exv10w65



 




Exhibit 10.65


FIRST MODIFICATION
AGREEMENT




     THIS FIRST MODIFICATION AGREEMENT (“AGREEMENT”) is made to be effective as
of April 30, 2004, by and between MANUFACTURERS AND TRADERS TRUST COMPANY, as
Administrative Agent (“ADMINISTRATIVE AGENT”); MANUFACTURERS AND TRADERS TRUST
COMPANY (“M&T”), BANK OF AMERICA, N.A. (“BANK OF AMERICA”), SUNTRUST BANK
(“SUNTRUST”), COMERICA BANK (“COMERICA”), FIFTH THIRD BANK (“FIFTH THIRD”), and
CHEVY CHASE BANK (“CHEVY CHASE”); MARTEK BIOSCIENCES CORPORATION, a Delaware
corporation (“BORROWER”); MARTEK BIOSCIENCES BOULDER CORPORATION (“MARTEK
BOULDER”), a Delaware corporation; and MARTEK BIOSCIENCES KINGSTREE CORPORATION
(“MARTEK KINGSTREE”), a Delaware corporation. Hereafter, M&T, BANK OF AMERICA,
SUNTRUST, COMERICA, FIFTH THIRD, and CHEVY CHASE are collectively referred to
as the “LENDERS”; MARTEK BOULDER and MARTEK KINGSTREE are collectively referred
to as the “GUARANTORS”; the BORROWER and the GUARANTORS are collectively
referred to as the “OBLIGORS”; and the ADMINISTRATIVE AGENT, the LENDERS, and
the OBLIGORS are collectively referred to as the “PARTIES.”



RECITALS




     The BORROWER is party to a Loan And Security Agreement dated January 26,
2004 (“LOAN AGREEMENT”) with the ADMINISTRATIVE AGENT and the LENDERS.
Hereafter, all defined terms in the LOAN AGREEMENT shall have the same
definitions and meanings in this AGREEMENT. All defined terms used in this
AGREEMENT shall be set forth in all capital letters.



     The BORROWER has requested that the LENDERS agree to certain modifications
to the terms of the LOANS and of the CREDIT DOCUMENTS. All of the PARTIES have
consented to the requested modifications and have entered into this AGREEMENT
to accomplish the required modifications.



     NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:



AGREEMENT




     Section 1.Acknowledgment Of Obligations. The OBLIGORS acknowledge that:
(a) each of the CREDIT DOCUMENTS is the valid and binding obligation of each of
the OBLIGORS that is a signatory thereto; (b) the CREDIT DOCUMENTS are
enforceable in accordance with all stated terms; and (c) the OBLIGORS have no
defenses, claims of offset, or counterclaims against the enforcement of the
CREDIT DOCUMENTS in accordance with all stated terms.



     Section 2. Amendment and Modification of Loan Agreement. The LOAN
AGREEMENT is hereby amended and modified as follows:




          Section 2.1 Increases In Commitment Amounts. The amounts set forth
opposite each LENDER’S name on the signature pages of the LOAN AGREEMENT
under the caption “Commitment Amount” shall be modified and increased to
the following COMMITMENT AMOUNTS:



	 	 	 	 	 
	M&T
	 	$	26,500,000.00	 
	BANK OF AMERICA
	 	$	23,500,000.00	 
	SUNTRUST BANK
	 	$	17,600,000.00	 
	COMERICA BANK
	 	$	11,800,000.00	 
	FIFTH THIRD BANK
	 	$	11,800,000.00	 
	CHEVY CHASE BANK
	 	$	8,800,000.00	 







 









 






          Section 2.2 Fixed Charge Coverage Ratio. Section 1.42 of the LOAN
AGREEMENT shall be modified such that the present references to
“aggregate cash balances” shall be “aggregate values of PERMITTED
INVESTMENTS.”




          Section 2.3 Increase In Maximum Aggregate Loan Amount. Section 1.73
of the LOAN AGREEMENT shall be modified such that the reference to
“Eighty-Five Million Dollars ($85,000,000.00)” shall be as of April 30,
2004 “One Hundred Million Dollars ($100,000,000.00).”




          Section 2.4 Definition of Fixed Charge Coverage Ratio. The
reference to CAPITAL EXPENDITURES in Section 1.42(a) of the LOAN
AGREEMENT shall be deleted for the time period beginning on April 30,
2004 and ending on October 31, 2004, and shall thereafter be reinstated
in Section 1.42 effective as of November 1, 2004. Beginning for the
period beginning on November 1, 2004 and continuing thereafter, CAPITAL
EXPENDITURES shall be measured for purposes of Section 1.42(a) on a
cumulative basis beginning on November 1, 2004 until October 31, 2005,
and thereafter for the immediately preceding four (4) FISCAL QUARTERS.




          Section 2.5 Interest Periods. Section 2.2.2(d) of the LOAN
AGREEMENT shall be modified such that the current reference to “five (5)”
shall be “seven (7).”




          Section 2.6 Increase in Fixed Charge Coverage Ratio. Section 5.14
of the LOAN AGREEMENT shall be modified such that the current reference
to “1.2 to 1.0” shall be as of April 30, 2004 and continuing thereafter
“2.5 to 1.0.”




          Section 2.7 Leverage Ratio. For the period beginning on April 30,
2004 and ending on January 31, 2005, the definition of LEVERAGE RATIO in
Section 1.65 of the LOAN AGREEMENT shall be modified to be the ratio of
“FUNDED INDEBTEDNESS minus the aggregate value of the PERMITTED
INVESTMENTS of the BORROWER and its SUBSIDIARIES on a consolidated basis
(as existing on the last day of such FISCAL QUARTER) to EBITDA.”
Beginning on February 1, 2005 and continuing thereafter, the definition
of LEVERAGE RATIO shall be reinstated as originally defined in the LOAN
AGREEMENT.




          Section 2.6 Capital Expenditure Limitations. The following Section
6.14 shall be added to the LOAN AGREEMENT:




               Section 6.14 2004 Capital Expenditures. The BORROWER
and its SUBSIDIARIES shall not make CAPITAL EXPENDITURES
during the 2004 FISCAL YEAR in excess of an aggregate amount
of Two Hundred Million Dollars ($200,000,000.00).



     Section 3. Amendment And Modification Of Notes. Each of the NOTES shall
be amended and restated in its entirety as of May 1, 2004 in order to reflect
the revised and increased COMMITMENT AMOUNTS of the LENDERS, as reflected in
Exhibits 3-1 through 3-6 attached hereto.



     Section 4. Obligors’ Representations And Warranties. As an inducement to
the SECURED PARTIES to enter into this AGREEMENT, each of the OBLIGORS makes
the following representations and warranties to the SECURED PARTIES and
acknowledges the justifiable reliance of the SECURED PARTIES thereon:




          A. Authority And Good Standing. The BORROWER: (a) has the power to
enter into this AGREEMENT and any related documents and to perform all of
its obligations hereunder and thereunder; (b) has duly authorized the
entry into and performance of this AGREEMENT and all related documents;
and (c) is in good standing in the state of its organization and is
qualified to do business and is in good standing in all other states in
which the BORROWER transacts business and in which the failure to qualify
could reasonably be expected to be or result in a MATERIAL ADVERSE EVENT.




          B. Violations. The execution, delivery, and performance of this
AGREEMENT by the BORROWER will not immediately, or with the passage of
time, the giving of notice, or both: (a) violate any LAWS or result in a
default under any contract, agreement, or instrument to which the
BORROWER is a party



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or by which the BORROWER or any properties of the BORROWER are
bound; or (b) result in the creation or imposition of any security
interest in, or lien or encumbrance upon, any of the assets of the
BORROWER, except in favor of the SECURED PARTIES.




          C. Liens. The SECURED PARTIES hold first lien priority perfected
liens and security interests in and to the assets of the BORROWER as
required by the terms and conditions of the CREDIT DOCUMENTS, which liens
shall survive intact the transactions contemplated by this AGREEMENT in
the same lien priority existing prior to this AGREEMENT.




          D. Enforceability. This AGREEMENT and all of the CREDIT DOCUMENTS,
as modified and amended in accordance herewith, are the valid and binding
obligations of the OBLIGORS, as indicated, and are fully enforceable in
accordance with all stated terms.



     Section 5. Guaranty Agreements. The GUARANTORS hereby ratify and reaffirm
the terms and conditions of the GUARANTY AGREEMENTS and acknowledge that the
GUARANTY AGREEMENTS will continue to be fully enforceable against the
GUARANTORS in accordance with all stated terms after the execution and delivery
of this AGREEMENT and the consummation of the transactions contemplated herein.



     Section 6. Fees. On or before May 14, 2004, the BORROWER shall pay to the
ADMINISTRATIVE AGENT for the pro rata benefit of the LENDERS an amendment fee
in the amount of Eighty-Five Thousand Dollars ($85,000.00), and an “Upfront
Fee” of Fifty-Six Thousand Two Hundred Fifty Dollars ($56,250.00), which fees
shall be deemed to have been fully earned upon the execution and delivery of
this AGREEMENT by the LENDERS.



     Section 7. No Other Modifications Of Credit Documents. The PARTIES
acknowledge that except as specifically stated in this AGREEMENT, the CREDIT
DOCUMENTS shall not be deemed to have been amended, modified or changed in any
respect, and shall continue to be enforceable against the parties thereto in
accordance with all stated terms. Nothing contained herein is intended to
limit, vary, or terminate any liens, pledges, or security interests presently
existing for the benefit of the SECURED PARTIES or to alter the lien priority
thereof. Each OBLIGOR reaffirms and ratifies all of such liens, pledges,
security interests or mortgage liens previously granted for the benefit of the
SECURED PARTIES.



     Section 8. Further Assurances. The OBLIGORS each agree to execute and
deliver to the ADMINISTRATIVE AGENT such other and further documents as may,
from time to time, be reasonably requested by the ADMINISTRATIVE AGENT in order
to execute or enforce the terms and conditions of this AGREEMENT or any of the
CREDIT DOCUMENTS.



     Section 9. No Novation; No Refinance. It is the intent of each of the
PARTIES that nothing contained in this AGREEMENT shall be deemed to effect or
accomplish or otherwise constitute a novation of any of the obligations owed by
any of the OBLIGORS to the LENDERS or to be a refinance of any of the LOANS.
Nothing contained herein shall be deemed to extinguish, terminate or impair any
of the duties or obligations owed by the OBLIGORS to the LENDERS with respect
to any of the LOANS, the CREDIT DOCUMENTS or the GUARANTY AGREEMENTS.



     Section 10. Enforceability. This AGREEMENT shall inure to the benefit of
and be enforceable against each of the PARTIES and their respective successors
and assigns.



     Section 11. Choice Of Law; Consent To Jurisdiction; Agreement As To Venue.
This AGREEMENT shall be construed, performed and enforced and its validity and
enforceability determined in accordance with the LAWS of the State of Maryland
(excluding, however, conflict of laws principles). Each of the PARTIES
consents to the jurisdiction of the courts of the State of Maryland and the
jurisdiction of the United States District Court for the District of Maryland,
if a basis for federal jurisdiction exists. Each of the PARTIES waives any
right to object to the maintenance of a suit in any of the state or federal
courts of the State of Maryland on the basis of improper venue or inconvenience
of forum.



     Section 12. Expenses. The BORROWER agrees to reimburse the ADMINISTRATIVE
AGENT upon demand for the costs and expenses incurred by the ADMINISTRATIVE
AGENT in connection with the preparation of this AGREEMENT, including
reasonable attorneys’ fees.



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     Section 13. Counterparts And Delivery. This AGREEMENT may be executed and
delivered in counterparts, and shall be fully enforceable against each
signatory, even if all designated signatories do not actually execute this
AGREEMENT. This AGREEMENT, and the signatures to this AGREEMENT, may be
delivered via facsimile.



     IN WITNESS WHEREOF, the parties have executed this AGREEMENT with the
specific intention of creating a document under seal to be effective as of the
date first above written.



	 	 	 	 	 	 	 
	WITNESS/ATTEST:	 	BORROWER:
	 
	 	 	 	 	 	 
	 	 	MARTEK BIOSCIENCES CORPORATION,
	 	 	A Delaware Corporation
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Peter L. Buzy	 	(SEAL)
	
 

	 	 	 	
 	 	 
	

	 	 	 	Peter L. Buzy,	 	 
	

	 	 	 	Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 	 	 
	 	 	MARTEK BIOSCIENCES BOULDER CORPORATION
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Peter L. Buzy	 	(SEAL)
	
 

	 	 	 	
 	 	 
	

	 	 	 	Peter L. Buzy,	 	 
	

	 	 	 	Chief Financial Officer and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	MARTEK BIOSCIENCES KINGSTREE CORPORATION
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Peter L. Buzy	 	(SEAL)
	
 

	 	 	 	
 	 	 
	

	 	 	 	Peter L. Buzy,	 	 
	

	 	 	 	Chief Financial Officer and Treasurer	 	 







[Signatures Continued On The Following Page]




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Signature Page to First Modification Agreement – Continued:




	 	 	 	 	 	 	 	 	 
	WITNESS/ATTEST:	 	AGENT:
	 
	 	 	 	 	 	 	 	 
	 	 	MANUFACTURERS AND TRADERS TRUST COMPANY,
	 	 	AS ADMINISTRATIVE AGENT
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	 	 	 /s/ Robert F. Topper	 	(SEAL)
	
 	 	 	 	
 	 	 
	

	 	 	 	Name:	 	 Robert F. Topper	 	 
	

	 	 	 	 	 	
 	 	 
	

	 	 	 	Title:	 	 Vice President	 	 
	

	 	 	 	 	 	
 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	LENDERS:
	 
	 	 	 	 	 	 	 	 
	 	 	MANUFACTURERS AND TRADERS TRUST COMPANY
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	 	 	 /s/ Robert F. Topper	 	(SEAL)
	
 	 	 	 	
 	 	 
	

	 	 	 	Name:	 	 Robert F. Topper	 	 
	

	 	 	 	 	 	
 	 	 
	

	 	 	 	Title:	 	 Vice President	 	 
	

	 	 	 	 	 	
 	 	 







[Signatures Continued On The Following Page]




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Signature Page to First Modification Agreement – Continued:




	 	 	 	 	 	 	 	 	 
	 	 	LENDERS :
	 
	 	 	 	 	 	 	 	 
	WITNESS/ATTEST:	 	BANK OF AMERICA, N.A.
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	 	 	 /s/ Michael J. Radcliffe	 	(SEAL)
	
 	 	 	 	
 	 	 
	

	 	 	 	Name:	 	 Michael J. Radcliffe	 	 
	

	 	 	 	 	 	
 	 	 
	

	 	 	 	Title:	 	 Senior Vice President	 	 
	

	 	 	 	 	 	
 	 	 







[Signatures Continued On The Following Page]




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Signature Page to First Modification Agreement – Continued:




	 	 	 	 	 	 	 	 	 
	 	 	LENDERS :
	 
	 	 	 	 	 	 	 	 
	WITNESS/ATTEST:	 	SUNTRUST BANK
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	 	 	 /s/ J. MacGregor Tisdale	 	(SEAL)
	
 	 	 	 	
 	 	 
	

	 	 	 	Name:	 	 J. MacGregor Tisdale	 	 
	

	 	 	 	 	 	
 	 	 
	

	 	 	 	Title:	 	 Vice President	 	 
	

	 	 	 	 	 	
 	 	 







[Signatures Continued On The Following Page]




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Signature Page to First Modification Agreement – Continued:




	 	 	 	 	 	 	 	 	 
	 	 	LENDERS :
	 
	 	 	 	 	 	 	 	 
	WITNESS/ATTEST:	 	COMERICA BANK
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	 	 	 /s/ Richard S. Bugosy	 	(SEAL)
	
 	 	 	 	
 	 	 
	

	 	 	 	Name:	 	 Richard S. Bugosy	 	 
	

	 	 	 	 	 	
 	 	 
	

	 	 	 	Title:	 	 Vice President	 	 
	

	 	 	 	 	 	
 	 	 







[Signatures Continued On The Following Page]




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Signature Page to First Modification Agreement – Continued:




	 	 	 	 	 	 	 	 	 
	 	 	LENDERS :
	 
	 	 	 	 	 	 	 	 
	WITNESS/ATTEST:	 	FIFTH THIRD BANK
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	 	 	 /s/ David C. Melin	 	(SEAL)
	
 	 	 	 	
 	 	 
	

	 	 	 	Name:	 	 David C. Melin	 	 
	

	 	 	 	 	 	
 	 	 
	

	 	 	 	Title:	 	 Vice President	 	 
	

	 	 	 	 	 	
 	 	 







[Signatures Continued On The Following Page]




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Signature Page to First Modification Agreement – Continued:




	 	 	 	 	 	 	 	 	 
	 	 	LENDERS :
	 
	 	 	 	 	 	 	 	 
	WITNESS/ATTEST:	 	CHEVY CHASE BANK
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	 	 	 /s/ William J. Olsen	 	(SEAL)
	
 	 	 	 	
 	 	 
	

	 	 	 	Name:	 	 William J. Olsen	 	 
	

	 	 	 	 	 	
 	 	 
	

	 	 	 	Title:	 	 Group Vice President	 	 
	

	 	 	 	 	 	
 	 	 








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