Exhibit 10.02
May 18, 2006
Henry “Pete” Linsert, Jr.
Martek Biosciences Corporation
6480 Dobbin Road
Columbia, MD 21045
Dear Pete:
          On behalf of my fellow Board members and myself, please accept my
congratulations on a spectacular 17 year career as Chief Executive Officer of
Martek. Your diligence, vision and leadership have been essential to the growth
and vibrancy of Martek. Similarly, your foresight in grooming Steve Dubin to be
your successor is an achievement of which the entire Board is most appreciative
and which will benefit Martek in the years to come. It has been a pleasure to be
your colleague on the Board for the last few years and I look forward to our
future endeavors.
          Now to the business at hand. This letter is a follow-up to the
previous discussions that we have had regarding your indication to us that you
will retire as Chief Executive Officer of Martek Biosciences Corporation (the
“Company”) as of July 1, 2006 and your continued employment with the Company
after your retirement. It is intended to supersede (except as provided below)
the Employment Agreement between the Company and you dated May 4, 1990 (the
“Employment Agreement”) and any other employment agreement or arrangement
between the parties (but does not affect the terms of any stock options issued
to you).
     1. Employment. Effective July 1, 2006 (the “Effective Date”), by mutual
agreement the Employment Agreement is terminated and will have no further
effect, except that the provisions of Section 2 thereof regarding competition
and confidential information will continue to remain in full force and effect
during the Service Term (as defined in Section 4 below) and, to the extent
provided therein, after you leave the employ of the Company. As of the Effective
Date the Company engages you to serve as an employee of the Company in a
non-executive capacity, and you agree to serve the Company, during the Service
Term, and subject to the terms and conditions, set forth in this Letter
Agreement. As an employee, you shall report directly to the President and Chief
Executive Officer. Nothing herein shall affect your service as a member of the
Board of Directors (the “Board”) or, at the pleasure of the Board, as Chairman
thereof.
     2. Duties. During the Service Term, you shall perform such duties as are
mutually agreed among you, the Board and the Chief Executive Officer.
     It is understood that in performing these duties you will not be expected
to devote more than one-half of your working time to the business of the Company
and its subsidiaries.

 

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Henry “Pete” Linsert, Jr.
May 18, 2006
Page 2
     3. Salary, Bonus and Benefits. The Board, in its sole discretion, shall
make all decisions related to your salary and the payment of bonuses, if any.

  (a)   Base Salary. During the Service Term, the Company will pay you a base
salary (the “Annual Base Salary”) as the Board may designate from time to time.
The initial Annual Base Salary shall be at the rate of $285,000 per annum in
accordance with the Company’s customary payroll practices (minus all applicable
withholdings). The Annual Base Salary may be increased, but not decreased, from
time to time during the Service Term by the Board in its sole discretion.
Further, Steve Dubin, in his sole discretion, shall have the authority to
increase the Annual Base Salary in an appropriate manner in the event that you
devote more than one-half of your working time to the business of the Company
and its subsidiaries. The compensation provided for in this letter agreement
includes all compensation to be paid to you during the Service Term for your
service as both an employee of the Company and as a member of the Board of
Directors of the Company and you will not receive any fees like those paid to
members of the Board who are not employees of the Company.     (b)   Bonus and
Stock Incentive Plans. While you will not be a participant in the Company’s
Management Cash Bonus Incentive Plan (the “Bonus Plan”), the Board may, in its
sole discretion, pay you a bonus, pro-rated for the period of November 1, 2005
to June 30, 2006, on the same basis that bonus payments are made to Eligible
Employees under the Bonus Plan for the Company’s FY2006. The Board may also make
equity grants to you under the Company’s stock incentive plans in the Board’s
sole discretion.     (c)   Benefits.

        (i) You and, to the extent eligible, your dependents, shall continue to
be entitled to participate in and receive all benefits under any welfare or
pension benefit plans and programs made available to you prior to July 1, 2006
(including, without limitation, medical, disability and life insurance programs,
and accidental death and dismemberment protection), subject, however, to the
generally applicable eligibility and other provisions of the various plans and
programs and laws and regulations in effect from time to time. You will be
entitled to six weeks paid time off during the Service Term.
        (ii) The Company shall continue to provide to you an office and
secretarial services during the Service Term and will reimburse you for all
reasonable, ordinary and necessary business, travel or entertainment expenses
incurred during the Service Term in the performance of your services hereunder
in accordance with the policies of the Company as they are from time to time in
effect.
        (iii) Notwithstanding anything to the contrary contained above, the
Company shall be entitled to terminate or reduce any employee benefit enjoyed by
you pursuant to the

 

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Henry “Pete” Linsert, Jr.
May 18, 2006
Page 3
provisions of this Section 3(c), if such reduction is part of an
across-the-board reduction applicable to all employees of the Company who are
entitled to such benefit.
     4. Employment Term. Unless your employment is sooner terminated as a result
of your resignation or termination in accordance with the provisions of
Section 5 below, your term of employment (“Service Term”) under this Agreement
shall commence on July 1, 2006 and shall end on June 30, 2007.
     5. Termination. Your employment with the Company shall cease upon the first
of the following events to occur (each a “Termination Date”):

  (a)   Your death.     (b)   Your disability, which means your incapacity due
to physical or mental illness such that you are unable to perform the essential
functions of your previously assigned duties where (1) such incapacity has been
determined to exist by either (x) the Company’s disability insurance carrier or
(y) by the concurring opinions of two licensed physicians (one selected by the
Company and one by you), and (2) the Board has determined, based on competent
medical advice, that such incapacity will likely last for a continuous period of
at least six (6) months. Any such termination for disability shall be only as
expressly permitted by the Americans with Disabilities Act.     (c)  
Termination by the Company effective (i) upon delivery to you of written notice
from the Board that you have been terminated with cause, or (ii) 30 days’
following delivery to you of written notice from the Board that you have been
terminated without cause.     (d)   Your voluntary resignation by the delivery
to the Board of a written notice of resignation at least 30 days prior to the
resignation effective date.     (e)   Expiration of the Service Term under
Section 4 of this letter.

     6. Rights on Termination.
          In the event your employment is terminated, the Company will pay your
Annual Base Salary and all other benefits up to and including the Termination
Date. In the case of a termination for any reason other than a termination by
the Company without cause prior to the expiration of the Service Term, the
Company’s obligations for such amounts will cease as of the Termination Date. In
case of a termination of your employment by the Company without cause prior to
the expiration of your Service Term, the Company will continue to pay your
Annual Base Salary through the end of the Service Term, assuming no further
renewals thereof, but shall not pay or provide any additional amounts after the
Service Term. For purposes hereof, “cause” shall mean gross negligence,
dishonesty, fraud, misappropriation or intentional material damage to the
property or business of the Company, commission of a felony, substantial failure
by you to perform your duties in compliance with this letter after notice to you
by the Board specifying such failure, or

 

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Henry “Pete” Linsert, Jr.
May 18, 2006
Page 4
any other breach by you of the provisions hereof or Section 2 of the Employment
Agreement, all as determined in the good faith business judgment of the Board.
     If this is in accordance with your understanding, please indicate with your
signature below. Again, the Board extends to you its sincere appreciation for
your distinguished service as the Company’s Chief Executive Officer.

       
 
  Very truly yours,  
 
     
 
  /s/ Robert J. Flanagan  
 
  Robert Flanagan,  
 
  Chairman, Nominating and Corporate  
 
     Governance Committee  

Accepted and agreed to
as of the date first above written

       
/s/ Henry Linsert, Jr.
   
 
Henry “Pete” Linsert, Jr.