Joint Venture Agreement

EXHIBIT 10.35


JOINT VENTURE AGREEMENT


February 14, 1992


between


POLYGEN CORPORATION


and


TEIJIN LIMITED


TABLE OF CONTENTS


Page ARTICLE 1 - DEFINITIONS.................................................. 1


ARTICLE 2 - EFFECTIVE DATE AND TERM...................................... 2


ARTICLE 3 - SCHEDULE OF EVENTS........................................... 2


3.1 Closing.................................................... 2
3.2 Filing of Incorporation Documents.......................... 3
3.3 Distributorship Agreement.................................. 3


ARTICLE 4 - ESTABLISHMENT OF THE COMPANY................................. 3


4.1 Formation of the Company................................... 3
4.2 Articles of Incorporation.................................. 3
4.3 Name and Principal Office.................................. 3
4.4 Procedures Involving Japanese Government................... 4


ARTICLE 5 - PURPOSES OF THE COMPANY...................................... 4


5.1 Corporate Purposes......................................... 4
5.2 Cooperation................................................ 4


ARTICLE 6 - CAPITAL OF THE COMPANY; SHAREHOLDERS AND ASSETS.............. 4


6.1 Capital Stock.............................................. 4
6.2 Subscription of Capital Shares............................. 5
6.3 Rights; Restrictions....................................... 5
6.4 Working Capital Loans...................................... 5
6.5 Preemptive Rights.......................................... 5
6.6 Securities................................................. 6


ARTICLE 7 - BUSINESS YEAR AND ACCOUNTING................................. 6


7.1 Business Year.............................................. 6
7.2 Accountant and Financial Statements........................ 6
7.3 Access to Books, Records and Facilities.................... 7
7.4 Records and Books; Internal Reports........................ 7
7.5 Statutory Auditor.......................................... 7


ARTICLE 8 - OPERATION OF THE COMPANY; ASSISTANCE;
PRODUCT DEVELOPMENT COORDINATION;
RIGHTS OF FIRST REFUSAL TO PRODUCTS.......................... 7


8.1 Adoption and Implementation of Operating
Procedures................................................. 7
8.2 Assistance to the Company.................................. 7


-i-


8.3 Product Development Coordination............................................ 8
8.4 Rights of First Refusal to Teijin's Products................................ 8
8.5 Right of First Refusal to Teijin Systems
Technology................................................................. 9
8.6 Obligation to Proceed Diligently............................................ 9
8.7 Company as Exclusive Distributor............................................ 9
8.8 Duty of Management to Act Impartially....................................... 10
8.9 Employee Benefits........................................................... 10


ARTICLE 9 - SHAREHOLDERS' MEETINGS........................................................ 10


9.1 Shareholders' Meetings....................................................... 10
9.2 Shareholders' Resolutions.................................................... 10


ARTICLE 10 - MANAGEMENT OF THE COMPANY.................................................... 11


10.1 Board of Directors.......................................................... 11
10.2 Election of Directors....................................................... 12
10.3 Board of Directors' Meetings................................................ 12
10.4 Resolutions of Board of Directors Meetings.................................. 12
10.5 Mutual Consultation......................................................... 13
10.6 Management.................................................................. 13


ARTICLE 11 - RESTRICTION ON TRANSFER OF SHARES............................................ 13


ARTICLE 12 - RIGHT OF FIRST REFUSAL....................................................... 14


ARTICLE 13 - PROFITS AND DIVIDENDS POLICY................................................. 15


ARTICLE 14 - SECRECY...................................................................... 15


14.1 Obligation of Secrecy....................................................... 15
14.2 Obligation Not to Use....................................................... 16
14.3 Observance by Company....................................................... 16
14.4 Indemnity; Injunctive Relief................................................ 16


ARTICLE 15 - TERMINATION.................................................................. 17


15.1 Termination................................................................. 17
15.2 Effect of Termination....................................................... 18


ARTICLE 16 - DISSOLUTION.................................................................. 18


16.1 Events Triggering Dissolution............................................... 18
16.2 Management of Company During Winding Up..................................... 18
16.3 Distribution of Assets...................................................... 18
16.4 Documents and Records....................................................... 19


ARTICLE 17 - REPRESENTATIONS, WARRANTIES AND COVENANTS.................................... 19


17.1 Representations, Warranties and Covenants of PMSI........................... 19


-ii-


17.2 Representations, Warranties and Covenants of
Teijin........................................................... 20


ARTICLE 18 - GOVERNING LAW AND LANGUAGE; DISPUTE RESOLUTION...................... 21


18.1 Governing Law and Language........................................ 21
18.2 Dispute Resolution................................................ 21


ARTICLE 19 - ENFORCEMENT........................................................ 22


19.1 Severability...................................................... 22
19.2 Waiver of Obligation.............................................. 22
19.3 Specific Performance/Injunctive Relief............................ 22
19.4 Rights of Shareholders are Cumulative............................. 23
19.5 Third Parties..................................................... 23


ARTICLE 20 - GENERAL TERMS....................................................... 23


20.1 Assignment........................................................ 23
20.2 Amendment......................................................... 23
20.3 Notices........................................................... 23
20.4 Compliance by Company............................................. 24
20.5 Entire Agreement.................................................. 24
20.6 Force Majeure..................................................... 24
20.7 Headings.......................................................... 24
20.8 Counterparts...................................................... 24
20.9 Export Compliance................................................. 24
20.10 Parties Advised by Counsel - No Interpretation
Against Drafter.................................................. 25


EXHIBITS


Exhibit A: Distributorship Agreement
Exhibit B: Common Stock Purchase Agreement
Exhibit C: Corporate License Agreement
Exhibit D-1: Articles of Incorporation of the Company
(Japanese Original not included herein)
Exhibit D-2: English translation of Articles of
Incorporation


-iii-


JOINT VENTURE AGREEMENT


THIS JOINT VENTURE AGREEMENT ("Agreement") is made as of the 14th day of February, 1992 by and between Polygen Corporation (doing business as Polygen Molecular Simulations Incorporated), a Delaware corporation, having its principal office at 200 Fifth Avenue, Waltham, Massachusetts 02154, U.S.A. (hereinafter "PMSI"), and Teijin Limited, a corporation organized under the laws of Japan, having its principal office at 6-7, Minamihommachi 1-chome, Chuo-ku, Osaka 541, Japan (hereinafter "Teijin"). PMSI and Teijin shall hereinafter be collectively referred to as the "Shareholders" and individually as a "Shareholder".


RECITALS


WHEREAS, the Shareholders desire to enter into a strategic partnership through the formation of a joint venture corporation in Japan upon the terms and conditions set forth below for the purposes of marketing, distributing, licensing, selling and supporting PMSI's and its subsidiaries' computational chemistry software products in the Territory and establishing a strong strategic business in the Territory which has direct relationships with customers and a strong technology base.


WHEREAS, the Shareholders desire to acquire the stock of such corporation, and the Shareholders desire to provide for the consistent and uniform management of such corporation.


AGREEMENT


NOW THEREFORE, in consideration of the premises and mutual covenants herein contained, the Shareholders hereby agree as follows:


ARTICLE 1 - DEFINITIONS


For the purposes of this Agreement, the following terms shall, unless the context otherwise requires, have the meanings set forth below:


1.1 "Company" means the corporation to be organized under the laws of Japan pursuant to Article 4 hereof.


1.2 "Territory" means the entire country of Japan, which Territory may be expanded from time to time by mutual agreement of the Shareholders to include other countries in the Asian Pacific Rim such as Korea and Taiwan.


1.


1.3 "Products" mean those computational chemistry software products marketed presently or in the future by PMSI or PMSI Subsidiaries as defined in the Distributorship Agreement attached hereto as Exhibit A and as to which the Company shall have the right to act as a distributor under the Distributorship Agreement.


1.4 "Distributorship Agreement" means the distributorship agreement by and between PMSI and the Company in the form attached hereto as Exhibit A.


1.5 "Stock Purchase Agreement" means the common stock purchase agreement by and between PMSI and Teijin in the form attached hereto as Exhibit B, pursuant to which Teijin shall make an equity investment in PMSI through the purchase of newly issued PMSI common stock.


1.6 "Corporate License Agreement" means the corporate license agreement by and between PMSI and Teijin in the form attached hereto as Exhibit C, pursuant to which PMSI shall grant Teijin a non-exclusive corporate license to use the Products.


1.7 "PMSI Subsidiaries" mean and include any corporation, company or other corporate entity in the United States or any other country in the world whose voting stock is, at any time during the term of this Agreement, fifty percent (50%) or more directly owned by PMSI.


ARTICLE 2 - EFFECTIVE DATE AND TERM


This Agreement shall become effective on the later to occur of: (i) the date of execution of this Agreement by the Shareholders, or (ii) the date on which all Japanese governmental clearance (whether in the form of an approval, notification or otherwise) is obtained with respect to Japanese foreign exchange and trade control regulations, and shall continue until terminated as provided in Article 15 hereof.


ARTICLE 3 - SCHEDULE OF EVENTS


3.1 Closing. The closing (the "Closing") of the transactions contemplated by this Agreement shall take place on March 6, 1992 (the "Closing Date"), or such other subsequent date as the Shareholders may agree. The Closing shall be held at the offices of Teijin in Tokyo, Japan, or at such other place as the Shareholders may agree. Prior to or at the Closing, the Shareholders shall concurrently execute and enter into this Agreement, the Stock Purchase Agreement, the Corporate License Agreement, and any other agreements and/or document(s) as they or


2.


their legal counsel may mutually deem necessary or appropriate in the circumstances.


3.2 Filing of Incorporation Documents. As soon as practicable following the execution of this Agreement, the Shareholders shall file or arrange for the filing of the incorporation documents for the Company.


3.3 Distributorship Agreement. As soon as practicable after the incorporation of the Company, PMSI and the Company shall enter into the Distributorship Agreement whereby the Company shall be appointed as PMSI's exclusive distributor with respect to the marketing, distribution, licensing, sale and support of the Products in the Territory.


ARTICLE 4 - ESTABLISHMENT OF THE COMPANY


4.1 Formation of the Company. As soon as practicable after the execution of this Agreement, the Shareholders will cause the Company to be organized and incorporated as a joint stock company (Kabushiki Kaisha) under the laws of Japan. All reasonable costs incurred in connection with the incorporation and qualification of the Company in Japan shall be borne by the Company to the extent legally permitted under the laws of Japan. The remainder of such costs shall be shared equally by the Shareholders.


4.2 Articles of Incorporation. The Articles of Incorporation of the Company shall be in the form attached hereto as Exhibit D-1 (Japanese original); the English translation of which is attached hereto as Exhibit D-2. In the event of any conflict between this Agreement and the Articles of Incorporation, this Agreement shall prevail and the Shareholders shall amend the Articles of Incorporation of the Company as necessary, to the extent permitted by law, to eliminate such conflict. Notwithstanding the foregoing, in the course of incorporating the Company, the promoter(s) may revise the Japanese original Articles of Incorporation as required or suggested by the Notary Public or District Registry in charge to the extent that no conflict between the revised Japanese Articles of Incorporation and this Agreement and/or the English translation attached hereto as Exhibit D-2 is created as a result of such revision.


4.3 Name and Principal Office. The corporate name of the Company shall be Teijin Molecular Simulations Incorporated in English and [ Japanese Translation] in Japanese or, if such name is not available, such other name as is acceptable to the Shareholders. The principal place of business of the Company shall initially be located at Chiyoda-ku, Tokyo, Japan.


3.


4.4 Procedures Involving Japanese Government. Teijin shall be responsible for completing and/or assisting PMSI in completing any approval and/or notification procedures required by law involving the Japanese government (national and/or local) with respect to the formation of the Company, including but not limited to assisting PMSI in filing with the relevant Japanese governmental ministries all required notices under the Foreign Exchange and Foreign Trade Control Law of Japan, as amended, concerning PMSI's purchase of stock in the Company. The Company shall: (i) file any and all reports and notices and take any and all other further action as necessary or appropriate to establish and maintain its existence under the laws of Japan, and (ii) be responsible for completing any approval procedures required by law involving the Japanese government with respect to the importation, marketing, distribution, licensing, sale and support of the Products in the Territory.


ARTICLE 5 - PURPOSES OF THE COMPANY


5.1 Corporate Purposes. The Company shall pursue the following business purposes:


(a) the importation, marketing, distribution, licensing and sale of the Products in the Territory through all legitimate channels, including direct, through subdistributors and OEMS;


(b) the provision of technical support services for the Products and contract services relating to the Products; and


(c) other business activities which the Board of Directors of the Company may from time to time decide.


5.2 Cooperation. The Shareholders agree to cooperate with each other in good faith in the fulfillment of the above purposes and activities and otherwise in the implementation of the provisions of this Agreement, and shall jointly develop a business plan for the Company.


ARTICLE 6 - CAPITAL OF THE COMPANY; SHAREHOLDERS AND ASSETS


6.1 Capital Stock. The Company shall have one class of shares designated common stock, to which the rights more particularly defined in Section 6.3 hereof shall attach. The total authorized capital of the Company shall consist of sixteen thousand (16,000) shares of common stock, with a par value of fifty thousand Japanese yen (Y50,000) each.


4.


6.2 Subscription of Capital Shares.


(a) The Company shall issue four thousand (4,000) shares of common stock at the time of its incorporation. The Shareholders shall subscribe for such initial shares to be issued by the Company as follows:


Shareholder Common Shares Percentage
----------- ------------- ----------

PMSI 2,000 (50%)
Teijin 2,000 (50%)


(b) In consideration for its shares, PMSI shall pay to the Company, within forty-five (45) days after the date of execution of this Agreement and as the Shareholders may agree, the sum of one hundred million Japanese yen (Y100,000,000) in cash. In consideration for its shares, Teijin shall pay to the Company, within forty-five (45) days after the date of execution of this Agreement and as the Shareholders may agree, the sum of one hundred million Japanese yen (Y100,000,000) in cash. The obligation of each Shareholder to subscribe and pay for shares as above-stated shall be conditioned upon a subscription and payment, within twenty-four (24) hours, by the other Shareholder of its respective portion thereof.


6.3 Rights; Restrictions. All shares issued by the Company shall have equal voting and other rights, preferences and restrictions as set forth in the Company's Articles of Incorporation attached hereto as Exhibit D-1.


6.4 Working Capital Loans. To the extent that funds generated from the operations of the Company are not sufficient to cover all proper operational expenses thereof, loans to the Company for working capital purposes in such sums reasonably determined by the Board of Directors of the Company to be necessary to fund such operational expenses ("Operating Loans") shall be obtained and shall be severally guaranteed (if necessary) by the Shareholders in proportion to their then respective shareholdings in the Company. Use of any Operating Loans or other lines of credit by the Company shall be in accordance with a budget set by the Board of Directors of the Company.


6.5 Preemptive Rights. The Shareholders shall have preemptive rights to subscribe and pay for any additional new shares of the Company that are issued in the future, in proportion to their then existing respective shareholdings in the Company. Each Shareholder shall exercise its preemptive rights by sending written notice to the Company of its intent to subscribe for the new shares of the Company, within fourteen (14) days of being notified by the Company of such capital increase. In each case, the subscription of and payment for such new shares


5.


shall be consummated within thirty (30) days following receipt by the Company of the Shareholder's written notice.


If either Shareholder shall not wish to subscribe for the shares covering any capital increase, such Shareholder shall immediately notify the Company and the other Shareholder thereof in writing, whereupon the preemptive right of the first Shareholder shall pass to the other Shareholder and the latter shall have the right to subscribe for all or any part of the shares not so subscribed, and shall exercise such right in the manner set forth in the preceding paragraph.


6.6 Securities. Unless otherwise agreed to between the Shareholders in writing, the Company shall not issue any equity, including convertible bonds, bonds with warrants or any other type of security, holders of which can acquire an equity interest in the Company, without the prior approval of the Board of Directors of the Company.


ARTICLE 7 - BUSINESS YEAR AND ACCOUNTING


7.1 Business Year. The business and tax year of the Company shall be from April 1 to March 31 of each calendar year, provided that the first business and tax year of the Company shall begin on the date of its incorporation and end on the next occurring March 31.


7.2 Accountant and Financial Statements. The Company, at its expense, shall employ an independent certified public accountant, as agreed to by the Board of Directors of the Company, to perform an annual audit of the books and records of the Company and to prepare any and all tax returns of the Company required under Japanese law. Within sixty (60) days after the close of each business year of the Company, an audited balance sheet and profit and loss statement of the Company prepared in accordance with generally accepted accounting principles in Japan consistently applied, together with a report of such accountant shall be prepared in the Japanese language, translated into the English language, and sent to each Shareholder. Any services of such accountant other than such audit, performed at the request of either Shareholder, shall be at the cost of the requesting Shareholder. Within thirty (30) days after the close of each month of the business year of the Company, an unaudited balance sheet and profit and loss statement of the Company for such month, prepared in accordance with generally accepted accounting principles in Japan consistently applied and certified by the chief financial officer of the Company to be true, correct and complete in all material respects, shall be prepared in the Japanese language, translated into the English language, and sent to each Shareholder.


6.


7.3 Access to Books, Records and Facilities. Each of the Shareholders, at its own expense, shall have full and complete access, through an accountant or other agent of its choice, to the books, records and facilities of the Company during normal business hours for the purpose of inspection, making copies, auditing or any other purpose not inconsistent with the best interests of the Company. The books and records of the Company will be in the Japanese language with a summary of such records to be made available, upon request, in the English language. The cost of preparing the English language summary shall be borne by the Company.


7.4 Records and Books; Internal Reports. The types of records and accounting books which the Company will maintain shall be established by the Board of Directors of the Company in accordance with any applicable law and shall reflect generally accepted accounting principles in Japan. Such records and books shall be maintained at the Company's principal office or, to the extent permitted by applicable law, at such other location as the Company's Board of Directors shall determine. If either Shareholder shall desire any additional information or operating reports to be generated by the Company, such Shareholder may cause such reports to be prepared at its own expense.


7.5 Statutory Auditor. In addition to the independent certified public accountant to be employed pursuant to Section 7.2 hereof, the Company shall have one (1) statutory auditor to be nominated by Teijin and to be elected by resolution of the General Shareholders' Meeting.


ARTICLE 8 - OPERATION OF THE COMPANY; ASSISTANCE;
PRODUCT DEVELOPMENT COORDINATION;
RIGHTS OF FIRST REFUSAL TO PRODUCTS


8.1 Adoption and Implementation of Operating Procedures. All operating procedures, including, without limitation, pricing policies with respect to the licensing/sale of the Products in the Territory, staffing and hiring, compensation of employees, supervision of work and marketing of the Products, shall be determined under guidelines established by action of the Board of Directors of the Company.


8.2 Assistance to the Company. Teijin will assist the Company in the development of its business by providing a highly qualified management, staff and necessary facilities for the Company's operations, at a reasonable compensation. The Company's sales and support staff shall be solely engaged in marketing and providing services related to the Products in the Territory. PMSI will technically assist and provide initial technical staffing to the Company. The salaries, travel, overseas assignment (where applicable) and incidental expenses of


7.


all staff shall be borne by the Company while they are attached to the Company.


8.3 Product Development Coordination. Teijin agrees that, during the term of this Agreement, it will coordinate its product development activities in the field of computational chemistry with PMSI such that:


(a) Teijin and its subsidiaries will not, during the term of this Agreement, engage in the development, licensing, or sale of any product (except for "SetPro" which is currently under development and "Materia" which is currently being sold) that Competes (as such term is defined below) with the Products or any other software product under development or planned to be developed by PMSI and/or PMSI Subsidiaries which are disclosed to Teijin in writing in sufficient detail to enable Teijin to comply with the provisions of this Section 8.3(a). For the purposes of this Agreement, two products shall be considered to "Compete" with one another if the sale of one product to a customer would substantially substitute for the sale of the other product to su ...