Document:

exv10w3

 

Exhibit 10.03

EXECUTION COPY

	 	 	 	 	 
	 

	 	NOTICE:
	 	CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR

PORTIONS OF THIS DOCUMENT AS INDICATED HEREIN

LICENSE AGREEMENT

(United States Version)

     This License Agreement ("Agreement”) is made and entered into as of the
28th day of January, 1993, by and between Martek Biosciences Corporation, a Delaware
corporation ("Licensor”), and American Home Products Corporation, a Delaware
corporation, represented by its Wyeth-Ayerst division ("Licensee”).

WITNESSETH:

     WHEREAS, Licensor has developed certain technology relating to the production by microbial
fermentation of Omega-3 and Omega-6 long-chain polyunsaturated fatty acid-containing triglycerides
for possible incorporation into infant formula; and

     WHEREAS, Licensee and its affiliates are in the business of developing, manufacturing and
marketing infant nutritional products; and

     WHEREAS, Licensee desires to obtain a non-exclusive license from Licensor for the Technology
and Licensor is willing to grant such license subject to the conditions and pursuant to the terms
set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants of the parties
hereto, each party hereby agrees with the other as follows:

ARTICLE I

DEFINITIONS

     Section 1.1. “Affiliate” shall mean any person, corporation, firm, partnership or
other entity which directly or indirectly owns Licensee, is owned by Licensee or is owned by a
party which owns Licensee to the extent of at least 50% of the equity having the power to vote on
or direct the affairs of the entity. Except as the term "Affiliate” is used in
Sections 6.4 and 8.4 of this Agreement, the term “Affiliate” shall exclude (i) Genetics
Institute, (ii) Sherwood Medical Company, a Division of Licensee and (iii) Fort Dodge Laboratories
(collectively, the “Other Entities”).

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     Section 1.2. “Infant Formula Product” shall mean a breast milk substitute
formulated industrially in accordance with applicable Codex Alimentarius and United States Food and
Drug Administration standards to satisfy the total normal nutritional, requirements of
infants from birth up to between four and six months’ of age and adapted to their physiological
characteristics and fed in addition to other foods to infants up to approximately one year of age.

     Section 1.3. “Licensed Patents” shall mean the patent applications attached hereto as
Exhibit III and all patents and patent applications in the Territory which cover the
Technology, including all patents and patent applications covering inventions, improvements or
modifications conceived or developed by Licensor during the term of this Agreement and included in
the Technology.

     Section 1.4. “Martek Product” shall mean triglycerides containing Omega-3 and/or
Omega-6 long-chain polyunsaturated fatty acids produced by microbial fermentation according to the
Technology and Licensed Patents.

     Section 1.5. “AHPC Formulaid Product” shall mean a product (i) which is an Infant
Formula Product, (ii) which is in a form for utilization by consumers, (iii) which is developed by
Licensee or its Affiliates, (iv) which bears Licensee’s label or the label of an Affiliate, and (v)
into which the Martek Product is incorporated.

     Section 1.6. “Technology” shall mean the organisms, microorganisms, specifications,
biological materials, designs, formulae, processes, standards, data, trade secrets, knowhow and
technology relating to the development and production of the Martek Product which are proprietary
to Licensor and any modifications, improvements and enhancements to any of the foregoing made by
Licensor, which, in Licensor’s and Licensee’s mutual opinion expressed in writing, is or are
necessary in the production and development of the Martek Product.

     Section 1.7. “Territory” shall mean the [ * ]

     Section 1.8. “Third Party” shall mean any party other than Licensor, Licensee and
Affiliates.

     Section 1.9 “Trademark” shall mean the trademark “FORMULAID”, which is the subject
of U.S. Trademark Application Serial No. 74-141195, a copy of which is attached hereto as
Exhibit I.

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ARTICLE II

GRANT OF LICENSE AND OTHER RIGHTS

     Section 2.1. License. Licensor hereby grants to Licensee for the term of this
Agreement and subject to the conditions of this Agreement, a non-exclusive, non-transferable right
and license, in the Territory, directly or through sublicense to an Affiliate, (i) to use the
Technology for the production of the AHPC Formulaid Product, (ii) to use and make the Martek
Product for purposes of producing the AHPC Formulaid Product and (iii) to use, market and
distribute by sale the AHPC Formulaid Product itself or through its Affiliates.

     Section 2.2. Licenses to Third Parties.

          (i) Licenses to Third Parties Generally. Licensor shall be entitled to grant
any license to any Third Party relating to the Technology, the Martek Product or the Licensed
Patents upon any terms whatsoever; provided, however, that Licensor shall not grant any license to
any Third Party for the incorporation of the Martek Product into, or for the use of the Technology
for the production of, an Infant Formula Product with payment terms, including payment terms under
subsections 4(i) and (ii) of this Agreement, which are more favorable to such Third Party than the
payment terms provided in this Agreement with respect to the Licensee, without the prior written
consent of Licensee or unless such more favorable payment terms prospectively are extended to
Licensee. Notwithstanding the preceding sentence, Licensor shall be entitled to charge lesser
non-Royalty lump sum payments to a Third Party licensee (similar to those provided in subsections
4.1(i) and (ii) of this Agreement) without the prior consent of Licensee and without being
obligated prospectively to extend such a payment term to Licensee, if the license to such a Third
Party is territory restricted and if the amount of the reduction in the lump sum charged reasonably
is related to the reduced marketing opportunities available to such Third Party licensee due to the
territorial restrictions applicable to use of the Technology and the Martek Product.

          (ii) Licenses to Third Party Suppliers. Licensor shall be obligated to license the
Technology, the Licensed Patents and the Martek Product to Third Parties as follows:

               (A) Licensor shall use reasonable efforts further to license the Technology or the Licensed
Patents or otherwise to produce the Martek Product, itself or through a Third Party whether

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or not
pursuant to another licensing arrangement, for the purpose of creating a sufficient supply of the
Martek Product at a commercially reasonable price to satisfy Licensee’s and its Affiliates’
requirements with respect to their marketing and sale of the AHPC Formulaid Product; provided,
however, that such requirements and any increases or decreases thereof shall be communicated in
writing by Licensee to Licensor not less than 12 months prior
to Licensor’s obligation to satisfy such requirements or increases or decreases thereof.

               (B) If Licensor licenses the Martek Product, the Licensed Patents and the Technology to a
Third Party for the purposes of manufacturing and creating a supply of the Martek Product pursuant
to subsection (ii)(A) of this Section 2.2, Licensor shall permit Licensee to negotiate the terms of
the purchase and supply arrangements between the Licensee and such Third Party directly with such
Third Party; provided, however, that such direct negotiations or arrangements shall not affect
Licensor’s rights to royalties or other fees from Licensee or such Third Party.

               (C) If the Third Parties to whom the Martek Product and the Technology are licensed and Martek
in the aggregate are unable to satisfy Licensee’s and its Affiliates’ requirements for the Martek
Product (as established and communicated pursuant to subsection (ii)(A) of this Section 2.2),
Licensor shall appoint one or more additional licensed suppliers who are reasonably acceptable to
Licensee and who can satisfy the excess demands of Licensee and its Affiliates at a commercially
reasonable price.

               (D) Licensor and Licensee acknowledge and agree that, at the time of the execution of this
Agreement, the production cost of the Martek Product in gross quantities, the fair market value
thereof and the commercial volumes thereof necessary to meet Licensee’s demands are not
ascertainable, and Licensor and Licensee covenant and agree that, prior to the first sale of a AHPC
Formulaid Product, Licensor and Licensee shall negotiate in good faith and strive to agree upon
reasonable terms relating to the consideration to be payable by Licensee or its Affiliates to
Licensor or Third Parties for amounts of the Martek Product produced by or on behalf of Licensor
and delivered to Licensee or its Affiliates.

          (iii)
Transfer of Martek Product. Nothing in this Section 2.2 or in this
Agreement shall be construed to permit Licensee or its Affiliates to sub-license the Martek Product
or the Technology or otherwise unilaterally to transfer to any Third Party the Martek Product or
the Technology except as the same are incorporated into the AHPC Formulaid Product.

          (iv) Licensee’s Patents. Nothing in this Section 2.2 shall be construed so as to
permit Licensors to grant rights to any Third Party under U.S. Patent No. 4,670,285 and Canadian
Patent No. 1,244,708.

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     Section 2.3. Sublicensing. The grants to Licensee under this Article II shall not
include the right to grant sublicenses, except sublicenses to Affiliates.

     Section 2.4. Trademarks. In addition to the license granted hereunder relating to the
Martek Product and the Technology, Licensor hereby grants to Licensee the non-exclusive,
non-transferable right and license to use the Trademark solely on, and in connection with the
manufacture and sale of, the AHPC Formulaid Product, subject to the following terms and conditions:

          (i) Licensee shall not use the Trademark as or part of its corporate or business name or the
name of any business entity which is controlled by it, whether an Affiliate or
otherwise.

          (ii) Licensee and its Affiliates shall have no right to sublicense to Third Parties any of
the rights in the Trademark conveyed hereunder.

          (iii) Licensee and its Affiliates shall not affix or use the Trademark on any product other
than the AHPC Formulaid Product.

          (iv) Licensee recognizes and acknowledges Licensor’s ownership of the Trademark and
Licensor’s intent to protect the Trademark in the Territory. Licensee covenants and agrees that it
and its Affiliates shall not challenge, or cause a Third Party to challenge, Licensor’s right,
title or interest in and to the Trademark. All use by Licensee or its Affiliates of the Trademark
in the Territory shall inure to the benefit of Licensor, and Licensee and its Affiliates shall
make no use or apply for any registration thereof except as permitted by this Agreement. Nothing
in this Agreement shall be construed so as to require Licensor to take any actions or measures to
protect or secure any rights in or obtain or apply for registration of the Trademark.

          (v) Licensee covenants that, upon notification from Licensor that Licensor has obtained a
U.S. Federal Registration on the Trademark, Licensee will use the trademark registration symbol®
each time it or its Affiliates uses the Trademark on the AHPC Formulaid Product or on the labels,
labeling or packaging thereof and on all material originating with Licensee or its Affiliates and
used to promote the sale of AHPC Formulaid Products, and the following legend prominently shall
appear at least once in each such AHPC Formulaid Product or material: “Formulaid ® is a registered
trademark of Martek Biosciences Corporation.” Until such time as

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Licensor obtains a U.S. Federal
Registration on the Trademark, Licensee shall substitute the symbol
“ TM ” in place of the
symbol ® as specified herein.

          (vi) Licensee covenants that AHPC Formulaid Products manufactured for and by it and sold by
it shall be of a high standard and quality so as to reflect favorably upon the business of both
Licensor and Licensee and the goodwill associated therewith. To effectuate the foregoing:

               (A) Prior to the time that Licensee or its Affiliates shall sell or offer for sale, in the
regular course of business, any AHPC Formulaid Product bearing the Trademark, Licensee shall
submit to Licensor, for its approval, samples of the AHPC Formulaid Product as well as samples of
all materials used to sell or to promote the sale of AHPC Formulaid Products, including, but not
limited to, labels, labeling, packaging materials, advertising and other promotional materials.
Thereafter, Licensee and its Affiliates shall not make any material change to the way in which the
Trademark is used or depicted in connection with the AHPC Formulaid Product without first
submitting such proposed change to Licensor and obtaining its approval.

               (B) Licensor and Licensee hereby acknowledge that Licensee has given Licensor the opportunity
to inspect the manufacturing operations of Licensee and its Affiliates where AHPC
Formulaid Products depicting the Trademark, if any, will be made and
to evaluate the quality control standards and practices of Licensee and its Affiliates
relating to such operations. Licensor hereby acknowledges that Licensee’s and its Affiliates’
quality control standards and practices are acceptable and sufficiently protective of Licensor’s
interests in the Trademark. Licensee hereby covenants and agrees to notify Licensor prior to any
material changes in Licensee’s or its Affiliates’ quality control standards or practices as such
standards and practices relate to the manufacturing operations of AHPC Formulaid Products
depicting the Trademark. Licensee shall submit to Licensor, without charge, at Licensor’s request
at reasonable intervals throughout the term of this Agreement, a reasonable number of samples of
AHPC Formulaid Products and other materials that depict the Trademark.

               (C) No approval required of Licensor under this subsection (vi) shall be unreasonably
withheld or delayed.

               (D) Licensee shall advise Licensor of any infringement of the Trademark of which it or its
Affiliates becomes aware, but Licensee and its Affiliates shall not bring any action with respect
to any such infringement without Licensor’s prior written consent. Licensee and its Affiliates
shall cooperate with Licensor, at Licensor’s request, with respect to any of Licensor’s efforts to
protect its interests in the Trademark. Nothing in this Agreement shall be construed so as to
require Licensor to take any actions or measures with respect to any alleged, suspected or known
infringement of the Trademark.

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               (E) Licensee shall notify Licensor in writing prior to any material alterations to the formula
of the AHPC Formulaid Product.

          (vii) Nothing in this Section 2.4 or in this Agreement shall be construed to require Licensee
or its Affiliates to use the Trademark on the AHPC Formulaid Product or on the labels, labeling or
packaging thereof or on materials used to promote the sale of the AHPC Formulaid Product.

          (viii) The term of the Trademark license of this Section 2.4 shall be coterminous with that of
the license granted in Section 2.1, which term is defined in Article III of this Agreement.
Notwithstanding the preceding, upon the expiration of the twenty-five (25) year period described in
Section 3.1 of this Agreement, this Agreement shall continue as to Licensee’s and its Affiliates’
rights and obligations relating to the Trademark; provided, however, that the Royalty due hereunder
after the expiration of the period described in paragraph (v)(B) of Section 4.1 of this Agreement
relating to sales of AHPC Formulaid Products depicting the Trademark or sales of AHPC Formulaid
Products to which advertising or other promotional materials depicting the Trademark relate shall
be in an amount equal to [ * ] of the greater of (A) the Cost of Goods Sold applicable to
each such AHPC Formulaid Product or (B) the Sales Price of each such AHPC Formulaid Product sold to
Third Parties.

     Section 2.5. Services. Licensor shall make its officers and other employees available
at reasonable times to provide technical and other consultation services relating to the use of the
Technology, the production of the Martek Product and/or the incorporation of the Martek Product
into the AHPC Formulaid Product to the extent of [ * ] hours in the aggregate by all such
officers and employees over the term of this Agreement; provided, however, that any services which
are mutually agreed in advance of the performance thereof to be mutually
beneficial to the businesses of Licensor and Licensee shall not be considered in determining
the number of hours of technical or other consultation services performed by Licensor’s officers
and other employees under this Section 2.5. If greater than [ * ] hours of such technical or
other consultation services in the aggregate are required and requested by Licensee or its
Affiliates, Licensor and Licensee hereby agree that, prior to the provision of additional technical
or other consultation services, they shall enter into good faith negotiations relating to
compensation and other terms for such additional technical or other consultation services, which
compensation and other terms shall be commensurate with industry standards.

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ARTICLE III.

TERM AND CANCELLATION

     Section 3.1. Term. This Agreement shall commence on the date of this Agreement and,
unless earlier terminated pursuant to another Section of this Article III, shall terminate; as to
each country in which the AHPC Formulaid Product is sold for consumer use, on the date which is
twenty five (25) years after the first commercial introduction of the AHPC Formulaid Product in the
Territory. Upon expiration under this Section, Licensee shall have a fully paid, royalty free
license to continue in perpetuity to utilize the Martek Product and the Technology as provided for
in Section 2.1.

     Section 3.2. Material Breach; Opportunity to Cure. Either party to this Agreement may
immediately terminate this Agreement by written notice and without judicial intervention if the
other party shall materially fail to comply with or shall materially breach any of its obligations
and covenants hereunder and shall not remedy and make good such breach or failure, or have
undertaken to cure the same, within sixty (60) days from the receipt of a written notice of failure
of compliance or breach.

     Section 3.3. Termination in case of Infringement. Licensee shall have the right to
terminate this Agreement with respect to the manufacture, use or sale of the Technology or the
Martek Product if a court of competent jurisdiction determines by final order that the Technology
or the Martek Product infringes upon the patent of any Third Party; provided, however, that
Licensor and Licensee hereby covenant and agree that, prior to any such termination, Licensor and
Licensee shall engage in reasonable, good faith efforts to develop, and shall cooperate with the
other in developing, a lawful method of using, selling or manufacturing, as applicable, the AHPC
Formulaid Product in the Territory, including, but not limited to, efforts to procure a license
from such Third Party or efforts to alter the design or offending composition of the Martek
Product, the Technology or. the AHPC Formulaid Product, as applicable, so as to eliminate the
infringement.

     Section 3.4. Termination by Licensee. At any time after the first anniversary date of
this Agreement, Licensee shall have the right to terminate this Agreement of its own volition upon
ninety (90) days prior written notice to Licensor.

     Section 3.5. Payments Due Upon Termination or Cancellation. Upon expiration or
termination of this Agreement, pursuant to any of the foregoing Sections, all amounts due
pursuant to Article IV shall be immediately payable as of the date of termination or cancellation.

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     Section 3.6. Sale of Inventory Upon Termination. Effective upon the date of
termination of this Agreement, Licensee and its Affiliates shall cease manufacturing the Martek
Product and the AHPC Formulaid Product; provided, however, that, Licensee and its Affiliates may
continue to distribute the Martek Product or the AHPC Formulaid Products manufactured prior to
such date if, to the extent lawful, Licensee continues to make payments under Section 4.1 with
respect to such AHPC Formulaid Products and otherwise continues to comply with the
terms and conditions of this Agreement. Notwithstanding the preceding, upon the earlier to occur
of (i) the sale by Licensee and its Affiliates of all of their inventory of AHPC Formulaid
Products manufactured prior to the date of the termination of this Agreement or (ii) the date
which is six months after the date of the termination of this Agreement, Licensee and its
Affiliates shall cease all use of the Technology, sale of the Martek Product or AHPC Formulaid
Product and use of the Trademark and Licensee and its Affiliates shall have no further rights
under this Agreement. This Section 3.6 shall not apply in the event this Agreement expires
pursuant to Section 3.1 of this Agreement.

     Section 3.7. Other Rights and Remedies. Unless another provision of this Agreement
specifically provides to the contrary, the rights of termination as herein provided shall be in
addition to all other rights and remedies which either party may have to enforce this Agreement or
to secure damages for the breach hereof, and the exercise of any right of termination as herein
provided by either party shall not relieve the other of any of its obligations under this Agreement
accruing prior to the effective date of termination, including, but not limited to, the obligation
to pay fees and Royalties pursuant to Section 4.1 or to render reports with respect thereto.

ARTICLE IV

PAYMENTS BY LICENSEE

     Section 4.1. Fees and Royalties. Licensee shall pay Licensor:

(i) As compensation for Licensor’s performance of its obligation under Section 7.1 of this
Agreement to make reasonable efforts during the period beginning on the date of this
Agreement and ending March 31, 1993 to refine the

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development process of the Technology,
One Million Five Hundred Thousand Dollars ($1,500,000) payable upon execution of this
Agreement, reduced by any advances made prior to the date hereof pursuant to the Letter of
Intent executed by Licensor and Licensee on or about April 1, 1992 (the “Letter of
Intent”);

(ii) As compensation for Licensor’s performance of its obligation under Section 7.1 of this
Agreement to make reasonable efforts during the period beginning April 1, 1993 and ending on
the first anniversary date of this Agreement to refine the
development process of the Technology, One Million Dollars ($1,000,000) payable on or before
the first anniversary date of this Agreement; and

(iii) During the term described in Section 4.1(v)(A) below, a royalty payment (the
“Royalty”) in an amount equal to [ * ] of the greater of (A) the cost of goods sold
applicable to the AHPC Formulaid Product, as determined using generally acceptable
accounting principals and methodologies reflected on Licensee’s audited annual financial;
statements and as mutually agreed to by Licensor and Licensee (the “Cost of Goods Sold”),
or (B) the amount received by Licensee or its Affiliates from the sale for value
of each AHPC Formulaid Product to Third Parties, which amount received by Licensee or its
Affiliates shall not be reduced by taxes assessed on income from such sales but shall not
include: normal returns and allowances actually paid or allowed by Licensee or its
Affiliates; customary discounts, whether cash or trade; rebates; and sales and other taxes
based on the sales prices of the AHPC Formulaid Product whether or not absorbed
by Licensee or its Affiliates (the “Sales Price”).

(iv) During the term described in Section 4.1(v)(B) below, a Royalty in an amount equal to
[ * ] of the greater of (A) the Cost of Goods Sold applicable to the AHPC Formulaid
Product, or (B) the Sales Price of each AHPC Formulaid Product to Third Parties.

(v)(A) For a term of ten (10) years after the first commercial introduction of the AHPC
Formulaid Product in the Territory; provided, however, that if a patent is obtained with
respect to the Technology or the Martek Product in the Territory prior to the twenty-fifth
(25th) anniversary of the date of first commercial introduction of the AHPC Formulaid
Product therein, for a term of longer than ten (10) years, which term shall begin on the
date of the issuance of such patent and end on the earlier of (A) the date of the
expiration, lapse or invalidation of any such patents and (B) the twenty-fifth (25th)
anniversary of the date of the first commercial introduction of the AHPC Formulaid Product
in such country.

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(v)(B) For such additional period of time following the period described in Section
4.l(v)(A) above, if any, and ending on the twenty-fifth (25th) anniversary after the first
commercial introduction of the AHPC Formulaid Product in the Territory.

     Licensor shall be responsible for all taxes levied on account of any payment accruing under
this Agreement that constitutes income taxable to Licensor. If provision is made in law or
regulation for withholding, such tax shall be deducted from any royalty payment then due, paid to
the proper taxing authority and receipt for payment of the tax secured and promptly sent to
Licensor.

     Section 4.2. Manner of Royalty Payment. All Royalty payments with respect to each
AHPC Formulaid Product sold shall be made quarterly, within sixty days of the close of each of
Licensee’s three month and annual accounting periods, based on Licensee’s fiscal year, with
respect to Licensee’s and its Affiliates’ sales occurring during such quarters, at Licensor’s
office as set forth below.

     Section 4.3. Reimbursement of Expenses. Licensee agrees to pay to Licensor, in
addition
to the amounts specified in Section 4.1 above, all reasonable traveling, living and
out-of-pocket expenses for services rendered by Licensor pursuant to Section 2.5 of this Agreement
which are considered in determining whether Licensor’s officers and other employees have performed
[ * ] hours of service under such Section.

     Section 4.4. Commercialization and Other Expenses. Licensee and its Affiliates shall
pay all expenses for the commercialization of the AHPC Formulaid Product. Licensee shall compensate
Licensor for any samples of the Martek Product reasonably requested by Licensee at a reasonable
price to be agreed upon by Licensor and Licensee pursuant to good faith negotiation. For purposes
of the preceding sentence, “samples” shall mean quantities which are requested by Licensee or its
Affiliates for research, development or testing purposes and not requested for the purpose of
incorporation thereof into a AHPC Formulaid Product which is to be distributed to Third Parties.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

     Section 5.1. Licensor’s Representations and  Warranties. Licensor
represents and warrants to the Licensee as follows:

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          (i) Exhibit II sets forth a complete and accurate list of the Licensed Patents as of
the date of this Agreement.

          (ii) Licensor has all necessary corporate .power and authority to enter into this
Agreement, perform its obligations hereunder and license the Technology and the Martek Product
pursuant to the terms of this Agreement. Licensor’s performance under this Agreement does not
conflict with any other contract to which Licensor is bound.

          (iii) Licensor has, prior to the date of this Agreement, informed Licensee of all Third Party
patents relevant to the Technology or the Licensed Patents and known to Licensor.

          (iv) At the time of this Agreement, Licensor has no actual knowledge of the existence of other
patents which would be infringed by the commercial exploitation in the Territory, by Licensee or
its Affiliates, of the Technology, the Martek Product or the Licensed Patents.

          (v) Licensor believes that it has disclosed to all relevant patent authorities in the
Territory and to Licensee all information within its knowledge material to patentability of the
Licensed Patents within the Territory.

     SECTION 5.2. DISCLAIMERS. (I) LICENSOR HEREBY DISCLAIMS ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE RELATING TO THE MARTEK PRODUCT OR THE TECHNOLOGY AND ANY OTHER WARRANTY OR WARRANTIES
RELATING THERETO AND NOT EXPRESSLY SET FORTH IN THIS AGREEMENT, AND LICENSOR DISCLAIMS ANY
LIABILITY FOR CONSEQUENTIAL DAMAGES RELATING TO THE USE, MANUFACTURE, DISTRIBUTION, MARKETING, OR
SALE OF THE TECHNOLOGY, THE MARTEK PRODUCT OR THE AHPC FORMULAID PRODUCT. LICENSOR MAKES NO
REPRESENTATIONS OR WARRANTIES THAT THE TECHNOLOGY OR THE MARTEK PRODUCT IS USABLE WITH THE AHPC
FORMULAID PRODUCT OR THAT THE TECHNOLOGY OR THE MARTEK PRODUCT CAN BE INCORPORATED SAFELY INTO THE
AHPC FORMULAID PRODUCT. LICENSOR SHALL NOT BE LIABLE FOR DAMAGES RESULTING FROM ANY IMPROVEMENTS OR
MODIFICATIONS TO THE TECHNOLOGY OR THE MARTEK PRODUCT WHICH ARE NOT APPROVED AND ACKNOWLEDGED
SPECIFICALLY BY LICENSOR AS BEING PROPRIETARY TO LICENSOR OR RESULTING FROM ANY SALE, MANUFACTURE
OR USE OF THE AHPC FORMULAID PRODUCT.

          (II) LICENSOR HEREBY DISCLAIMS ANY WARRANTY THAT THE TECHNOLOGY, THE MARTEK PRODUCT OR THE
LICENSED PATENTS ARE FREE FROM INFRINGEMENT BY THIRD PARTIES, EXCEPT AS SET FORTH IN SUBSECTION
5.1(IV). LICENSOR FURTHER DISCLAIMS ANY WARRANTY RELATING TO THE

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PATENTABILITY OF, OR THE VALIDITY
OF ANY PATENTS RELATING TO, THE TECHNOLOGY OR THE MARTEK PRODUCT AND MAKES NO REPRESENTATIONS
WHATSOEVER WITH REGARD TO THE SCOPE OF ANY SUCH PATENTS OR EXCEPT AS SET FORTH IN SUBSECTION
5.1(IV), THAT SUCH PATENTS MAY BE COMMERCIALLY EXPLOITED WITHOUT INFRINGING OTHER PATENTS.

     IT IS HEREBY ACKNOWLEDGED AND AGREED THAT IT SHALL BE LICENSEE’S, AND NOT LICENSORS,
OBLIGATION TO DETERMINE THE SAFETY AND UTILITY OF THE MARTEK PRODUCT AS IT RELATES TO INFANT
FORMULA PRODUCTS.

     Section 5.3. Manufacturing Standards. During the course of this Agreement, in the
event Licensor elects to manufacture the Martek Product hereunder, Licensor shall advise Licensee
of any proposed change contemplated by Licensor associated with the manufacturing processes,
including the source of supply of all materials utilized by Licensor in the manufacture of the
Martek Product and the specifications and controls utilized in the manufacturing process
therefor. In the event Licensor elects to manufacture the Martek Product hereunder, Licensor
shall manufacture the Martek Product in accordance with applicable Technology meeting all agreed
upon specifications in accordance with good manufacturing practices and such manufacturing,
quality control, safety and handling procedures and standards as may be mutually agreed upon in
writing by the parties or required by applicable governmental regulation. In order to ascertain
compliance with the provisions of this Section 5.3, Licensee may inspect and/or audit the
facilities, processes records and other facets
employed by Licensor in the manufacturing, processing, testing and storage of the Martek
Product. Such inspection/audit will be conducted to ensure compliance with all pertinent acts,
regulations, and guidelines promulgated by the federal Food and Drug Administration and other
relevant regulatory bodies. Any such inspection by Licensee shall not relieve Licensor of its
obligations to manufacture according to the agreed upon requirements and specifications. Licensor
hereby undertakes to use reasonable efforts to have a provision containing covenants similar to
those made by Licensor in this Section 5.3 included in any agreement between Licensor and a Third
Party relative to the manufacture of the Martek Product by such Third Party for Licensee and
Licensee shall be a third party beneficiary of any such promise by any such Third Party;
provided, however, that a failure by such Third Party to discharge its obligations under such an
agreement shall not constitute a breach by Licensor of this Agreement and shall not otherwise, in
and of itself, give Licensee a right to receive damages from Licensor. Nothing in this Section
5.3 shall be construed as a warranty concerning the merchantability, fitness for a particular
purpose or safety of the Technology, the Martek Product or the AHPC Formulaid Product.

     Section 5.4. Licensee’s_ Representations and Warranties. Licensee represents
and warrants to the Licensor as follows:

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          (i) The execution and delivery of this Agreement and the performance by Licensee of the
transactions contemplated hereby have been duly authorized by all necessary corporate actions.

          (ii) The performance by Licensee of any of the terms and conditions of this Agreement will
not constitute a breach or violation of any other agreement or understanding, written or oral, to
which it or its Affiliates is a party.

ARTICLE VI

LICENSEE’S COVENANTS

     Section 6.1. Compliance with Law, Regulatory Approval and Commercial
Introduction. Licensee covenants and agrees that it and its Affiliates shall conduct all of
their operations dealing with the Technology, the Martek Product and the AHPC Formulaid Product in
material compliance with all applicable laws, regulations and other requirements which may be in
effect from time to time, of all national governmental authorities, and of all states,
municipalities and other political subdivisions and agencies thereof, including, without limiting
the generality of the foregoing, the Infant Formula Act of 1980, the Federal Food, Drug, and
Cosmetic Act, the regulations and other requirements of the United States Food and Drug
Administration, similar state laws and regulations and similar laws and other requirements as may
be applicable in any jurisdiction in which the AHPC Formulaid Product is sold. Licensee further
covenants and agrees that it shall use its diligent efforts to obtain, at its expense and as soon
as practicable, all necessary regulatory approvals with respect to the use, manufacture and sale of
the AHPC Formulaid Product in the United States and Licensee shall be responsible for performing
all acts reasonably required for obtaining such approvals, including, but not limited to, the
preparation of all necessary petitions or pre-market approval applications with regulatory agencies
and the performance of all reasonably required tests and data preparation. Licensee promptly shall
communicate to Licensor the details of all regulatory approvals and to obtain such approvals in the
United States. If Licensee reasonably concludes that it and its Affiliates cannot, after diligent
efforts, lawfully distribute for sale the AHPC Formulaid Product in the United States,
Licensee further covenants and agrees that it shall use its diligent efforts to register and market
the AHPC Formulaid Product (if it has not already done so) in one or more jurisdictions which are
not subject to the jurisdiction of the applicable regulatory agencies of the United States and
which, alone or in the aggregate, offer comparable marketing opportunities for the AHPC Formulaid
Product to the marketing opportunities available thereto in the United States. Licensee further
covenants and agrees that it shall use its diligent efforts to distribute for sale in the United
States the AHPC Formulaid Product if such distribution would be lawful in the absence of
affirmative regulatory approval. Notwithstanding the preceding sentence, Licensee’s. obligation to
use its diligent efforts to

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obtain regulatory approvals for the AHPC Formulaid Product and to
perform those actions reasonably required to obtain such approvals shall continue during the term
of this Agreement and such obligation shall not be relieved in the event Licensee or its Affiliates
first distribute the AHPC Formulaid Product for sale in the United States and later determine that
affirmative regulatory approval will be necessary in order to continue to distribute for sale the
AHPC Formulaid Product in the United States.

     Section 6.2. Performance and Product Quality. Licensee covenants and agrees that it
and its Affiliates shall exercise a reasonable standard of care in the testing, manufacturing,
marketing, packaging, distribution and sale of the AHPC Formulaid Product. Licensee further
covenants and agrees that it and its Affiliates shall maintain quality control, provide adequate
tests of materials, provide quality workmanship, and do such other things as are reasonably
required to assure high quality production of the AHPC Formulaid Product and, if Licensee elects
to manufacture the Martek Product, to assure high quality development of the Martek Product. In
this regard, and without limiting the applicability of the general indemnification provisions
applicable to the representations, warranties and covenants made by the parties to this Agreement
as provided in Article XI of this Agreement, Licensee hereby covenants and agrees to indemnify,
defend and hold harmless Licensor and Licensor’s directors, officers, employees and agents from
and against all claims, actions or causes of action (whether sounding in contract, negligence or
strict liability), suits and proceedings and all loss, assessments, liability, damages, and
expenses incurred in connection therewith (including reasonable attorneys’ fees) for which
Licensor or its directors, officers, employees or agents may become liable or incur with respect
to any product liability claim asserted against Licensee, its Affiliates, Third Parties or
Licensor relating to the manufacturing, marketing, storage, packaging, distribution, sale or use
of the AHPC Formulaid Product, unless such claim, damage or loss results from the negligent
failure of Licensor to manufacture the Martek Product in accordance with specifications provided
or approved by Licensee or results from any intentional wrongdoing of Licensor.

     Section 6.3. Licensee’s Records. Licensee covenants and agrees that, for as long as
Royalties are due under this Agreement, Licensee will keep true and accurate records adequate to
permit Royalties due to Licensor to be computed and verified, which records shall be made
available upon prior written request by Licensor, during business hours, for inspection by an
independent accountant who is reasonably acceptable to Licensee and who shall be bound by a
confidentiality agreement with the Licensee, to the extent necessary for the determination of the
accuracy of the reports made

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hereunder. For purposes of this Section 6.3, any of the six largest
accounting firms in the United States shall be deemed reasonably acceptable to Licensee.
Licensor shall bear the full cost of such inspection unless a discrepancy of five percent or
greater of Royalties due hereunder is discovered by the accountant, in which case Licensee shall
bear the full cost of the inspection.

     Section 6.4. Protection of Licensor’s Proprietary Interest. Licensee acknowledges and
agrees that the Licensed Patents and the Martek Product are proprietary to Licensor, and Licensee
hereby covenants and agrees that Licensee and its Affiliates shall not use the Technology or the
Martek Product for any purpose not provided for hereunder, shall not challenge or cause any
Affiliate or Third Party to challenge Licensor’s rights to the Technology, the Licensed Patents or
the Martek Product or the rights therein of Third Parties who are licensees of the Technology, the
Licensed Patents and/or the Martek Product, and Licensee and its Affiliates shall cooperate with
Licensor in protecting Licensor’s rights to the Technology, the Licensed Patents and the Martek
Product. The provisions of this Section 6.4 shall survive the termination or expiration of this
Agreement, whether the termination is occasioned by the Agreement’s natural expiration pursuant to
Section 3.1 of this Agreement or is earlier terminated pursuant to the other Sections of Article
III of this Agreement.

     Section 6.5. United States Export Regulation. Licensee covenants and agrees
that it and its Affiliates shall not knowingly export or re-export, directly or indirectly, the
Technology, the Martek Product, or the AHPC Formulaid Product or any part or direct product
thereof, to any country in violation of the United States Export Administration Regulations.

     Section 6.6. Product Development and  Use. Licensee covenants and agrees
that it and its Affiliates shall, throughout the term of this Agreement, use their diligent
efforts to use and develop the Martek Product and/or the Technology with respect to the AHPC
Formulaid Product in a way which is consistent with the parties’ objective of developing a final
marketed product which has a polyunsaturated fatty acid composition effectively equivalent to that
of human breast milk. This Section 6.6 shall not be construed to require all AHPC Formulaid
Products to incorporate the identical quantities of the Martek Product or to incorporate the
identical quantities of the Market Product as is contained in similar products sold by Third
Parties under license from Licensor.

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ARTICLE VII

ENHANCEMENTS

     Section 7.1. Improvements to Products. During the first year of this
Agreement, Licensor covenants and agrees to use reasonable efforts to refine the development
process for the Technology and the Martek Product and timely to notify Licensee (in accordance with
its obligations to supply quarterly written reports to Licensee under Section 13.1 of this
Agreement) of any improvements or modifications thereto and to make the relevant information and
technology available as promptly as possible for use by Licensee in accordance with this
Agreement. In the event that Licensee terminates this Agreement on or before the first
anniversary date of this Agreement due to Licensor’s failure to comply with its obligations
described in the preceding sentence, Licensee shall be relieved of its obligation to pay to
Licensor the fee described in Section 4.1 (ii) of this Agreement, and such relief from such
obligation shall be Licensee’s sole and exclusive remedy with respect to Licensor’s failure to
comply with its obligations described in the preceding sentence. Licensee shall have the right to
make improvements or modifications to the Technology or the Martek Product during the term of this
Agreement, and, in the event Licensee makes any improvements or modifications to the Technology or
the Martek Product, (i) Licensor shall during the term of this Agreement have a royalty free right
to use such improvements or modifications, (ii) the Technology or the Martek Product as so improved
or modified shall be subject, to the terms of this Agreement, and (iii) Licensee shall
give Licensor prompt written notice of any such improvement or modification.

ARTICLE VIII

PATENT PROSECUTION AND ENFORCEMNT

     Section 8.1. Patent Applications. Exhibit III of this Agreement sets forth
the complete texts of all United States patent applications filed by Licensor which reasonably
relate to the Licensed Patents. The responsibility for the prosecution of, and the exclusive right
to prosecute, such patent applications and the exclusive right to apply for patent applications in
any and all jurisdictions shall be and remain with Licensor except as provided below. Licensor
shall exercise all reasonable efforts in this regard. Licensor agrees to keep Licensee informed of
the course of such patent prosecution.

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     Section 8.2. Infringement Notice. Licensee shall notify Licensor promptly in writing
of any infringement of any issued Licensed Patent or other interference with Licensor’s proprietary
interests relating to the Technology or the Martek Product which becomes known to Licensee. If
Licensor determines that a material infringement exists, Licensor shall communicate such
determination to Licensee in writing and take prompt action to attempt to eliminate that
infringement.

     Section 8.3. Infringement Actions. If Licensor receives Licensee’s infringement
notice under Section 8.2 of this Agreement and within a reasonable time thereafter Licensor is
unsuccessful in eliminating the infringement, Licensor shall have the first right to bring, at its
own expense, an infringement action against any Third Party within a reasonable time no longer
than three (3) months from the date of Licensee’s notice of an infringement under Section 8.2 of
this Agreement. If the infringement materially and adversely affects Licensee’s and its
Affiliates’ market share relating to the AHPC Formulaid Product and Licensor waives its right to
bring such an infringement action in writing to Licensee or has not eliminated such infringement
or initiated an infringement suit within five (5) months from the date of Licensee’s notice of
infringement, Licensee, after notifying Licensor in writing, shall be entitled to bring such
infringement action at its own expense. In the latter event, any sums recovered by Licensee in any
such infringement action or in its settlement shall belong to Licensee; provided, however, that,
for purposes of Section 4.1 of this Agreement, any damages attributable to loss of sales of the
AHPC Formulaid Product shall be considered an amount received by Licensee or an
Affiliate from the sale for value of the AHPC Formulaid Product in the period(s) to which
such damages relate and Royalties thereon shall be deemed timely remitted by Licensee to Licensor
hereunder if remitted to Licensor within sixty (60) days of the date on which such damages are
received by Licensee and, in the case of settlement, Licensee shall reasonably and in good faith
determine the portion of the settlement that represents compensation for loss of sales of the AHPC
Formulaid Product and such portion shall be treated as if such portion were damages attributable
to loss of sales of the AHPC Formulaid Product. The party conducting such action shall. have full
control over its conduct, including settlement thereof. Regardless of which party brings the suit,
Licensor and Licensee shall assist one another and cooperate in any such litigation at the other’s
request.

     Section 8.4. Defense of  Infringement Actions. Licensor and Licensee hereby
acknowledge and agree that each party shall be responsible for defending, at its own expense, any
infringement action brought against such party by any Third Party, and Licensor and Licensee agree
reasonably to cooperate with the other in any such defense and in responding to any threatened
infringement action; provided, however, that, if Licensee is obligated to pay a royalty to a Third
Party relative to use or sale of the AHPC Formulaid Product in excess of [ * ] of the Sales
Price of the AHPC Formulaid

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Product (based upon an opinion of counsel reasonably acceptable to
Licensor that Licensee would infringe a patent or other proprietary interest of such Third Party in
the absence of such a royalty payment), then the Royalty payable to Licensor under Section 4.1
(iii) of this Agreement shall be reduced with respect to sales of the AHPC Formulaid Product in the
Territory with respect to which such royalties to such Third Party relate from [ * ] or, if
applicable, the Royalty payable to Licensor under Section 4.1 (iv) of this Agreement shall be
reduced with respect to sales of the AHPC Formulaid Product in the Territory with respect to which
such royalties to such Third Party relate from [ * ], during any period such a royalty to
such a Third Party is paid.

ARTICLE IX

ASSIGNMENT

     Section 9.1. Assignment. This Agreement and the rights granted hereunder shall not be
assignable, in whole or in part, by Licensee, nor shall its obligations hereunder be delegated,
without the prior written consent of Licensor; provided, however, that this, prohibition against
assignment shall not apply to an assignment to an Affiliate of Licensee or an assignment in
connection with the transfer of a substantial portion of Licensee’s business or its merger or
consolidation with another company if Licensee promptly notifies Licensor of any such assignment,
merger or consolidation. Licensor may assign its rights under this Agreement freely and without
Licensee’s. consent. Licensor shall be entitled to delegate its obligations hereunder only with the
prior written consent of Licensee, which consent may not unreasonably be withheld, until the date
on which the Martek Product can be produced at commercial volumes and costs, which date will be
deemed to have occurred upon the first commercial introduction of the AHPC Formulaid Product
anywhere in the world. After the Martek Product can be produced at commercial volumes and costs,
Licensor shall be entitled to delegate any or all of its obligations, if any, hereunder without the
consent of Licensee.

ARTICLE X

PARTIES’ RELATIONSHIP

     Section 10.1. Relationship Between Parties. Neither party to this Agreement shall
have the power to bind the other by any guarantee or representation that either party may give, or
in any other respect whatsoever, or to incur any debts or liabilities in the name of or

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on behalf
of the other party, and for purposes. of this Agreement, the parties hereto hereby
acknowledge ad agree that they shall not be deemed partners, joint venturers, or to have created
the relationship of agency or of employer and employee between the parties.

ARTICLE XI

INDEMNITY

     Section 11.1. Indemnity. Licensee shall indemnify, defend and hold harmless Licensor
and Licensor’s directors, officers, employees and agents from and against all claims, actions or
causes of action (whether sounding in contract, negligence or strict liability), suits and
proceedings and all loss, assessments, liability, damages, costs and expenses incurred in
connection therewith (including reasonable attorneys’ fees) for which Licensor or its directors,
officers, employees or agents may become liable or incur or be compelled to pay and arising out of
a breach of any of the Licensee’s covenants, representations and warranties contained herein,
except in the event such claim is the result of the negligent failure of Licensor to manufacture
the Martek Product in accordance with specifications provided or approved by Licensee, results from
any intentional wrongdoing by Licensor, or results from Licensor’s failure to fulfill its
obligations under Section 5.3 of this Agreement.

     Licensor shall indemnify, defend and hold harmless Licensee, its Affiliates, and Licensee’s
and its Affiliates’ directors, officers, employees and agents from and against all claims, actions
or causes of action, suits and proceedings and all loss, assessments, liability, damages, costs and
expenses incurred in connection therewith (including reasonable attorneys’ fees) for which
Licensee, its Affiliates or the directors, officers, employees or agents of either of them may
become liable or incur or be compelled to pay and arising out of a breach of any of the Licensor’s
covenants, representations and warranties contained herein.

     The indemnifications provided in this Agreement, including that provided in this Article and
in Section 6.2 of this Agreement, shall survive the termination of this Agreement, whether the
termination is occasioned by the Agreement’s expiration pursuant to Section 3.1 of this Agreement
or is earlier terminated pursuant to the other Sections of Article III of this Agreement.

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ARTICLE XII

CONFIDENTIALITY

     Section 12.1. Disclosure of Information. All the Technology and all other
information exchanged by the parties pursuant to, and in execution of their obligations and in
exercise of their rights under, this Agreement shall be deemed confidential. Licensor and
Licensee acknowledge and agree that the value of the Technology and the Martek Product is based,
to a large extent, on maintaining the confidentiality of the Technology and the Martek Product
and preventing any unauthorized dissemination to or use by Third Parties of information relating
to the Technology or the Martek Product. Disclosure of confidential and proprietary information
hereunder, whether orally or in written form, shall be safeguarded by the recipient and shall not
be disclosed to Third Parties and shall be made available only to the receiving party’s employees
or other agents who have a need to know such information for purposes of performing the party’s
obligations, or for purposes of exercising the party’s rights, under this Agreement and such
employees or other agents shall have a legal obligation to the employer or principal, as
applicable, not to disclose such information to Third Parties. Each party shall treat any and
all such confidential information in the same manner and with the same protection as such party
maintains its own confidential information. These mutual obligations of confidentiality shall not
apply to any information to the extent that such information: (i) is or later becomes generally
available to the public, such as by publication or otherwise, through no fault of the receiving
party; or (ii) is obtained from a Third Party having the legal right to make such a disclosure.
Licensee or its Affiliates shall not remove from any communications or other documents delivered
by Licensor to Licensee or its Affiliates any proprietary notices affixed thereto by Licensor.

     Without the written approval of the other party hereto, Licensor and Licensee shall not be
permitted to disclose the fact, the nature and the terms of this Agreement and the transactions
to be performed pursuant hereto to any Third Person; provided, however, that (i) Licensor and
Licensee may disclose any otherwise confidential or proprietary information as and to the extent
required by applicable law, including, but not limited to, any applicable disclosure requirements
under the federal securities laws or regulations thereunder which arise by virtue of a public
offering of the securities of Licensor upon prior written notice to the other party that the
information is required to be disclosed under applicable law and following steps exercised upon
the advice

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and consent, which consent may not unreasonably be withheld, of the other party to
maintain the confidentiality of such information to the extent permissible under applicable law;
(ii) Licensor and Licensee may disclose the fact and the terms of this Agreement to its attorneys
and accountants; and (iii) Licensor may disclose the fact of this Agreement to its shareholders
and potential investors.

     Licensee covenants and agrees that it and its Affiliates shall not disclose any information
related to this Agreement, the Martek Product or the Technology to the Other Entities and Licensee
represents and warrants that, for the purposes of this Section, the. Other Entities operate
independently of Licensee and its Affiliates. The exclusion of the Other Entities from
the term “Affiliates” under this Agreement shall terminate and the Other Entities shall
become Affiliates if and when any such Other Entity obtains information relating to this
Agreement, the Martek Product or the Technology directly or indirectly from Licensee or its
Affiliates.

     Section 12.2. Post-Termination Obligations. The mutual confidentiality obligations of
the parties under the provisions of this Article XII shall survive the termination of this
Agreement for a period of fifteen years. Unless this Agreement expires at a time after which
Licensee is entitled to a fully paid, royalty free license to use the Technology and the Martek
Product pursuant to Section 3.1 of this Agreement, at the termination of this Agreement, Licensee
promptly shall return to Licensor all the Technology, microbial strains, Martek Product samples,
documents, records, and all other property or documentation disclosed or delivered to Licensee or
its Affiliates pursuant to this Agreement and then in existence, including all copies thereof, and
each party shall destroy or promptly deliver to the other any documentary material in its
possession created by the other during the course of this Agreement, and thereafter, which contains
information about the other or information about matters and things in which the other has a
proprietary interest that is not in the public domain, including notes, memoranda or
correspondence, except that each party shall be permitted to retain one copy of any such
documentation belonging to the other for archival purposes and only for archival purposes.

ARTICLE XIII

MISCELLANEOUS

     Section 13.1. Free Flow of Information. Licensor and Licensee covenant and agree,
except as prohibited by an enforceable arms’

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length agreement with a Third Party which was not
entered into for the purpose of inhibiting the free, flow of information under this Section 13.1,
promptly to share with the other all material information obtained by the Licensor or Licensee, or
Licensee’s Affiliates concerning the progress of clinical and pre-clinical testing of the
Technology and the Martek Product and adverse reaction data relating to the Technology and the
Martek Product, and Licensor and Licensee shall provide to each other quarterly written reports
disclosing the details of such information. Licensor and Licensee shall maintain the
confidentiality of such information as required under Section 12.1 of this Agreement.

     Section 13.2. Dispute Resolution. Licensor and Licensee covenant and agree to use
their diligent efforts to resolve any disputes that arise between them in the future and are
related to this Agreement through negotiation and mutual agreement.

     Section 13.3. Force Majeure. Neither party to this Agreement shall be liable for
damages due to delay or failure to perform any obligation under this Agreement if such delay or
failure results directly or indirectly from circumstances beyond the control of such party. Such
circumstances shall include, but shall not be limited to, acts of God, acts of war, civil
commotions, riots, strikes, lockouts, acts of the government in either its sovereign or contractual
capacity, perturbation in telecommunications transmissions, inability to obtain suitable
equipment or components, accident, fire, water damages, flood, earthquake, or other natural
catastrophes.

     Section 13.4. Construction of Agreement. This Agreement shall be construed and the
respective rights of the parties shall be determined under and pursuant to the laws of the State of
Delaware, without regard to the principles of conflict of laws thereof.

     Section 13.5. Notices. Notices required under this Agreement shall be in writing and
sent by registered mail or by facsimile transmission or hand delivery to the respective parties at
the following addresses:

     Notices to Licensor:

Martek Biosciences Corporation 6480

Dobbin Road

Columbia, Maryland 21045

Telecopy: {410) 740-2985

Attn: Henry Linsert, Jr.

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     Notices to Licensee:

Dr. David Richards,

M.D. Wyeth-Ayerst Laboratories

555 East Lancaster Avenue

St. Davids, Pennsylvania 19087 Telecopy:

     With a copy to:

Larry J. McDermott

Wyeth-Ayerst Laboratories

555 East Lancaster Avenue

St. Davids, Pennsylvania 19087 Telecopy:

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

     Section 13.6. Entire Agreement. This Agreement, including the Exhibits hereto,
constitutes the entire agreement between the parties hereto and there are no representations,
warranties or covenants relative hereto, including those set forth in the Letter of Intent, which
shall survive the execution of this Agreement unless fully set forth herein.

     Section 13.7. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns. No person,
firm or corporation other than the parties hereto and their successors and permitted assigns shall
derive rights or benefits under this Agreement.

     Section 13.8. Counterparts. This Agreement may be executed in counterparts.

     Section 13.9. Extra-Territorial Agreements. Licensor and Licensee hereby. acknowledge
that Licensor and Licensee or its Affiliate have entered into agreements without the Territory
relating to the subject matter of this Agreement and Licensee hereby covenants and agrees to
perform its obligations as set forth in any and all such other agreements to the extent and as if
such other agreement(s) and this Agreement were one agreement.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed in their
respective behalves as of the day and year first written above.

	 	 	 	 	 	 	 	 	 
	WITNESS/ATTEST:	 	 	 	MARTEK BIOSCIENCES CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Steve Dubin
 

	 	 	 	By:
	 	/s/ Henry Linsert
 

	 	 
	Officer 	 	 	 	Print Name: Henry Linsert	 	 
	 	 	 	 	Print Title: Chief Executive Officer	 	 

	 	 	 	 	 	 	 	 	 
	WITNESS/ATTEST:
	 	 	 	 	 	 	 	 
	 	 	 	 	AMERICAN HOME PRODUCTS CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	/s/
 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Bernard Canavan 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	 	 	Print Name: Bernard Canavan	 	 
	 	 	 	 	Print Title: President	 	 

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     These mutual obligations of confidentiality shall not apply to any information to the extent
that such information: (i) is or later becomes generally available to the public, such as by
publication or otherwise, through no fault of the receiving party; or (ii) is obtained from a Third
Party having the legal right to make such a disclosure. Licensee or its Affiliates shall not remove
from any communications or other documents delivered by Licensor to Licensee or its Affiliates any
proprietary notices affixed thereto by Licensor.

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EXECUTION COPY

	 	 	 	 	 
	 

	 	NOTICE:
	 	CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
	 

	 	 	 	PORTIONS OF THIS DOCUMENT AS INDICATED HEREIN

LICENSE AGREEMENT

(International Version)

     This License Agreement (“Agreement”) is made and entered into as of the 28th day of
January, 1993, by and between Martek Biosciences Corporation, a Delaware corporation (“Licensor”),
and American Home Products Corporation, a Delaware corporation, as represented by its agent,
Wyeth-Ayerst International, Inc. (“Licensee”).

WITNESSETH:

     WHEREAS, Licensor has developed certain technology relating to the production by microbial
fermentation of Omega-3 and Omega-6 long-chain polyunsaturated fatty acid-containing triglycerides
for possible incorporation into infant formula; and

     WHEREAS, Licensee and its affiliates are in the business of developing, manufacturing and
marketing infant nutritional products; and

     WHEREAS, Licensee desires to obtain a non-exclusive license from Licensor for the Technology
and Licensor is willing to grant such license subject to the conditions and pursuant to the terms
set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants of. the parties
hereto, each party hereby agrees with the other-as follows:

ARTICLE I

DEFINITIONS

     Section 1.1. “Affiliate” shall mean any person, corporation, firm, partnership or
other entity which directly or indirectly owns Licensee, is owned by Licensee or is owned by a
party which owns Licensee to the extent of at least 50% of the equity having the power to vote on
or direct the affairs of the entity. Except as the term “Affiliate” is used in Sections 6.4
and 8.4 of this Agreement, the term “Affiliate” shall exclude (i) Genetics Institute, (ii) Sherwood Medical Company, a Division of
American Home Products Corporation and (iii) Fort Dodge Laboratories (collectively, the “Other
Entities”).

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     Section 1.2. “Infant Formula Product” shall mean a breast milk substitute formulated
industrially in accordance with applicable Codex Alimentarius and United States Food and Drug
Administration standards to satisfy the total normal nutritional requirements of infants from birth
up to between four and six months of age and adapted to their physiological characteristics and fed
in addition to other foods to infants up to approximately one year of age.

     Section 1.3. “Licensed Patents” shall mean all patents and patent applications
throughout the world which cover the Technology, including all patents and patent applications
covering inventions, improvements or modifications conceived or developed by Licensor during the
term of this Agreement and included in the Technology.

     Section 1.4. “Martek Product” shall mean triglycerides containing Omega-3 and/or
Omega-6 long-chain polyunsaturated fatty acids produced by microbial fermentation according to the
Technology and Licensed Patents.

     Section 1.5. “AHPC Formulaid Product” shall mean a product (i) which is an Infant
Formula Product, (ii) which is in a form for utilization by consumers, (iii) which is developed by
Licensee or its Affiliates, (iv) which bears Licensee’s label or the label of an Affiliate, and
(v) into which the Martek Product is incorporated.

     Section 1.6. “Technology” shall mean the organisms, microorganisms, specifications,
biological materials, designs, formulae, processes, standards, data, trade secrets, knowhow and
technology relating to the development and production of the Martek Product which are proprietary
to Licensor and any modifications, improvements and enhancements to any of the foregoing made by
Licensor, which, in Licensor’s and Licensee’s mutual opinion expressed in writing, is or are
necessary in the production and development of the Martek Product.

     Section 1.7. “Territory” shall mean [ * ]

     Section 1.8. “Third Party” shall mean any party other than Licensor, Licensee and
Affiliates.

     Section 1.9. “Trademark” shall mean the trademark “FORMULAID”, which is the subject
of U.S. Trademark Application Serial No. 74-141195, a copy of which is attached hereto as
Exhibit I.

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ARTICLE II

GRANT OF LICENSE AND OTHER RIGHTS

     Section 2.1. License.

          (i) Grant of License to License. Licensor hereby grants to Licensee for the term of
this Agreement and subject to the conditions of this Agreement, a non-exclusive, non-transferable
right and license, in the Territory, directly or through sublicense to an Affiliate, (i) to use the
Technology for the production of the AHPC Formulaid Product, (ii) to use and make the Martek
Product for purposes of producing the AHPC Formulaid Product and (iii) to use, market and
distribute by sale the AHPC Formulaid Product itself or through its Affiliates.

          (ii) Direct License to Affiliates. Licensee may, at any time, request from Licensor
and Licensor agrees to grant directly to any Affiliate in any country of the Territory license
rights consistent with those granted to Licensee herein. Accordingly, upon receipt of Licensee’s
request, Licensor shall enter into and sign a separate direct license agreement or agreements with
the Affiliate companies designated by Licensee in the request. All direct agreements shall be
prepared by Licensee at Licensee’s expense. In the event that the laws and regulations of such
country(ies) require modification of the royalty rate, duration and/or terms and conditions and to
the extent that compliance with such laws and regulations are reasonably necessary to market the
AHPC Formulaid Product in such country, the direct licenses to the Affiliates(s) shall be so
modified and Licensee shall pay for all costs incurred by the Licensee in effecting such
modification. In the absence or upon the expiration of such laws and regulations, the terms and
conditions thereof shall not be less favorable to Licensor than those contained in this Agreement.
In those countries in which the validity of such a direct license agreement requires prior
governmental approval or registration, such direct license agreement shall not be binding or have
any force or effect until the required governmental approval or registration has been granted.
Notwithstanding the preceding, Licensor shall not be required to enter into any agreement with any
Affiliate with royalty terms which are different than those provided hereunder if Licensor would
thereby be in violation of a term of any agreement with any other licensor of the Technology
similar to the provisions of Section 2.2(i) of this Agreement.

     Section 2.2. Licenses to Third Parties.

          (i) Licenses to Third Parties Generally. Licensor shall be entitled to grant any
license to any Third Party relating to the Technology, the Martek Product or the Licensed Patents
upon any terms whatsoever; provided, however, that Licensor shall not grant any license to any
Third Party for the incorporation of

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the Martek Product into, or for the use of the Technology for
the production of, an Infant Formula Product with payment terms which are more favorable to such
Third Party than the payment terms provided in this Agreement with respect to the Licensee,
without the prior written consent of Licensee or unless such more favorable payment terms
prospectively are extended to Licensee.

          (ii) License to Third Party Suppliers. Licensor shall be obligated to license the
Technology, the Licensed Patents and the Martek Product to Third Parties as follows:

               (A) Licensor shall use reasonable efforts further to license the Technology or the Licensed
Patents or otherwise to produce the Martek Product, itself or through a Third Party whether or not
pursuant to another licensing arrangement, for the purpose of creating a sufficient supply of the
Martek Product at a commercially reasonable price to satisfy Licensee’s and its Affiliates’
requirements with respect to their marketing and sale of the AHPC Formulaid Product; provided,
however, that such requirements and any increases or decreases thereof shall be communicated in
writing by Licensee to Licensor not less than 12 months prior to Licensor’s obligation to satisfy
such requirements or increases or decreases thereof.

               (B) If Licensor licenses the Martek Product, the Licensed Patents and the Technology to a
Third Party for the purposes of manufacturing and creating a supply of the Martek Product pursuant
to subsection (ii)(A) of this Section 2.2, Licensor shall permit Licensee to. negotiate the terms
of the purchase and supply arrangements between the Licensee and such Third Party directly with
such Third Party; provided, however, that such direct negotiations or arrangements shall not
affect Licensor’s rights to royalties or other fees from Licensee or such Third Party.

               (C) If the Third Parties to whom the Martek Product and the Technology are licensed and Martek
in the aggregate are unable to satisfy Licensee’s and its Affiliates’ requirements for the Martek
Product (as established and communicated pursuant to subsection (ii)(A) of this Section 2.2),
Licensor shall, appoint one or more additional licensed suppliers who are reasonably
acceptable to Licensee and who can satisfy the excess demands of Licensee and its Affiliates at a
commercially reasonable price.

               (D) Licensor and Licensee acknowledge and agree that, at the time of the execution of this
Agreement, the production cost of the Martek Product in gross quantities, the fair market value
thereof and the commercial volumes thereof necessary to meet Licensee’s demands are not
ascertainable, and Licensor

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and Licensee covenant and agree that, prior to the first sale of a AHPC
Formulaid Product, Licensor and Licensee shall negotiate in good faith and strive to agree upon
reasonable terms relating to the consideration to be payable by Licensee or its Affiliates to
Licensor or Third Parties for amounts of the Martek Product produced by or on behalf of Licensor
and delivered to Licensee or its Affiliates.

          (iii) Transfer of Martek Product. Nothing in this Section 2.2 or in this Agreement
shall be construed to permit Licensee or its Affiliates to sub-license the Martek Product or the
Technology or otherwise unilaterally to transfer to any Third Party the Martek Product or the
Technology except as the same are incorporated into the AHPC Formulaid Product.

          (iv) Licensee’s Patents. Nothing in this Section 2.2 shall be construed so as to
permit Licensors to grant rights to any Third Party under U.S. Patent No. 4,670,285 and Canadian
Patent No. 1,244,708.

     Section 2.3. Sublicensing. The grants to Licensee under this Article II shall not
include the right to grant sublicenses, except sublicenses to Affiliates.

     Section 2.4. Trademarks. In addition to the license granted hereunder relating to the
Martek Product and the Technology, Licensor hereby grants to Licensee the non-exclusive,
non-transferable right and license to use the Trademark solely on, and in connection with the
manufacture and sale of, the AHPC Formulaid Product, subject to the following terms and conditions:

          (i) Licensee shall not use the Trademark as or part of its corporate or business name or the
name of any business .entity which is controlled by it, whether an Affiliate or otherwise.

          (ii) Licensee and its Affiliates shall have no right to sublicense to Third Parties any of the
rights in the Trademark conveyed hereunder.

          (iii) Licensee and its Affiliates shall not affix or use the Trademark on any product other
than the AHPC Formulaid Product.

          (iv) Licensee recognizes and acknowledges Licensor’s ownership of the Trademark and Licensor’s
intent to protect the Trademark in such foreign countries as Licensor, in its sole discretion,
deems appropriate. Licensee covenants and agrees that it and its Affiliates shall not challenge, or
cause a Third Party to
challenge, Licensor’s right, title or interest in and to the Trademark anywhere in the world.
All use by Licensee or its Affiliates of the Trademark anywhere in the world shall inure to the
benefit of Licensor, and Licensee and its Affiliates shall make no use or apply for any
registration thereof except as permitted by this

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Agreement. Nothing in this Agreement shall be
construed so as to require Licensor to take any actions or measures to protect or secure any rights
in or obtain or apply for registration of-the Trademark.

          (v) Licensee agrees that it will comply with the marking and registered user requirements of
all foreign countries in which the Trademark is used, including, but not limited to, requirements
relating to the execution of any documentation needed in order to effectuate the purpose of this
provision.

          (vi) Licensee covenants that AHPC Formulaid Products manufactured for and by it and sold by it
shall be of a high standard and quality so as to reflect favorably
upon the business of
both Licensor and Licensee and the goodwill associated therewith. To effectuate the foregoing:

               (A) Prior to the time that Licensee or its Affiliates shall sell or offer for sale, in the
regular course of business, any AHPC Formulaid Product bearing the Trademark, Licensee shall submit
to Licensor, for its approval, samples of the AHPC Formulaid Product as well as samples of all
materials used to sell or to promote the sale of AHPC Formulaid Products, including, but not
limited to, labels, labeling, packaging materials, advertising and other promotional materials.
Thereafter, Licensee and its Affiliates shall not make any material change to the way in which the
Trademark is used or depicted in connection with the AHPC Formulaid Product without first
submitting such proposed change to Licensor and obtaining its approval.

               (B) Licensor and Licensee hereby acknowledge that Licensee has given Licensor the opportunity
to inspect the manufacturing operations of Licensee and its Affiliates where AHPC Formulaid
Products depicting the Trademark, if any, will be made and to evaluate the quality control
standards and practices of Licensee and its Affiliates relating to such operations. Licensor hereby
acknowledges that Licensee’s and its Affiliates’ quality control standards and practices are
acceptable and sufficiently protective of Licensor’s interests in the Trademark. Licensee hereby
covenants and agrees to notify Licensor prior to any material changes in Licensee’s or its
Affiliates’ quality control standards or practices as such standards and practices relate to the
manufacturing operations of AHPC Formulaid Products depicting the Trademark. Licensee shall submit
to Licensor, without charge, at Licensor’s request at reasonable intervals throughout the term of
this Agreement, a reasonable number of samples of AHPC Formulaid
Products and other materials that depict the Trademark.

               (C) No approval required of Licensor under this subsection (vi) shall be unreasonably
withheld or delayed.

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               (D) Licensee shall advise Licensor of any infringement of the Trademark of which it or its
Affiliates becomes aware, but Licensee and its Affiliates shall not bring any action with respect
to any such infringement without Licensor’s prior written consent. Licensee and its Affiliates
shall cooperate with Licensor, at Licensor’s request, with respect to any of Licensor’s efforts to
protect its interests in the Trademark. Nothing in this Agreement shall be construed so as to
require Licensor to take any actions or measures with respect to any alleged, suspected or known
infringement of the Trademark.

               (E) Licensee shall notify Licensor in writing prior to any material alterations to the formula
of the AHPC Formulaid Product.

          (vii) Nothing in this Section 2.4 or in this Agreement shall be construed to require Licensee
or its Affiliates to use the Trademark on the AHPC Formulaid Product or on the labels, labeling or
packaging thereof or on materials used to promote the sale of the AHPC Formulaid Product.

          (viii) The term of the Trademark license of this Section 2.4 shall be coterminous with that of
the license granted in Section 2.1, which term is defined in Article III of this Agreement.
Notwithstanding the preceding, upon the expiration of the twenty-five (25) year period described in
Section 3.1 of this Agreement, this Agreement shall continue as to Licensee’s and its Affiliates’
rights and obligations relating to the Trademark; provided, however, that the Royalty due hereunder
after the expiration of the period described in paragraph (iii)(B) of Section 4.1 of this Agreement
relating to sales of AHPC Formulaid Products depicting the Trademark or sales of AHPC Formulaid
Products to which advertising or other promotional materials depicting the Trademark relate shall
be in an amount equal to [ * ] of the greater of (A) the Cost of Goods Sold applicable to
each such AHPC Formulaid Product or (B) the Sales Price of each such AHPC Formulaid
Product sold to Third Parties.

     Section 2.5. Services. Licensor shall make its officers and other employees available
at reasonable times to provide technical and other consultation services relating to the use of the
Technology, the production of the Martek Product and/or the incorporation of the Martek Product
into the AHPC Formulaid Product to the extent of [ * ] hours in the aggregate by all such
officers and employees over the term of this Agreement; provided, however, that any services which
are mutually agreed in advance of the performance thereof to be mutually beneficial to the
businesses of Licensor and Licensee shall not be considered in determining the number of hours
of technical or other consultation services performed by Licensor’s officers and other employees
under this Section 2.5. If greater than [ * ] hours of such technical or other consultation
services in the aggregate are required and requested by Licensee or its Affiliates, Licensor and
Licensee hereby agree that,

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prior to the provision of additional technical or other consultation
services, they shall enter into good faith negotiations relating to compensation and other terms
for such additional technical or other consultation services, which compensation and other terms
shall be commensurate with industry standards.

ARTICLE III

TERM AND CANCELLATION

     Section 3.1. Term. This Agreement shall commence on the date of this Agreement and,
unless earlier terminated pursuant to another Section of this Article III, shall terminate, as to
each country in which the AHPC Formulaid Product is sold for consumer use, on the date which is
twenty five (25) years after the first commercial introduction of the AHPC Formulaid Product in
such country. Upon expiration under this Section, Licensee shall have a fully paid, royalty free
license to continue in perpetuity to utilize the Martek Product and the Technology as provided for
in Section 2.1.

     Section 3.2. Material Breach; Opportunity to Cure. Either party to this Agreement may
immediately terminate this Agreement by written notice and without judicial intervention if the
other party shall materially fail to comply with or shall materially breach any of its obligations
and covenants hereunder and shall not remedy and make good such breach or failure, or have
undertaken to cure the same, within sixty (60) days from the receipt of a written notice of failure
of compliance or breach.

     Section 3.3. Termination in case of Infringement. Licensee shall have the right to
terminate this Agreement with respect to the manufacture, use or sale of the Technology or the
Martek Product in a particular jurisdiction if a court of competent jurisdiction therein
determines by final order that the Technology or the Martek Product infringes upon the patent
of any. Third Party; provided, however, that Licensor and Licensee hereby covenant and
agree that, prior to any such termination, Licensor and Licensee shall engage in reasonable, good
faith efforts to develop, and shall cooperate with the other in developing, a lawful method of
using, selling or manufacturing, as applicable, the AHPC Formulaid Product in the applicable
jurisdiction., including, but not limited to, efforts to procure a license from such
Third Party or efforts to alter the design or offending composition of the
Martek Product, the Technology or the AHPC Formulaid Product, as applicable, so as to
eliminate the infringement.

     Section 3.4. Termination by Licensee. At any time after the first anniversary date of
this Agreement, Licensee shall have the right to terminate this Agreement

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of its own volition upon
ninety (90) days prior written notice to Licensor.

     Section.3.5. Payments Due Upon Termination or Cancellation. Upon expiration or
termination of this Agreement, pursuant to any of the foregoing Sections, all amounts due-pursuant
to Article IV shall be immediately payable as of the date of termination or cancellation.

     Section 3.6. Sale of Inventory Upon Termination. Effective upon the date of
termination of this Agreement, Licensee and its Affiliates shall cease manufacturing the Martek
Product and the AHPC Formulaid Product; provided, however, that, Licensee and its Affiliates may
continue to distribute the Martek Product or the AHPC Formulaid Products manufactured prior to such
date if, to the extent lawful, Licensee continues to make payments under Section 4.1 with respect
to such AHPC Formulaid Products and otherwise continues to comply with the terms and conditions of
this Agreement. Notwithstanding the preceding, upon the earlier to occur of (i) the sale by
Licensee and its Affiliates of all of their inventory of AHPC Formulaid Products manufactured prior
to the date of the termination of this Agreement or (ii) the date which is six months after the
date of the termination of this Agreement, Licensee and its Affiliates shall cease all use of the
Technology, sale of the Martek Product or AHPC Formulaid Product and use of the Trademark and
Licensee and its Affiliates shall have no further rights under this Agreement. This Section 3.6
shall, not apply in the event this Agreement expires pursuant to Section 3.1 of this Agreement.

     Section 3.7. Other Rights and Remedies. Unless another provision of this Agreement
specifically provides to the contrary, the rights of termination as herein provided shall be in
addition to all other rights and remedies which either party may have to enforce this Agreement or
to secure damages for the breach hereof, and the exercise of any right of termination as herein
provided by either party shall not relieve the other of any of its obligations under this Agreement
accruing prior to the effective date of termination, including, but not limited to, the obligation
to pay fees and Royalties pursuant to Section 4.1 or to render reports with respect thereto.

ARTICLE IV.

PAYMENTS BY LICENSEE

     Section 4.1. Fees and Royalties. Licensee shall pay Licensor as compensation
for the license and other rights granted hereby:

     (i) During the term described in Section 4.1(iii)(A) below, a royalty payment (the
“Royalty”) in an amount equal to [ * ] of the greater of (A) the cost of goods sold
applicable to the AHPC Formulaid Product, as

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determined using generally acceptable
accounting principals and methodologies reflected on Licensee’s audited annual financial
statements and as mutually agreed to by Licensor and Licensee (the “Cost of Goods Sold”), or
(B) the amount received by Licensee or its Affiliates from the sale for value of each AHPC
Formulaid Product to Third Parties, which amount received by Licensee or its Affiliates
shall not be reduced by taxes assessed on income from such sales but shall not include:
normal returns and allowances actually paid or allowed by Licensee or its Affiliates;
customary discounts, whether cash or trade; rebates; and sales and other taxes based on the
sales prices of the AHPC Formulaid Product whether or not absorbed by Licensee or its
Affiliates (the “Sales Price”).

     (ii) During the term described in Section 4.1(iii)(B) below, a Royalty in an amount
equal to [ * ] of the greater of (A) the Cost of Goods Sold applicable to the AHPC
Formulaid Product, or (B) the Sales Price of each AHPC Formulaid Product to Third Parties.

     (iii)(A) As to each country in which the AHPC Formulaid Product is sold or otherwise
distributed for consumer use, for a term of ten (10) years after the first commercial
introduction of the AHPC Formulaid Product in such country; provided, however, that if a
patent is obtained with respect to the Technology or the Martek Product in such country
prior to the twenty-fifth (25th) anniversary of the date of first commercial introduction of
the AHPC Formulaid Product in. such country, for an additional term beginning on the date of
the issuance of such patent and ending on the earlier of (A) the date of the
expiration, lapse or invalidation of such patent and (B) the twenty-fifth (25th) anniversary
of the date of the first commercial introduction of the AHPC Formulaid Product in such
country.

     (iii)(B) As to each country in which the AHPC Formulaid Product is sold or otherwise
distributed for consumer use, for such additional period of time following the period
described in Section 4.1(iii)(A) above, if any, and ending on the twenty-fifth (25th)
anniversary after the’ first commercial introduction of the AHPC Formulaid
Product in such country.

     Licensor shall be responsible for all taxes levied on account of any payment accruing under
this Agreement that constitutes income taxable to Licensor. If provision is made in law or
regulation for withholding, such tax shall be deducted
from any royalty payment then due, paid to the proper taxing authority and receipt for payment
of the tax secured and promptly sent to Licensor.

     Section 4.2. Manner of Royalty Payment. The Royalties provided for herein shall accrue
and be payable in the national currency of the country where the sale

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on which payment is based was
made and shall be paid to Licensor within sixty (60) days following the end of each calendar
quarter in which the Royalty is earned, provided that:

     (i) if law or regulation permits the conversion of such currency into U.S. currency, the same
shall be converted into the equivalent value in U.S. currency at a rate of exchange equal to the
average applicable rate of exchange over the first thirty (30) days following the end of the
applicable calendar quarter and paid in U.S. currency to Licensor at the place of payment;

     (ii) if the conversion into and/or remittance of U.S. currency is subject to administrative
authorization, Licensee shall take appropriate action with the competent authorities and
diligent efforts applied to obtain such authorization so as to pay the Royalty in U.S. currency
within the time stipulated for payment of the Royalty;

     (iii) if by enforceable law, regulations or fiscal policy of a country, conversion into or
transfer of U.S. currency is restricted or forbidden, notice thereof in writing will be given to
Licensor and payment of the Royalty shall be made through such lawful means or method as Licensor
may designate at Licensee’s expense. Failing the designation by Licensor of such lawful means or
method as aforesaid within a period of sixty (60) days after the aforementioned notice is given to
Licensor, the payment of such Royalty by Licensee shall be made by the deposit thereof in local
currency to the credit of Licensor in a recognized banking institution designated by Licensor or if
none be designated by it within the period of. sixty (60) days as aforesaid then in a
recognized banking institution notified to Licensor.

     Section 4.3. Reimbursement of Expenses. Licensee agrees to pay to Licensor, in
addition to the amounts specified in Section 4.1 above, all reasonable traveling, living and
out-of-pocket expenses for services rendered by Licensor pursuant to Section 2.5 of this Agreement
which are considered in determining whether Licensor’s officers and other employees have performed
[ * ] hours of service under such Section.

     Section.4.4. Commercialization and Other Expenses. Licensee and its
Affiliates shall pay all expenses for the commercialization of the AHPC Formulaid Product. Licensee
shall compensate Licensor for any samples of the Martek Product reasonably requested by Licensee at
a reasonable price to be agreed upon by
Licensor and Licensee pursuant to good faith negotiation. For purposes of the preceding
sentence, “samples” shall mean quantities which are requested by Licensee or its Affiliates for
research, development or testing purposes and not requested for the purpose of incorporation
thereof into a AHPC Formulaid Product which is to be distributed to Third Parties.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES

     Section 5.1. Licensor’s Representations and Warranties. Licensor represents and
warrants to the Licensee as follows:

          (i) Exhibit II sets forth a complete and accurate list of the Licensed Patents as of
the date of this Agreement.

          (ii) Licensor has all necessary corporate power and authority to enter into this Agreement,
perform its obligations hereunder and license the Technology and the Martek Product pursuant to the
terms of this Agreement. Licensor’s performance under this Agreement does not conflict with any
other contract to which Licensor is bound.

          (iii) Licensor has, prior to the date of this Agreement, informed Licensee of all Third Party
patents relevant to the Technology or the Licensed Patents and known to Licensor.

          (iv) Licensor has recently become aware of European Patent EP—B-231904 of Milupa (the “Milupa
Patent”) and European Patent EP-B-2223960 of Lion Corporation (the “Lion Patent”), which currently
are under study. With the exception of the Milupa Patent and the Lion Patent, at the time of this
Agreement, Licensor has no actual knowledge of the existence of other patents which would be
infringed by the commercial exploitation, by Licensee or its Affiliates, of the Technology, the
Martek Product or the Licensed Patents.

     SECTION 5.2. DISCLAIMERS. (I) LICENSOR HEREBY DISCLAIMS ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE RELATING TO THE MARTEK PRODUCT OR THE
TECHNOLOGY AND ANY OTHER WARRANTY OR WARRANTIES RELATING THERETO AND NOT EXPRESSLY SET FORTH IN
THIS AGREEMENT, AND LICENSOR DISCLAIMS ANY LIABILITY FOR CONSEQUENTIAL DAMAGES RELATING TO THE USE,
MANUFACTURE, DISTRIBUTION, MARKETING, OR SALE OF THE TECHNOLOGY, THE MARTEK PRODUCT OR THE AHPC
FORMULAID PRODUCT. LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES THAT THE TECHNOLOGY OR THE MARTEK PRODUCT IS
USABLE WITH THE AHPC FORMULAID PRODUCT OR THAT THE TECHNOLOGY OR THE MARTEK PRODUCT CAN BE
INCORPORATED SAFELY INTO THE AHPC FORMULAID PRODUCT. LICENSOR SHALL NOT BE LIABLE FOR DAMAGES
RESULTING FROM ANY IMPROVEMENTS OR

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MODIFICATIONS TO THE TECHNOLOGY OR THE MARTEK PRODUCT WHICH ARE
NOT APPROVED AND ACKNOWLEDGED SPECIFICALLY BY LICENSOR AS BEING PROPRIETARY TO LICENSOR OR
RESULTING FROM ANY SALE, MANUFACTURE OR USE OF THE AHPC FORMULAID PRODUCT.

     (II) LICENSOR HEREBY DISCLAIMS ANY WARRANTY THAT THE TECHNOLOGY, THE MARTEK PRODUCT OR THE
LICENSED PATENTS ARE FREE FROM INFRINGEMENT BY THIRD PARTIES, EXCEPT AS SET FORTH IN SUBSECTION
5.1(IV). LICENSOR FURTHER DISCLAIMS ANY WARRANTY RELATING TO THE PATENTABILITY OF, OR THE VALIDITY
OF ANY PATENTS RELATING TO, THE TECHNOLOGY OR THE MARTEK PRODUCT AND MAKES NO REPRESENTATIONS
WHATSOEVER WITH REGARD TO THE SCOPE OF ANY SUCH PATENTS OR EXCEPT AS SET FORTH IN SUBSECTION
5.1(IV), THAT SUCH PATENTS MAY BE COMMERCIALLY EXPLOITED WITHOUT INFRINGING OTHER PATENTS.

     IT IS HEREBY ACKNOWLEDGED AND AGREED THAT IT SHALL BE LICENSEE’S, AND NOT LICENSOR’S,
OBLIGATION TO DETERMINE THE SAFETY AND UTILITY OF THE MARTEK PRODUCT AS IT RELATES TO INFANT
FORMULA PRODUCTS.

     Section 5.3. Manufacturing Standards. During the course of this Agreement, in the
event Licensor elects to manufacture the Martek Product hereunder, Licensor shall advise Licensee
of any proposed change contemplated by Licensor associated with the manufacturing processes,
including the source of supply of all materials utilized by Licensor in the manufacture of the
Martek Product and the specifications and controls utilized in the manufacturing process therefor.
In the event Licensor elects to manufacture the Martek Product hereunder, Licensor shall
manufacture the Martek Product in accordance with applicable Technology meeting all agreed upon
specifications in accordance with good manufacturing practices and such manufacturing, quality
control, safety and handling procedures and standards as may be mutually agreed upon in writing by
the parties or required by applicable governmental regulation. In order to ascertain compliance
with the provisions of this Section 5.3, Licensee may inspect and/or audit the facilities,
processes records
and other facets employed by Licensor in the manufacturing, processing, testing and storage of
the Martek Product. Such inspection/audit will be conducted to ensure compliance with all pertinent
acts, regulations, and guidelines promulgated by the federal Food and Drug Administration and other
relevant regulatory bodies. Any such inspection by Licensee shall not relieve Licensor of its
obligations to manufacture according to the agreed upon requirements and specifications.

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Licensor hereby undertakes to use reasonable efforts to have a provision containing covenants similar to
those made by Licensor in this Section 5.3 included in any agreement between Licensor and a Third
Party relative to the manufacture of the Martek Product by such Third Party for Licensee and
Licensee shall be a third party beneficiary of any such promise by any such Third Party; provided,
however, that a failure by such Third Party to discharge its obligations under such an agreement
shall not constitute a breach by Licensor of this Agreement and shall not otherwise, in and of
itself, give Licensee a right to receive damages from Licensor. Nothing in this Section 5.3 shall
be construed as a warranty concerning the merchantability, fitness for a particular purpose or
safety of the Technology, the Martek Product or the AHPC Formulaid Product.

     Section 5.4. License’s Representations and Warranties. Licensee represents and
warrants to the Licensor as follows:

          (i) The execution and delivery of this Agreement and the performance by Licensee of the
transactions contemplated hereby have been duly authorized by all necessary corporate actions.

          (ii) The performance by Licensee of any of the terms and conditions of this Agreement will not
constitute a breach or violation of any other agreement or understanding, written or oral, to which
it or its Affiliates is a party.

ARTICLE VI

LICENSEE’S COVENANTS

     Section 6.1. Compliance with Law, Regulatory Approval and Commercial Introduction.
Licensee covenants and agrees that it and its Affiliates shall conduct all of their operations
dealing with the Technology, the Martek Product and the AHPC Formulaid Product in material
compliance with all applicable laws, regulations and other requirements which may be in effect from
time to time, of all governmental authorities, in any jurisdiction in which, the AHPC Formulaid
Product is sold. Licensee further covenants and agrees that it shall use its diligent efforts to
obtain, at its expense and as soon as practicable, all necessary regulatory approvals with respect
to the use, manufacture and sale of the AHPC Formulaid
Product in the Territory and Licensee shall be responsible for performing all acts
reasonably required for obtaining such approvals, including, but not limited to, the preparation of
all necessary petitions or pre-market approval applications with regulatory agencies and the
performance of all reasonably required tests and data preparation. Licensee promptly shall
communicate to Licensor the details of all regulatory approvals and efforts to obtain such
approvals in any jurisdiction in

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which approval for the AHPC Formulaid Product is sought by
Licensee or its Affiliates.

     Section 6.2. Performance and Product Quality. Licensee covenants and agrees that it
and its Affiliates shall exercise a reasonable standard of care in the testing, manufacturing,
marketing, packaging, distribution and sale of the AHPC Formulaid Product. Licensee further
covenants and agrees that it and its Affiliates shall maintain quality control, provide adequate
tests of materials, provide quality workmanship, and do such other things as are reasonably
required to assure high quality production of the AHPC Formulaid Product and, if Licensee elects to
manufacture the Martek Product, to assure high quality development of the Martek Product. In this
regard, and without limiting the applicability of the general indemnification provisions applicable
to the representations, warranties and covenants made by the parties to this Agreement as provided
in Article XI of this Agreement, Licensee hereby covenants and agrees to indemnify, defend and hold
harmless Licensor and Licensor’s directors, officers, employees and agents from and against all
claims, actions or causes of action (whether sounding in contract, negligence or strict liability),
suits and proceedings and all loss, assessments, liability, damages, and expenses incurred in
connection therewith (including reasonable attorneys’ fees) for which Licensor or its directors,
officers, employees or agents may become liable or incur with respect to any product liability
claim asserted against Licensee, its Affiliates, Third Parties or Licensor relating to the
manufacturing, marketing, storage, packaging, distribution, sale or use of the AHPC Formulaid
Product, unless such claim, damage or loss results from the negligent failure of Licensor to
manufacture the Martek Product in accordance with specifications provided or approved by Licensee
or results from any intentional wrongdoing of Licensor.

     Section 6.3. Licensee’s Record. Licensee covenants and agrees that, for as long as
Royalties are due under this Agreement, Licensee will keep true and accurate records adequate to
permit Royalties due to Licensor to be computed and verified, which records shall be made available
upon prior written request by Licensor, during business hours, for inspection by an independent
accountant who is reasonably acceptable to Licensee and who shall be bound by a confidentiality
agreement with the Licensee, to the extent necessary for the determination of the accuracy of the
reports made hereunder. For purposes of this Section 6.3, any of the
six largest accounting firms in the United States shall be deemed reasonably acceptable to
Licensee. Licensor shall bear the full cost of such inspection unless a discrepancy of five percent
or greater of Royalties due hereunder is discovered by the accountant, in which case Licensee shall
bear the full cost of the inspection.

     Section 6.4. Protection of Licensor’s Proprietary Interest. Licensee

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acknowledges and agrees that the Licensed Patents and the Martek Product are proprietary to Licensor, and Licensee
hereby covenants and agrees that Licensee and its Affiliates shall not use the Technology or the
Martek Product for any purpose not provided for hereunder, shall not challenge or cause any
Affiliate or Third Party to challenge Licensor’s rights to the Technology, the Licensed Patents or
the Martek Product or the rights therein of Third Parties who are licensees of the Technology, the
Licensed Patents and/or the Martek Product, and Licensee and its Affiliates shall cooperate with
Licensor in protecting Licensor’s rights to the Technology, the Licensed Patents and the Martek
Product. The provisions of this Section 6.4 shall survive the termination or expiration of this
Agreement, whether the termination is occasioned by the Agreement’s natural expiration pursuant to
Section 3.1 of this Agreement or is earlier terminated pursuant to the other Sections of Article
III of this Agreement.

     Section 6.5. United States Export Regulation. Licensee covenants and agrees that it
and its Affiliates shall not knowingly export or re-export, directly or indirectly, the Technology,
the Martek Product, or the AHPC Formulaid Product or any part or direct product thereof, to any
country in violation of the United States Export Administration Regulations.

     Section 6.6. Product Development and Use. Licensee covenants and agrees that it and
its Affiliates shall, throughout the term of this Agreement, use their diligent efforts to use and
develop the Martek Product and/or the Technology with respect to the AHPC Formulaid Product in a
way which is consistent with the parties’ objective of developing a final marketed product which
has a polyunsaturated fatty acid composition effectively equivalent to that of human breast milk.
This Section 6.6 shall not be construed to require all AHPC Formulaid Products to incorporate the
identical quantities of the Martek Product or to incorporate the identical quantities of the Market
Product as is contained in similar products sold by Third Parties under license from Licensor.

ARTICLE VII

ENHANCEMENTS

     Section 7.1. Improvements to Products. During the first year of this Agreement,
Licensor covenants and agrees timely to notify Licensee (in accordance
with its obligations to supply quarterly written reports to Licensee under Section 13.1 of
this Agreement) of any improvements or modifications thereto and to make the relevant information
and technology available as promptly as possible for use by Licensee in accordance with this
Agreement. Licensee shall have the right to make improvements or modifications to the Technology or
the Martek Product during the term of this Agreement, and, in the event Licensee makes any
improvements or

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modifications to the Technology or the Martek Product, (i) Licensor shall during
the term of this Agreement have a royalty free right to use such improvements or modifications,
(ii) the Technology or the Martek Product as so improved or modified shall be subject to the terms
of this Agreement, and (iii) Licensee shall give Licensor prompt written notice of any such
improvement or modification.

ARTICLE VIII

PATENT PROSECUTION AND ENFORCEMENT

     Section 8.1. Patent Applications. Licensor has delivered to Licensee prior to the date
of this Agreement all foreign patent applications reasonably relating to the Licensed Patents. The
responsibility for the prosecution of, and the exclusive right to prosecute, such patent
applications and the exclusive right to apply for patent applications in any and all jurisdictions
shall be and remain with Licensor except as provided below. Licensor shall exercise all reasonable
efforts in this regard. Licensor agrees to keep Licensee informed of the course of such patent
prosecution.

     Section 8.2. Infringement Notice. Licensee shall notify Licensor promptly in writing
of any infringement of any issued Licensed Patent or other interference with Licensor’s proprietary
interests relating to the Technology or the Martek Product which becomes known to Licensee. If
Licensor determines that a material infringement exists, Licensor shall communicate such
determination to Licensee in writing and take prompt action to attempt to eliminate that
infringement.

     Section 8.3. Infringement Action. If Licensor receives Licensee’s infringement notice
under Section 8.2 of this Agreement and within a reasonable time thereafter Licensor is
unsuccessful in eliminating the infringement, Licensor shall have the first right to bring, at its
own expense, an infringement action against any Third Party within a reasonable time no longer than
three (3) months from the date of Licensee’s notice of an infringement under Section 8.2 of this
Agreement, and to use Licensee’s name in connection therewith. If the infringement materially and
adversely affects Licensee’s and its Affiliates’ market share relating to the AHPC Formulaid
Product and Licensor waives its right to bring such an infringement action in writing to Licensee
or has not eliminated such infringement or initiated an infringement suit within five (5) months
from the date of Licensee’s notice of
infringement, Licensee, after notifying Licensor in writing, shall be entitled to bring such
infringement action at its own expense. In the latter event, any sums recovered by Licensee in any
such infringement action or in its settlement shall belong to Licensee; provided, however, that,
for purposes of Section 4.1 of this Agreement, any damages attributable to loss of sales of the
AHPC Formulaid Product shall be considered an amount received by Licensee or an Affiliate from the
sale for value of

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the AHPC Formulaid Product in the period(s) to which such damages relate and
Royalties thereon shall be deemed timely remitted by Licensee to Licensor hereunder if remitted to
Licensor within sixty (60) days of the date on which such damages are received by Licensee and, in
the case of settlement, Licensee shall reasonably and in good faith determine the portion of the
settlement that represents compensation for loss of sales of the AHPC Formulaid Product and such
portion shall be treated as if such portion were damages attributable to loss of sales of the AHPC
Formulaid Product. The party conducting such action shall have full control over its conduct,
including settlement thereof. Regardless of which party brings the suit, Licensor and Licensee
shall assist one another and cooperate in any such litigation at the other’s request.

     Section 8.4. Defense of Infringement Actions. Licensor and Licensee hereby
acknowledge and agree that each party shall be responsible for defending, at its own expense, any
infringement action brought against such party by any Third Party, and Licensor and Licensee agree
reasonably to cooperate with the other in any such defense and in responding’ to any threatened
infringement action; provided, however, that, if Licensee is obligated to pay a royalty to a Third
Party relative to use or sale of the AHPC Formulaid Product in excess of [ * ] of the Sales
Price of the AHPC Formulaid Product {based upon an opinion of counsel reasonably acceptable to
Licensor that Licensee would infringe a patent or other proprietary interest of such Third Party in
the absence of such a royalty payment), then the Royalty payable to Licensor under Section 4.1
(iii) of this Agreement shall be reduced with respect to sales of the AHPC Formulaid Product in the
jurisdiction(s) with respect to which such royalties to such Third Party relate from [ * ]
or, if applicable, the Royalty payable to Licensor under Section 4.1 (iv) of this Agreement shall
be reduced with respect to sales of the AHPC Formulaid Product in the jurisdiction(s) with respect
to which such royalties to such Third Party relate from [ * ], during any period such a
royalty to such a Third Party is paid.

ARTICLE IX

ASSIGNMENT

     Section 9.1. Assignment. This Agreement and the rights granted hereunder shall not be
assignable, in whole or in part, by Licensee, nor shall its obligations
hereunder be delegated, without the prior written consent of Licensor; provided, however, that
this prohibition against assignment shall not apply to an assignment to an Affiliate or an
assignment in connection with the transfer of a substantial portion of Licensee’s business or its
merger or consolidation with another company if Licensee promptly notifies Licensor of any such
assignment,. merger or consolidation. Licensor may assign its rights under this Agreement freely
and

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without Licensee’s consent. Licensor shall be entitled to delegate its obligations hereunder
only with the prior written consent of Licensee, which consent may not unreasonably be withheld,
until the date on which the Martek Product can be produced at commercial volumes and costs, which
date will be deemed to have occurred upon the first commercial introduction of the AHPC Formulaid
Product anywhere in the world. After the Martek Product can be produced at commercial volumes and
costs, Licensor shall be entitled to delegate any or all of its obligations, if any, hereunder
without the consent of Licensee.

ARTICLE X

PARTIES’ RELATIONSHIP

     Section 10.1. Relationship Between Parties. Neither party to this Agreement shall
have the power to bind the other by any guarantee or representation that either party may give, or
in any other respect whatsoever, or to incur any debts or liabilities in the name of or on behalf
of the other party, and for purposes of this Agreement, the parties hereto hereby acknowledge and
agree that they shall not be deemed partners, joint venturers, or to have created the relationship
of agency or of employer and employee between the parties.

ARTICLE XI

INDEMNITY

     Section 11.1. Indemnity. Licensee shall indemnify, defend and hold harmless Licensor
and Licensor’s directors, officers, employees and agents from and against all claims, actions or
causes of action (whether sounding in contract, negligence or strict liability), suits and
proceedings and all loss, assessments, liability, damages, costs and expenses incurred in
connection therewith (including reasonable attorneys’ fees) for which Licensor or its directors,
officers, employees or agents may become liable or incur or be compelled to pay and arising out of
a breach of any of the Licensee’s covenants, representations and warranties contained herein,
except in the event such claim is the result of the negligent failure of Licensor to manufacture
the Martek Product in accordance with specifications provided or approved by Licensee, results from
any intentional wrongdoing by Licensor, or results from Licensor’s
failure to fulfill its obligations under Section 5.3 of this Agreement.

     Licensor shall indemnify, defend and hold harmless Licensee, its Affiliates, and Licensee’s
and its Affiliates’ directors, officers, employees and agents from and against all claims, actions
or causes of action, suits and proceedings and all loss, assessments, liability, damages, costs and
expenses incurred in connection therewith

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(including reasonable attorneys’ fees) for which
Licensee, its Affiliates or the directors, officers, employees or agents of either of them may
become liable or incur or be compelled to pay and arising out of a breach of any of the Licensor’s
covenants, representations and warranties contained herein.

     The indemnifications provided in this Agreement, including that provided in this Article and
in Section 6.2 of this Agreement, shall survive the termination of this Agreement, whether the
termination is occasioned by the Agreement’s expiration pursuant to Section 3.1 of this Agreement
or is earlier terminated pursuant to the other Sections of Article III of this Agreement.

ARTICLE XII

CONFIDENTIALITY

     Section 12.1. Disclosure of  Information. All the Technology and all other
information exchanged by the parties pursuant to, and in execution of their obligations and in
exercise of their rights under, this Agreement shall be deemed confidential. Licensor and Licensee
acknowledge and agree that the value of the Technology and the Martek Product is based, to a large
extent, on maintaining the confidentiality of the Technology and the Martek Product and preventing
any unauthorized dissemination to or use by Third Parties of information relating to the Technology
or the Martek Product. Disclosure of confidential and proprietary information hereunder, whether
orally or in written form, shall be safeguarded by the recipient and shall not be disclosed to
Third Parties and shall be made available only to the receiving party’s employees or other agents
who have a need to know such information for purposes of performing the party’s obligations, or for
purposes of exercising the party’s rights, under this Agreement, and such employees or other agents
shall have a legal obligation to the employer or principal, as applicable, not to disclose such
information to Third Parties. Each party shall treat any and all such confidential information in
the same manner and with the same protection as such party maintains its own confidential
information. These mutual obligations of confidentiality shall not apply to any information to the
extent that such information: (i) is or later becomes generally available to the public, such as by
publication or otherwise, through no fault of the receiving party; or (ii) is obtained from a Third
Party having the legal right to make such a disclosure. Licensee or its Affiliates shall
not remove from any communications or other documents delivered by Licensor to Licensee or its
Affiliates any proprietary notices affixed thereto by Licensor.

     Without the written approval of the other party hereto, Licensor and Licensee shall not be
permitted to disclose the fact, the nature and the terms of this Agreement and the transactions to
be performed pursuant hereto to any Third

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Person; provided, however, that (i) Licensor and Licensee
may disclose any otherwise confidential or proprietary information as and to the extent required by
applicable law, including, but not limited to, any applicable disclosure requirements under the
federal securities laws or regulations thereunder which arise by virtue of a public offering of the
securities of Licensor upon prior written notice to the other party that the information is
required to be disclosed under applicable law and following steps exercised upon the advice and
consent, which consent may not unreasonably be withheld, of the other party to maintain the
confidentiality of such information to the extent permissible under applicable law; (ii) Licensor
and Licensee may disclose the fact and the terms of this Agreement to its attorneys and
accountants; and (iii) Licensor may disclose the fact of this Agreement to its
shareholders and potential investors.

     Licensee covenants and agrees that it and its Affiliates shall not disclose any information
related to this Agreement, the Martek Product or the Technology to the Other Entities and Licensee
represents and warrants that, for the purposes of this Section, the Other Entities operate
independently of Licensee and its Affiliates. The exclusion of the Other Entities from the term
“Affiliates” under this Agreement shall terminate and the Other Entities shall become Affiliates if
and when any such Other Entity obtains information relating to this Agreement, the Martek Product
or the Technology directly or indirectly from Licensee or its Affiliates.

     Section 12.2. Post-Termination Obligations. The mutual confidentiality obligations of
the parties under the provisions of this Article XII shall survive the termination of this
Agreement for a period of fifteen years. Unless this Agreement expires at a time after which
Licensee is entitled to a fully paid, royalty free license to use the Technology and the Martek
Product pursuant to Section 3.1 of this Agreement, at the termination of this Agreement, Licensee
promptly shall return to Licensor all the Technology, microbial strains, Martek Product samples,
documents, records, and all other property or documentation disclosed or delivered to Licensee or
its Affiliates pursuant to this Agreement and then in existence, including all copies thereof, and
each party shall destroy or promptly deliver to the other any documentary material in its
possession created by the other during the course of this Agreement, and thereafter, which contains
information about the other or information about matters and things in which the other has a
proprietary interest that is not in the public domain, including notes, memoranda or
correspondence,
except that each party shall be permitted to retain one copy of any such documentation
belonging to the other for archival purposes and only for archival purposes.

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ARTICLE XIII

MISCELLANEOUS

     Section 13.1. Free Flow of Information. Licensor and Licensee covenant and agree,
except as prohibited by an enforceable arms’ length agreement with a Third Party which was not
entered into for the purpose of inhibiting the free flow of information under this Section 13.1,
promptly to share with the other all material information obtained by the Licensor or Licensee, or
Licensee’s Affiliates concerning the progress of clinical and pre-clinical testing of the
Technology and the Martek Product and adverse reaction data relating to the Technology and the
Martek Product, and Licensor and Licensee shall provide to each other quarterly written reports
disclosing the details of such information. Licensor and Licensee shall maintain the
confidentiality of such information as required under Section 12.1 of this Agreement.

     Section 13.2. Dispute Resolution. Licensor and Licensee covenant and agree to use
their diligent efforts to resolve any disputes that arise between them in the future and are
related to this Agreement through negotiation and mutual agreement.

     Section 13.3. Force Majeure. Neither party to this Agreement shall be liable for
damages due to delay or failure to perform any obligation under this Agreement if such delay or
failure results directly or indirectly from circumstances beyond the control of such party. Such
circumstances shall include, but shall not be limited to, acts of God, acts of war, civil
commotions, riots, strikes, lockouts, acts of the government in either its sovereign or contractual
capacity, perturbation in telecommunications transmissions, inability to obtain suitable equipment
or components, accident, fire, water damages, flood, earthquake, or other natural catastrophes.

     Section 13.4. Construction of Agreement. This Agreement shall be construed and the
respective rights of the parties shall be determined under and pursuant to the laws of the State of
Delaware, without regard to the principles of conflict of laws thereof.

     Section 13.5. Notices. Notices required under this Agreement shall be in writing and
sent by registered mail or by facsimile transmission or hand delivery to the respective parties at
the following addresses:

     Notices to Licensor:

Martek Biosciences Corporation

6480 Dobbin Road

Columbia, Maryland 21045

Telecopy: (410) 740-2985

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Attn: Henry Linsert, Jr.

     Notices to Licensee:

Dr. David Richards, M.D.

Wyeth-Ayerst Laboratories

555 East Lancaster Avenue

St. Davids, Pennsylvania 19087

Telecopy:

     With a copy to:

Larry J. McDermott

Wyeth-Ayerst Laboratories

555 East Lancaster Avenue

St. Davids, Pennsylvania 19087

Telecopy:

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

     Section 13.6. Entire Agreement. This Agreement, including the Exhibits hereto,
constitutes the entire agreement between the parties hereto and there are no representations,
warranties or covenants relative hereto, including those set forth in the Letter of Intent, which
shall survive the execution of this Agreement unless fully set forth herein.

     Section 13.7. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns. No person,
firm or corporation other than the parties hereto and their successors and permitted assigns shall
derive rights or benefits under this Agreement.

     Section 13.8. Counterparts. This Agreement may be executed in counterparts.

ARTICLE XIV

WYETH-AYERST INTERNATIONAL, INC.

AS AGENT FOR LICENSEE

     Section 14.1. Licensee’s Appointment of Agent. Licensee hereby appoints the
undersigned, WYETH-AYERST INTERNATIONAL, INC., an Affiliate, as its sole and exclusive agent during
the term of this Agreement for the purpose of

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administering on its behalf the rights and
obligations (except those pertaining to Patents) under this Agreement, including but not limited
to, collection, receipt and payment of Royalties due Licensor and verification of reports and
statements relating to the sale of the AHPC Formulaid Product.

     Section 14.2. Licensor’s Consent. Licensor hereby consents to the appointment of
WYETH-AYERST INTERNATIONAL, INC., as the exclusive agent of Licensee as provided for in Section
14.1.

     Section 14.3. Termination of Agency. This agency appointment and Licensor’s consent
thereto shall be revoked automatically upon the cessation of WYETH-AYERST INTERNATIONAL, INC.’s
status as an Affiliate under this Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed in their
respective behalves as of the day and year first written above.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	WITNESS/ATTEST:	 	MARTEK BIOSIENCES CORPORATION	 	 
	 
	 	 	 	 	 	 
	/s/ Steve Dubin

	 	By:
	 	/s/ Henry Linsert Jr.	 	 
	 

	 	 	 	 	 	 
	 	 	Print Name: Henry
Linsert Jr.	 	 
	 	 	Print Title: Chief Executive officer	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	WITNESS/ATTEST:	 	AMERICAN HOME PRODUCTS CORPORATION	 	 
	 
	 	 	 	 	 	 
	/s/

	 	By:	 	/s/ Bernard Canavan	 	 
	 

	 	 	 	 	 	 
	 	 	Print Name: Bernard Canavan	 	 
	 	 	Print Title: President	 	 

WYETH-AYERST INTERNATIONAL, INC.

WYETH-AYERST INTERNATIONAL, INC.

accepts the delegation as set forth in Article

XIV above.

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	By:
	 	/s/ David M. Olivier 	 	 
	Print Name:

	 	 

David M. Olivier
	 	 
	Print Title:

	 	President	 	 

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Exhibit 10.1

James W. Bagley Employment Agreement 
 Page 1

EMPLOYMENT AGREEMENT

     This Employment Agreement (the “Agreement”) is made and entered into between James W. Bagley
(the “Executive”), a Texas resident, and Lam Research Corporation, a Delaware corporation (the
“Company”).

R E C I T A L S

     A. The Company and Executive desire to enter into this Agreement with respect to the
Executive’s employment with the Company.

     B. Certain capitalized terms used in the Agreement are defined in Section 6 below.

          In consideration of the mutual covenants herein contained, and in consideration of the
employment of Executive by the Company, the parties agree as follows:

     1. Duties and Scope of Employment.

          (a) Position. During the Employment Period (as defined in Section 2 (a) below), the
Executive shall serve as the Executive Chairman of the Company. The duties and responsibilities of
Executive shall include diligent service on the Board of Directors of the Company (the “Board”) and
the performance of such activities as the Board may, from time to time, reasonably assign to
Executive. Based on the scope of Executive’s duties, the Board shall from time to time determine
Executive’s status as a Section 16 officer, as defined by Rule 16a-1(f) of the Securities Exchange
Act of 1934.

          (b) Executive’s Obligations. Executive shall comply with all of Company’s policies
and procedures governing employment. During the Employment Period, the Executive shall not devote
substantial business efforts and time to another for-profit enterprise other than his duties for
Teradyne and Micron or any other activity that is pre-approved by the Board. The foregoing,
however, shall not preclude the Executive from engaging in such activities and services as do not
interfere or conflict with his responsibilities to the Company.

     2. Employment Period.

     (a) Term. This Agreement shall cover the period between January 1, 2006 and March
31, 2009 unless earlier terminated as set forth herein (the “Employment Period”). The Employment
Period may be extended with the mutual agreement of the Executive and the Board.

     (b) Termination. This Agreement may be terminated prior to expiration as follows:

          (i) By the Company. The Company may terminate the Executive’s employment for Cause
(as defined in Section 6(a) below), by giving the Executive thirty (30) days’ advance written
notice, subject, however, to the cure

 

James W. Bagley Employment Agreement 
 Page 2

provisions of such Section. The Company may terminate the Executive’s employment with the Company
for any other reason (which termination shall be regarded as an Involuntary Termination of the
Executive) by giving the Executive ninety (90) days’ advance notice in writing, although the
Company may pay out this period in lieu of such notice. Any waiver of notice shall be valid only if
it is made in writing and expressly refers to the applicable notice requirement of this Section
2(b). Termination under this section shall become effective at the end of the notice period (unless
cured prior to the expiration of such period).

          (ii) By the Executive. The Executive may terminate his employment with the Company
by reason of Involuntary Termination (as defined in Section 7(c) below) by giving the Company
thirty (30) days’ advance written notice, subject, however, to the cure provisions of such Section.
The Executive may terminate his employment with the Company at any time for any other reason
(“Voluntary Resignation”) by giving the Company ninety (90) days’ advance written notice, which
period may be waived or reduced at the Company’s option. Any waiver or reduction of notice shall be
valid only if it is made in writing and expressly refers to the applicable notice requirement of
this Section 2(b). Termination under this section shall become effective at the end of the notice
period (unless cured prior to the expiration of such period).

          (iii) Death. The Executive’s employment shall terminate immediately in the event of
his death.

          (iv) Disability. The Company may terminate the Executive’s employment for Disability
(as defined in Section 6(b) below) by giving the Executive ninety (90) days’ advance notice in
writing. In the event the Executive resumes the performance of substantially all of his duties
hereunder before the termination of his employment under this Section 2(b)(iv) becomes effective,
the notice of termination shall automatically be deemed to have been revoked.

     (c) Shareholder Action. The Shareholders of the Company may fail to elect Executive
to the Board of Directors of the Company; while that action may terminate Executive’s tenure on the
Board of Directors, such action shall not terminate this Agreement or otherwise affect Executive’s
rights to compensation hereunder. During the Employment Period, Company will (A) recommend to the
Nominating and Governance Committee and/or independent members of the Board that Executive be
nominated to the Board of Directors, and (B) to the extent permitted by the Board and the proxies
submitted by the shareholders, the Company shall exercise its proxies in such a manner as to secure
Executive’s election to the Board.

     (d) Priority of Rights and Obligations upon Termination. If any event leading to or
permitting termination of this Agreement, or providing notice thereof, occurs at approximately the
same time as any other termination event or during any termination notice period, and those events
invoke different notice periods or different severance or other benefit arrangements, the
deadlines, obligations, rights and benefits applicable to the termination event having the highest
priority shall control. The priority of termination events (from highest to lowest priority) is as
follows: (1) Termination for Cause; (2) Voluntary Resignation or Voluntary Termination of Entire
Agreement by Executive; (3) Involuntary Termination; (4) Disability; and (5) death. For example,
if

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James W. Bagley Employment Agreement 
 Page 3

Executive gives notice of his Voluntary Resignation and, before the 90 day notice period has expired, he is subject
to an Involuntary Termination, only the rights and benefits available to him for Voluntary
Resignation apply since the provisions governing Voluntary Resignation have a higher priority than
those applicable to Involuntary Termination. Similarly, if Executive has been subject to an
Involuntary Termination and dies during the notice period, he shall have the rights and benefits
available to his estate as one subject to an Involuntary Termination. Expiration of this Agreement
prevails over all termination events.

     (e) Should Executive be a member of the Company’s Board of Directors at the time his
employment terminates due to (i) Involuntary Termination, (ii) Voluntary Termination of Entire
Agreement by Executive or (iii) termination for Cause, he shall immediately tender his resignation
as a Board member, which resignation shall be accepted, or not, in the Board’s discretion. This
provision does not apply in the case of expiration of this Agreement at the end of the Employment
Period.

     3. Compensation and Benefits.

          (a) Base Compensation. The Executive’s compensation during the term of this
Agreement shall consist of (i) Salary, and (ii) Lump Sum Compensation, as described in Exhibit 1.
Executive shall receive his Salary as long as he is employed by the Company during the Employment
Period. The Salary and Lump Sum Compensation are defined in Exhibit 1 to this Agreement.

          (b) Bonus. Executive shall not be entitled to participate in any performance bonus
plan offered by the Company.

          (c) Deferred Compensation. Executive shall be entitled to participate in the
Company’s Executive Deferred Compensation Plan pursuant to the terms thereof.

          (d) Benefits. During the Employment Period, the Executive shall be eligible to
participate in the medical, dental and insurance benefit plans and compensation programs maintained
by the Company of general applicability to other key executives of the Company, subject in each
case to the generally applicable terms and conditions of the plan or program in question and to the
determination of the Board or any committee administering such plan or program.

          (e) Reimbursement of Business Expenses. The Company shall reimburse the Executive
for all reasonable and necessary business expenses incurred by the Executive in the performance of
his duties hereunder upon proper submission of expense reports in accordance with Company policies
regarding such reimbursement.

          (f) Stock Option or other Equity-Based Grants. Executive shall not be entitled to
receive any stock option grants or other equity based compensation except as may be granted to him
in the discretion of the independent members of the Board. Executive has received stock option or
other equity-based compensation grants separately from this Agreement. This Agreement shall not
alter or affect those prior grants except as expressly set forth herein.

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James W. Bagley Employment Agreement 
 Page 4

          (g) Compensation as a Non-Employee Director. If Executive’s employment terminates
but the shareholders of the Company re-elect him to the Company’s Board of Directors, he shall be
entitled to receive the same compensation that other non-employee directors receive. He may also be
entitled to receive the Lump Sum Compensation described in Exhibit 1 if he performs the conditions
precedent to receipt of that compensation.

          (h) Administrative Support. During the term of this Agreement, as long as Executive
is involved with the Company, either as an employee or director, the Company will provide him with
administrative support comparable to his current support levels. This may either be provided by the
Company directly or may be reimbursed by the Company pursuant to appropriately incurred expenses by
the Executive.

     4. Section 162(m). If during the Employment Period the Executive is a “covered
employee” as defined in Section 162(m)(3) of the Internal Revenue Code of 1986 (as amended)(the
“Code”), the Executive agrees to allow the Company to use reasonable good faith efforts, to the
extent reasonably practicable and not materially adverse to Executive, to structure payment of all
amounts of Executive’s compensation from the Company so as to avoid non-deductibility of any such
amounts under Section 162(m) of the Code or any successor provision.

     5. Severance Benefits.

     (a) In the event of early termination, Executive shall be entitled to severance benefits that
vary depending upon the reason for early termination. Such benefits shall be as follows (and no
others):

     (1) Voluntary Resignation Severance Benefits.

     Following a Voluntary Resignation of Executive’s employment with the Company
(but not his service on the Board): (i) Executive shall receive a pro-rated amount
of his Salary. (ii) All medical and health benefits shall cease on the effective
date of termination, except as specified in any then existing Executive Retirement
Medical Benefit Plan for which Executive qualifies. (iii) Stock Options will cease
to vest and will be cancelled thirty or ninety days after the effective date of
termination as described in the grant agreement (unless they are exercised or
expire before cancellation). Such a Voluntary Termination of employment shall not
terminate Executive’s right to receive the Lump Sum Compensation described in
Exhibit 1 provided that he fulfills the conditions precedent to his receipt of such
compensation as described in Exhibit 1.

     (2) Severance Benefit upon Voluntary Termination of Entire Agreement by
Executive.

     Following Executive’s voluntary termination of all the obligations of this
Agreement (which may or may not include termination of his service on the Board):
(i) Executive shall receive a pro-rated amount of his

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 James W. Bagley Employment Agreement 
 Page 5

Salary. (ii) All medical and
health benefits shall cease on the effective date of termination, except as
specified in any then existing Executive Retirement
Medical Benefit Plan for which Executive qualifies. (iii) Stock Options will
cease to vest and will be cancelled thirty or ninety days after the effective date
of termination as described in the grant agreement (unless they are exercised or
expire before cancellation). Following such a Voluntary Resignation, the Executive
shall give up his right to receive the Lump Sum Compensation described in 

Exhibit 1.

     (3) Involuntary Termination Severance Benefits.

     Following an Involuntary Termination: (A) Executive shall be entitled to
receive his entire Base Compensation as described in Exhibit 1, including the
Salary that he would have received during the Employment Period, payable at the
time that he would have received those payments had Involuntary Termination not
occurred and, provided that Executive continues to comply with the obligations of
sections 9, 10 and 12 of this Agreement, the Lump Sum Compensation that he would
have received, payable at the time that he would have received it. (B) Company will
provide the Executive Retirement Medical Benefit Plan for which Executive qualifies
on the effective date of termination. (C) Stock Options granted to Executive before
the effective date of termination will be exercisable for the time period described
in the original grant document (unless they are exercised or expire before
cancellation) and will thereafter be cancelled.

     (4) Severance Benefits following a termination for Cause.

     In the event Executive is terminated for Cause during the term of this
Agreement: (A) Executive shall not be entitled to receive any Base Compensation
beyond what he has received as of the date of termination except as granted to him
in the determination of the Board of Directors. (B) All medical and health benefits
shall cease on the effective date of termination, except as specified in any then
existing Executive Retirement Medical Benefit Plan for which Executive qualifies.
(C) Stock Options will cease to vest and will be cancelled thirty days or ninety
days after the effective date of termination as described in the grant agreement
(unless they are exercised or expire before cancellation).

     (5) Death Severance Benefits.

     In the event of Executive’s death during the term of this Agreement: (A)
Executive shall be entitled to receive his Salary paid up until the date of death
and shall be entitled to receive the full amount of the Lump Sum Compensation
component of his Base Compensation, as described in Exhibit 1, except that all
amounts payable shall be accelerated and payable within 90 days of Executive’s
death. (B) All applicable medical and health benefits for Executive’s family shall
continue for the period specified in any then existing Executive Retirement Medical
Benefit Plan for which Executive qualifies. (C) Stock

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  James W. Bagley Employment Agreement 
 Page 6

Options granted to Executive
before the effective date of termination will be exercisable for the time
period described in the original grant document (unless they are exercised or
expire before cancellation) and will thereafter be cancelled.

     (6) Disability Severance Benefits.

     In the event of Executive’s disability during the term of this Agreement: (A)
Executive shall be entitled to receive his Salary paid up until the date of
termination and, provided that Executive continues to comply with the obligations
of sections 9, 10 and 12 of this Agreement, he shall be entitled to receive the
full amount of the Lump Sum Compensation component of his Base Compensation, as
described in Exhibit 1. (B) All applicable medical and health benefits shall
continue for the period specified in any then existing Executive Retirement Medical
Benefit Plan for which Executive qualifies. (C) Stock Options granted to Executive
before the effective date of termination will be exercisable for the time period
described in the original grant document (unless they are exercised or expire
before cancellation) and will thereafter be cancelled.

     (b) Compliance with Section 409A of the Code. Notwithstanding any other provision of
this Agreement, to the extent that (i) any amount paid pursuant to this Section 5 of the Agreement
is treated as nonqualified deferred compensation pursuant to Section 409A of the Code and (ii) the
Executive is a “specified employee” pursuant to Section 409A(2)(B) of the Code, then such payments
shall be made on the date which is six (6) months after the date of the Executive’s separation from
service.

     (c) Benefits; Miscellaneous. Executive shall accrue vacation or holiday pay in the
same manner as any other employee. In the event of any termination of Executive’s employment at any
time during the Employment Period, and following submission of proper expense reports by the
Executive (or his Estate), the Company shall reimburse the Executive for all expenses reasonably
and necessarily incurred by the Executive in connection with the business of the Company. These
payments shall be made promptly and within the period of time mandated by law.

     (d) Deferred Compensation Plan Election. Should Executive have any sums in the
Company’s Elective Deferred Compensation Plan (“EDCP”) at the time of termination, he shall be
entitled to delay receipt of those funds to the extent provided by the EDCP, and in accordance with
the Executive’s elections in effect at such time. The Company shall not exercise any right it may
have under the EDCP, however amended, to disburse funds to the Executive earlier than the period
that he has properly selected under the EDCP.

     (e) Benefits upon Expiration of the Agreement. Upon expiration of this Agreement
without an early termination event, Executive shall be entitled to receive any vested benefits to
which Executive would be entitled but for the terms of this Agreement, such as (without limitation)
participation in the Executive Retirement Medical Benefit Plan, 401(k) benefits, benefits under the
Executive Deferred Compensation Plan or payment of any accrued vacation time.

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 James W. Bagley Employment Agreement 
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     6. Definition of Terms. The following terms referred to in this Agreement shall have
the following meanings:

          (a) Cause. “Cause” shall mean (i) a willful act of personal dishonesty knowingly
taken by the Executive in connection with his responsibilities as an employee and intended to
result in his substantial personal enrichment, (ii) a willful and knowing act by the Executive
which constitutes gross misconduct, (iii) any refusal by the Executive to comply with a reasonable
written directive of the Board or the CEO, (iv) a willful breach by the Executive of a material
provision of this Agreement, (v) a material and willful violation of a federal or state law or
regulation applicable to the business of the Company or (vi) Executive’s acceptance of an executive
officer role for another entity (not affiliated with the Company). No act, or failure to act, by
the Executive shall be considered “willful” unless committed without good faith and without a
reasonable belief that the act or omission was in the Company’s best interest. Termination for
Cause shall not be deemed to have occurred unless, by the affirmative vote of all of the members of
the Board (excluding the Executive, if applicable), at a meeting called and held for that purpose
(after reasonable notice to the Executive and his counsel and after allowing the Executive and his
counsel to be heard before the Board), a resolution is adopted finding that in the good faith
opinion of such Board members the Executive was guilty of conduct set forth in (i), (ii), (iii),
(iv), (v) or (vi), of this section, specifying the particulars thereof; provided that in the case
of conduct set forth in (iii) or (iv), the Executive shall have the opportunity to cure same within
30 days following the Executive’s receipt of written notice thereof.

          (b) Disability. “Disability” shall mean that the Executive has been or will be unable
to substantially perform his duties under this Agreement for a period of twelve (12) or more
consecutive months due to illness, accident or other physical or mental incapacity as certified by
an approved Company physician; or is certified by an approved Company physician as being
permanently disabled due to illness, accident, or other physical or mental incapacity from
performing all or substantially all of the duties under this Agreement.

          (c) Involuntary Termination. “Involuntary Termination” shall mean:

               (i) any purported termination of the Executive’s employment by the Company other than for
Cause, Disability or death;

               (ii) the failure of the Company to obtain the assumption of this Agreement by any successors
contemplated in Section 8 below; or

               (iii) any material breach by the Company of any material provision of this Agreement;

provided, that none of the foregoing shall constitute Involuntary Termination to the extent the
Executive has agreed thereto; and provided, further, that the foregoing shall constitute
Involuntary Termination only if and to the extent that (i) the Executive provides written notice to
the Company setting forth in reasonable detail such facts which Executive believes constitute
Involuntary Termination and (ii) any circumstances

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 James W. Bagley Employment Agreement 
 Page 8

constituting Involuntary Termination remain uncured for a period of thirty (30) days following the Company’s receipt of such written notice.

          (d) Termination Date. “Termination Date” shall mean (i) the last day of the
applicable notice period set forth in Section 2(b) or 2(d) above (except for any Involuntary
Termination Notice, given by the Executive, which is cured by the Company, or a Termination for
Disability Notice which is revoked by the Executive resuming the performance of his duties), (ii)
the date as of which such notice is waived in accordance with the terms of Section 2(b), (iii) the
date of Executive’s employment termination pursuant to this Agreement if notice of the same is not
required under Section 2, or (iv) the date upon which this Agreement expires. If more than one
Termination Date may apply, then the priority provisions of section 2(e) of this Agreement shall
determine which Termination Date controls.

          (e) Voluntary Termination of Entire Agreement. “Voluntary Termination of Entire
Agreement” refers to the choice by Executive to terminate all his obligations under this Agreement
including the covenants and conditions of section 9.

     7. Successors.

          (a) Company’s Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets shall assume the Company’s obligations
under this Agreement and agree expressly to perform such obligations in the same manner and to the
same extent as the Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term “Company” shall include any successor
to the Company’s business and/or assets which executes and delivers the assumption agreement
described in this subsection (a) or which becomes bound by the terms of this Agreement by operation
of law.

          (b) Executive’s Successors. The terms of this Agreement and all rights of the
Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees.

     8. Notice.

          (a) General. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when personally delivered or when
mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the
case of the Executive, mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company, mailed notices shall
be addressed to its corporate headquarters, and all notices shall be directed to the attention of
its Secretary.

          (b) Notice of Termination. Any termination by the Company for Cause or by the
Executive as a result of a Voluntary Resignation or an Involuntary Termination shall be
communicated by a notice of termination to the other party hereto given in accordance with Section
8(a) of this Agreement. Such notice shall indicate the

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 James W. Bagley Employment Agreement 
 Page 9

specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the
provision so indicated, and shall specify the termination date in accordance with Section 2(b) or
2(d).

     9. Receipt of Confidential Information; Non-Compete; Non-Solicit.

          (a) In consideration of the Executive’s agreement in subparagraph (b) below, the Company
agrees that it will provide Executive with confidential information and trade secrets that are of
substantial value to the Company during the Employment Period. Executive agrees not to use the
Company’s confidential information or trade secrets except as permitted by the Company. The parties
hereto recognize that the Executive’s services are special and unique, that the Company has a
substantial interest in protecting its confidential information and trade secrets, and that his
level of compensation and the provisions herein for compensation upon Involuntary Termination are
partly in consideration of and conditioned upon the Executive’s not misappropriating the Company’s
trade secrets nor competing with the Company, and that the covenant on his part not to compete and
not to solicit as set forth in this Section 9 is essential to protect the business, trade secrets
and goodwill of the Company.

          (b) The Executive agrees that prior to March 31, 2009, the Executive will not either directly
or indirectly, whether as a director, officer, consultant, employee or advisor or in any other
capacity (i) render any planning, marketing, executive, operational or other services respecting
the creation, design, manufacture or sale of semiconductor manufacturing equipment and/or software
or the operation of such business to any business, agency, partnership or entity (“Restricted
Business”) other than the Company, or (ii) make or hold any investment in any Restricted Business
in the United States other than the Company, whether such investment be by way of loan, purchase of
stock or otherwise, provided that there shall be excluded from the foregoing the ownership of not
more than 4% of the listed or traded stock of any publicly held corporation. For purposes of this
Section 9, the term “Company” shall mean and include the Company, any subsidiary or affiliate of
the Company, any successor to the business of the Company (by merger, consolidation, sale of assets
or stock or otherwise) and any other corporation or entity of which the Executive may serve as a
director, officer or employee at the request of the Company or any successor of the Company.

          (c) Prior to the Termination Date, and for the period extending six (6) months thereafter, the
Executive will not, directly or indirectly, induce or attempt to influence any employee of the
Company to leave its employ, and the Executive will not, directly or indirectly, involve himself in
decisions to hire any employee who has left the Company’s employ within the three-month period
preceding the Executive’s cessation of employment or the three-month period following his cessation
of employment.

          (d) The Executive agrees that the Company would suffer an irreparable injury if he were to
breach the covenants contained in subparagraphs (a), (b) or (c) and that the Company would by
reason of such breach or threatened breach be entitled to injunctive relief in a court of
appropriate jurisdiction, and the Executive hereby stipulates to the entering of such injunctive
relief prohibiting him from engaging in such breach.

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 James W. Bagley Employment Agreement 
 Page 10

          (e) If Executive violates any provision of this Section 9, he loses any right to any either
the Salary or the Lump Sum Compensation elements of his Base
Compensation or severance benefits. If any of the restrictions contained in this Section 9 shall
be deemed to be unenforceable in any dispute between the parties in which Executive has performed
an act in violation of such restriction, then the parties hereto contemplate that Executive shall
waive his right to receive Base Compensation or other severance benefit described in Section 5 of
this Agreement.

     10. Existing Confidentiality and Non-Compete Agreements.

          Executive represents and warrants (i) that prior to the date hereof he has provided the
Company with true and complete copies of any and all written confidentiality and/or non-compete
agreements to which Executive is a party as of the date hereof (together with a written description
of any such oral agreements), and (ii) to the best of Executive’s knowledge, full compliance with
the terms of each such agreement will not materially interfere with Executive’s duties hereunder
(except to the extent that Executive reasonably may determine to absent himself from certain
Company meetings and communication during the first year of the Employment Period). The Executive
further covenants that he will not willfully and knowingly fail to fully abide by the terms of any
and all such agreements and will work in good faith with the Company to avoid any breach thereof.

     11. Arbitration.

          At the option of either party, any and all disputes or controversies whether of law or fact
and of any nature whatsoever arising from or respecting this Agreement shall be decided by
arbitration under the rules of the American Arbitration Association in accordance with the rules
and regulations of that Association with the exception of any claim for temporary, preliminary or
permanent injunctive relief arising from or respecting this Agreement which may be brought by the
Company in any court of competent jurisdiction irrespective of Executive’s desire to arbitrate such
a claim.

          The arbitrator shall be selected as follows. In the event the Company and the Executive agree
on one arbitrator, the arbitration shall be conducted by such arbitrator. If the parties cannot
agree on an arbitrator, then an arbitrator shall be appointed by the Honorable Joseph Hart, retired
judge of Travis County Superior Court, or, if the parties are unable to secure such appointment
from Judge Hart, in any other manner mutually agreed to by the parties. If the parties cannot agree
on the manner for appointing a single arbitrator, then a single arbitrator shall be appointed in a
manner consistent with the rules of the American Arbitration Association.

          Arbitration shall take place in Dallas, Texas, or any other location mutually agreeable to the
parties. At the request of either party, arbitration proceedings will be conducted in the utmost
secrecy; in such case all documents, testimony and records shall be received, heard and maintained
by the arbitrators in secrecy under seal, available for the inspection only by the Company and the
Executive and their respective attorneys and their respective experts who shall agree in advance
and in writing to receive all such information confidentially and to maintain such information in
secrecy unless and until such information shall become generally known. The arbitrator shall have
the power and authority to decree any and all relief of an equitable nature including,

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James
W. Bagley Employment Agreement 
 Page 11

but not limited to, such relief as a temporary restraining order, a temporary and/or permanent injunction,
and shall also have the power and authority to award damages, with or without an accounting
and costs, provided, that punitive damages shall not be awarded, and provided, further, that the
Executive shall be entitled to reimbursement for his reasonable attorney’s fees to the extent he
prevails as to the material issues in such dispute. The decree or judgment of an award rendered by
the arbitrator may be entered in any court having jurisdiction thereof.

          Reasonable notice of the time and place of arbitration shall be given to all persons, other
than the parties, as shall be required by law, in which case such persons or those authorized
representatives shall have the right to attend and/or participate in all the arbitration hearings
in such a manner as the law shall require.

     12. Miscellaneous Provisions.

          (a) No Duty to Mitigate. Provided that Executive fully performs his obligations
under this Agreement, the Executive shall not be required to mitigate the amount of any payment
contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the
Executive may receive from any other source.

          (b) Waiver. No provisions of this Agreement shall be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed by the Executive
and by an authorized officer of the Company (other than the Executive). No waiver by either party
of any breach of, or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the same condition or
provision at another time.

          (c) Whole Agreement. This Agreement and the documents expressly referred to herein
represent the entire agreement of the parties with respect to the matters set forth herein.
Nothing herein affects the continued enforceability of the Company’s Employment, Confidential
Information and Invention Assignment Agreement previously executed by the Executive.

          (d) Choice of Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the state of Texas. Payments made hereunder shall
be made under the laws of the state of Executive’s residence at the time such payment is delivered
to Executive.

          (e) Severability. If any provision of this Agreement is determined to be invalid or
unenforceable, the Agreement shall remain in full force and effect as to the remaining provisions,
and the parties shall replace the invalid or unenforceable provision with one which reflects the
parties’ original intent in agreeing to the invalid/unenforceable one.

          (f) No Assignment of Benefits. Except as otherwise provided herein, the rights of
any person to payments or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor’s process, and any
action in violation of this subsection (f) shall be void.

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James W. Bagley Employment Agreement 
Page 12

          (g) Employment Taxes. All payments made pursuant to this Agreement by Company
shall be subject to withholding of applicable income and employment taxes.

          (h) Assignment by Company. The Company may assign its rights under this Agreement to
an affiliate, and an affiliate may assign its rights under this Agreement to another affiliate of
the Company or to the Company, provided, however, that no assignment shall be made if the net worth
of the assignee is less than the net worth of the Company at the time of assignment. In the case of
any such assignment, the term “Company” when used in a section of this Agreement shall mean the
corporation that actually employs the Executive.

          (i) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together will constitute one and the same instrument.

          (j) Survival of Obligations. Except as otherwise described herein, the obligations of
section 5, 6, 7, 8, 9, 10, 11 and 12 shall survive termination of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement.

LAM RESEARCH CORPORATION

	 	 	 	 
	 	 
	By:  	 /s/ Stephen G. Newberry
 	 
	 	Stephen G. Newberry 	 
	Its:	Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	 	 
	DATED: December 11, 2006 	  	/s/ James W. Bagley
 	 
	 	 	James W. Bagley 	 
	 	 	 	 
	 

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James W. Bagley Employment Agreement 
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Exhibit 1

Elements and Payment of Base Compensation

Executive’s Base Compensation shall consist of the Salary and Lump Sum Compensation as described in
this Exhibit 1.

Salary:

Salary shall continue as long as Executive is employed by the Company. During the Employment
Period, Executive shall receive a salary at the annualized rate of $240,000 per year.

Lump Sum Compensation:

Except as otherwise provided in Section 5(a) of the Agreement relating to the Executive’s Voluntary
Resignation or termination for Cause, Executive shall be entitled to Lump Sum Compensation of
$2,500,000 so long as he abides by the provisions of section 9, 10 and 12 of this Agreement through
March 31, 2009.

Except as otherwise provided in Section 5(a)(4), if earned, the Lump Sum Compensation shall be paid
on April 15, 2009 provided that Executive is not a Covered Employee of the Company as defined in
Section 162(m) of the Code for such taxable year. If Executive is a Covered Employee for such
taxable year, the payment of the Lump Sum Compensation, or portion thereof, shall be delayed until
the Company reasonably anticipates that the Company’s deduction with respect to such payment, or
portion thereof, will not be limited or eliminated by the application of Section 162(m) of the
Code. Executive shall be entitled as of April 15, 2009 to be paid the largest portion of the Lump
Sum Compensation which will not be limited or eliminated by application of Section 162(m) of the
Code. Any portion of the Lump Sum Compensation otherwise payable that is delayed pursuant to this
provision shall be paid at the earlier of (i) the date that the Company reasonably anticipates that
the deduction of the payment of the amount will not be limited or eliminated by the application of
Section 162(m) or (ii) the calendar year in which the Executive separates from service.

- 13 -

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