Coast

                  Schedule to the Loan and Security Agreement

Borrower:   Cyanotech Corporation                    Nutrex, Inc.

Address:    73-4460 Queen Kaahumanu Hwy.             73-5574 Maiau Street
            #102                                     #1
            Kailua-Kona, HI  96740                   Kailua-Kona, HI  96740

Date:       July 28, 1998

     This  Schedule  forms an integral  part of the Loan and Security  Agreement
between Coast Business  Credit(R),  a division of Southern Pacific Bank, and the
above-borrower of even date.
================================================================================
SECTION 2 - CREDIT FACILITIES

Section 2.1 - Credit Limit:        Loans   in   a   total  amount  at  any  time
                                   outstanding not to exceed  the  lesser  of  a
                                   total  of  Three Million Dollars ($3,000,000)
                                   at  any  one  time outstanding  (the "Maximum
                                   Dollar Amount"),  or the sum of (a), (b), (c)
                                   and (d) below:

                                        (a) Receivable Loans in an amount not to
                                        exceed 80% of the  amount of  Borrower's
                                        Eligible   Receivables  (as  defined  in
                                        Section  1  of  the  Agreement)  and  if
                                        Dilution  is less than 5%,  the  advance
                                        rate  will be  increased  to 85%  with a
                                        Sublimit of Seven Hundred Fifty Thousand
                                        Dollars     ($750,000)    for    Foreign
                                        Receivables(excluding receivables backed
                                        by  Letters  of  Credit   acceptable  to
                                        Coast), plus

                                        (b) Inventory Loans in  an amount not to
                                            exceed the lesser of:

                                             (1) up to 60% of cost  of  eligible
                                             First  Grade   Spirulina   finished
                                             goods  inventory,  60% of  cost  of
                                             eligible    Drum   Dry    Spirulina
                                             finished  goods  inventory,  60% of
                                             the cost of eligible Bulk Spirulina
                                             Tablets  finished goods  inventory,
                                             60%  of  the   cost   of   eligible
                                             Packaged  Spirulina  finished goods
                                             inventory,   50%  of  the  cost  of
                                             eligible   Spirulina   Feed   Grade
                                             finished goods  inventory,  and 30%
                                             of the cost of eligible Astaxanthin
                                             finished goods inventory,calculated
                                             at  cost on a  first-in,  first-out
                                             basis, or

                                             (2)   Seven  Hundred Fifty Thousand
                                             Dollars ($750,000), plus

                                       1
<PAGE>

                                        (c)  A  Term   Loan   in  the   original
                                        principal  amount of Seven Hundred Fifty
                                        Thousand  Dollars  ($750,000) (an amount
                                        equal to 80% of the orderly  liquidation
                                        value of Borrower's  existing  Machinery
                                        and Equipment) (the  "Equipment  Loan"),
                                        repayable  in sixty (60)  equal  monthly
                                        principal installments.

                                        (d) Equipment  Acquisition  Loans, to be
                                        drawn  within  Twenty-four  (24)  months
                                        from  the  date   hereof,   in   minimum
                                        advances of One Hundred Thousand Dollars
                                        ($100,000)   with   principal   payments
                                        amortized  over sixty  months in a total
                                        amount not to exceed the lesser of:

                                             (1)  Eighty  percent  (80%)  of the
                                             cost of new Equipment  (after  sub-
                                             tracting  taxes  and  installation 
                                             charges); up to eighty (80%) of the
                                             appraised forced liquidation  value
                                             of used Equipment acquired  by Bor-
                                             rower (after subtracting  taxes and
                                             installation charges); or

                                             (2)  Two   Million   Dollars
                                             ($2,000,000).

                                        Availability  for Equipment  Acquisition
                                        Loans shall be subject to maintenance of
                                        a  Debt  Service  Coverage  Ratio  of at
                                        least  1.25:1  for the  prior  two  full
                                        consecutive quarters on a combined
                                        basis.


SECTION 3 - INTEREST AND FEES

Section 3.1 - Interest Rate:       For all Loans,  an interest rate equal to the
                                   Prime  Rate  plus 2.50% per annum, calculated
                                   on the basis of a 360-day year for the actual
                                   number  of  days  elapsed.  In  the event the
                                   Borrower  reports  net income of at least 80%
                                   of projected net income  (as  set   forth  in
                                   Exhibit "A"  attached  to  this Schedule) for
                                   the  two  quarters  ending December 31, 1998,
                                   the  interest rate will decrease to the Prime
                                   Rate   plus  1.25%  per  annum.   Thereafter,
                                   the Borrower must continue to maintain 80% of
                                   cumulative  projected  quarterly  net  income
                                   to continue to receive the  interest  rate of
                                   Prime Rate plus 1.25%  annum.  Otherwise, the
                                   interest rate will revert to Prime  Rate plus
                                   2.50% per annum (Cumulative is defined as the
                                   quarter  beginning July 1, 1998  through  the
                                   most  recent  quarter).   The  interest  rate
                                   applicable  to  all  Loans  shall be adjusted
                                   monthly  as  of the


                                   first day of each month,  and the interest to
                                   be charged  for each month  shall be based on
                                   the highest  Prime Rate in effect during said
                                   month,  but in no  event  shall  the  rate of
                                   interest charged on any Loans in any month be
                                   less than 8.5% per annum.

                                   Projections  for  fiscal  year  end  2000 and
                                   fiscal  year end 2001 may be

                                     2

<PAGE>
                                   revised 30 days prior to the  beginning of a 
                                   fiscal  year  end.  However,  projected   net
                                   income during fiscal year end 2000 and fiscal
                                   year end 2001 cannot  be  less  than $270,000
                                   for each quarter.

Section 3.1 - Minimum Monthly
                     Interest:     Based  on daily outstandings equal to Thirty-
                                   three  percent  (33%)  of  the Maximum Dollar
                                   Amount.

Section 3.2 - Loan Fee:            Thirty   Thousand   Dollars  ($30,000),  such
                                   amount  being  fully  earned  on  the Closing
                                   Date, and payable  Fifteen  Thousand  Dollars
                                   ($15,000)  on  the  Closing  Date and Fifteen
                                   Thousand  Dollars  ($15,000)   on  the  first
                                   anniversary of the Closing Date.

Section 3.2 - Facility Fee:        Twenty  Five  Hundred  Dollars  ($2,500)  per
                                   calendar quarter, payable on the Closing Date
                                   (prorated  for  any  partial  quarter  at the
                                   beginning  of the term of this Agreement) and
                                   continuing each quarter thereafter during the
                                   term of this Agreement.

Section 9.1  Renewal Fee:          One half of one percent (1/2%) of the Maximum
                                   Dollar  Amount at the end of the initial Term
                                   of this Agreement and thereafter.

Section 9.2 - Early Termination
                            Fee:   An amount equal to three  percent (3%) of the
                                   Maximum  Dollar  Amount  (as  defined  in the
                                   Schedule), if termination occurs on or before
                                   the first anniversary of the Closing  Date of
                                   this  Agreement;  two  percent  (2%)  of  the
                                   Maximum Dollar Amount, if termination  occurs
                                   after the first anniversary  and on or before
                                   the second anniversary of the Closing Date of
                                   this  Agreement;  and one percent (1%) of the
                                   Maximum Dollar Amount, if termination  occurs
                                   after the second  anniversary  of the Closing
                                   Date of this Agreement.


SECTION 5 - CONDITIONS PRECEDENT

Section 5.2  Minimum Availability: Five Hundred Thousand Dollars ($500,000).

Section 5.14 -    Other Documents
                   and Agreements:
                                   1.   Joint and Several Borrower Rider.
                                   2.   First  Deed  of  Trust  on the property
                                        located  at  73-5574  Maiau Street,  #1,
                                        Kailua-Kona, HI.

                                   3.   UCC-1   financing   statements,  fixture
                                        filings and termination statements.

                                   4.   Security   Agreements  (including  those
                                        covering  copyrights, patents and
      
                                       3
<PAGE>
                                        trademarks).

                                   5.   Receipt of Certified  Public  Accountant
                                        audited  financial  statement for fiscal
                                        year ended  March 31,  1998 that are not
                                        materially   different   from  draft  of
                                        fiscal   year  ended   March  31,   1998
                                        financial statement.

                                   6.   No  accounts  payable over 120 days past
                                        invoice date at date of funding.

                                   7.   All taxes to be current  at funding  and
                                        ongoing,  except where  Borrower in good
                                        faith contests its obligation to pay the
                                        taxes as provided  for in Section 6.8 of
                                        this Agreement.

                                   8.   Perfected first security interest on all
                                        assets,   including   all  tangible  and
                                        intangible  assets,  including  accounts
                                        receivable,   inventory,  machinery  and
                                        equipment (except equipment financed  by
                                        Spirulina International, Heller Leasing,
                                        KeyCorp  Leasing,  GE Capital  and First
                                        Hawaiian  Leasing),   real   estate  and
                                        patents.

                                   9.   Collections to be submitted to Coast via
                                        lockbox.

                                  10.   Minimum ongoing Consolidated  Net  Worth
                                        of Twenty Million  Dollars ($20,000,000)
                                        as determined at the end of each month.

                                  11.   Warehouse  waivers   for  all  locations
                                        where   Borrower   maintains  inventory,
                                        except at Accord  Packaging  and Olympex
                                        International (Nutrex inventory  located
                                        at   these   sites  will  be  considered
                                        ineligible).

                                  12.   Borrower   shall   increase    insurance
                                        coverage   for   inventory   located  at
                                        73-5581  Lawehana  St.,  Bay 3,  5, & 6,
                                        Kailua-Kona, HI 96740 to $750,000.

                                  13.   Receivables    of   Nutrex    shall   be
                                        considered ineligible for calculation of
                                        availability   until   Coast   re-audits
                                        Nutrex's  books and  records  within One
                                        Hundred Twenty (120) day from funding.

                                  14.   Registration Certificates showing  Coast
                                        as  a  lender  shall be required  on all
                                        vehicles financed by Coast.

                                  15.   Borrower shall insure inventory  located
                                        at Allied Cold  Storage,  74-5540  Kaiwi
                                        St., Kailua-Kona, HI.

                                  16.   Review of equipment liens and validation
                                        that  said  equipment is not included in
                                        the  appraisal  to be completed prior to
                                        funding.

                                       4
<PAGE>

                                  17.   Coast shall  maintain a rent  reserve of
                                        $80,000  until  such  time a  Landlord's
                                        Waiver and  Agreement  with the State of
                                        Hawaii is executed by all parties.

================================================================================
SECTION 6 - REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 6.2 - Prior Names of
                         Borrower:      None


Section 6.2 - Prior Trade Names
                      of Borrower:      None

Section 6.2 - Existing Trade Names
                      of Borrower:      Cyanotech Asia (Unaffiliated)
                                        Cyanotech International FSC, Ltd.
                                        (Affiliate)

Section 6.3 - Other Locations and
                        Addresses:      73-5581 Lawehana  Street, Bay 3, 5  &  6
                                        Kailua-Kona, HI  96740
                                        (Cyanotech Corporation & Nutrex Inc.);
                                        Allied Cold Storage
                                        Div. of J.F.B. Enterprises
                                        74-5540 Kaiwi Street
                                        Kailua-Kona, HI 96740
                                        (Cyanotech Corporation);
                                        Olympex International
                                        4587 Maywood Avenue
                                        Vernon City, CA  90058
                                        (Nutrex, Inc.);
                                        Accord Packaging
                                        741 E. Santa Ana St.
                                        Ontario, CA  91761

                                        (Nutrex, Inc.);
                                        Buyers and Shippers
                                        Current Address:
                                        12500 E. Slauson Avenue, Unit B3
                                        Santa Fe Springs, CA  90670
                                        Future Address:
                                        19801 S. Santa Fe Avenue
                                        Rancho Domingues, CA  90221
                                        (Cyanotech Corporation).

Section 6.10 -    Material Adverse
                         Litigation:    Na Kamalii O'Kaina O'Hoona,  et  al. vs.
                                        Cyanotech Corporation,  

                                       5
<PAGE>
                                        State  of  Hawaii,  Case  No.3CC98-0076K
                                        filed  April 8, 1998;  Cyanotech  Corpo-
                                        ration  vs. Aquasearch, Inc.,  State  of
                                        Hawaii,  Case No. CU98-00600  filed July
                                        13, 1998.

Section 6.10 -    Future Claims and
                         Litigation:    Borrower will promptly inform  Coast  in
                                        writing   of   any   claim,  proceeding,
                                        litigation  or  investigation   in   the
                                        future  threatened  or  instituted by or
                                        against  Borrower  involving  any single
                                        claim    of   Fifty   Thousand   Dollars
                                        ($50,000)  or  more,  or  involving  One
                                        Hundred Thousand  Dollars  ($100,000) or
                                        more in the aggregate.

================================================================================
SECTION 8 - ADDITIONAL DUTIES OF BORROWER

Section 8.1 - Other Provisions:         1.   Borrower    is    prohibited   from
                                             upstreaming  and  sidestreaming  of
                                             funds.   Borrower will not,  during
                                             the  term  of  this Agreement, make
                                             any payments or transfers of money,
                                             property,  rights or  assets of any
                                             kind or nature  (including  without
                                             limitation   sales,   repayment  of
                                             loans, capital  contributions, pur-
                                             chases,  compensation arrangements,
                                             consulting  fees,  management fees,
                                             license,  or any other transactions
                                             of any kind or nature) to Cyanotech
                                             International  FSC,  Ltd.   or  any
                                             other Affiliate of Borrower without
                                             the prior written consent of Coast.

                                        2.   Review of Certificate of Inspection
                                             Requirements.

                                        3.   Borrower  shall immediately  notify
                                             Coast in the event royalty payments
                                             under the Stanford Licensing Agree-
                                             ment  increase  above  ten  percent
                                             (10%)    for    all    non-licensed
                                             customers.

                                       4.    Only the  President  and  Executive
                                             Vice    President    of   Cyanotech
                                             Corporation  shall be authorized to
                                             borrow under this credit facility.


Section 8.2 - Insurance:                Subject to the  limitations set forth in
                                        Section 8.2  of  the  Agreement,   Coast
                                        shall  release  to  Borrower   insurance
                                        proceeds   with   respect  to  Equipment
                                        totaling  less than One Hundred Thousand
                                        Dollars ($100,000)

Section 8.3 - Reporting:                Borrower  shall  provide  Coast with the
                                        following:

                                        1.   Monthly Receivable agings,  aged by
                                             invoice date,  within ten (10) days
                                             after   the  end  of  each   month,
                                             reconciled  to the         

                                       6
<PAGE>
                                             general  ledger and rolled  forward
                                             from the prior month  together with
                                             the calculated month end Ineligible
                                             Receivables.

                                        2.   Monthly  accounts  payable  agings,
                                             aged   by   invoice    date,    and
                                             outstanding or held check registers
                                             within  ten (10) days after the end
                                             of each month.

                                        3.   Monthly  inventory report detailing
                                             monthly   sales  by  product  type,
                                             inventory on hand, and sell-through
                                             with   values   by   category   and
                                             location  reconciled to the general
                                             ledger,  within ten (10) days after
                                             the end of each month.

                                        4.   Weekly inventory  reports  for  the
                                             Inventory broken down by  category,
                                             location, lot number and expiration
                                             date, valued on a first-in,  first-
                                             out basis at the lower of cost  (in
                                             accordance with GAAP) or such other
                                             inventory reports as are reasonably
                                             requested by Coast,  due by Tuesday
                                             of the following week.

                                        5.   Monthly     internally     prepared
                                             financial  statements,  as  soon as
                                             available,  and in any event within
                                             thirty  (30) days  after the end of
                                             each month.

                                        6.   Quarterly    internally    prepared
                                             financial  statements,  as  soon as
                                             available,  and in any event within
                                             forty-five  (45) days after the end
                                             of each fiscal quarter of Borrower.

                                        7.   Quarterly customer lists, including
                                             customer name, address, and phone
                                             number.

                                        8.   Annual   financial  statements,  as
                                             soon   as   available,  and  in any
                                             event   within   ninety  (90)  days
                                             following  the  end  of  Borrower's
                                             fiscal   year,    containing    the
                                             unqualified    opinion    of,   and
                                             certified   by,   an    independent
                                             certified     public     accountant
                                             acceptable to Coast.

                                        9.   Monthly   accrued    warranty   and
                                             advertising  allowances by customer
                                             within  ten (10) days after the end
                                             of each month.

                                       10.   Month  end  reconciled  bank state-
                                             ments  within  ten  (10) days after
                                             the end of each month.

                                       11.   Monthly Certification of  Financial
                                             Documents and Covenants within ten
                                             (10) days after the end of each
                                             month.

                                       12.   Borrower  shall  maintain  shipping
                                             records that include purchase order
                                             number,  and  invoice  number  on a
                                             dated and signed bill of lading.

                                       7

<PAGE>

Section 8.5 -     Negative Covenants
                  (Acquired Assets):   One Hundred Thousand Dollars ($100,000)
================================================================================
SECTION 9 - TERM

Section 9.1 -     Maturity Date:  July 31, 2001, subject to automatic renewal as
                                  provided in Section 9.1 of the Agreement,  and
                                  early  termination  as provided in Section 9.2
                                  of the Agreement.

<TABLE>
<CAPTION>
<S>                                               <C>
BORROWER:                                         COAST:                    
                                                  COAST BUSINESS CREDIT(R), a division of                     
CYANOTECH CORPORATION                             Southern Pacific Bank

                                                                
                                                                             
By          /s/Gerald R. Cysewski                 By         /s/Robert D. Peters                    
            ------------------------                -------------------------  
            Gerald R. Cysewski                               Robert D. Peters                       
Title:      Chairman & President                  Title:     Vice President


By          /s/Ronald P. Scott
            ------------------------
            Ronald P. Scott
Title:      Executive Vice President

NUTREX, INC.


By          /s/Larry L. Line
            ------------------------
            Larry L. Line
Title:      President


By          /s/Ronald P. Scott
            ------------------------
            Ronald P. Scott
Title:      Executive Vice President

                                       8
</TABLE>