<PAGE>
As filed with the Securities and Exchange Commission on October 27, 1995
Registration No. 33-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
______________________
CYANOTECH CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 91-1206026
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 4384, Keahole Point
Kailua-Kona, Hawaii 96745
(Address of principal executive offices)
______________________
CYANOTECH CORPORATION
1995 STOCK OPTION PLAN
(Full title of Plan)
______________________
RONALD P. SCOTT
Executive Vice President, Finance & Administration
73-4460 Queen Kaahumanu Highway, Suite 102
Kailua-Kona, Hawaii 96740
(Name and address of agent for service)
1-(808) 326-1353
(Telephone number, including area code, of agent for service)
Copy to:
E. LAURENCE GAY, ESQ.
Goodsill Anderson, Quinn & Stifel
P.O. Box 3196
Honolulu, Hawaii 96801
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities to to be Offering Price Aggregate Offering Registration
be Registered Registered Per Unit/(1)/ Price/(1)/ Fee/(1)/
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
($.005 par
value).......... 400,000 $7.375 $2,950,000 $1,017.25
shares
====================================================================================
</TABLE>
/(1)/ Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(h) based on the last price on October 24, 1995 as
reported in the NASDAQ Small-Cap Issues List.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
I. PLAN INFORMATION.*
II. REGISTRANT INFORMATION.*
_______________
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with Rule
428 under the Securities Act of 1933 and the Note to Part I of Form S-8.
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
III. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by Cyanotech Corporation (the "Company")
(File No. 0-146-02) with the Securities and Exchange Commission (the
"Commission") under the Securities Exchange Act of 1934 (the "Exchange Act") are
incorporated herein by reference: (1) The Company's Annual Report on Form 10-
KSB for the year ended March 31, 1995; (2) The Company's Quarterly Report on
Form 10-QSB for the quarter ended June 30, 1995; (3) The Company's Proxy
Statement, dated June 26, 1995 filed pursuant to Section 14 of the Exchange Act
in connection with the Company's 1995 Annual Meeting of Stockholders; (4) The
description of the Common Stock filed under Section 12 of the Exchange Act, and
in past and future amendments thereto and in those portions of periodic reports
filed under the Exchange Act for the purpose of updating such description; and
(5) All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the filing of
a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all such securities then remaining unsold.
Any statement contained in this Registration Statement or in any
document incorporated herein by reference (each referred to as an "Incorporated
Document") shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement in this Registration
Statement or any subsequently filed Incorporated Document modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this
Registration Statement.
IV. DESCRIPTION OF SECURITIES.
Not applicable.
V. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
3
<PAGE>
VI. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-Laws of the Company provide that the Company shall indemnify
each person who is or was an officer, director, agent, or employee of the
corporation and each person who, while an officer or director, has served or is
now serving at the request of the corporation as an officer, director, partner,
trustee, employee, or agent of an employee benefit plan or of another domestic
or foreign corporation, partnership, joint venture, trust, or other enterprise,
to the fullest extent permitted under Section 78.751 of the Nevada Revised
Statutes, as amended from time to time.
VII. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
VIII. EXHIBITS.
* 4(a) Restated Articles of Incorporation of Cyanotech Corporation
* 4(b) By-Laws of Cyanotech Corporation (Amended)
4(c) 1995 Stock Option Plan
5 Opinion of Woodburn and Wedge
24(a) Consent of KPMG Peat Marwick LLP
24(b) Consent of Woodburn and Wedge, included in Exhibit 5
______________
* Previously filed as Exhibit 3.3 to Form 10-Q, March 31, 1991, and
incorporated herein by this reference.
** Previously filed as Exhibit 3.2 to Form 10-K, December 31, 1989, and
incorporated herein by this reference.
IX. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
4
<PAGE>
(a) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, unless the information required to be included in such
post-effective amendment is contained in a periodic report filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 and incorporated by reference in this Registration Statement;
(b) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement,
unless the information required to be included in such post-effective amendment
is contained in a periodic report filed by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 and incorporated by
reference in this Registration Statement; and
(c) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in the Registration Statement;
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
5
<PAGE>
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to the provisions
described under Item 6, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Kailua-Kona, County of Hawaii, State of Hawaii, on
the 27th day of September, 1995.
By: /s/ Gerald R. Cysewski
----------------------
Gerald R. Cysewski
Chairman of the Board,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the Board,
President and Chief
Executive Officer
(Principal Executive
/s/ Gerald R. Cysewski Officer) and Director September 27, 1995
- -------------------------
GERALD R. CYSEWSKI
Executive Vice
President, Finance and
Administration
(Principal Financial
/s/ Ronald P. Scott and Accounting Officer) September 27, 1995
- -------------------------
RONALD P. SCOTT
/s/ Eva R. Reichl Director September 25, 1995
- -------------------------
EVA R. REICHL
/s/ Paul C. Yuen Director September 25, 1995
- -------------------------
PAUL C. YUEN
/s/ John T. Ushijima Director September 25, 1995
- -------------------------
JOHN T. USHIJIMA
7
<PAGE>
EXHIBIT 4(c)
CYANOTECH CORPORATION
1995 STOCK OPTION PLAN
----------------------
ARTICLE ONE
GENERAL
-------
I. PURPOSE OF THE PLAN
A. This 1995 Stock Option Plan ("Plan") is intended to promote the
interests of Cyanotech Corporation, a Nevada corporation (the "Corporation"), by
providing (i) key employees (including officers) of the Corporation (or its
subsidiary corporations) and (ii) consultants and other independent contractors
who provide valuable services to the Corporation (or its subsidiary
corporations) with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to join or remain in the service of the Corporation (or its
subsidiary corporations).
B. The Plan shall become effective immediately upon approval of the
Corporations' stockholders at the 1995 Annual Stockholders Meeting to be held on
August 9, 1995. Such date is hereby designated as the Effective Date of the
Plan.
C. For purposes of the various equity incentive programs in effect under
the Plan, the following definitions apply:
BOARD: the Corporation's Board of Directors.
COMMON STOCK: shares of the Corporation's common stock, par value
$0.005 per share.
CHANGE IN CONTROL: a change in ownership or control of the Corporation
effected through either of the following transactions:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation) directly or
indirectly acquires beneficial ownership (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended, "1934 Act") of stock
possessing more than fifty percent (50%) of the total combined voting power
of the Corporation's outstanding stock pursuant to a tender or exchange
offer made directly to the Corporation's stockholders which the Board does
not recommend such stockholders accept; or
(ii) there is a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority
of the Board members (rounded up to the next whole number) ceases, by
reason of one or more proxy contests for the election of Board members, to
be comprised of persons who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected
1
<PAGE>
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board.
CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:
(i) a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State in which the Corporation is incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation
or dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which stock possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's outstanding
stock are transferred to person or persons different from those who held
such stock immediately prior to such merger.
EMPLOYEE: a person who performs services while in the employ of the
Corporation or one or more subsidiary corporations, subject to the control and
direction of the employer entity not only as to the work to be performed but
also as to the manner and method of performance.
FAIR MARKET VALUE: the last reported price per share of the Common
Stock on the day in question on the NASDAQ Small-Cap Market, or if the Common
Stock is regularly traded in some other market or on an exchange the closing
selling price per share of the Common Stock on the date in question, as such
price is officially quoted by a national reporting service. If there is no such
reported price on the date in question, then the fair market value shall be the
price on the last preceding date for which such quotation exists.
HOSTILE TAKE-OVER: a change in ownership of the Corporation through
the following transaction:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation) directly or
indirectly acquires beneficial ownership (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended) of stock possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding stock pursuant to a tender or exchange offer made
directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept, and
---
(ii) more than fifty percent (50%) of the stock so acquired in
such tender or exchange offer are accepted from holders other than the
officers and directors of the Corporation who are subject to the short-
swing profit restrictions of Section 16 of the 1934 Act.
2
<PAGE>
SERVICE: the performance of services on a periodic basis to the
Corporation (or any subsidiary corporation) in the capacity of an Employee or an
independent consultant, except to the extent otherwise specifically provided in
the applicable stock option agreement.
TAKE-OVER PRICE: the greater of (a) the Fair Market Value per share of
-------
Common Stock on the date the option is surrendered to the Corporation in
connection with a Hostile Take-Over or (b) the highest reported price per share
of Common Stock paid by the tender offerer in effecting such Hostile Take-Over.
However, if the surrendered option is an Incentive Option, as defined in Section
IV (C) of this Article One, the Take-Over Price shall not exceed the clause (a)
price per share.
D. The following provisions shall be applicable in determining the
subsidiary corporations of the Corporation:
Each corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, provided each such corporation (other than
the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in any other corporation in
such chain.
II. STRUCTURE OF THE PLAN
A. Option Programs. The Plan shall be divided into two separate equity
---------------
incentive programs: the Discretionary Option Grant Program specified in Article
Two and the Discount Option Grant Program specified in Article Three. Under the
Discretionary Option Grant Program, eligible persons may, at the discretion of
the Committee, be granted options to purchase shares of Common Stock in
accordance with the provisions of Article Two. Under the Discount Option Grant
Program, eligible persons may elect, in accordance with the provisions of
Article Three, to have a portion of their base salary reduced each year in
return for options to purchase shares of Common Stock at an aggregate discount
from the Fair Market Value of the option shares on the grant date equal to the
salary reduction amount.
B. GENERAL PROVISIONS. Unless the context clearly indicates otherwise,
------------------
the provisions of Articles One and Four shall apply to the Discretionary Option
Grant Program and the Discount Option Grant Program and shall accordingly govern
the interests of all persons under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Stock Option and Compensation
Committee of the Board ("Committee") or other named Committee of the Board,
subject to the requirements of 1934 Act Rule 16b-3:
(i) The Committee of two (2) or more non-employee Board members
shall be appointed by the Board to have sole and exclusive authority to
administer the Discretionary Option Grant and Discount Option Grant
Programs. No Board member shall be eligible to serve on the Committee if
such person has, within the twelve (12)-month period immediately preceding
the date he or she is to be appointed to the
3
<PAGE>
Committee, received an option grant or stock issuance under this Plan or
any other stock option, stock appreciation, stock bonus or other stock plan
of the Corporation (or any subsidiary corporation), other than plans
permitted by 1934 Act Rule 16b-3.
(ii) Members of the Committee shall serve for such term as the
Board may determine and shall be subject to removal by the Board at any
time.
B. The Committee shall have full power and authority (subject to the
express provisions of the Plan) to establish such rules and regulations as it
may deem appropriate for the proper administration of the Discretionary Option
Grant and Discount Option Grant Programs and to make such determinations under,
and issue such interpretations of, the provisions of each such program and any
outstanding option grants thereunder as it may deem necessary or advisable. All
decisions of the Committee within the scope of its administrative functions
under the Plan shall be final and binding on all parties who have an interest in
the Discretionary Option Grant or Discount Option Grant Program under its
jurisdiction or any outstanding option thereunder.
C. Service on the Committee shall constitute service as a Board member,
and members of the Committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on the
Committee. No member of the Committee shall be liable for any act or omission
made in good faith with respect to the Plan or any option grant under the Plan.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option Grant
Program under Article Two and the Discount Option Grant Program under Article
Three ("Optionees") are as follows:
(i) officers and other employees of the Corporation (or its
subsidiary corporations) who render services which contribute to the
management, growth and financial success of the Corporation (or its
subsidiary corporations); and
(ii) those consultants or other independent contractors who
provide valuable services to the Corporation (or its subsidiary
corporations).
B. Non-employee Board members shall not be eligible to participate in the
---
Discretionary Option Grant or Discount Option Grant Program or in any other
stock option, stock purchase, stock bonus or other stock plan of the Corporation
(or its subsidiary corporations), except for plans permitted by 1934 Act Rule
16b-3.
C. The Committee shall have full authority to determine which eligible
persons are to receive option grants, the number of shares to be covered by each
such grant, the status of the granted option as either an incentive stock option
("Incentive Option") which satisfies the requirements of Section 422 of the
Internal Revenue Code or a non-qualified option not intended to meet such
requirements, the time or times at which each granted option is to become
exercisable and the maximum term for which the option may remain outstanding.
4
<PAGE>
V. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation on the open
market. The maximum number of shares of Common Stock which may be issued over
the term of the Plan shall not exceed 400,000 shares, subject to adjustment from
time to time in accordance with the provisions of this Section V.
B. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full (including any option
canceled in accordance with the cancellation-regrant provisions of Section IV of
Article Two of the Plan), then the shares subject to the portion of each option
not so exercised shall be available for subsequent option grant under the Plan.
Shares subject to any option or portion thereof surrendered in accordance with
the stock appreciation right provisions of the Plan and all share issuances
under the Plan, shall reduce on a share-for-share basis the number of shares of
Common Stock available for subsequent option grants under the Plan. In
addition, should the exercise price of an outstanding option under the Plan be
paid with shares of Common Stock or should shares of Common Stock otherwise
issuable under the Plan be withheld by the Corporation in satisfaction of the
withholding taxes incurred in connection with the exercise of an outstanding
option under the Plan, then the number of shares or Common Stock available for
issuance under the Plan shall be reduced by the gross number of shares for which
the option is exercised, and not by the net number of shares of Common Stock
actually issued to the option holder.
C. Should any change be made to the Common Stock issuable under the Plan
by reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
stock issuable under and (ii) the number and/or class of stock and price per
share in effect under each option outstanding under the Discretionary Option
Grant or Discount Option Grant. Such adjustments to the outstanding options are
to be effected in s manner which shall preclude the enlargement or dilution of
rights and benefits under such options. The adjustments determined by the
Committee shall be final, binding and conclusive.
5
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
----------------------------------
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Option Grant Program shall be
authorized by action of the Committee and may, at the Committee's discretion, be
either Incentive Options or non-qualified options. Persons who are not Employees
of the Corporation may only be granted non-qualified options. Each granted
option shall be evidenced by one or more instruments in the form approved by the
Committee; provided, however, that each such instrument shall comply with the
--------
terms and conditions specified below. Each instrument evidencing an Incentive
Option shall, in addition, be subject to the applicable provisions of Section II
of this Article Two.
A. Option Price.
------------
1. The option price per share under this Article Two shall be fixed
by the Committee in accordance with the following provisions:
(i) The option price per share of the Common Stock subject to an
Incentive Option shall in no event be less than one hundred percent (100%)
of the Fair Market Value of such Common Stock on the grant date.
(ii) The option price per share of the Common Stock subject to a
non-qualified stock option shall be in the amount determined by the
Committee at the time of grant and may be less than, equal to or more than
the Fair Market Value of such Common Stock on the grant date.
2. The option price shall become immediately due upon exercise of
the option and shall be payable in one of the alternative forms specified below;
(i) full payment in cash or check made payable to the
Corporation's order:
(ii) full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's earnings
for financial reporting purposes and valued at Fair Market Value on the
Exercise Date (as such term is hereinafter defined in subparagraph 2);
(iii) full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the
Corporation's reported earnings and valued at Fair Market Value on the
Exercise Date and cash or check payable to the Corporation's order; or
(iv) full payment through a broker-dealer sale and remittance
procedure pursuant to which the Optionee (I) shall provide irrevocable
written instructions to a
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designated brokerage firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate option price
payable for the purchased shares plus all applicable Federal and State
income and employment taxes required to be withheld by the Corporation in
connection with such purchase and (II) shall provide written directives to
the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale transaction.
For purposes of this subparagraph 2, the Exercise Date shall be the
date on which written notice of the of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
B. Term and Exercise of Options.
----------------------------
Each option granted under this Article Two shall be exercisable at
such time or times, during such period, and for such number of shares as shall
be determined by the Committee and set forth in the instrument evidencing such
option. No granted option shall, however, have a maximum term in excess of ten
(10) years. During the lifetime of the Optionee, the option, together with any
stock appreciation rights pertaining to such option, shall be exercisable only
by the Optionee and shall not be assignable or transferable other than by
transfer of the option effected by will or by the laws of descent and
distribution following the Optionee's death, or pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986, as amended, or
Title I of the Employment Retirement Income Security Act, or the rules
thereunder.
C. Termination of Service.
----------------------
1. In the event the Optionee should cease Service while holding one
or more options under this Article Two, then each such option shall not remain
exercisable beyond the limited post-Service exercise period specified by the
Committee in the instrument evidencing the grant, unless the Committee otherwise
extends such period in accordance with subparagraph C.5 below.
2. During the post-Service exercise period, the option may not be
exercised for more than the number of option shares (if any) in which the
Optionee is vested at the time of cessation of Service. Upon the expiration of
such post-Service exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding. However,
each option shall immediately terminate and cease to be outstanding, at the time
of the Optionee's cessation of Service, with respect to any option shares for
which such option is not otherwise at the time exercisable.
3. Should the optionee die while holding one or more outstanding
options under this Article Two, then each such option may be exercised, subject
to the limitations of subparagraph 2 above, by the personal representative of
the Optionee's estate or by the person or persons to whom the option is
transferred pursuant to the Optionee's will or the laws of descent and
distribution.
4. Should (i) the Optionee's Service be terminated for misconduct
(including, but not limited to, any act of dishonesty, willful misconduct, fraud
or embezzlement) or (ii) the optionee
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<PAGE>
make any unauthorized use or disclosure of confidential information or trade
secrets of the Corporation or its subsidiaries, then in any such event all
outstanding options held by the Optionee under this Article Two shall terminate
immediately and cease to be outstanding.
5. The Committee shall have full power and authority to extend the
period of time for which the option is to remain exercisable following the
Optionee's cessation of Service or death from the limited period specified in
the instrument evidencing such grant to such greater period of time as the
Committee shall deem appropriate under the circumstances. In no event, however,
shall such option be exercisable after the specified expiration date of the
option term.
6. The Committee shall have complete discretion, exercisable either
at the time the option is granted or at any time the option remains outstanding,
to permit one or more options granted under this Article Two to be exercised not
only for the number of shares for which each such option is exercisable at the
time of the Optionee's cessation of Service but also for one or more subsequent
installments of purchasable shares for which the option would otherwise have
become exercisable had such cessation of Service not occurred.
D. Stockholder Rights.
------------------
An Optionee has none of the rights of a stockholder with respect to any
option shares until such person has exercised the option and paid the option
price for the purchased shares.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to persons who are Employees of the Corporation. Options which are
specifically designated as "non-qualified" options when issued under the Plan
shall not be subject to such terms and conditions.
---
A. Dollar Limitation. The aggregate Fair Market Value (determined as of
-----------------
the respective date of dates of grant of the Common Stock for which one or more
options granted to any Employee under this Plan (or any other option plan of the
Corporation or its subsidiary corporations) may for the first time become
exercisable as incentive stock options under the Federal tax laws during any one
calendar year shall not exceed the sum of One Hundred Thousand dollars
($100,000). To the extent the Employee holds two (2) or more such options which
become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as incentive stock options
under the federal tax laws shall be applied on the basis of the order in which
such options are granted. Should the number of shares of Common Stock for which
any Incentive Option first becomes exercisable in any calendar year exceed the
applicable one hundred thousand dollar ($100,000) limitation, then the option
may nevertheless be exercised in that calendar year for the excess number of
shares as a non-qualified option under the Federal tax laws.
B. 10% Stockholder. If any person to whom an Incentive Option is granted
---------------
is the owner of stock (as determined under Section 424(d) of the Internal
Revenue Code) possessing ten percent (10%) or more of the total combined voting
power of all classes of stock of the corporation or any one of its
8
<PAGE>
subsidiary corporations, then the option price per share shall not be less than
one hundred and ten percent (110%) of the fair market value per share of Common
Stock on the grant date, and the option term shall not exceed five (4) years,
measured from the grant date.
Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Four of the Plan shall apply to all
Incentive Options granted hereunder.
III. CORPORATE TRANSACTIONS / CHANGES IN CONTROL
A. Each option which is outstanding under this Article Two at the time of
a Corporate Transaction shall automatically accelerate so that each such option
shall, immediately prior to the specified effective date for such Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for all
or any portion of such shares. However, an outstanding option under this
Article Two shall not so accelerate if and to the extent: (i) such option is,
in connection with the Corporate Transaction, either to be assumed by the
successor corporation or parent thereof or to be replaced with a comparable
option to purchase shares of the capital stock of the successor corporation or
parent thereof, (ii) such option is to be replaced with a cash incentive program
of the successor corporation which preserves the option spread existing at the
time of the Corporate Transaction and provides for subsequent payout in
accordance with the same exercise schedule applicable to such option, or (iii)
the acceleration of such option is subject to other limitations imposed by the
Committee, at the time of the option grant. The determination of option
comparability under clause (i) above shall be final, binding and conclusive.
The Committee shall also have full power and authority to grant options under
the Plan which are to automatically accelerate in whole or in part immediately
prior to the Corporate Transaction or upon the subsequent termination of the
Optionee's Service, whether or not those options are otherwise to be assumed or
replaced in connection with the consummation of such Corporate Transaction.
B. Upon the consummation of the Corporate Transaction, all outstanding
options under this Article Two shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its parent company.
C. Each outstanding option under this Article Two which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of stock which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the Option price
payable per share, provided the aggregate option price payable for such stock
--------
shall remain the same. In addition, the class and number of stock available for
issuance under the Plan following the consummation of the Corporate Transaction
shall be appropriately adjusted.
D. The grant of options under this Article Two shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
E. The Committee shall have the discretionary authority, exercisable
either in advance of any actually-anticipated Change in Control or at the time
of an actual Change in Control, to provide for
9
<PAGE>
the automatic acceleration of one or more outstanding options under this Article
Two upon the occurrence of the Change in Control. The Committee shall also
have full power and authority to condition any such option acceleration upon the
subsequent termination of the Optionee's Service within a specified period
following the Change in Control.
F. Any options accelerated in connection with the Change in Control shall
remain fully exercisable until the expiration or sooner termination of the
option term or the surrender of such option in accordance with Section V of this
Article Two.
G. The exercisability as incentive stock options under the Federal tax
laws of any options accelerated under this Section III in connection with a
Corporate Transaction or Change in Control shall remain subject to the dollar
limitation of Section II of this Article Two.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Committee shall have the authority to effect, at any time and from time
to time, with the consent of the affected Optionees, the cancellation of any or
all outstanding options under this Article Two and to grant in substitution new
options under the Plan covering the same or different numbers of shares of
Common Stock but with an option price per share based upon the Fair Market Value
of the Common Stock on the new grant date.
V. STOCK APPRECIATION RIGHTS
A. One or more Optionees may be granted the right, exercisable upon such
terms and conditions as the Committee may establish, to surrender all or part of
an unexercised option under this Article Two in exchange for a distribution from
the Corporation in an amount equal to the excess of (i) the Fair Market Value
(on the option surrender date) of the number of shares for which the option is
at the time exercisable (or surrendered portion thereof) over (ii) the aggregate
option price payable for such shares.
B. No such option surrender shall be effective unless it is approved by
the Committee. If the surrender is so approved, then the distribution to which
the Optionee shall accordingly become entitled under this Section V may be made
in shares of Common Stock valued at Fair Market Value on the option surrender
date, in cash, or partly in shares and partly in cash, as the Committee shall in
its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Committee, then the
Optionee shall retain whatever rights the Optionee had under the surrendered
option (or surrendered portion thereof) on the option surrender date and may
exercise such rights at any time prior to the later of (i) five (5) business
-----
days after the receipt of the rejection notice or (ii) the last day on which the
option is otherwise exercisable in accordance with the terms of the instrument
evidencing such option, but in no event may such rights be exercised more than
ten (10) years after the date of the option grant.
D. One or more officers of the Corporation subject to the short-swing
profit restrictions of the Federal securities laws may, in the Committee's sole
discretion, be granted limited stock appreciation rights in tandem with their
outstanding options under this Discretionary Option Grant Program. Upon
10
<PAGE>
the occurrence of a Hostile Take-Over, each such officer holding one or more
options with such a limited stock appreciation right in effect for at least six
(6) months shall have the unconditional right (exercisable for a thirty (30)-day
period following such Hostile Take-Over) to surrender each such option to the
Corporation, to the extent the option is at the time exercisable. In return for
the surrendered option, the officer shall be entitled to a cash distribution
from the Corporation in an amount equal to the excess of (i) the Take-Over Price
of the shares of Common Stock which are at the time vested under each
surrendered option (or surrendered portion) over (ii) the aggregate exercise
price payable for such vested shares. Such cash distribution shall be paid
within five (5) days following the option surrender date. Neither the approval
of the Committee nor the consent of the Board shall be required in connection
with such option surrender and cash distribution. The balance of the option (if
any) shall continue in full force and effect in accordance with the instrument
evidencing such grant.
11
<PAGE>
ARTICLE THREE
DISCOUNT OPTION GRANT PROGRAM
-----------------------------
I. ELIGIBILITY
The Committee shall have authority to select, prior to the start of each
calendar year, the particular key employees who will be eligible for
participation in the Discount Option Grant Program for the calendar year. In
order to become an actual participant for a particular calendar year, each
selected person must, prior to the start of that calendar year, file with the
Committee (or its designate) an irrevocable authorization pursuant to which the
Corporation is to reduce his or her base salary for that calendar year by a
designated multiple of five percent (5%).
The Committee shall review the filed authorizations and determine whether
to approve, in whole or in part, one or more of these authorizations. To the
extent the Committee approves one or more such authorizations, the participants
who filed those authorizations shall be granted options under this Article Three
option program. To the extent one or more authorizations are not approved by
the Committee, those authorizations shall have no force or effect and no
discounted options shall be granted with respect to the unapproved salary
reductions.
To the extent options are granted under the Discount Option Grant Program,
such options shall be non-qualified options evidenced by instruments in such
form as the Committee shall from time to time approve; provided, however, that
--------
each such instrument shall comply with and incorporate the terms and conditions
specified below.
II. TERMS AND CONDITIONS OF OPTION
A. Option Price.
------------
1. The option price per share shall be thirty-three and one-third
percent (33-1/3%) of the Fair Market Value per share of Common Stock on the
grant date.
2. The option price shall become immediately due upon exercise of
the option and shall be payable in one of the alternative forms specified in
Section I(A)(2) of Article Two.
B. Number of Option Shares.
-----------------------
1. The number of shares of Common Stock for which each grant under
this Article Three is to be made to a selected Optionee shall be determined
pursuant to the following formula:
X = A / (B x 66-2/3%)
where X is the number of option shares,
A is the dollar amount of the approved reduction in the Optionee's
base salary for the calendar year, and
B is the Fair Market Value per share of Common Stock on the date of
the grant.
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<PAGE>
C. Term and Exercise of Options.
----------------------------
1. Each option shall have a maximum term of ten (10) years measured
from the grant date. Provided the Optionee continues in Service, the option
shall become exercisable for (A) fifty percent (50%) of the option shares on
last day of June next following the grant date and (B) for the balance of the
option shares in a series of six (6) successive equal monthly installments on
the last day of each of the next six (6) calendar months.
2. During the Optionee's lifetime, the option, shall be exercisable
only by the Optionee and shall not be assignable or transferable other than by
transfer of the option by will or by the laws of descent and distribution
following the Optionee's death, or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or Title I of
the Employment Retirement Income Security Act, or the rules thereunder.
D. Effect of Termination of Service.
--------------------------------
1. Should an Optionee cease Service for any reason after one or more
of his outstanding options under this Article Three have become exercisable in
whole or in part, then each such option shall remain exercisable, for any or all
of the shares for which the option is exercisable on the date of such cessation
of Service, until the expiration of the ten (10)-year option term or its sooner
termination, under Section F(1) of this Article Three. Following the Optionee's
death, each such option may be exercised, for any or all of the shares for which
the option is exercisable at the time of the Optionee's death, by the personal
representative of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution, but any such exercise must be effected prior
to the expiration or sooner termination of the option term.
2. Should the Optionee die before one or more of his outstanding
options under this Article Three become exercisable for any of the option
shares, then the personal representative of the Optionee's estate or the person
or persons to whom such options are transferred pursuant to the Optionee's will
or in accordance with the laws of descent and distribution shall nevertheless
have the right to exercise each such option for up to that number of option
shares equal to (A) one-twelfth (1/12) of the total number of option shares
multiplied by (B) the number of full calendar months which will have elapsed
between the first day of the calendar year for which the option is granted and
the last day of the calendar month during which the Optionee ceases Service.
Such exercise must occur prior to the specified expiration date of the option
term or (if earlier) the first anniversary of the date of the Optionee's death.
Upon the occurrence of the earlier event, the option shall terminate and cease
to be exercisable. Each such option shall, with respect to the balance of the
option shares for which it is not exercisable at the time of the Optionee's
cessation of Service, terminate immediately upon such cessation of Service and
shall cease to be outstanding with respect to those option shares.
3. Should the Optionee become permanently disabled (as determined in
accordance with Section 22(e) of the Internal Revenue Code) and cease by reason
thereof to remain in Service before one or more of his outstanding options under
this Article Three become exercisable for any of the option shares, then the
Optionee shall nevertheless have the right to exercise each such option for up
to that number of option shares equal to (A) one-twelfth (1/12) of the total
number of option shares multiplied by (B) the number of full calendar months
which will have elapsed between the first day of the calendar
13
<PAGE>
year for which the option is granted and the last day of the calendar month
during which the Optionee ceases Service. Each such exercise must, however, be
effected prior to the expiration of the ten (10)-year option term or its sooner
termination under Section F(1) of this Article Three. The option shall, with
respect to the balance of the option shares for which it is not exercisable at
the time of the Optionee's cessation of Service, terminate immediately upon such
cessation of Service and shall cease to be outstanding with respect to those
option shares.
4. Except to the limited extent specifically provided in
subparagraphs 2 and 3 above, should the Optionee cease for any reason to remain
in Service before one or more of his outstanding options under this Article
Three become exercisable for any of the option shares, then each such non-
exercisable option shall immediately terminate upon such cessation of Service
and cease to be outstanding.
E. Stockholder Rights. The Optionee shall have none of the rights of a
------------------
stockholder with respect to any option shares until such person shall have
exercised the option and paid the option price for those shares.
F. Corporate Transaction / Change in Control.
-----------------------------------------
1. Should any Corporate Transaction occur while the Optionee remains
in Service, then each outstanding option held by such Optionee under this
Article Three shall become exercisable, immediately prior to the specified
effective date of such Corporate Transaction, for all of the shares at the time
subject to such option and may be exercised for any or all of such shares. Upon
the consummation of the Corporate Transaction, each such option shall terminate
unless assumed by the successor corporation or parent thereof.
2. Should a Change in Control occur while the Optionee is still in
Service, then each outstanding option held by such Optionee under this Article
Three shall, immediately prior to the effective date of such Change in Control,
become exercisable with respect to the total number of shares of Common Stock at
the time subject to such option and may be exercised for all or any portion of
such shares at any time prior to the expiration or sooner termination of the
option term.
3. The grant of options under this Article Three shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
14
<PAGE>
ARTICLE FOUR
MISCELLANEOUS
-------------
I. LOANS OR INSTALLMENT PAYMENTS
A. The Committee may assist any Optionee (including any officer) in the
exercise of one or more outstanding options under the Discretionary Option Grant
or Discount Option Grant Program by (a) authorizing the extension of a loan to
such Optionee from the Corporation or (b) permitting the Optionee to pay the
option price for the purchased Common Stock in installments over a period of
years. The terms of any such loan or installment method of payment (including
the interest rate and terms of repayment) shall be established by the Committee
in its sole discretion. Loans and installment payments may be granted without
security or collateral, but the maximum credit available per person shall not
exceed the sum of (i) the aggregate option price of the purchased shares plus
---
(ii) any Federal, State and local income tax and employment tax liabilities
incurred by the person in connection with the exercise of the option or the
acquisition of the shares.
B. The Committee may, in its absolute discretion, determine that one or
more loans extended under this financial assistance program shall be subject to
forgiveness by the Corporation in whole or in part upon such terms and
conditions as the Committee may deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to amend or
modify the Plan (or any equity incentive program hereunder) in any or all
respects whatsoever. However, no such amendment or modification shall adversely
affect rights and obligations with respect to options at the time outstanding
under the Plan, unless the Optionee consents to such amendment. In addition,
the Board may not, without the approval of the Corporation's stockholders, amend
the Plan to (i) materially increase the maximum number of shares issuable under
the Plan, except for permissible adjustments under Section V(C) of Article One,
(ii) materially modify the eligibility requirements for plan participation or
(iii) materially increase the benefits accruing to Optionees.
E. Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant and the Discount Option Grant Programs which are in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under the Discretionary Option Grant
or the Discount Option Grant Program are held in escrow until stockholder
approval is obtained for a sufficient increase in the number of shares available
for issuance under the Plan. If such stockholder approval is not obtained
within twelve (12) months after the date the first such excess option grants or
excess share issuances are made, then (I) any unexercised excess options shall
terminate and cease to be exercisable and (II) the Corporation shall promptly
refund the purchase price paid for any excess shares actually issued under the
Plan and held in escrow, together with interest (at the applicable Short Term
Federal Rate) for the period the shares were held in escrow.
15
<PAGE>
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock upon
exercise of stock options or the vesting of shares acquire upon exercise of such
options under the Plan shall be subject to the satisfaction of all applicable
Federal, State and local income tax and employment tax withholding requirements.
B. The Committee may, in its discretion and in accordance with the
provisions of this Section III and such supplemental rules as the Committee may
from time to time adopt (including the applicable safe-harbor provisions of 1934
Act Rule 16b-3), provide any or all holders of non-qualified options or unvested
shares under the Plan with the right to use shares of Common Stock in
satisfaction of all or part of the Federal, State and local income tax and
employment tax liabilities incurred by such holders in connection with the
exercise of their options. Such right may be provided to any such holder in
either or both of the following formats:
(i) Stock Withholding: The holder of the non-qualified option may
-----------------
be provided with the election to have the Corporation withhold, from the
shares of Common Stock otherwise issuable upon the exercise of such non-
qualified option, a portion of those shares with an aggregate Fair Market
Value equal to the percentage of the applicable Taxes (up to one hundred
(100%)) specified by such holder.
(ii) Stock Delivery: The Committee may, in its discretion,
--------------
provide the holder of the non-qualified option with the election to deliver
to the Corporation, at the time the non-qualified option is exercised, one
or more shares of Common Stock already held by such person with an
aggregate Fair Market Value (100%) as specified by such person) of the
Taxes incurred in connection with such option exercise.
IV. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan shall become effective on August 9, 1995, immediately upon
approval by the Corporation's stockholders at the 1995 Annual Meeting.
B. The Plan shall terminate upon the earlier of (i) August 8, 2005 or
-------
(ii) the date on which all shares available for issuance under the Plan shall
have been issued or canceled pursuant to the exercise of options or stock
appreciation rights granted under the Plan. If the date of termination is
determined under clause (i) above, then all option grants and unvested stock
issuances outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the instruments evidencing such
grants or issuances.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants under the Plan shall be used for general corporate
purposes.
16
<PAGE>
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option under the
Plan, and the issuance of Common Stock upon the exercise or surrender of the
option grants made hereunder shall be subject to the Corporation's procurement
of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it, and the Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or delivered
under this Plan unless and until there shall have been compliance with all
applicable requirements of Federal and State securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which the Common Stock is then listed.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor any
action taken by the Committee hereunder, nor any provision of the Plan shall be
construed so as to grant any person the right to remain in the employ or service
of the Corporation (or any subsidiary corporation) for any period of specific
duration, and the Corporation (or any subsidiary corporation retaining the
services of such person) may terminate such person's employment or service at
any time and for any reason, with or without cause.
VIII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the Plan may
not be assigned, encumbered or otherwise transferred by any Optionee, except as
specifically provided in the Plan.
B. The provisions of the Plan relating to the exercise of options and the
vesting of shares shall be governed by the laws of the State of Hawaii, as such
laws are applied to contracts entered into.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.
17
<PAGE>
EXHIBIT 5
---------
October 24, 1995
Cyanotech Corporation
73-4460 Queen Kaahumanu Highway
Suite 102
Kailua-Kona, Hawaii 96740
Dear Sirs:
We refer to the Registration Statement on Form S-8 filed by Cyanotech
Corporation ("Company") with the Securities and Exchange Commission relating to
the 400,000 shares of the Common Stock, par value $0.005, of the Company (the
"Common Stock") issuable pursuant to the 1995 Stock Option Plan of the Company
as provided therein.
It is our opinion that:
1. The Company is a duly incorporated and existing corporation under
the laws of the State of Nevada.
2. The shares of Common Stock, when issued and delivered against
payment of the price therefor as provided in the 1995 Stock Option Plan, will be
validly issued, fully paid and nonassessable.
The opinions herein are limited to the matters expressly set forth
herein and no opinion is implied or may be inferred beyond the matters expressly
stated. We disclaim any obligation to update this opinion letter for events
occurring after the date of this opinion letter, or as a result of knowledge
acquired by us after that date, including changes in any of the statutory or
decisional law after the date of this opinion letter. We are members of the bar
of the State of Nevada. We are not opining on, and assume no responsibility as
to, the applicability to or the effect on any of the matters covered herein of
the laws of any other jurisdiction, other than the laws of the State of Nevada
and the United States as presently in effect. We express no opinion as to the
effect and application of the antitrust and securities laws of the United States
or of any state, including the State of Nevada.
<PAGE>
We hereby consent to the use of this opinion in the Registration
Statement and to the reference to our name in the Prospectus constituting a part
of such Registration Statement under the heading "Legal Matters". In giving
such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
WOODBURN and WEDGE
By: /s/ Kirk S. Schumacher
----------------------
<PAGE>
EXHIBIT 24(a)
-------------
The Board of Directors
Cyanotech Corporation:
We consent to incorporation by reference in the Registration Statement on Form
S-8 of Cyanotech Corporation (for the Cyanotech Corporation 1995 Stock Option
Plan) of our report dated May 3, 1995, relating to the consolidated balance
sheet of Cyanotech Corporation and subsidiary as of March 31, 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years ended March 31, 1995 and 1994, which report is incorporated
by reference in the March 31, 1995 annual report on Form 10-KSB of Cyanotech
Corporation and to the reference to our firm under the heading "Experts" in the
Prospectus.
/s/ KPMG PEAT MARWICK LLP
-------------------------
Honolulu, Hawaii
October 24, 1995
