ex10-01



 



EXHIBIT 10.01











MARTEK BIOSCIENCES CORPORATION



2001 STOCK OPTION PLAN












 






 



TABLE OF CONTENTS




	 	 	 	 	 	 	 
	Page
	

	1.	 	
PURPOSE
	 	 	1	 
	2.	 	
DEFINITIONS
	 	 	1	 
	3.	 	
ADMINISTRATION OF THE PLAN
	 	 	4	 
	 	 	
3.1. Board
	 	 	4	 
	 	 	
3.2. Committee
	 	 	4	 
	 	 	
3.3. Terms of Options
	 	 	4	 
	 	 	
3.4. No Liability
	 	 	5	 
	4.	 	
STOCK SUBJECT TO THE PLAN
	 	 	5	 
	5.	 	
EFFECTIVE DATE, DURATION AND AMENDMENTS
	 	 	6	 
	 	 	
5.1. Effective Date
	 	 	6	 
	 	 	
5.2. Term
	 	 	6	 
	 	 	
5.3. Amendment and Termination of the Plan
	 	 	6	 
	6.	 	
OPTION ELIGIBILITY AND LIMITATIONS
	 	 	6	 
	 	 	
6.1. Company or Subsidiary Employees; Service Providers; Other Persons
	 	 	6	 
	 	 	
6.2. Successive Options
	 	 	6	 
	 	 	
6.3. Stand-Alone, Additional, Tandem, and Substitute Options
	 	 	6	 
	7.	 	
OPTION AGREEMENT
	 	 	7	 
	8.	 	
TERMS AND CONDITIONS OF OPTIONS
	 	 	7	 
	 	 	
8.1. Option Price
	 	 	7	 
	 	 	
8.2. Vesting
	 	 	7	 
	 	 	
8.3. Term
	 	 	7	 
	 	 	
8.4. Termination of Service
	 	 	7	 
	 	 	
8.5. Limitations on Exercise of Option
	 	 	8	 
	 	 	
8.6. Method of Exercise
	 	 	8	 
	 	 	
8.7. Rights of Holders of Options
	 	 	8	 
	 	 	
8.8. Delivery of Stock Certificates
	 	 	8	 
	 	 	
8.9. Reload Options
	 	 	8	 
	9.	 	
TRANSFERABILITY OF OPTIONS
	 	 	9	 
	 	 	
9.1. Transferability of Options
	 	 	9	 
	 	 	
9.2. Family Transfers
	 	 	9	 
	10.	 	
FORM OF PAYMENT FOR OPTIONS
	 	 	9	 
	 	 	
10.1. General Rule
	 	 	9	 
	 	 	
10.2. Surrender of Stock
	 	 	9	 
	 	 	
10.3. Cashless Exercise
	 	 	10	 
	 	 	
10.4. Promissory Note
	 	 	10	 
	 	 	
10.5. Other Forms of Payment
	 	 	10	 
	11.	 	
PARACHUTE LIMITATIONS
	 	 	10	 
	12.	 	
REQUIREMENTS OF LAW
	 	 	11	 
	 	 	
12.1. General
	 	 	11	 
	 	 	
12.2. Rule 16b-3
	 	 	11	 
	13.	 	
EFFECT OF CHANGES IN CAPITALIZATION
	 	 	12	 



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13.1. Changes in Stock
	 	 	12	 
	 	 	
13.2. Reorganization in Which the Company Is the
Surviving Entity Which

        does not Constitute a Corporate Transaction
	 	 	12	 
	 	 	
13.3. Corporate Transaction
	 	 	13	 
	 	 	
13.4. Adjustments
	 	 	13	 
	 	 	
13.5. No Limitations on Company
	 	 	14	 
	14.	 	
GENERAL PROVISIONS
	 	 	14	 
	 	 	
14.1. Pooling
	 	 	14	 
	 	 	
14.2. Disclaimer of Rights
	 	 	14	 
	 	 	
14.3. Nonexclusivity of the Plan
	 	 	14	 
	 	 	
14.4. Withholding Taxes
	 	 	15	 
	 	 	
14.5. Captions
	 	 	15	 
	 	 	
14.6. Other Provisions
	 	 	15	 
	 	 	
14.7. Number And Gender
	 	 	15	 
	 	 	
14.8. Severability
	 	 	15	 
	 	 	
14.9. Governing Law
	 	 	15	 



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MARTEK BIOSCIENCES CORPORATION



2001 STOCK OPTION PLAN



     Martek Biosciences Corporation, a Delaware corporation (the “Company”),
sets forth herein the terms of its 2001 Stock Option Plan (the “Plan”), as
follows:


1. PURPOSE



     The Plan is intended to enhance the Company’s and its Affiliates’ (as
defined herein) ability to attract and retain highly qualified employees,
officers and directors to serve the Company and its Affiliates and to expend
maximum effort to improve the business results and earnings of the Company, by
providing to such persons an opportunity to acquire or increase a direct
proprietary interest in the operations and future success of the Company. To
this end, the Plan provides for the grant of stock options in accordance with
the terms hereof. Stock options granted under the Plan are non-qualified stock
options.


2. DEFINITIONS



     For purposes of interpreting the Plan and related documents (including
Option Agreements), the following definitions shall apply:


     2.1 “Affiliate” means, with respect to the Company, any company or other
trade or business that controls, is controlled by or is under common control
with the Company within the meaning of Rule 405 of Regulation C under the
Securities Act, including, without limitation, any Subsidiary.


     2.2 “Benefit Arrangement” shall have the meaning set forth in Section 11
hereof.


     2.3 “Board” means the Board of Directors of the Company.


     2.4 “Cause” means, as determined by the Board and unless otherwise
provided in an applicable agreement with the Company or an Affiliate, (i) gross
negligence or willful misconduct in connection with the performance of duties;
(ii) conviction of a criminal offense (other than minor traffic offenses); or
(iii) material breach of any term of any employment, consulting or other
services, confidentiality, intellectual property or non-competition agreements,
if any, between the Service Provider and the Company or an Affiliate.


     2.5 “Code” means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.


     2.6 “Committee” means a committee of, and designated from time to time by
resolution of, the Board.


     2.7 “Company” means Martek Biosciences Corporation.


 






 


     2.8 “Corporate Transaction” means (i) the dissolution or liquidation of
the Company or a merger, consolidation, or reorganization of the Company with
one or more other entities in which the Company is not the surviving entity,
(ii) a sale of substantially all of the assets of the Company to another person
or entity, or (iii) any transaction (including without limitation a merger or
reorganization in which the Company is the surviving entity) which results in
any person or entity (other than persons who are shareholders or Affiliates
immediately prior to the transaction) owning 50% or more of the combined voting
power of all classes of stock of the Company.


     2.9 “Disability” means the Optionee is unable to perform each of the
essential duties of such Optionee’s position by reason of a medically
determinable physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous period of not less
than 12 months.


     2.10 “Effective Date” means May 31, 2001, the date the Plan is approved by
the Board.


     2.11 “Exchange Act” means the Securities Exchange Act of 1934, as now in
effect or as hereafter amended.


     2.12 “Fair Market Value” means the value of a share of Stock, determined
as follows: if on the Grant Date or other determination date the Stock is
listed on an established national or regional stock exchange, is admitted to
quotation on The Nasdaq Stock Market, Inc. or is publicly traded on an
established securities market, the Fair Market Value of a share of Stock shall
be the closing price of the Stock on such exchange or in such market (if there
is more than one such exchange or market the Board shall determine the
appropriate exchange or market) on the trading day immediately preceding the
Grant Date or such other determination date (or if there is no such reported
closing price, the Fair Market Value shall be the mean between the highest bid
and lowest asked prices or between the high and low sale prices on such trading
day) or, if no sale of Stock is reported for such trading day, on the next
preceding day on which any sale shall have been reported. If the Stock is not
listed on such an exchange, quoted on such system or traded on such a market,
Fair Market Value shall be the value of the Stock as determined by the Board in
good faith.


     2.13 “Family Member” means a person who is a spouse, former spouse, child,
stepchild, grandchild, parent, stepparent, grandparent, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive relationships, of the
Optionee, any person sharing the Optionee’s household (other than a tenant or
employee), a trust in which any one or more of these persons have more than
fifty percent of the beneficial interest, a foundation in which any one or more
of these persons (or the Optionee) control the management of assets, and any
other entity in which one or more of these persons (or the Optionee) own more
than fifty percent of the voting interests.


     2.14 “Grant Date” means, as determined by the Board or authorized
Committee, the latest to occur of (i) the date as of which the Board approves
an Option, (ii) the date on

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which the recipient of an Option first becomes eligible to receive an
Option under Section 6 hereof, or (iii) such other date as may be specified by
the Board.


     2.15 “Non-qualified Stock Option” means an Option that is not an incentive
stock option within the meaning of section 422 of the Code.


     2.16 “Option” means an option to purchase one or more shares of Stock
pursuant to the Plan.


     2.17 “Option Agreement” means the written agreement between the Company
and an Optionee that evidences and sets out the terms and conditions of an
Option.


     2.18 “Option Price” means the purchase price for each share of Stock
subject to an Option.


     2.19 “Optionee” means a person who receives or holds an Option under the Plan.


     2.20 “Other Agreement” shall have the meaning set forth in Section 11 hereof.


     2.21 “Plan” means this Martek Biosciences Corporation 2001 Stock Option Plan.


     2.22 “Securities Act” means the Securities Act of 1933, as now in effect
or as hereafter amended.


     2.23 “Service” means service as an employee, officer, director or other
Service Provider of the Company or an Affiliate. Unless otherwise stated in
the applicable Option Agreement, an Optionee’s change in position or duties
shall not result in interrupted or terminated Service, so long as such Optionee
continues to be an employee, officer, director or other Service Provider of the
Company or an Affiliate. Subject to the preceding sentence, whether a
termination of Service shall have occurred for purposes of the Plan shall be
determined by the Board, which determination shall be final, binding and
conclusive.


     2.24 “Service Provider” means an employee, officer or director of the
Company or an Affiliate, or a consultant or adviser currently providing
services to the Company or an Affiliate.


     2.25 “Stock” means the common stock, par value $.10 per share, of the
Company.


     2.26 “Termination Date” means the date upon which an Option shall
terminate or expire, as set forth in Section 8.3 hereof.


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3. ADMINISTRATION OF THE PLAN



     3.1. Board


     The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company’s certificate of
incorporation and by-laws and applicable law. The Board shall have full power
and authority to take all actions and to make all determinations required or
provided for under the Plan, any Option Agreement, and shall have full power
and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate to the administration
of the Plan or any Option Agreement. All such actions and determinations shall
be by the affirmative vote of a majority of the members of the Board present at
a meeting or by unanimous consent of the Board executed in writing in
accordance with the Company’s certificate of incorporation and by-laws and
applicable law. The interpretation and construction by the Board of any
provision of the Plan or any Option Agreement shall be final and conclusive.


     3.2. Committee.


     The Board from time to time may delegate to the Committee such powers and
authorities related to the administration and implementation of the Plan, as
set forth in Section 3.1 above and other applicable provisions, as the Board
shall determine, consistent with the certificate of incorporation and by-laws
of the Company and applicable law. In the event that the Plan or any Option
Agreement entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken or such
determination may be made by the Committee if the power and authority to do so
has been delegated to the Committee by the Board as provided for in this
Section. Unless otherwise expressly determined by the Board, any such action
or determination by the Committee shall be final, binding and conclusive. To
the extent permitted by law, the Committee may delegate its authority under the
Plan to a member of the Board.


     3.3. Terms of Options.


     Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority to:


     (i)  designate Optionees,


     (ii)  determine the type or types of Options to be granted to an Optionee,


     (iii)  determine the number of shares of Stock to be subject to an Option,


     (iv)  establish the terms and conditions of each Option (including, but not
limited to, the exercise price of any Option and the nature and duration of any
restriction or condition (or provision for lapse thereof) relating to the
vesting, exercise, transfer, or forfeiture of an Option or the shares of Stock
subject thereto),


     (v)  prescribe the form of each Option Agreement evidencing an Option, and


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     (vi)  amend, modify, or supplement the terms of any outstanding Option.
Such authority specifically includes the authority, in order to effectuate the
purposes of the Plan but without amending the Plan, to modify Options to
eligible individuals who are foreign nationals or are individuals who are
employed outside the United States to recognize differences in local law, tax
policy, or custom.


     As a condition to any subsequent Option, the Board shall have the right,
at its discretion, to require Optionees to return to the Company Options
previously granted under the Plan. Subject to the terms and conditions of the
Plan, any such new Option shall be upon such terms and conditions as are
specified by the Board at the time the new Option is granted. The Board shall
have the right, in its discretion, to grant Options in substitution or exchange
for any other award under another plan of the Company, any Affiliate, or any
business entity to be acquired by the Company or an Affiliate. The Company may
retain the right in an Option Agreement to cause a forfeiture of the gain
realized by an Optionee on account of actions taken by the Optionee in
violation or breach of or in conflict with any non-competition agreement, any
agreement prohibiting solicitation of employees or clients of the Company or
any Affiliate thereof or any confidentiality obligation with respect to the
Company or any Affiliate thereof or otherwise in competition with the Company
or any Affiliate thereof, to the extent specified in such Option Agreement
applicable to the Optionee. Furthermore, the Company may annul an Option if
the Optionee is an employee of the Company or an Affiliate thereof and is
terminated for Cause as defined in the applicable Option Agreement or the Plan,
as applicable. The grant of any Option shall be contingent upon the Optionee
executing the appropriate Option Agreement.


     3.4. No Liability.


     No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Option
Agreement.


4. STOCK SUBJECT TO THE PLAN



     Subject to adjustment as provided in Section 13 hereof, the number of
shares of Stock available for issuance under the Plan shall be 1,000,000
shares. Stock issued or to be issued under the Plan shall be authorized but
unissued shares. If any shares covered by an Option are not purchased or are
forfeited, or if an Option otherwise terminates without delivery of any Stock
subject thereto, then the number of shares of Stock counted against the
aggregate number of shares available under the Plan with respect to such
Options shall, to the extent of any such forfeiture or termination, again be
available for making Options under the Plan. If the Option Price of any Option
granted under the Plan, or if pursuant to Section 14.4 the withholding
obligation of any Optionee with respect to an Option, is satisfied by tendering
shares of Stock to the Company (by either actual delivery or by attestation) or
by withholding shares of Stock, only the number of shares of Stock issued net
of the shares of Stock tendered or withheld shall be deemed delivered for
purposes of determining the maximum number of shares of Stock available for
delivery under the Plan.


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5. EFFECTIVE DATE, DURATION AND AMENDMENTS



     5.1. Effective Date.


     The Plan shall be effective as of the Effective Date.


     5.2. Term.


     The Plan shall terminate automatically ten (10) years after its adoption
by the Board and may be terminated on any earlier date as provided in Section
5.3.


     5.3. Amendment and Termination of the Plan


     The Board may, at any time and from time to time, amend, suspend, or
terminate the Plan as to any shares of Stock as to which Options have not been
granted. An amendment shall be contingent on approval of the Company’s
stockholders to the extent stated by the Board or required by applicable law.
No Options shall be granted after termination of the Plan. No amendment,
suspension, or termination of the Plan shall, without the consent of the
Optionee, impair rights or obligations under any Option theretofore awarded
under the Plan.


6. OPTION ELIGIBILITY AND LIMITATIONS



     6.1. Company or Subsidiary Employees; Service Providers; Other
Persons


     Subject to this Section 6, Options may be granted under the Plan to: (i)
any employee of, or other Service Provider to, the Company or of any Affiliate,
including any such employee or other Service Provider who is an officer or
director of the Company, or of any Affiliate, as the Board shall determine and
designate from time to time, (ii) any Outside Director, and (iii) any other
individual whose participation in the Plan is determined to be in the best
interests of the Company by the Board.


     6.2. Successive Options.


     An eligible person may receive more than one Option, subject to such
restrictions as are provided herein.


     6.3. Stand-Alone, Additional, Tandem, and Substitute Options


     Options granted under the Plan may, in the discretion of the Board, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Option or any award granted under another plan of the
Company, any Affiliate, or any business entity to be acquired by the Company or
an Affiliate, or any other right of an Optionee to receive payment from the
Company or any Affiliate. Such additional, tandem, and substitute or exchange
Options may be granted at any time. If an Option is granted in substitution or
exchange for another Option, the Board shall require the surrender of such
other Option in consideration for the grant of the new Option.


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7. OPTION AGREEMENT



     Each Option granted pursuant to the Plan shall be evidenced by an Option
Agreement, in such form or forms as the Board shall from time to time
determine. Option Agreements granted from time to time or at the same time
need not contain similar provisions but shall be consistent with the terms of
the Plan.


8. TERMS AND CONDITIONS OF OPTIONS



     8.1. Option Price


     The Option Price of each Option shall be fixed by the Board and stated in
the Option Agreement evidencing such Option. In no case shall the Option Price
of any Option be less than the par value of a share of Stock.


     8.2. Vesting.


     Subject to Sections 8.3 and 13.3 hereof, each Option granted under the
Plan shall become exercisable at such times and under such conditions as shall
be determined by the Board and stated in the Option Agreement. For purposes of
this Section 8.2, fractional numbers of shares of Stock subject to an Option
shall be rounded down to the next nearest whole number. The Board may provide,
for example, in the Option Agreement for (i) accelerated exercisability of the
Option in the event the Optionee’s Service terminates on account of death,
Disability or another event, (ii) expiration of the Option prior to its term in
the event of the termination of the Optionee’s Service, (iii) immediate
forfeiture of the Option in the event the Optionee’s Service is terminated for
Cause or (iv) unvested Options to be exercised subject to the Company’s right
of repurchase with respect to unvested shares of Stock.


     8.3. Term.


     Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten
years from the date such Option is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be fixed by the
Board and stated in the Option Agreement relating to such Option (the
“Termination Date”).


     8.4. Termination of Service.


     Each Option Agreement shall set forth the extent to which the Optionee
shall have the right to exercise the Option following termination of the
Optionee’s Service. Such provisions shall be determined in the sole discretion
of the Board, need not be uniform among all Options issued pursuant to the
Plan, and may reflect distinctions based on the reasons for termination of
Service.


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     8.5. Limitations on Exercise of Option.


     Notwithstanding any other provision of the Plan, in no event may any
Option be exercised, in whole or in part after ten years following the Grant
Date or after the occurrence of an event referred to in Section 13 hereof which
results in termination of the Option.


     8.6. Method of Exercise.


     An Option that is exercisable may be exercised by the Optionee’s delivery
to the Company of written notice of exercise on any business day, at the
Company’s principal office, on the form specified by the Company. Such notice
shall specify the number of shares of Stock with respect to which the Option is
being exercised and shall be accompanied by payment in full of the Option Price
of the shares for which the Option is being exercised plus the amount (if any)
of federal and/or other taxes which the Company may, in its judgment, be
required to withhold with respect to the exercise of the Option. The minimum
number of shares of Stock with respect to which an Option may be exercised, in
whole or in part, at any time shall be the lesser of (i) 100 shares or such
lesser number set forth in the applicable Option Agreement and (ii) the maximum
number of shares available for purchase under the Option at the time of
exercise.


     8.7. Rights of Holders of Options


     Unless otherwise stated in the applicable Option Agreement, an individual
holding or exercising an Option shall have none of the rights of a stockholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in Section 13 hereof, no adjustment
shall be made for dividends, distributions or other rights for which the record
date is prior to the date of such issuance.


     8.8. Delivery of Stock Certificates.


     Promptly after the exercise of an Option by an Optionee and the payment in
full of the Option Price, such Optionee shall be entitled to the issuance of a
stock certificate or certificates evidencing his or her ownership of the shares
of Stock subject to the Option.


     8.9. Reload Options.


     At the discretion of the Board and subject to such restrictions, terms and
conditions as the Board may establish, Options granted under the Plan may
include a “reload” feature pursuant to which an Optionee exercising an Option
by the delivery of a number of shares of Stock in accordance with Section 8.6
hereof would automatically be granted an additional Option (with an Option
Price equal to the Fair Market Value of the Stock on the date the additional
Option is granted and with such other terms as the Board may provide) to
purchase that number of shares of Stock equal to the number delivered to
exercise the original Option with an Option term equal to the remainder of the
original Option term unless the Board otherwise determines in the Option
Agreement for the original grant.


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9. TRANSFERABILITY OF OPTIONS



     9.1. Transferability of Options


     Except as provided in Section 9.2, during the lifetime of an Optionee,
only the Optionee (or, in the event of legal incapacity or incompetency, the
Optionee’s guardian or legal representative) may exercise an Option. Except as
provided in Section 9.2, no Option shall be assignable or transferable by the
Optionee to whom it is granted, other than by will or the laws of descent and
distribution.


     9.2. Family Transfers.


     If authorized in the applicable Option Agreement, an Optionee may transfer
an Option, not for value, to any Family Member, provided that the Optionee
provides prior written notice to the Company, in a form satisfactory to the
Company, of such transfer. For the purpose of this Section 9.2, a “not for
value” transfer is a transfer which is (i) a gift, (ii) a transfer under a
domestic relations order in settlement of marital property rights; or (iii) a
transfer to an entity in which more than fifty percent of the voting interests
are owned by Family Members (or the Optionee) in exchange for an interest in
that entity. Following a transfer under this Section 9.2, any such Option
shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer. Subsequent transfers of transferred
Options are prohibited except to Family Members of the original Optionee in
accordance with this Section 9.2 or by will or the laws of descent and
distribution. The events of termination of Service of Section 8.4 hereof shall
continue to be applied with respect to the original Optionee, following which
the Option shall be exercisable by the transferee only to the extent, and for
the periods specified, in Section 8.4.


10. FORM OF PAYMENT FOR OPTIONS



     10.1. General Rule.


     Payment of the Option Price for the shares purchased pursuant to the
exercise of an Option shall be made in cash or in cash equivalents acceptable
to the Company.


     10.2. Surrender of Stock.


     To the extent the Option Agreement so provides, payment of the Option
Price for shares purchased pursuant to the exercise of an Option may be made
all or in part through the tender to the Company of shares of Stock, which
shares, if acquired from the Company, shall have been held for at least six
months at the time of tender and which shall be valued, for purposes of
determining the extent to which the Option Price has been paid thereby, at
their Fair Market Value on the date of exercise.


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     10.3. Cashless Exercise.


     To the extent the Option Agreement so provides, payment of the Option
Price for shares purchased pursuant to the exercise of an Option may be made
all or in part by delivery (on a form acceptable to the Board) of an
irrevocable direction to a licensed securities broker acceptable to the Company
to sell shares of Stock and to deliver all or part of the sales proceeds to the
Company in payment of the Option Price and any withholding taxes described in
Section 14.4.


     10.4. Promissory Note.


     To the extent the Option Agreement so provides, payment of the Option
Price for shares purchased pursuant to the exercise of an Option may be made
all or in part with a full recourse promissory note executed by the Optionee.
The interest rate and other terms and conditions of such note shall be
determined by the Board. The Board may require that the Optionee pledge the
Stock subject to the Option for the purpose of securing payment of the note.
Unless the Board determines otherwise, the stock certificate(s) representing
the Stock shall not be released to the Optionee until such note is paid in
full.


     10.5. Other Forms of Payment.


     To the extent the Option Agreement so provides, payment of the Option
Price for shares purchased pursuant to exercise of an Option may be made in any
other form that is consistent with applicable laws, regulations and rules.


11. PARACHUTE LIMITATIONS



     Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by
an Optionee with the Company or any Affiliate, except an agreement, contract,
or understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an “Other Agreement”), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Optionee (including groups or classes of
Optionees or beneficiaries of which the Optionee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Optionee (a “Benefit Arrangement”), if the Optionee is a “disqualified
individual,” as defined in Section 280G(c) of the Code, any Option held by that
Optionee and any right to receive any payment or other benefit under this Plan
shall not become exercisable or vested (i) to the extent that such right to
exercise, vesting, payment, or benefit, taking into account all other rights,
payments, or benefits to or for the Optionee under this Plan, all Other
Agreements, and all Benefit Arrangements, would cause any payment or benefit to
the Optionee under this Plan to be considered a “parachute payment” within the
meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute
Payment”) and (ii) if, as a result of receiving a Parachute Payment, the
aggregate after-tax amounts received by the Optionee from the Company under
this Plan, all Other Agreements, and all Benefit Arrangements would be less
than the maximum after-tax amount that could be received by the Optionee
without causing any such payment or benefit to be considered a Parachute
Payment. In the event that the receipt of

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any such right to exercise, vesting, payment, or benefit under this Plan, in
conjunction with all other rights, payments, or benefits to or for the Optionee
under any Other Agreement or any Benefit Arrangement would cause the Optionee
to be considered to have received a Parachute Payment under this Plan that
would have the effect of decreasing the after-tax amount received by the
Optionee as described in clause (ii) of the preceding sentence, then the
Optionee shall have the right, in the Optionee’s sole discretion, to designate
those rights, payments, or benefits under this Plan, any Other Agreements, and
any Benefit Arrangements that should be reduced or eliminated so as to avoid
having the payment or benefit to the Optionee under this Plan be deemed to be a
Parachute Payment.


12. REQUIREMENTS OF LAW



     12.1. General.


     The Company shall not be required to sell or issue any shares of Stock
under any Option if the sale or issuance of such shares would constitute a
violation by the Optionee, any other individual exercising an Option, or the
Company of any provision of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion,
that the listing, registration or qualification of any shares subject to an
Option upon any securities exchange or under any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the
issuance or purchase of shares hereunder, no shares of Stock may be issued or
sold to the Optionee or any other individual exercising an Option pursuant to
such Option unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company, and any delay caused thereby shall in no way affect
the date of termination of the Option. Specifically, in connection with the
Securities Act, upon the exercise of any Option or the delivery of any shares
of Stock underlying an Option, unless a registration statement under such Act
is in effect with respect to the shares of Stock covered by such Option, the
Company shall not be required to sell or issue such shares unless the Board has
received evidence satisfactory to it that the Optionee or any other individual
exercising an Option may acquire such shares pursuant to an exemption from
registration under the Securities Act. Any determination in this connection by
the Board shall be final, binding, and conclusive. The Company may, but shall
in no event be obligated to, register any securities covered hereby pursuant to
the Securities Act. The Company shall not be obligated to take any affirmative
action in order to cause the exercise of an Option or the issuance of shares of
Stock pursuant to the Plan to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable until the shares of Stock
covered by such Option are registered or are exempt from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.


     12.2. Rule 16b-3.


     During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, it is the intent of the Company that
Options pursuant to the Plan and the exercise of Options granted hereunder will
qualify for the exemption provided


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by Rule 16b-3 under the Exchange Act. To the extent that any provision of the
Plan or action by the Board does not comply with the requirements of Rule
16b-3, it shall be deemed inoperative to the extent permitted by law and deemed
advisable by the Board, and shall not affect the validity of the Plan. In the
event that Rule 16b-3 is revised or replaced, the Board may exercise its
discretion to modify this Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the revised exemption
or its replacement.


13. EFFECT OF CHANGES IN CAPITALIZATION



     13.1. Changes in Stock.


     If the number of outstanding shares of Stock is increased or decreased or
the shares of Stock are changed into or exchanged for a different number or
kind of shares or other securities of the Company on account of any
recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such shares effected without
receipt of consideration by the Company occurring after the Effective Date, the
number and kinds of shares for which grants of Options may be made under the
Plan shall be adjusted proportionately and accordingly by the Company. In
addition, the number and kind of shares for which Options are outstanding shall
be adjusted proportionately and accordingly so that the proportionate interest
of the Optionee immediately following such event shall, to the extent
practicable, be the same as immediately before such event. Any such adjustment
in outstanding Options shall not change the aggregate Option Price payable with
respect to shares that are subject to the unexercised portion of an outstanding
Option, as applicable, but shall include a corresponding proportionate
adjustment in the Option Price per share. The conversion of any convertible
securities of the Company shall not be treated as an increase in shares
effected without receipt of consideration. Notwithstanding the foregoing, in
the event of any distribution to the Company’s stockholders of securities of
any other entity or other assets (other than dividends payable in cash or stock
of the Company) without receipt of consideration by the Company, the Company
may, in such manner as the Company deems appropriate, adjust (i) the number
and kind of shares subject to outstanding Options and/or (ii) the exercise
price of outstanding Options to reflect such distribution.


     13.2. Reorganization in Which the Company Is the Surviving Entity
Which does not Constitute a Corporate Transaction.


     Subject to Section 13.3 hereof, if the Company shall be the surviving
entity in any reorganization, merger, or consolidation of the Company with one
or more other entities which does not constitute a Corporate Transaction, any
Option theretofore granted pursuant to the Plan shall pertain to and apply to
the securities to which a holder of the number of shares of Stock subject to
such Option would have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate adjustment of the
Option Price per share so that the aggregate Option Price thereafter shall be
the same as the aggregate Option Price of the shares remaining subject to the
Option immediately prior to such reorganization, merger, or consolidation.
Subject to any contrary language in an Option Agreement, any restrictions
applicable to such Option shall apply as well to any


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replacement shares received by the Optionee as a result of the reorganization,
merger or consolidation.


     13.3. Corporate Transaction.


     Subject to the exceptions set forth in the last sentence of this Section
13.3 and the last sentence of Section 13.4 either of the following two actions
shall be taken:


     (A)  fifteen days prior to the scheduled consummation of a Corporate
Transaction, all Options outstanding hereunder shall become immediately
exercisable and shall remain exercisable for a period of fifteen days, or


     (B)  the Board may elect, in its sole discretion, to cancel any outstanding
Option and pay or deliver, or cause to be paid or delivered, to the holder
thereof an amount in cash or securities having a value (as determined by the
Board acting in good faith) equal to the product of the number of shares of
Stock subject to the Option (the “Option Shares”) multiplied by the amount, if
any, by which (I) the formula or fixed price per share paid to holders of
shares of Stock pursuant to such transaction exceeds (II) the Option Price
applicable to such Option Shares.


     With respect to the Company’s establishment of an exercise window, (i) any
exercise of an Option during such fifteen-day period shall be conditioned upon
the consummation of the event and shall be effective only immediately before
the consummation of the event, and (ii) upon consummation of any Corporate
Transaction the Plan, and all outstanding but unexercised Options shall
terminate. The Board shall send written notice of an event that will result in
such a termination to all individuals who hold Options not later than the time
at which the Company gives notice thereof to its stockholders. This Section
13.3 shall not apply to any Corporate Transaction to the extent that provision
is made in writing in connection with such Corporate Transaction for the
assumption or continuation of the Options theretofore granted, or for the
substitution for such Options for new common stock options relating to the
stock of a successor entity, or a parent or subsidiary thereof, with
appropriate adjustments as to the number of shares (disregarding any
consideration that is not common stock) and option and stock appreciation right
exercise prices, in which event the Plan and Options theretofore granted shall
continue in the manner and under the terms so provided.


     13.4. Adjustments.


     Adjustments under this Section 13 related to shares of Stock or securities
of the Company shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. No fractional shares or other
securities shall be issued pursuant to any such adjustment, and any fractions
resulting from any such adjustment shall be eliminated in each case by rounding
downward to the nearest whole share. The Board may provide in the Option
Agreements at the time of grant, or any time thereafter with the consent of the
Optionee, for different provisions to apply to an Option in place of those
described in Sections 13.1, 13.2 and 13.3.


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     13.5. No Limitations on Company.


     The making of Options pursuant to the Plan shall not affect or limit in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.


14. GENERAL PROVISIONS



     14.1. Pooling


     In the event any provision of the Plan or the Option Agreement would
prevent the use of pooling of interests accounting in a corporate transaction
involving the Company and such transaction is contingent upon pooling of
interests accounting, then that provision shall be deemed amended or revoked to
the extent required to preserve such pooling of interests. The Company may
require in an Option Agreement that an Optionee who receives an Option under
the Plan shall, upon advice from the Company, take (or refrain from taking, as
appropriate) all actions necessary or desirable to ensure that pooling of
interests accounting is available.


     14.2. Disclaimer of Rights


     No provision in the Plan or in any Option Agreement shall be construed to
confer upon any individual the right to remain in the employ or service of the
Company or any Affiliate, or to interfere in any way with any contractual or
other right or authority of the Company either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any employment or other relationship between any individual and the Company.
In addition, notwithstanding anything contained in the Plan to the contrary,
unless otherwise stated in the applicable Option Agreement, no Option granted
under the Plan shall be affected by any change of duties or position of the
Optionee, so long as such Optionee continues to be a director, officer,
consultant or employee of the Company or an Affiliate. The obligation of the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
Optionee or beneficiary under the terms of the Plan.


     14.3. Nonexclusivity of the Plan


     The adoption of the Plan shall not be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board in its discretion
determines desirable, including, without limitation, the granting of stock
options otherwise than under the Plan.


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     14.4. Withholding Taxes


     The Company or an Affiliate, as the case may be, shall have the right to
deduct from payments of any kind otherwise due to an Optionee any Federal,
state, or local taxes of any kind required by law to be withheld with respect
to the vesting of or other lapse of restrictions applicable to an Option or
upon the issuance of any shares of Stock upon the exercise of an Option. At
the time of such vesting, lapse, or exercise, the Optionee shall pay to the
Company or the Affiliate, as the case may be, any amount that the Company or
the Affiliate may reasonably determine to be necessary to satisfy such
withholding obligation. Subject to the prior approval of the Company or the
Affiliate, which may be withheld by the Company or the Affiliate, as the case
may be, in its sole discretion, the Optionee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company or the Affiliate
to withhold shares of Stock otherwise issuable to the Optionee or (ii) by
delivering to the Company or the Affiliate shares of Stock already owned by the
Optionee. The shares of Stock so delivered or withheld shall have an aggregate
Fair Market Value equal to such withholding obligations. The Fair Market Value
of the shares of Stock used to satisfy such withholding obligation shall be
determined by the Company or the Affiliate as of the date that the amount of
tax to be withheld is to be determined. An Optionee who has made an election
pursuant to this Section 14.4 may satisfy his or her withholding obligation
only with shares of Stock that are not subject to any repurchase, forfeiture,
unfulfilled vesting, or other similar requirements.


     14.5. Captions


     The use of captions in this Plan or any Option Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Option Agreement.


     14.6. Other Provisions


     Each Option granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Board, in
its sole discretion.


     14.7. Number And Gender


     With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.


     14.8. Severability


     If any provision of the Plan or any Option Agreement shall be determined
to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.


     14.9. Governing Law


     The validity and construction of this Plan and the instruments evidencing
the Options hereunder shall be governed by the laws of the State of Delaware,
other than any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Plan and the instruments evidencing the Options
granted hereunder to the substantive laws of any other jurisdiction.


* * *



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     To record adoption of the Plan by the Board as of May 31, 2001.



	 	Martek Biosciences Corporation

/s/ HENRY LINSERT JR.




	 	By:
  Henry Linsert Jr.

Title:  Chief Executive Officer




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