exv10w57



 



EXHIBIT 10.57


THIRD AMENDMENT TO SECURITY AGREEMENT



          This
THIRD AMENDMENT TO SECURITY AGREEMENT (this “Third
Amendment”) is
made as of the 5th day of September, 2003, by and between Martek Biosciences
Kingstree Corporation, a Delaware corporation (“Martek Kingstree”), and
Genencor International, Inc., a Delaware corporation
(“Genencor”).



WITNESSETH



          FermPro Manufacturing, LP (“FermPro”), a Georgia limited partnership,
Astral Technologies, Inc., a South Carolina corporation and the general partner
of FermPro, and Martek Biosciences Corporation, a Delaware corporation, on
behalf of itself and Martek Kingstree, have entered into that certain Asset
Sale and Purchase Agreement dated as of July 21, 2003 (the “Fermpro Asset Sale
and Purchase Agreement”) pursuant to which Martek Kingstree assumed the
obligations of Fermpro under the “Note”, the “Mortgage”, the “Security
Agreement”, the “Non Compete Covenant in Assignee’s Favor” and the “TMA”, each
as defined in the Security Agreement by and between Fermpro and IBIS Limited
Partnership (“IBIS”), a North Carolina limited partnership, dated April 27,
1994, as amended on May 4, 1994 and April 3, 1996 (as amended, the “Security
Agreement”). To facilitate the assumption of these documents, it is necessary
to amend and modify certain terms of the Security Agreement, and Martek
Kingstree and Genencor, as assignee of IBIS, have entered into this Third
Amendment for the purposes of modifying and amending in accordance with the
terms of this Third Amendment, the Security Agreement.



     NOW, THEREFORE, in consideration of the premises set forth above and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, each to the other, the parties do
hereby agree as follows:


          1. Modifications to Security Agreement.



          (a) The Security Agreement is hereby amended by adding the following
two paragraphs to the end of the recitals:




		
	 	     “FermPro Manufacturing, LP (“FermPro”), a Georgia limited
partnership, Astral Technologies, Inc., a South Carolina corporation and
the general partner of FermPro, and
Martek Biosciences Corporation, a Delaware corporation, on behalf of
itself and Martek Biosciences Kingstree Corporation (“Martek Kingstree”),
have entered into that certain Asset Sale and Purchase Agreement dated as
of July 21, 2003 (the “Fermpro Asset Sale and Purchase Agreement”)
pursuant to which Martek Kingstree has assumed the obligations of Fermpro
under the Note, Mortgage, Security Agreement, Non Compete



 






 

		
	 	Covenant in Assignee’s Favor and the TMA. To facilitate the assignment
of these documents, it is necessary to amend and modify certain terms of
the Security Agreement.






		
	 	     Hereinafter, references to the Security Agreement shall mean the
Security Agreement as amended by the Third Amendment to the Security
Agreement by and between Martek Kingstree and Genencor dated the date
hereof; references to the Mortgage shall mean the Mortgage as amended by
the Third Amendment to Purchase Money Mortgage, Assignment of Rents and
Leases, Security Agreement and Fixture Filing dated the date herewith,
and filed or to be filed of record in the Office of the Clerk of Court of
Williamsburg County, South Carolina; references to the Note shall mean
the Second Amended and Restated and Substituted Promissory Note dated the
date hereof payable to the order of Genencor; references to the Purchaser
shall mean Martek Kingstree; and, references to the Seller shall mean
Genencor.”



          (b) Section 1(a) is hereby amended and restated in its entirety to read as
follows:



          “Collateral” shall mean those assets as set forth on Schedule 1(a).



          (c) Section 1(b) is hereby deleted in its entirety.



          (d) Section 1(c) is hereby deleted in its entirety.



          (e) Section 1(d) is hereby deleted in its entirety.



          (f) Section 1(e) is hereby deleted in its entirety.



          (g) Section (2) is hereby amended and restated in its entirety
to read as follows:




		
	 	     “As security for the full and punctual payment of the Note and the
performance by the Purchaser of all of its obligations under this
Security Agreement, the Purchaser hereby grants to Seller, its
successors and assigns, a continuing security interest in the
Collateral.”



          (h) When the word “Equipment” appears in Section 4 it shall
mean “Equipment” as defined in the Uniform Commercial Code of South
Carolina.



          (i) Section 6 is hereby amended and restated in its entirety
to read as follows:



          “Section 6. [Intentionally deleted]”




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          (j) Section 9 is hereby amended and restated in its entirety to read as
follows:




		
	 	“This Security Agreement shall terminate and the lien evidenced
hereby shall be released by Seller when the Note has been fully
paid and performed. Upon the termination of this Security Agreement
or Seller’s release of any security interest in the Collateral
evidenced hereby, Seller shall take whatever action may be
necessary, including filing the appropriate statements under the
UCC to effect such termination or release.”



          (k) Section 10(b) is hereby amended and restated as follows:




		
	 	“All rights of Seller shall inure to the benefit of its successors
and assigns, and all obligations of the Purchaser shall bind its
successors and assigns. Seller may not assign this Security
Agreement and the rights and interests herein without the prior
written consent of the Purchaser.”



          (1) The Security Agreement is hereby amended to include a new
Section 11 which shall read as follows:



          “Section 11.




		
	 	     (a) Within 30 days of the end of each fiscal quarter,
Purchaser shall deliver to Seller a report (a “Collateral
Report”) setting
forth the book value of all
Collateral valued in accordance with US GAAP (the “Collateral
Value”), and the
principal amount outstanding on the Note (the “Loan
Balance”).
Upon the request
of the Seller following receipt of a Collateral Report
indicating that the Loan
Balance exceeds the Collateral Value by more than $100,000,
Purchaser, at its own
expense, shall within 15 days after such request, duly execute
and deliver to Seller
such amendments to Schedules l(a), granting a first priority
lien on any of
Purchaser’s hereinafter acquired Equipment (as such term is
defined in the Uniform
Commercial Code of South Carolina), which shall secure the
obligations under the
Note, such additional property at the time of granting of the
security interest therein
to have a Collateral Value at least equal to the difference
between the then Loan
Balance and the Collateral, as set forth on the most recent
Collateral Report.




		
	 	     (b) During the term of this Security Agreement, Purchaser
shall keep hereinafter acquired Equipment (as such term is defined in the
Uniform Commercial Code of South Carolina) free and clear of any lien,
encumbrance, pledge or security interest, sufficient to cover any
difference between the Loan Balance and the Collateral Value, unless such lien,
encumbrance, pledge or security
interest is or would be subordinated to any security interest
granted in this Security
Agreement.



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	 	     (c) Purchaser shall take such other actions (including,
without limitation, the filing of Uniform Commercial Code
financing statements) as may be reasonably necessary to vest in
Seller valid and subsisting first priority liens on the properties
purported to be subject to the Security Agreement as
supplemented.”



     2.     Effect of Amendment. This Third Amendment shall modify and amend the
Security Agreement as set forth herein. Except as expressly modified and
amended hereby, or
unless the context requires otherwise, the Security Agreement shall be and
remain in full force and
effect. Any reference in any of the Note, Mortgage, Security Agreement or
TMA (or any exhibits
thereto) to “the Security Agreement” shall be deemed to mean and refer to
the Security
Agreement as modified hereby.


     3.     Conflict of Terms. In the event of a conflict between the terms of
this Third
Amendment and the Security Agreement, the terms of this Third
Amendment shall govern.


     4.     Successors
and Assigns. Whenever in this Third Amendment any of the
parties
hereto are referred to, such reference shall be deemed to include the
successors, assigns, heirs or
personal representatives of such party.


     5.     Counterparts. This Third Amendment may be executed by Martek Kingstree
and
Genencor on separate counterparts, and said counterparts taken together
shall constitute one and
the same instrument.


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     IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be executed by their duly authorized officers, all as of the day and year first
above written.



	 	 	 	 	 
	 	Purchaser:
	 	 	 	 	 
	 	
MARTEK BIOSCIENCES KINGSTREE

CORPORATION	 	 
	 
	 	By:	
/s/ GEORGE P. BARKER	 	 
	 	 	

	 	 
	 	Name:	
GEORGE P. BARKER	 	 
	 	Title:	
SR. V.P. & GENERAL COUNSEL	 	 
	 	 	 	 	 
	 	
Seller:  	 	 	 
	 	 	 	 	 
	 	
GENENCOR INTERNATIONAL, INC.
	 	 	 	 	 
	 	By:	
 /s/ Carole B. Cobb	 	 
	 	 	
    
	 	 
	 	Name:	
 Carole B. Cobb	 	 
	 	Title:	
 Senior Vice President,

Global Supply	 	 



[THIRD AMENDMENT TO SECURITY AGREEMENT]



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SECOND AMENDMENT TO

SECURITY AGREEMENT



     This SECOND AMENDMENT TO SECURITY AGREEMENT (this “Amendment”) is made as
of the 3rd day of April, 1996, by and between FermPro Manufacturing, LP, a
Georgia limited partnership (hereinafter referred to as “Purchaser”), and IBIS
Limited Partnership, a North Carolina limited partnership (hereinafter
referred to as “Seller”).


WITNESSETH:



     Purchaser has purchased from Seller pursuant to an Asset
Purchase Agreement dated as of April 21, 1994 (the “Original Asset
Purchase Agreement”) as amended by a First Amendment to Asset
Purchase Agreement dated May 4, 1994 (as amended, the “Asset
Purchase Agreement”) certain personal property described in a
Security Agreement dated April 27, 1994 and amended May 4, 1994
(collectively, the “Security Agreement”) and also certain real
property more specifically described in Exhibit A to the Purchase
Money Mortgage, Assignment of Rents and Leases, Security Agreement
and Fixture Filing dated April 27, 1994 and duly recorded in Book
338 at Page 96 in the Office of the Clerk of Court of Williamsburg
County, South Carolina, as amended by the First Amendment to
Purchase Money Mortgage, Assignment of Rents and Leases, Security
Agreement and Fixture Filing dated as of May 4, 1994 and duly
recorded in Book 349 at Page 271 in the Office of the Clerk of
Court of Williamsburg County, South Carolina (as amended, the
“Mortgage”), including all buildings, structures, and improvements
thereon, together with certain fixtures attached thereto, and in
payment of the purchase price has executed and delivered to Seller
an Amended and Restated and Substituted Promissory Note, dated as
of May 4, 1994 (the “Amended Note”), which amends and restates the
terms of a Purchase Money Promissory Note in the principal amount
of $10,000,000, dated April 27, 1994 as set forth therein. The
Mortgage and the Security Agreement are herein collectively
referred to as the “Collateral Documents”.


     Seller has entered into a Purchase Agreement with Genencor International,
Inc., a Delaware corporation (“Assignee”), pursuant to which Seller has
transferred the Amended Note and has agreed to transfer and assign the
Collateral Documents to Assignee. To facilitate the assignment it is necessary
to amend and modify certain of the Purchase Agreements (as defined in the
Security Agreement) and the Security Agreement, and Seller, Purchaser and
Assignee Gist-Brocades International B.V., Gist-Brocades B.V. and
Gist-Brocades BSD B.V. have entered into a Multi-Party Agreement dated April
3, 1996, agreeing to such amendments and modifications (the “Multi-Party
Agreement”). Seller and Purchaser desire to


 






 


enter into this Second Amendment for the purpose of modifying and amending the
Security Agreement in accordance with the terms of the Multi-Party Agreement.


      NOW, THEREFORE, in pursuance of the Security Agreement and in
consideration of the premises set forth above and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, each to the other, the parties do hereby agree as follows:


      1.     Modifications to Security Agreement. (a) The Security Agreement is
hereby amended by deleting the first paragraph of the recitals and inserting
in lieu thereof:



		
	 	“Purchaser has purchased from Seller pursuant to an Asset
Purchase Agreement between Purchaser and Seller dated as of
April 21, 1994, as amended by a First Amendment to Asset
Purchase Agreement dated as of May 4, 1994 (as amended, the
“First Amended Asset Purchase Agreement”) and as further
amended by the Multi-Party Agreement dated as of April 3, 1996
among Seller, Purchaser, Genencor International, Inc., a
Delaware corporation (“Assignee”), Gist-Brocades International
B.V., a Netherlands corporation (“GBI”), Gist-Brocades B.V.
(“G-B BV”), a Netherlands corporation, and Gist-Brocades BSD
B.V. (“GB-BSD”), a Netherlands corporation (the “Multi-Party
Agreement”) (the First Amended Asset Purchase Agreement as
further amended, the “Asset Purchase Agreement”) (i) certain
personal property described in a Security Agreement dated
April 27, 1994 between Purchaser and Seller, as amended as of
May 4, 1994 (as amended, the “First Amended Security
Agreement”) and as further amended by a Second Amendment to
Security Agreement dated as of April 3, 1996 (the First
Amended Security Agreement as further amended, the “Security
Agreement”) and (ii) certain real property more specifically
described in Exhibit A to the Purchase Money Mortgage,
Assignment of Rents and Leases, Security Agreement and Fixture
Filing dated April 27, 1994 and duly recorded in Book 338 at
Page 96 in the office of the Clerk of Court of Williamsburg
County, South Carolina, as amended by the First Amendment to
Purchase Money Mortgage, Assignment of Rents and Leases,
Security Agreement and Fixture Filing dated as of May 4, 1994
and duly recorded in Book 349 at Page 271 in the office of the
Clerk of Court of Williamsburg County, South Carolina (as
amended, the “First Amended Mortgage”) , and further amended by
the Second Amendment to Purchase Money Mortgage, Assignment of
Rents and Leases, Security Agreement and Fixture Filing dated
as of April 3, 1996, filed or to be filed for record in the
office of the Clerk of Court of Williamsburg County, South
Carolina (the First Amended Mortgage as further amended, the
“Mortgage”) , including all buildings, structures, and
improvements thereon, together with certain fixtures attached
thereto, and in payment of the purchase price has executed and
delivered to Seller a Purchase Money Promissory Note dated
April 27, 1994 in the principal amount of $10,000,000 which



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	 	has been amended, restated and substituted pursuant to the terms of an
Amended and Restated and Substituted Promissory Note (the “Amended Note”)
in the principal amount of $10,000,000.00 dated as of May 4, 1994, as
assigned to Assignee pursuant to the Allonge dated June 2, 1995 and as
amended by the Second Amendment to Note, dated as of April 3, 1996 (the
“Note Amendment”), among Purchaser, Seller and Assignee (the Amended Note
together with the Second Amendment, hereinafter, the “Note”). Purchaser,
Seller, Assignee, Gist-Brocades International B.V., Gist-Brocades B.V. and
Gist-Brocades BSD B.V. have entered into the Multi-Party Agreement pursuant
to which the parties have agreed to modify and amend the First Amended
Asset Purchase Agreement, the Amended Note, the First Amended Mortgage and
the First Amended Security Agreement. Pursuant
 to the Multi-Party
Agreement, Seller is affirming its assignment to Assignee of the Note and
assigning to Assignee the Mortgage, the Security Agreement, the Toll
Manufacturing Agreement dated as of April 27, 1994, between Purchaser and
Gist-Brocades BSD B.V. (“G-B BSD”) (the “TMA”) and a portion of the
covenant not to compete in the Asset Purchase Agreement, such assigned
portion being set forth in Section 11.2 of the Asset Purchase Agreement, as
amended by the Multi-Party Agreement, and being referred to herein as the
“Noncompete Covenant in Assignee’s Favor.” It has been agreed that this
Security Agreement secures all of the obligations of Purchaser under the
Note, the Mortgage, the Noncompete Covenant in Assignee’s Favor, and the
TMA. The Note, the Mortgage, the Noncompete Covenant in Assignee’s Favor
and the TMA are hereinafter referred to as the “Purchase Documents.”



      (b)  The Security Agreement is hereby amended by deleting the
definition of “Ancillary Agreements” from Section 7 and by deleting
subparagraph (c) from the term “Event of Default” and inserting in
lieu thereof:



		
	 	“(c) Purchaser shall default in the due and punctual payment or
performance of any obligation under the Purchase Documents after
any notice of such default by another party thereto required to be
given thereunder has been given and any applicable period of grace
thereunder shall have expired;”



      (c)  The Security Agreement is hereby amended by deleting the
phrase “, including Gist-Brocades B.V.,” from the last sentence in
Section 10(b).


     2.     Effect of Amendment. This Amendment shall modify and amend the
Security Agreement as set forth herein. Except as expressly modified and
amended hereby, or unless the context requires otherwise, the Security
Agreement shall be and remain in full force and effect. Any reference in any
of the Purchase Documents (or any exhibits thereto) to “the Security
Agreement” shall be deemed to mean and refer to the Security Agreement as
modified hereby.


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     3.     Conflict of Terms. In the event of a conflict between
the terms of this Amendment and the Security Agreement, the terms
of this Amendment shall govern.


     4.     Successors and Assigns. Whenever in this Amendment any
of the parties hereto are referred to, such reference shall be
deemed to include the successors, assigns, heirs or personal
representatives of such party.


     5.     Counterparts. This Amendment may be executed by
Purchaser and Seller on separate counterparts, and said
counterparts taken together shall constitute one and the same
instrument.


4






 


     IN WITNESS WHEREOF, Purchaser and Seller have caused this Amendment to be
executed by their duly authorized officers, all as of the day and year first
above written.



	 	 	 	 	 	 	 
	 	 	Purchaser:	 	 
	 	 	 	 	 	 	 
	 	 	FERMPRO MANUFACTURING, LP
	 	 	 	 	 	 	 
	 	 	By:	 	Astral Technologies, Inc.,
	 	 	 	 	   Its General Partner
	 	 	 	 	 	 	 
	 	 	 	 	   By:
	/s/ James W. Godfrey Jr.
	 	 	 	 	 	

	 	 	 	 	   Name:	 	James W. Godfrey Jr.
	 	 	 	 	   Title:
	 	PRESIDENT
	 	 	 	 	 	 	 
	 	 	Seller:	 	 
	 	 	 	 	 	 	 
	 	 	IBIS LIMITED PARTNERSHIP
	 	 	 	 	 	 	 
	 	 	By:	 	   Gist-Brocades Agro Business
	 	 	 	 	   Group B.V., General Partner
	 	 	 	 	 	 	 
	 	 	 	 	   By:
	 	/s/ A. L. de Haas
	 	 	 	 	 	 	

	 	 	 	 	 	 	A. L. de Haas



5






 


FIRST AMENDMENT TO

SECURITY AGREEMENT



     This FIRST AMENDMENT TO SECURITY AGREEMENT (this “Amendment”) is made as
of the 4th day of May, 1994, by and between FermPro Manufacturing, LP, a
Georgia limited partnership (hereinafter referred to as the “Purchaser”) and
IBIS Limited Partnership, a North Carolina limited partnership (hereinafter
referred to as the “Seller”).


WITNESSETH:



     The Purchaser has purchased from Seller pursuant to an Asset Purchase
Agreement dated as of April 21, 1994 (the “Original Asset Purchase Agreement”)
as amended by a First Amendment to Asset Purchase Agreement dated the date
hereof (as amended, the “Asset Purchase Agreement”) certain personal property
described in a Security Agreement dated April 27, 1994 and amended of even
date herewith (collectively, the “Security Agreement”) and also certain real
property more specifically described in Exhibit A to the Purchase Money
Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture
Filing and duly recorded in Book 338 at Page 96 in the Office of the Clerk of
Court of Williamsburg County, South Carolina as amended by the First Amendment
to Purchase Money Mortgage, Assignment of Rents and Leases, Security Agreement
and Fixture Filing duly recorded or to be recorded in the Office of the Clerk
of Court of Williamsburg County, South Carolina (as amended, the “Mortgage”),
including all buildings, structures, and improvements thereon, together with
certain fixtures attached thereto, and in payment of the purchase price has
executed and delivered to Seller a purchase money promissory note in the
principal amount of $10,000,000.00, such Promissory Note dated April 27, 1994
(the “Original Note”).


     The Purchaser and Seller have agreed to modify and amend the Original
Purchase Agreement in accordance with the terms of a First Amendment to
Purchase Agreement dated of even date herewith between the Purchaser and
Seller (the “First Amendment to Purchase Agreement”). In connection therewith,
the Purchaser has executed and delivered an Amended and Restated and
Substituted Promissory Note, of even date herewith (the “Amended Note”), which
amends and restates the terms of the Original Note as set forth therein.


     Purchaser and Seller desire to enter into this First Amendment for the
purpose of modifying and amending the Security Agreement in accordance with
the terms of the First Amendment to the Purchase Agreement and the Amended
Note.


     NOW, THEREFORE, in pursuance of the Security Agreement and in
consideration of the premises set forth above and other good and valuable
consideration, the receipt and sufficiency of which are


 






 



hereby acknowledged by the parties hereto, each to the other, the parties do
hereby agree as follows:



      1.     Amendment to Security Agreement. The Security Agreement is hereby
amended by deleting the first paragraph of the recitals and inserting in lieu
thereof:



		
	 	“The Purchaser has purchased from Seller pursuant to an Asset
Purchase Agreement dated as of April 21, 1994 certain assets more
specifically described in the Asset Purchase Agreement and amended by a
First Amendment to Asset Purchase Agreement dated May 4, 1994
(collectively, the “Asset Purchase Agreement”) and in payment of the
purchase price has executed and delivered to Seller the Original Note
which has been amended, restated and substituted pursuant to the terms
of the Amended Note dated May 4, 1994 in the principal amount of
$10,000,000.00 (as amended, restated and substituted, the “Note”). The
Note is secured by the Collateral pursuant to the terms hereof and by
the Properties (as defined in the Mortgage) pursuant to the terms of the
Mortgage. It has been agreed that all of the obligations of the
Purchaser under the Note, the Mortgage and Asset Purchase Agreement, and
the following additional agreements, each dated as of April 27, 1994,
are to be secured by this Security Agreement: the Toll Manufacturing
Agreement between Purchaser and Gist-Brocades BSD B.V. (the “TMA”) and
the License Agreement between Purchaser and IBIS (the “License
Agreement”). The Asset Purchase Agreement, the Note, the Mortgage, the
TMA and the License Agreement are hereinafter referred to as the
“Purchase Documents.”



      2.     Effect of Amendment. This Amendment shall modify and
amend the Security Agreement as set forth herein. Except as
expressly modified and amended hereby, or unless the context
requires otherwise, the Security Agreement shall be and remain in
full force and effect. Any reference in any of the Purchase
Documents (or any exhibits thereto) to “the Security Agreement”
shall be deemed to mean and refer to the Security Agreement as
modified hereby.


      3.     Conflict of Terms. In the event of a conflict between
the terms of this Amendment and the Security Agreement, the terms
of this Amendment shall govern.


      4.     Successors and Assigns. Whenever in this Amendment any
of the parties hereto are referred to, such reference shall be
deemed to include the successors, assigns, heirs or personal
representatives of such party.


      5.     Counterparts. This Amendment may be executed by the
Purchaser and Seller on separate counterparts, and said


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counterparts taken together shall constitute one and the same instrument.


     IN WITNESS WHEREOF, the Purchaser and Seller have caused this Amendment to
be executed under seal by their duly
authorized officers, all as of the day and year first above written.



	 	 	 	 	 	 	 
	 	Purchaser:	 	 
	 	 	 	 	 	 	 
	 	FERMPRO MANUFACTURING, LP
	 	 	 	 	 	 	 
	 	By:	Astral Technologies, Inc.,
	 	 	 	 	Its General Partner
	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	/s/ James W. Godfrey
Jr.
	 	 	 	 	 	 	

	 	 	 	 	Name:
	 	JAMES W. GODFREY JR.
	 	 	 	 	Title:
	 	PRESIDENT / CEO
	 	 	 	 	 	 	 
	 	 	 	 	ATTEST:
	 	 	 	 	 	 	 
	 	 	 	 	/s/ Roger Gause
	 	 	 	 	

	 	 	 	 	Name:
	 	Roger Gause
	 	 	 	 	Title:
	 	Assistant Secretary
	 	 	 	 	 	 	 
	 	Seller:	 	 
	 	 	 	 	 	 	 
	 	IBIS LIMITED PARTNERSHIP
	 	 	 	 	 	 	 
	 	By:	Gist-Brocades Agro Business
	 	 	 	Group B.V., General Partner
	 	 	 	 	 	 	 
	 	 	 	By:
	 	/s/ A. L. de Haas
	 	 	 	 	 	 	

	 	 	 	 	 	 	A. L. de Haas
	 	 	 	 	 	 	 
	 	 	 	By:
	 	/s/ S. J. Quist
	 	 	 	 	 	 	

	 	 	 	 	 	 	S. J. Quist



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SECURITY AGREEMENT



     THIS SECURITY AGREEMENT (hereinafter referred to as this “Security
Agreement”) is made as of the 27th day of April, 1994 by and among



		
	 	FERMPRO MANUFACTURING, LP, a Georgia limited
partnership (hereinafter referred to as the
“Purchaser”);



and



		
	 	IBIS LIMITED PARTNERSHIP, a North Carolina Limited Partnership
(hereinafter referred to as the “Seller”).



WITNESSETH:



     The Purchaser has purchased from Seller pursuant to an Asset Purchase
Agreement dated as of April 21, 1994 (the “Asset Purchase Agreement”) certain
assets more specifically described in the Asset Purchase Agreement and in
payment of the purchase price has executed and delivered to Seller a purchase
money promissory note in the principal amount of $10,000,000.00 of even date
herewith (the “Note”). The Note is secured by the Collateral pursuant to the
terms hereof and by the Properties (as defined in the Purchase Money Mortgage,
Assignment of Rents and Leases, Security Agreement and Fixture Filing of even
date herewith (the Mortgage”)) pursuant to the terms of the Mortgage. It has
been agreed that all of the obligations of the Purchaser under the Note, the
Mortgage and Asset Purchase Agreement, and the following additional agreements,
each dated as of the date hereof are to be secured by this Security Agreement:
the Toll Manufacturing Agreement between Purchaser and Gist-Brocades BSD B.V.
(the “TMA”) and the License Agreement between Purchaser and IBIS (the “License
Agreement”). The Asset Purchase Agreement, the Note, the Mortgage, the TMA and
the License Agreement are hereinafter referred to as the “Purchase Documents.”


     NOW, THEREFORE, in consideration of the execution and delivery of the Note
to Seller and for other good and valuable consideration as set forth in the
Note, the receipt of which is hereby acknowledged, Purchaser, for itself, its
successors and assigns, covenants and agrees with Seller as follows:


     Section 1. Definitions.


     (a)  “Collateral” shall mean the Assets, and all Contract Rights,
Equipment and General Intangibles, together with any and all present and future
proceeds thereof (including insurance proceeds).


 






 


     (b)  “Assets” shall mean all assets, other than inventory,
owned by Purchaser as of the date hereof and transferred to
Purchaser pursuant to the, Asset Purchase Agreement.


     (c)  “Contract Rights” shall mean all present and future
contracts and contract rights other than accounts receivable as
defined in the Uniform Commercial Code of the State of South
Carolina (the “UCC”).


     (d)  “Equipment” shall mean all equipment as defined under
the UCC, including, without limitation, all manufacturing,
distribution, selling, data processing and office equipment, all
machinery, all furniture, furnishings, appliances, fixtures and trade
fixtures, computer equipment and software, vehicles, rolling stock, vessels,
accessions, accessories, additions, additions, parts, supplies, apparatus,
appliances, tools, tooling, molds, dies, blueprints, fittings, and all other
goods of every type and description, wherever located, other than inventory ,
whether now owned or hereafter acquired by the Purchaser.


     (e)  “General Intangibles” shall mean all general intangibles
as defined under the UCC, now existing or hereafter owned,
acquired or arising in which the Purchaser now has or hereafter
acquires any rights, and shall include, but shall not be limited
to, all intangible personal property (including things in action)
other than goods, accounts, chattel paper, documents, instruments
and money, including, without limitation, causes of action,
corporate or business records, inventions, designs, patents,
patent applications, trademarks, trademark registrations and
applications therefor, goodwill, copyrights, trademarks and patents,
licenses, permits, customer lists, and all other intangible personal
property of every kind and nature, now owned or
hereafter acquired, except to the extent excluded under the UCC.


     Section 2. Creation of Security Interest. As security for the full and
punctual payment of the Note and the performance by the Purchaser of all of its
obligations under this Security Agreement and the other Purchase Documents, the
Purchaser hereby grants to Seller, its successors and assigns, a continuing
security interest in the Collateral.


     Section 3. Representations and Warranties of Purchaser.


     (a)  The Purchaser has full power and authority to execute, deliver and
perform its obligations under this Security Agreement, and this Security
Agreement is the legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as the enforceability
hereof may be limited by applicable bankruptcy, insolvency and similar laws
affecting creditor’s rights generally and by general principles of equity.


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     (b)  The Purchaser is and will be the lawful owner of all Collateral; the
Purchaser has full power and authority to execute this Agreement and to
perform its obligations hereunder; the Purchaser has not made, nor will it at
any time, without obtaining the prior written consent of the Seller, make, any
agreement which prohibits or restricts the pledging or creation of liens upon
the Collateral, or which creates a lien on the Collateral prior to the
security interest herein provided to the Seller; and all information with
respect to the Collateral set forth in any schedule, certificate or other
writing at any time heretofore or hereafter furnished by the Purchaser to the
Seller, is and will be true and correct as of the date furnished.


     Section 4. Protection of Collateral.


     (a)  The Purchaser will keep accurate and complete records
of the Collateral and permit Seller and its agents and
representatives to inspect the same at reasonable times and upon
reasonable advance written notice to Purchaser. All records
relating to the Collateral shall remain in the possession and
control of the Purchaser at all times at the Purchaser’s risk of
loss.


     (b)  The Purchaser will be responsible for the safekeeping
of the Equipment, and in no event shall Seller have any
responsibility for any loss or damage to the Equipment or
destruction thereof occurring or arising in any manner or from
any cause.


     (c)  The Purchaser will at all times maintain the Equipment
in good order and condition, ordinary wear and tear excepted, and
keep the Equipment insured against loss, damage, theft and other
risks, in such amounts and with such companies and under such
policies as shall be required pursuant to Section 2.03 of the
Mortgage, which policies shall provide that loss thereunder shall
be payable jointly to Seller and the Purchaser as their interests
may appear and the Purchaser will immediately notify Seller of
the occurrence of any casualty or acts of God causing a material
loss in value of such property.


     (d)  The Purchaser will not sell, transfer, lease or otherwise
dispose of any of the Equipment, or any interest therein,
except for the sale of Equipment which is no longer useful in the
business of the Purchaser.


     Section 5. Protection of Security Interest.


     (a)  The Purchaser will, upon the written request of Seller, execute and
deliver specific assignments of Collateral and such financing statements,
applications for notation of lien, notices of assignment (and continuations or
amendments of any of the foregoing) and other documents as Seller may from time
to time


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reasonably request to establish and maintain a valid perfected security
interest in the Collateral to secure the payment of the Note or to enable
Seller to exercise and enforce any of its rights, powers and remedies
hereunder.


     (b)  The Purchaser will not change the location of its place
of business unless, prior to such change, it notifies Seller of
such change, makes all UCC filings required to continue Seller’s
security interest in the Collateral and takes all other action
necessary or that Seller may reasonably request to preserve,
perfect, confirm and protect the security interest granted Seller
hereunder.


     (c)  So long as this Security Agreement is in effect,
Purchaser will not create, grant or suffer to exist any lien,
encumbrance or security interest upon or in respect of any of the
Collateral other than security interests in favor of Seller,
purchase money security interests and leases for equipment and
such other liens second in priority to the lien of Seller provided
written notice of the granting of any such lien is given to
Seller in advance.


     (d)  The Purchaser will reimburse Seller for all expenses,
including reasonable attorneys’ fees and disbursements, incurred
by Seller in seeking to enforce any rights hereunder.


     (e)  The Purchaser will furnish the Seller such information
concerning the Purchaser and the Collateral as the Seller may
from time to time reasonably request for purposes of determining
compliance hereunder by Purchaser.


     (f)  The Purchaser will, concurrently with the granting of
this security interest in the Collateral, place notations on its
books and records disclosing the security interest of the Seller
in such Collateral.


     Section 6. Purchaser Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Purchaser shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Seller of any of
its rights hereunder shall not release the Purchaser from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) the Seller shall not have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Agreement, nor
shall the Seller be obligated to perform any of the obligations or duties of
the Purchaser thereunder, to make any payment, to make any inquiry as to the
nature or sufficiency of any payment received by the Purchaser or the
sufficiency of any performance by any party under any such contract or
agreement


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or to take any action to collect or enforce any claim for payment assigned
hereunder.


     Section 7. Default. The term “Event of Default” as used herein means
the occurrence of any of the following events:


     (a)  Purchaser shall default in the due and punctual payment
or performance of any covenant, condition or agreement contained
herein and such default shall not be cured within thirty (30)
days after written notice from Seller;


     (b)  Purchaser shall default in the due and punctual payment
of the Note or in the due and punctual payment or performance of
the Secured Obligations (as defined therein) under the Mortgage;


     (c)  Purchaser shall default in the due and punctual payment
or performance of any obligation under the Ancillary Agreements
(as defined hereinafter) after notice of such default by another
party thereto and any applicable period of grace shall have
expired;


     (d)  a court enters an order for relief with respect to
Purchaser in an involuntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law; the
continuance of either of the following for 60 days: an involuntary case is
commenced against Purchaser under any applicable
bankruptcy, insolvency or other similar law or an order of a
court for the appointment of a receiver over Purchaser or any of
its property is entered; Purchaser commences a voluntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency or
other similar law; or Purchaser ceases to be solvent or
admits in writing its present or prospective inability to pay its
debts as they become due; or


     (e)  the voluntary or involuntary liquidation or dissolution
of Purchaser, the sale by Purchaser of substantially all of its
assets, the merger by Purchaser into or with any other entity;
the equity owners of Purchaser as of the date hereof cease to
beneficially own and control at least 51% of the outstanding
equity of Purchaser, which equity will be determined on the basis
of the interests of the partners in the profits and losses of
Purchaser.


     For purposes of this Section 7 the following terms shall have the
meanings ascribed below:


     (a)  “Ancillary Agreements” means the Asset Purchase Agreement; the TMA;
Wastewater Fee and Cost Allocation Agreement between Travenol Laboratories,
Inc. and GB Fermentation Industries, Inc. dated as of January 4, 1983;
Agreement for Sewage Collection and Treatment Services dated December 18, 1980
among the Town of Kingstree, Travenol Laboratories, Inc. and GB


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Fermentation Industries, Inc.; the agreements, judgments, orders and
undertakings related to the litigation and arbitration in Town of Kingstree
vs. Baxter Healthcare Corporation, et al (U.S.D.C., D.S.C., Florence Division,
C/A No. 4: 87-2830-2) including without limitation the Dispute Resolution
Agreement dated June 1, 1988, the Supplemental Agreement dated April 22, 1992,
the Security Agreement dated April 22, 1992 and the Letter Agreement between
Baxter Healthcare Corporation and International Bio-Synthetics Inc. dated
April 22, 1992; and any loan, purchase money agreement or guarantee evidencing
any indebtedness or contingent liability by Purchaser in an amount in excess
of $100,000.


     (b)  “Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as amended from time to time, or any successor statute.


     Section 8. Seller’s Rights and Remedies. Upon the occurrence of an Event
of Default, Seller shall have all the rights and remedies of a secured party
under the UCC, and under any other applicable law, all of which rights and
remedies shall be cumulative and none of which shall be exclusive, to the
extent permitted by law.


     Section 9. Termination of Security Agreement. This Security Agreement
shall terminate and the lien evidenced hereby shall be released by Seller when
the Note and all obligations of the Purchaser hereunder and under the Purchase
Documents have been fully paid and performed. Upon the termination of this
Security Agreement or Seller’s release of any security interest in the
Collateral evidenced hereby, Seller shall take whatever action may be
necessary, including filing the appropriate statements under the UCC to effect
such termination or release.


     Section 10. Additional Agreements.


     (a)  Seller shall have the right at all times to enforce the provisions of
this Security Agreement in strict accordance with the terms hereof,
notwithstanding any conduct or custom on its part in refraining from so doing
at any time. No waiver or omission to act by Seller shall operate as a waiver
of any other default or of the same default at a future time, and no single or
partial exercise by Seller of any right or remedy shall preclude any other or
future exercise of that or of any other right or remedy. The provisions,
rights and remedies hereof are cumulative and concurrent to and with those of
all other agreements and documents held by Seller in connection with the
indebtedness herein described. Time is of the essence of this Security
Agreement.


     (b)  All rights of Seller shall inure to the benefit of its successors and
assigns, and all obligations of the Purchaser


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shall bind its successors and assigns. Seller shall be entitled to assign this
Security Agreement and its rights and interests herein to any of its
affiliates, including Gist-Brocades B.V., without notice or consent from
Purchaser.


     (c)  This Security Agreement has been delivered in the State
of South Carolina and shall be construed in accordance with the
laws of such State. Wherever possible, each provision of this
Security Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Security Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this
Security Agreement.


     (d)  All notices herein required shall be in the form and
shall be transmitted by the means and to the addresses specified
in or as contemplated by the Asset Purchase Agreement.


     IN WITNESS WHEREOF, the Purchaser and Seller have caused this Security
Agreement to be executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.



	 	 	 	 	 	 	 
	 	FERMPRO MANUFACTURING, LP
	 	 	 	 	 	 	 
	 	By:	Astral Technologies, Inc.,
	 	 	 	 	Its General Partner
	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	/s/ James W.
Godfrey Jr.
	 	 	 	 	 	 	

	 	 	 	 	Name:
	 	James W. Godfrey Jr.
	 	 	 	 	Title:
	 	President
	 	 	 	 	 	 	 
	 	 	 	 	ATTEST:
	 	 	 	 	 	 	 
	 	 	 	 	/s/ H.
Ronald Easler
	 	 	 	 	

	 	 	 	 	Name:
	 	H. RONALD EASLER
	 	 	 	 	Title:
	 	SECRETARY
	 	 	 	 	 	 	 
	 	IBIS LIMITED PARTNERSHIP
	 	 	 	 	 	 	 
	 	By:	Gist-Brocades Agro Business
	 	 	 	 	Group B.V., General Partner
	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	/s/ A. L. de Haas
	 	 	 	 	 	 	

	 	 	 	 	 	 	A. L. de Haas




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