Promissory Note, dated April 30, 2020, by and between First Hawaiian Bank and Cyanotech Corporation

SBA Loan #

69754672-07

SBA Loan Name

CYANOTECH CORPORATION

Date

04/30/2020

Loan Amount

$1,380,975.00

Interest Rate

One percent (1.00%) per year

Borrower

CYANOTECH CORPORATION

Operating Company

Lender

First Hawaiian Bank, a Hawaii Corporation

1

PROMISE TO PAY:

2

DEFINITIONS:

3

PAYMENT TERMS:

a.

Payroll costs

b.

Any payment of interest on a covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation)

c.

Any payment on a covered rent obligation

d.

Any covered utility payment

a.

Give Lender written notice;

b.

Pay all accrued interest; and

c.

If the prepayment is received less than 21 days from the date Lender received the notice, pay an amount equal to 21 days interest form the date lender received the notice, less any interest accrued during the 21 days and paid under b. of this paragraph. If Borrower does not prepay within 30 days from the date Lender received the notice, Borrower must give Lender a new notice.

a.

No Collateral was required by Lender for this loan; and

b.

No personal or corporate guarantees were required by Lender for this loan.

4

DEFAULT:

A.

Fails to do anything required by this Note and other Loan Documents;

B.

Defaults on any other loan with Lender;

C.

Does not preserve, or account to Lender’s satisfaction for, any of the Collateral or its proceeds;

D.

Does not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender or SBA;

E.

Makes, or anyone acting on their behalf makes, a materially false or misleading representation to Lender or SBA;

F.

Defaults on any loan or agreement with another creditor, if Lender believes the default may materially affect Borrower’s ability to pay this Note;

G.

Fails to pay any taxes when due;

H.

Become the subject of a proceeding under any bankruptcy or insolvency law;

I.

Has a receiver or liquidator appointed for any part of their business or property;

J.

Makes an assignment for the benefit of creditors;

K.

Has any adverse change in financial condition or business operation that Lender believes may materially affect Borrower's ability to pay this Note;

L.

Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without Lender’s prior written consent; or

M.

Becomes the subject of a civil or criminal action that Lender believes may materially affect Borrower’s ability to pay this Note.

5

LENDER’S RIGHTS IF THERE IS A DEFAULT

A.

Require immediate payment of all amounts owing under this Note;

B.

Collect all amounts owing from any Borrower or Guarantor;

C.

File suit and obtain judgement;

D.

Take possession of any Collateral; or

E.

Sell, lease, or otherwise dispose of, any Collateral at public or private sale, with or without advertisement.

6

LENDER’S GENERAL POWERS:

A.

Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses;

B.

Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payments for property taxes, prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorney’s fees and cost. If Lender incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance;

C.

Release anyone obligated to pay this Note;

D.

Compromise, release, renew, extend or substitute any of the Collateral; and

E.

Take any action necessary to protect the Collateral or collect amounts owing on this Note.

7

WHEN FEDERAL LAW APPLIES:

8

SUCCESSOR AND ASSIGNS:

9

GENERAL PROVISIONS:

A.

All individuals and entities signing this Note are jointly and severally liable.

B.

Borrower waives all suretyship defenses.

C.

Borrower must sign all documents necessary at any time to comply with the Loan Documents and to enable Lender to acquire, perfect, or maintain Lender’s liens on Collateral.

D.

Lender may exercise any of its rights separately or together, as many times and in any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

E.

Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note.

F.

If any part of this Note is unenforceable, all other parts remain in effect.

G.

To the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that Lender did not obtain any guarantee; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of Collateral at a sale.

10

STATE SPECIFIC PROVISIONS

a.

Borrower has received a copy of the Authorization Paycheck Protection Program.

b.

Borrower acknowledges that if Borrower defaults on this loan, SBA may be required to pay Lender under the SBA guarantee, and SBA may then seek recovery on this loan (to the extent any balance remains after loan forgiveness).

c.

Borrower will keep books and records in a manner satisfactory to Lender, furnish financial statements as requested by Lender, and allow Lender and SBA to inspect and audit books, records and papers relating to Borrower’s financial or business condition.

d.

Borrower will not, without Lender’s consent, change its ownership structure, make any distribution of company assets that would adversely affect its financial condition, or transfer (including pledging) or dispose of any assets, except in the ordinary course of business.

a.

Documentation verifying the number of full-time equivalent employees on payroll and pay rates for the required periods, including payroll tax filings reported to the IRS and state income, payroll and unemployment insurance filings.

b.

Documentation, including canceled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered mortgage obligations, payments on covered lease obligations, and covered utility payments.

c.

A certification from an authorized representative of the Borrower that the documentation presented is true and correct, and the amount for which forgiveness is requested was used to retain employees, make interest payments on a covered mortgage obligation, make payments on a covered rent obligation or make covered utility payments.

d.

Any other documentation SBA determines necessary.

11

BORROWER’S NAME(S) AND SIGNATURE(S):