Document:

EX-10.2

EXHIBIT 10.2

SECOND MODIFICATION AGREEMENT

THIS SECOND MODIFICATION AGREEMENT (“AGREEMENT”) is made to be effective as of September 30,
2005, 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, as amended and
modified by a First Modification Agreement dated April 30, 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. It is
anticipated that additional financial institutions will join into the amended AGREEMENT as
additional LENDERS.

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, modified, and restated in its entirety as the Amended And Restated Loan And Security
Agreement intended to be of even date herewith, an unexecuted copy of which is attached hereto as
Exhibit A.

Section 3. Amendment And Modification Of Notes. Each of the NOTES shall be amended
and restated in its entirety, 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 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 And Security Agreements. The GUARANTORS: (a) agree
that the GUARANTY AGREEMENTS are hereby amended and modified such that each reference to the
“LOANS” and the “CREDIT DOCUMENTS” in the GUARANTY AGREEMENTS shall hereafter refer to the LOANS
and the CREDIT DOCUMENTS as the stated terms thereof are modified in accordance with this
AGREEMENT, including without limitation the contemplated increases in the “MAXIMUM AGGREGATE LOAN
AMOUNT,” as such term is defined in the LOAN AGREEMENT, and (ii) each reference to the “LOAN
AGREEMENT” in the GUARANTY AGREEMENTS shall hereafter refer to the Amended And Restated Loan
Agreement intended to be of even date herewith (as it may be modified from time to time); (b)
ratify and reaffirm the terms and conditions of the GUARANTY AGREEMENTS as herein amended and
modified; (c) acknowledge that the GUARANTY AGREEMENTS as herein amended and modified will continue
to be fully enforceable against the GUARANTORS after the execution and delivery of this AGREEMENT
and the consummation of the transactions contemplated herein; (d) ratify and reaffirm the Security
Agreements (“SECURITY AGREEMENTS”) dated January 26, 2004; and (e) acknowledge that the SECURITY
AGREEMENTS shall continue to secure the GUARANTY AGREEMENTS as herein amended.

Section 6. 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 7. 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 8. 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 9. Enforceability. This AGREEMENT shall inure to the benefit of and be
enforceable against each of the PARTIES and their respective successors and assigns.

Section 10. 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 11. 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.

Section 12. 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:
	 	(SEAL)
	 

	 	 
	 	

	
 
	 	Peter L. Buzy,

Chief Financial Officer
	 	

	 
	 	 	 	 
	
 
	 	GUARANTORS:
	 	

MARTEK BIOSCIENCES BOULDER CORPORATION

	 	 	 	 	 
	By:

	 	 	 	(SEAL)
	
 
	 	 
	 	

	
 
	 	Peter L. Buzy,

Chief Financial Officer and Treasurer
	 	

MARTEK BIOSCIENCES KINGSTREE CORPORATION

	 	 	 	 	 
	By:

	 	 	 	(SEAL)
	
 
	 	 
	 	

	
 
	 	Peter L. Buzy,

Chief Financial Officer and Treasurer
	 	

[Signatures Continued On The Following Page]

1

Signature Page to Second Modification Agreement – Continued:

	 	 	 	 	 	 	 
	WITNESS/ATTEST:

	 	AGENT:
	 	

	 	

	 
	 	 	 	 	 	 
	 	 	MANUFACTURERS AND TRADERS TRUST COMPANY,
	 	 
	 
	 	 	 	 	 	 
	
 
	 	AS ADMINISTRATIVE AGENT
	 	

	 	

	 
	 	 	 	 	 	 
	
 
	 	By:
	 	 	 	(SEAL)
	 

	 	 	 	 
	 	

	
 
	 	 	 	Name:
	 	

	
 
	 	 	 	 
	 	

	
 
	 	 	 	Title:
	 	

	
 
	 	 	 	 
	 	

	 
	 	 	 	 	 	 
	
 
	 	LENDERS:
	 	

	 	

MANUFACTURERS AND TRADERS TRUST COMPANY

	 	 	 	 	 
	By:

	 	 	 	(SEAL)
	
 
	 	 
	 	

	
 
	 	Name:
	 	

	
 
	 	Title:
	 	

	
 
	 	 
	 	

[Signatures Continued On The Following Page]

2

Signature Page to Second Modification Agreement – Continued:

LENDERS:

	 	 	 	 	 	 	 
	WITNESS/ATTEST:

	 	BANK OF AMERICA, N.A.
	 	

	 	

	 
	 	 	 	 	 	 
	
 
	 	By:
	 	 	 	(SEAL)
	 

	 	 	 	 
	 	

	
 
	 	 	 	Name:
	 	

	
 
	 	 	 	 
	 	

	
 
	 	 	 	Title:
	 	

	
 
	 	 	 	 
	 	

[Signatures Continued On The Following Page]

3

Signature Page to Second Modification Agreement – Continued:

LENDERS:

	 	 	 	 	 	 	 
	WITNESS/ATTEST:

	 	SUNTRUST BANK
	 	

	 	

	 
	 	 	 	 	 	 
	
 
	 	By:
	 	 	 	(SEAL)
	 

	 	 	 	 
	 	

	
 
	 	 	 	Name:
	 	

	
 
	 	 	 	 
	 	

	
 
	 	 	 	Title:
	 	

	
 
	 	 	 	 
	 	

[Signatures Continued On The Following Page]

4

Signature Page to Second Modification Agreement – Continued:

LENDERS:

	 	 	 	 	 	 	 
	WITNESS/ATTEST:

	 	COMERICA BANK
	 	

	 	

	 
	 	 	 	 	 	 
	
 
	 	By:
	 	 	 	(SEAL)
	 

	 	 	 	 
	 	

	
 
	 	 	 	Name:
	 	

	
 
	 	 	 	 
	 	

	
 
	 	 	 	Title:
	 	

	
 
	 	 	 	 
	 	

[Signatures Continued On The Following Page]

5

Signature Page to Second Modification Agreement – Continued:

LENDERS:

	 	 	 	 	 	 	 
	WITNESS/ATTEST:

	 	FIFTH THIRD BANK
	 	

	 	

	 
	 	 	 	 	 	 
	
 
	 	By:
	 	 	 	(SEAL)
	 

	 	 	 	 
	 	

	
 
	 	 	 	Name:
	 	

	
 
	 	 	 	 
	 	

	
 
	 	 	 	Title:
	 	

	
 
	 	 	 	 
	 	

[Signatures Continued On The Following Page]

6

Signature Page to Second Modification Agreement – Continued:

LENDERS:

	 	 	 	 	 	 	 
	WITNESS/ATTEST:

	 	CHEVY CHASE BANK
	 	

	 	

	 
	 	 	 	 	 	 
	
 
	 	By:
	 	 	 	(SEAL)
	 

	 	 	 	 
	 	

	
 
	 	 	 	Name:
	 	

	
 
	 	 	 	 
	 	

	
 
	 	 	 	Title:
	 	

	
 
	 	 	 	 
	 	

	 
	 	 	 	 	 	 

7Exhibit 10.1 J. Knapp's Share Plan 1998

    Exhibit
      10.1

    
 

    Summary
      Information

    Employee:
      A.
      John Knapp, Jr.

    Location:
      corporate

    Date
      of
      Grant: October 3, 2005

    ESOP:
      1998

    Exercise
      Price: $2.89/Share

    Expiration:
      October 3, 2012, 12:00 a.m.

    Total
      #
      Shares subject to grant: 120,000

    Vesting:
      

    10,000
      Shares vest on October 31, 2005 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on November 30, 2005 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on December 31, 2005 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on January 31, 2006 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on February 28, 2006 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on March 31, 2006 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on April 30, 2006 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on May 31, 2006 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on June 30, 2006 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on July 31, 2006 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on August 31, 2006 (provided that Knapp is employed on that
      date)

    10,000
      Shares vest on September 30, 2006 (provided that Knapp is employed on that
      date)

    In
      the
      event that Mr. Knapp’s employment terminates prior to the last day of a month
      during the above period, a pro-rated number of shares shall vest for that
      month. 

    

    STOCK
      OPTION AGREEMENT

     

    This
      AGREEMENT is made and effective this 3rd
      day of
      October, 2005 (the “Date of Grant”), between ICO, Inc., a Texas corporation (the
“Company”), and (“Employee”), an employee of Company or one of its subsidiaries.

     

    To
      carry
      out the purposes of ICO, Inc.’s 1998 STOCK OPTION PLAN, (the “Plan”), by
      affording Employee the opportunity to purchase shares of the common stock of
      the
      Company (“Shares”), and in consideration of the mutual agreements and other
      matters set forth herein and in the Plan, the Company and Employee hereby agree
      as follows: 

     

    1. Grant
      of Option.
      The
      Company hereby grants to Employee the right to purchase all or any part of
      an
      aggregate of 120,000 Shares (such right to purchase 120,000 Shares at the
      purchase price set forth in paragraph 2 below being referred to herein as this
      “Option”), on the terms and conditions set forth herein and in the Plan, as such
      Plan may be amended or supplemented from time to time, and which Plan is
      incorporated herein by reference as a part of this Agreement, and subject to
      the
      conditional vesting described below. This Option shall not
      be
      treated as an incentive stock option within the meaning of Section 422(b) of
      the
      Internal Revenue Code of 1986, as amended (the “Code”).

     

    2. Purchase
      Price.
      The
      purchase price of the Shares that may be purchased by Employee pursuant to
      the
      exercise of this Option shall be $2.89 per Share, which has been determined
      to
      be not less than the fair market value of the Shares on the Date of Grant of
      this Option. For the purpose of this Agreement, the “fair market value” of the
      Shares shall be determined in accordance with the definition of “fair market
      value” contained in the Plan. 

     

    3. Exercise
      of Option / Vesting Schedule.
      This
      Option shall vest and may be exercised, in whole or part, according to the
      schedule described below. 

     

    This
      Option may be exercised in whole or part, by written notice to the Company
      at
      its principal executive office addressed to the attention of its General
      Counsel, at any time and from time to time after the Date of Grant hereof,
      provided that the Option or portion thereof has vested and may be purchased
      in
      accordance with the following schedule:

     

    
      	
              Vesting
                Date 

            	
              Number
                of Shares

              That
                Vest and May Be Purchased

               

            
	
              October
                31, 2005

            	
              10,000
                Shares*

            
	
              November
                30, 2005

            	
              10,000
                Shares*

            
	
              December
                31, 2005

            	
              10,000
                Shares*

            
	
              January
                31, 2006

              February
                28, 2006  

            	
              10,000
                Shares*

              10,000
                Shares*

            
	
              March
                31, 2006

            	
              10,000
                Shares*

            
	
              April
                30, 2006

            	
              10,000
                Shares*

            
	
              May
                31, 2006

            	
              10,000
                Shares*

            
	
              June
                30, 2006

            	
              10,000
                Shares*

            
	
              July
                31, 2006

            	
              10,000
                Shares*

            
	
              August
                31, 2006

            	
              10,000
                Shares*

            
	
              September
                30, 2006

            	
              10,000
                Shares*

            

    

    

     

    *Vesting
      is conditioned upon Employee continuing to be employed during the month prior
      to
      and including the referenced Vesting Date. In the event that Employee’s
      employment terminates prior to the Vesting Date, a pro-rated number (rounded-up
      for any fractional Share) of Shares shall vest during the month of termination.
      (For example only, if Employee’s employment terminates on December 10, 2005,
      only 3,226 Shares shall vest in connection with the month of December, 2005,
      representing 10/31 of 10,000 Shares.) Any Options to purchase Shares that have
      not vested as of the date of Employee’s termination of employment shall be
      terminated and shall not be exercisable by Employee. This Option shall not
      be
      exercisable in any event after October 2, 2012. 

     

    4. Withholding
      of Tax.
      To the
      extent that the exercise of this Option or the disposition of Shares acquired
      by
      exercise of this Option results in compensation income or wages to Employee
      for
      federal, state, or local tax purposes, if requested by Company, Employee shall
      deliver to the Company at the time of such exercise or disposition such amount
      of money or Shares as the Company may require to meet its obligations under
      applicable tax laws or regulations, and, if Employee fails to do so, the Company
      is authorized to withhold from any cash or Share remuneration then or thereafter
      payable to Employee any tax required to be withheld by reason of such resulting
      compensation income. Upon an exercise of this Option, the Company is further
      authorized in its discretion to satisfy any such withholding requirements out
      of
      any cash or Shares distributable to Employee upon such exercise. 

     

    5. Binding
      Effect.
      This
      Agreement shall be binding upon and inure to the benefit of any successors
      to
      the Company and all persons lawfully claiming under Employee. In the event
      of
      conflict between any of the provisions in this Agreement and provisions in
      the
      Plan, the provisions of the Plan will govern. 

     

    6. Governing
      Law and Dispute
      Resolution.
      This
      Agreement and the Option granted hereunder, shall be governed by, and construed
      in accordance with the laws of the State of Texas, without regard to its
      principles of conflicts of law. Any and all controversies, claims and
      differences arising out of or relating to the Option granted under this
      Agreement which cannot be settled by good faith negotiation between the parties
      will be finally settled by binding arbitration brought within three (3) months
      of the termination of the Option, with the date of termination to be governed
      by
      the provisions of the Plan and this Agreement. The binding arbitration will
      be
      conducted in accordance with the then existing rules of the American Arbitration
      Association (“AAA”), by one arbitrator. In the event of any conflict between
      such rules and this paragraph, the provisions of this paragraph shall govern.
      Upon the written demand of either party, the parties shall appoint a single
      arbitrator acceptable to both parties. Arbitration proceedings shall be held
      in
      Houston, Texas. The decision of the arbitrator shall be final and binding upon
      the parties hereto, not subject to appeal, and shall deal with the questions
      of
      interest, cost of the arbitration, and all matters relevant thereto. Judgment
      upon the award or decision rendered by the arbitrator may be entered in any
      court having jurisdiction thereof, or application may be made to such court
      for
      a judicial recognition of the award or any order of enforcement thereof as
      the
      case may be.

     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Agreement to be duly executed by its officer thereunto
      duly authorized, and Employee has executed this Agreement, to be effective
      as of
      the Date of Grant set forth above.

     

    

    
      	 ICO,
              INC.
	
               

              By:  
                /s/ Jon C. Biro     
                                       
                

            
	
              Jon
                C. Biro

            
	
              Chief
                Financial Officer

            

    

     

     

    
      
        	
                  Employee

              
	
                 

                 
                  /s/ A. John Knapp,
                  Jr.                      
                  

              
	
                 
                  A. John Knapp, Jr.

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