April 28, 2000


Cyanotech Corporation
Hawaii Ocean Science Technology Park
73-4460 Queen Kaahumanu Hwy. #102
Kailua-Kona, Hawaii 96740

Attn:   Ronald Scott
        Executive Vice President

Re:     Project  Closeout  Costs  and  Suspension  Agreement for the Astaxanthin
        Expansion Project

This  letter  is  being  sent  as  a  follow up  to the meeting we had yesterday
regarding  the  closeout  agreement  between  Kiewit  Pacific  Co. and Cyanotech
Corporation for the Astaxanthin Expansion project.

Based  on  your  desire  to extend  our contract suspension, we are agreeable to
revising  our  previous  suspension  agreement  dated  September 17, 1999.  That
agreement addressed  the payment of the $338,335.00 balance due on the contract.
The terms of the suspension agreement will be modified as follows:

        1.      Kiewit  Pacific  Co.  agrees  to  further  suspend  work  on the
                construction contract until December 1, 2000.  In  consideration
                for  this,  Cyanotech will pay Kiewit Pacific Co. $85,000.00  of
                the  amount  remaining  due  on the contract now.  An additional
                payment  of  $85,000.00  will  be  made on or before December 1,
                2000.

        2.      In  the  event  Cyanotech  Corporation  chooses  to proceed with
                construction  on  or before December 1, 2000, Kiewit Pacific Co.
                will  be  allowed to  renegotiate the  price for  the work to be
                done.

        3.      If the parties cannot  come to agreement  for the  completion of
                the  work,  Cyanotech Corporation  may proceed with an alternate
                contractor   after  paying  Kiewit  Pacific  Co.  the  remaining
                $168,335.00 due plus interest as allowed by the contract.

If  these  provisions  are  acceptable to Cyanotech Corporation please sign this
document  and  return it  to our office.  We hope to resume construction on your
site in the near future.

Sincerely,                                      Cyanotech Corporation
/s/Jamie Wisenbaker                             By:/s/ Ronald P. Scott
- --------------------                               --------------------
Jamie Wisenbaker                                Its Exec. V.P./CFO
Hawaii Area Manager                             Date: 5/1/2000