exv10w60



 



EXHIBIT 10.60


AMENDMENT TO MANUFACTURING AGREEMENT



     THIS AMENDMENT TO MANUFACTURING AGREEMENT (this “Amendment”) is made this
1st day of October, 2003, by and between CP Kelco U.S., Inc. (“CP Kelco”) and
Martek Biosciences Boulder Corporation (“Martek”).



     WHEREAS, CP Kelco and OmegaTech, Inc. (“OmegaTech”) executed a
Manufacturing Agreement (the “Agreement”) effective as of October 19, 2001
under which CP Kelco was to manufacture Products (capitalized terms not defined
herein shall have the meanings assigned thereto in the Agreement) for
OmegaTech;



     WHEREAS, Martek acquired OmegaTech’s business and pursuant to this
purchase was assigned the Agreement;



     *



     WHEREAS, Martek has agreed to provide CP Kelco with the funds required for
the improvements subject to the terms of this Amendment.



     NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, CP Kelco and Martek agree as follows:



1. Temporary Improvements



1.1 CP Kelco shall use, or continue to use, its best efforts to
construct and assemble temporary improvements (“Temporary Improvements”) to its
Plant * prior to the implementation of the Permanent
Improvements, as defined below.



1.2 Martek shall have the right to inspect and approve the
Temporary Improvements before the initial production run to satisfy itself that
the Temporary Improvements are in compliance with GMPs. Upon satisfactory
inspection of the Temporary Improvements, Martek shall indicate its approval of
the same in writing to CP Kelco.



1.3 Martek shall reimburse CP Kelco for all costs CP Kelco
incurs, up to a maximum *, in connection
with the assembly, disassembly and reassembling of the Temporary Improvements
(“Temporary Improvement Costs”). CP Kelco shall provide Martek with an
itemization of all such Temporary Improvement Costs and any substantiation
Martek reasonably requires in connection therewith. All costs shall be limited
to



 

 

 


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


 






 


CP Kelco direct out of pocket costs without any markup or other adjustments.
Payments shall be made within thirty (30) days of Martek’s receipt of
itemization of such Temporary Improvements costs. CP Kelco hereby acknowledges
that Martek has, prior to the date of this Amendment, paid CP Kelco *, which amount shall be applied towards
Martek’s obligation to reimburse CP Kelco for the cost of such Temporary
Improvements, or if less than *, such balance
shall be applied to other obligations of Martek under this Agreement.



2. Permanent Improvements



2.1 By December 31, 2003, Martek and CP Kelco shall use their
reasonable best efforts to jointly develop the scope of permanent improvements
(“Permanent Improvements”) the Plant requires to enable the continuous
production of DHA-INT that will meet the Specifications and be manufactured in
accordance with GMPs. The parties shall seek to control the costs of the
Permanent Improvements and to limit the amount of time before the Permanent
Improvements are completed.



2.2 If the parties reach agreement, in writing, as to the
scope and costs of the Permanent Improvements, and upon the written approval of
Martek, Martek shall pay CP Kelco 50% of the agreed cost within thirty (30)
days of Martek’s written approval to proceed, and, as soon as possible after
agreement is reached, CP Kelco shall proceed with the construction of the
Permanent Improvements. CP Kelco has provided, prior to the date of this
Amendment, a preliminary cost estimate * for the
Permanent Improvements.



2.3 Upon satisfactory completion of the Permanent Improvements,
Martek shall pay and/or reimburse CP Kelco for the balance of all costs
directly incurred for the purchase, fabrication, and installation of the
Permanent Improvements (“Permanent Improvement Costs”). CP Kelco shall provide
Martek with an itemization of all such Permanent Improvement Costs and any
substantiation Martek reasonably requires in connection therewith, all such
costs to be limited to the direct out of pocket costs incurred by CP Kelco,
without any markup or other adjustment. Payment shall be made within thirty
(30) days of Martek’s receipt of itemization of such Permanent Improvement
Costs.



3. Term



3.1 The term of the Agreement is hereby extended for six months
to June 30, 2005.



3.2 If (i) the initial production run utilizing the Temporary
Improvements meets GMPs and product is in accordance with the Specifications
for DHA-INT and (ii) Martek agrees to proceed with the construction of the
Permanent Improvements in accordance with Section 2.2 of this Amendment , the
term of the Agreement shall automatically be extended an additional 12 months
until June 30, 2006.



3.3 If (i) the initial production run utilizing the Temporary
Improvements meets GMPs and product is in accordance with the Specifications
for DHA-INT and (ii) Martek agrees to proceed with the construction of the
Permanent Improvements in accordance with Section 2.2 of this Amendment, Martek
shall have the option at anytime prior to August 31, 2005, upon written



 

 

 


* 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.


 






 


notice from Martek to CP Kelco, to extend the term of the Agreement an
additional 18 months until December 31, 2007.



4. Payment If the condition set forth in Section
3.2(i) is satisfied but Martek, in its sole and absolute discretion determines,
once the parties agree upon the scope and costs of the Permanent Improvements,
not to proceed with the construction of the Permanent Improvements, Martek
shall provide CP Kelco with a payment of $300,000 within 60 days of Martek’s
determination not to proceed. Such payment shall fully satisfy any and all
claims that CP Kelco may possess as a result of Martek’s determination not to
proceed with the construction of the Permanent Improvements, including, but not
limited to, any loss of revenue or profits associated with the elimination or
reduction of the Plant’s production capacity as a result of the assembly,
disassembly or reassembling of the Temporary Improvements. CP Kelco shall have
no other rights against Martek as a result of Martek’s determination not to
proceed with the construction of the Permanent Improvements. Martek’s
determination not to proceed shall be made no later than December 31, 2003,
provided that the completion of the development of the Permanent Improvements
as described in Section 2.1 above has been completed by November 30, 2003, or
if later, then by the date which is thirty (30) days following the completion
of the development of the Permanent Improvements described in Section 2.1.



5. Pricing



5.1 Effective as of January 1, 2005, the Product Pricing
Schedule to the Agreement shall be amended in accordance with Schedule 1 to
this Amendment. *


5.2 If Martek does not agree to the 12-month extension set
forth in Section 3.2 of this Amendment, Martek shall purchase and CP Kelco
shall deliver a minimum of * of Products at Base Pricing during the
6-month period January 1, 2005 to June 30, 2005. Should Martek purchase less
than the minimum quantity during that period, Martek shall reimburse CP Kelco
for net lost profits pursuant to Section 5.5 below.



5.3 If Martek agrees to the 12-month extension set forth in
Section 3.2 of this Amendment, the following terms shall apply:



5.3.1 Martek shall purchase and CP Kelco shall deliver a minimum of
125,000 kg of Products during each of the 6-month periods: i) January 1, 2005
to June 30, 2005, ii) July 1, 2005 to December 31, 2005, and iii) January 1,
2006 to June 30, 2006. Should Martek purchase less than the minimum quantity
during any given period, Martek shall reimburse CP Kelco for net lost profits
pursuant to Section 5.5 below.



5.3.2 Martek shall have the right to a pricing rebate (reflected as a
dollar for dollar immediate purchase price reduction when earned on invoices so
that amounts due from Martek shall always be the net amount after subtracting
any rebates) for Products purchased during the 18-month extension period
January 1, 2005 to June 30, 2006. Cumulative rebate during the 18-month
extension period shall not exceed 20% of the actual Permanent Improvement Costs
as described in Section 2.3 above. *



 

 

 


* 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.









 


5.4 If Martek exercises its option for an additional 18-month
extension under Section 3.3 of this Amendment, the following terms shall apply:



5.4.1 Martek shall purchase and CP Kelco shall deliver a minimum of
* of Products during each of the 6-month periods: i) July 1, 2006 to
December 31, 2006, ii) January 1, 2007 to June 30, 2007, and iii) July 1, 2007
to December 31, 2007. Should Martek purchase less than the minimum quantity
during any given period, Martek shall reimburse CP Kelco for net lost profits
pursuant to Section 5.5 below.



5.4.2 Martek shall have the right to a pricing rebate (reflected as a
dollar for dollar purchase price reduction when earned on invoices so that
amounts due from Martek shall always be the net amount after subtracting any
rebates) for Products purchased during the 18-month extension period July 1,
2006 to December 31, 2007. Cumulative rebate during the 18-month period shall
not exceed 30% of the actual Permanent Improvement Costs as described in
Section 2.3 above. *



     5.5 In the event that Martek purchases less than the minimum amounts
of Products during any given period as required under Sections 5.2, 5.3.1, or
5.4.1 above, then, the reimbursement due from Martek shall be the net lost
profits to CP Kelco, which will be determined as the purchase price for DHA
Gold in 15 kg kraft bags otherwise applicable under Schedule 1 hereof, less the
amount of * (“Variable Cost Reduction”), multiplied by the shortfall
between the minimum amounts of Products required and the actual quantity
purchased during the period in question. In addition, the amount of * (“Labor Reduction”) shall also be similarly subtracted from the purchase
price on account of labor costs, provided, that CP Kelco is able to either
redeploy its workers to other projects, or such workers’ services are
discontinued so that CP Kelco is no longer paying salaries or wages to such
workers. In the event that CP Kelco is only able to partially redeploy its
workers, or discontinue the services of a portion of its workers, then, the
amount set forth above for the Labor Reduction shall be reduced
proportionately. CP Kelco shall take all commercially reasonable measures to
mitigate any damages to Martek. *



6. Rights Upon Termination



6.1 If the Agreement shall terminate under Section 9.1.1 of the Agreement as a
result of a material breach by CP Kelco or under Section 9.1.2 if any of the
events set forth therein apply to CP Kelco, Martek shall be reimbursed the
costs advanced by Martek for the Permanent Improvement Costs, less cumulative
amortization of the Permanent Improvement Costs over the applicable contract
extension period at termination as per Section 5.3 and/or 5.4 (i.e., 18 months
or 36 months), less cumulative discounts previously received by Martek. Such
amount shall not be in lieu of, but shall otherwise be in addition to, any
other and further claims Martek may have against CP Kelco as a result of a
termination of the Agreement under Sections 9.1.1 and 9.1.2. In all other
cases, the discount available to Martek is non-refundable.



 

 

 


* 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.









 


7. Effect Except as otherwise provided in, or
affected by, this Amendment, the Agreement shall remain in full force and
effect; except, however, Section 5.1.3 shall be deemed deleted from the
Agreement and of no further force or effect.


8. ASSIGNMENT This Agreement, as amended herein, may not be
assigned by a party without the prior written consent of the other party, which
consent will not be unreasonably withheld. In the event that majority control
of the capital stock of CP Kelco (which shall include the stock of any ultimate
parent company) is sold, assigned or otherwise transferred to a third party
which in the reasonable opinion of Martek is deemed by Martek to be a
Competitor (defined below), then, Martek shall have the option to elect to
terminate this Agreement and the rights specified in Section 6.1 above shall be
available to Martek. “Competitor” shall be defined as any third party which
is in any aspect of the business of production, manufacturing, processing,
marketing, or performing research and development relating in any manner to
Omega-3 and Omega-6 long chain polyunsaturated fatty acids which includes, but
are not limited to, docosahexaenoic acid(DHA), arachidonic acid(ARA), or
eicosapentaenoic acid(EPA).


9. NOTICE Notices to Martek shall be sent to: Martek Biosciences
Corporation, 6480 Dobbin Road, Columbia Maryland 21045, and Facsimile: (410)
740-2985, Attn.: General Counsel. Notices to C.P. Kelco shall be sent to:
Richard B. Langston, CP Kelco U.S., Inc, 8355 Aero Drive, San Diego California
92123, and Facsimile: (858) 467-6440, with a copy to: CP Kelco U.S., Inc,
1313 N. Market Street, Wilmington Delaware 19894-0001, and Facsimile: (302)
594-6260, Attn: VP, Intellectual Property.


IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and
year set forth above.



	 	 	 
	 	 	
CP KELCO U.S., INC.
	 	 	 
	 	 	
Jurgen Dominik
	 	 	 
	 	 	
Sr. Vice President,



Manufacturing and Process R&D




	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Jurgen
Dominik
	 	 	 	 	

	 	 	 	 	 	 	 
	 	 	 	 	MARTEK BIOSCIENCES BOULDER CORPORATION
	 	 	 	 	 	 	 
	 	 	By:
	 	/s/ George P.
Barker
	 	 	 	 	


	 	 	 	 	
George P. Barker

Sr. Vice President & General Counsel










 



SCHEDULE 1



PRICING AMENDMENT


*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*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 Exchange Commission.