CYANOTECH CORPORATION
PREFERRED STOCK CONVERSION AND REGISTRATION RIGHTS AGREEMENT
THIS PREFERRED STOCK CONVERSION AND REGISTRATION RIGHTS AGREEMENT (this
"Agreement") is made as of February 20, 1996, by and between Cyanotech
Corporation, a Nevada corporation (the "Company"), and Firemen's Insurance
Company of Newark, New Jersey, a New Jersey insurance company ("Firemen's
Insurance"). National-Ben Franklin Co. of Illinois, and Illinois corporation
("National-Ben"), has executed this Agreement for purposes of Article IV hereof
only.
WHEREAS, Firemen's Insurance holds 1,250,000 shares (the "Series A
Shares") of the Company's 12% Cumulative, Convertible Preferred Shares - Series
A, par vale $.001 per share, constituting all the shares of such series of the
Company currently issued and outstanding;
WHEREAS, Firemen's Insurance purchased the Series A Shares pursuant to
the Venture Capital Unit Purchase Agreement dated as of April 18, 1985 between
The Continental Corporation (the successor in interest to Firemen's Insurance)
and the Company (the "Series A Agreement");
WHEREAS, Firemen's Insurance holds 595,031 shares (the "Series C
Shares") of the Company's 8% Cumulative, Convertible Preferred Shares - Series
C, par value $.001 per share;
WHEREAS, the 1,250,000 outstanding Series A Shares were convertible by
their terms into 250,000 shares of the Company's common stock, par value $.005
per share (all shares of the Company's common stock referred to herein as the
"Common Stock"), until February 28, 1995;
WHEREAS, the Company is contemplating an underwritten public offering
of its Common Stock (the "Contemplated Public Offering"), registered under the
Securities Act of 1933, as amended (the "Securities Act"), which Contemplated
Public Offering is expected to occur in late March or early April 1996;
WHEREAS, the underwriters of the Contemplated Public Offering have
advised the Company that for marketing reasons, among other factors, the success
of the Contemplated Public Offering is partially dependent, among other factors,
upon agreement of Firemen's Insurance to convert the outstanding Series A Shares
into Common Stock of the Company;
WHEREAS, Firemen's Insurance will benefit from the success of the
Contemplated Public Offering;
WHEREAS, Firemen's Insurance desires to convert, and the Company
desires Firemen's Insurance to convert, the Series A Shares into shares of
Common Stock, on the terms and subject to the terms set forth herein; and
WHEREAS, to further induce Firemen's Insurance to convert the Series A
Shares and the Series C Shares, the Company has agreed to grant certain
"piggy-back" registration rights to Firemen's Insurance with respect to its
resale of the shares of Common Stock issuable on conversion of the Series A
Shares and the Series C Shares.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
Conversion of Series A Shares
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1.1 Conversion of Series A Shares. Subject to the terms and
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conditions of this Agreement, Firemen's Insurance shall convert the Series A
Shares into 250,000 shares of Common Stock (subject to appropriate adjustment
for stock splits, stock dividends, combinations, other recapitalizations and
similar events) which conversion ratio has been determined in accordance with
the independent valuation attached hereto as Exhibit A and the Company shall
issue to Firemen's Insurance 250,000 shares of Common Stock in respect thereof
(subject to appropriate adjustment for stock splits, stock dividends,
combinations, other recapitalizations and similar events). The aggregate 250,000
shares of Common Stock to be issued to Firemen's Insurance shall herein be
referred to as the "Common Shares."
1.2 Termination of Rights Under Other Agreements. All rights
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of Firemen's Insurance to cause the Company to register the resale of any of the
Company's securities existing prior to the date hereof under the Securities Act
or any state securities laws shall terminate as of the date hereof. All rights
of Firemen's Insurance under the Series A Agreement, and any other agreement to
which the Company and Firemen's Insurance is a party relating to the Series A
Shares and the Common Stock issuable upon conversion thereof shall terminate as
of the date hereof. All rights of Firemen's Insurance incident to ownership of
Series A Shares, including, without limitation, the ability of the holders of
the Series A Shares to elect one director of the Company, shall terminate as of
the Closing (as defined below).
1.3 Closing. The conversion of the Series A Shares and the
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issuance of the Common Shares in respect thereof shall take place at such time
and place as the closing of the Contemplated Public Offering (which time and
place are designated as the "Closing"). At the Closing, Firemen's Insurance
shall deliver to the Company the certificates representing the Series A Shares
and the Company shall deliver to Firemen's Insurance certificates representing
the Common Shares as set forth in Section 1.1 hereof. This Agreement shall
terminate in its entirety and be of no further force and effect, and any rights
terminated pursuant to Section 1.2 shall be reinstated, if the Closing does not
occur by September 30, 1996, or such later date as all parties hereto shall
agree.
ARTICLE II
Representations and Warranties of Firemen's Insurance
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Firemen's Insurance hereby represents and warrants to the
company that:
2.1 Title to Stock. Firemen's Insurance has good and valid
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title to the Series A Shares held by it, free and clear of any lien, pledge,
security interest, or other encumbrance with full right and power to convert
such shares as set forth herein.
2.2 Authorization. This Agreement constitutes a valid and
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legally binding obligation, enforceable in accordance with its terms, subject to
bankruptcy and other laws of general application affecting the right and
remedies of creditors, and rules of law governing specific performance,
injunctive relief, or other equitable remedies.
2.3 Restricted Securities. Firemen's Insurance understands
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that the Common Shares are characterized as "restricted securities" under the
federal securities laws inasmuch as they were initially acquired from the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations, such securities may be resold without
registration under the Securities Act, only in certain limited circumstances. In
this connection, Firemen's Insurance represents that it is familiar with
Securities and Exchange Commission ("SEC") Rule 144 as presently in effect and
it understands the resale limitations imposed thereby and by the Securities Act.
Firemen's Insurance understands that it may be deemed an "affiliate" of the
Company as that term is defined in Rule 144.
2.4 Disclosure of Information. Firemen's Insurance believes
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that it has received all the information that it consider necessary or
appropriate for deciding whether to enter into the transactions contemplated by
this Agreement and to acquire the Common Shares. Firemen's Insurance has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the Common Shares. The Company has not made any
representations to Firemen's Insurance regarding the Company, its business,
prospects, financial condition, or any other matter.
2.5 Legends. It is understood that the certificates evidencing
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the Common Shares, when reissued in the name of Firemen's Insurance, may bear
the following legend, or a legend substantially similar to such legend:
"These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledge or hypothecated in the absence of a registration statement in effect with
respect to the securities under such Act or an opinion of counsel satisfactory
to the Company that such registration is not required or unless sold pursuant to
Rule 144 of such Act."
ARTICLE III
Registration Rights
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The Company covenants and agrees as follows:
3.1 Definitions. For purposes of this Article III:
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(a) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means (1) the Common
Shares issued to Firemen's Insurance pursuant to this Agreement, (2) the shares
of Common Stock of the Company issuable or issued upon conversion of the Series
C Shares, and (3) any Common Stock of the Company issued as (or issuable upon
the conversion or exercise of any warrant, right, or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, such Common Shares or such Common Stock, excluding in all
cases, however, any Registrable Securities sold by a person in a transaction in
which his/her rights under this Article III are not assigned;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities;
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 3.10 hereof; and
(e) The term "Form S-3" means such form under the Securities
Act as in effect on the date hereof or any comparable or successor form under
the Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
3.2 Company Registration. If (but without any obligation to do
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so under this Agreement), at any time after the closing of the Contemplated
Public Offering, the Company proposes to register any of its stock or other
securities under the Securities Act in connection with the public offering of
such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, at such
time, give each Holder written notice of such registration at least 20 days
prior to the proposed date to file any registration statement. Upon the written
request of each Holder given within twenty (20) days after mailing of such
notice by the Company in accordance with Section 4.5, the Company shall, subject
to the provisions of Section 3.6, cause to be registered under the Securities
Act all of the Registrable Securities that each such Holder has requested to be
registered.
3.3 Obligations of the Company. Whenever required under this
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Article III to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its reasonable best efforts
to cause such registration statement to become effective and to remain effective
for a period of not less than 90 days or such shorter period which will
terminate when all Registrable Securities covered by such registration statement
have been sold.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act and other applicable laws and regulations with
respect to the disposition of all securities covered by such registration
statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus including all supplements
thereto, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonable request in order to facilitate the
disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify
the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to quality to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) Use its reasonable best efforts to list for quotation on
the National Association of Securities Dealers Automated Quotation System
("Nasdaq") (or such other national exchange or national quotation system on
which the Company's Common Stock is then listed) such Registrable Securities.
(f) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement. In addition, all shares registered shall be
distributed substantially in accordance with the plan of distribution as set
forth in the registration statement.
(g) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing and notice of any stop order issued or threatened by the SEC and to
take all reasonable actions to prevent the entry of such stop order or to remove
it if it is entered.
(h) If any Registrable Securities are offered for sale, on the
date that the Registrable Securities are delivered to the underwriters, if any,
and if such Registrable Securities are not being sold through underwriters, then
on the date the registration statement becomes effective, the Company shall
furnish the Holder with (A) a signed opinion, dated as of the date of such
delivery, of the legal counsel of the Company addressed to the underwriters, if
any, and if such Registrable Securities are not being sold through underwriters,
then to the Holder covering such matters as are customarily addressed in
opinions rendered to underwriters on such transactions, and (B) a letter, dated
as of the date of such delivery of the Company independent public accountants
addressed to the underwriters, and if such Registrable Securities are not being
sold through underwriters, then to the Holder and, if such accountants refuse to
deliver such letter to the Holder, then to the Company (x) stating that they are
independent certified public accountants within the meaning of the Securities
Act and that, in the opinion of such accountants, the financial statements and
other financial data of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and (y) covering such other financial matters (including information as to
the period ending not more then five (5) business days prior to the date of such
letter) with respect to the registration in respect of which such letter is
being given as the Holder may reasonably request and as would be customary in
such a transaction.
3.4 Furnish information. It shall be a condition precedent to
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the obligations of the Company to take any action pursuant to this Article III
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required by law or otherwise to effect the
registration of such Holder's Registrable Securities.
3.5 Expenses of Company Registration. The Company shall bear
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and pay all expenses incurred in connection with any registration, filing, of
qualification of Registrable Securities with respect to the registrations
pursuant to Section 3.2 for each Holder (which right may be assigned as provided
in Section 3.10), including (without limitation) all registration, filing, and
qualification fees, printer's and accounting fees relating thereto, and fees and
disbursements of counsel for the Company, but excluding the fees and
disbursements of legal counsel for the selling Holders if separate legal counsel
is employed and underwriting discounts and commissions relating to Registrable
Securities.
3.6 (a) Underwriting Requirements. In connection with any
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offering involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 3.2 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then subject to the
terms set forth below only in such quantity as will not in the opinion of the
underwriters jeopardize the success of the offering by the Company. If the total
amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters believe will not jeopardize the
success of the offering (the securities so included to be apportioned pro-rata
among the selling stockholders according to the total amount of securities
entitled to be included therein owned by each selling stockholder or in such
other proportions as shall mutually be agreed to by such selling stockholders),
provided, however, that the amount of Registrable Securities and other
securities excluded from the offering may not be reduced to less than forty
percent (40%) of such offering; and further provided, however that Firemen's
Insurance will be entitled to include in each public offering, if it shall so
elect, no fewer than 507,000 shares of Registrable Securities (subject to
appropriate adjustment for stock splits, stock dividends, combinations, other
recapitalizations and similar events). For purposes of the parenthetical in the
preceding sentence concerning apportionment, for any selling stockholder which
is a Holder of Registrable Securities and which is a partnership or corporation,
the partners, retired partners and stockholders of such Holder, or the estates
and family members of any such partners and retired partners and any trusts for
the benefit of any of the foregoing persons shall be deemed to be a single
"selling stockholder," and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
(b) Withdrawal Rights. Each Holder shall be permitted to
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withdraw up to 507,000 shares (subject to appropriate adjustment for stock
splits, stock dividends, combinations, other recapitalizations and similar
events) of such Holder's Registrable Securities included in a registration at
any time prior to the effective date of such registration. In addition, to the
extent the number of Registrable Securities being sold by the Holder is greater
than 507,000 shares (subject to appropriate adjustment for stock splits, stock
dividends, combinations, other recapitalizations and similar events) the Holder
can withdraw any such portion above 507,000 shares if, on the date of such
withdrawal, the last reported sale price of the Company's Common Stock on Nasdaq
(or such other national exchange or national quotation system on which the
Company's Common Stock is then listed) was less than 85% of the proposed maximum
offering price per share listed on the "Calculation of Registration Fee" section
on the cover of the registration statement filed with the respect to the
Registrable Securities.
3.7 Delay of Registration. No Holder shall have any right to
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obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Article III. This Section 3.7 shall
not affect any remedies at law available to the Holder for breaches of Section
3.6(a)( by the Company.
3.8 Indemnification and Contribution. In the event any
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Registrable Securities are included in a registration statement under this
Article III:
(a) To the extent permitted by law, the company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "1934 Act"), against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act or the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions, or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be state therein, or necessary to make
the statements therein not misleading, or (iii any violation or alleged
violation by the Company of the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act or
the 1934 Act or any state securities law; and the Company will pay to each such
Holder, underwriter, or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
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that the indemnity agreement contained in this subsection 3.8(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, underwriter, or
controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject under the Securities Act or the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection 3.8(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
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in this subsection 3.8(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld.
(c) Promptly after receipt by an indemnified party under this
Section 3.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 3.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
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(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain separate counsel in each
jurisdiction where separate representation would be appropriate in the judgment
of the indemnified party, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party to the extent of such prejudice of any liability
to the indemnified party under this Section 3.8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 3.8.
(d) No indemnifying party, in the defense of any claim arising
out of a Violation shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation and, in the event the terms of such judgment or settlement
include any term other than the payment by the indemnifying party of money
damages, the indemnifying party shall not so consent or enter into such a
settlement without the consent of each indemnified party (which will not be
unreasonably withheld) whether or not the terms thereof include such a release.
(e) Contribution. If for any reason the indemnity provided for
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in this Section 3.8 is unavailable to, or is insufficient to hold harmless, an
indemnified party, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, or provides a lesser sum to
the indemnified party than the amount hereinafter calculated, in such proportion
as is appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parities shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties; and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 3.8(d), any legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 3.8(e) were determined by
pro-rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person or entity who was not guilty of such fraudulent misrepresentation.
(f) The obligations of the Company and Holders under this
Section 3.8 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Article III, and otherwise.
3.9 Reports Under Securities Exchange Act of 1934. With a view
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to making available to the Holders the benefits of Rule 144 promulgated under
the Securities Act and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees and
covenants to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act;
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Securities Act and the 1934 Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company with the
SEC or any securities exchange, and (ii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form; and
(d) provide the Holder with prompt notice of any failure by
the Company to comply with the requirements of Rule 144.
3.10 Assignment of Registration Rights. The rights to cause
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the Company to register Registrable Securities pursuant to this Article III may
be assigned (but only with all related obligations) by a Holder to a transferee
or assignee of such securities who, after such assignment or transfer, holds (i)
at least 1% of the Registrable Securities then outstanding (subject to
appropriate adjustment for stock splits, stock dividends, combinations, other
recapitalizations and similar events), or (ii) all of the shares or Registrable
Securities initially issued to such Holder, provided that, within a reasonable
time after such transfer, the Company is furnished with written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned; and provided, further,
that such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and/or not otherwise eligible
for sale under Rule 144(k) of the Securities Act or similar exemption. For the
purpose of determining the number of shares of Registrable Securities held by a
transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partner of such partnership (including
spouses and ancestors, lineal descendants, and siblings of such partners or
spouses who acquire Registrable Securities by gift, will, or intestate
succession) shall be aggregated together and with the partnership; provided that
all assignees and transferees who would not qualify individually for assignment
of registration rights shall have a single attorney-in-fact for the purpose of
exercising any rights, receiving notices, or taking any action under this
Article III.
3.11 Amendment of Registration Rights. Any provision of this
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Article III may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
Holder of any Registrable Securities then outstanding, each future holder of al
such Registrable Securities and the Company.
3.12 Termination of Registration Rights. No Holder
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shall be entitled to exercise any right provided for in this Article III after
February 3, 2005.
ARTICLE IV
Miscellaneous
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4.1 Market Stand-Off. Firemen's Insurance and National-Ben
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hereby covenant that they will not, except for the conversion of the Series A
Shares contemplated by this Agreement, without the prior written consent of ▇▇▇
▇▇▇▇▇▇ & Company (or such other investment bank that serves as the lead managing
underwriter in the company's Contemplated Public Offering, which person is
referred to herein as the "Lead Managing Underwriter"), offer, sell, or
otherwise dispose of, directly or indirectly, any shares of the Company's Common
Stock, or any securities convertible into or exercisable or exchangeable for, or
any rights to purchase or acquire, Common Stock owned by it (otherwise than as a
bona fide gift or gifts, provided the donee or donees thereof agree in writing
to be bound by the terms of this Section 4.1) for the period beginning on the
date hereof and ending on the date one hundred and twenty (120) days after the
date of the closing of the Contemplated Public Offering. If requested by the
Lead Managing Underwriter, Firemen's Insurance and National-Ben each agree to
execute an agreement similar to that set forth in this Section 4.1 addressed to
the Lead Managing Underwriter. The Company shall be expressly entitled to
enforce the provisions of this Section 4.1 on behalf of the Lead Managing
Underwriter. This Section 4.1 shall be effective only upon the execution of a
similar provision by American Cyanamid Company.
4.2 Survival of Warranties. The warranties, representations,
----------------------
and covenants of Firemen's Insurance, National-Ben and the Company contained in
or made pursuant to this Agreement shall survive the execution and delivery of
this Agreement and shall in no way be affected by any investigation of the
subject matter thereof made by or on behalf of Firemen's Insurance or the
Company.
4.3 Successors and Assigns. Except as otherwise provided
------------------------
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
4.4 Expenses. Except as otherwise provided in Article III
--------
hereof, irrespective of whether the Closing is effected, each party shall pay
its own costs and expenses that such party incurs with respect to the
negotiation, execution, delivery, and performance of this Agreement.
4.5 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or three
days after deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified at the
address indicated for such party on the signature page hereof, or by facsimile
confirmed by such certified or registered mail or at such other address as such
party may designate by ten (10) days' advance written notice to the other
parties.
4.6 Governing Law. This Agreement shall be governed by and
--------------
construed under the laws of the State of Nevada.
4.7 Titles and Subtitle. The titles and subtitles used in this
-------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
4.8 Entire Agreement Amendments and Waivers. This writing,
------------------------------------------
together with any exhibits annexed hereto, constitutes the entire Agreement of
the parties with respect to the subject matter hereof and shall supersede all
prior understandings and writings with respect thereto. Any term of this
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of all the parties hereto.
4.9 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.10 Severability. If one or more provisions of this Agreement
------------
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Cyanotech Corporation
By: S/▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: PRESIDENT AND CEO
Address: ▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇-▇▇▇▇, ▇▇ ▇▇▇▇▇
Firemen's Insurance Company of Newark, New Jersey
By: S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: VICE PRESIDENT
Address: ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
For purposes of Article IV
only:
National-Ben Franklin Co. of Illinois
By: S/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: VICE PRESIDENT
Address: ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
