTO”) at the rate of four (4) weeks (160 hours) for each twelve (12) months Executive is employed by the Company, which accrual shall be subject to the generally applicable policies of the Company. Electronic equipment (laptop computer, monitors & accessories) necessary to do the job in a remote office will be provided by the company.

Executive will be reimbursed on a regular basis for reasonable, necessary and properly documented business and travel expenses incurred for the purpose of conducting the Company’s business.

Executive shall devote Executive’s entire business time, attention and energies exclusively to the business interests of the Company while employed full-time by the Company except as otherwise specifically approved in writing by the CEO. Subject to approval by the CEO, Executive may accept speaking or presentation engagements in exchange for honoraria and may serve on boards of directors and advisory boards of charitable organizations as long as such service does not adversely affect the performance of her duties under this Agreement.

9.1     Non-Competition.      Executive agrees that for two (2) years after Executive’s employment with the Company, Executive will not, alone or as a member, employee, or agent of any individual or partnership, or as an officer, agent, employee, director, stockholder, or investor of any corporation, directly or indirectly, own, manage, operate, join, control, or participate in the ownership or management, operation, or control of, or work for or permit the use of Executive’s name by, or be connected in any manner with any business or activity which produces, distributes, sells, markets, or has plans to produce, distribute, sell or market, any products that directly compete with Cyanotech Corporation or Nutrex Hawaii products.

9.2     Confidentiality and Invention Assignment. Executive acknowledges and agrees to at all times abide by the terms of the Company’s Confidentiality and Invention Assignment Agreement. Any modifications to the Confidentiality and Invention Assignment Agreement must be made and approved in writing by the Company’s CEO.

This Agreement shall be binding upon the parties hereto and their respective heirs, executors, legal representatives, successors and assigns. This Agreement is specific to Executive and may not be assigned.

No modification, waiver or amendment of this Agreement will be effective unless in writing signed by the Executive and by the Company. No waiver by either party of any condition or provision of this Agreement shall be considered a waiver of any other condition or provision or a waiver of the same condition or provision at another time.

This Agreement sets forth the entire agreement and understanding between the Company and Executive relating to the subject matters herein and supersedes all prior or contemporaneous discussions and agreements between the parties, whether oral or written, with respect to such terms.

This Agreement shall be governed by the laws of the State of Hawaii.

The invalidity or unenforceability of one or more provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect to the maximum extent of the law.

Executive and the Company mutually agree that they will submit all disputes arising under this Agreement or arising out of or related to Executive’ employment with Company to final and binding arbitration in Honolulu, Hawaii, under the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (AAA Rules) or, if the parties mutually agree, under the Employment Arbitration Rules and Procedures of JAMS. The arbitrator selected shall have the authority to grant Executive or the Company or both all remedies otherwise available by law.

Notwithstanding anything to the contrary in the AAA or JAMS Rules, the arbitration shall provide (i) for written discovery and depositions adequate to give the parties access to documents and witnesses that are essential to the dispute and (ii) for a written decision by the arbitrator that includes the essential findings and conclusions upon which the decision is based. Executive and the Company shall each bear her, or its own costs and attorneys’ fees incurred in conducting the arbitration.

In disputes where Executive asserts a claim under a state or federal statute prohibiting discrimination in employment (“Statutory Claim”), reasonable attorneys’ fees shall be awarded by the arbitrator based on the same standard as such fees would be awarded if the Statutory Claim had been asserted in state or federal court. Judgment upon any award rendered may be entered in any court of competent jurisdiction.

This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

Cyanotech Corporation

Executive