<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Cyanotech Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CYANOTECH CORPORATION
73-4460 Queen Kaahumanu Hwy., Suite 102
Kailua-Kona, HI 96740
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held Thursday, September 19, 1996 at 7:00 P.M.
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Cyanotech Corporation (the "Company") to be held on Thursday, September 19, 1996
at 7:00 P.M., local time, at the Ala Moana Hotel, 410 Atkinson Drive, Honolulu,
Hawaii, for the following purposes:
1. To elect six directors to serve until the next Annual Meeting or
until their successors are elected, by vote of holders of Common
Stock and Series C Preferred Stock.
2. To consider and vote upon a proposal to amend the Company's
Articles of Incorporation to increase the number of authorized
shares of Common Stock (par value $.005) from 18,000,000 to
25,000,000.
3. To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending March 31, 1997;
and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
These matters are more fully described in the Proxy Statement accompanying
this notice.
The Board of Directors has fixed the close of business on July 22, 1996 as
the record date for Stockholders entitled to notice of and to vote at this
meeting and any adjournment thereof. The stock transfer books will not be closed
between the record date and the date of the meeting. Only stockholders of record
at the close of business on July 22, 1996 are entitled to notice of and to vote
at the Annual Meeting; however all stockholders are cordially invited to attend
the meeting.
By Order of the Board of Directors
Ronald P. Scott
Secretary
Kailua-Kona, Hawaii
July 22, 1996
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PAID ENVELOPE. THIS WILL ENSURE THAT YOUR SHARES ARE VOTED IN ACCORDANCE
WITH YOUR WISHES AND SAVE THE EXPENSE OF FURTHER COMMUNICATION. IF YOU ATTEND
THE MEETING AND WISH TO VOTE IN PERSON, YOU MAY DO SO, BECAUSE YOU MAY REVOKE
YOUR PROXY AT ANY TIME PRIOR TO ITS USE.
<PAGE>
STOCKHOLDERS SHOULD READ THE ENTIRE PROXY STATEMENT
CAREFULLY PRIOR TO RETURNING THEIR PROXIES
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS OF
CYANOTECH CORPORATION
TO BE HELD SEPTEMBER 19, 1996
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of CYANOTECH CORPORATION ("Cyanotech" or the "Company")
of proxies to be voted at the Annual Meeting of Stockholders (the "Annual
Meeting") which will be held at 7:00 p.m., local time, on September 19, 1996 at
the Ala Moana Hotel, 410 Atkinson Drive, Honolulu, Hawaii, or at any adjournment
or postponement thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of Stockholders. This Proxy Statement and the proxy card were
first mailed to stockholders on or about July 24, 1996.
The Company's principal executive offices are located at 73-4460 Queen
Kaahumanu Highway, Suite 102, Kailua-Kona, HI 96740.
VOTING RIGHTS AND SOLICITATION
The enclosed proxy is being solicited on behalf of the Board of Directors
of Cyanotech for use at the Annual Meeting.
The close of business on July 22, 1996 is the record date for stockholders
entitled to notice of and to vote at the Annual Meeting. All holders of the
Company's Common Stock outstanding on the record date are entitled to vote at
the Annual Meeting. Such stockholders have one (1) vote for each share so held
on the matters to be voted on. Holders of 8% Cumulative Convertible Preferred
Shares - Series C ("Series C Preferred Stock") of record at the close of
business on July 22, 1996 are entitled to five votes for each share of such
stock on all matters to be voted on. At July 22, 1996, Cyanotech had 12,657,520
shares of Common Stock, $.005 par value per share (the "Common Stock"), issued
and outstanding; and 734,977 shares of 8% Cumulative Convertible Series C
Preferred Stock, each convertible into five shares of Common Stock. The presence
in person or by proxy of the holders of record of a majority of the voting power
of the outstanding shares entitled to vote constitutes a quorum. A plurality of
votes cast by the holders of Common Stock and Series C Preferred Stock, voting
as a single class, present at the meeting at which a quorum is present, is
required for election of each of the six directors. A majority of the voting
power of stockholders holding the Common Stock and Series C Preferred Stock,
voting as a single class, present at the meeting at which a quorum is present,
is required for approval of all other matters to be voted on. Abstentions are
counted only for purposes of determining whether a quorum is present. Broker
non-votes are not treated as votes nor are they counted in determining the
existence of a quorum.
Shares of the Company's Stock represented by proxies in the accompanying
form which are properly executed and returned to Cyanotech will be voted at the
Annual Meeting in accordance with the stockholders' instructions contained
therein. In the absence of contrary instructions, shares represented by such
proxies will be voted FOR the election of each of the directors as described
herein under "Proposal One - Election of Directors," FOR approval to amend the
Articles of Incorporation to increase the number of authorized shares from
18,000,000 to 25,000,000 as described herein under "Proposal Two - Increase in
the Number of Authorized Shares," and FOR ratification of the selection of
accountants as described herein under "Proposal Three - Ratification of
Selection of Independent Public Accountants." Management does not know of any
matters to be presented at this Annual Meeting other than those set forth in
this Proxy Statement and in the Notice
2
<PAGE>
accompanying this Proxy Statement. If other matters should properly come
before the meeting, the proxy holders will vote on such matters in accordance
with their best judgment. Any shareholder has the right to revoke his or her
proxy at any time before it is voted.
The entire cost of soliciting proxies will be borne by Cyanotech. Proxies
will be solicited principally through the use of the mails, but, if deemed
desirable, may be solicited personally or by telephone, telegraph or special
letter by officers and regular Cyanotech employees who will receive no
additional compensation. Arrangements may be made with brokerage houses and
other custodians, nominees and fiduciaries to send proxies and proxy material to
the beneficial owners of the Company's Common Stock, and such persons may be
reimbursed for their expenses.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of
the Company's Common Stock as of July 22, 1996 by (i) each person who is known
by the Company to own beneficially more than 5% of the outstanding shares of the
Common Stock of the Company, (ii) each of the Company's executive officers named
in the Summary Compensation Table appearing herein, (iii) each director and (iv)
all directors and executive officers as a group. Holders of Common Stock have
one vote per share; holders of Series C Preferred Stock have five votes per
share. The following table sets forth what such persons' beneficial security
ownership position would be assuming the conversion of all outstanding
convertible preferred stock and the exercise of all outstanding stock options
and warrants, exercisable on the date hereof or within 60 days of July 22, 1996.
All shares shown are subject to the named person's sole voting and investment
power, subject to community property laws where applicable.
Number of Shares
Beneficially Approximate
Name Owned Percent Owned (1)
- ------------------------------ ----------------- -------------------
CNA Financial Corporation..... 3,408,641(2) 20.8
CNA Plaza
Chicago, IL 60685
B. Michael Pisani............. 855,573 5.2
44 Lake Road
Short Hills, NJ 07078
American Cyanamid Company..... 699,730(4) 4.3
(A wholly owned subsidiary
of American Home Products)
5 Giralda Farms
Madison, NJ 07940
Julian C. Baker (3)........... --(5) --
Gerald R. Cysewski (3)........ 479,683(6) 2.9
Glenn D. Jensen (3)........... 42,550(7) *
Kelly J. Moorhead (3)......... 38,100(8) *
Eva R. Reichl (3)............. 1,805,000 11.1
Ronald P. Scott (3)........... 44,875(9) *
John T. Ushijima (3).......... 283,600 1.7
Paul C. Yuen (3).............. 13,100 *
All directors and executive
officers as a group
(8 persons)(5)........... 2,706,908(10) 16.5
___________________________
* Less than 1.0%
3
<PAGE>
(1) Approximate percentage owned assumes full conversion of all outstanding
shares of Series C Preferred Stock into shares of Common Stock (for a total
of 16,332,405 shares at July 22, 1996.)
(2) Represents 250,000 shares held by Fireman's Insurance Company of Newark, NJ
("Fireman's Insurance"), 183,486 shares held by National-Ben Franklin
Company of Illinois ("National-Ben Franklin"), and 2,975,155 shares of
Common Stock issuable upon conversion of 595,031 shares of Series C
Preferred Stock held by Fireman's Insurance. National-Ben Franklin and
Fireman's Insurance are indirect wholly owned subsidiaries of CNA Financial
Corporation. Fireman's Insurance holds approximately 81.0% of the Series C
Preferred Stock.
(3) Address is c/o Cyanotech Corporation, 73-4460 Queen Kaahumanu Hwy., Suite
102, Kailua-Kona, HI 96740.
(4) Represents 699,730 shares of Common Stock issuable upon conversion of
139,946 shares of Series C Preferred Stock. American Cyanamid Company holds
approximately 19.0% of the Series C Preferred Stock.
(5) Does not include 250,000 shares held by Fireman's Insurance, 183,486
shares held by National-Ben Franklin, and 2,975,155 shares of Common Stock
issuable upon conversion of 595,031 shares of Series C Preferred Stock held
by Fireman's Insurance. Mr. Baker is a representative of CNA Financial
Corporation, the parent company of Fireman's Insurance and National Ben
Franklin, and disclaims beneficial ownership of such shares.
(6) Includes options exercisable within 60 days of July 22, 1996 for 17,375
shares of Common Stock.
(7) Includes options exercisable within 60 days of July 22, 1996 for 31,750
shares of Common Stock.
(8) Includes options exercisable within 60 days of July 22, 1996 for 34,000
shares of Common Stock.
(9) Includes options exercisable within 60 days of July 22, 1996 for 32,375
shares of Common Stock.
(10)Includes 115,500 shares issuable under option to purchase shares of Common
Stock exercisable within 60 days of July 22, 1996 to: Gerald R. Cysewski
(17,375 shares); Glenn D. Jensen (31,750 shares); Kelly J. Moorhead (34,000
shares); Ronald P. Scott (32,375 shares).
PROPOSAL ONE:
ELECTION OF DIRECTORS
NOMINEES
A board of six (6) directors are to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
FOR the election of the six nominees named below, all of whom are presently
directors of the Company. Each nominee has consented to be named a nominee in
this Proxy Statement and to continue to serve as a director if elected. Should
any nominee become unable or decline to serve as a director or should additional
persons be nominated at the meeting, the proxy holders intend to vote all
proxies received by them in such a manner as will assure the election of as many
nominees listed below as possible (or, if new nominees have been designated by
the Board of Directors, in such a manner as to elect such nominees) and the
specific nominees to be voted for will be determined by the proxy holders. The
Company is not aware of any reason that any nominee will be unable or will
decline to serve as a director. Each director elected at this Annual Meeting
will serve until the next Annual Meeting or until such director's successor has
been elected and qualified. Voting for the election of directors is non-
cumulative.
In connection with the purchase by Eva R. Reichl in 1993 of 1,800,000 vote
shares of the Company's Common Stock, certain holders of Common Stock, including
Gerald R. Cysewski (the "Holders"), the Company and Ms. Reichl entered into a
Stockholders Agreement dated as of May 17, 1993 (the "Stockholders Agreement").
Under the Stockholders Agreement, the parties agreed that without approval of a
majority of the Holders' and Ms. Reichl's shares, the Company would not propose,
and the Holders and Ms. Reichl would not
4
<PAGE>
vote for, any resolution, Bylaw change or other proposal that would increase the
Company's Board of Directors to more than six members. In addition, the Company
is obligated under the Stockholders Agreement to notify Ms. Reichl of any Board
elections so that she may nominate one person for election as a director. She
has nominated herself at this election. At any Board election, the Holders and
Ms. Reichl have agreed to vote their shares to elect such nominee. The
Stockholders Agreement terminates when Ms. Reichl sells, transfers or disposes
of any of the 1,800,000 shares acquired, other than by will, the laws of
descent, or to any entity controlled by Ms. Reichl. See " Security Ownership of
Certain Beneficial Owners and Management."
The following table sets forth certain information regarding the nominees
for election by holders of Common and Series C Preferred Stock to the Board of
Directors, all of whom were elected at the last annual meeting, except Mr. Scott
who was elected on November 9, 1995 to fill a vacancy on the Board, and Mr.
Baker who was elected on November 9, 1995 as the director nominee of the Series
A Preferred Stock shareholder.
<TABLE>
<CAPTION>
Director
Name Principal Occupation Since Age
- ---- -------------------- ----- ---
<S> <C> <C> <C>
Julian C. Baker Portfolio Manager for 1995 30
Laurence A. Tisch and
Preston R. Tisch
Gerald R. Cysewski, Ph.D. Chairman of the Board, 1983 47
President and Chief
Executive Officer,
Cyanotech Corporation
Eva R. Reichl Private investor 1993 77
Ronald P. Scott Executive Vice President, 1995 41
Finance and Administration,
Cyanotech Corporation
John T. Ushijima Partner, Ushijima & 1984 72
Ushijima (law firm)
Paul C. Yuen, Ph.D. Dean, College of Engineering 1993 68
University of Hawaii at Manoa
(public university)
</TABLE>
Mr. Baker has served as a director of the Company since November 1995. Mr.
Baker is a portfolio manager for Laurence A. Tisch and Preston R. Tisch and for
members of their family. Prior to his employment by the Tisch family, Mr. Baker
was a member of The Clipper Group and its predecessors, CS First Boston Merchant
Bank and First Boston Venture Capital. Mr. Baker is a graduate of Harvard
University. Laurence A. Tisch and Preston R. Tisch are Co-Chairmen and Co-Chief
Executive Officers of Loews Corporation and own approximately 32% of the
outstanding shares of that corporation. Loews Corporation owns approximately 84%
of the outstanding shares of CNA Financial Corporation. CNA Financial
Corporation, through a wholly owned subsidiary, is a significant stockholder of
Cyanotech. See " Security Ownership of Certain Beneficial Owners and
Management."
Dr. Cysewski co-founded the Company in 1983 and has served as a director of
the Company since that time. Until June 1996, he also served as Scientific
Director. Since March 1990, Dr. Cysewski has served as President and Chief
Executive Officer of the Company and in October 1990 was also appointed to the
position of Chairman of the Board. From 1988 to November 1990, he served as Vice
Chairman of the Company. From 1980 to 1982 Dr. Cysewski was group leader of
microalgae research and development at Battelle Northwest, a
5
<PAGE>
major contract research and development firm. From 1976 to 1980 Dr. Cysewski was
an assistant professor in the Department of Chemical and Nuclear Engineering at
the University of California, Santa Barbara, where he received a two-year grant
from the National Science Foundation to develop a culture system for blue-green
algae. Dr. Cysewski received his doctorate in Chemical Engineering from the
University of California at Berkeley.
Mrs. Reichl has served as a director of the Company since 1993. She is a
private investor who has been involved in a variety of real estate and fruit
growing operations in the states of Florida and Washington during the past ten
years.
Mr. Scott was appointed to the Board of Directors of the Company in
November 1995, has served as Executive Vice President - Finance and
Administration since August 1995, and has served as Secretary and Treasurer
since November 1990 and June 1990, respectively. From December 1990 until August
1995 Mr. Scott served as Vice President - Finance and Administration. From
September 1990 to December 1990, Mr. Scott served as Controller. From 1989 to
1990, he was Assistant Controller for PRIAM Corporation, a manufacturer of
Winchester disk drives. From 1980 to 1989, he served in various accounting
management positions with Measurex Corporation, a manufacturer of industrial
process control systems. Mr. Scott holds a B.S. degree in Finance and Management
from California University, San Jose, and an M.B.A. degree from University of
Santa Clara.
Mr. Ushijima has served as a director of the Company since 1984. He has
been a Partner of the law firm of Ushijima & Ushijima, Hilo, Hawaii, for more
than ten years. Mr. Ushijima is also a former Hawaii State Senator.
Dr. Yuen has served as a director of the Company since August 1993. Dr.
Yuen currently serves as Dean, College of Engineering for the University of
Hawaii at Manoa. From July 1992 to March 1993, Dr. Yuen was Acting President of
the University of Hawaii. From 1989 to 1992, Dr. Yuen was Interim Senior Vice
President for Academic Affairs, University of Hawaii at Manoa. Dr. Yuen holds
M.S. and Ph.D degrees in Electrical Engineering from the Illinois Institute of
Technology. Dr. Yuen is also a director of Hawaiian Electric Company, Inc., a
wholly owned subsidiary of Hawaiian Electric Industries, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THAT HOLDERS OF COMMON STOCK AND SERIES C
PREFERRED STOCK VOTE FOR ALL OF THE ABOVE NAMED DIRECTOR NOMINEES.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held four regular meetings and three
special meetings in fiscal 1996. No incumbent director attended less than 75%
of all meetings of the Board of Directors and the committees, if any, upon which
such director served.
The Board of Directors of the Company has an Audit Committee and a
Compensation and Stock Option Committee. The Board of Directors does not have a
standing nominating committee.
The Audit Committee, which consisted of independent non-employee directors
Yuen (chair), Reichl, and Ushijima in fiscal 1996, held two regularly scheduled
meetings during the last fiscal year. The principal functions of the Audit
Committee are to recommend engagement of the Company's independent auditors, to
review and approve the services performed by the Company's independent auditors
and to review the Company's accounting principles, its internal control
structure, policies and procedures.
6
<PAGE>
The Compensation and Stock Option Committee, which also consisted of
independent non-employee directors Ushijima (chair), Edwards, Reichl, and Yuen
in fiscal 1996, held two regularly scheduled meetings and one special meeting
during the last fiscal year. The Compensation and Stock Option Committee
reviews and makes recommendations to the Board concerning the Company's
executive compensation policy, bonus plans and incentive option plans, and
approves the granting of stock options to officers and employees.
Mr. William L. Edwards resigned from the Board of Directors on August 31,
1995 and was replaced by Mr. Ronald P. Scott on November 9, 1995.
DIRECTOR REMUNERATION
Each non-employee director is entitled to receive $500 per Board meeting
attended and is reimbursed for all out-of-pocket costs incurred in connection
with attendance at such meetings. In addition, each non-employee director (other
than Mr. Baker) has received, pursuant to the Company's 1994 Non-Employee
Directors Stock Option and Stock Grant Plan (the "Non-Employee Directors Plan"),
options to purchase 3,000 shares of the Company's Common Stock. At the 1996
Annual Meeting of Stockholders, Mr. Baker and any other new non-employee
director (in each case if continuing as a director) who has not received such a
grant will receive a 10-year option to purchase 3,000 shares of the Company's
Common Stock. Each non-employee director who has received such an option grant,
at each subsequent annual meeting of stockholders, received or will receive
under the Non-Employee Directors Plan an automatic grant of 2,000 shares of
fully paid and non-assessable shares of Common Stock that are non-transferable
for six months following the date of such grant. During the fiscal year ended
March 31, 1996, each of the director nominees other than Messrs. Baker,
Cysewski, and Scott received grants of 2,000 shares of Common Stock.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file with the Securities and Exchange Commission (the
"SEC") and the National Association of Securities Dealers, Inc. initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and any written representations that no other
reports were required, all Section 16(a) filing requirements for the fiscal year
ended March 31, 1996, applicable to its officers, directors and greater than ten
percent stockholders were complied with, except for one report, covering one
transaction, filed five days late by John T. Ushijima, a director of the
Company.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the compensation paid or accrued by the
Company to the Chief Executive Officer and all executive officers of the Company
who earned more than $100,000 for services rendered in all capacities to the
Company (hereinafter referred to as the "named executive officers") for the
fiscal years ended March 31, 1996, 1995, and 1994. No executive officers who
would have otherwise been includable in such tables on the basis of salary and
bonus earned for fiscal 1996 have resigned or terminated employment during the
fiscal year.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
Name and ------------------- ------------
Principal Fiscal
Position Year Salary ($) Bonus ($) Options (#)
- -------- ----- ----------- --------- -----------
<S> <C> <C> <C> <C>
Gerald R. Cysewski 1996 $94,640 $37,500 14,500
Chairman of the Board, 1995 86,809 10,000 11,000
President and Chief 1994 71,941 -- 11,000
Executive Officer
Glenn D. Jensen 1996 $64,405 $37,500 12,000
Vice President, Operations 1995 57,385 10,000 11,000
1994 46,504 -- 11,000
Kelly J. Moorhead 1996 $67,385 $40,500 13,000
Vice President, Sales 1995 57,728 15,000 11,000
and Marketing 1994 48,115 -- 11,000
Ronald P. Scott 1996 $84,757 $40,000 14,500
Executive Vice President, 1995 78,616 10,000 11,000
Finance and Administration 1994 66,542 -- 11,000
</TABLE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options made under the Company's 1995 Stock Option Plan for the 1996 fiscal year
to the named executive officers. No stock appreciation rights ("SARs") were
granted during the fiscal years shown above.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
- -------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted (1) Fiscal Year Per Share Date
---- ----------- ------------- --------- ----------
<S> <C> <C> <C> <C>
Gerald R. Cysewski 14,500 14.4% $5.125 8/10/00
Glenn D. Jensen 12,000 11.9% $5.125 8/10/00
Kelly J. Moorhead 13,000 12.9% $5.125 8/10/00
Ronald P. Scott 14,500 14.4% $5.125 8/10/00
</TABLE>
(1) All the options were granted on August 10, 1995, and are exercisable in
four equal and cumulative annual installments over the optionee's period of
service with the Company, beginning one year after the grant date. Each option
has a term of five (5) years.
8
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to each of the above
named executive officers concerning the exercise of options during the 1996
fiscal year and unexercised options held as of the end of the 1996 fiscal year.
No SARs were exercised during the 1996 fiscal year or outstanding as of the end
of the 1996 fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
---------------------------------------------------------------------------------
Shares
Acquired Number of Securities Value of Unexercised
on Value Underlying Unexercised In-the-Money
Exercise Realized Options at FY-End (#) Options at FY-End ($)(2)
-------- -------- ---------------------------------------- ------------------------------
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- -------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald R.
Cysewski -0- $ 0 13,750 22,750 $ 80,438 $ 78,500
Glenn D.
Jensen 15,000 $115,313 28,750 20,250 $178,868 $ 73,500
Kelly J.
Moorhead 20,000 $ 86,250 30,750 21,250 $191,992 $ 75,500
Ronald P.
Scott 10,000 $42,031 28,750 22,750 $178,868 $ 78,500
</TABLE>
____________________________________
(1) Market value on the date of exercise, less option exercise price.
(2) Market value of shares covered by in-the-money options on March 31, 1996
($7.125), less the option exercise price. Options are in-the-money if the
market value of the shares covered thereby is greater than the option
exercise price.
CERTAIN TRANSACTIONS
In connection with the purchase by Eva R. Reichl in 1993 of 1,800,000 shares of
the Company's Common Stock, certain holders of Common Stock, including Gerald R.
Cysewski (the "Holders"), the Company and Ms. Reichl entered into a Stockholders
Agreement dated as of May 17, 1993 (the "Stockholders Agreement"). Under the
Stockholders Agreement, the parties agreed that without approval of a majority
of the Holders' and Ms. Reichl's shares, the Company would not propose, and the
Holders and Ms. Reichl would not vote for, any resolution, Bylaw change or other
proposal that would increase the Company's Board of Directors to more than six
members. In addition, the Company is obligated under the Stockholders Agreement
to notify Ms. Reichl of any Board elections so that she may nominate one person
for election as a director. She has nominated herself at this election. At any
Board election, the Holders and Ms. Reichl have agreed to vote their shares to
elect such nominee. The Stockholders Agreement terminates when Ms. Reichl sells,
transfers or disposes of any of the 1,800,000 shares acquired, other than by
will, the laws of descent, or to any entity controlled by Ms. Reichl. See
"Security Ownership of Certain Beneficial Owners and Management."
9
<PAGE>
PROPOSAL TWO:
PROPOSAL TO APPROVE AN AMENDMENT TO THE
ARTICLES OF INCORPORATION
The Board of Directors has recommended the adoption of an amendment to the
Articles of Incorporation of Cyanotech which will increase the authorized Common
Stock from 18,000,000 shares to 25,000,000. As of July 22, 1996, 12,657,520
shares of Common Stock are issued and outstanding, 3,674,885 shares are reserved
for issuance upon exchange of the Series C Preferred Stock, 658,930 shares are
reserved for issuance upon the exercise of outstanding warrants and options, and
266,600 shares are reserved for future issuance under employee and non-employee
benefit plans. As of July 22, 1996, only 742,065 shares are available for future
issuance.
The Board of Directors believes that the proposed increase in the
authorized shares of Common Stock is desirable to enhance Cyanotech's
flexibility in connection with possible future actions such as stock dividends
or splits, acquisitions, adoption of stock option or similar employee benefit
plans, the funding of capital or operating expenditures or other corporate
purposes. The future issuance of any newly authorized stock, if any, would be
authorized by resolution of the Board of Directors without further approval of
the stockholders. At this time, no specific use for the increased shares is
contemplated.
The additional Common Stock would be authorized subject to the same voting
rights which now apply and which are discussed above under the caption "VOTING
RIGHTS AND SOLICITATION." As provided for in the Board of Directors resolution,
the first and second paragraphs of Article V of the Articles of Incorporation of
Cyanotech will be amended to read as follows:
"The Corporation shall have the authority to issue thirty million
(30,000,000) shares of stock. Of these shares, twenty-five million (25,000,000)
shares shall be common stock, par value $.005, having a total par value of
$125,000, and five million (5,000,000) shares shall be special or preferred
stock, par value $.001, having a total par value of $5,000. Each common share
issued pursuant to this paragraph shall be fully paid and nonassessable."
Adoption of the foregoing amendment requires the affirmative vote of
majority of the voting power of the Company's Common Stock and Series C
Preferred Stock, voting as a single class. If adopted, the proposed amendment
will become effective upon the filing of a Certificate of Amendment as required
by the Nevada General Corporation Law.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL. The
enclosed Proxy will be voted for the proposal unless a contrary specification is
made.
PROPOSAL THREE:
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP served as independent public accountants
for the Company for the fiscal year ended March 31, 1996 and has done so since
1987. The Board of Directors has selected the firm to continue in this capacity
for the current fiscal year ending March 31, 1997. A representative of KPMG Peat
Marwick LLP is expected to attend the annual meeting with the opportunity to
make a statement and to respond to appropriate questions from stockholders
present at the meeting.
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Although it is not required to do so, the Company wishes to provide
stockholders with the opportunity to indicate their approval of the selection of
auditors and accordingly is submitting a proposal to ratify the selection of
KPMG Peat Marwick LLP. If the stockholders should fail to approve this
proposal, the Board of Directors will consider the selection of another auditing
firm.
A majority of the voting power of the Common Stock and Series C Preferred
Shares, voting as a single class, present at a meeting at which a quorum is
present, is required for approval of the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF KPMG
PEAT MARWICK LLP TO SERVE AS THE COMPANY'S AUDITORS FOR THE YEAR ENDING MARCH
31, 1997.
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors does not know
of any business to be presented for consideration at the meeting other than
those set forth herein and in the Notice accompanying this Proxy Statement. If
any other business should properly come before the meeting, the shares
represented by Proxies will be voted in accordance with the judgment of the
persons named in such proxies.
The Company will provide, without charge, to each person whose proxy is
solicited by this Proxy Statement, on the written request of such person, a copy
of the Company's most recent Annual Report on Form 10-KSB, including the
exhibits thereto, as filed by the Company with the Securities and Exchange
Commission. Requests should be directed to: Secretary, Cyanotech Corporation,
73-4460 Queen Kaahumanu Hwy., Suite 102, Kailua-Kona, HI 96740.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered at the 1997 Annual Meeting
of Stockholders must be received by Cyanotech no later than February 1, 1997.
The proposal must be mailed to the Company's principal executive offices,
73-4460 Queen Kaahumanu Hwy., Suite 102, Kailua-Kona, Hawaii 96740, Attention:
Corporate Secretary. Such proposals may be included in next year's proxy
statement if they comply with certain rules and regulations promulgated by the
Securities and Exchange Commission.
You are most cordially invited to attend this meeting in person. HOWEVER,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENVELOPE PROVIDED. THIS WILL NOT
PREVENT YOU FROM VOTING IN PERSON AT THE MEETING IF YOU SO DESIRE.
By Order of the Board of Directors
Ronald P. Scott
Secretary
Kailua-Kona, Hawaii
July 22, 1996
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PROXY CYANOTECH CORPORATION PROXY
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 19, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ronald P. Scott and Gerald R. Cysewski and
each of them (with full power to act without the other), as proxies, each having
full power to substitute, to represent and to vote, as designated below, all
shares of stock of Cyanotech Corporation which the undersigned would be entitled
to vote if personally present at the Annual Meeting of the Corporation to be
held at the Ala Moana Hotel, 410 Atkinson Drive, Honolulu, Hawaii, on Thursday,
September 19, 1996 at 7:00 p.m. prevailing local time, and any adjournment
thereof, with respect to matters set forth below and described in the Notice of
Annual Meeting and Proxy Statement dated July 22, 1996.
1. ELECTION OF DIRECTORS.
FOR all nominees listed below WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary) nominees. (To withhold authority to
vote for any nominee, strike a line
through nominee's name in list
below.)
Directors to be elected by holders of Common Stock and Series C Preferred
Stock:
JULIAN C. BAKER, GERALD R. CYSEWSKI, EVA R. REICHL, RONALD P. SCOTT,
JOHN T. USHIJIMA, PAUL C. YUEN
2. APPROVE AN AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 18,000,000 TO 25,000,000.
For Against Abstain
3. RATIFY SELECTION OF KPMG PEAT MARWICK LLP
AS INDEPENDENT ACCOUNTANTS FOR FISCAL YEAR 1997. For Against Abstain
WHEN PROPERLY EXECUTED THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE
SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2, AND 3.
All other proxies heretofore given by the undersigned to vote shares of
stock of Cyanotech Corporation which the undersigned would be entitled to vote
if personally present at said Annual Meeting or any adjournment thereof are
hereby expressly revoked. This proxy may be revoked at any time prior to the
voting hereof as set forth in the Proxy Statement.
Please date this proxy and sign it exactly as your name or names appear on
your share. If signing as an attorney, executor, administrator, guardian or
trustee, please give full title as such. If a corporation, please sign full
corporate name by duly authorized officer or officers.
Dated:________________________ 1996
________________________
Signature
________________________
Signature
Please sign and date this proxy and return it promptly whether you expect to
attend the meeting or not. If you do attend the meeting you may vote in person.
