Joint Venture Agreement

JOINT VENTURE AGREEMENT


BY AND AMONG


ECOSCIENCE CORPORATION,


AGRO DYNAMICS, INC.


AND


GRODANIA A/S


JANUARY 12, 2000


TABLE OF CONTENTS


PAGE
---- ARTICLE I DEFINITIONS.................................................................................1
1.1 Definitions.........................................................................1


ARTICLE II THE TRANSACTIONS............................................................................8
2.1 Formation of NEWCO..................................................................8
2.2 ADI Contribution of Assets and Liabilities..........................................8
2.3 Grodan Contribution................................................................10
2.4 Issuance of Common Stock...........................................................10
2.5 Timing.............................................................................10


ARTICLE III CLOSING................................................................................... 10


ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ADI......................................................11
4.1 Organization; Capitalization.......................................................11
4.2 Subsidiaries.......................................................................11
4.3 Authorization of Agreements, No Conflict, Etc......................................12
4.4 Title to Properties................................................................12
4.5 Leases.............................................................................13
4.6 Condition of Property..............................................................13
4.7 Compliance with Laws, Etc..........................................................13
4.8 Intellectual Property..............................................................15
4.9 Books and Records..................................................................15
4.10 Receivables........................................................................15
4.11 Litigation.........................................................................15
4.12 Material Contracts.................................................................16
4.13 Labor Matters......................................................................17
4.14 Financial Statements...............................................................17
4.15 Absence of Certain Changes or Events...............................................17
4.16 Undisclosed Liabilities............................................................18
4.17 Tax Matters........................................................................18
4.18 Insurance..........................................................................19
4.19 Employee Benefits..................................................................19
4.20 Employees..........................................................................22
4.21 Environmental Matters..............................................................22
4.22 Affiliate Transactions.............................................................24
4.23 Authorization of Transaction by ES.................................................24
4.24 Ownership of Common Stock of Seller................................................25
4.25 Sufficiency of Purchased Assets....................................................25
4.26 Broker's or Finder's Fees..........................................................25
4.27 Disclosure.........................................................................25


(i)


ARTICLE V REPRESENTATIONS AND WARRANTIES OF GRODAN...................................................25
5.1 Organization of Grodan.............................................................25
5.2 Authorization of this Agreement, Etc...............................................26
5.3 Broker's or Finder's Fees..........................................................26


ARTICLE VI COVENANTS..................................................................................26
6.1 Covenants of ES and ADI............................................................26
6.2 Filings and Governmental Consents..................................................28
6.3 Post Closing Cooperation/Further Assurances........................................28
6.4 Employment Matters.................................................................29
6.5 Financial Due Diligence............................................................30
6.6 Notification.......................................................................30
6.7 Non-Compete........................................................................31


ARTICLE VII CONDITIONS TO OBLIGATIONS OF GRODAN........................................................31
7.1 Representations, Warranties and Covenants of ADI and ES............................31
7.2 Absence of Proceedings.............................................................32
7.3 Due Diligence......................................................................32
7.4 Opinion of Counsel to Seller.......................................................32
7.5 Consents or Approvals..............................................................33
7.6 Other Agreements...................................................................33
7.7 Bill of Sale.......................................................................34
7.8 Conveyance; Assignment and Assumption Agreement....................................34


ARTICLE VIII CONDITIONS TO OBLIGATIONS OF ADI...........................................................35
8.1 Representations, Warranties and Covenants of Grodan................................35
8.2 Absence of Proceedings.............................................................35
8.3 Opinion of Grodan's Counsel........................................................35
8.4 Consent of Century.................................................................36
8.5 Other Agreements...................................................................36


ARTICLE IX TERMINATION................................................................................37
9.1 Termination........................................................................37
9.2 Effect of Termination..............................................................37


ARTICLE X INDEMNIFICATION............................................................................38
10.1 Indemnification of Grodania and NEWCO..............................................38
10.2 Indemnification of ADI and ES......................................................38
10.3 Claims for Indemnification.........................................................38
10.4 Materiality or Knowledge...........................................................39
10.5 Method of Payment of Indemnification...............................................39
10.6 Limitations on Indemnification.....................................................39


ARTICLE XI MISCELLANEOUS..............................................................................40
11.1 Expenses...........................................................................40
11.2 Survival...........................................................................40
11.3 Notices............................................................................40


(ii)


11.4 Assignment; Successors and Assigns.................................................42
11.5 Entire Agreement...................................................................42
11.6 Governing Law; Construction........................................................42
11.7 Construction.......................................................................42
11.8 Severability.......................................................................42
11.9 Arbitration........................................................................43
11.10 Captions...........................................................................43
11.11 Counterparts.......................................................................43
11.12 Publicity..........................................................................43
11.13 Waiver.............................................................................43
11.14 No Third Party Beneficiaries/No Partnership........................................44


Exhibits & Schedules


Exhibits - --------


2.1 Newco Certificate of Incorporation & By-Laws 2.2 Assumption Agreement 6.1(g) Terms of APD/NEWCO Supply Agreement 7.6(a) Stockholders' Agreement 7.6(b) Distribution Agreement between Newco and Grodan 7.6(e) Michael DeGiglio Noncompetition Agreement 7.6(g) Cost-Sharing Agreement


Schedules - --------- 2.2.1 Contributed Assets of ADI 2.2.2 Excluded Assets of ADI 2.2.3 Assumed Liabilities of ADI 4.1 ADI's jurisdiction of incorporation and the jurisdictions in which ADI is authorized to do
business; liens on ADI stock 4.2 Liens on ADCI capital stock 4.3 Conflicts/Necessary Consents of ADI 4.4 Liens on property owned by ADI 4.5 ADI & ADCI Leases 4.6 Inventory of Property 4.7 Governmental Authorizations held by ADI and ADCI 4.8 Intellectual Property of ADI and ADCI 4.10 Accounts Receivable of ADI and ADCI 4.11 Litigation involving ADI 4.12 Material Contracts of ADI 4.13(b) Proceedings involving ADI Related to Labor Law 4.14 Financial Statements of ADI 4.15 Deviations form the Ordinary Course of Business by ADI and ADCI since


(iii)


1/1/99 4.16 Liabilities of ADI and ADCI 4.17 Tax Issues Related to ADI and ADCI 4.18 Insurance policies held by ADI and ADCI 4.19 Employee Benefits Plans 4.20 List of ADI employees 4.21 Environmental Compliance 4.22 Affiliate Transactions 4.24 Ownership of Common Stock of ADI 6.4 Terms and conditions of employment for individuals appointed by Grodan


(iv)


JOINT VENTURE AGREEMENT


JOINT VENTURE AGREEMENT, dated as of January 12, 2000, by and among EcoScience Corporation, a Delaware corporation ("EcoScience" or "ES"), Agro Dynamics, Inc., a Delaware corporation wholly owned by ES ("ADI") and Grodania A/S, a Denmark corporation or its designee ("Grodan").


WHEREAS, ADI and Grodan have had an ongoing business relationship pursuant to which ADI has been a distributor of Grodan substrates products for the horticultural and greenhouse farming industry; and


WHEREAS, the parties wish to expand their business relationship and establish a new entity to conduct the ongoing business operations of ADI which is to be owned 51% by ADI and 49% by Grodan or a direct or indirect subsidiary of Grodan;


NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained herein, and upon the terms and subject to the conditions hereinafter set forth, the parties hereto agree as follows:


ARTICLE I
DEFINITIONS.


Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:


"Accounts Receivable" has the meaning set forth in Section 4.10.


"Affiliate" means a Person that, directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with, the first mentioned Person.


"Affiliated Group" less has the meaning set forth in Section 4.17.


"Applicable Labor Law" means any and all laws, regulations, ordinances, statutes or codes enacted by any Governmental Body, regarding or pertaining to labor, employment, hiring, firing, equal employment opportunity, discrimination, layoffs, session of employment, leaves of absence, immigration, wages, hours, benefits, collective bargaining, labor relations, payment of social security and similar taxes, occupation safety and health, plant closing, employment loss (as that term is used in the WARN Act), independent contracting, affirmative action, or contribution or portability of insurance benefits.


"Assumed Liabilities" has the meaning set forth in Section 2.2.


"Balance Sheet" has the meaning set forth in Section 4.14.


"Business Day" means any Day on which banks in the State of New Jersey are not authorized or required to close.


"Closing" has the meaning set forth in Article III.


"Closing Date" has the meaning set forth in Article III.


"Closing Documents" means all agreements and documents to be executed or delivered in connection with the closing of the transactions contemplated by this Agreement, including, without limitation, the documents described in Article VII.


"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.


"Code" means the Internal Revenue Code of 1986, as amended.


"Company Other Benefit Obligation" means an Other Benefit Obligation owed, adopted or followed by the EcoScience Group or an ERISA Affiliate of the EcoScience Group.


"Company Plan" means all Plans of which the EcoScience Group or an ERISA Affiliate of the EcoScience Group is or was a Plan Sponsor, or to which the EcoScience Group or an ERISA Affiliate of the EcoScience Group otherwise contributes or has contributed, or in which the EcoScience Group or an ERISA Affiliate of the EcoScience Group otherwise participates or has participated. All references to Plans are to Company Plans unless the context requires otherwise.


"Contracts" has the meaning set forth in Section 4.12.


"Contributed Assets" has the meaning set forth in Section 2.2.


"Control" (including the terms "Controlled," "Controlled by" and "under common Control with") means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of stock or as trustee or executor, by contract or credit arrangement or otherwise.


"Covenant Properties" means land and buildings owned, occupied or used by the EcoScience Group.


"Day" means a calendar day.


"EcoScience Business" means any business activity undertaken by the EcoScience Group.


"EcoScience Group" means, individually and collectively, EcoScience, ADI, Agro Power Development, Inc., a Delaware corporation ("APD") and their Affiliates.


"Employee Benefit Plan" means any (a) bonus, incentive compensation, profit sharing, retirement, pension, group insurance, death benefit, group health, medical expense reimbursement, dependent care, stock option, stock purchase, stock appreciation rights, phantom stock, savings, deferred compensation, consulting, severance pay, termination pay, vacation pay, leave of absence, layoff, life insurance, accident, disability, workers' compensation, welfare or


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other employee benefit or fringe benefit plan, program, arrangement, practice or policy, or (b) plan, program, arrangement, practice or policy, which is an "employee pension benefit plan" as such term is defined in Section 3(2) of ERISA or an "employee welfare benefit plan" as such term is defined in Section 3(1) of ERISA, whether written or unwritten.


"Environment" means soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins, and wetlands), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource.


"Environmental Claims" means any and all allegations, actions, orders, decrees, suits, demands, demand letters, directives, claims, liens, investigations, proceedings or notices of noncompliance or violation, or causes of action for any damage or lost use of property, by any Person, alleging potential Liability (a) arising out of the operation of the EcoScience Business prior to Closing based upon the presence, Release, or Threat of Release of any Hazardous Materials on the Covenant Properties or Former Properties, owned, leased or operated by the EcoScience Group prior to Closing; (b) arising out of any violation of any Environmental Law by the EcoScience Group prior to Closing; or (c) arising out of Environmental Matters that would result in such Liability based upon Environmental Laws.


"Environmental Laws" means all applicable federal, state, district, local, municipal, foreign, international, multinational or other law, administrative order, constitution, ordinance, principal of common law, regulation, code, statute or treaty, all rules or regulations promulgated thereunder, and all orders, consent orders, judgments, notices, permits or demand letters issued, promulgated or entered pursuant thereto, relating to pollution or protection of the Environment and human health including (i) laws relating to emissions, discharges, Releases or Threatened Releases of Hazardous Materials, pollutants, contaminants, chemicals, industrial materials, wastes of all types or other substances into the Environment; and (ii) laws relating to the identification, generation, manufacture, processing, distribution, use, treatment, storage, disposal, recycling, recovery, shipment, transport or other handling of Hazardous Materials, pollutants, contaminants, chemicals, industrial materials, wastes of all types or other substances. Environmental Laws include but are not limited to the Comprehensive Environmental Response, Compensation and Liability Act, as amended (42 U.S.C. ss. 9601 et seq.) and the regulations thereunder ("CERCLA"), the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et. seq.) and the regulations thereunder ("RCRA"), the Toxic Substances Control Act (15 U.S.C. ss.ss. 2601, 2606) ("TSCA"), the Hazardous Materials Transportation Act, the Federal Water Pollution Control Act ("FWPCA"), the Clean Air Act (42 U.S.C. ss. 7401, 7412) (the "Clean Air Act"), the Safe Drinking Water Act, the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), and the Occupational Safety and Health Act ("OSHA"), all as amended prior to Closing;


"Environmental Losses" means any losses, damages, Liabilities, Harm, penalties, charges and claims and reasonably and properly incurred costs and expenses suffered or incurred pursuant to Environmental Laws (but for the avoidance of doubt excluding consequential loss and loss of opportunity or future profits) and "Loss" shall be construed accordingly.


"Environmental Matters" means, in relation to the EcoScience Business and the Covenant Properties and Former Properties, all matters relating to Releases, Environmental


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Losses, Liability or Harm to the Environment, whether by Releases or Threat of Releases of Hazardous Materials or by other means;


"Environmental Permits" means all permits, licenses, registrations, authorizations, approvals, consents or orders of, or filings with, or notifications to, any Governmental Body, or required under Environmental Laws or necessary for the present and continued conduct of the EcoScience Business at the Covenant Properties;


"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law.


"ERISA Affiliate" means, with respect to the EcoScience Group, any other person that, together with the EcoScience Group, would be or has been treated as a single employer under Section 4001(b) of ERISA or Section 414 of the Code.


"Excluded Assets" has the meaning set forth in Section 2.2.


"Former Properties" means all land and buildings previously owned, occupied or used by the EcoScience Group.


"GAAP" means generally accepted accounting principles in the United States.


"Grodan's Business" means the substrates business and services as such services relate to the substrates business engaged in by Grodan.


"Governmental Authorization" means any approval, consent, license, variance, permit, conditional use permit, waiver or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.


"Governmental Body" means any (i) nation, state, county, city, town, village, district, or other jurisdiction of any nature, (ii) federal, state, local, municipal, foreign, or other government, (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), (iv) multi-national organization or body, or (v) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power.


"Green Meteor Agreement" means that certain distribution agreement, dated March 10, 1998, between ADI and Green Meteor B.V.


"Harm" means harm to the health of any living organism or other interference with the ecological systems of which its forms a part and, in the case of human beings, includes offense to any of the senses, impairment of amenity and damage to property;


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"Hazardous Materials" means any


(i) "hazardous substance," "pollutants" or "contaminant" (as defined in
Sections 101(14) and (33) of CERCLA or the regulations issued pursuant to
Section 102 of CERCLA and found at 40 C.F.R. ss. 302), including any
element, compound, mixture, solution or substance that is or may be
designated pursuant to Section 102 of CERCLA;


(ii) substance that is or may be designated pursuant to Section
311(b)(2)(A) of the FWPCA, as amended (33 U.S.C.ss. 125, 1321(b)(2)(A));


(iii) hazardous waste having the characteristics identified under or listed
pursuant to Section 3001 of RCRA or having characteristics that may
subsequently be considered under RCRA to constitute a hazardous waste;


(iv) substance containing petroleum, as that term is defined in Section
9001(8) of RCRA;


(v) toxic pollutant that is or may be listed under Section 307(a) of FWPCA;


(vi) hazardous air pollutant that is or may listed under Section 112 of the
Clean Air Act;


(vii) imminently hazardous chemical substance or mixture with respect to
which action has been or may be taken pursuant to Section 7 of TSCA; (viii)
asbestos, asbestos-containing material;


(ix) waste oil and other petroleum products; and


(x) any other toxic materials, contaminants, or hazardous substances or
wastes pursuant to any Environmental Law.


"Hoogendoorn Agreement" means that certain distribution agreement, dated March 10, 1995 between ADI and H. Hoogendoorn Automation B.V.


"ICC" means the International Chamber of Commerce located in Paris, France.


"ICC Rules" means the Rules of Arbitration of the ICC in effect on the date that a dispute is submitted to the ICC for arbitration.


"including" means including without limitation.


"Indemnified Party" means the party or parties claiming a right to indemnification pursuant to Article X.


"Indemnifying Party" means the party or parties from whom indemnification is sought pursuant to Article X.


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"Intellectual Property" means patents, trademarks, service marks, trade dress, logos, trade names, corporate names assumed names, and copyrights together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith.


"IRS" means the Internal Revenue Service.


"Law" has the meaning set forth in Section 4.3.


"Lease" or "Leases" means all of the right, title and interest of ADI and ADCI in, to and under all leases, subleases, licenses and/or other occupancy agreements affecting real property except as set forth on Schedule 2.2.2.


"Legal Requirement" means any applicable federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, code, statute, or treaty.


"Liability" means any liability or obligation of any kind whatsoever, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, determined or indeterminable, due or to become ...