Exhibit 10.01
SUPPLY AGREEMENT
     THIS SUPPLY AGREEMENT (the “Agreement”) is made as of January 1, 2006 (the
“Effective Date”), by and between Mead Johnson & Company, a corporation
organized under the laws of Delaware with offices located at 2400 West Lloyd
Expressway, Evansville, Indiana 47721 (“PURCHASER”), and Martek Biosciences
Corporation, a Delaware corporation with offices located at 6480 Dobbin Road,
Columbia, Maryland 21045 (“SELLER”).
WITNESSETH THAT:
     WHEREAS, PURCHASER and SELLER entered into a License Agreement dated as of
October 28, 1992 and amended by letter agreement dated January 21, 2004 *, which
License Agreement is amended by this Agreement solely to the extent expressly
provided herein (as so amended, the “License Agreement”) wherein SELLER has
granted to PURCHASER in the Territory (as defined therein) certain rights under
Licensed Patents (as defined therein) and Technology (as defined therein) (A) to
produce the Mead Johnson Product (as defined therein), (B) to use and make the
Martek Product (as defined therein) for purposes of making and having made the
Mead Johnson Product and (C) to use, market and distribute directly or
indirectly the Mead Johnson Product, in each case as further specified in the
License Agreement; and
     WHEREAS, PURCHASER wishes to purchase the Martek Product from SELLER; and
     WHEREAS, SELLER is willing to supply Martek Product for use by PURCHASER to
manufacture, use, market and distribute the Mead Johnson Product in accordance
with the terms of the License Agreement; and
     WHEREAS, such purchase and supply of Martek Product shall be subject to the
terms and conditions set forth in this Agreement.
     NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual undertakings herein contained, the parties agree as follows:
ARTICLE 1. DEFINITIONS
     Unless defined herein, all capitalized terms will have the meaning stated
in the License Agreement, as amended hereby. References herein to SELLER and
PURCHASER shall also be deemed as references to Licensor and Licensee,
respectively, for purposes of the License Agreement.
     1.1 “ARA” shall mean arachidonic acid.
     1.2 “Annual Forecast” shall have the meaning specified in Section 2.2.1.
     1.3 “DHA” shall mean docosahexaenoic acid.
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

 

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     1.4 “LCPUFA” shall mean any fatty acid, other than linoleic acid,
gammalinolenic acid and alphalinolenic acid, which contains at least eighteen
(18) carbon atoms and at least two (2) double bonds.
     1.5 “Martek Product Specifications” shall mean the specifications for the
Martek Product to be supplied hereunder, as set forth in Exhibit C attached
hereto, as such Exhibit may be modified by written agreement of the parties.
     1.6 “Unit of the Martek Product” shall mean that quantity of Martek Product
containing one (1) kilogram of DHA and/or ARA.
     1.7 “Infant Formula Product” shall mean an enteral product formulated for
the nutritional support of premature infants and/or a breast milk substitute
formulated industrially in accordance with applicable Codex Alimentarius and
United States Food and Drug Administration standards to satisfy the total normal
nutritional requirements of infants up to between four and six months of age and
adapted to their physiological characteristics and fed in addition to other
foods to infants up to approximately one year of age.
ARTICLE 2. PURCHASE AND SUPPLY OF COMPOUNDS
     2.1 Purchase. (a) During the Term of this Agreement and subject to the
terms of this Agreement, PURCHASER shall purchase and/or shall direct the
Designee(s) (as defined in Exhibit B hereto) to purchase, from SELLER,
PURCHASER’s total requirements of DHA and ARA as required by PURCHASER for use
in Infant Formula Products in accordance with the terms of the License Agreement
as amended hereby. All quantities of the Martek Product purchased by PURCHASER
or any Designee under this Agreement shall be used solely for purposes of
production, distribution and/or sale of the Mead Johnson Product.
     (b) As partial consideration for the rights granted to PURCHASER hereunder,
including without limitation the pricing provisions and price protection
provided in Exhibit A attached hereto, PURCHASER agrees that during the Term of
this Agreement Section 2.2 (i) of the License Agreement shall be of no force or
effect, and after the Term of this Agreement, Section 2.2(i) of the License
Agreement shall only apply with respect to actions which occur after the Term of
this Agreement. Notwithstanding the above, to the extent PURCHASER elects to add
new countries to the Territory after the Effective Date of this Agreement, the
incremental additional License Fee cost to PURCHASER shall be *, after the
Effective Date of this Agreement, to *, provided that SELLER has established
specific License Fees for those particular countries.
     2.2 Forecasts and Orders.
     2.2.1 On the Effective Date of this Agreement, PURCHASER shall give SELLER
written notice of the quantity of Martek Product which PURCHASER estimates in
good faith that it will order or direct the Designee(s) to order from SELLER
during the remainder of the current calendar year (the “Initial Annual
Forecast”). Not later than November 30 of each calendar year during the Term of
this Agreement, PURCHASER shall give SELLER written notice of the quantity of
Martek Product which PURCHASER estimates in good faith that it will order or
direct the Designee(s) to
 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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order from SELLER during the next subsequent calendar year (each, an “Annual
Forecast”). The Annual Forecast shall be used to establish the per unit and per
kilogram pricing for the Martek Products purchased during the relevant calendar
year in accordance with Section 2.3.1 and Exhibit A attached hereto; provided
that, for the remainder of calendar year 2006, the per kilogram pricing to be
used, subject to the year-end adjustment pursuant to Section 2.3.1, shall be *
per kilogram, notwithstanding the Initial Annual Forecast. In addition to the
foregoing, one (1) month before the commencement of each calendar quarter during
the Term of this Agreement, PURCHASER shall provide SELLER with a forecast (a
“Rolling Forecast”) of PURCHASER’s requirements for the Martek Product for each
of the succeeding four (4) quarters, specifying quantities and requested
delivery dates. These forecasts will be PURCHASER’s good-faith, best estimate of
requirements and should not be considered a firm commitment.
     2.2.2 PURCHASER expressly acknowledges that available supplies of the
Martek Product have been in the past, and, may from time to time in the future,
be insufficient to meet current demand. Nevertheless, SELLER shall use
commercially reasonable efforts to have available for shipment to PURCHASER or
to a Designee for PURCHASER’s account such quantities of the Martek Product as
PURCHASER forecasts in good faith pursuant to Section 2.2.1 above and any
additional quantities which PURCHASER may reasonably request. In case for any
reason SELLER cannot or does not supply such quantities of the Martek Products
as are forecasted in good faith by PURCHASER pursuant to Section 2.2.1 to
PURCHASER, PURCHASER shall be allowed to use an alternative supplier for
quantities of Omega-3 and Omega-6 long-chain polyunsaturated fatty acids equal
to those quantities of Martek Products that were ordered by PURCHASER pursuant
to a Purchase Order and not delivered by SELLER.
     2.2.3 PURCHASER shall issue and/or shall direct the Designee(s) to issue
formal purchase orders (“Purchase Orders”) at least sixty (60) but no more than
ninety (90) days in advance of the date on which PURCHASER or the Designee
requests that SELLER ship the Martek Product. SELLER shall accept or reject any
such Purchase Order within five (5) business days of receipt, provided that
SELLER shall not reject any Purchase Order for any quantities within the most
recent forecast.
     2.2.4 Purchase Orders which have been accepted by SELLER shall be
considered as firm and binding orders (subject to the provisions of
Section 2.2.2 above) and shall only be canceled or amended by mutual written
agreement of the parties.
     2.3 Payment Terms.
     2.3.1 Price. During the Term of this Agreement, PURCHASER and the
Designee(s) shall pay for the Martek Product in any order submitted by PURCHASER
or a Designee in accordance with the terms set forth in Exhibit A attached
hereto. PURCHASER hereby covenants and agrees to abide by the conditions set
forth on Exhibit A, as amended by mutual agreement from time to time, which
shall be applicable to the Martek Product delivered to PURCHASER or a Designee
pursuant to the relevant Purchase Order, and PURCHASER shall acknowledge in
writing to SELLER, within thirty (30) days after each calendar year-end, that
PURCHASER has complied with this covenant during the preceding twelve (12) month
period. Price calculations based on annual ordering volumes shall be made using
the Annual Forecasts submitted to SELLER by PURCHASER in accordance with
Section 2.2.1 and as further demonstrated in Exhibit A-1 attached hereto. At the
end of each
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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calendar year, if the quantity actually purchased (as reflected in Purchase
Orders accepted by SELLER that satisfy the requirements of Section 2.2 3 above
and which are scheduled for shipment within the corresponding calendar year) is
less than the quantity specified in the Annual Forecast for the relevant
calendar year, SELLER shall invoice PURCHASER within thirty (30) days after the
end of the calendar year for an amount equal to the difference, if any, between
the total price paid, and the total purchase price payable for the quantity of
Martek Product actually purchased from SELLER in such calendar year as specified
in Exhibit A. Alternatively, if the quantity actually purchased during a
calendar year exceeds the quantity specified in the Annual Forecast for purchase
in such calendar year, SELLER shall credit against future purchases of Martek
Product by PURCHASER from SELLER an amount equal to the difference, if any,
between the total purchase price payable for the quantity actually purchased as
specified in Exhibit A and the total price paid by PURCHASER, provided that if
this AGREEMENT has terminated, SELLER shall, in lieu of any such credit, pay
such amount to PURCHASER. Notwithstanding the foregoing, for calendar year 2006,
the year-end reconciliation described above shall be calculated as of
December 1, 2006 based on actual shipments in 2006 prior to such date, plus
shipments which are, as of December 1st, 2006, scheduled to occur in
December 2006, and any resulting credit shall be applied to invoices issued in
December 2006, and if any balance is remaining, payment shall be issued prior to
December 31st, 2006.
     2.3.2 Taxes. The purchase price for the Martek Product is exclusive of any
and all national, state or local sales, use, value added or other taxes, customs
duties and similar tariffs and fees which SELLER or its Affiliates may be
required to pay or collect upon the delivery of the Martek Product, or
otherwise. Should any tax or levy be made, PURCHASER agrees to pay such tax or
levy and indemnify SELLER for any claim for such tax or levy demanded.
     2.3.3 Terms and Guarantee. PURCHASER and the Designee(s), as applicable,
shall pay all correct invoices for amounts due in accordance with Section 2.3.1
above in the United States in U.S. dollars within * days from the postmark date
or date of electronic transmission, or transmission by facsimile, as applicable,
of SELLER’s invoice, which invoice shall not be deemed to be delivered earlier
than the date of delivery of the invoiced Martek Product. For any invoices
containing invoicing errors, payment shall not be due with respect to the
incorrect portions of the invoice only until the invoicing errors are corrected
and a new invoice, with respect to the incorrect portions on the original
invoice, is received by PURCHASER. In order to induce SELLER to fill orders for
the Martek Product placed by the Designees, PURCHASER hereby assumes
responsibility for, and unconditionally guarantees, the timely payment of
amounts due from the Designees (the “Guaranteed Obligations”) within * days
after receipt from SELLER of notice of nonpayment of any such amount. SELLER
shall not be required, prior to any such notice to PURCHASER, to pursue or
exhaust any of its rights or remedies against a defaulting Designee with respect
to performance of any Guaranteed Obligation.
     2.3.4 Sample Analysis. SELLER shall have the right to analyze samples of
the Mead Johnson Product at any time and from time to time for purposes of
verifying that PURCHASER has complied with any conditions that may be applicable
to the PURCHASER pursuant to the terms of this Agreement, including its exhibits
and appendices, for any order of Martek Product. The expenses of such analyses
shall be borne by SELLER; provided, however, that PURCHASER shall provide
reasonable samples to SELLER without charge upon SELLER’s request, to be made no
more often than quarterly, and provided, further, that PURCHASER shall be
charged for, and
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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shall promptly pay the expense of any such analysis that discloses a failure to
comply with any applicable condition.
          2.4 Order and Delivery Terms.
          2.4.1 Martek Product shall be delivered F.O.B. SELLER’s place of
shipment to PURCHASER or Designee, as specified in the applicable Purchase
Order.
          2.4.2 Title to and risk of loss of Martek Product shall be transferred
to PURCHASER upon delivery by SELLER to a carrier for shipment to PURCHASER or
the indicated Designee.
          2.4.3 In connection with ordering and delivering the Martek Product
hereunder, PURCHASER’s standard forms shall govern each order; however, nothing
in such forms shall be construed to bind SELLER in any way that modifies or
contradicts any express term of this Supply Agreement or its exhibits and
appendices.
ARTICLE 3. REPRESENTATIONS, WARRANTY AND DISCLAIMER.
          3.1 SELLER warrants that the Martek Product will be manufactured in
compliance with (1) current good manufacturing practices promulgated by the U.S.
Food and Drug Administration, (2) in accordance with the requirements of
Article 5.2 herein and (3) in accordance with the Martek Product Specifications.
Except as otherwise provided in Section 8.2, the exclusive liability of SELLER,
and PURCHASER’s exclusive remedy, for failure of any Martek Product to conform
to the Martek Product Specifications shall be the replacement of the
nonconforming Martek Product or a refund of the purchase price paid by PURCHASER
for the nonconforming Martek Product (including duty, freight, insurance
charges, and other similar related expenses) at the SELLER’s sole option.
          3.2 SELLER’s Representations and Warranties. SELLER represents and
warrants to the PURCHASER as follows:
     (i) Exhibit D attached hereto sets forth a complete and accurate list of
the Licensed Patents as of the date of this Agreement.
     (ii) SELLER has all necessary corporate power and authority to enter into
this Agreement and perform its obligations hereunder.
     (iii) SELLER’s performance under this Agreement does not conflict with any
other contract to which SELLER is bound.
          3.3 SELLER’s Disclaimers.
          3.3.1 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER HEREBY
DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS AND IMPLIED, INCLUDING WITHOUT
LIMITATION ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
AND NONINFRINGEMENT, RELATING TO
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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THE TECHNOLOGY, THE MARTEK PRODUCTS OR THE MARTEK TRADEMARKS. SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES AND HAS NO DUTY TO ENSURE THAT THE TECHNOLOGY OR
THE MARTEK PRODUCTS ARE USABLE WITH THE MEAD JOHNSON PRODUCT OR THAT THE MARTEK
PRODUCTS ARE SAFE OR CAN BE INCORPORATED SAFELY INTO THE MEAD JOHNSON PRODUCT.
IT IS HEREBY ACKNOWLEDGED AND AGREED THAT IT SHALL BE PURCHASER’S RIGHT AND
OBLIGATION TO DETERMINE THE SAFETY AND UTILITY OF THE MARTEK PRODUCTS AS THEY
RELATE TO EACH MEAD JOHNSON PRODUCT.
     3.3.2 SELLER HEREBY DISCLAIMS ANY WARRANTY THAT SELLER’S RIGHTS IN THE
TECHNOLOGY OR USE OF THE MARTEK PRODUCT ARE FREE FROM INFRINGEMENT BY THIRD
PARTIES. SELLER FURTHER DISCLAIMS ANY WARRANTY RELATING TO THE PATENTABILITY OF,
OR THE VALIDITY OF ANY PATENTS RELATING TO, THE TECHNOLOGY, OR THE MARTEK
PRODUCT AND MAKES NO REPRESENTATIONS WHATSOEVER WITH REGARD TO THE SCOPE OF ANY
LICENSED PATENTS OR THAT ANY LICENSED PATENTS MAY BE COMMERCIALLY EXPLOITED
WITHOUT INFRINGING OTHER PATENTS.
     3.3.3 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER HEREBY
DISCLAIMS AND SHALL NOT BE LIABLE FOR ANY DAMAGES OF ANY NATURE RESULTING OR
ARISING FROM OR RELATING TO (A) THE USE, MANUFACTURE, DISTRIBUTION, MARKETING,
OR SALE BY PURCHASER, ITS AFFILIATES OR ANY THIRD PARTY OF THE TECHNOLOGY, THE
MARTEK PRODUCT, OR THE MEAD JOHNSON PRODUCTS, OR (B) ANY IMPROVEMENTS OR
MODIFICATIONS TO THE TECHNOLOGY, THE MARTEK PRODUCT, OR THE MEAD JOHNSON
PRODUCTS WHICH ARE NOT MADE BY AND PROPRIETARY TO SELLER, [
     3.3.4 PURCHASER’s Warranties. PURCHASER represents and warrants to the
SELLER as follows:

  (i)   The execution and delivery of this Agreement and the performance by
PURCHASER of the transactions contemplated hereby have been duly authorized by
all necessary corporate actions.

  (ii)   The performance by PURCHASER of any of the terms and conditions of this
Agreement will not constitute a breach or violation of any other agreement or
understanding, written or oral, to which it or its Affiliates is a party.

ARTICLE 4. TERM, TERMINATION
     4.1 Term: This Agreement shall commence on the Effective Date and, subject
to prior termination of this Agreement in accordance with the terms hereof,
shall terminate on the tenth (10th) anniversary of the Effective Date (the
“Term”).
     4.2 Termination:
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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     4.2.1 Termination in Case of Material Breach; Opportunity to Cure. Either
party to this Agreement may terminate this Agreement upon sixty (60) days prior
written notice if the other party shall commit a material breach of this
Agreement and shall not cure such breach within such sixty (60) day period.
     4.2.2 Termination in Case of Infringement. PURCHASER shall have the right
to terminate this Agreement in a particular jurisdiction within the Territory if
the parties receive a written opinion of a mutually agreeable outside patent
counsel, or a court or other tribunal of competent jurisdiction determines by
final order, that the Technology or any material portion thereof or the Martek
Product infringe upon the patent or other proprietary rights of any Third Party
in such jurisdiction; provided, however, that if, prior to any such termination,
SELLER develops a non-infringing alternative that is fully compliant with all
applicable laws and regulations and meets PURCHASER’S specifications and
requirements as a substitute for the Martek Product, or obtains a license from
such Third Party, such that PURCHASER could lawfully use the Technology and/or
the Martek Product (as the case may be) in connection with the Mead Johnson
Products at no additional cost or expense to PURCHASER beyond that expressly
provided in this Agreement, PURCHASER shall not terminate this Agreement.
     4.2.2.1 Volumes in Case of Infringement Termination. In the event that
PURCHASER terminates this Agreement as to a particular jurisdiction within the
Territory based on Section 4.2.2, SELLER agrees to annually credit the * of
PURCHASER for the particular jurisdiction to * used in determining PURCHASER’s *
Schedule A for future purchases of Martek Product.
     4.2.3 Termination in Case of Insolvency; Government Action. Notwithstanding
any other provisions of this Agreement, either party to this Agreement may
terminate this Agreement upon giving notice to the other, should the other
commit an act of bankruptcy, declare bankruptcy, be declared bankrupt, enter
into an arrangement for benefit of creditors, enter into a procedure of winding
up or dissolution, or should a trustee or receiver be appointed for the other or
upon the expropriation, takeover or nationalization of the other party or a
majority portion of its assets by governmental action.
     4.2.4 Other Termination Rights. In addition to the termination rights set
forth above, either party may terminate this Agreement upon twelve (12) months
prior written notice provided that such notice shall not be given until after
the fifth (5th) anniversary of the Effective Date of this Agreement.
     4.2.5 Termination of License Agreement. This Agreement shall automatically
terminate in the event of the termination of the License Agreement.
     4.3 Effect of Termination. Upon termination of this Agreement in its
entirety other than pursuant to Section 4.2.5 or on account of PURCHASER’s
breach of this Agreement, PURCHASER and its Affiliates and Designees may
continue to manufacture, produce, use, market, offer for sale, sell, promote and
distribute, to the extent lawful, any Mead Johnson Products containing Martek
Product purchased hereunder until its inventory of such Mead Johnson Products is
exhausted. Upon termination of this Agreement pursuant to Section 4.2.4 or on
account of PURCHASER’s breach of this Agreement,
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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SELLER shall have the right, but not the obligation, to purchase from PURCHASER,
its Affiliates and Designees, at the cost paid for such Martek Product,
PURCHASER’s unused inventories of the Martek Product.
     4.4 Effect on License Agreement. Upon termination of this Agreement,
notwithstanding any other provision hereof, the amendments to Sections 2.2(i)
(subject to the last phrase of the first sentence of Section 2.1(b) hereof),
4.1(ii), 4.1(iii), 6.1, 6.2, and 6.3 of the License Agreement as set forth
herein shall be of no further force or effect.
     4.5 No Royalties. As of the date of this Agreement, the parties declare
that no royalties are due from PURCHASER to SELLER under the License Agreement
for actions which have occurred prior to the Effective Date or which occur
during the Term of this Agreement Furthermore, to SELLER’s knowledge without
inquiry, PURCHASER is current on all payments due to SELLER whether for license
fees or product delivered.
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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ARTICLE 5. COVENANTS
     5.1 During the Term of this Agreement, Sections 6.1, 6.2 and 6.3 of the
License Agreement shall be deemed deleted in their entirety and replaced with
Sections 5.2, 5.3 and 5.4 below.
     5.2 Compliance with Law; Regulatory Approval. Each of SELLER and PURCHASER
(each for itself and on behalf of its Affiliates and Designees) covenants and
agrees that it shall conduct all of its operations dealing with the Technology,
the Martek Product and the Mead Johnson Product, in material compliance with all
applicable laws, regulations and other requirements which may be in effect from
time to time, of all national governmental authorities, and of all states,
municipalities and other political subdivisions and agencies thereof, including,
without limiting the generality of the foregoing, the Federal Food, Drug, and
Cosmetic Act, the Infant Formula Act of 1980, the regulations and other
requirements of the United States Food and Drug Administration, similar state
laws and regulations or similar laws and other requirements in the Territory,
including any and all amendments, as may be applicable in any jurisdiction in
the Territory in which any Martek Product, or Mead Johnson Product, as
applicable, is sold. It shall be PURCHASER’s, and not SELLER’s, responsibility
to secure any regulatory approvals in the Territory that may be necessary in
connection with exercise by PURCHASER of the rights granted under this
Agreement, and in connection therewith, PURCHASER shall not intentionally impair
SELLER’s ability to obtain any regulatory approval of the Martek Product by the
competent governmental authorities in any Territory and for any product that
SELLER may elect to pursue.
     5.3 Performance and Product Quality. PURCHASER covenants and agrees that it
and its Affiliates, and to the extent applicable, its Designees, shall exercise
a reasonable standard of care and quality control in the testing, manufacturing,
marketing, packaging, distribution and sale of each Mead Johnson Product.
PURCHASER further covenants and agrees that it and its Affiliates shall maintain
quality control, provide adequate tests of materials, provide quality
workmanship, and do such other things as are reasonably required to assure high
quality production of such Mead Johnson Products.
     5.4 PURCHASER’s Records. PURCHASER covenants and agrees that, PURCHASER
will keep true and accurate records adequate to permit SELLER to monitor
PURCHASER’s compliance with the terms and conditions of this Agreement and the
License Agreement, and to allow any applicable payments due to SELLER hereunder
or under the License Agreement to be computed and verified. Such records shall
be made available upon prior written request by SELLER, during business hours,
for inspection by an independent accountant who is not the auditor of record for
SELLER and who is reasonably acceptable to PURCHASER and who shall be bound by a
confidentiality agreement with PURCHASER, to the extent necessary for the
determination of the accuracy of the payments made hereunder, and such records
shall be retained for a period of three years following the year to which they
relate. For the purposes of this Section 5.4, any of the four largest accounting
firms in the United States (as of the date of the audit) shall be deemed
acceptable to PURCHASER, provided that the firm selected by SELLER is not
SELLER’s auditor of record. The accountant shall provide SELLER with a report
containing his/her conclusions, but not the inspected records, nor the
information contained therein, and shall concurrently provide PURCHASER with
such report. PURCHASER shall promptly remit to SELLER the amount of any
underpayment
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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discovered by an inspection conducted in accordance herewith, and SELLER shall
promptly remit to PURCHASER the amount of any overpayment so discovered to the
extent that such overpayment exceeds the cost of the inspection. Each such
inspection shall cover no more than the three (3) calendar years prior to the
date of the request for inspection, and SELLER shall be entitled to no more than
one (1) such inspection per calendar year, provided that, if an inspection
reveals an underpayment by PURCHASER of five percent (5%) or greater, then the
accountant shall also be permitted to inspect such records covering a two
(2) calendar year period preceding the three (3) year period of such inspection.
SELLER shall bear the full cost of such inspection unless the audit discloses an
underpayment by PURCHASER of five percent (5%) or greater of any applicable
royalties due hereunder, in which case PURCHASER shall bear the full cost of the
inspection. The provisions of this Section 5.4 shall survive any termination or
expiration of this Agreement for the limited purpose of permitting SELLER to
verify PURCHASER’s payment of the correct prices for the quantities of the
Martek Product purchased under this Agreement.
     5.4.1 Notwithstanding Section 5.1, PURCHASER retains its rights under the
License Agreement to audit the records of SELLER (Licensor under the License
Agreement), as described in the last sentence of Section 6.3 of the License
Agreement, for all periods during which Section 2.2(i) of the License Agreement
was in effect.
     5.5 Product Use. In order to ensure the quality and efficacy of the Mead
Johnson Product, PURCHASER covenants and agrees that for a period of * from the
Effective Date of this Agreement, PURCHASER shall include in any Mead Johnson
Product for sale in the United States (i) * of total fatty acids as DHA and * of
total fatty acids as ARA and (ii) of total fatty acids as ARA and DHA.
     5.5.1 The parties’ reaffirm that (a) outside the United States and (b) in
the United States after the above * period has expired, Section 6.6 of the
License Agreement applies, which reads as follows: Licensee covenants and agrees
that it and its Affiliates shall, throughout the term of this Agreement, use
reasonable efforts to use and develop the Technology and the Martek Product with
respect to the Mead Johnson Product in a way which is consistent with the
parties’ objective of developing a final marketed product which has a
polyunsaturated fatty acid composition effectively *.
ARTICLE 6. [Reserved]
ARTICLE 7. LIMITATION OF LIABILITY
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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     7.1 Indirect Damages. UNLESS CAUSED BY THE INTENTIONAL MISCONDUCT OF A
PARTY, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT,
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS OR
BUSINESS OPPORTUNITY, WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING
NEGLIGENCE) OR ANY OTHER THEORY UPON WHICH ONE PARTY MAY SEEK REMEDIES AGAINST
THE OTHER.
     7.2 Maximum Aggregate Liability. UNLESS ARISING FROM THE INTENTIONAL
MISCONDUCT OR GROSS NEGLIGENCE OF A PARTY OR IN THE CASE OF PRODUCTS LIABILITY,
NEITHER PARTY’S TOTAL LIABILITY TO THE OTHER PARTY ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT IN ANY CALENDAR YEAR DURING THE TERM OF THIS
AGREEMENT, WHETHER BASED ON BREACH OF CONTRACT OR TORT (INCLUDING NEGLIGENCE),
SHALL EXCEED THE TOTAL AMOUNT ACTUALLY PAID TO SELLER BY PURCHASER IN ACCORDANCE
WITH THIS AGREEMENT DURING SUCH CALENDAR YEAR. NOTWITHSTANDING THE ABOVE,
SELLER’S TOTAL LIABILITY TO PURCHASER ARISING OUT OF INTENTIONAL MISCONDUCT,
GROSS NEGLIGENCE OR PRODUCTS LIABILITY SHALL NOT EXCEED THE ACTUAL PROCEEDS
RECEIVED FROM INSURANCE COVERAGE MAINTAINED IN ACCORDANCE WITH SECTION 10.4, IT
BEING UNDERSTOOD AND AGREED THAT SELLER SHALL USE COMMERCIALLY REASONABLE
EFFORTS TO RECOVER THE FULL AMOUNT OF ANY CLAIM OR LIABILITY UNDER SUCH
COVERAGE. AS PURCHASER IS SELF INSURED, PURCHASER’S TOTAL LIABILITY TO SELLER
ARISING OUT OF INTENTIONAL MISCONDUCT, GROSS NEGLIGENCE OR PRODUCTS LIABILITY
SHALL NOT EXCEED THE AMOUNT OF INSURANCE CARRIED BY SELLER, WHICH SHALL IN NO
EVENT BE LESS THAN THAT REQUIRED PURSUANT TO SECTION 10.4.
ARTICLE 8. INDEMNIFICATION
     8.1 Indemnity by PURCHASER. Except with respect to Losses (as defined
below) for which SELLER has agreed to indemnify PURCHASER pursuant to
Section 8.2 below, and as limited by Sections 7.1 and 7.2 above, PURCHASER shall
indemnify, defend and hold harmless SELLER, SELLER’s Affiliates and SELLER’s
Affiliates’ directors, officers, employees and agents from and against all
costs, expenses, damages, losses and liabilities (“Losses”) asserted against
SELLER, SELLER’s Affiliates and SELLER’s Affiliates’ directors, officers,
employees and agents for which any of them may become liable or incur or be
compelled to pay with respect to or involving the Martek Product supplied
pursuant to this Agreement and/or the Mead Johnson Product, except to the extent
that any such Losses result from (i) a defect caused by SELLER or any SELLER
Affiliate in the Martek Products ordered by PURCHASER or any PURCHASER Affiliate
or Designee from SELLER hereunder (excluding the determination of the safety and
utility of the Martek Product relating to its use in a PURCHASER Product);
(ii) the failure of SELLER or any SELLER Affiliate to manufacture the Martek
Products ordered by PURCHASER or any PURCHASER Affiliate or Designee from SELLER
in accordance with the Martek Product
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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Specifications; (iii) any gross negligence or intentional wrongdoing of SELLER
or any SELLER Affiliate; or (iv) the material breach by SELLER of a material
term or condition of this Agreement.
     8.2 Indemnity by SELLER. Notwithstanding Section 3.1 herein and except as
limited by Sections 7.1 and 7.2 above, SELLER shall indemnify, defend and hold
harmless PURCHASER, PURCHASER’s Affiliates, and PURCHASER’s Affiliates’
directors, officers, employees and agents from and against all Losses asserted
against PURCHASER, PURCHASER’s Affiliates or the directors, officers, employees
or agents of either of them for which any of them may become liable or incur or
be compelled to pay to the extent resulting from: (i) a defect caused by SELLER
or any SELLER Affiliate in the Martek Products ordered by PURCHASER or any
PURCHASER Affiliate or Designee from SELLER hereunder (excluding the
determination of the safety and utility of the Martek Product relating to its
use in a Mead Johnson Product); (ii) the failure of SELLER or any SELLER
Affiliate to manufacture the Martek Products ordered by PURCHASER or any
PURCHASER Affiliate or Designee from SELLER in accordance with the Martek
Product Specifications; (iii) any gross negligence or intentional wrongdoing of
SELLER or any SELLER Affiliate; or (iv) the material breach by SELLER of a
material term or condition of this Agreement, except to the extent that any such
Losses result from a material breach of any of the PURCHASER’s covenants,
representations and warranties or other material terms and conditions contained
herein.
     8.3 Condition to Indemnification. If either party expects to seek
indemnification under this Article 8, it shall promptly give notice to the
indemnifying party of the basis for such claim of indemnification, and the
indemnifying party shall have sole authority to defend and/or settle such claim
or suit. If indemnification is sought as a result of any third party claim or
suit, such notice to the indemnifying party shall be given within fifteen
(15) days after receipt by the other party of such claim or suit; provided,
however, that the failure to give notice within such time period shall not
relieve the indemnifying party of its obligation to indemnify unless it shall be
materially prejudiced by the failure. Each party shall fully cooperate with the
other party in the defense of all such claims or suits at the expense of the
indemnifying party. No offer of settlement, settlement or compromise shall be
binding on a party hereto without its prior written consent (which consent shall
not be unreasonably withheld) unless such settlement fully releases such party
without any liability, loss, cost or obligation to such party.
     8.4 Survival of Indemnity Obligation. The indemnification obligations
provided in this Agreement, including that provided in this Article 8 and in
Section 5.3 above, shall survive the expiration or termination of this
Agreement, whether occasioned by the Agreement’s expiration pursuant to
Section 4.1 above or earlier termination pursuant to the other Sections of
Article 4 above.
ARTICLE 9. CONFIDENTIALITY
     9.1 Disclosure of Information. All the Technology and all other information
exchanged by the parties pursuant to and in execution of their obligations and
in exercise of their rights under this Agreement, including, without limitation,
the terms of this Agreement and the Martek Product Specifications, shall be
deemed confidential. SELLER and PURCHASER acknowledge and agree that the value
of the Technology, the Martek Product, and the Mead
 

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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Johnson Products is based, to a large extent, on maintaining the confidentiality
of the Technology, the Martek Product, and the Mead Johnson Products and
preventing any unauthorized dissemination to or use by Third Parties of
information relating to the Technology, the Martek Product, or the Mead Johnson
Products. Confidential and proprietary information hereunder, whether orally or
in written form, shall be safeguarded by the recipient and shall not be
disclosed to Third Parties and shall be made available only to the receiving
party’s employees or other agents who have a need to know such information for
purposes of performing the party’s obligations, or for purposes of exercising
the party’s rights, under this Agreement and such employees or other agents
shall have a legal obligation to the employer or principal, as applicable, not
to disclose such information to Third Parties. Each party shall treat, and
PURCHASER shall ensure that its Affiliates and Designees treat, any and all such
confidential information in the same manner and with the same protection as such
party maintains its own confidential information. These mutual obligations of
confidentiality shall not apply to any information to the extent that such
information: (i) is or later becomes generally available to the public, such as
by publication or otherwise, through no fault of the receiving party; (ii) is
obtained from a Third Party having the legal right to make such a disclosure
without obligations of confidentiality; or (iii) is independently developed by a
party without access to the confidential information. SELLER, PURCHASER or
PURCHASER’s Affiliates shall not remove from any communications or other
documents delivered by a disclosing party any proprietary notices affixed
thereto by the disclosing party.
     Notwithstanding the foregoing, SELLER and PURCHASER may disclose (including
but not limited to disclosure in response to questions) or announce to any Third
Person, or issue a press release concerning (a) the fact and the nature of this
Agreement and the transactions to be performed pursuant hereto; or (b) any
otherwise confidential or proprietary information as and to the extent required
by applicable law or government agency of the United States and the countries of
the Territory, including, but not limited to, any applicable disclosure
requirements under the federal securities laws or regulations thereunder,
provided that in the case of each such disclosure, announcement or press
release, the disclosing party gives no less than five (5) business days prior
written notice to the other party and gives the other party such assistance as
the other party may reasonably request, in accordance with applicable law, in
order to prevent, challenge, modify or protect such disclosure; provided,
however, that SELLER and PURCHASER may disclose the fact and the terms of this
Agreement to its attorneys and accountants without notice to the other party.
Furthermore, PURCHASER may deliver a copy of this Agreement (including drafts
thereof) to any Affiliate or any Designee so long as any such recipient has
undertaken, in writing, an obligation to maintain the terms of this Agreement in
confidence.
     9.2 Post-Termination Obligations. The mutual confidentiality obligations of
the parties under the provisions of this Article 9 shall survive the expiration
or termination of this Agreement for a period of fifteen (15) years from the
date thereof. Upon expiration or termination of this Agreement, each party shall
promptly return to the other all confidential or proprietary property or
documentation disclosed or delivered to such party pursuant to this Agreement
and then in existence, subject to the retention by such party of one (1) copy
thereof for archival purposes only.
ARTICLE 10. GENERAL PROVISIONS
 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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     10.1 Dispute Resolution. SELLER and PURCHASER covenant and agree to use
their diligent efforts to resolve any disputes that arise between them in the
future and are related to this Agreement through negotiation and mutual
agreement and, if good faith efforts to so negotiate and mutually agree are
unavailing, through binding arbitration under the procedures set forth herein.
When either party determines that there is a dispute subject to arbitration
under this Agreement, it shall promptly send written notice of the dispute to
the other party. The parties agree that for a period of thirty (30) days from
the sending of such written notice, they shall in good faith negotiate to
resolve the dispute. Subject to the foregoing, disputes arising in connection
with this Agreement shall be finally settled under the Rules of the American
Arbitration Association by three arbitrators appointed in accordance with such
Rules. Unless the parties to such dispute agree otherwise in writing, any such
arbitration shall be conducted in Baltimore, Maryland and the results of such
Arbitration shall be final and binding on the parties and enforceable in any
court of competent jurisdiction. Notwithstanding the foregoing, the parties
acknowledge and agree that each of them shall have the right to seek immediate
injunctive and other equitable relief through the courts in the event of any
material breach of this Agreement by the other party that would cause the
non-breaching party irreparable injury for which there would be no adequate
remedy at law.
     10.2 Information Exchange. During the Term of this Agreement, the parties
shall promptly notify each other of any report of an adverse event associated
with the use of Martek Product in any Mead Johnson Product. PURCHASER shall have
sole discretion in determining what action, if any, is to be taken by PURCHASER
in connection with any such adverse event reported by PURCHASER relating to a
Mead Johnson Product.
     10.3 Force Majeure. Neither party to this Agreement shall be liable for
damages due to delay or failure to perform any obligation under this Agreement,
other than an obligation to make payments, if such delay or failure results
directly or indirectly from circumstances beyond the reasonable control of such
party. Such circumstances shall include, but shall not be limited to, acts of
God, acts of war, acts of terrorism, civil commotions, riots, strikes, lockouts,
acts of the government in either its sovereign or contractual capacity,
perturbation in telecommunications transmissions, inability to obtain suitable
equipment or components or raw materials, accident, fire, water damages, flood,
earthquake, or other natural catastrophes. If remittance of U.S. Dollars is
prevented or impaired for reasons of force majeure, the party owing the money
shall settle such obligations in the manner as may be reasonably instructed by
the party to whom the obligation is owed. Should the effect of force majeure
continue for more than six (6) consecutive months, the adversely affected party
may terminate this Agreement without liability (other than for claims arising
prior to the effective date of termination) on thirty (30) days notice to the
party impaired by force majeure.
     10.4 Insurance. PURCHASER is self-insured (or is an additional insured
under a Designee policy) with respect to product liability insurance covering
Mead Johnson Products. SELLER shall procure and maintain product liability
insurance coverage of not less than Ten Million Dollars ($10,000,000.00)
covering Martek Product, with PURCHASER named as an additional insured and loss
payee. PURCHASER may request from SELLER a certificate evidencing such insurance
and such certificate shall be promptly provided. The minimum insurance coverage
set forth above shall be maintained at all times unless changed to equivalent
 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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coverage by another carrier upon thirty (30) days prior written notice to
PURCHASER. Any successor to or permitted assignee of this Agreement shall
procure and maintain product liability insurance coverage of not less than Ten
Million Dollars ($10,000,000.00) covering such successor’s or assignee’s
applicable products.
     10.5 Notices. Notices required under this Agreement shall be in writing and
sent by registered mail, by facsimile transmission, by nationally recognized
overnight courier service, or by hand delivery, with written verification of
receipt and date of receipt, to the respective parties at the following
addresses:
     Notices to SELLER:
Martek Biosciences Corporation
6480 Dobbin Road
Columbia, Maryland 21045
Facsimile: (410) 740-2985
Attn: General Counsel
     Notices to PURCHASER:
Mead Johnson & Company
2400 West Lloyd Expressway
Evansville, Indiana 47721-0001
Facsimile: (812) 429-8845
Attn: Legal Department
or to such other address as either party may designate by a notice given in
compliance with this paragraph, and shall be deemed effective when received.
     10.6 Entire Agreement. The terms and provisions contained in this Agreement
and its Exhibits constitute the entire agreement between the parties on the
subject matter hereof and shall supersede all previous communications,
representations, agreements or understandings, either oral or written, between
the parties hereto with respect to the subject matter hereof. In the event of
any inconsistency between the terms of this Agreement and the License Agreement
relating to the purchase and supply of Martek Product or the liability for the
use of any Martek Product supplied hereunder, the provisions of this Agreement
shall supersede and shall be controlling. In the event of an inconsistency
between the terms of this Agreement and the License Agreement relating to
matters other than the purchase and supply of Martek Product or the liability
for the use of any Martek Product supplied hereunder, the provisions of the
License Agreement shall be controlling. No agreement or understanding varying or
extending this Agreement will be binding upon either party hereto, unless in a
writing which specifically refers to this Agreement, and signed by duly
authorized officers or representatives of the respective parties. The provisions
of this Agreement not specifically amended by any such further amendment shall
remain in full force and effect. The provisions of this Agreement, including
without limitation the provisions of Exhibit A and Exhibit B attached hereto,
expressly amend Article I and Sections 2.2, 2.3, 4.1(ii), 4.1(iii), 4.4, 6.1,
6.2, 6.3 and 11.1 of the License Agreement, and, except to the extent expressly
provided in Section 4.4 herein, such
 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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amendments shall survive any termination of this Agreement, and the parties
hereby ratify the terms of the License Agreement as amended by this Agreement
including without limitation by the provisions of Exhibit A and Exhibit B
attached hereto.
     10.7 Assignment. This Agreement and the rights granted hereunder shall not
be assignable, in whole or in part, by PURCHASER without the prior written
consent of SELLER (which consent shall not be unreasonably withheld or delayed);
provided, however, that this prohibition against assignment shall not apply to
and notice shall only be required for an assignment to an Affiliate. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. No person, firm or
corporation other than the parties hereto and their successors and permitted
assigns shall derive rights or benefits under this Agreement.
     10.8 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be a duplicate original, but which, taken together,
shall be deemed to constitute a single instrument.
     10.9 Severability. If any provision of this Agreement is declared void or
unenforceable by any relevant judicial or administrative authority, such
declaration shall not of itself nullify the remaining provisions of this
Agreement. Consequently, the parties shall meet to determine the effect of any
such declaration and any variations to this Agreement which are mutually
desirable.
     10.10 Waiver. No waiver by either party of any breach of any of the terms
or conditions herein provided to be performed by the other party shall be
construed as a waiver of any subsequent breach, whether of the same or of any
other term or condition hereof.
     10.11 Headings. Section headings contained in this Agreement are inserted
for convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
     10.12 Survival. Sections 4.3, 4.4, 5.5, 10.1, 10.5, 10.6, 10.7, 10.9,
10.10, 10.11, 10.12, 10.13 and 10.14, and Articles 3, 7, 8 and 9 shall survive
the termination or expiration of this Agreement in perpetuity and Section 10.4
shall survive for two (2) years following the termination or expiration of this
Agreement.
     10.13 Construction of Agreement. This Agreement shall be construed and the
respective rights of the parties shall be determined under and pursuant to the
laws of the State of Delaware, without regard to the principles of conflict of
laws thereof. The parties expressly exclude the applicability of the Convention
on Contracts for the International Sale of Goods.
     10.14 Relationship between Parties. Neither party to this Agreement shall
have the power to bind the other by any guarantee or representation that either
party may give, or in any other respect whatsoever, or to incur any debts or
liabilities in the name of or on behalf of the other party, and for purposes of
this Agreement, the parties hereto hereby acknowledge and agree that they shall
not be deemed partners, joint venturers, or to have created the relationship of
agency or of employer and employee between the parties.
 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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     IN WITNESS WHEREOF, this Supply Agreement has been executed in English in
four copies, each a duplicate original, of which two are for SELLER and two are
for PURCHASER, as of the day and year first above written.

           
MARTEK BIOSCIENCES CORPORATION
  MEAD JOHNSON & COMPANY    
 
        By: /s/ George P. Barker   By: /s/ James J. Jobe  
Name: George P. Barker
  Name: James J. Jobe  
Title: Sr. V.P. & Gen. Counsel
  Title: Sr. V.P. Global Supply Chain  

 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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EXHIBIT A
PURCHASE PRICE
During the Term of this Agreement, the pricing provisions set forth in Section 1
below shall amend the License Agreement by replacing Sections 2.2(i), 4.1(ii)
and 4.1(iii) of the License Agreement in their entirety. Following termination
by either party for any reason, these Sections of the License Agreement shall
once again be in full force and effect for actions occurring after such
termination.

1.   Purchase Price

PURCHASER shall pay SELLER compensation for the Martek Product (in oil form)
and/or the rights granted to PURCHASER with respect to the Martek Product in
accordance with this Exhibit A. From and after the Effective Date, provided that
PURCHASER is not in material breach of any provision of this Agreement, the
Purchase Price charged to PURCHASER hereunder for the Martek Product in any
country at any time shall be * that available at such time * for purchases of
the Martek Product for use in an Infant Formula Product in substantially similar
quantities and subject to substantially similar terms and conditions without the
prior written consent of PURCHASER or unless SELLER offers * to PURCHASER.
The prices set forth in this Exhibit A may be increased annually by SELLER by up
to *, and provided that any such percentage increases shall apply to *.
In the event SELLER limits the supply of the Martek Product to PURCHASER during
any calendar year during the Term (“Allocation Program”), any * of the Martek
Product supplied to PURCHASER, as compared to * placed by PURCHASER during such
year, as a result of the Allocation Program shall be * in the * set forth in
this Exhibit A for such year, * the purpose of determining the appropriate * for
such year.
Per Section 4.2.2.1 of the Agreement, in the event that PURCHASER terminates
this Agreement as to a particular jurisdiction within the Territory based on
Section 4.2.2, SELLER agrees to annually credit the * of PURCHASER for the
particular jurisdiction to the * used in determining PURCHASER’s * Schedule A
for future purchases of Martek Product.
Temporary reductions in the volume of Martek Product purchased by SELLER caused
by product recalls or other similar events shall not result in * of this
Agreement.
Purchase Price for annual volumes of Martek Product will be calculated as
follows:
Pricing Alternative A:
Purchase Price for annual of Martek Product up to * will be calculated as
follows:
 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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              Annual Volume   Price per Unit of   Annual Volume   Price per
Kilogram of (Units)   Martek Product   (Kilograms)   Martek Product
*
  *   *   *
*
  *   *   *
*
  *   *   *
*
  *   *   *

Purchase Price for * over *, which price will apply only to *, and not to *,
will be calculated as follows:

              Annual Volume   Price per Unit of   Annual Volume   Price per
Kilogram of (Units)   Martek Product   (Kilograms)   Martek Product
*
  *   *   *
*
  *   *   *
*
  *   *   *
*
  *   *   *

Royalty: None
Additional conditions:
1. Martek Product ordered from SELLER must comprise one hundred percent (100%)
of any and all Omega-3 and Omega-6 Long-Chain Polyunsaturated Fatty Acids
(“LCPUFA”) contained in any quantity of any Mead Johnson Product (for purposes
of this Exhibit A, the term “LCPUFA” shall mean any fatty acid, other than
linoleic acid, gammalinolenic acid and alphalinolenic acid, which contains at
least eighteen (18) carbon atoms and at least two (2) double bonds).
2. Any Mead Johnson Products for sale in the United States shall have an Omega-3
and Omega-6 LCPUFA composition of: (i) * of total fatty acids as DHA and * of
total fatty acids as ARA and (ii) * of total fatty acids as ARA and DHA as set
forth in Section 5. 5 and 5.5.1 of the Agreement.
Pricing Alternative B:
If, after the * of the Effective Date of this Agreement (i) any Mead Johnson
Products for sale in the United States shall have an Omega-3 and Omega-6 LCPUFA
composition of: (i) * of total fatty acids as DHA and * of total fatty acids as
ARA and (ii) * of total fatty acids as ARA and DHA and (ii) PURCHASER’s total
annual volumes of the Martek Products actually purchased fall below *, SELLER
may, at SELLER’s sole option, for SELLER’s ARA and DHA up to the following:

              Annual Volume   Price per Unit of   Annual Volume   Price per
Kilogram of (Units)   Martek Product   (Kilograms)   Martek Product
*
  *   *   *
*
  *   *   *
*
  *   *   *

 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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EXHIBIT A-1
The example set forth below illustrates how the per kilogram pricing will be
calculated as described in Section 2.3.1:
Annual Forecast: *
Price per kg for annual volumes of * – *.: *
Price per kg for annual volumes from * to *.: *
Sub-total for the first *. (* x *): *
Sub-total for the * above * (* x *): *
Total based on an Annual Forecast of *.: *
Based on the Annual Forecast, the * to be charged per *: *
*
 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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EXHIBIT B
ADDITIONAL AMENDMENTS TO LICENSE AGREEMENT
1. The License Agreement is hereby amended by adding the following at the end of
Article I: “Designee” shall mean any entity that is designated by Licensee, and
is approved by Licensor in writing, at Licensor’s discretion and subject to
Licensor ‘s right to withdraw such approval in its discretion, to order
quantities of the Martek Product from Licensor pursuant to any supply agreement
then in effect between Licensee and Licensor solely for (a) * approved by
Licensor and (b) * for use in accordance with the terms of the License
Agreement.
2. Section 2.3 of the License Agreement is hereby amended by adding the
following to the end of the section:
Notwithstanding the foregoing, Licensee may transfer the Martek Product, or may
direct Licensor to transfer the Martek Product, to any Designee solely for (a) *
that may be approved in writing by Licensor and (b) * for use in accordance with
the terms of the License Agreement. The parties agree that any Designee may
perform said * outside of the Territory.
3. Section 4.4 of the License Agreement is hereby amended by deleting all
language after the first sentence thereof.
4. Section 11.1 of the License Agreement is hereby amended by adding the
following to the end of the section:
In addition, Licensee shall indemnify, defend and hold harmless Licensor, its
Affiliates and Licensor’s and its Affiliates’ directors, officers, employees and
agents from and against all losses as described above asserted against them by
any Designee relating to this Agreement or any Supply Agreement between the
parties hereto.
 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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EXHIBIT C
MARTEK PRODUCT SPECIFICATIONS
*
 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

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EXHIBIT D
LICENSED PATENTS
(as of 5/8/2006)
“Microbial Oil Mixtures and Uses Thereof”

              Country   Status   Application No.   Publ. or Patent No.
Australia
  Granted 7 Nov 95   12392/92   661,297
 
           
*
  *   *    
 
           
Canada
  Granted 15 Dec 98   2,101,274   2,101,274
 
           
Europe, (designates Austria, Belgium, Denmark, France, Germany, Great Britain,
Greece, Italy, Luxembourg, Monaco, Netherlands, Spain, Sweden, and Switzerland/
Liechtenstein)
  Granted 18 Apr 01
Opposition Pending

*   92904388.3

*   0 568 606
 
           
Indonesia
  Granted 20 Jun 95   P 001678   ID 0000174
 
           
Israel
  Granted 1 Apr 96   100733   100733
 
  Granted 14 Oct 97   114253   114253
 
           
Mexico
  Granted 6 Jan 97   9200320   183638
 
           
New Zealand
  Granted 16 Feb 96   241359   241359
 
           
OPAI (French Africa)
  Granted 29 Dec 97   PV 60396   10348
 
           
PCT
  Nationalized
Published 6 Aug 92   PCT/US92/00522   WO92/12711
 
           
Philippines
  Granted 23 Nov 01   43812   1992-43812
 
           
Russia
  Granted 27 Oct 97   93052410.13   2,093,996
 
           
Singapore
  Granted 10 Jan 02   9608986.7   49307
 
           
South Africa
  Granted 28 Oct 92   92/0452   92/0452
 
           
South Korea
  Granted 9 Jan 02   1993-0702205   321543
 
  Granted 20 Mar 01   2000-7003480   292103
 
  Granted 25 Oct 01   2001-7002283   313987
 
           
Sri Lanka
  Granted 17 Jun 94   10526   10526
 
           
United States
  Granted 20 Dec 94   07/944,739   5,374,657
 
  Granted 27 Aug 96   08/358,474   5,550,156

 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

- 23 -

--------------------------------------------------------------------------------

 

“Arachidonic Acid and Methods for the Production and Use Thereof”

              Country   Status   Application No.   Publ. or Patent No.
Australia
  Granted 21 Nov 95   12355/92   661,674     Granted 02 Dec 1999   48542/96  
713,567
 
           
*
  *   *         *   *    
 
           
Canada
  Granted 2 Apr 02   2,101,273   2,101,273
 
  Granted 28 May 02   2,209,513   2,209,513
 
           
China
  Published 11 Mar 98   96192002.2   CN1175976A
 
  Published 16 Nov 05   05071295.   CN1696300A
 
           
Eurasia
  Granted 28 Aug 00   97-0090US   1036
 
           
Europe, (designates Austria, Belgium, Denmark, France, Greece, Germany, Great
Britain, Ireland, Italy, Luxembourg, Monaco, Netherlands, Portugal, Spain,
Sweden, and Switzerland/ Liechtenstein)
  Granted 6 Sep 00
Granted 2 May 03
Opposition Pending

Granted 5 Oct 05
(Div of EP 0 568 608)

Published 10 Sep 03
(Div of EP 0 800 584)   92904428.7
96904435.3

99204324.0

03076254.6
  0 568 608
0 800 584

1 001 034

1 342 787

 
           
*
  *   *    
 
           
Hong Kong
  Published 21 May 04   4101355.3   HK 1058528A
 
           
Indonesia
  Granted 22 Dec 95   P-001679   ID 0000393
 
           
Israel
  Granted 1 Oct 95   100,732   100,732
 
           
* 
  *   *      
Mexico
  Granted 6 Jul 01   9200301   202940
 
  *   *    
 
           
New Zealand
  Granted 8 Feb 95   241,358   241,358
 
           
*
  *   *    
 
           
OAPI (French Africa)
  Granted 15 Sep 94   PV 60397   09909
 
           
PCT
  Published 6 Aug 1992   PCT/92US/00517   WO 92/13086
 
  Published 11 Jul 1996   PCT/US96/00182   WO 96/21037
 
           
Philippines
  Granted 22 Aug 02   1992 -43811   43811
 
           
Poland
  Granted 14 Jan 04   P321,208   187694
 
           
Russia
  Granted 29 Jan 98   93-054772   2120998
 
           
Singapore
  Granted 30 Mar 99   9703038.1   42669
 
           
South Korea
  Granted 1 Feb 00        
 
  Granted 29 Jun 01   1993-702193   254300
 
  Opposition Pending   1999-7008800   302036
 
  *   *    
 
           
South Africa
  Granted 28 Oct 92   92/0454   92/0454
 
           
Sri Lanka
  Granted 27 Oct 93   10527   10527
 
           
United States
  Granted 19 Aug 97   08/367,881   5,658,767

 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

- 24 -

--------------------------------------------------------------------------------

 

“Docosahexaenoic Acid, Methods for its Production
and Compounds Containing the Same”

              Country   Status   Application No.   Publ. or Patent No.
Australia
  Granted 15 Jun 95   73302/91   660,162
 
           
*
  *   *    
 
           
Canada
  Granted 2 May 00   2,076,018   2,076,018
 
           
Europe (designates Austria, Belgium, Denmark, France, Greece, Germany, Great
Britain, Italy, Luxembourg, Netherlands, Romania, Spain, Sweden, and
Switzerland/ Liechtenstein)
  Granted 22 Apr 1998   91903945.3   0 515 460
 
           
Israel
  Granted 16 Jun 95   97,126   97,126
 
  Granted 11 Jun 98   111,174   111,174
 
           
Japan
  Granted 25 Sep 98   504147/91   2830951
 
  Published   10-177561 (1998)   11-092783
 
  *   *  
 
  *   *  
 
           
PCT
  Nationalized   PCT/US91/00733   WO 91/11918
 
  Published 22 Aug 1991    
 
           
Philippines
  Granted 3 Nov 98   I 41991   31568
 
  Granted 26 May 03   I 54562   1-1996-54562
 
  Granted 5 Aug 03   I 54563   1-1996-54563
 
           
South Korea
  Granted 8 Jan 01   91-701943   285870
 
  Granted 22 Dec 00   98-708207   284731
 
  Granted 13 Apr 01   7011087   294293
 
           
United States
  Granted 14 Mar 95   07/916,874   5,397,591
 
  Granted 18 Apr 95   07/479,135   5,407,957
 
  Granted 20 Feb 96   08/386,079   5,492,938
 
  Granted 27 Jan 98   08/583,845   5,711,983

 

*   The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.