STOCKHOLDERS AGREEMENT
----------------------
This STOCKHOLDERS AGREEMENT ("Agreement") is entered into as of May 17,
1993, by and among Xxxxxx X. Xxxxxxxx, The Continental Corporation,
National - Ben Franklin Insurance Co. of Illinois, Xxxxxx X. Xxxxxxxx
(collectively the "Stockholders"); Xxx X Xxxxxx (the "Stock Purchaser"); and
Cyanotech Corporation, a Nevada corporation (the "Corporation").
R E C I T A L S
A. Each of the Stockholders is a stockholder of the Corporation and
owns the shares of the Corporation's Common Stock or its 8% Cumulative
Convertible Preferred Shares Series C (collectively the "Stock") as set forth
on Exhibit A attached hereto; and
B. Under Subscription Agreement dated as of May 15, 1993, between the
Corporation and Xxx X. Xxxxxx, The Stock Purchaser has agreed to purchase
from the Corporation 1,800,000 shares of its Common Stock, and the
Corporation has agreed to sell, in consideration of the payment of the
purchase price thereof, such shares of its Common Stock (the "Stock
Purchasers Shares"), subject to the condition, among others, that this
Agreement be duly executed and
delivered by the parties hereto; and
C. The Corporation and the Stockholders each desire that the
transactions contemplated by the Subscription Agreement be consummated and
are willing to enter into this Agreement for the benefit of all parties;
In consideration of the mutual agreements and covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to legally bind themselves,
their successors, executors, heirs and assigns, the parties hereto agree as
follows:
1. Size of the Board of Director. Without the prior written consent of
a majority of the votes entitled to be cast with respect to the shares of
Stock then held by the Stockholders and with respect to the Stock Purchaser
Shares then held by the Stock Purchaser, the Corporation shall not propose,
and the Stockholders shall not vote for, or take or cause to be taken any
action in favor of any resolution, Bylaw change or proposal that would result
in the Corporation's Board of Directors (the "Board") becoming larger than
six (6) members. This agreement in no way cancels of modifies the rights of
holders of 12% Cumulative Convertible Preferred Shares Series A ("Series A")
to elect one director to the Board. Should holders of Series A exercise
their right to elect one member to the Board, the Board would consist of a
maximum of seven members.
2. Nomination of Directors. The Corporation shall give written notice
to the Stock Purchaser of any election to the Board (the "Election Notice")
not less than 10 business days before any deadline for submitting names of
nominees for membership on the Board or 45 days before said election,
whichever is the longer period. Xxx X. Xxxxxx may nominate one person for
election as director (the "Stock Purchaser Nominee"). The Stock Purchaser
shall give the Corporation and the Stockholders written notice of the name of
their respective Stock Purchaser Nominee, if any, within 10 business days
after receipt of the Election Notice.
3. Election of Directors. At any election of directors of the
Corporation, the Stockholders and Stock Purchaser shall vote their shares so
as to elect the Stock Purchaser Nominee.
4. Specific Performance. Each of the parties hereto acknowledges and
agrees that any other parties hereto would be irreparably damaged in the
event any of the provisions of this Agreement were not performed in
accordance with its specific terms or were otherwise breached. Accordingly,
each of the parties hereto agrees that each other party is entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any foreign or domestic court
having subject matter jurisdiction, to the extent permitted by applicable
law.
5. No Waiver. Except as expressly provided in this Agreement, nothing
contained in this Agreement shall cause the failure of the Corporation or the
Stockholders to insist upon strict compliance with any covenant, obligation,
condition or agreement contained herein to operate as a waiver of, or
estoppel with respect to, any which or any other covenant, obligation,
condition or agreement by the party entitled to the benefit thereto.
6. Severability. If any provisions hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and,
subject to applicable law, shall not affect the validity or effect of any
other provisions hereof.
7. Authority. Each party to this Agreement has full power and
authority to execute, deliver and perform this Agreement in accordance with
the
respective terms hereof. The Stockholders represent that in their individual
or corporate capacity they have the authority to bind the shares they
beneficially own, as listed on Exhibit A, to all the covenants,
representations and warranties contained herein.
8. Third Party Beneficiary. This Agreement has been entered into for
the express benefit of the parties hereto. Nothing herein expressed or
implied is intended to or shall be construed to confer upon or give to any
person or corporation other than the parties hereto and their successors or
permitted assigns any rights or remedies under or by reason of this
Agreement.
9. Entire Agreement; Amendments. This Agreement contains, and is
intended as, a complete statement of the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersedes
all prior statements, representations, discussions, agreements, draft
agreements and undertakings, whether written or oral, expressed or implied,
of any and every nature with respect thereto. This Agreement cannot be
changed or terminated orally, and may only be amended by written agreement of
all of the parties.
10. Successors and Assigns. All terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors in interest of the respective parties hereto and by each
transferee of the shares of Stock held by the Stockholders.
11. Termination. This Agreement terminates with respect to the Stock
Purchaser when such Stock Purchaser sells, transfers or disposes of any of
its Stock Purchaser Shares, other than by will, the laws of descent, or to
any entity controlled, directly or indirectly, by such Stock Purchaser.
12 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Hawaii applicable to agreements made
and to be performed in such State.
13. Notices. All notices, requests, demands, and other communications
under this Agreement are to be in writing and delivered personally (including
by courier) or mailed by certified mail, return receipt requested or by
reliable overnight courier, or given by facsimile transmission to the parties
at the following addresses (or to such other address as a party may have
specified by notice given to the other pursuant to this provision) and deemed
given when so received:
(i) if to the Corporation, to:
Cyanotech Corporation
X.X. Xxx 0000
Xxxxxxx Xxxxx
Xxxxxx-Xxxx, Xxxxxx 00000
(000) 000-0000 (fax)
Attn: Xxxxxx X. Xxxxx,
Vice-President, Finance &
Administration and Secretary
(ii) if to Xxxxxx X. Xxxxxxxx, to:
Xxxxxx X. Xxxxxxxx
X.X. Xxx 0000
Xxxxxxx Xxxxx
Xxxxxx-Xxxx, Xxxxxx 00000
(000 000-0000 (fax)
(iii) if to The Continental Corporation, to:
Continental Asset Management Corporation
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000 (fax)
Attn: Xxxxxx Xxxxxxx,
Executive Vice President
(iv) if to National - Ben Franklin Insurance Co. of Illinois, to:
Continental Asset Management Corporation
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000 (fax)
Attn: Xxxxxx Xxxxxxx,
Executive Vice President
(v) if to Xxxxxx X. Xxxxxxxx, to:
Xxxxxx X. Xxxxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxx Xxxxxx Xxxxx, Xxxxxxx 00000
(000) 000-0000 (fax)
(vi) if to Xxx X. Xxxxxx, to:
Xxx X. Xxxxxx
X.X. Xxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
(000) 000-0000 (fax)
14. Counterparts. This Agreement may be executed by the parties hereto
in counterparts each of which constitutes an original, but together are one
and the same instrument.
15. Further Assurances. Each party hereto agrees to perform such
additional acts necessary or appropriate to further the purposes of this
Agreement.
The undersigned have caused this Agreement to be executed as of the date
first above written.
CYANOTECH CORPORATION
By:/S/_GERALD R. CYSEWSKI_____
Name:_GERALD R. CYSEWSKI______
Title:__PRESIDENT_____________
STOCKHOLDERS: XXXXXX X. XXXXXXXX
/S/_GERALD R. CYSEWSKI______
THE CONTINENTAL CORPORATION by
CONTINENTAL ASSET MANAGEMENT CORPORATION,
attorney-in-fact,
By:/S/ XXXXXX X. BOLLMAN________
Name:__GERALD W. BOLLMAN________
Title:_EXECUTIVE VICE PRESIDENT_
NATIONAL - BEN FRANKLIN
INSURANCE CO. of ILLINOIS by
CONTINENTAL ASSET MANAGEMENT CORPORATION,
attorney-in-fact,
By:/S/ XXXXXX X. BOLLMAN_________
Name:__GERALD W. BOLLMAN_________
Title:__EXECUTIVE VICE PRESIDENT_
XXXXXX X. XXXXXXXX
/S/XXXXXX X. SHERLOCK___________
STOCK PURCHASER: XXX X. XXXXXX
/S/XXX X. REICHL________________
EXHIBIT A
Stockholder Shares/Class
Xxxxxx X. Xxxxxxxx 487,308 (Common)
National - Ben Franklin Insurance co. of Illinois 183,486 (Common)
The Continental Corporation 595,031 (Pfd Class C)
Xxxxxx X. Xxxxxxxx 420,000 (Common)
EXHIBIT 3
August 31, 1995
Cyanotech Corporation
00-0000 Xxxxx Xxxxxxxxx Xxx., Xxxxx 000
Xxxxxx-Xxxx, Xxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
President
Re: 1,250,000 shares of the Issuer's 12% Cumulative, Convertible, Preferred
Shares, Series A (the "Series A Preferred Stock")
Dear Xx. Xxxxxxxx:
Per your conversations with Xxxxxx Xxxxx at Loews Corporation, Firemen's
Insurance Company of Newark, New Jersey ("Firemen's") agrees to convert its
shares of Series A Preferred Stock within two weeks of Firemen's receipt of
notice of the reinstatement of the convertibility feature [as described in the
Articles of Incorporation of Cyanotech Corporation, as amended, (other than
with respect to the expiration date of the convertibility period)], if the
convertibility feature is reinstated within thirty days. Please include with
the notice an opinion of counsel (which may be in-house counsel) which states
that the convertibility reinstatement was properly authorized. Notices may be
sent by confirmed facsimile, express delivery or certified mail. Please sign a
copy of this letter and return it to me by facsimile at (000)000-0000 if the
previous description reflects your understanding of the terms of the
reinstatement of the convertibility feature for the Series A Preferred Stock.
Sincerely,
Xxxxxxx X. Xxxxxxxx
Vice President
RWD:lg
Agreed:
Cyanotech Corporation
By:__________________________
Title:_______________________
