REDACTED VERSION
* = Confidential Portions
have been separately
submitted to the commission
MARTEK BIOSCIENCES CORPORATION/
GIST-BROCADES B.V.
ARA PURCHASE AND PRODUCTION AGREEMENT
This ARA Purchase Agreement (the "Agreement") is made and entered into
this 31st day of December, 1996 (the "Effective Date") by and between
Gist-Brocades, B.V., a company organized and existing under the laws of the
Netherlands, having its principal place of business at Wateringseweg 1, 2611 XT
Delft, The Netherlands ("GB"), and Martek Biosciences Corporation, a Delaware
corporation having its principal place of business at 6480 Dobbin Road,
Columbia, Maryland 21045 ("Martek"), who, intending to be legally bound, hereby
agree as follows:
1. INTRODUCTION
1.1. Martek owns technology related to the manufacture and use of
arachidonic acid and has certain issued patents and patents pending throughout
the world, claiming (i) certain processes for the manufacture of arachidonic
acid, (ii) certain compounds and (iii) certain applications; Martek manufactures
and sells arachidonic acid to a number of customers for application in food
(including infant formula) products.
1.2. GB owns technology related to the manufacture and use of
arachidonic acid and has patents pending throughout the world, claiming (i)
certain processes for the manufacture of arachidonic acid, (ii) certain
formulations for that product and (iii) certain compounds.
1.3. GB is currently building new production facilities for the
manufacture of arachidonic acid for sale to its customers; the capacity of these
facilities will exceed GB's own requirements for arachidonic acid for sale to
its customers.
1.4. Martek wishes to have GB manufacture arachidonic acid in
accordance with certain specifications as further specified below in Section 2
and GB is willing to supply arachidonic acid conforming to such specifications
to Martek.
1.5. The parties wish to enter into this Agreement to provide for
certain terms under which GB will produce arachidonic acid ordered by Martek,
and Martek will pay for arachidonic acid it orders from GB.
2. DEFINITIONS
2.1. "ARA" means arachidonic acid-rich trigliceride oil.
2.2. "Confidential Information" shall mean the information
described in Section 10 below.
2.3. "Customer Specifications" shall mean specifications for ARA, other
than the Martek Specifications, which are required by specific customers of
Martek and are agreed upon by the Committee (as defined below in Section 4.1);
as agreed upon, each order for ARA placed by Martek which is required to satisfy
Customer Specifications shall identify the applicable specifications by customer
name or other unique designation. Customer Specifications shall always include
at least compliance with current good manufacturing practices (cGMPs)
promulgated by FDA and comparable requirements by other governmental bodies for
food ingredients, even if such requirements are not expressly set forth in any
statement of the Customer Specifications.
2.4. "Finished Oil" shall mean oil containing ARA that has been
degummed, refined, bleached and deodorized and meets either Martek
Specifications or Customer Specifications as specified by Martek in accordance
with Section 7.7.
2.5. "GB Costs" shall mean, for each period for which GB supplies a
budget to Martek in accordance with Section 9.1, those expenses of GB related to
production of ARA which are identified in such budget.
2.6. "Martek Specifications" shall mean specifications agreed upon by
the Committee (as defined below in Section 4.1) and to be attached to this
Agreement as an Exhibit, pursuant to which GB shall be required to produce ARA
for all orders by Martek other than those orders which Martek expressly advises
GB are to be produced to satisfy identified Customer Specifications. The Martek
Specifications shall initially be the specifications for crude oil containing
ARA; the Martek Specifications shall always include at least compliance with
current good manufacturing practices (cGMPs) promulgated by FDA and comparable
requirements by other governmental bodies for food ingredients, even if such
requirements are not expressly set forth in any statement of the Martek
Specifications.
2.7. "FDA" shall mean the U.S. Food and Drug Administration.
2.8. "cGMPs" shall specifically mean those FDA regulations pertaining
to food ingredients appearing in the Code of Federal Regulations, Title 21,
Parts 106 and 110 , including FDA guidelines related thereto and other FDA
interpretations thereof.
2.9. "ARA Patent" shall mean any patent issued under the laws of any
country which claims any of the inventions described and fully supported in
International Patent Publications WO 92/13086 and/or WO 96/21037, attached
hereto as Exhibit B.
2.10. "Oil Blend Patent" shall mean any patent issued under the laws of
any country which claims any of the inventions described and fully supported in
International Patent Publication WO 92/12711, attached hereto as Exhibit C.
2.11. "Unit of ARA" shall mean either (a) that quantity of Finished Oil
containing ARA determined by an assay procedure to be developed by the
Committee, which contains one (1) kilogram of pure ARA or (b) that quantity of
crude oil containing ARA that, after processing, yields Finished Oil containing
ARA determined by an assay procedure to be developed by the Committee, which
contains one (1) kilogram of pure ARA
3. PATENT MATTERS
3.1. Acknowledgment. GB acknowledges that Martek has applications for
ARA Patents and Oil Blend Patents pending in many countries throughout the
world. A listing of the countries in which ARA Patents and Oil Blend Patents
have issued is set forth in Exhibit D. Martek shall notify GB promptly upon the
issuance of any additional ARA Patents or Oil Blend Patents.
3.2. Limited Patent License and Disclaimer. To the extent necessitated
by transfer of crude oil containing ARA to any facility of Martek or a
contractor of Martek for refining of any quantities of ARA for GB, Martek hereby
grants GB a limited license under any pending application for an ARA Patent to
sell the ARA. The license provided through this Section 3.2 is limited to
manufacture and/or sale of ARA under the manufacturing arrangement described
herein and is limited to activities occurring during the pendency of an
application for an ARA Patent before the European Patent Office. The license
does not extend to use of ARA which infringes a claim in an issued ARA Patent.
3.3. Infringement Determination. If and when an ARA Patent issues to
Martek in a country where GB makes or sells ARA, the parties hereto shall
determine whether or not GB's manufacture and/or sale of ARA infringes such ARA
Patent. If the parties hereto are unable to reach consensus on the question of
whether or not GB's manufacture and/or sale of ARA infringes such ARA Patent,
the matter shall be referred to Patent Arbitration in accordance with Exhibit E
attached hereto. In any country where GB's manufacture or sale of ARA are
determined in accordance with this paragraph to infringe an ARA Patent, GB
agrees to cease such manufacture or sales except as provided in Section 3.4.
3.4. Subcontractor Appointment. So long as this Agreement has not been
previously terminated, and GB is not in material default on the performance of
its obligations hereunder, on the earliest date on which it is determined in
accordance with Section 3.3 that GB's manufacture and/or sale of ARA infringes
or would infringe an ARA Patent issued by the European Patent Office, Martek
agrees to license and appoint GB as its subcontractor to manufacture ARA solely
for purchase by Martek. Upon appointment as subcontractor, GB shall be granted a
limited retroactive license to manufacture and sell ARA under the ARA Patent
issued by the European Patent Office for the period prior to issuance of such
ARA Patent, subject to the disclaimer set forth in Section 3.8 below. Martek
further agrees that so long as this Agreement has not then been terminated and
GB is not then in material default on the performance of its obligations
hereunder, it shall appoint GB as its subcontractor to manufacture ARA, solely
for purchase by Martek, in any other country where an ARA Patent issues and it
is determined in accordance with Section 3.3 that GB's manufacture and/or sale
of ARA infringes or would infringe such ARA Patent. Upon such appointment, GB
shall be entitled to continue production of ARA for purchase by Martek on the
terms set forth in this Agreement.
3.5. Validity. While this Agreement is in effect, the parties agree
that any ARA Patent issued under the laws of any country shall be presumed valid
and enforceable unless and until such ARA Patent is held invalid or
unenforceable by a competent court or other competent tribunal from which no
appeal is permitted. While this Agreement is in effect, GB agrees not to
challenge the validity of any ARA Patent directly or indirectly in any country
where such agreement not to challenge is enforceable.
3.6. Infringement of ARA Patents by Third Parties.
a. GB agrees to promptly notify Martek of any infringement of an
ARA Patent by any third party of which GB is or becomes aware.
b. Martek undertakes to use reasonable efforts to abate any
infringement of an ARA Patent by a third party of which Martek has notice, by
any suitable means, including without limitation legal action against the third
party, settlement agreement or otherwise causing cessation of the infringement
by the third party; provided, however, that so long as GB retains Exclusive
Supplier Rights as described in Section 7.1, Martek shall not, without the prior
consent of GB, abate any infringement of an ARA Patent in the United States or
Europe by granting a license to, or entering into a prospective non-assert
agreement with, the infringing party. Martek shall not be required by this
Agreement to pursue abatement activity directed at more than one third party at
the same time. Abatement activity will be under Martek's sole control and at
Martek's expense. GB agrees to provide assistance when required by the law of
any jurisdiction in which an ARA Patent has issued, including without limitation
joining an infringement suit as a party. Any assistance required by law from GB,
and any voluntary assistance provided by GB through agreement of the parties,
shall be at GB's expense.
3.7. DISCLAIMER OF LIABILITY REGARDING OIL BLEND PATENTS. IF AND TO THE
EXTENT THAT AN OIL BLEND PATENT ISSUES IN ANY COUNTRY WHERE GB SELLS ARA TO
CUSTOMERS OTHER THAN MARTEK, MARTEK AGREES THAT SUCH SALE BY GB SHALL BE FREE OF
LIABILITY TO MARTEK, AND THAT MARTEK SHALL NOT SUE GB, FOR INDIRECT OR
CONTRIBUTORY INFRINGEMENT OF SUCH OIL BLEND PATENT, PROVIDED THAT GB SHALL
EXPRESSLY DISCLAIM ANY WARRANTIES TO CUSTOMERS THAT USE OF SUCH ARA IS LICENSED
UNDER OR WILL NOT INFRINGE ANY ARA PATENTS OR OIL BLEND PATENTS.
3.8. PATENT WARRANTY DISCLAIMER. THE PARTIES ACKNOWLEDGE THAT GB IS NOT
GRANTED ANY RIGHTS UNDER ANY PATENTS OR PATENT APPLICATIONS FILED IN THE NAME OF
OR ON BEHALF OF MARTEK EXCEPT THOSE SET FORTH IN SECTIONS 3.2, 3.4 and 3.7.
MARTEK EXPRESSLY DISCLAIMS ANY WARRANTY TO GB OR ANY THIRD PARTY THAT ANY
SUBLICENSE BY GB OF ITS LIMITED RIGHT TO MAKE AND SELL ARA AS SET FORTH IN
SECTIONS 3.2 AND 3.4 OR ANY USE OF ARA MANUFACTURED BY GB WILL NOT INFRINGE ANY
PROPRIETARY RIGHTS OF MARTEK OR ANY THIRD PARTY, AND GB AGREES THAT IT SHALL
EXPRESSLY DISCLAIM TO ANY GB CUSTOMER WHICH PURCHASES ARA ANY REPRESENTATION
THAT USE OF SUCH ARA WILL NOT INFRINGE THE ARA PATENTS, OIL BLEND PATENTS OR ANY
OTHER PATENT.
4. STEERING COMMITTEE
4.1. Formation. Not later than fifteen (15) days after the Effective
Date, the parties shall form a steering committee (the "Committee") which shall
consist of four (4) members: two (2) appointed by Martek and two (2) appointed
by GB. Each party shall identify one of the team members it has appointed as its
"Leader." In addition to its two (2) members, each party may send one (1)
non-participating, nonvoting observer to each meeting of the Committee. If
either party decides at any time to replace its designated Leader or its other
Committee member, it may do so by written notice to the other party's Leader.
4.2. Meetings. The Committee shall meet at such times and places as it
may select but, in any event, it shall meet at least once per calendar quarter,
provided that the first such meeting shall be held as soon as practicable, but
in no event later than thirty (30) days after the Effective Date of this
Agreement. Meetings of the Committee shall be in person or by conference call as
the Committee decides.
4.3. Status Reports. The Leaders shall report to each other monthly, or
as otherwise mutually agreed upon, regarding the status of the parties'
respective obligations under this Agreement, any anticipated problems (resolved
or unresolved), and any indication of delay in fixed or tentative schedules.
4.4. Agenda. The Committee shall be responsible for overseeing the
collaboration under this Agreement, for monitoring the parties' adherence to the
terms hereof and for agreeing on or determining any matters that are to be
agreed on or determined by the Committee pursuant to this Agreement. In
particular, the Committee shall, in good faith, mutually resolve, among other
things, the following: (a) determining a program to reach agreement on the
Martek Specifications; (b) determining the methods of analysis and the format
for certification of analysis referred to in Section 7.10 below, and following
the dispute settlement procedure referred to in Section 5.2 below; (c)
determining the procedure to agree on Customer Specifications and on the terms
under which GB shall supply Martek and/or Martek's customers with ARA meeting
Customer Specifications; (d) determining the schedule at which GB shall adjust
its manufacturing processes to manufacture ARA in accordance with the Martek
Specifications and Customer Specifications; (e) determining a schedule for
verification by Martek that GB is able to produce ARA which satisfies the Martek
Specifications and the Customer Specifications; (f) determining the schedule at
which GB shall adjust its manufacturing processes to accommodate changes, which
have been agreed upon by the Committee, in the Martek Specifications or Customer
Specifications and any applicable changes to GB Costs which may result
therefrom; (g) selecting the facilities of GB, GB subcontractors, Martek and/or
Martek subcontractors at which various steps in the ARA manufacturing process
will be completed with the goal of achieving the lowest possible production
costs for ARA taking into account all quality requirements that have to be met;
(h) determining the appropriate means for packaging and shipping ARA ordered by
Martek; and (i) periodically reviewing GB's production processes for ARA with
the goal of improving quality and reducing production costs.
4.5. Improvements. Proposed improvements to the manufacturing process
for ARA shall be submitted to the Committee by the party proposing the
improvement. The Committee may agree that the parties jointly or individually
perform development work aimed at improvement of the manufacturing process for
ARA or may elect not to implement the improvement. If the Committee agrees that
the parties shall develop the work jointly, the parties shall share equally the
research and development costs related to the work at issue, and the Committee
shall agree on development protocols, describing the work to be carried out by
each of the parties in this respect. The proprietary rights in any improvement
to the manufacturing process for ARA which is developed by the parties jointly
and for which they have shared the related research and development costs shall
be jointly owned by them and shall be considered jointly owned Confidential
Information. GB Costs shall be reduced to the full extent that GB's actual cost
of production is reduced by any improvement owned solely by Martek, but shall
not be reduced if GB's actual cost of production is reduced by any improvement
owned solely by GB, except as expressly set forth below. Except as expressly set
forth below, in the event that GB's actual cost of production is reduced by a
jointly owned improvement, GB Costs shall be reduced by fifty percent (50%) of
the reduction in GB's actual cost of production. At six (6) month intervals
following the first use of any improvement to the manufacturing process,
regardless of the identity of the owner(s), the parties shall calculate, for the
preceding six (6) months (the "Review Period"), sales of ARA by GB to Martek as
a percentage of aggregate sales of ARA by GB. If during any Review Period, sales
of ARA by GB to Martek represent fifty percent (50%) or less of aggregate sales
of ARA by GB, Martek shall be entitled to a credit against future purchases of
ARA from GB in an amount equal to fifty percent (50%) of the reduction, due to
all the implemented improvements to the manufacturing process for ARA during the
Review Period, in GB's actual cost of production for the quantities of ARA
purchased by Martek during the Review Period. If during any Review Period, sales
of ARA by GB to Martek represent more than fifty percent (50%) but less than one
hundred percent (100%) of aggregate sales of ARA by GB, Martek shall be entitled
to a credit against future purchases of ARA from GB in an amount equal to a
percentage of the reduction, due to all improvements to the manufacturing
process for ARA during the Review Period, in GB's actual cost of production for
the quantities of ARA purchased by Martek during the Review Period which is
equal to the difference between (a) one hundred percent (100%) and (b) the
percentage of aggregate sales of ARA by GB to Martek. The proprietary rights in
any improvement to the manufacturing process for ARA that is actually
implemented in that process and has been (i) incidentally discovered or
developed, or (ii) developed by either party, or by the parties jointly, without
prior submission of a development proposal to the Committee in accordance
herewith shall be jointly owned by the parties, and shall be considered jointly
owned Confidential Information.
5. VERIFICATION OF ARA PRODUCTION QUALITY
5.1. Specifications for ARA. The parties acknowledge that Martek wishes
to have the ability to order ARA from GB that satisfies Martek Specifications
or, as necessary, Customer Specifications. Martek will use all reasonable
efforts to encourage its customers to accept the Martek Specifications as the
base specification for the ARA they purchase.
5.2. Verification of Production. Once the Martek Specifications and/or
the Customer Specifications for any customer have been agreed upon by the
Committee, GB shall deliver to Martek a quantity of ARA prepared to satisfy the
Martek Specifications and quantities of ARA prepared to satisfy the Customer
Specifications for each Martek customer. Such delivery shall be made in
accordance with a schedule and in quantities and on terms determined by the
Committee, which quantities shall be sufficient in all cases to enable Martek to
verify that the quantities of ARA provided satisfy the applicable
specifications. Martek shall thereupon subject the delivered quantities of ARA
to the testing and analysis procedures agreed upon by the Committee to verify
that the individual quantities satisfy the applicable specifications. If any
quantity of ARA fails to satisfy the applicable specifications, Martek shall so
notify GB. Any dispute between the parties regarding the quality of any ARA thus
supplied shall be resolved in accordance with the procedure set forth in Exhibit
F. In case it is resolved that any quantity of ARA thus supplied by GB fails to
satisfy the applicable specifications, GB shall adjust its manufacturing process
or take other appropriate action and provide a replacement quantity of ARA for
testing and analysis by Martek. The process shall continue until Martek
determines that all quantities of ARA provided by GB satisfy the applicable
specifications.
5.3. Specification Changes. The parties acknowledge and agree that the
Martek Specifications and the Customer Specifications may be subject to change
at any time and from time to time. Martek shall bring any required changes to
the Martek Specifications or the Customer Specifications for any Martek customer
to the attention of the Committee as soon as reasonably practicable. Upon
agreement by the Committee to accept any such required changes, the Committee
shall then determine the terms, including GB Costs and delivery dates applicable
to ARA which will meet the proposed specification changes. GB agrees to use its
best efforts to accommodate any requested changes at reasonable costs. Upon
agreement by the Committee on such terms GB shall implement the necessary
adjustments in accordance therewith, and the parties shall follow the procedure
set forth in Section 5.2 for verifying that quantities of ARA produced by GB
satisfy the changed specifications.
6. WARRANTY
6.1. Compliance. GB represents and warrants that it shall obtain and
maintain, and shall ensure that its subcontractors obtain and maintain all
licenses, permits, approvals, clearances and notifications which may be required
in connection with the manufacture and packaging of ARA for Martek and that the
performance of all GB obligations under this Agreement by GB and its
subcontractors shall comply with all applicable laws, rules and regulations of
any government having jurisdiction over such performance, including without
limitation regulations and other requirements regarding cGMPs. GB further
represents and warrants that all quantities of ARA that it supplies to Martek
hereunder shall be manufactured in conformity with, and shall fully satisfy, the
Martek Specifications or the applicable Customer Specifications as identified to
GB in Martek's order.
6.2. Disclaimer. THE LIMITED WARRANTY SET FORTH HEREIN IS EXCLUSIVE AND
IN LIEU OF, AND GB HEREBY DISCLAIMS, ALL OTHER WARRANTIES REGARDING THE ARA
PRODUCED FOR MARTEK HEREUNDER, EXPRESS AND IMPLIED, INCLUDING WITHOUT LIMITATION
ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6.3. Notification and Replacement. If any shipment of ARA supplied by
GB to Martek or, on behalf of Martek, to any Martek customer does not conform to
the applicable specifications, Martek shall promptly give GB written notice of
the nonconformity. Likewise, if GB discovers or has reason to believe that any
shipment of ARA fails to conform to the applicable specifications, GB shall
promptly notify Martek. Any dispute between the parties regarding the conformity
of any shipment of ARA to the applicable specifications shall be resolved in
accordance with the procedure set forth in Exhibit F. In case it is resolved
that any shipment of ARA fails to satisfy the applicable specifications, GB
shall promptly replace the nonconforming shipment, without charge, with a
substitute shipment that satisfies the applicable specifications. Any
nonconforming shipment of ARA shall be returned to GB at GB's request and
expense. In the event that GB is unable to produce a replacement shipment of ARA
that satisfies the applicable specifications within a reasonable time after
receipt of the notice of nonconformity, Martek shall have no obligation to pay
GB for the nonconforming shipment, and if payment has already been made, Martek
shall be entitled to an immediate refund of the price of the nonconforming
shipment.
7. PLANNING, PRODUCTION AND ORDERING TERMS
7.1. Exclusive Supplier Rights. Except as otherwise expressly provided
in Section 7.3, beginning on the later of (a) July 1, 1997 or (b) the date on
which the Committee agrees on the Martek Specifications, and for the remaining
term of this Agreement, GB shall have "Exclusive Supplier Rights." For so long
as GB's Exclusive Supplier Rights remain in effect, Martek agrees that it shall
not order ARA from any other third-party supplier and shall not itself produce,
in any calendar year a quantity of ARA greater than the "Martek Allocation." For
purposes of this Section 7.1, the term "Martek Allocation" shall mean the lesser
of (a) twenty-five percent (25%) of Martek's total sales of ARA during such year
or (b) eight thousand (8,000) Units of ARA; provided, however, that the Martek
Allocation shall in no event be less than two thousand (2,000) Units of ARA per
year The Martek Allocation shall be used as much as possible to satisfy Customer
requirements referred to below in Section 7.2.
7.2. Exceptions to Exclusivity. Until such time as GB shall have
obtained the kosher certification referred to in Section 7.6, Martek shall be
entitled to produce all quantities of ARA that require a kosher certification by
the Orthodox Union at any Martek facility. In addition, in the event that any
Martek customer requires more than a single supplier of ARA as a condition for
placing one or more orders with Martek, the Martek Allocation referred to in
Section 7.1 above shall be increased if necessary to enable Martek to fill
orders for ARA for which any customer expressly requires an alternative
supplier. In the event such customer is not satisfied with a combination of
Martek and GB as suppliers, Martek shall be free to contract with third parties
to fill any such orders.
GB and Martek acknowledge that in the countries of China and
India, local companies might become interested in purchasing ARA for their
domestic markets (the "China and India Markets"). If such interest materializes,
GB and Martek shall negotiate in good faith a way for both parties to
participate in the China and India Markets in a way that both parties will
equally share in the benefit of selling into the China and India Markets without
Martek jeopardizing its ARA Patent rights and rights in potential ARA Patents.
If the parties fail to reach an agreement on this matter within two years of the
Effective Date, Martek shall be entitled to produce ARA for the China and India
Markets. If Martek produces ARA for the China and India Markets itself, the
sales price of ARA charged by GB for sale(s) into the China and India Markets
shall not be taken into account for the purpose of setting the maximum ARA sales
price pursuant to Section 8.2(b) herein.
7.3. Termination of Rights. GB's Exclusive Supplier Rights shall
automatically terminate in the event that GB fails to fill any order for ARA
placed by Martek (a) in compliance with the provisions of applicable delivery
instructions submitted by Martek in accordance with this Section 7, (b) with a
shipment that satisfies the specifications identified in the applicable delivery
instructions, and (c) at a price that is not more than ten percent (10%) higher
than the price offered to Martek by any other prospective supplier of good
standing, as reasonably determined by Martek, for similar quantities and
quality. Notwithstanding the foregoing, failure by a shipment to satisfy the
specifications or instructions in the applicable delivery instructions shall not
be grounds for automatic termination of GB's Exclusive Supplier Rights so long
as GB fully complies with Section 6.3 in connection with such shipment, and no
such failure recurs in connection with (A) the next consecutive order for the
same Martek customer (whether ordered for delivery to Martek or directly to the
customer) or (B) more than three (3) orders placed by Martek (whether ordered
for delivery to Martek or directly to the customer) during any twelve
consecutive month period; provided, however, that the Martek Allocation
referenced in Section 7.1 shall be increased by the amount necessary to enable
Martek to fill any order for which a GB shipment has failed to satisfy the
specifications. In the event that GB's Exclusive Supplier Status is
automatically terminated for any reason, Martek shall have the option to
terminate this Agreement in accordance with Section 13.2.
7.4. Purchase Estimates and Orders. To assist GB in organizing an
adequate supply of ARA to fill Martek's orders, Martek shall submit to GB, on
the first working day of each month, a written firm purchase order setting out
the quantities of ARA Martek will purchase during the month (the "Month")
following the first mentioned month as well the minimum quantities of ARA Martek
will purchase during the two months following the Month. Simultaneously, Martek
will submit to GB a tentative forecast of the quantities of ARA that Martek
expects to order during the three (3) calendar quarters following the three (3)
months referred to above. Except for the quantities of ARA set out in the firm
purchase order for the Month as referred to above, Martek may order, and GB
agrees to timely deliver, quantities of ARA up to one hundred ten percent (110%)
of the minimum quantities set out in the firm purchase orders for each of the
two months following the Month. In the event the actual quantities of ARA
ordered by Martek during the following two months exceed said one hundred ten
percent (110%), GB shall endeavor to manufacture and supply such additional
quantities to Martek and, in doing so, shall use all inventory and manufacturing
capacity which GB is not contractually obligated to use for the purpose of
filling orders for any third party, but shall not be under any obligation to do
so within such two (2) month period. In addition to any other remedies provided
herein, the Martek Allocation as defined in Section 7.1 shall be increased by
any quantities of ARA not timely delivered by GB pursuant to Sections 7.4 and
7.7 herein.
7.5. Maximum GB Capacity. Notwithstanding anything to the contrary set
forth in Section 7.4, if Martek's orders for ARA in any twelve (12) month period
exceed one hundred thousand (100,000) Units of ARA, Martek acknowledges that GB
will have to build additional processing capacity and that Martek's first orders
aggregating in excess of one hundred thousand (100,000) Units of ARA in any
twelve (12) month period (the "First Over Capacity Orders") may be delayed for
up to eighteen (18) months pending the building of additional capacity by GB.
During the period that GB is building such additional capacity (the "Build-Out
Period"), to the extent that GB cannot fill Martek's orders for ARA, (a) the
Martek Allocation referred to in Section 7.1 above shall be increased as
necessary to enable Martek to fill orders for ARA from customers and/or (b)
Martek shall be free to contract with third parties for the production of ARA,
in which case Martek shall transfer (and GB shall provide Martek any required
assistance) to such third party(ies) any technical information necessary for the
production of ARA. Martek agrees that contracts with any third parties for
production of ARA during the Build-Out Period shall be structured so as not to
preclude GB from re-establishing its exclusivity, based upon the terms of this
Agreement, at the end of the Build-Out Period.
7.6. Kosher Certification. GB shall obtain, as soon as
practicable, and shall thereaftermaintain and at all times adhere to the
requirements for kosher certification by the Orthodox Union for all facilities
of GB and any GB subcontractors that are used to manufacture, produce and/or
package any component(s) of ARA.
7.7. Delivery Instructions. Martek shall submit delivery instructions
to GB for quantities of ARA subject to firm orders placed in accordance with
Section 7.4 above at GB's address written above. Such delivery instructions, as
so placed, shall identify (a) the quantity of ARA required, (b) specifications
which the ARA shall be required to satisfy, (c) the required delivery date, (d)
the address to which the shipment shall be delivered, and (e) any other
applicable shipping instructions. GB shall confirm orders within five (5)
business days after receipt.
7.8. Shipment. During a Month, GB shall deliver quantities of ARA
covered by the firm order for the Month on the later of (a) the last business
day of the month or (b) ten (10) days after receipt of delivery instructions
from Martek. All orders shall be shipped F.O.B. GB's facility. For purposes
hereof, each order shall be deemed to have been "delivered, and risk of loss
with respect to each shipment shall pass from GB to Martek, upon delivery of the
shipment by GB to a carrier agreed upon by the Committee for transport to the
location specified in the Martek order. GB shall retain title to all shipments
of ARA until payment is received, whereupon title shall pass to Martek or the
Martek customer, as applicable.
7.9. Order Fulfillment. Issues relevant to order fulfillment, including
but not limited to the location(s) at which various stages in the production
process for ARA shall occur and methods for packaging and shipment of ARA, shall
be determined by the Committee. Notwithstanding the foregoing, Martek shall be
entitled to know the identity of each facility and subcontractor which GB may
use for production of ARA for Martek, and all shipments of ARA in fulfillment of
Martek's orders shall bear no brand name other than Martek brand names unless
otherwise directed by Martek.
7.10. Certification of Analysis. Promptly on the date of each GB
shipment of ARA ordered by Martek, whether for delivery to Martek or a Martek
customer, GB shall furnish Martek with a certificate of analysis in the form
determined by the Committee and signed by GB's relevant QA/QC officer, which
certifies the actual content of those components of the ARA which are identified
in the Martek Specifications or Customer Specifications, as applicable.
7.11. Refinement and Extraction. The parties shall enter into a
separate agreement, the "Toll Manufacture Agreement," on terms substantially
similar to those set forth herein, pursuant to which Martek shall refine ARA
from crude oil containing ARA for GB or extract ARA from biomass and refine the
crude oil for GB. The members of the Committee shall comprise the steering
committee referenced in the Toll Manufacture Agreement. Martek hereby grants an
option to GB to purchase Martek's blueprints for facilities for the refinement
and/or extraction of ARA, in return for fair and reasonable consideration to be
agreed upon by the parties and amortized monthly over a period of five years as
of the sale and delivery of the blueprints. The foregoing option may be
exercised only if the Committee determines that GB should refine ARA in one or
more facilities in Europe, and the consideration shall be payable only upon
termination of this ARA Purchase Agreement in the unamortized amount remaining
at such time.
8. PAYMENTS
8.1. By GB. In consideration of Martek's undertaking to appoint GB as
Martek's subcontractor for the manufacture of ARA as set forth herein, GB shall
pay to Martek the following amounts on the dates provided:
(a) [ * ] shall be paid by GB to Martek upon the date of
execution of this Agreement;
(b) [ * ] shall be paid by GB to Martek within thirty (30)
days after the date of issuance by the European Patent Office of the
first ARA Patent that would be infringed by continued manufacture, use
or sale of ARA by GB; and
(c) [ * ] shall be paid within thirty (30) days after the date
of issuance in the United States of the first ARA Patent that would be
infringed by continued manufacture, use or sale of ARA by GB.
A payment made by GB pursuant to this Section 8.1 shall be
reimbursable by Martek to GB to the extent of the Reimbursement Percentage set
forth on the next page, only if Martek terminates this Agreement other than (i)
for cause in accordance with Section 13.2 or in accordance with Section 13.3(b),
or (ii) by reason of bankruptcy in accordance with its rights as a bankrupt
party under the bankruptcy laws of the United States.
<PAGE>
Reimbursement
Time of Termination by Martek Percentage
----------------------------- ----------
During the first year after the due date for the 90%
applicable payment
During the second year after the due date for the 70%
applicable payment
During the third year after the due date for the 50%
applicable payment
During the fourth year after the due date for the 30%
applicable payment
During the fifth year after the due date for the 10%
applicable payment
After the fifth year after the due date for the 0%
applicable payment
8.2. By Martek. For each shipment of ARA ordered by Martek and
shipped to the address specified in Martek's delivery instructions which
satisfies the specifications identified in Martek's delivery instructions,
Martek shall pay to GB the GB Costs per Unit of ARA for filling such order plus
an additional [ * ] of such GB Costs per Unit of ARA; provided,
however, that in no event shall the total amount paid by Martek for any shipment
of ARA which satisfies the Martek Specifications exceed the lowest of:
(a) for the first [ * ] Units of ARA per [ * ] month period beginning
July 1, 1997, [ * ] per Unit of ARA; and for all additional Units of
ARA during such period, [ * ] per Unit of ARA (exclusive in each case
of transportation costs and customs duties), or
(b) for the first [ * ] Units of ARA delivered by GB in fulfillment of
orders by Martek under this Agreement, [
*
], and for any additional Units of ARA delivered by GB in fulfillment
of orders by Martek under this Agreement, a price that is [
*
]; or
<PAGE>
(c) a price per Unit of ARA based on GB Costs that are not more than ten
percent (10%) higher than Martek's cost of production per Unit of ARA,
calculated in a manner identical to the calculation of GB Costs, for
ARA of equivalent quantity and quality.
GB shall invoice Martek for each order no earlier than the date on which such
order is shipped, and Martek shall remit all payments due to GB within
forty-five (45) days following receipt of GB's invoice.
8.3. ARA Price Adjustments. For each shipment of crude oil containing
ARA which Martek is responsible for converting to Finished Oil, Martek shall
determine the quantity of ARA in the Finished Oil in accordance with the method
agreed upon by the Committee as a percentage of the quantity of ARA in the crude
oil (the "Recovery Rate"). GB shall be able to verify the Recovery Rate as
determined by Martek. If the Recovery Rate for any shipment is less than
ninety-five percent (95%), the price paid by Martek to GB per Unit of ARA shall
be increased by One U.S. Dollar (US $1.00) for every one percent (1%) that the
Recovery Rate is less than ninety-five percent (95%). If the Recovery Rate is
less than ninety percent (90%) for more than six thousand (6,000) Units of ARA
recovered by Martek from crude oil shipped by GB during the twelve (12) month
period immediately following Martek's receipt of the first shipment from GB of
crude oil containing ARA or during any subsequent twelve (12) month period, the
price paid by Martek to GB for such crude oil shall be increased by an
additional Two U.S. Dollars (US $2.00) per Unit of ARA for every one percent
(1%) that the Recovery Rate is less than ninety percent (90%) during such
period. If, during the twelve (12) month period immediately following Martek's
receipt from GB of the first shipment of crude oil containing ARA the Recovery
Rate is less than eighty-five percent (85%), GB's obligation to deliver crude
oil to Martek and GB's Exclusive Supplier Rights shall be suspended, and the
parties shall use commercially reasonable efforts to increase the Recovery Rate,
negotiate a change in the prices set forth in Section 8.2(a) or reach another
mutually agreeable procedure for recovery of ARA from crude oil. GB's obligation
to deliver crude oil to Martek and GB's Exclusive Supplier Rights shall
immediately resume upon achievement of a mutually satisfactory increase in the
Recovery Rate, change in the prices set forth in Section 8.2(a) or other
procedure for recovery of ARA from crude oil within twelve (12) months after
Martek first calculated a Recovery Rate of less than eighty-five percent (85%).
If by the end of such twelve (12) month period, the parties have not achieved a
mutually satisfactory increase in the Recovery Rate, change in the ceiling
prices set forth in Section 8.2(a) or other procedure for recovery of ARA from
crude oil, then either party may terminate this Agreement.
8.4. Ceiling Price Adjustments. The maximum prices per kilogram of
crude oil containing ARA set forth in Section 8.2(a) are subject to increase on
each anniversary (the "Adjustment Date") of the effective date of this Agreement
in accordance with this Section 8.3. On each Adjustment Date, GB Costs shall be
adjusted to reflect (a) any increase in the actual cost of raw materials
required to produce ARA and (b) a percentage of that portion of the
then-applicable maximum prices attributable to items other than raw materials
which is equal to the percentage increase, if any, in the Consumer Price Index
for the month which is two (2) months prior to the Adjustment Date over the
Consumer Price Index for the corresponding month in the preceding year. For
purposes of this Section 8.3, the term Consumer Price Index shall mean the
"Index Number" for "All Items" for as published in the Revised Consumer Price
Index--Cities (36 mo. avg. 1982-84 = 100) by the Bureau of Labor Statistics of
the U.S. Department of Labor. If the Consumer Price Index for the month two
months prior to the Adjustment Date shall not have the same base period (that
is, the period for which the index is 100) as the index for 1982-84, then either
or both of such indexes shall be adjusted through the use of conversion factors
provided by the Bureau of Labor Statistics so as to be comparable to each other
for the purposes hereof, it being the intention of the parties that the ceiling
prices per kilogram of crude oil containing ARA shall be adjusted upward to
reflect the decreased purchasing power of the United States dollar, if any, when
compared to the purchasing power of the US dollar in 1982-84.
8.5. [ * ]
8.6. Currency. All payments hereunder shall be in made in United
States dollars.
9. REPORTING, RECORD KEEPING AND AUDIT
9.1. Within thirty (30) days after the effective date of this Agreement
and thereafter on January 1 of each year during the remaining term of this
Agreement, GB shall provide Martek with a budget for GB's costs of production
for ARA, determined in good faith in accordance with Exhibit A, for the twelve
(12) month period immediately following the date on which such budget is to be
provided. On September 30 and March 31 of each year during the term of this
Agreement, GB shall deliver to Martek a statement of GB's actual costs of
production of ARA for the periods ending the preceding June 30 and December 31,
respectively. Any difference between budgeted costs and actual costs for any
applicable six (6) month period will be reconciled (by a cash refund to Martek
if budgeted costs exceed actual costs, or by an invoice to Martek for the
additional amount payable if actual costs exceed budgeted costs) upon submission
of the applicable statement of actual costs.
9.2. GB shall maintain complete and accurate records of all GB Costs
and of ARA transactions with other customers. Martek shall have the right, upon
reasonable prior written notice, through an independent public accounting firm
reasonably acceptable to GB, to examine GB's books, records and accounts
relating to GB's performance under this Agreement and for the purposes of
verifying the accuracy of GB's statements of actual costs for the production of
ARA. All information regarding GB's business received in any such examination
shall be held in confidence. The expenses of such audits shall be borne by
Martek, and any overpayment by Martek of the amounts GB was entitled to receive
for fulfillment of orders for ARA which is established as a result of such audit
shall be promptly refunded to Martek with interest at the prime rate per annum,
as published bi-weekly in the Wall Street Journal, calculated from the date(s)
of the overpayment until the date of refund in accordance herewith. If any such
audit establishes an aggregate overpayment by Martek during the period covered
by the audit by five percent (5%) or more of the amounts to which GB was
entitled, then Martek shall be reimbursed by GB for the expenses of the audit.
10. CONFIDENTIAL INFORMATION
The parties acknowledge and agree that each party will be disclosing
confidential information to the other party, including but not limited to, the
Martek Specifications, Customer Specifications, know-how, business strategy,
ideas, concepts and financial information (the "Confidential Information"). Each
party agrees that it shall hold the Confidential Information of the other party
in strict confidence, shall not disclose it to others or use it in any way,
commercially or otherwise, except for purposes of performing its obligations
under this Agreement. Each party further agrees to take all action necessary to
protect the confidentiality of the other party's Confidential Information
including, without limitation, (a) implementing and enforcing operating
procedures to minimize the possibility of unauthorized use or copying of the
other party's Confidential Information, and (b) obligating each of its
subcontractors, by written agreement, to protect the other party's Confidential
Information. Notwithstanding this Section 10, the term "Confidential
Information" shall not include any information which (i) is or becomes part of
the public domain through no fault of the receiving party, (ii) is obtained by
the receiving party from any third party which is under no obligation to the
disclosing party to protect the confidentiality thereof, or (c) can be
established by the receiving party with reasonable documentary evidence to have
been independently developed by the receiving party without reliance on the
other party's Confidential Information. The parties hereby acknowledge that
Martek and GB, as corporations whose stock is publicly traded, may be required
by applicable laws to disclose the terms of this Agreement.
11. LIMITATION OF LIABILITY
EXCEPT FOR THE LIABILITY OF GB UNDER SECTION 12, IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOSS OF PROFITS OR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCURRED BY THE OTHER PARTY AND
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT FOR ANY CAUSE OF ACTION OF
ANY KIND EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
12. INDEMNIFICATION
GB shall indemnify and hold Martek harmless from and against any and
all liability, damages, loss or expense (including reasonable fees of attorneys
and other professionals) arising from any claim, demand, action or proceeding
initiated by any third party based upon failure by any shipment of ARA to
satisfy the warranty provisions of Section 6.1, including without limitation any
claim that any shipment of ARA contained any contaminant or other substance not
included in the applicable specifications.
13. TERM AND TERMINATION
13.1. Term. The term of this Agreement shall commence upon the
effective date hereof and shall remain in effect for ten (10) years from the
Effective Date unless otherwise terminated in accordance with this Section. This
Agreement may be renewed upon mutual consent of the parties; provided however,
that renewal on the same terms, if the parties so consent, shall not be
conditioned upon payment by GB of additional consideration for appointment as a
subcontractor.
13.2. Termination for Cause. This Agreement may be terminated by either
party in the event that the other party has not performed any material
obligation or has otherwise breached any material term of this Agreement or any
other contract or agreement between the parties (a) immediately upon receipt of
written notice thereof if the breach or nonperformance is incapable of cure, or
(b) upon the expiration of thirty (30) days (or any longer cure period
authorized by the nonbreaching party with respect to any individual breach)
after receipt of written notice thereof if the breach or nonperformance is
capable of cure and has not then been cured.
13.3. Termination by Martek. Martek may terminate this Agreement
without prejudice to any other rights or claims it may have in the event of (a)
final determination that both Martek's pending ARA Patent and pending or issued
(as applicable) Oil Blend Patent will not issue or are abandoned, withdrawn or
otherwise lapse in either the United States or in the countries of the European
Union and the number of Units of ARA sold by Martek is less than fifty percent
(50%) of the total number of combined Units of ARA sold by both Martek and GB in
the United States and the countries of the European Union, in the aggregate, or
(b) GB challenges the validity of, or otherwise opposes any ARA Patent, pending
ARA Patent, Oil Blend Patent or pending Oil Blend Patent anywhere in the world.
13.4. Termination by GB. GB shall have the right to terminate this
agreement, without liability or obligation to GB in connection with such
termination, (i) in the event that Martek initiates any claim, action or
proceeding against GB based upon an allegation that GB has infringed any ARA
Patent or Oil Blend Patent, or (ii) if and when Martek fails to comply with its
obligations under Section 3.6 above. Nothing herein shall be construed to
release GB from any liability that it may have to Martek in connection with any
alleged infringement.
13.5. Effect of Termination. Upon any termination of this Agreement,
there shall be no further obligation by Martek to purchase ARA from GB and no
further limitation on the suppliers from which Martek may purchase ARA. In the
event that either party terminates this Agreement in accordance with Section
13.2 by reason of a material default by the other party or in the event that
Martek terminates this Agreement in accordance with Section 13.3(b), the
terminating party shall have an unrestricted royalty-free right and license to
use and sublicense the use of any information and technology related to the
manufacture and production of ARA owned or used by such other party that the
terminating party has become aware of during the term hereof. Notwithstanding
the foregoing, Martek shall have no right or license to use GB-owned information
or technology related to the production of ARA as a result of termination of
this Agreement in accordance with Section 13.2 by reason of a failure by GB to
fill an order placed by Martek for ARA at a price that is not more than ten
percent (10%) higher than the price offered to Martek by another supplier.
14. TRADEMARKS
14.1. Use. During the term of this Agreement, GB shall use Martek's
brand names and the Martek trade name, solely on Martek's behalf and for
Martek's benefit, on all shipments of ARA by GB, in response to orders and
delivery instructions by Martek, to Martek or any Martek customer, and GB shall
not attach any additional brand names, trademarks, trade names, logos or
designations to any such shipment. GB's use of Martek's brand names and the
Martek trade name shall be in accordance with Martek's policies in effect from
time to time, as communicated by Martek to GB. GB shall not be authorized to
use, and is expressly prohibited from using, any Martek brand name or the Martek
trade name on any shipment of ARA other than a shipment subject to an order and
delivery instructions submitted to GB by Martek.
14.2. Ownership. GB has paid no consideration for the use of any Martek
brand name or the Martek trade name, and nothing contained in this Agreement
will give GB any right, title or interest in any of them. GB acknowledges that
Martek owns and retains all rights in the Martek brand names and the Martek
trade name. GB will not at any time during or after this Agreement assert or
claim any interest in any Martek brand name or the Martek trade name. Upon
expiration or termination of this Agreement, GB will immediately cease all use
of the Martek brand names and the Martek trade name.
15. DISPUTES; ARBITRATION
15.1. Disputes Generally. The parties hereby undertake to use good
faith efforts to settle any dispute arising under this Agreement. Failing
settlement, all disputes, including without limitation claims of breach of
contract, fraud in the inducement and negligence shall be finally settled in
accordance with the Rules of Conciliation and Arbitration of the International
Chamber of Commerce. The arbitration shall take place in Baltimore, Maryland
USA, and the parties hereby agree to exclude any right of application or appeal
to the courts in connection with any question of law arising in the course of
the reference or out of the award. Notwithstanding the foregoing, any disputes
with respect to disclosure of any Confidential Information shall not be subject
to this arbitration provision.
15.2. Selection of Arbitrator(s). If the parties hereto fail to settle
any dispute arising under this Agreement within a period of sixty (60) days
after the date on which such dispute arose, each party shall, within sixty (60)
days thereafter, appoint one arbitrator and the two so nominated shall, in turn,
choose a third arbitrator. If the arbitrators chosen by the parties cannot agree
on the choice of the third arbitrator within a period of thirty (30) days after
their nomination, then the third arbitrator shall be appointed by the American
Arbitration Association. If either party fails to appoint its own arbitrator
within the specified period, the arbitrator appointed by the other party shall
be the sole arbitrator. The parties shall use their best efforts to appoint
arbitrators who are knowledgeable in biochemical technology.
15.3. Language; Transcript. The arbitration shall be conducted in
the English language. Relevant documents in other languages shall be translated
into English if the arbitrators so direct. A written transcript in English of
the hearing will be made and furnished to the parties.
15.4. Decision of Arbitrators. The arbitrators will decide in
accordance with the terms of this Agreement and will take into account any
appropriate international trade usages applicable to the transaction. The award
of the arbitrators will be final and binding upon the parties. Judgment upon the
award may be entered in any court having jurisdiction. An application may be
made to any such court for judicial acceptance of the award and an order of
enforcement.
15.5. Expense of Arbitration. The arbitrators shall determine the
allocation between the parties of expenses incurred in connection with the
arbitration.
16. REGULATORY MATTERS; ACCESS TO ARA PRODUCTION FACILITIES
16.1. Approvals. Each party shall obtain all regulatory approvals,
permits, licenses, clearances and notifications which it is required to have for
manufacture, shipment, sale or use of ARA prior to any such manufacture, sale or
use or shall ensure that such required approvals, permits, licenses, clearances
and notifications are otherwise obtained. Each party shall provide the other
party with all information the other party may reasonably request in order to
obtain or comply with any necessary regulatory approvals, permits, licenses,
clearances and notifications for manufacture, shipment, sale or use of ARA such
as, but not limited to, all information concerning studies performed by or on
behalf of such party in the field of product identification, characterization
and analysis; pathogenicity, toxicity, mutagenicity and clinical trials.
16.2. Inspection. Upon reasonable notice during regular working hours,
Martek and any Martek customer may inspect the manufacturing facilities of GB
and any subcontractor(s) in order to inspect the manufacture of ARA, examine
samples of ARA, review quality control and manufacturing procedures for ARA or
any other purpose related to this Agreement.
16.3. Manufacturing Changes. GB shall notify the Committee of any
proposed change to any manufacturing procedure for ARA and shall not change the
manufacture of ARA without the prior approval of the Committee.
16.4. Government Communications. GB will promptly provide to Martek
copies of all documents in its possession concerning communications to or from
FDA or prepared by FDA, or to or from or prepared by any other governmental
agency, which bear in any respect on compliance by GB with FDA and other
relevant governmental agency requirements pertaining to the manufacture of ARA
under this Agreement.
17. GENERAL PROVISIONS
17.1. Assignment. Neither this Agreement nor any rights granted hereby
may be assigned by either party without the prior written consent of the other
party, which consent shall not be unreasonably withheld. Any attempt by either
party to assign any rights, duties or obligations without the requisite consent
of the other party shall be void and without force or effect.
17.2. Modification. This Agreement can only be modified by a written
agreement duly signed by persons authorized to sign agreements on behalf of
Martek and of GB, and variance from the terms and conditions of this Agreement
in any written notification given by either party shall have no force or effect.
17.3. Severability. If any provision of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
17.4. Relationship of the Parties. For purposes of this Agreement, GB
and Martek will be and shall act as independent contractors, and neither party
is authorized to act as an agent or partner of, or joint venturer with, the
other party for any purpose. Neither party by virtue of this Agreement shall
have any right, power, or authority to act or create any obligation, express or
implied, on behalf of the other party.
17.5. Notices. All notices shall be in writing and shall be deemed to
be delivered when deposited with a recognized international express courier
service, or when sent by facsimile transmission promptly confirmed by return
transmission. All notices shall be directed to Martek or GB at the respective
addresses first set forth above or to such other address as either party may,
from time to time, designate by notice to the other party.
17.6. Governing Law. This Agreement, and any and all tort claims that
may arise in connection with ARA and any related services, will be governed by
the substantive laws of the State of Maryland. The parties hereby expressly
exclude the applicability of the Convention on Contracts for the International
Sale of Goods and that body of law known as conflicts of laws. Notwithstanding
anything to the contrary herein, issues regarding the scope of any ARA Patent
shall be determined in accordance with the laws of the jurisdiction in which
such ARA Patent has issued.
17.7. Force Majeure. Neither party shall be liable for any damages or
penalty for any delay in performance of, or failure to perform, any obligation
hereunder or for failure to give the other party prior notice thereof when such
delay or failure is due to the elements, acts of God, delays in transportation,
delays in delivery by vendors or other causes beyond that party's reasonable
control.
17.8. No Waivers. No express or implied waiver by either party of
any event of default hereunder shall in any way be, or be construed as, a waiver
of any future or subsequent event of default.
17.9. Survival. The respective rights and obligations of the
parties under Sections 6, 9, 10, 11, 12, 13.5, 14, 15 and 17 shall survive the
termination of this Agreement.
17.10. Entire Agreement. The parties acknowledge that this Agreement,
together with Exhibits A - F hereto, sets forth the complete, exclusive and
integrated understanding of the parties which supersedes all proposals or prior
agreements, oral or written, and all other prior communications between the
parties relating to the subject matter of this Agreement.
17.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MARTEK BIOSCIENCES GIST-BROCADES B.V. (GB)
CORPORATION (Martek)
By: By:
Title: Title:
Date: Date:
<PAGE>
EXHIBIT A
GB COSTS
GB Costs per Unit of ARA = Variable Costs per Unit of ARA + Production Costs per
Unit of ARA, as follows and adjusted as necessary in accordance with Sections
4.5 and 8.5 of the attached Agreement:
Variable Costs
Variable Costs shall be determined on the basis of actual consumption taking
actual purchase prices into account.
Variable Costs shall comprise those costs are directly identifiable within a
product, namely:
Raw and intermediate materials
Packaging
Operations performed elsewhere
Transport
Production Costs
Production Costs shall be determined on the basis of actual yields and actual
department costs, which are directly or indirectly related to production. Cost
categories include, without limitation, labor, depreciation based on historical
costs, project costs, energy, waste and effluent disposal or treatment,
insurance, local taxes, site service allocations like production staff,
maintenance, purchasing, quality assurance, security services, etc.
The determination of Variable Costs and the allocation of Production Costs to
Units of ARA shall be made according to Generally Accepted Accounting
Principles.
ACCEPTED AND AGREED TO:
MARTEK BIOSCIENCES GIST-BROCADES B.V. (GB)
CORPORATION (Martek)
By: By:
Title: Title:
Date: Date:
<PAGE>
EXHIBIT B
ARA PATENTS
INTERNATIONAL PUBLICATION NO: WO 92/13086
INTERNATIONAL PUBLICATION NO: WO 96/21037
[attached]
ACCEPTED AND AGREED TO:
MARTEK BIOSCIENCES GIST-BROCADES B.V. (GB)
CORPORATION (Martek)
By: By:
Title: Title:
Date: Date:
<PAGE>
EXHIBIT C
OIL BLEND PATENTS
INTERNATIONAL PUBLICATION NO: WO 92/12711
[attached]
ACCEPTED AND AGREED TO:
MARTEK BIOSCIENCES GIST-BROCADES B.V. (GB)
CORPORATION (Martek)
By: By:
Title: Title:
Date: Date:
<PAGE>
EXHIBIT D
COUNTRIES IN WHICH ARA PATENTS AND
OIL BLEND PATENTS HAVE ISSUED
ARA Patents issued in
Australia
Indonesia
Israel
New Zealand
OAPI
South Africa
Sri Lanka
Oil Blend Patents issued in
Australia
Indonesia
Israel
New Zealand
South Africa
Sri Lanka
U.S.A.
ACCEPTED AND AGREED TO:
MARTEK BIOSCIENCES GIST-BROCADES B.V. (GB)
CORPORATION (Martek)
By: By:
Title: Title:
Date: Date:
<PAGE>
15
\\\BA - 61954/3 - 0035607.01
EXHIBIT E
PATENT ARBITRATION PROCEDURE
FOR INFRINGEMENT DETERMINATION
IT IS AGREED by and among Gist-Brocades B.V. (hereinafter referred to
as "GB") and Martek Biosciences Corporation (hereinafter referred to as
"Martek") that the following procedure will be used to resolve certain issues
arising under the Section 3.3 of the AGREEMENT to which this PROCEDURE is
attached.
Article E - I. PURPOSE
The purpose of this PROCEDURE is to provide an arbitration mechanism by
which, at the election of either party, any or all of the following issues may
be submitted to and finally decided by an independent panel of arbitrators:
1. Whether a claim of an issued Martek Patent is infringed by
a GB product, either directly or indirectly.
2. Whether a claim of a Martek Patent issued in a particular country is
drawn to an invention which is described and fully supported in
accordance with laws of that country in the International Patent
Publication attached as Exhibit B hereto.
It is understood and agreed that arbitration pursuant to this Agreement relates
to and is intended to resolve certain issues arising out of this Agreement,
without the burden and expense of litigation. As further provided herein, the
decision of a majority of the arbitrators shall be final and binding on both
parties so long as this Agreement is in effect. Such decision will have no
effect in a dispute outside the scope of this Agreement, e.g. patent litigation,
nor will such decision survive termination of this Agreement except as the
decision affects arbitration under this Agreement.
Subject to the express provisions of this Procedure and those rulings
or determinations made by the arbitrators, the parties shall have the power to
agree upon the form of the patent arbitration proceeding(s) and the rules under
which it shall be conducted.
Article E - II. ARBITRATORS AND GENERAL PROCEDURES
The arbitrators shall be licensed patent practitioners and/or retired
judges knowledgeable as to patent law and practice in the jurisdiction where the
patent has issued. Three (3) neutral arbitrators will hear and decide the
issue(s) as a panel, with a majority of the panel having the power to make final
rulings and issue the decision(s).
The panel will be selected by agreement of the parties from a group of
twelve (12) candidates, six (6) of whom shall be proposed by each party by not
later than thirty (30) days following the date a party shall have demanded in
writing the arbitration of the enumerated issue(s). Each party shall then select
two (2) arbitrators from the six (6) proposed by the other party, for a total of
four (4) nominees. The three (3) members of the panel shall than be chosen by
blind draw from the four (4) nominees, with the fourth nominee to be available,
to serve as an arbitrator in the event an arbitrator earlier chosen is or
becomes unable or unwilling to serve. In the event a party shall fail to (i)
submit its list of six (6) nominees, (ii) designate two (2) persons from the
other party's list or (iii) participate in the blind draw, the nonfailing party
shall have the right, by blind draw conducted before not less than three (3)
disinterested witnesses, to draw names from that party's list of six nominees,
the first three (3) of whom shall compose the panel for the arbitration and the
fourth, fifth and sixth of whom shall be available, in order, to serve as an
arbitrator in the event an arbitrator earlier chosen is or becomes unable or
unwilling to serve. Neither party shall knowingly propose any arbitrator
candidate whose impartiality might reasonably be questioned for any reason.
The arbitrators' compensation shall be agreed upon by the parties and
the arbitrators. The terms of compensation for each of the arbitrators shall be
identical. The fees and expenses of the arbitrators shall be shared equally
between the parties, but each party shall bear its own costs respecting the
preparation and presentation of its case.
All communications between the parties and the arbitrators shall be in
the English language, and furthermore shall be in writing except during an inter
partes hearing and in unusual circumstances requiring oral communication
regarding procedural or scheduling matters. Any oral communication to the
arbitrator(s) shall be promptly confirmed in writing. Copies of all
communications with the arbitrator(s) shall be served by overnight delivery to
the other party. Neither party shall, directly or indirectly, engage in any ex
parte contact with any arbitrator or potential arbitrator prior to the
termination of this proceeding or the rendering of a written decision in this
proceeding.
Each arbitrator shall agree in writing to maintain in confidence the
existence of this proceeding and any non-public information revealed or
furnished to the arbitrator during the proceeding. Each arbitrator shall further
agree that, upon termination of this proceeding or the rendering of a written
decision in this proceeding, he or she shall return to each party the originals
of all materials provided to the arbitrator by that party, and shall certify to
that party that no copies thereof have been retained.
The arbitrators shall select a Chairman by majority vote. Upon
consultation with the other arbitrators and the parties, the Chairman shall, at
the earliest practicable date, set the dates for written submissions and the
hearing date and establish any prehearing conferences or procedural schedules as
the panel determines to be necessary and appropriate. The Chairman shall be the
presiding officer of the proceeding(s), with all decisions and determinations of
the parties and the panel to be by a majority of the arbitrators, unless the
parties agree otherwise in writing. It is understood and agreed that any dispute
between the parties which concerns any and all procedural matters or which is
ancillary to the arbitrator's determination of the enumerated issue in dispute
shall be finally determined by the arbitrators in a timely fashion after
providing both parties an opportunity to be heard.
Article E - III. DISCOVERY
The parties agree that adequate information on which to base a decision
will generally be available from public sources, including public records of
patent prosecution, supplemented by information shared between the parties under
this Agreement, and neither of them shall demand further discovery except upon a
showing to the satisfaction of the panel of special circumstances which exist
justifying the requested additional discovery. Incomplete or insufficient
provision by a party of information to be shared under this Agreement may
constitute such special circumstances.
Each party will provide the identity of any expert witnesses, along
with the report, curriculum vita, publication list and the substance of
testimony for each expert not later than 20 days before the hearing in Article E
- - VI. Each identified expert witness will be made available for deposition by
the other party upon request. Deposition of other witnesses may be requested,
and will be taken at the discretion of the panel.
In the event a party hereto believes additional discovery with respect
to an issue, including deposition of other witnesses, is necessary in order to
ensure full and fair consideration of such issue by the arbitrators, the parties
shall discuss and consider, in good faith, mutually acceptable methods of
obtaining such discovery. In the event the parties have not agreed to such
discovery by not later than fifteen (15) days following written notice
requesting same, then the party or parties so requesting may submit the matter
to the panel for final determination, with the panel's ruling to issue within
ten (10) days following submission.
It is the mutual intention of the parties that discovery, if any, shall
be limited in nature and scope; shall be conducted expeditiously; shall have as
its sole purpose the obtaining of information that is directly relevant and
necessary to the presentation of the requesting party's case; shall be conducted
in a fair, cooperative and courteous manner; and shall be accomplished primarily
if not exclusively by the voluntary exchange of documents and information. The
other paragraphs of this article shall be interpreted in keeping with the spirit
and intent reflected in this paragraph. Notwithstanding the foregoing, neither
party shall be entitled to use, refer to or submit any document in briefing, at
the hearing, or otherwise, unless that party shall have furnished the document
to the other party not later than ten (10) days prior to said use, reference or
submission.
Any dispute regarding discovery shall be submitted promptly to the
arbitrators for their determination. The parties shall promptly comply with any
decision by the arbitrators. If necessary, any decision by the arbitrators
concerning any procedural matters may be enforced by any court of competent
jurisdiction in the same manner as a final decision of an enumerated issue,
including an order of specific performance.
Article E - IV. BRIEFING
As of the date specified in the procedural schedule, Martek shall
deliver to GB's counsel and to the arbitrators an opening brief, not to exceed
fifty (50) pages, concerning the enumerated issue(s). On that same date, GB
shall deliver to Martek`s counsel and to the arbitrators an opening brief, not
to exceed fifty (50) pages, concerning the enumerated issue(s). Each brief shall
be accompanied by an appendix containing any evidentiary materials which have
previously been furnished to the other party pursuant to Article E-III and which
the party wishes to submit to the panel. The pages in Martek's appendix shall be
consecutively numbered 1, 2, 3, etc. The pages in GB's appendix shall be
consecutively numbered A-l, A-2, A-3, etc.
As of the date specified in the procedural schedule, each party shall
deliver to the other party's counsel and to the arbitrators an opposing brief,
not to exceed fifty (50) pages responding to the opening brief of the other
party. Each brief shall be accompanied by an appendix containing evidentiary
materials which have previously been furnished to the other party pursuant to
Article E - III and which have not previously been included in the appendix to
the opening briefs, with each page consecutively numbered as indicated above,
starting with the next number following the last number used in the party's
opening appendix.
As of the date specified in the procedural schedule, each party shall
deliver to the other party's counsel and to the arbitrators a reply brief, not
to exceed twenty-five (25) pages, replying to the opposition brief of the other
party. Each brief shall be accompanied by an appendix containing evidentiary
materials which have previously been furnished to the other party pursuant to
Article E - III and which have not previously been included in the opening or
opposing briefs, with each page consecutively numbered as indicated above,
starting with the next number following the last number used in that party's
response appendix.
Each party shall have discretion not to file one or more of the
foregoing briefs, and a party which fails to file by the date specified shall be
conclusively deemed to have fully and finally waived the right to file said
brief(s).
Article E - V. EVIDENTIARY STANDARD
At the hearing, the parties may offer such evidence as is relevant and
material to the dispute and shall produce such additional evidence as the panel
may deem necessary to the determination of the dispute. The failure or refusal
to adduce additional evidence which is within the control of a party may be
taken into account by the panel, in its sole discretion, in rendering its final
decision. It is specifically agreed by the parties that they and the arbitrators
may use and rely upon evidence that would typically be relied upon by a lawyer
rendering an infringement opinion for a client.
Article E - VI. ARBITRATION HEARING
The hearing shall be held at a time and at a place to be selected by
the parties or, failing agreement, by the panel. All proceedings at the hearing
shall be in the English language.
By not later than twenty (20) days prior to the hearing, the parties
shall exchange lists of the names and addresses of all witnesses, together with
the substance of the testimony of each, including any expert witnesses as
provided for in Article E - III above.
At the hearing, each party shall be allotted a total of two and
one-half (2 1/2) hours within which to present all argument and to answer any
questions posed by the arbitrators. Time may be allocated to the required
sequence in any manner as each party elects. Time limits shall be strictly
enforced.
No party shall rely upon any evidentiary material not submitted with
the briefs, although demonstrative exhibits that were not submitted with the
briefs may be used if copies thereof are provided to the other party five (5)
business days before the start of the hearing.
The hearing proceedings shall not be recorded either electronically or
stenographically. Attendance at the hearing shall be limited to persons entitled
to have access to Confidential Information under Article E - VIII below.
Neither party shall be required to authenticate documents or to present
or otherwise rely upon sworn affidavits or statements of any kind, or upon
declarations made under penalty of perjury or otherwise. Unless the parties
otherwise agree, each party shall have the right to present one expert witness,
in person, and the opposing party shall have the right to cross examine any
witness called. The time for cross examination shall be charged to the cross
examining party.
At hearing, counsel may present witnesses and exhibits, read excerpts
from exhibits and reports, and otherwise present the case by means of an opening
statement, evidentiary presentation and final argument. Counsel shall make only
such submission and/or summary of evidence as is consistent with a good faith
belief based upon reasonable investigation that such evidence is factually true.
No statement of counsel may be challenged before the panel on the basis that no
documentary or other evidence is presented in support, but the weight to be
given any statement of counsel may be questioned if and to the extent no such
confirming evidence is presented.
Article E - VII. DECISION
The arbitrators shall render a brief written decision in the English
language respecting their determination of the enumerated issue(s) and deliver
duplicate copies of said decision to the parties by certified mail within
fifteen (15) days of the conclusion of the hearing and shall base its decision
solely upon the evidence before it and consistent with this Agreement. The
decision shall be by a majority of the panel, with each arbitrator who concurs
in the decision so indicating by signing the duplicate originals.
Article E - VIII. CONFIDENTIALITY
If a page or part of a brief, document, or evidentiary material
contains information (i) that is not in the public domain, and (ii) that has
been held in confidence by the producing party, those pages or parts of such
brief, document, or evidentiary material which contain such information may be
designated as containing confidential information by the party contending it is
entitled to protection hereunder (hereinafter "Confidential Information").
Briefs, documents, or evidentiary materials may be designated as containing
Confidential Information by stamping, tagging, or writing the words
"CONFIDENTIAL UNDER ARBITRATION PROCEDURE" on each page or part containing
Confidential Information, prior to the production or service thereof by the
producing party upon the other party. Such designation, or lack thereof, will
not change the status of any Information disclosed in accordance with other
provisions of this Agreement.
The arbitrators and the parties shall each maintain in confidence the
existence of those proceedings and the opinion(s) of the panel.
Any and all Confidential Information which has been obtained from the
other party during the course of this proceeding shall be maintained
confidential and subject to the following restrictions:
a. It shall be used only for purposes of this proceeding and
not for any business or other purpose whatsoever;
b. It shall not be given, shown, made available to, or
communicated in any way to anyone other than:
(i) the outside attorneys for either party and those
employed in the course of assisting such attorneys, including
paralegals and office personnel;
(ii) attorneys who are employees of one of the
parties, and the paralegals and office personnel employed
in the ordinary course of assisting such attorneys;
(iii) two technical consultants (who may be employees of the
receiving party), each of whom shall be identified to the
producing party at least forty-eight hours in advance of the
first disclosure to him of any Confidential Information of the
producing party;
(iv) the arbitrators and persons employed by any
arbitrator and assisting in this proceeding; and
(v) a reasonable number, not to exceed three (3), of
management level personnel of each party having a need to
know.
The provisions of this Article E - VIII shall not, however, be deemed
to apply to information which was lawfully in the possession of the receiving
party (or its counsel) prior to the disclosure by the producing party;
information which a party (or its counsel) lawfully obtains from a third party
having the right to disclose such information; information which was developed
independently by a party as reflected in written documents; or information that
was in the public domain before the effective date of this Agreement or which
subsequently becomes part of the public domain through no fault of the receiving
party.
Article E - IX. ABSENT PARTY
The arbitration may proceed in the absence of a party that, after due
notice, fails to be present. A written decision on an enumerated issue shall not
be made solely on the basis of a default of a party, but the panel shall require
that the party present submit such available evidence as may be reasonably
required for the making of a final decision.
Article E - X. SERVICE
Any papers, notices or process necessary or proper for the initiation
or completion of arbitration hereunder, or for the entry of enforcement of
judgment on a written decision, may be served upon a party in accordance with
Section 17.5 of this Agreement.
Article E - XI. CHOICE OF LAW
This Procedure shall be governed by the Choice of Law set forth
in Section 17.6 of the attached Agreement.
ACCEPTED AND AGREED TO:
MARTEK BIOSCIENCES GIST-BROCADES B.V. (GB)
CORPORATION (Martek)
By: By:
Title: Title:
<PAGE>
EXHIBIT F
PROCEDURE FOR RESOLUTION
OF ARA QUALITY ISSUES
IT IS AGREED by and among Gist-Brocades B.V. (hereinafter referred to
as "GB") and Martek Biosciences Corporation (hereinafter referred to as
"Martek") that the following procedure will be used to resolve certain issues
arising under the Sections 5.2 and 6.1 of the AGREEMENT to which this PROCEDURE
is attached.
Article F - I. PURPOSE
The purpose of this PROCEDURE is to provide a mechanism by which, at
the election of either party, any dispute regarding whether or not any quantity
of ARA delivered by GB to Martek meets the applicable specifications which have
been agreed upon by the Committee and specified by Martek to GB.
It is understood and agreed that resolution of disputes about ARA quality
pursuant to this PROCEDURE relates to and is intended to resolve certain issues
arising out of the AGREEMENT to which this PROCEDURE is attached, without the
burden and expense of litigation. As further provided herein, the decision of
the third-party analyst (or of a majority of the third-party analysts if the
Committee agrees upon multiple analysts) shall be final and binding on both
parties so long as this Agreement is in effect.
Article F - II. SPECIFICATIONS FOR ARA
The parties acknowledge that the AGREEMENT provides for the possibility
of more than one set of specifications for ARA: "Customer Specifications" as
defined by Section 2.3 of the AGREEMENT and "Martek Specifications" as defined
by Section 2.6 of the AGREEMENT. The Martek Specifications and any Customer
Specifications require approval by the Committee. Section 7.7 of the Agreement
permits Martek to specify which of the foregoing specifications any particular
order for ARA must satisfy.
Article F - III. ROLE OF THE COMMITTEE
Section 4.4 of the Agreement authorizes the Committee to determine
methods of analysis of ARA, including identification of one or more independent
third parties that are to be engaged to analyze quantities of ARA produced by
GB. Pursuant to this PROCEDURE, the Committee shall select and agree upon
alternative third-party analysts, other than those selected by the Committee to
analyze all quantities of ARA produced by GB, who shall be and remain available
to analyze any quantity of ARA with respect to which a dispute arises about
whether the applicable specifications have been met.
Article F - IV. COMMITTEE SELECTIONS
As soon as practicable after the AGREEMENT has been executed, the
Committee shall agree upon (1) the Martek Specifications (and, at Martek's
request, any Customer Specifications), (2) the method of analysis to be used to
determine whether ARA meets applicable specifications and (3) a minimum of three
(3) third-party analysts different from the analysts already selected by the
Committee to analyze all ARA produced GB. The foregoing selections shall be
memorialized, at the Committee's discretion, either by attachment to this
Exhibit F or retention in the Committee's files.
Article F - V. DISPUTE RESOLUTION PROCEDURE
In the event that Martek notifies GB pursuant to Section 5.2 or 6.3 of
failure by any quantity of ARA to conform to the applicable specifications, GB
shall have three (3) business days following receipt of such notice within which
to notify Martek that GB disputes Martek's conclusion. Either party shall
thereupon be entitled to notify each of the two Committee Leaders, by facsimile
transmission and by email of the existence of a dispute as to the quality of
ARA. Not later than the close of business on the day immediately following the
date on which such notice was transmitted to the Committee Leaders, the
Committee shall agree upon the number of alternative analysts to be used to
resolve the dispute, shall request expedited services from the selected
analyst(s) and, upon confirmation by the selected analyst(s) of acceptance of
the offered engagement and the time within which the analysis will be completed,
the Committee shall immediately direct Martek and GB each to ship to such
analyst(s) quantities of ARA from the shipment of disputed quality. Each
selected analyst shall analyze the samples of ARA furnished by Martek and GB,
and shall advise the Committee in writing in the English language, within the
time committed to in connection with acceptance of the engagement, whether or
not the ARA samples provided by Martek meet the applicable specifications. If
the selected analyst(s) determine that the sample of ARA furnished by GB meets
the applicable specifications while the sample furnished by Martek does not, the
selected analyst(s) shall have the authority to investigate the matter and
allocate responsibility for the deviation from specifications either to Martek
or to GB. The decision(s) of the selected analyst(s) shall be final and binding
on the parties. The fees charged by the selected analyst(s) and the costs for
shipping samples of ARA to such analyst(s) shall be shared equally by Martek and
GB.
<PAGE>
Article F - VI. PROCEDURE DEFAULT
In the event that, for any reason, (a) the Committee has not agreed
upon a method of analysis to be used to determine whether ARA meets applicable
specifications or a minimum of three (3) third-party analysts different from the
analysts engaged to analyze all ARA produced GB, or (b) a sufficient number of
analysts, as determined by the Committee, do not accept the offered engagement
to analyze the ARA of disputed quality, the Committee shall have the opportunity
to complete such selections pr make alternative selections in sufficient time to
engage analyst(s) within the time otherwise required. If, for any reason, the
Committee fails to act within the times periods specified in Article F - V above
or a written opinion is not received within the time specified by the Committee
from each selected analyst who has accepted the engagement, either party shall
be entitled to seek resolution of the dispute in accordance with the provisions
of Section 15 of the AGREEMENT. Such arbitration proceeding shall be governed by
the Choice of Law set forth in Section 17.6 of the attached AGREEMENT.
ACCEPTED AND AGREED TO:
MARTEK BIOSCIENCES GIST-BROCADES B.V. (GB)
CORPORATION (Martek)
By: By:
Title: Title:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
------------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1996 Commission file number: 0-22354
MARTEK BIOSCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
------------
Delaware 52-1399362
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6480 Dobbin Road, Columbia, Maryland 21045
(Address of principal executive offices)
Registrant's telephone number including area code: (410) 740-0081
------------
Securities registered pursuant to Section 12(b) of the Act:
None None
(Title of class:) (Name of each exchange on which registered:)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the last 90 days. X Yes __ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form
The aggregate market value of Common Stock held by non-affiliates of
Registrant is $315,876,553 (based upon a last sale price of $24.75 per share of
the Common Stock as reported on the NASDAQ National Market System on January 17,
1997). The number of shares of Common Stock outstanding as of January 17, 1997
was 13,520,850.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of Registrant's Annual Report to Stockholders for the
fiscal year ended October 31, 1996 are incorporated by reference into Part II of
this Report. Certain portions of the Registrant's Definitive Proxy Statement for
its 1997 Annual Meeting of Stockholders (which is expected to be filed with the
Commission within 120 days after the end of the Registrant's 1996 fiscal year)
are incorporated by reference into Part III of this Report.
\\\BA - 61954/14 - 0019862.03
<PAGE>
<TABLE>
<S> <C>
to the Company's Registration Statement on Form S-3, File No.
33-93580, filed June 16, 1995, and incorporated by reference
herein ).
4.03 Warrant No.1 issued pursuant to Common Stock and Warrant Purchase
Agreements and schedule of Warrants (filed as Exhibit 4.3 to
the Company's Registration Statement on Form S-3, File No.
33-93580, filed June 16, 1995, and incorporated by reference
herein).
4.04 Form of Rights Agreement dated as of January 24, 1996 between
the Company and Registrar and Transfer Company, as Rights
Agent (filed as Exhibit 4 to the Company's Form 8-K, File No.
0-22354, filed January 29, 1996, and incorporated by reference
herein).
10.01 Form Indemnification Agreement for directors.
10.02 1986 Stock Option Plan, as amended.
10.03 1992 Registration Rights Agreement between the Company and
Preferred Stockholders.
10.04 Employment Agreement, dated May 4, 1990, between the Company and
Henry Linsert, Jr.
10.05 Employment Agreement, dated May 7, 1990, between the Company and
Richard J. Radmer.
10.06 Employment Agreement, dated May 7, 1990, between the Company and
David J. Kyle.
10.07 Employment Agreement, dated May 7, 1990, between the Company and
Paul W. Behrens.
10.08 Form of Proprietary Information, Inventions and Non-Solicitation
Agreement.
10.12 Collaborative Research and License Agreement, dated April 30,
1993, as amended June 11, 1993, between the Company and the
Trustees of Columbia University.
10.13 Lease, commencement date October 15, 1992, between the Company
and Aetna Life Insurance Company, as modified on August 5,
1993.
10.14 License Agreement, dated September 10, 1992, between the Company
and [*].
10.14A Exhibits to September 10, 1992 License Agreement.[*]
10.15 License Agreement, dated October 28, 1992, between the Company
and [*].
10.15A Exhibits to October 28, 1992 License Agreement.[*] 10.16 License
Agreement, dated January 28, 1993 between the Company and [*]
(Domestic and International Versions).
10.16A Exhibits to January 28, 1993 License Agreements.[*] 10.17
Management Cash Bonus Incentive Plan, dated June 10, 1993.
10.18 Lease Modification Agreement, dated October 14, 1993 between the
Company and Aetna Life Insurance Company.
10.19 Letter of Intent, dated January 13, 1995, between the Company
and Golden Technologies Corporation (filed as Exhibit 10.19 to
the Company's 1994 Form 10-K, File No. 0-22354, and
incorporated by reference herein).
10.20 Second Lease Modification Agreement, dated September 27, 1994,
between the Company and Aetna Life Insurance Company (filed as
Exhibit 10.20 to the Company's 1994 Form 10-K, File No.
0-22354, and incorporated by reference herein).
10.21 Purchase and Sale Agreement, dated February 16, 1995, between
the Company and Zeagan, Inc. (filed as Exhibit 4.3 to the
Company's Registration Statement on Form S-3, File No.
33-89760, filed March 15, 1995, and incorporated by reference
herein ).
10.22 Directors' Stock Option Plan (filed as Exhibit 4.1(b) to the
Company's Registration Statement on Form S-8, File No.
33-79222, filed May 23, 1994, and incorporated by reference
herein).
10.23 Manufacturing Agreement, dated December 31, 1996, between the
Company and Royal Gist-Brocades B.V. [***] **
13.01 Portions of the Annual Report to Stockholders of the Company
for the year ended October 31, 1996.** A complete Annual
Report to Stockholders is furnished solely for the information
of the Securities and Exchange Commission and shall not be
deemed a "filed" document.
23.01 Manually signed Consent of Ernst & Young LLP, Independent
Auditors.**
24.01 Power of Attorney of the Board of Directors (included on
signature page of this Report)
</TABLE>
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<PAGE>
* Confidential treatment was granted for certain portions of these
agreements.
** Filed herewith. Unless otherwise noted, all other Exhibits
are incorporated by reference as an exhibit to the Registrant's
Registration Statement on Form S-1 (No. 33-68522).
*** Confidential treatment is being requested for certain portions of
this agreement and such portions have been separately submitted to the
commission.
(b) Reports on Form 8-K
None
-22-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized on January 29, 1997.
MARTEK BIOSCIENCES CORPORATION
By /s/ Henry Linsert, Jr.
Henry Linsert, Jr.
Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Henry Linsert, Jr. and Steve Dubin, and each of them
individually, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and his name, place and stead
in any and all capacities, to sign the report and any and all amendments to this
report, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney's-in-fact and agents, full power and authority to perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirement of the Securities Exchange Act of 1934, this Report
has been signed by the following persons in the capacities and on the date
indicated.
<TABLE>
<S> <C>
Signatures Title Date
/s/ Henry Linsert, Jr. Chief Executive Officer and January 29, 1997
- -------------------------- Director (Principal Executive
Henry Linsert, Jr. Officer)
/s/ Steve Dubin Secretary and Treasurer January 29, 1997
- --------------------------
Steve Dubin (Principal Financial and
Accounting Officer)
/s/ Jules Blake Director January 29, 1997
Jules Blake
/s/ Ann L. Johnson Director January 29, 1997
- --------------------------
Ann L. Johnson
-23-
<PAGE>
/s/Douglas J. MacMaster, Jr. Director January 29, 1997
- --------------------------
Douglas J. MacMaster, Jr.
/s/ John H. Mahar Director January 29, 1997
- --------------------------
John H. Mahar
/s/ Sandra Panem Director January 29, 1997
- --------------------------
Sandra Panem
/s/ Richard J. Radmer President and Director January 29, 1997
- --------------------------
Richard J. Radmer
/s/ Eugene H. Rotberg Director January 29, 1997
- --------------------------
Eugene H. Rotberg
/s/ William D. Smart Director January 29, 1997
- --------------------------
William D. Smart
/s/ Bruce E. Elmblad Director January 29, 1997
- --------------------------
Bruce E. Elmblad
-24-
<PAGE>
10.18 Lease Modification Agreement, dated October 14, 1993
between the Company and Aetna Life Insurance Company.
10.19 Letter of Intent, dated January 13, 1995, between the Company
and Golden Technologies Corporation (filed as Exhibit 10.19 to
the Company's 1994 Form 10-K, File No. 0-22354, and
incorporated by reference herein).
10.20 Second Lease Modification Agreement, dated September 27, 1994,
between the Company and Aetna Life Insurance Company (filed as
Exhibit 10.20 to the Company's 1995 Form 10-K, File No.
0-22354, and incorporated by reference herein).
10.21 Purchase and Sale Agreement, dated February 16, 1995, between
the Company and Zeagan, Inc. (filed as Exhibit 4.3 to the
Company's Registration Statement on Form S-3, File No.
33-89760, filed March 15, 1995, and incorporated by reference
herein).
10.22 Directors' Stock Option Plan (filed as Exhibit 4.1(b) to the
Company's Registration Statement on Form S-8, File No.
33-79222, filed May 23, 1994, and incorporated by reference
herein).
10.23 Manufacturing Agreement, dated December 31, 1996, between the
Company and Royal Gist-Brocades B.V. [***] **
13.01 Portions of the Annual Report to Stockholders of the Company
for the year ended October 31, 1996.** A complete Annual
Report to Stockholders is furnished solely for the information
of the Securities and Exchange Commission and shall not be
deemed a "filed" document..
23.01 Manually signed Consent of Ernst & Young LLP, Independent Auditors.**
24.01 Power of Attorney of the Board of Directors (included on signature
page of this Report)
</TABLE>
* Confidential treatment was granted for certain portions of these
agreements.
** Filed herewith. Unless otherwise noted, all other Exhibits are
incorporated by reference as an exhibit to the Registrant's
Registration Statement on Form S-1 (No. 33-68522).
*** Confidential treatment is being requested for certain portions of
this agreement and such portions have been separately submitted
to the commission.
-26-
