THIS TERM LOAN AGREEMENT,  is made, entered into and effective as of the

_____  day of  April,  2000,  by and among  CYANOTECH  CORPORATION  (hereinafter

referred to as the  "Borrower"),  and B & I LENDING,  LLC,  having its principal

offices at 3353 Peachtree Road, North Tower, Suite 1130, Atlanta,  Georgia 30326

(the "Lender").



                              W I T N E S S E T H:

                              - - - - - - - - - -





        WHEREAS,  Borrower  has applied to Lender for  financing  of the type or

types more particularly described hereinbelow; and



        WHEREAS, Lender is willing to extend financing to Borrower in accordance

with the terms hereof upon the execution of this Agreement by Borrower, provided

that  Borrower  is in  compliance with all of the terms and provisions  of  this

Agreement  and  has  fulfilled all conditions precedent to  Lender's obligations

herein contained;



        NOW,  THEREFORE,  in consideration of the sum of $100.00,  the foregoing

premises  and for other good and valuable  consideration,  the  sufficiency  and

receipt of all of which are  acknowledged  by Borrower,  and Lender and Borrower

agree as follows:



                                    ARTICLE I



                        DEFINITIONS, TERMS AND REFERENCES



        1.1.    CERTAIN  DEFINITIONS.   In  addition  to  such  other  terms  as

elsewhere defined  herein,  as  used  in this Agreement and in any exhibits, the

following terms  shall have the  following meanings, unless the context requires

otherwise:



TERM_AGR.DOC



{PAGE}



        "ACCOUNTS  RECEIVABLE  COLLATERAL" shall mean all rights of the Borrower

and of Nutrex, Inc., a Hawaii corporation, which is a wholly owned subsidiary of

the Borrower ("Nutrex") to payment for goods sold or leased, or to be sold or to

be leased, or for services rendered, howsoever evidenced or incurred, including,

without  limitation,  all  accounts,  instruments,  chattel  paper  and  general

intangibles,  all tax refunds and tax refund claims, all returned or repossessed

goods and all books, records, computer tapes, programs, and ledger books arising

therefrom  or  relating  thereto,  and as  further  described  in  the  Security

Instruments, whether now owned or hereafter acquired or arising.



        "AGREEMENT"  shall  mean  this  Term  Loan  Agreement,   as  amended  or

supplemented from time to time.



        "BANKRUPTCY  CODE"  shall mean Title 11 of the United  States  Code,  as

amended from time to time.



        "BORROWING  BASE  CERTIFICATE"  shall mean a Borrowing Base  Certificate

acceptable  to the Lender in form and content and  consistent  with the terms of

Section 10.37.



        "BORROWER" shall mean CYANOTECH CORPORATION, a corporation organized and

existing under the laws of the State of Nevada, and their respective  successors

and permitted assigns.



        "BUSINESS  DAY" shall mean a day on which Lender is open for the conduct

of banking  business at its office located at 3353 Peachtree Road,  North Tower,

Suite 1130, Atlanta, Georgia 30326.



        "CLOSING  DATE" shall mean the date of the  execution of this  Agreement

and the date on which the Term Loan is made pursuant hereto.



                                       -2-



{PAGE}



        "COLLATERAL" shall mean the Accounts  Receivable  Collateral,  Inventory

Collateral,  Equipment Collateral,  Fixtures Collateral, Property Collateral and

Maintenance  Reserve Account  Collateral all defined herein,  and all collateral

described in the Security Instruments, and in which Lender has, or is to have, a

security interest pursuant hereto, as security for payment of the Term Note.



        "COLLATERAL   LOCATIONS"  shall  mean  those  locations  set  forth  and

described on Exhibit "B" attached hereto.



        "DEBT SERVICE  COVERAGE"  shall mean annual  earnings  before  interest,

taxes,  depreciation  and  amortization  divided by all  principal  and interest

payments owed in one year.



        "DEFAULT  CONDITION" shall mean the occurrence of any event which, after

satisfaction  of any  requirement for the giving of notice or the lapse of time,

or both, would become an Event of Default.



        "DEFAULT  RATE"  shall mean that  interest  rate per annum equal to five

percent (5%) plus the stated  interest rate  effective  under the Term Note from

time to time.



        "EQUIPMENT  COLLATERAL"  shall mean all  equipment  and machinery of the

Borrower, whether now owned or hereafter acquired,  together with all furniture,

furnishings,  improvements, equipment, tools and personal property of every kind

of the Borrower, together with all accessories, parts, components,  attachments,

repairs,  replacements,   modifications,   renewals,  additions,   improvements,

upgrades and accessions of, to or upon such items of equipment and/or machinery,

and as further described in the Security Instruments.



        "EVENT OF DEFAULT" shall mean any of the events or conditions  described

in Article XII,  provided that any  requirement  for the giving of notice or the

lapse of time, or both, has been satisfied.



                                       -3-



{PAGE}



        "EXECUTIVE OFFICE" shall mean the offices of Borrower located at 73-4460

Queen  Kaahumanu  Highway,  Suite 102,  Kailua-Kona,  Hawaii 96740  ("Borrower's

Address").



        "FACILITY"  shall mean all of the real  property  and  improvements  now

existing or  hereafter  constructed  on those  tracts of land more  particularly

described in Exhibit "A",  upon which  Borrower  operates the business and which

are used as collateral for this loan wherever such may be located.



        "FINANCIAL STATEMENTS" shall mean the consolidated audited balance sheet

and  statement  of change in  financial  position  of  Borrower  and the  income

statements of Borrower.



        "FISCAL YEAR" shall mean the fiscal year of Borrower, which shall be the

twelve (12) month period  ending March 31 in each year,  or such other period as

the Borrower may  designate  and Lender may approve in writing.  Fiscal  quarter

shall mean the corresponding fiscal quarters within such Fiscal Year.



        "FIXTURES   COLLATERAL"   shall  mean  all  buildings,   structures  and

improvements of every nature whatsoever now or hereafter situated on the Land as

described  in  Exhibit  "A" (as  such  term  is  hereinafter  defined),  and all

fixtures,  machinery,  building  materials,  appliances,  and  equipment  of the

Borrower of every nature now or hereafter  located on or upon, or intended to be

used  in  connection  with,  the  Land  as  described  in  Exhibit  "A"  or  the

improvements  thereon,  including,  but not by way of limitation,  those for the

purposes of operating the Facility;  supplying or distributing heating, cooling,

electricity, gas, water, air and light; and all related machinery and equipment;

all  plumbing;  and all like  personal  property  and fixtures of every kind and

character now or at any time hereafter  located in or upon the Land as described

in Exhibit "A" or the  improvements  thereon,  or which may now or  hereafter be

used or obtained in connection therewith,  including all extensions,  additions,

improvements,  betterments,  after-acquired property, renewals, replacements and





                                       -4-



{PAGE}



substitutions,  or proceeds from  a permitted sale  or any of the foregoing, and

all the right,  title and interest of Borrower in any such fixtures,  machinery,

equipment,  appliances and personal  property subject to or covered by any prior

security agreement, conditional sales contract, chattel mortgage or similar lien

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