Document:

EXHIBIT 10.01

 

Amendment
No. 1

to Supply Agreement

between

Martek
Biosciences Corporation

and

Mead
Johnson & Company, LLC

 

This Amendment No. 1 (the “Amendment”)
to that certain Supply Agreement between (i) Martek Biosciences
Corporation, a Delaware corporation, having its principal place of business at
6480 Dobbin Road, Columbia, Maryland 21045 (“Martek”)
and (ii) Mead Johnson & Company, LLC, a Delaware limited
liability company, and wholly-owned subsidiary of Mead Johnson Nutrition
Company, with offices located at 2400 West Lloyd Expressway, Evansville, Indiana
47721 (“MJN”), which is dated as of January 1,
2006, as amended with respect to payment terms on August 6, 2009 by letter
agreement  (the “Supply
Agreement”) is made and entered into
effective as of June 1, 2010 (the “Amendment  Effective Date”) by and between Martek and MJN.

 

WHEREAS,  Martek and MJN  entered into a License Agreement dated as of October 28,
1992 (as amended, the “License Agreement”)
wherein Martek granted to MJN certain rights under Licensed Patents (as defined
therein) and Technology (as defined therein) (A) to produce the Mead
Johnson Product (as defined therein), (B) to use and make the Martek
Product (as defined therein) for purposes of making and having made the Mead
Johnson Product and (C) to use, market and distribute directly or
indirectly the Mead Johnson Product, in each case as further specified in the
License Agreement;

 

WHEREAS, pursuant to the Supply Agreement, Martek (“SELLER”)
has agreed to supply, and MJN (“PURCHASER”) has
agreed to purchase, Martek Product for use by MJN to manufacture, use, market
and distribute the Mead Johnson Product in accordance with the terms of the
License Agreement and the Supply Agreement; and

 

WHEREAS, the parties now wish to amend the Supply Agreement as provided herein.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:

 

1.                                       Amendments.  The following changes to the Supply Agreement
shall be effective as of the Amendment Effective Date:

 

A.                                   The definition of “Infant Formula Product” is hereby amended by replacing
the words “characteristics and fed” in the last full line thereof with the
words “characteristics and/or fed”.

 

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

 

1

 

B.                                     Section 2.1(a) is hereby deleted in its entirety and replaced
with the following:

 

“During the Term of this Agreement and subject
to the terms of this Agreement, PURCHASER shall purchase and/or shall direct
the Designee(s) (as defined in Exhibit B hereto) to purchase, from
SELLER, PURCHASER’s and its Affiliates’ total requirements of DHA and ARA as
required by PURCHASER and its Affiliates for use in Infant Formula Products in
accordance with the terms of the License Agreement as amended hereby.  All quantities of the Martek Product
purchased by PURCHASER or any Designee under this Agreement shall be used
solely for purposes of production, distribution and/or sale of the Mead Johnson
Product.

 

C.                                     The third sentence of Section 2.2.1, which begins “The Annual Forecast
shall be used...”, is hereby deleted in its entirety.

 

D.                                    Section 2.3.1 is hereby amended by deleting everything after the first
two sentences thereof, starting with “Price calculations...” and continuing
through the end of the paragraph, and replacing it with the following:

 

“At the end of calendar year 2010, a price
reconciliation for purchases in 2010 prior to June 1, 2010 shall occur as
follows: If the quantity actually purchased (as reflected in Purchase Orders
accepted by SELLER that satisfy the requirements of Section 2.2.3 above
and which are scheduled for shipment within 2010) is less than the quantity
specified in the Annual Forecast for 2010, SELLER shall invoice PURCHASER
within thirty (30) days after the end of the calendar year for an amount equal
to the difference, if any, between the total price paid and the total purchase
price payable for Martek Product purchased prior to June 1, 2010, based on
the quantity of Martek Product actually purchased from SELLER in calendar year
2010, as such price is determined using Exhibit A as in effect prior to
the Amendment Effective Date. 
Alternatively, if the quantity actually purchased during calendar year
2010 exceeds the quantity specified in the Annual Forecast for purchase in
2010, SELLER shall credit against future purchases of Martek Product by
PURCHASER from SELLER an amount equal to the difference, if any, between the
total purchase price payable for Martek Product purchased prior to June 1,
2010, based on the quantity actually purchased in calendar year 2010, as such
price is determined using Exhibit A as in effect prior to the Amendment
Effective Date, and the total price paid by PURCHASER for such Martek Product,
provided that if this Agreement has terminated, SELLER shall, in lieu of any
such credit, pay such amount to PURCHASER.”

 

E.                                      Section 2.3.3 is hereby amended by replacing the first sentence
thereof with the following:

 

“PURCHASER and the Designee(s), as applicable,
shall pay all correct invoices for amounts due in accordance with Section 2.3.1
above in the United States in U.S. dollars within * from the postmark date or
date of electronic transmission, or transmission by facsimile, as applicable,
of SELLER’s invoice, which invoice shall not be deemed to be

 

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

 

2

 

delivered earlier than the date of delivery of
the invoiced Martek Product; provided, however, that for invoices received by
PURCHASER *.”

 

F.                                      A new Section 2.5 is hereby added as follows:

 

“2.5                           *.

 

2.5.1                        *.

 

2.5.2                        *.”

 

G.                                     A new Section 2.6 is hereby added as follows:

 

“2.6                           Manufacturing Changes.  PURCHASER will make commercially reasonable
efforts to qualify and accept manufacturing changes implemented by SELLER from
time to time.

 

H.                                    Section 4.1 is hereby deleted in its entirety and replaced with the
following:

 

“4.1                           Term:  This Agreement shall commence on the
Effective Date and, subject to prior termination of this Agreement in
accordance with the terms hereof, shall terminate as of January 1, 2016
(the “Term”); provided, however, that the Term may be extended by PURCHASER
beyond December 31,  2015 at the
sole discretion of PURCHASER, upon prior written notice given to SELLER at
least twelve (12) months prior to the expiration of the initial Term, for an
additional four (4) years (the “Extended Term”).”

 

I.                                         Section 4.2.4 is hereby deleted in its entirety and replaced with the
following:  “[Reserved]”.

 

J.                                        For the avoidance of doubt, Section 5.5 is hereby deleted in its
entirety and replaced with the following:

 

“5.5                           The parties reaffirm that Section 6.6 of the License Agreement
applies, which reads as follows: 
Licensee covenants and agrees that it and its Affiliates shall,
throughout the term of this Agreement, use reasonable efforts to use and
develop the Technology and the Martek Product with respect to the Mead Johnson
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.”  The parties affirm that PURCHASER, in its
sole discretion, may alter the level of Martek Product contained in the Mead
Johnson Product if PURCHASER determines, in its sole discretion, that
scientific information indicates that alternate levels of Martek Product may be
more beneficial or as beneficial as existing levels.  *.

 

K.                                    Exhibits A and A-1 are hereby deleted in their entirety and replaced with
the Exhibit A attached to this Amendment.

 

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

 

3

 

2.                                       Definitions.  The capitalized terms used in this Amendment
shall have the meaning set forth in the Supply Agreement and/or the License
Agreement, as relevant, unless specifically defined in this Amendment.

 

3.                                       Press Releases.  Upon final execution of this Amendment, the
parties shall each issue a press release in the forms set forth in Exhibit 1A
and 1B attached hereto.  Subject to Section 9
of the Supply Agreement, the parties shall agree on those portions of this
Amendment to be redacted to the extent such Amendment is publicly filed with
the Securities and Exchange Commission. 
Neither party, nor any of their respective affiliates, shall make any
public disclosures, including without limitation, press releases, securities
filings or investor or analyst calls or presentations, of any information that
has been redacted as described above.

 

4.                                       Entity.  MJN represents and warrants to Martek that
MJN has converted its organizational form to a limited liability company and
that such conversion did not involve any material changes in the operation,
scope, assets, business or net worth of the company.  Based on such representation and warranty,
the parties acknowledge and agree that the conversion does not constitute an
assignment for which consent is required pursuant to Section 10.7 of the
Supply Agreement.  All references to “MJN”
and “PURCHASER” in this Amendment and the Supply Agreement shall be read to
mean “Mead Johnson & Company, LLC.” MJN further represents and
warrants to Martek that MJN is a wholly-owned subsidiary of Mead Johnson
Nutrition Company.

 

5.                                       Effect of Amendment.  Except as expressly modified herein, all
terms and conditions set forth in the Supply Agreement shall remain in full force
and effect.

 

6.                                       Counterparts.  This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Amendment.

 

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

 

4

 

IN WITNESS WHEREOF, the parties have each caused this Amendment to be signed and delivered by
their duly authorized representatives as of the date first written above.

 

 

	
   

  	
  Martek Biosciences Corporation

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Steve Dubin

  
	
   

  	
  Name: 

  	
  Steve Dubin

  
	
   

  	
  Title: 

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Mead Johnson & Company, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Richard Baumgart

  
	
   

  	
  Name: 

  	
  Richard Baumgart

  
	
   

  	
  Title: 

  	
  Vice President, RSS and NASC

  
	
   

  	
   

  
	
   

  	
  Martek First Amendment to Supply Agreement; RNB;
  06/17/10

  

 

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

 

5

 

EXHIBIT 1A

PRESS
RELEASE — MJN

 

MEAD
JOHNSON EXTENDS

GLOBAL
SOLE-SOURCE SUPPLY AGREEMENT

WITH
MARTEK BIOSCIENCES

 

GLENVIEW, Ill., June 21,
2010 — Mead Johnson Nutrition Company (MJN: NYSE)
announced today that it has extended its supply agreement with Martek
Biosciences Corporation for DHA (docosahexaenoic acid) and ARA (arachidonic
acid) for use in its infant formula products. 
Under the terms of the amendment, Martek will continue to be Mead
Johnson’s global sole-source supplier of DHA and ARA for all of its infant
formula products through Dec. 31, 2015, an extension of four years beyond
the earliest possible termination date of the current agreement.

 

“Mead Johnson pioneered the inclusion of DHA and ARA
in infant formula in the United States. 
We continue to choose Martek’s DHA and ARA because of their commitment
to innovation and quality in DHA and ARA technology and science,” said Dirk
Hondmann, senior vice president — global research & development.  “The use of Martek’s trusted sources of DHA
and ARA supports Mead Johnson’s mission to create nutritional products trusted
to give infants the best start in life.”

 

Martek has been supplying DHA and ARA to Mead Johnson
for use in infant formula under a 25-year global license agreement executed in
1992.  Mead Johnson launched infant
formulas containing DHA and ARA in international markets beginning in 2000 and
introduced the first infant formula in the United States with these key
nutrients in 2002.  In May 2006, a
new supply agreement established Martek as Mead Johnson’s global sole-source
supplier of DHA and ARA for use in its infant formula products.  Today, Mead Johnson offers these beneficial
ingredients in all its U.S. routine infant formula products, led by EnfamilÒ PremiumÔ LIPIL®, and is the first and only infant formula manufacturer to date to
receive scientific endorsement by the European Food Safety Authority for an
infant formula health claim — specifically involving DHA and visual acuity.

 

Under the terms of the amended agreement, Martek will
provide graduated price reductions to Mead Johnson over the time period of the
extension, beginning in 2010.  In
addition, Mead Johnson has the option to add another four years to the
extension beyond 2015.  Mead Johnson said
that estimated cost reductions for 2010 would not be material and would not
affect its previously announced annual earnings guidance.

 

Naturally present in human breast milk, DHA and ARA
are fatty acids important to infant development and growth.  Clinical studies have demonstrated numerous
benefits for infants receiving DHA and ARA supplemented formula versus
non-supplemented formula, including improved mental and visual development.

 

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

 

6

 

Forward-Looking Statements

 

Certain statements in this news release are forward
looking as defined in the Private Securities Litigation Reform Act of
1995.  These statements, which are
identified by words such as “expects,” “intends” and “believes,” involve
certain risks and uncertainties that may cause actual results to differ
materially from expectations as of the date of this news release.  These risks include, but are not limited to: (1) the
ability to sustain brand strength, particularly the Enfa family of brands; (2) the
effect on the company’s reputation of real or perceived quality issues; (3) the
adverse effect of commodity price increases; (4) increased competition
from branded, private label, store and economy-branded products; (5) the
effect of an economic downturn on consumers’ purchasing behavior and customers’
ability to pay for product; (6) inventory reductions by customers; (7) the
adverse effect of changes in foreign currency exchange rates; (8) legislative,
regulatory or judicial action that may adversely affect the company’s ability
to advertise its products or maintain product margins; (9) the possibility
of changes in the Women, Infant and Children (WIC) program, or increases
in levels of participation in WIC; and (10) the ability to develop and
market new, innovative products.  For
additional information on these and other factors, see the risk factors
identified in the company’s periodic reports, including the annual report on Form 10-K
for 2009, quarterly reports on Form 10-Q and current reports on Form 8-K,
filed with, or furnished to, the Securities and Exchange Commission, available
upon request or at meadjohnson.com.  The company undertakes no obligation to
publicly update any forward-looking statement, whether as a result of new
information, future events or otherwise.

 

About Mead Johnson

 

Mead Johnson, a global leader in pediatric nutrition,
develops, manufactures, markets and distributes more than 70 products in 60
markets worldwide.  The company’s mission is to create nutritional brands
and products trusted to give infants and children the best start in life. 
The Mead Johnson name has been associated with science-based pediatric
nutrition products for over 100 years. 
The company’s “Enfa” family of brands, including Enfamil® infant formula, is the world’s
leading brand franchise in pediatric nutrition. 
For more information, go to meadjohnson.com.

 

# # #

 

	
  Contacts:

  	
   

  
	
   

  	
   

  
	
  Investors:

  	
  Kathryn Chieger, (847) 832-2419, kathryn.chieger@mjn.com

  
	
   

  	
   

  
	
  Media:

  	
  Christopher Perille,
  (847) 832-2178, chris.perille@mjn.com

  

 

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

 

7

 

EXHIBIT 1B

PRESS
RELEASE — MARTEK

 

	
  

  	
   

  	
  

  

 

	
  For Immediate Release

  	
  Contact:

  
	
   

  	
  Kyle Stults

  
	
   

  	
  Investor Relations

  
	
   

  	
  (410) 740-0081

  
	
   

  	
  investors@martek.com

  

 

Martek
Biosciences Announces Extended Global

Sole-Source
Supply Agreement with Mead Johnson

 

COLUMBIA, Md., June 21, 2010 — Martek Biosciences Corporation (MATK:NASDAQ) announced today that it has
extended its sole-source supply agreement with Mead Johnson & Company,
LLC, for DHA (docosahexaenoic acid) and ARA (arachidonic acid) for infant formula
products. Under the terms of the amendment, Martek will remain Mead Johnson’s
global sole-source supplier of DHA and ARA for all of its infant formula
products through December 31, 2015, an extension of four years beyond the
earliest possible termination date of the current agreement.

 

“This agreement solidifies a significant additional
portion of Martek’s base infant formula business and continues Martek’s strong
relationship with Mead Johnson, a global leader in pediatric nutrition that has
been a leading innovator and proponent of the clinical importance and
demonstrated benefits of DHA and ARA in infant development,” said Steve Dubin,
Martek CEO. “This agreement is further evidence that Martek’s trusted, high
quality nutritional products, patent position, production capacity, strong
research and science base, and long history of experience in DHA and ARA
manufacturing and technology will continue to provide us a meaningful
competitive advantage in the marketplace.”

 

Martek has been supplying DHA and ARA to Mead Johnson
for use in infant formula under a global 25-year license agreement executed
in1992. In May 2006, Martek and Mead Johnson entered into a supply
agreement that established Martek as Mead Johnson’s global sole-source supplier
of DHA and ARA for use in its infant formula products. Mead Johnson first
launched infant formulas containing Martek’s DHA and ARA in international
markets in 2000. Mead 

 

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

 

8

 

Johnson launched Enfamil LIPIL®, the first infant formula
in the U.S. to feature DHA and ARA, in 2002.

 

Under the terms of the amendment, Martek will continue
to be Mead Johnson’s global sole-source supplier of DHA and ARA for all of its
infant formula products through December 31, 2015, an incremental four
years beyond the terms of the prior agreement. In addition, Mead Johnson has
the option to further extend the term of the agreement for an additional four
years beyond 2015. The amendment also provides graduated price reductions to
Mead Johnson over the term of the extension, beginning in 2010.  The financial terms of this amendment were
factored into the company’s recent financial guidance provided during its
second quarter conference call on June 3, 2010.  Martek’s strategy is to offset a significant
portion of price reductions that result from its infant formula contract
extensions by implementing manufacturing cost savings and product innovation
initiatives, and by growing its non-infant formula business.

 

Naturally present in human breast milk, DHA and ARA
are fatty acids important to infant development and growth. Clinical studies
have demonstrated numerous benefits for infants receiving DHA and ARA
supplemented formula, including improved mental and visual development. Martek’s
blend of DHA and ARA, life’sDHATM & life’sARATM, is the only source of these nutrients
currently used in U.S. infant formula, and is present in more than 99 percent
of infant formula sold in the U.S. Additionally, Martek is a leading global
supplier of DHA and ARA, and infant formulas containing Martek’s nutritional
oils are available in more than 75 countries worldwide.

 

Martek Biosciences Corporation is a leader in the
innovation and development of DHA and ARA and has developed patented technology
for the production and use of these ingredients. DHA omega-3 products promote
health and wellness through every stage of life and ARA omega-6 products
support growth and development in infants and children. The company produces life’sDHATM, a sustainable, vegetarian source of DHA omega-3,
for use in foods, beverages, infant formula and supplements, and life’sARATM, a sustainable vegetarian source of ARA omega-6,
for use in infant formula and growing-up milks. For more information on Martek
Biosciences, visit http://www.martek.com/.
For more information on products containing life’sDHA and life’sARA, visit http://www.lifesdha.com/.

 

Sections of this release contain forward-looking
statements. These statements are based upon numerous assumptions which Martek
cannot control and involve risks and uncertainties that could cause actual
results to differ. These statements should be understood in light of the risk
factors set forth in the company’s filings with the Securities and Exchange
Commission, including, but not limited to, the company’s Form 10-K for the
fiscal year ended October 31, 2009 and other filed reports on Form 10-K,
Form 10-K/A, Form 10-Q and Form 8-K.

 

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

 

9

 

EXHIBIT A

 

PURCHASE PRICE

 

During the Term of this Supply Agreement, the pricing
provisions set forth in Sections 1 and 2 below shall amend the License
Agreement by replacing Sections 2.2(i), 4.1(ii) and 4.1(iii) of the
License Agreement in their entirety. 
Following termination by either party for any reason, these Sections of
the License Agreement shall once again be in full force and effect for actions
occurring after such termination.

 

1.             Pricing
Terms:

 

PURCHASER shall pay SELLER compensation for the
Martek Product (in oil form) and/or the rights granted to PURCHASER with
respect to the Martek Product in accordance with this Exhibit A.  The Purchase Prices set forth herein are
applicable per kilogram of DHA and/or ARA in the Martek Product, as determined
based on the Martek Product Specifications in effect on the Amendment Effective
Date.  *.

 

From and after the Effective Date, provided
that PURCHASER is not in material breach of any provision of this Agreement,
the Purchase Price charged to PURCHASER hereunder for the Martek Product in any
country at any time shall be * than that available at such * for purchases of
the Martek Product for use in an Infant Formula Product in substantially
similar quantities and subject to substantially similar terms and conditions
without the prior written consent of PURCHASER or unless SELLER offers * to
PURCHASER.

 

Notwithstanding anything to the contrary in
this Agreement, the prices set forth in this Exhibit A may be
increased annually by SELLER by up *, and provided that any such percentage
increases shall apply to *.

 

In the event SELLER limits the supply of the
Martek Product to PURCHASER during any calendar year during the Term (“Allocation
Program”), any * of the Martek Product supplied to PURCHASER, as compared to *
placed by PURCHASER during such year, as a result of the Allocation Program
shall be * set forth in this Exhibit A for such year, * the purpose of
determining the appropriate * for such year.

 

Per Section 4.2.2.1 of the Agreement, in the event that PURCHASER
terminates this Agreement as to a particular jurisdiction within the Territory
based on Section 4.2.2, SELLER agrees to annually credit the * of
PURCHASER for the particular jurisdiction to * used in determining PURCHASER’s
* for future purchases of Martek Product hereunder.

 

Temporary
reductions in the volume of Martek Product purchased by SELLER caused by
product recalls or other similar events shall not result in * under this
Agreement.

 

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

 

10

 

2.             Purchase
Price:  From and after the Amendment
Effective Date, the Purchase Price for Martek Product will be calculated as
follows:

 

Price Schedule for
CY2010 - CY2015

 

	
  Calendar Year

  	
   

  	
  2010

  	
   

  	
  2011

  	
   

  	
  2012

  	
   

  	
  2013

  	
   

  	
  2014

  	
   

  	
  2015*

  	
   

  
	
  Global
  Price Schedule (per kg)

  	
   

  	
  $

  	
   

  	
  *

  	
  $

  	
   

  	
  *

  	
  $

  	
   

  	
  *

  	
  $

  	
   

  	
  *

  	
  $

  	
   

  	
  *

  	
  $

  	
   

  	
  *

  
																				

 

*

 

Royalty:  None

 

Additional
conditions:

 

I.              Martek
Product ordered from SELLER must comprise one hundred percent (100%) of any and
all Omega-3 and Omega-6 Long-Chain Polyunsaturated Fatty Acids (“LCPUFA”)
contained in any quantity of any Mead Johnson Product (for purposes of this Exhibit A,
the term “LCPUFA” shall mean any fatty acid, other than linoleic acid,
gammalinolenic acid and alphalinolenic acid, which contains at least eighteen
(18) carbon atoms and at least two (2) double bonds).

 

II.            The
per kilogram pricing outlined above is for annual volumes *.  If PURCHASER’s total annual volume of Martek
Product for use in Infant Formula Products actually purchased during any
calendar year *, SELLER shall, at SELLER’s sole discretion, * listed for such
calendar year in the Price Schedule set forth above.  An * for any such *, which shall apply *,
shall be *.  Notwithstanding the
foregoing, * to PURCHASER shall at all times be subject to the second paragraph
in Section 1 above.

 

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

 

11Exhibit
10.1

 

SUPPLEMENT NUMBER TWO TO

ORIGINAL EQUIPMENT MANUFACTURING AGREEMENT

AND ENGINEERING SUPPORT AGREEMENT

 

between

 

Esaote
S.p.A., a company organized under the laws of the Republic of Italy and with
registered seat in  Genova, Italy
(hereinafter referred to as “Esaote”)

 

- of the one Party -

 

TechniScan, Inc.,
a Delaware corporation (“TS Delaware”) through its successor in interest,
TechniScan, Inc., a Delaware corporation (hereinafter referred to as “TechniScan”)

 

- of the other Party -

 

Esaote
and TechniScan are hereinafter referred to individually as a “Party” and
collectively as the “Parties”

 

Recitals

 

WHEREAS,
Esaote and TS Delaware entered into that certain Original Equipment
Manufacturing with an Effective Date of 11 February 2008 (the “Agreement”);

 

WHEREAS,
TechniScan, as the successor-in-interest to TS Delaware, is now a party to the
Agreement;

 

WHEREAS,
the Parties wish to supplement certain provisions under the Agreement and to
provide for the provision of additional services by Esaote in consideration for
the additional consideration provided in this Supplement Number One (the “Supplement”);

 

WHEREAS,
as of June 28th, 2010,
TechniScan Delaware instituted a series of transactions consisting of: (i) 
1 for 4 reverse split of the foregoing TechniScan Delaware common stock held by
Esaote; and (iv) a further raise of capital with
a minimum close of $6 million or more, and repayment or conversion of the
convertible notes currently outstanding such that the Intellectual Property of
the Company is no longer encumbered (“Qualified Financing”), to
fund TechniScan’s operations through 2012 (all of the foregoing transactions
collectively constituting the “Transactions”).

 

WHEREAS, TechniScan has requested that ESAOTE provide
additional components, development services and miscellaneous costs to support
the further development of the Products 
as proposed in Annex 1 hereto (the “Supplemental Support”);

 

WHEREAS, Esaote and TechniScan have agreed that Esaote
shall provide the Supplemental Support valued at the sum of up to One Million
Eight Thousand Four Hundred Seventeen Dollars ($1,008,417) (the “Supplemental
Amount”) and Esaote shall receive additional shares of common stock, as
provided herein;

 

 

WHEREAS, Esaote and TechniScan have agreed that if a
Qualified Financing is not completed by December 31st , 2010 this Supplement Two becomes
void.

 

WHEREAS, Esaote began providing the Supplemental
Support on or about October 1, 2009 and, as of July 2010 has expended
approximately €255,000 in Supplemental Services (currency conversion to be
determined effective the date of closing of a Qualified Financing).

 

NOW,
THEREFORE, the Parties enter into this Supplement as follows:

 

Article 1

Supplemental Services

 

Esaote
shall provide the Esaote system components, development services as outlined in
Annex 1 attached hereto and be as outlined below:

 

1.1.  Esaote will provide the following engineering
support services, Esaote Products and Modified Esaote Products:

 

(a)           the continuing modification of the
Esaote Product into the Modified Esaote Product;

 

(b)           the supply of the Modified Esaote
Product and a non-exclusive license to the executable version of the related
software exclusively for incorporation by TechniScan into the Products;

 

(c)           the contribution of engineering and
design support and original equipment manufacturing prototype equipment and
supplies necessary to incorporate the Modified Esaote Products into the
Products and technical assistance related to the completion and manufacture of
the Products incorporating the Modified Esaote Products;

 

(d)           the supply of spare parts relevant to
the Modified Esaote Products; and

 

(e)           the technical assistance on the
Modified Esaote Products and spare parts including training in the service, installation
and application of Modified Esaote Product, to TechniScan’s designated
technical personnel.

 

1.2.  Except as
expressly provided in the budget contained in Annex 1 with regard to travel
expenses and the costs of its own personnel, Esaote shall not be required to
pay any amounts to any third party or to make advances to or on behalf of
TechniScan.  If the actual value of the
Supplemental Services is less than the amounts estimated on Annex 1, Esaote
shall not have any obligation to provide any consideration or compensation in
respect of such shortfall.  Furthermore,
Esaote shall be permitted to cease providing Supplemental Services once it
determines, in its reasonable judgment, that the value of the Supplemental
Services equals or exceeds the Supplemental Amount.

 

1.3  In consideration of the Supplemental
Services, Esaote shall receive, additional shares of common stock of TechniScan
in an amount equal to the Supplemental Amount as determined once the
Qualified Financing is completed.  The
value of the Common Stock paid for the 

 

2

 

services
contemplated herein shall be determined at the same price paid by Investors in
the Qualified Offering.

 

1.4  TechniScan will provide a complete business
plan to Esaote as soon as practicable after the date of this Supplement.

 

Article 2

Progress Toward Completion of Contemplated Transactions

 

It is expressly acknowledged and agreed that
the progress toward and realization of each of the enumerated steps of the Transactions
to the reasonable satisfaction of Esaote shall be a continuing condition
precedent to Esaote’s continuing delivery of the Supplemental Support provided
herein.

 

2.1.  Upon request, TechniScan shall provide a
written or oral update on the status of the Transactions to Esaote or its
representatives or counsel, including Gerald Richardson and/or Esaote’s
counsel, Baker & Daniels LLP.

 

2.2.  If Esaote
determines that any one or more steps of the Transactions or Phase 2 of the
Program (as defined below) are not progressing to its satisfaction, it shall
provide written notice thereof to TechniScan by email or fax to the attention
of David Robinson or any other representative appointed by TechniScan to accept
such communications.

 

2.3.  TechniScan shall, within twenty business days
of its receipt of the notice from Esaote referenced above, provide a written
update on the status of the Transactions or Phase 2 of the Program, including
such information or documents which Esaote may reasonably request.

 

2.4  If
Esaote is not satisfied with the information received from TechniScan, it may
either suspend the Supplemental Services or terminate this Supplement by
providing a second written notice to TechniScan within twenty business days of
its receipt of the update from TechniScan pursuant to Section 2.3
hereof.  If Esaote has not received the
response required under Section

 

2.3, it may suspend the Supplemental Services
until such time that it is satisfied with the response of TechniScan.  If Esaote incurs incremental expenses as a
result of the suspension and resumption of the Supplemental Services, such
incremental expenses shall be included with the costs of the Supplemental
Services and shall count towards Esaote’s maximum obligations hereunder.

 

Article 3

Intellectual Property Issues

 

3.1.  The Parties agree that the project plan to be
included in Annex 1 shall set forth the additional contribution to the Program
by Esaote (“Phase 2 of the Program”) and sets out inter alia:

 

·              the contribution in
terms of technology, know-how, manpower, materials, assistance, etc. of
each of the Parties;

 

3

 

·              the time schedule for
development, sample production, tests and relevant milestones which are
necessary to periodically assess and verify the results from time to time
obtained.

 

3.2.  The intellectual property rights, including
Program Rights developed through the continuation of the Program shall be as
provided in the Agreement.

 

Article 4

Term; No Amendment to the Agreement

 

4.1.  Term

 

If a Qualified Financing is not completed by December 31st , 2010 this Supplement Two becomes
void.

 

If a Qualified Financing is completed by December 31st, 2010 this Supplement shall be
effective upon execution hereof and shall continue in effect for the then
remaining term of the Agreement; provided that the termination of the
Supplemental Services by Esaote shall not terminate the Agreement, except as
otherwise indicated by Esaote when permitted to terminate the Agreement
pursuant to the terms thereof.

 

4.2.  No Amendment to Agreement

 

4.2.1  The provisions of this Agreement are intended
to be supplemental to the provisions contained in the Agreement and this
Supplement is not intended to amend the Agreement except as expressly provided
herein.

 

4.2.2  If at any time this Supplement is found to be
conflicting with any express provision contained in the Agreement, then the
conflicting provision contained in this Supplement shall be deemed to be
controlling over the conflicting provision contained in the Agreement.

 

4.3.  TechniScan
Acknowledgement

 

TechniScan acknowledges and agrees that it is
the successor-in-interest to TS Delaware and TechniScan hereby acknowledges
that it has assumed all of the rights and obligations of TS Delaware  existing under the Agreement and all of its
other agreements involving Esaote.

 

4.4.  Effect
of Termination

 

4.4.1  This Supplement shall be deemed to be
terminated if Esaote terminates its obligations to provide the Supplemental
Services as provided herein.

 

4.4.2  The termination of the Agreement shall
terminate Esaote’s obligations to provide the Supplemental Services beginning
on the effective date of the termination date of the Agreement.

 

[SIGNATURES ON FOLLOWING PAGE]

 

4

 

IN
WITNESS WHEREOF, the Parties hereto have caused this Supplement Number One to
Original Equipment Manufacturing Agreement to be executed in duplicate by their
authorized officers on the dates and the places mentioned below:

 

 

	
  Genova,
  September 2nd, 2010

  	
   

  	
   

  
	
  Esaote
  S.p.A.

  	
   

  	
  TechniScan, Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Fabrizio Landi

  	
   

  	
  By: 

  	
  /s/ David C. Robinson

  
	
   

  	
   

  	
   

  
	
  Name:
  Fabrizio Landi

  	
   

  	
  Name:
  David C. Robinson

  
	
   

  	
   

  	
   

  
	
  Title: CEO & General Manager

  	
   

  	
  Title: President & CEO

  
					

 

5

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