exv10w49



 





EXHIBIT 10.49




SUPPLY AGREEMENT




     THIS SUPPLY AGREEMENT (the “Agreement”) is made as of January 1, 2007 (the “Effective Date”),
by and between Abbott Nutrition, a division of Abbott Laboratories, a corporation organized under
the laws of Illinois with offices located at 625 Cleveland Avenue, Columbus, OH 43215 (including
predecessor and successor entities, subsidiaries, divisions and Affiliates, “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 March
31st, 2000, which License Agreement is amended by this Agreement solely to the extent
expressly provided for 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 Licensee Product (as
defined therein), (B) to use and make the Martek Products (as defined therein) for purposes of
making and having made the Licensee Product and (C) to use, market and distribute the Licensee
Product, in each case as further specified in the License Agreement; and



     WHEREAS, PURCHASER wishes to purchase the Martek Products from SELLER; and



     WHEREAS, SELLER is willing to supply the Martek Products for use by PURCHASER to manufacture,
use, market and distribute the Licensee Product in accordance with the terms of the License
Agreement and as otherwise set forth herein; and



     WHEREAS, such purchase and supply of the Martek Products 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 * shall mean * as set forth in Exhibit F attached hereto, as such Exhibit may be modified
by written agreement of the parties.



     1.2 * shall mean* as such * may be modified by written agreement of 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.




–Page 1–









 










     1.3 “ARA” shall mean arachidonic acid.



     1.4 “DHA” shall mean docosahexaenoic acid.



     1.5 “Growing Up Milk” shall mean nutritionally enhanced milk and soy-milk based products
marketed to and intended for use by children from twelve (12) through thirty-six (36) months of
age.



     1.6 “Martek Product Specifications” shall mean the specifications for the Martek Products to
be supplied hereunder, as set forth in Exhibit C attached hereto, as such Exhibit may be modified
by written agreement of the parties.



     1.7 “Unit of the Martek Product” shall mean that quantity of Martek Products containing one
(1) kilogram of DHA, one (1) kilogram of ARA, or one (1) kilogram of ARA and DHA in the aggregate.



ARTICLE 2. PURCHASE AND SUPPLY OF COMPOUNDS




     2.1 Purchase.



     2.1.1 Notwithstanding PURCHASER’s right to make and have made DHA and ARA as provided in the
License Agreement, during the Term and subject to the terms of this Agreement including without
limitation Section 2.7, 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 the manufacture of Infant Formula Products in the Territory in
accordance with the terms of the License Agreement and as otherwise set forth herein; provided,
however, that such total requirements shall not include PURCHASER’s requirements of DHA and/or ARA
for research and development purposes, or * to the extent not prohibited by this Agreement or the
License Agreement. For purposes hereof, * includes the * of each formulation of each Licensee
Product using * reasonably prior to * as part of reasonable efforts to * following *.


All quantities of the Martek Products purchased by PURCHASER or any Designee under this Agreement
shall be used solely for purposes of manufacture and production of Licensee Products, or for
research and development purposes related to Infant Formula Products or Growing Up Milk.




     2.1.2 PURCHASER agrees that, unless otherwise expressly provided herein, from and after the
Effective Date, the provisions of Sections 2.4(i) and 4.1(vi) of the License Agreement shall be
deleted and of no further force or effect, and shall be replaced by the following provisions, which
shall survive termination of this Agreement until any later termination or expiration of the
License 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.




–Page 2–









 











	 	(i)	 	SELLER agrees that (A) the price per Unit of Martek Products and the
corresponding price per kilogram, for the same volume of Martek Products for use in
Infant Formula Products, charged to PURCHASER have been, since the effective date of
the License Agreement, * for Martek Products for use in Infant Formula Products, and
(B) the per unit and corresponding per kilogram price for Martek Products for use in Infant Formula Products charged to PURCHASER shall, unless
consented to in writing by PURCHASER or * to PURCHASER, *, continue to be *.
	 
	 	(ii)	 	SELLER shall not enter into * that includes any *, with another company having
* greater than * of the * (such * as measured on * basis by * or a mutually agreed
replacement therefor), for DHA and/or ARA for use in Infant Formula Products, with an *
unless SELLER pays to PURCHASER*; provided, however, that the foregoing provision shall
not apply with respect to any company that is an * with respect to Infant Formula
Products operating in * as of the Effective Date, or to any company that has received a
written offer of * within thirty-six (36) months prior to the Effective Date.





     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 Products that PURCHASER estimates in good faith it will order or direct the
Designees to order from SELLER during the remainder of the current calendar year. Not later than
September 30 of each calendar year during the Term, PURCHASER shall give SELLER written notice of
the quantity of Martek Products that PURCHASER estimates in good faith it will order or direct the
Designees to order from SELLER during the next calendar year. In addition to the foregoing, one
(1) month before the commencement of each calendar quarter during the Term, PURCHASER shall provide
SELLER with a forecast (a “Rolling Forecast”) of PURCHASER’s requirements for the Martek Products
for each of the succeeding four (4) quarters, specifying quantities and requested delivery dates.
These forecasts will be PURCHASER’s good-faith estimate of requirements and shall not be considered
a commitment or other obligation of PURCHASER or its Designees to purchase such Martek Products.



     2.2.2 PURCHASER and/or its Designees shall 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 deliver the Martek Products pursuant to Section 2.4.1 below. SELLER
shall accept and fulfill Purchase Orders from PURCHASER and its Designees made in accordance with
the terms of this Agreement for up to * of the relevant volumes specified in the Rolling Forecasts
provided by PURCHASER pursuant to Section 2.2.1 above. Purchase Orders for additional amounts
shall be accepted and filled by SELLER as is commercially reasonable.



     2.2.3 Purchase Orders submitted in accordance with this Agreement, which have been
acknowledged in writing by SELLER, shall be considered as firm and binding orders (subject to the
provisions of this Agreement) and shall only be canceled or amended by mutual written agreement of





 




			
	-*	 	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.




–Page 3–









 









the parties. SELLER shall acknowledge all Purchase Orders submitted in accordance with this
Agreement within five (5) business days of SELLER’s receipt of such Purchase Orders.




     2.3 Payment Terms.



     2.3.1 Price. During the Term, PURCHASER or its Designee(s), as applicable based on
who placed the Purchase Order, shall pay for the Martek Products that it orders and receives
delivery of in accordance with the terms of this Agreement, at the prices determined in accordance
with Exhibit A attached hereto (the “Purchase Price”). Since the Purchase Price per Unit of Martek
Product is based on an annual volume purchase level, the Purchase Price invoiced for Martek
Products purchased hereunder during a given calendar year shall be set using the annual forecasts
submitted to SELLER by PURCHASER on September 30th of the prior calendar year in
accordance with Section 2.2.1, subject to adjustments, if applicable, as provided in Section 2.3.2. Notwithstanding the foregoing, if
PURCHASER’s relevant September 30 forecast indicates an annual volume that is * below the volume
required for the next lower pricing tier, such lower price will be utilized for the invoiced
Purchase Price for the relevant calendar year, subject to adjustments, if applicable, as provided
in Section 2.3.2.



     2.3.2 Adjustments. If the quantity used to determine the invoiced Purchase Price as
provided in Section 2.3.1 is greater than the quantity actually purchased during the relevant
calendar year, and, as a result, the Purchase Price paid per Unit of Martek Product should have
been higher in accordance with Exhibit A, then SELLER shall invoice PURCHASER within thirty (30)
days after the end of such calendar year for an amount equal to the difference, if any, between the
total Purchase Price paid and the total Purchase Price payable for the quantity of Martek Products
actually purchased from SELLER as specified in Exhibit A. Alternatively, if the quantity actually
purchased during the relevant calendar year exceeds the quantity used to determine the invoiced
Purchase Price as provided in Section 2.3.1 for such calendar year, and, as a result, the Purchase
Price paid per Unit of Martek Product should have been lower in accordance with Exhibit A, then
SELLER shall credit against future purchases of the Martek Products 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 Purchase Price paid by PURCHASER. Any
credit due to PURCHASER shall be made available within thirty (30) days after the end of such
calendar year. In the event this Agreement terminates or is cancelled prior to the end of a
calendar year, then the payments or, in lieu of credits for future purchases, reimbursements
required to effectuate the foregoing shall be made within thirty (30) days of the date following
such termination or cancellation.



     2.3.3 Collaboration. In each calendar year (or prorated portion thereof) during the
Term, SELLER agrees to provide, as requested by PURCHASER, up to* man hours (or prorated portion
thereof in the event of less than a full calendar year) of reasonable assistance to PURCHASER in
PURCHASER’s efforts to identify efficiencies in PURCHASER’s shipping and handling of the Martek
Products and in other areas as mutually agreed. As to any efficiencies in shipping and handling
that may be attained pursuant to the foregoing sentence, * of any resulting savings shall accrue to
PURCHASER, and, as to any other efficiencies, the parties shall mutually negotiate and agree in
good faith on an apportionment of any savings resulting therefrom prior to undertaking such
collaborative efforts.





 




			
	-*	 	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.




–Page 4–









 










     2.3.4 Taxes. The Purchase Price for the Martek Products is exclusive of any and all
national, state or local sales, use, value added or other similar 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 Products, or otherwise. Should any such 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. In no event,
however, shall PURCHASER be responsible for any taxes based on SELLER’s income or similar measures.



     2.3.5 Terms. PURCHASER or the Designee, 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 * from the date of SELLER’s invoice, which invoice shall be dated as of the date of
delivery of the invoiced Martek Products in accordance with Section 2.4.1 below. Invoices to
Designees shall not reference any Martek Product other than that being delivered for the benefit of
PURCHASER hereunder. 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 Products placed by the
Designees, PURCHASER hereby agrees to * to ensure the timely payment of, and to assist in the collection of, amounts due from
the Designees following receipt from SELLER of written notice of nonpayment of correctly invoiced
amounts due hereunder from a Designee. Notwithstanding any other provision of this Agreement or
the License Agreement, SELLER, at its reasonable discretion, shall have the right to revoke its
approval of a particular Designee on sixty (60) days prior written notice to PURCHASER due to
SELLER’s reasonable dissatisfaction with the performance of such Designee.



     2.3.6 Sample Request. SELLER may request, up to two (2) times per year, and PURCHASER
shall provide following each such request, samples for up to six (6) SKUs of the Licensee Products
from PURCHASER’s international markets. Reasonable expenses of filling any such requests shall be
borne by SELLER. SELLER shall not resell or distribute such Licensee Products and shall use them
only for purposes of display or evaluating their content of Martek Products.



     2.4 Order and Delivery Terms.



     2.4.1 Martek Products shall be delivered ExWorks SELLER’s place of shipment to PURCHASER or
its Designee, as specified in the applicable Purchase Order.



     2.4.2 Title to and risk of loss of the Martek Products shall be transferred to PURCHASER or
its Designee in accordance with Section 2.4.1 above.



     2.4.3 SELLER shall comply with the Martek Product Specifications, as set forth in Exhibit C
attached hereto, and *, with respect to all Martek Product delivered hereunder.





 




			
	-*	 	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.




–Page 5–









 










     2.4.4 In connection with ordering and delivering the Martek Products hereunder, SELLER and
PURCHASER and/or its Designees may employ their standard forms, but nothing in such forms shall be
construed to bind SELLER or PURCHASER or its Designees or to modify or amend the terms of this
Agreement, and, in case of conflict herewith, this Agreement shall control.



     2.5 Product Recall/Complaints.



     2.5.1 Product Recall. Should the parties’ actions or any governmental action require
the recall, destruction or withholding from market of any Martek Product or Licensee Product sold
hereunder or pursuant hereto (a “Recall”), then SELLER shall bear the costs and expenses of such
Recall to the extent such Recall is the result of the fault or omission of SELLER or its agents or
subcontractors, including, by way of example only and not limitation, supplying Martek Product that
is not in compliance with the Martek Product Specifications *, and PURCHASER shall bear the costs
and expenses of such Recall to the extent such Recall is the result of the fault or omission of
PURCHASER or its agents or subcontractors.



     2.5.2 Product Complaints. If SELLER receives a complaint from any Third Party, or if
SELLER’s quality assurance group, infant formula business unit managers, or senior management
otherwise become aware of a complaint or issue, about Martek Product involving safety concerns,
SELLER shall notify PURCHASER in writing (Attn: Quality Assurance), including providing a copy of
the complaint, within twenty-four (24) hours.



     2.6 Capacity and Supply.



     2.6.1 SELLER shall manage its manufacturing capacity through process improvement, capital
expansion, and/or subcontracting with a Third Party to ensure it has the necessary capacity to
manufacture and deliver Martek Product as ordered by PURCHASER in accordance with this Agreement.



     2.6.2 In the event that SELLER subcontracts the manufacture of Martek Product to a Third Party
(a “SELLER TPM”), then SELLER shall (i) give PURCHASER at least three (3) months written notice
prior to contracting with a SELLER TPM, (ii) disclose the identity and manufacturing location of
the SELLER TPM, (iii) ensure that the SELLER TPM is bound to perform the relevant obligations of
SELLER set forth pursuant to this Agreement, and (iv) before use of such SELLER TPM to supply
Martek Product to PURCHASER, the SELLER TPM must be qualified pursuant to PURCHASER’s reasonable
qualification process, which process PURCHASER shall conduct in a timely manner.



     2.6.3 The parties shall cooperate in order to help ensure a continuous supply of Martek
Product. In order to help achieve this goal, SELLER shall use reasonable commercial efforts to
provide, within six (6) months after the Effective Date, contingency plans for the manufacture by
SELLER and/or its SELLER TPMs of Martek Product.



     2.6.4 If SELLER’s management does not reasonably believe that it will be able to supply all of
the volumes of Martek Product specified in a Rolling Forecast or any outstanding Purchase





 




			
	-*	 	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.




–Page 6–









 









Order, then within * of SELLER’s receipt of the relevant Rolling Forecast pursuant to Section 2.2.1, or
the occurrence of the event (e.g., a force majeure event or some other event that may interrupt
SELLER’s operations) causing such supply concern, SELLER shall in good faith notify PURCHASER in
writing of the quantity and timing of any expected shortfall, but any such notification shall not
be deemed to be considered a firm commitment or result in any liability or obligation on the part
of SELLER except as otherwise expressly set forth in this Agreement.




     2.7 Failure to Supply. In the event that SELLER (a) indicates pursuant to Section
2.6.4 that it is unable to satisfy PURCHASER’s requirements for Martek Product, or (b) fails to
supply all of PURCHASER’s requirements for Martek Product pursuant to Purchase Orders accepted and
acknowledged in accordance with Sections 2.2.2 and 2.2.3 (a “Shortfall Situation”), then Section
2.7.1 shall apply and, provided that PURCHASER is then in material compliance with the terms of
this Agreement, PURCHASER shall be released from the obligation to purchase all of its requirements
of Martek Product from SELLER, pursuant to Section 2.1.1, to the extent expressly provided below.



     2.7.1 In any Shortfall Situation, SELLER shall supply the portion of Martek Product that
SELLER is capable of supplying, provided that SELLER may allocate Martek Product among its
customers so long as SELLER treats PURCHASER*, and in no event shall PURCHASER receive, pursuant to
Purchase Orders placed in accordance with the terms of this Agreement, less than that percentage
share of available supply capacity that is directly proportionate to PURCHASER’s average percentage
of SELLER’s capacity used to supply PURCHASER and its Designees during the prior twelve (12)
months. SELLER shall use all commercially reasonable efforts to implement appropriate contingency
plans established or subsequently developed by the parties that are designed with the objective of
ensuring the continuity of uninterrupted supply of Martek Products as ordered by PURCHASER and its
Designees and to otherwise overcome as soon as possible the cause for the inability of SELLER to
fulfill PURCHASER’s and its Designees’ purchase orders for Martek Product. SELLER shall work collaboratively with PURCHASER to consider and pursue all other
reasonable contingency options and plans.



     2.7.2 If a failure to supply occurs during any * of the Term such that SELLER fails to supply
at least * of the amount of Martek Product ordered by PURCHASER and its Designees in the aggregate,
or if a Shortfall Situation as described in Section 2.7(a) shall exist, then, as elected by
PURCHASER, (y) PURCHASER may itself manufacture up to the Shortfall Quantity (as defined below) of
DHA and/or ARA, as relevant, and/or (z) PURCHASER may obtain any remaining Shortfall Quantity of
DHA and/or ARA, as relevant, from other sources by utilizing PURCHASER’s license and sublicensing
rights as set forth in the License Agreement.




	 	(a)	 	PURCHASER may obtain ARA and/or DHA via the foregoing rights for such period of
time as is reasonably necessary for PURCHASER to obtain reasonable cover for SELLER’s
failure to provide quantities of the Martek Products ordered hereunder by PURCHASER and
its Designees, and to the extent otherwise consistent with PURCHASER’s rights under the
License Agreement and this Agreement, but without an obligation to pay a Royalty. For
purposes hereof, the “Shortfall Quantity” shall mean a monthly quantity that is * of
(A) the maximum monthly shortfall amount






 




			
	-*	 	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.



–Page 7–









 






	 	 	 	reasonably specified by SELLER in any relevant
notice given pursuant to Section 2.6.4, or (B) the maximum amount actually ordered by
PURCHASER and its Designees pursuant to Purchase Orders placed in accordance with the
terms of this Agreement which is not delivered by SELLER in any of the * prior to
PURCHASER becoming eligible to exercise its rights under this Section 2.7.2, as
relevant.






	 	(b)	 	Notwithstanding the foregoing subpart (a),






	 	(i)	 	In negotiating any such contract for cover, PURCHASER shall
reasonably consult with SELLER as to terms being offered and cooperate in good
faith with SELLER in SELLER’s reasonable efforts to ensure it can resume its
supply of PURCHASER’s total requirements of Martek Product hereunder upon
SELLER’s resumption of its ability to supply such requirements. In any event,
PURCHASER shall ensure that any contract for cover can be unilaterally
terminated by PURCHASER on no more than * notice, unless otherwise agreed in
writing by SELLER, such agreement to not be unreasonably withheld.
	 
	 	(ii)	 	PURCHASER will use commercially reasonable efforts to minimize
the volume requirements and duration of any contract with a Third Party
reasonably entered into to obtain cover as permitted herein. In connection
with the foregoing sentence, provided SELLER agrees in writing to * PURCHASER
for any difference in the price necessary to obtain lesser volumes, a shorter
term, and/or a shorter notice period for a unilateral right to terminate early
without cause, as applicable, as compared to a lower price that has been
offered to PURCHASER in writing by a Third Party for other commercially
reasonable terms consistent with PURCHASER’s rights to cover herein, PURCHASER
shall agree to accept such higher price in exchange for such obligation of
SELLER.




In the event that it is necessary for PURCHASER to contract for more than the Shortfall Quantity in
order to obtain cover hereunder pursuant to reasonable commercial terms, PURCHASER shall, following
written notice to SELLER of such event, be permitted, subject to the above provisions in this
Section 2.7.2, to contract for a reasonable amount in addition to such Shortfall Quantity, provided
that, notwithstanding any other provision of this Agreement, PURCHASER shall be required to pay to
SELLER the Royalty as provided in the License Agreement (prior to any amendment made hereunder) on
Infant Formula Product derived from any such quantity in excess of the Shortfall Quantity. For
clarity, if any Shortfall Situation only relates to DHA or ARA, and not both, the rights as
provided herein shall only relate to DHA or ARA, as relevant.




     2.7.3 In the event PURCHASER exercises any of its rights above in this Section 2.7 (including
due to the force majeure provision in this Agreement), any amounts obtained by PURCHASER in
accordance with this Section 2.7 in order to cover for SELLER’s failure to supply hereunder shall
be credited to the volumes in the pricing tiers set forth in Exhibit A for the relevant year(s),
solely for the purpose of making any adjustments pursuant to Section 2.3.2.





 




			
	-*	 	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.




–Page 8–









 










     2.7.4 PURCHASER’s exercise of the rights granted in this Section 2.7 shall not be a breach of
this Agreement by PURCHASER, and SELLER shall not pursue patent infringement actions against
PURCHASER or any Third Party suppliers to the extent their actions are consistent with PURCHASER’s
rights under this Section 2.7 and the License Agreement.



ARTICLE 3. WARRANTY AND DISCLAIMER




     3.1 SELLER’s Warranties. SELLER represents and warrants that:



     3.1.1 All Martek Products will be manufactured in accordance with current good manufacturing
practices and in accordance with the characteristics, composition, stability and other requirements
included in the Martek Product Specifications set forth in Exhibit C and *.



     3.1.2 All Martek Products manufactured and delivered to PURCHASER or any Designee pursuant to
this Agreement will, at the time of such delivery, not be adulterated or misbranded within the
meaning of the Federal Food, Drug and Cosmetic Act, as amended (the “Act”) or within the meaning of
any applicable state or municipal law in which the definitions of adulteration and misbranding are
substantially the same as those contained in the Act, as such Act and such laws are constituted and
effective at the time of delivery and will not be an article that may not be introduced into
interstate commerce.



     3.1.3 If any Martek Products fail to conform to the warranties set forth in Sections 3.1.1 and
3.1.2 above, SELLER, *, shall either replace the nonconforming Martek Products or refund to
PURCHASER or its Designee, as applicable, the Purchase Price paid by PURCHASER or its Designee, as
applicable, for the nonconforming Martek Products (including duty, freight, insurance charges, and
other similar related expenses).



     3.1.4 To the knowledge of any of SELLER’s senior management (which includes SELLER’s General
Counsel), as of the signing of this Agreement, there are no valid and enforceable Third Party
patents that are infringed by SELLER’s manufacture or sale, in the Territory, of the Martek
Products.



     3.2 SELLER’s Disclaimers.



     3.2.1 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 OR
FITNESS FOR A PARTICULAR PURPOSE, RELATING TO THE TECHNOLOGY OR THE MARTEK PRODUCTS. SELLER MAKES
NO REPRESENTATIONS OR WARRANTIES AND HAS NO DUTY TO ENSURE THAT THE TECHNOLOGY OR THE MARTEK
PRODUCTS ARE USABLE WITH THE LICENSEE PRODUCT OR CAN BE INCORPORATED SAFELY INTO THE LICENSEE
PRODUCT. IT IS HEREBY ACKNOWLEDGED AND AGREED THAT IT SHALL BE PURCHASER’S RIGHT AND OBLIGATION TO
DETERMINE THE SAFETY AND UTILITY OF THE USE OF THE





 




			
	-*	 	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.




–Page 9–









 









MARTEK PRODUCTS WITH EACH LICENSEE PRODUCT; PROVIDED, HOWEVER, THAT THIS PROVISION DOES NOT SERVE TO RELIEVE MARTEK OF ITS OBLIGATIONS AS
OTHERWISE SET FORTH IN THIS AGREEMENT.




     3.2.2 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER FURTHER DISCLAIMS ANY WARRANTY
RELATING TO THE PATENTABILITY OF, OR THE VALIDITY OF ANY PATENTS RELATING TO, THE TECHNOLOGY, OR
THE MARTEK PRODUCTS 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 Mutual Warranties. SELLER and PURCHASER, as to its respective self, each
represents and warrants to the other as follows:



     3.3.1 That its execution and delivery of this Agreement and its performance of the
transactions contemplated hereby have been duly authorized by all necessary corporate actions.



     3.3.2 That its performance 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.



     3.3.3 To the best of its knowledge after the exercise of reasonable diligence, as of the
Effective Date, no actions have been threatened in writing or are pending before any court or
governmental agency or other tribunal that would affect its ability to perform its obligations
under this Agreement.



ARTICLE 4. TERM; TERMINATION




     4.1 Term. This Agreement shall commence on the Effective Date and, subject to
possible earlier 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.



     4.2.1 Termination in Case of Material Breach; Opportunity to Cure. Either party to
this Agreement may terminate this Agreement upon thirty (30) days prior written notice if the other
party shall commit a material breach of this Agreement and shall not cure such breach within such
thirty (30) day period. Any such written notice to terminate shall include a detailed statement as
to the notifying party’s claimed material breach by the notified party.



     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 a court or other
tribunal of competent jurisdiction determines by final order that the Technology or the Martek
Products 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





 




			
	-*	 	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.




–Page 10–









 









alternative or obtains a license from such Third Party, such that PURCHASER could lawfully use the Technology and/or the Martek Products (as the case may be) in a commercially
reasonable manner as permitted in this Agreement or the License Agreement in connection with the
Licensee Products at no additional cost or expense to PURCHASER beyond that expressly provided in
this Agreement, PURCHASER shall not terminate this Agreement pursuant to this Section 4.2.2. *.




     4.2.3 Termination in Case of Insolvency; Change of Control.




	 	(i)	 	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.
	 
	 	(ii)	 	In the event of any assignment of this Agreement pursuant to Section 9.7 by
SELLER to any of the following entities, including to any acquirer, successor, assign,
or person controlling, or under the common control of, any such named entity, and any
other entity carrying on an infant formula business substantially similar to the
businesses on an equivalent or greater scale to that carried on by any of such named
entities, PURCHASER shall be entitled to terminate this Agreement by providing written
notice of such intent to SELLER and to SELLER’s assignee at any time within sixty (60)
days of receipt by PURCHASER of such notice of assignment: *. The date on which
PURCHASER desires any such termination to become effective shall be indicated in its
notice hereunder, and shall in no event be more than three hundred sixty-five (365)
days after the date of PURCHASER’s notice.





     4.2.4 Early Termination. PURCHASER, with or without cause, unilaterally may terminate
this Agreement effective as of or after the fifth (5th) anniversary of the Effective
Date of the Agreement, provided that written notice thereof is provided to SELLER at least twelve
(12) months prior to the intended effective termination date.



     4.3 Effect of Termination. Upon termination of this Agreement, PURCHASER and its
Affiliates and Designees may continue, for a period of up to six (6) months, to manufacture and
produce Licensee Products containing the Martek Products purchased hereunder, and to thereafter
use, market, offer for sale, sell, promote and distribute, to the extent lawful, any such Licensee
Products. Upon termination of this Agreement on account of SELLER’s breach of this Agreement,
PURCHASER shall have the right, but not the obligation, to request SELLER to purchase from
PURCHASER and its Affiliates and Designees, at the cost paid for such Martek Products,
PURCHASER’s unused inventories of the Martek Products, and upon such a request SELLER shall
purchase such Martek Products.





 




			
	-*	 	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.




–Page 11–









 










     4.4 Effect on License Agreement. Except to the extent specified in the second
sentence of this Section 4.4, the provisions of this Agreement, including without limitation the
provisions of Exhibit A and Exhibit B attached hereto, expressly amend Article I and Sections 1.2,
2.1, 2.3, 2.4, 3.4, 4.1(iii), 4.1(iv), 4.1(v), 4.1(vi), 4.4, 6.1, 6.2 and 6.3 of the License
Agreement, and such amendments shall survive any termination of this Agreement, and the parties
hereby ratify the terms of the License Agreement as amended by this Agreement. Upon termination of
this Agreement, notwithstanding any other provision hereof, the License Agreement shall continue in
accordance with the terms in effect as amended by this Agreement, except that (a) the amendments in
this Agreement to Sections 4.1(iii) through 4.1(vi) of the License Agreement, and (b) the amendment
to the License Agreement that is in Section 6 of Exhibit B to this Agreement, shall each be of no
further force or effect from and after the effective date of termination.



ARTICLE 5. COVENANTS




     5.1 License Agreement. During the Term, Sections 6.1, 6.2 and 6.3 of the License
Agreement shall be deemed deleted in their entirety and replaced with Sections 5.3, 5.4 and 5.5
below.



     5.2 Licensed Patents. It shall be solely SELLER’s responsibility to prosecute,
defend, and maintain the Licensed Patents.



     5.3 Compliance with Law; Regulatory Approval; Manufacturing Audits.



     5.3.1 Each of SELLER and PURCHASER (itself and on behalf of its Affiliates) covenants and
agrees that it shall conduct all of its operations dealing with the Technology, the Martek Products
and the Licensee 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
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 Products,
or Licensee Product, as applicable, is sold.



     5.3.2 It shall be PURCHASER’s, and not SELLER’s, responsibility to secure any regulatory
approvals for Licensee Products in the Territory that may be necessary in connection with exercise
by PURCHASER of the rights granted to it under this Agreement; provided, however, that PURCHASER
shall not be obligated to take any specific action or measure to seek regulatory approval for or to
market Licensee Products. In connection with the immediately foregoing sentence, PURCHASER shall
not intentionally impair SELLER’s ability to obtain any regulatory approval of the Martek Products
by the competent governmental authorities in any Territory and for any product that SELLER may
elect to pursue, and SELLER shall not intentionally impair PURCHASER’s ability to obtain any
regulatory approval of the Licensee Product by the competent governmental authorities in any
Territory and for any Licensee Product that PURCHASER may elect to pursue.





 




			
	-*	 	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.




–Page 12–









 










     5.3.3 PURCHASER may, with reasonable notice, inspect and/or conduct audits, including, without
limitation, Compliance Audits of any SELLER plants used for the manufacture of Martek Product
hereunder (“Plants”). In connection therewith, PURCHASER and/or its designated representatives
shall have the right to (i) enter those Plants where the Martek Products are manufactured, tested,
packaged, stored, handled, or shipped, (ii) examine such facilities and the manufacture and quality
control records relating to Martek Products, and (iii) inspect and audit the ingredients, work in
process, inventories, premises, documentation, manufacturing methods, testing practices and
results, packaging procedures, and all other matters associated with the manufacture and packaging
of Martek Product or otherwise related to SELLER’s performance under this Agreement, in each case
to the extent reasonably related to ensuring SELLER’s compliance with its obligations hereunder.
Such inspections and/or audits shall be held during normal business hours and shall be conducted in
accordance with SELLER’s reasonable directions and health and safety and other protocols as
applicable at the relevant Plant or other facility.


For the purposes of this Agreement, the term “Compliance Audit” shall mean a review by appropriate
representatives of PURCHASER of those portions of each Plant at which the manufacture, packaging,
and/or storage of Martek Product being purchased by PURCHASER has been or is then being conducted,
for purposes of reasonably reviewing SELLER’s procedures and processes used in the manufacture,
packaging, and/or storage of Martek Product, including, but not limited to, production and quality
control records and investigations of quality specifically relating to Martek Product. A SELLER
representative shall accompany any of PURCHASER’s representatives, including PURCHASER’s employees,
while such individuals are on the premises of SELLER or its Affiliates. In connection with any
such audit, PURCHASER and its representatives shall comply with those site procedures, instructions
of SELLER’s representatives, and instructions applicable to employees of SELLER of which PURCHASER
shall be reasonably notified. SELLER shall cooperate with and provide reasonable assistance to
PURCHASER during such audit. All Compliance Audits shall be at PURCHASER’s expense. Visits by
PURCHASER representatives to SELLER’s facilities may involve the transfer of Confidential
Information and shall be subject to the terms of Article 8 hereof. The results of such audits and
inspections shall also be considered Confidential Information under Article 8.



PURCHASER shall submit to SELLER a written report outlining its findings, observations, and items
PURCHASER believes require corrective action from any such Compliance Audit. Within thirty (30)
days after receipt of any such report from PURCHASER, SELLER shall respond to PURCHASER in writing,
which response shall include a detailed corrective and preventative action plan along with a
timetable, reasonably acceptable to PURCHASER for resolution of any matters either identified by
PURCHASER as or otherwise deemed to be a material finding. If the parties are unable to agree on
the terms of any corrective and/or preventive actions (including whether or not any is required),
or resolve any such matters identified pursuant to this section, such terms or matters shall be
shall be resolved in accordance with the Alternative Dispute Resolution process in Exhibit D.



SELLER shall use commercially reasonable efforts to obtain similar audit rights for PURCHASER with
respect to any SELLER TPM, as defined in Section 2.6.2.






 




			
	-*	 	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.




–Page 13–









 










     5.4 Performance and Product Quality. PURCHASER covenants and agrees that it and its
Affiliates shall exercise a reasonable standard of care and quality control in the testing,
manufacturing, marketing, packaging, distribution and sale of each Licensee 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 help assure high quality production of such Licensee Products.



     5.5 Audit Rights.



     5.5.1 SELLER covenants and agrees that SELLER shall keep true and accurate records as is
reasonably necessary to allow PURCHASER to verify SELLER’s compliance with * this Agreement. Such
records shall be made available during business hours upon prior written request by PURCHASER,
which request shall be made no more than once in any calendar year, for inspection by a Third Party
independent accountant who is not the auditor of record for PURCHASER and who is reasonably
acceptable to SELLER and who shall be bound by a confidentiality agreement with SELLER. Such
inspection shall be limited to the extent necessary for the determination of compliance with such
provisions. Such records shall be retained for a period of three (3) years following the year to
which they relate. Such records shall be limited to those records reasonably necessary to verify
SELLER’s compliance with Section 2.1.2 of this Agreement. The accountant shall provide PURCHASER
with a report containing the accountant’s conclusions, but not the inspected records nor the
information contained therein, and shall concurrently provide SELLER with such report. In the
event the Third Party independent accountant shows non-compliance with Section 2.1.2 and the
parties cannot agree on a resolution, then the arbitration provisions of Exhibit D will apply.
PURCHASER shall bear the full cost of any such audit: provided that if the audit, as reasonably
agreed by SELLER or as determined via the arbitration provisions of Exhibit D, shows an overpayment
by PURCHASER of * or greater of the amounts audited, and in any event an overpayment of at least *,
SELLER shall bear the reasonable out-of-pocket costs paid by PURCHASER to the Third Party
accountant for the audit.



     5.5.2 PURCHASER covenants and agrees that PURCHASER shall keep true and accurate records
regarding PURCHASER’s compliance with the terms of Section 2.1.1 of this Agreement. Such records
shall be made available during business hours upon prior written request by SELLER, which request
shall be made no more than once in any calendar year, for inspection by a Third Party 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. Such inspection
shall be limited to the extent necessary for the determination of compliance with such provision.
Such records shall be retained for a period of three (3) years following the year to which they
relate. Such records shall be limited to those records reasonably necessary to verify PURCHASER’s
compliance with Section 2.1.1 of this Agreement. The accountant shall provide SELLER with a report
containing the audit’s conclusions, but not the inspected records nor the information contained
therein, and shall concurrently provide PURCHASER with such report. In the event the Third Party
independent accountant shows





 




			
	-*	 	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.




–Page 14–









 









non-compliance with Section 2.1.1 and the parties cannot agree on a resolution, then the arbitration provisions of Exhibit D will apply.




ARTICLE 6. LIMITATION OF LIABILITY




     6.1 Indirect Damages. EXCEPT AS SET FORTH IN ARTICLE 7, OR UNLESS ARISING FROM THE
WILLFUL OR INTENTIONAL MISCONDUCT OR GROSS NEGLIGENCE OF A PARTY, IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR SIMILAR 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 (“INDIRECT DAMAGES”). EXCEPT AS SET FORTH IN ARTICLE 7,
IN NO EVENT SHALL A PARTY BE RESPONSIBLE FOR PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT.



     6.2 Maximum Aggregate Liability. EXCEPT FOR LIABILITY WHICH IS THE SUBJECT OF
INDEMNIFICATION AS SET FORTH IN ARTICLE 7, OR UNLESS ARISING FROM THE WILLFUL OR INTENTIONAL
MISCONDUCT OR GROSS NEGLIGENCE OF A PARTY, NEITHER PARTY’S TOTAL LIABILITY TO THE OTHER PARTY
DURING ANY CALENDAR YEAR AND ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, WHETHER BASED ON
BREACH OF CONTRACT OR TORT (INCLUDING NEGLIGENCE), SHALL EXCEED THE GREATER OF (I) THE TOTAL
PURCHASE PRICE OF MARTEK PRODUCT SOLD TO PURCHASER AND ITS DESIGNEES UNDER THIS AGREEMENT DURING
THE PRIOR CALENDAR YEAR AND (II) *.



ARTICLE 7. INDEMNIFICATION




     7.1 Indemnity by SELLER. Except to the extent of Losses for which PURCHASER has
agreed to indemnify SELLER pursuant to Section 7.2(ii) and (iii) below, SELLER shall indemnify,
defend, and hold harmless PURCHASER, PURCHASER’s Affiliates, and PURCHASER’s and PURCHASER’s
Affiliates’ directors, officers, employees, and agents from and against all costs, expenses,
damages, losses and liabilities (“Losses”) asserted by a Third Party against PURCHASER, PURCHASER’s
Affiliates, or PURCHASER’s or PURCHASER’s Affiliates’ directors, officers, employees, or agents for
which any of them may become liable or incur or be compelled to pay to the extent such Losses
result from: (i) SELLER’s or its Affiliates’ breach of any of its obligations, representations or
warranties under this Agreement; (ii) a failure of the Martek Product to conform to the Martek
Product Specifications * or a defect in the Martek Product existing as of delivery of such
Martek Product pursuant to Section 2.4.1 (including latent defects); or (iii) any negligence, gross
negligence, or willful or intentional misconduct of SELLER or any of its Affiliates.



     7.2 Indemnity by PURCHASER. Except to the extent of Losses for which SELLER has
agreed to indemnify PURCHASER pursuant to Section 7.1 above, PURCHASER shall indemnify, defend, and
hold harmless SELLER, SELLER’s Affiliates, and SELLER’s 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.




–Page 15–









 









SELLER’s Affiliates’ directors, officers, employees, and agents from and against all Losses asserted by a Third Party against
SELLER, SELLER’s Affiliates, or SELLER’s or SELLER’s Affiliates’ directors, officers, employees, or
agents for which any of them may become liable or incur or be compelled to pay to the extent such
Losses result from: (i) the production, manufacture, use, importation, distribution or sale of
Licensee Products, including, without limitation, product liability claims; (ii) PURCHASER’s or its
Affiliates’ breach of any obligations, representations or warranties under this Agreement; or (iii)
any negligence, gross negligence, or willful or intentional misconduct of PURCHASER or any of its
Affiliates.




     7.3 Condition to Indemnification. If either party expects to seek indemnification
under this Article 7, it shall promptly give notice to the indemnifying party of the basis for such
claim of indemnification. 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 except to the extent that 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. The indemnifying party shall have sole authority
to defend and/or settle such claim or suit; provided, however, that the indemnified party shall
have the right to participate in its defense at its own expense, and 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.



     7.4 Survival of Indemnity Obligation. The indemnification obligations provided in
this Agreement 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 8. CONFIDENTIALITY




     8.1 Disclosure of Information. All the Technology and all other information provided
hereunder 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, the Martek
Product Specifications, and *, shall be deemed confidential (“Confidential Information”). SELLER
and PURCHASER acknowledge and agree that the value of the Technology, the Martek Products, and the
Licensee Products is based, to a large extent, on maintaining the confidentiality of the
Technology, the Martek Products, and the Licensee Products and preventing any unauthorized
dissemination to or use by Third Parties of Confidential Information relating to the Technology,
the Martek Products, or the Licensee Products. Confidential Information hereunder 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, agents or permitted subcontractors 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, agents or permitted
subcontractors shall have a legal obligation to the party hereunder from whom they receive
Confidential Information not to disclose such information to Third Parties and not to use it in any





 




			
	-*	 	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.




–Page 16–









 









manner other than as permitted herein. Each party shall treat, and PURCHASER shall ensure that its
Affiliates treat, any and all such Confidential Information in a reasonable manner, and in any
event with no less than the same level of 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;
(iii) is independently developed by a party without access to the Confidential Information, as
evidenced by written records; or (iv) is known to the receiving party before receipt thereof under
this Agreement or the License Agreement, as evidenced by the receiving party’s written records.
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, (y) SELLER may issue the press release set forth in attached
Exhibit E upon final execution of this Agreement and (z) SELLER and PURCHASER may disclose
(including but not limited to disclosure in response to questions, interrogatories, requests for
information or documents in legal proceedings, subpoenas, civil investigative demand or other similar process) or announce to any Third Person, disclose in any filings under applicable
securities laws or regulations or otherwise make any public disclosure 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 Confidential Information of the other party, 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, upon the advice of outside counsel, in good
faith deems the disclosure necessary to comply with the foregoing and to the extent practicable and
consistent with applicable laws, gives reasonable 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. In addition,
SELLER and PURCHASER may disclose the fact and the terms of this Agreement to its attorneys and
accountants without notice to the other party, and PURCHASER may deliver a copy of this Agreement
to any Affiliate, so long as any such recipient has undertaken, in writing, an obligation to
maintain the terms of this Agreement in confidence.



     8.2 Post-Termination Obligations. The mutual confidentiality obligations of the
parties under the provisions of this Article 8 shall survive the expiration or termination of this
Agreement for a period of ten (10) years from the date thereof. Upon expiration or termination of
this Agreement, each party shall promptly return to the other all Confidential Information
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.





 




			
	-*	 	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.




–Page 17–









 










ARTICLE 9. GENERAL PROVISIONS




     9.1 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, any controversy or claim arising out
of or relating to this Agreement or the breach thereof shall be settled pursuant to a binding
dispute resolution procedure as set forth on the attached Exhibit D. 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.



     9.2 Information Exchange. During the Term, the parties shall promptly notify each
other of any report of an adverse event associated with the use of Martek Products in any Licensee
Product. PURCHASER shall have sole discretion in determining what action, if any, is to be taken
by PURCHASER in connection with any adverse event relating to a Licensee Product. In addition,
PURCHASER may, in its sole discretion, on a semi-annual basis, provide to SELLER market data
relating to the countries in which PURCHASER is selling Licensee Products, the brands under which
such products are sold, and whether such products are premium or full line conversions.



     9.3 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 and constituting a force majeure event. A force majeure event
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. Upon occurrence of a force majeure event, the party affected shall promptly notify
the other in writing, setting forth the details of the occurrence, and make reasonable commercial
efforts to resume the performance of its obligations as soon as practicable after the force majeure
event ceases. 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 reasonably agreed to by
the parties, such agreement of a party not to be unreasonably withheld or delayed. Should the
effect of force majeure continue for more than six (6) consecutive months, the party to whom the
performance is owed 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.





 




			
	-*	 	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.




–Page 18–









 









SELLER expressly acknowledges that under this Agreement SELLER is a strategic and essential
supplier for PURCHASER’s ongoing business. Accordingly, notwithstanding anything in this Agreement
to the contrary, upon the occurrence of a force majeure event affecting SELLER’s ability to supply
Martek Products as ordered by PURCHASER or its Designees in accordance with the terms of this
Agreement, the provisions of Section 2.7 shall apply.




     9.4 Insurance. PURCHASER is self-insured with respect to product liability insurance
covering Licensee Products. SELLER, at its sole cost and expense, shall procure and maintain in
force a policy of comprehensive general liability insurance, including bodily injury, death, and
property damage, and product liability coverage, of not less than Ten Million Dollars
($10,000,000.00) per occurrence and Ten Million Dollars ($10,000,000) in the aggregate, covering
SELLER’s performance under this Agreement, including the Martek Products, with PURCHASER named as
an additional insured and loss payee and providing for at least thirty (30) days prior written
notice to PURCHASER of any cancellation, termination or change of such insurance coverage.
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 coverage by another carrier upon thirty (30) days prior
written notice to PURCHASER. Any successor to or permitted assignee of this Agreement shall
similarly procure and maintain such insurance coverage.



     9.5 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:


Abbott Nutrition

625 Cleveland Ave., Dept. 102300

Columbus, OH 43215

Attn: Manager of Purchasing

Facsimile: (614) 624-6677






 




			
	-*	 	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.




–Page 19–









 









With a copy to:



Senior Counsel, Abbott Nutrition Legal Operations

Abbott Nutrition

625 Cleveland Ave., Dept. 102300

Columbus, OH 43215

Facsimile: (614) 624-3074



Abbott Nutrition

200 Abbott Park Road

Abbott Park, IL 60064

Attn: Executive Vice President, Global Nutrition

Facsimile: (847) 935-3260



or to such other addresses as either party may designate by a notice given in compliance with this
paragraph, and shall be deemed effective when received.




     9.6 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 conflict between the terms of this Agreement and the License Agreement, the provisions of this
Agreement shall supersede and 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.



     9.7 Assignment. No party may transfer or assign this Agreement or any of its rights
or obligations under this Agreement, directly, indirectly, or in connection with any change in
control (with change in control meaning the acquisition of more than fifty percent (50%) of the
voting shares of a party or of more than fifty percent (50%) of the assets of a party by any
person, entity, or group (whether in a single transaction or a series of transactions)), without
the prior written consent of the other party, which consent shall not be unreasonably withheld;
provided, however, that either party may, without such other party’s consent, assign its rights and
obligations in whole or in part under this Agreement to an affiliate or wholly-owned subsidiary of
such party. Notwithstanding the foregoing sentence, either party (“the first Party”) may assign
this Agreement and/or its rights or obligations under this Agreement, without the prior written
consent of the other party, to any acquirer of all or substantially all of the first Party’s
business (which in PURCHASER’s case means its infant formula business, and in SELLER’s case means
its entire business) provided that prior notice of the assignment has been given by the first Party to the other party. In the
event of any permitted assignment, this Agreement will bind and inure to the benefit of the
assignee. Any purported assignment without a required consent shall be void. Any permitted
assignee shall assume all obligations of its assignor under this Agreement. No





 




			
	-*	 	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.




–Page 20–









 









assignment shall relieve any party of its responsibility for the performance of any obligations that accrued prior
to the effective date of such assignment.




     9.8 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.



     9.9 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.



     9.10 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.



     9.11 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.



     9.12 Survival. Sections 2.1.2, 2.5.1, 2.7.4, 3.1.4, 3.2, 3.3, 4.3, 4.4, 5.3.1, 5.5,
9.1, 9.5, 9.6, 9.7, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14, and Articles 6 and 7 shall survive the
termination or expiration of this Agreement for the longer of five (5) years or the term of the
License Agreement; Section 8 shall survive the termination or expiration of this Agreement for ten
(10) years; and Section 9.4 shall survive the termination or expiration of this Agreement for two
(2) years.



     9.13 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.



     9.14 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.



     9.15 Debarment and Exclusion. SELLER represents and warrants that neither it, nor any
of its employees or agents performing hereunder, have ever been, are currently, or are the subject
of a proceeding that could lead to it or such employees or agents becoming, as applicable, a
Debarred Entity or Individual, an Excluded Entity or Individual or a Convicted Entity or
Individual. SELLER further covenants, represents and warrants that if, during the term of this
Agreement, it, or any of its employees or agents performing hereunder, become or are the subject of
a proceeding that could lead to that party becoming, as applicable, a Debarred Entity or





 




			
	-*	 	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.




–Page 21–









 









Individual, an Excluded Entity or Individual or a Convicted Entity or Individual, SELLER shall immediately notify
PURCHASER, and PURCHASER shall have the right to immediately terminate this Agreement. This
provision shall survive termination or expiration of this Agreement. For purposes of this
provision, the following definitions shall apply:




     9.15.1 A “Debarred Individual” is an individual who has been debarred by the FDA pursuant to
21 U.S.C. §335a (a) or (b) from providing services in any capacity to a person that has an approved
or pending drug product application.



     9.15.2 A “Debarred Entity” is a corporation, partnership or association that has been debarred
by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from submitting or assisting in the submission of
any abbreviated drug application, or a subsidiary or affiliate of a Debarred Entity.



     9.15.3 An “Excluded Individual” or “Excluded Entity” is (i) an individual or entity, as
applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in
federal health care programs such as Medicare or Medicaid by the Office of the Inspector General of
the U.S. Department of Health and Human Services (“OIG/HHS”), or (ii) is an individual or entity,
as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate
in federal procurement and non-procurement programs, including those produced by the U.S. General
Services Administration (“GSA”).



(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)




     9.15.4 A “Convicted Individual” or “Convicted Entity” is an individual or entity, as
applicable, who has been convicted of a criminal offense that falls within the ambit of 21 U.S.C.
§335a (a) or 42 U.S.C. §1320a — 7(a), but has not yet been excluded, debarred, suspended or
otherwise declared ineligible.



     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	 	 	 	ABBOTT NUTRITION, a division of ABBOTT LABORATORIES	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ David Abramson	 	 	 	By:	 	/s/ Holger Liepmann	 	 
	 

	 	Name:
	 	David Abramson
	 	 	 	 	 	Name:
	 	Holger Liepmann	 	 
	 

	 	Title:
	 	President
	 	 	 	 	 	Title:
	 	Executive Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	October 5, 2007	 	 	 	October 5, 2007	 	 








 




			
	-*	 	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.




–Page 22–








 





EXHIBIT A




PURCHASE PRICE



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



1. Purchase Price



PURCHASER and its Designees shall pay SELLER compensation for the Martek Products (in oil form)
and/or the rights granted to PURCHASER with respect to the Martek Products in accordance with this
Exhibit A. All prices and pricing provisions in this Exhibit A or elsewhere in this Agreement are
subject to Section 2.1.2 of this Agreement.



The prices set forth in this Exhibit A may be increased annually by SELLER by up to the amount of
the percentage increase above * in the US Producer Price Index for Consumer Goods Excluding Food as
published by the U.S. Bureau of Labor Statistics (“PPI”) as compared to the PPI for the previous
year. In the event SELLER, pursuant to the prior sentence, is entitled to but elects not to take a
given annual price increase, SELLER may elect to take a cumulative price increase as of the next
annual price review; provided, however, that in no event shall such cumulative price increase
exceed * eligible but untaken increases.



For purposes of pricing under this Agreement, a kilogram of the Martek Products, as referred to in
this Exhibit A, shall contain approximately forty percent (40%), by weight, of DHA or ARA or DHA
and ARA in the aggregate combined. Notwithstanding the previous sentence, should Martek Products
containing approximately forty percent (40%), by weight, of DHA or ARA or DHA and ARA in the
aggregate cease to be available, the per kilogram pricing alternatives set forth below shall be
subject to change based on the available percent weight of DHA or ARA.



Purchase Price for annual volumes† of the Martek Products up to * will be
calculated as follows, which Purchase Price SELLER represents and warrants provides
PURCHASER with * as of the Effective Date as required pursuant to Section 2.1.2:




	 	 	 	 	 	 	 
	Annual Volume

(Units)
	 	Price per Unit of

Martek Products
	 	Annual Volume

(Kilograms)
	 	Price per Kilogram

of Martek Products
	*
	 	*
	 	*
	 	*
	*
	 	*
	 	*
	 	*
	*
	 	*
	 	*
	 	*
	*
	 	*
	 	*
	 	*








 




			
	†	 	Annual volumes are calculated on a full calendar year basis based on the cumulative
total of all purchases of Martek Products by PURCHASER and its Designees under this Agreement in
the relevant calendar year. In the event of less than a full calendar year period, the above
pricing brackets
	 
	-*	 	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.




 









 






			
	 	 	shall be pro rated in direct proportion to such shorter period. Furthermore, the price for all
Martek Product purchased will be dictated by the final annual volume price bracket for the relevant
calendar year (e.g., if PURCHASER purchases * in a calendar year, the price for all such Units
would be * per Unit of Martek Product). Notwithstanding the foregoing three (3) sentences, and
subject to the * in this Agreement, pricing for annual volume purchased over * will be supplied by
SELLER if applicable and will apply only to the annual volume purchased in excess of *.








Royalty: *






 




			
	-*	 	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.




 









 










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 an entity that is designated by Licensee, and is approved by Licensor
in writing, such approval not to be unreasonably withheld or delayed, to order quantities of the
Martek Products from Licensor pursuant to any supply agreement then in effect between Licensee and
Licensor solely for (a) microencapsulation and/or other processing and (b) resale to Licensee
solely for use in accordance with the terms of the License Agreement. As of October 1, 2007, * are
approved as Designees.



2. Section * of the License Agreement is amended by adding the word * before * and after *.



3. Section 2.1 of the License Agreement is amended by adding the following to the end of such
Section: “and (iv) to use the Martek Products for Licensee’s internal research and development
purposes relating to infant nutrition”.



4. Section 2.3 of the License Agreement is hereby deleted in its entirety and replaced with the
following:




     Reserved.


5. Sections 2.4(ii) and (iii) of the License Agreement are hereby deleted in their entirety, and
Section 2.4(iv) of the License Agreement is hereby renumbered as Section 2.4(ii), and amended by
adding the following to the end of the section:



     Notwithstanding the foregoing, Licensee may transfer the Martek Products, or may direct
Licensor to transfer the Martek Products, to any Designee solely for (a) microencapsulation and/or
other processing that may be approved in writing by Licensor and (b) resale to Licensee solely for
use in accordance with the terms of the License Agreement.



6. Section 3.4 of the License Agreement is hereby amended by adding the following sentence to the
end: “Notwithstanding the above, Licensee may not terminate this Agreement effective earlier than
January 1, 2012.”



7. Section 4.4 of the License Agreement is hereby amended by deleting all language after
the first sentence thereof.






 




			
	-*	 	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.




 









 










EXHIBIT C




MARTEK PRODUCT SPECIFICATIONS




ARASCO®




Product Specifications




General Characteristics




	 	 	 
	Description: 

Appearance: 

Odor: 

Antioxidants:

	 	Vegetable oil from fungi, containing 40% arachidonic acid (ARA)

Free flowing yellow liquid oil (triglyceride)

Characteristic

*






	 	 	 	 	 
	Chemical Characteristics	 	Fatty Acid Composition	 	Area %
	 
	 	 	 	 
	*
	 	 	 	 
	 

	 	*
	 	*
	*
	 	 	 	 






Elemental Composition




*


Product Storage and Stability



Maximum stability of ARASCO is achieved by shipping and storing the product frozen in the original
unopened container at -20 degrees Centigrade until thawed for use. The oil should be protected
from exposure to oxygen and elevated temperatures (> 30 C). Shipping and storage under frozen
conditions provides stability for ARASCO for up to three years if product is kept frozen and
unopened.



Once a container of oil is thawed and opened, use entire contents immediately. However, if it is
not possible to use the entire amount at one time, the remainder may be nitrogen purged and
refrozen at -20 degrees Centigrade.




Ingredients




Fungal Oil; *






 




			
	-*	 	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.




 









 










DHASCO®




Product Specifications




General Characteristics




	 	 	 
	Description: 

Appearance: 

Odor: 

Antioxidants:

	 	Vegetable oil from microalgae, containing 40% docosahexaenoic acid (DHA)

Free flowing light yellow to dark orange liquid oil (triglyceride) 

Characteristic

*






	 	 	 	 	 
	Chemical Characteristics	 	Fatty Acid Composition	 	Area %
	 
	 	 	 	 
	*
	 	 	 	 
	 

	 	*
	 	*
	*
	 	 	 	 






Elemental Composition




*


Product Storage and Stability



Maximum stability of DHASCO is achieved by shipping and storing the product frozen in the original
unopened container at -20 degrees Centigrade until thawed for use. The oil should be protected
from exposure to oxygen and elevated temperatures (> 30 C). Shipping and storage under frozen
conditions provides stability for DHASCO for up to three years if product is kept frozen and
unopened.



Once a container of oil is thawed and opened, use entire contents immediately. However, if it is
not possible to use the entire amount at one time, the remainder may be nitrogen purged and
refrozen at -20 degrees Centigrade.




Ingredients




Algal Oil; *






 




			
	-*	 	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.






 











 





EXHIBIT D




ALTERNATIVE DISPUTE RESOLUTION




     The parties recognize that from time to time a dispute may arise relating to either party’s
rights or obligations under this Agreement. The parties agree that any such dispute shall be
resolved by the Alternative Dispute Resolution (“ADR”) provisions set forth in this Exhibit, the
result of which shall be binding upon the parties.



     To begin the ADR process, a party first must send written notice of the dispute to the other
party for attempted resolution by good faith negotiations between their respective presidents (or
their designees) of the affected subsidiaries, divisions, or business units within twenty-eight
(28) days after such notice is received (all references to “days” in this ADR provision are to
calendar days). If the matter has not been resolved within twenty-eight (28) days of the notice of
dispute, or if the parties fail to meet within such twenty-eight (28) days, either party may
initiate an ADR proceeding as provided herein. The parties shall have the right to be represented
by counsel in such a proceeding.



     1. To begin an ADR proceeding, a party shall provide written notice to the other party of the
issues to be resolved by ADR. Within fourteen (14) days after its receipt of such notice, the other
party may, by written notice to the party initiating the ADR, add additional issues to be resolved
within the same ADR.



     2. Within twenty-one (21) days following the initiation of the ADR proceeding, the parties
shall select a mutually acceptable neutral to preside in the resolution of any disputes in this ADR
proceeding. If the parties are unable to agree on a mutually acceptable neutral within such period,
either party may request the President of the CPR International Institute for Conflict Prevention
and Resolution (“CPR”), 575 Lexington Avenue, 21st Floor, New York, New York 10022, to select a
neutral pursuant to the following procedures:




     (a) The CPR shall submit to the parties a list of not less than five (5) candidates
within fourteen (14) days after receipt of the request, along with a Curriculum Vitae for
each candidate. No candidate shall be an employee, director, or shareholder of either party
or any of their subsidiaries or affiliates.




     (b) Such list shall include a statement of disclosure by each candidate of any
circumstances likely to affect his or her impartiality.




     (c) Each party shall number the candidates in order of preference (with the number one
(1) signifying the greatest preference) and shall deliver the list to the CPR within seven
(7) days following receipt of the list of candidates. If a party believes a conflict of
interest exists regarding any of the candidates, that party shall provide a written
explanation of the conflict to the CPR along with its list showing its order of preference
for the candidates. Any party failing to return a list of preferences on time shall be
deemed to have no order of preference.





 




			
	-*	 	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.




 









 











     (d) If the parties collectively have identified fewer than three (3) candidates deemed
to have conflicts, the CPR immediately shall designate as the neutral the candidate for whom
the parties collectively have indicated the greatest preference. If a tie should result
between two candidates, the CPR may designate either candidate. If the parties collectively
have identified three (3) or more candidates deemed to have conflicts, the CPR shall
review the explanations regarding conflicts and, in its sole discretion, may either (i)
immediately designate as the neutral the candidate for whom the parties collectively have
indicated the greatest preference, or (ii) issue a new list of not less than five (5)
candidates, in which case the procedures set forth in subparagraphs 2(a) — 2(d) shall be
repeated.



     3. No earlier than twenty-eight (28) days or later than fifty-six (56) days after selection,
the neutral shall hold a hearing to resolve each of the issues identified by the parties. The ADR
proceeding shall take place at a location agreed upon by the parties. If the parties cannot agree,
the neutral shall designate a location other than the principal place of business of either party
or any of their subsidiaries or affiliates.



     4. At least seven (7) days prior to the hearing, each party shall submit the following to the
other party and the neutral:




     (a) a copy of all exhibits on which such party intends to rely in any oral or written
presentation to the neutral;




     (b) a list of any witnesses such party intends to call at the hearing, and a short
summary of the anticipated testimony of each witness;




     (c) a proposed ruling on each issue to be resolved, together with a request for a
specific damage award or other remedy for each issue. The proposed rulings and remedies
shall not contain any recitation of the facts or any legal arguments and shall not exceed
one (1) page per issue. The parties agree that neither side shall seek as part of its remedy
any punitive damages.




     (d) a brief in support of such party’s proposed rulings and remedies, provided that the
brief shall not exceed twenty (20) pages. This page limitation shall apply regardless of the
number of issues raised in the ADR proceeding.



          Except as expressly set forth in subparagraphs 4(a) — 4(d), no discovery shall be required or
permitted by any means, including depositions, interrogatories, requests for admissions, or
production of documents.




     5. The hearing shall be conducted on two (2) consecutive days and shall be governed by the
following rules:





 




			
	-*	 	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.




 









 











     (a) Each party shall be entitled to five (5) hours of hearing time to present its case.
The neutral shall determine whether each party has had the five (5) hours to which it is
entitled.




     (b) Each party shall be entitled, but not required, to make an opening statement, to
present regular and rebuttal testimony, documents or other evidence, to cross-examine
witnesses, and to make a closing argument. Cross-examination of witnesses shall occur
immediately after their direct testimony, and cross-examination time shall be charged
against the party conducting the cross-examination.




     (c) The party initiating the ADR shall begin the hearing and, if it chooses to make an
opening statement, shall address not only issues it raised but also any issues raised by the
responding party. The responding party, if it chooses to make an opening statement, also
shall address all issues raised in the ADR. Thereafter, the presentation of regular and
rebuttal testimony and documents, other evidence, and closing arguments shall proceed in the
same sequence.




     (d) Except when testifying, witnesses shall be excluded from the hearing until closing
arguments.




     (e) Settlement negotiations, including any statements made therein, shall not be
admissible under any circumstances. Affidavits prepared for purposes of the ADR hearing also
shall not be admissible. As to all other matters, the neutral shall have sole discretion
regarding the admissibility of any evidence.



     6. Within seven (7) days following completion of the hearing, each party may submit to the
other party and the neutral a post-hearing brief in support of its proposed rulings and remedies,
provided that such brief shall not contain or discuss any new evidence and shall not exceed ten
(10) pages. This page limitation shall apply regardless of the number of issues raised in the ADR
proceeding.



     7. The neutral shall rule on each disputed issue within fourteen (14) days following
completion of the hearing. Such ruling shall adopt in its entirety the proposed ruling and remedy
of one of the parties on each disputed issue but may adopt one party’s proposed rulings and
remedies on some issues and the other party’s proposed rulings and remedies on other issues. The
neutral shall not issue any written opinion or otherwise explain the basis of the ruling.



     8. The neutral shall be paid a reasonable fee plus expenses. These fees and expenses, along
with the reasonable legal fees and expenses of the prevailing party (including all expert witness
fees and expenses), the fees and expenses of a court reporter, and any expenses for a hearing room,
shall be paid as follows:




     (a) If the neutral rules in favor of one party on all disputed issues in the ADR, the
losing party shall pay 100% of such fees and expenses.





 




			
	-*	 	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.




 









 











     (b) If the neutral rules in favor of one party on some issues and the other party on
other issues, the neutral shall issue with the rulings a written determination as to how
such fees and expenses shall be allocated between the parties. The neutral shall allocate
fees and expenses in a way that bears a reasonable relationship to the outcome of the ADR,
with the party prevailing on more issues, or on issues of greater value or gravity,
recovering a relatively larger share of its legal fees and expenses.



     9. The rulings of the neutral and the allocation of fees and expenses shall be binding,
non-reviewable, and non-appealable, and may be entered as a final judgment in any court having
jurisdiction.



     10. Except as provided in paragraph 9 or as required by law, the existence of the dispute, any
settlement negotiations, the ADR hearing, any submissions (including exhibits, testimony, proposed
rulings, and briefs), and the rulings shall be deemed Confidential Information. The neutral shall
have the authority to impose sanctions for unauthorized disclosure of Confidential Information.



     11. All ADR hearings shall be conducted in the English language.





 




			
	-*	 	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.




 









 










EXHIBIT E




PRESS RELEASE




[Martek Letterhead]




	 	 	 	 	 
	For Immediate Release

	 	Contact:
	 	 
	 

	 	Philip Fass	 	 
	 

	 	Public Relations	 	 
	 

	 	(443) 542-2570	 	 
	 

	 	pfass@martek.com	 	 
	 
	 	 	 	 
	 

	 	Kyle Stults	 	 
	 

	 	Investor Relations	 	 
	 

	 	(410) 740-0081	 	 
	 

	 	investors@martek.com	 	 






Martek Signs Multi-Year Worldwide Sole Source Supply Agreement with Abbott



COLUMBIA, Md. — October 8, 2007 — Martek Biosciences Corporation announced today that it has
entered into a long-term supply agreement with Abbott Nutrition, a leading worldwide producer of
infant formula products including the Similac® Advance® brand. Martek will serve as Abbott’s
exclusive worldwide DHA and ARA supplier for all of its infant formula products. The agreement
provides for a ten-year term with Abbott having the right to terminate the arrangement as of
January 2012.



Martek has been supplying DHA and ARA to Abbott for use in infant formula products under a 25-year
license agreement signed in 2000 which remains in effect. In the new supply agreement, Abbott has
committed to purchase all of its worldwide DHA and ARA requirements from Martek.



Martek manufactures nutritional oils that contain the long-chain polyunsaturated fatty acids DHA
and ARA, both of which are naturally present in breast milk. Clinical studies have demonstrated
benefits for infants receiving formula supplemented with DHA and ARA. Martek’s proprietary blend
of DHA and ARA, marketed under the brand names life’sDHATM and life’sARATM, is currently used in over
95% of U.S. infant formulas. Additionally, infant formula containing life’sDHA and life’sARA has
been consumed by over 20 million infants in over 65 countries worldwide.



“This new agreement affirms the benefits of adding Martek’s DHA and ARA to infant formula,”
said Steve Dubin, CEO of Martek. “With this new arrangement, two-thirds of Martek’s business in the
infant formula market is subject to multi-year, sole source agreements.”



Martek Biosciences Corporation (NASDAQ: MATK) is a leader in the innovation and development of DHA
omega-3 products that promote health and wellness through every stage of life. The company produces
life’sDHATM, a sustainable and vegetarian source of the omega-3 fatty acid DHA (docosahexaenoic
acid), for use in foods, beverages, infant formula, and supplements. The company also produces
life’sARATM (arachidonic acid), an omega-6 fatty acid, from a sustainable, vegetarian source, for
use in infant formula. For more information on Martek Biosciences Corporation, visit
http://www.martek.com.






 




			
	-*	 	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.




 









 









Sections of this release contain forward-looking statements. These statements are based upon
numerous assumptions which Martek cannot control and involve risks and uncertainties that could
cause actual results to
differ. These statements should be understood in light of the risk factors set forth in the
company’s filings with the Securities and Exchange Commission, including, but not limited to, the
company’s Form 10-K for the fiscal year ended October 31, 2006 and other filed reports on Form
10-K, Form 10-K/A, Form 10-Q and Form 8-K.






 




			
	-*	 	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.




 









 










EXHIBIT F




*






 




			
	-*	 	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.