Joint Venture Agreement

EXHIBIT 10.1


Onyx Japan Joint Venture Agreement


Between


ONYX SOFTWARE CORPORATION


And


PRIME SYSTEMS CORPORATION


DATED SEPTEMBER 14, 2000


*Certain confidential information contained in this document, marked by brackets, has been omitted and filed with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.


Table of Contents 1 Recitals............................................................. 3 2 Effect of this Agreement............................................. 3 3 Purpose.............................................................. 4 4 Definitions.......................................................... 4 5 Structure............................................................ 5 6 Roles of the Parties................................................. 6 7 Intellectual Property................................................ 6 8 Operation and Management............................................. 7 9 Initial Public Offering.............................................. 10 10 Representations and Warranties....................................... 10 11 Withdrawal........................................................... 11 12 Term and Termination................................................. 13 13 Events to occur upon termination..................................... 15 14 Determination of Fair Market Value................................... 15 15 Indemnity............................................................ 16 16 Confidentiality Agreement............................................ 16 17 Public Announcement.................................................. 17 18 Non-Compete.......................................................... 17 19 Notices.............................................................. 18 20 Ancillary Provisions................................................. 18


Schedule 1: Matters requiring unanimous consent of Board of Directors
Schedule 2: Items not considered to be day-to-day operation matters


2


Joint Venture Agreement


This Joint Venture Agreement is executed on this 14th day of September 2000 by and between:


ONYX SOFTWARE CORPORATION, a company duly organized and existing under
the laws of Washington with its principal place of business located at
3180 139/th/ Avenue SE, Suite 500, Bellevue, WA 98005-4091, USA
(hereinafter "Onyx");


and


PRIME SYSTEMS CORPORATION, a corporation duly organized and existing
under the laws of Japan with its principal place of business located
at Sakurai Building, 3F 2-8-1 Fukagawa, Koto-ku, Tokyo, 135-0033 Japan
(hereinafter "Prime");


(Hereinafter, each of Onyx and Prime shall be individually referred to as the "Party" and, both of the two jointly as the "Parties")


1 Recitals


WHEREAS Onyx is in the business of developing, marketing and licensing computer software;


WHEREAS Prime is in the business of providing system solutions, developing and marketing computer software etc.;


WHEREAS Onyx and Prime entered into a non-binding term sheet dated May 27, 2000 for the purpose of the consideration of the establishment of a Joint Venture in Japan;


WHEREAS pursuant to the Interim Agreement dated August 8, 2000 (the "Interim Agreement"), Onyx and Prime established a legal entity, Onyx Software Co., Ltd. ("Onyx Japan") on August 31, 2000 with a paid in capital of JPY86,000,000 of which Onyx has invested JPY61,900,000 and Prime, JPY24,100,000; and


WHEREAS the Parties anticipate, and intend to exert their reasonable best efforts to cause, Softbank Investment Corporation ("Softbank") to invest in Onyx Japan by September 15, 2000;


Onyx and Prime enter into this Agreement to define the terms of the Joint Venture vehicle, Onyx Japan, for the purpose of ensuring a cooperative, mutually beneficial relationship and the successful realization of the purposes of the Joint Venture as set forth in Clause 3 below.


2 Effect of this Agreement


This Agreement will take effect on the occurrence of the later of (i) the execution of this Agreement; or (ii) Investment by Softbank into Onyx Japan (the "Effective Date"). On the Effective Date, all terms of the Interim Agreement will be superseded by this Agreement and this Agreement and the Schedules comprised herein shall from the Effective Date constitute the entire agreement relating to the relationship of the Parties with respect to Onyx Japan.


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The Parties understand and agree that there are no other oral or written collateral promises, representations, agreements or understandings between them concerning the subject matter of this Agreement other than those expressly stated herein.


3 Purpose


Onyx Japan is established for the purpose of successfully expanding Onyx technology and software products in Japan. Onyx Japan is organized for the purpose of product localization, sales, marketing and consulting as well as servicing the software and solutions provided by Onyx or developed independently by Onyx Japan, and for the purpose of engaging in all activities and transactions that are necessary in furtherance of that purpose. Unless otherwise agreed upon by the Parties in writing, Onyx Japan shall not engage in any other activities except those set forth above.


4 Definitions


"Agreement" refers to this Joint Venture Agreement unless specified otherwise.


"Affiliate" means any entity, other than Onyx Japan, in which a Party owns or controls more than 50% of the outstanding capital stock of such entity or any entity which owns or controls more than 50% of one of the Parties.


"Arrangements" means this Agreement and other arrangements relating to the establishment of Onyx Japan and the ongoing Joint Venture.


"Board of Directors" means the board of directors of Onyx Japan unless expressly specified otherwise.


"Business Day" means any day which is not Saturday, Sunday or a national holiday in the place where the performance of an obligation required under this Agreement is to be undertaken.


"Chairman" means the chairman and representative director of Onyx Japan.


"Confidential Information" means the terms and conditions of this Agreement and any information disclosed by either Party or their Affiliates to the other Party or to Onyx Japan, either directly or indirectly, in writing, orally or by inspection of tangible objects or software or Intellectual Property, which information is designated, orally or in writing, as "Confidential," "Proprietary" or some other designation. Confidential Information shall not, however, include any information which (i) was publicly known prior to the time of disclosure by the disclosing Party, (ii) becomes publicly known after disclosure by the disclosing Party to the receiving Party through no action or inaction of the receiving Party, (iii) is already in the possession of the receiving Party at the time of disclosure by the disclosing Party, or (iv) is obtained by the receiving Party from a third party without a breach of any obligations of confidentiality of such third party to the Party wishing to keep such information confidential.


"Fair Market Value" is the value determined in accordance with the procedure contained in Clause 14 of this Agreement.


"Intellectual Property" means any intellectual property in any jurisdiction including, without limitation, any and all patents, utility models, designs, logos, trademarks, service marks, trade names, copyrights (including software), know-how and domain names, and any rights to obtain any of the foregoing where applicable under pending applications for intellectual property rights.


"Interim Period" means the period from when the Interim Agreement was entered into until this Agreement takes effect pursuant to Clause 2.


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"IPO" means the initial public offering of Onyx Japan by listing on a recognized technology-related stock exchange market in Japan such as "TSE Mothers" or "Nasdaq Japan", in this case anticipated to be conducted during the calendar year [*] or as soon as optimal thereafter as described in Clause 9.1.


"Joint Venture" is the arrangement referred to in this Agreement to create, operate and manage Onyx Japan between Onyx and Prime and with investment by Softbank.


"Material Default" means default or non-performance of any obligations under this Agreement causing material damage to Onyx Japan or any Party to this Agreement.


"Par Value" is the price at which the Shares were originally issued, which is JPY50,000 per Share.


"President" means the president and representative director of Onyx Japan.


"Share" means a share in Onyx Japan represented by stock certificate or other security instrument.


"Shareholder" means a shareholder in Onyx Japan.


"Softbank Investment" means the investment in 14% of the Total Capital of Onyx Japan by Softbank anticipated to occur on or before September 15, 2000 or such other date thereafter as agreed upon in writing by the Parties.


"Territory" means Japan.


"Total Capital" means the capital in Onyx Japan during the operational period of JPY800,000,000 inclusive of the investment of Onyx, Prime and Softbank, as provided in Clause 5.


5 Structure


5.1 The Parties agree that the Joint Venture contemplated by this
Agreement shall be carried out by Onyx Japan, as established by Onyx
and Prime on August 31, 2000.


5.2 The anticipated ownership structure of Onyx Japan after the Softbank
Investment (and inclusive of investments made prior to or during the
Interim Period) is as follows:


Shareholder % Paid in Capital
(JPY)


Onyx 58% 464,000,000
Prime 28% 224,000,000
Softbank 14% 112,000,000


5.3 The Parties shall complete all necessary arrangements and cooperate
with each other to cause Onyx Japan to issue to Softbank, Onyx and
Prime, at par value, the number of Shares necessary to ensure that the
allocated Shares and Paid-in-Capital amounts provided above are
attained prior to September 15, 2000. The Parties shall subscribe for
such number of Shares and transfer the requisite capital to the bank
account designated by Onyx Japan on or before the date of the Softbank
Investment and shall use their reasonable best efforts to cause
Softbank to provide the above noted capital and to subscribe for
Shares by September 15, 2000. In the event that the Softbank
Investment does not occur by September 15, 2000, the Parties shall
confer in good


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--------------- [*] Confidential treatment requested.


faith for a reasonable period about an extension of the date by which
the Softbank Investment can and shall occur.


5.4 The Parties agree that they will consider, from a practical viewpoint
for the effective development of the business of Onyx Japan, the
possibility of the further equity participation in Onyx Japan by an
appropriate company that is determined by mutual agreement between
Prime and Onyx. Both Parties shall not unreasonably withhold their
consent in this respect and, subject to Clause 5.5, agree that they
will, in principle, decrease their respective Shareholding ratio on a
pro rata basis as necessary to effect such participation.


5.5 At no time shall Onyx's shareholding fall below 50.01% of the total
issued Shares (including any potential stock (senzai kabushiki)),
before or after the IPO is conducted.


6 Roles of the Parties


6.1 Onyx shall provide Onyx Japan with all necessary or appropriate advice
and guidance for effective operations, technical and marketing staff
with outstanding ability that is necessary or appropriate for
effective operations and all necessary or appropriate information on
Onyx's strategies and vision. Onyx shall assist Onyx Japan in setting-
up systems and processes for all operational departments which utilize
the existing infrastructure of Onyx's departments. Onyx shall provide
Onyx Japan with marketing materials and collateral, PR templates and
marketing campaign templates for Onyx Japan to leverage in Japan. Onyx
shall create, and provide Onyx Japan with, the core or base code for
products that are to be localized into Japanese versions and sold by
Onyx Japan. In the event the services to be provided by Onyx
hereunder, with the exception of such minor services as mutually
agreed upon by the Parties, require that any efforts or out-of-pocket
costs, including, but not limited to, salaries and any other payments
and costs relating to Onyx's employees to be seconded or transferred
to Onyx Japan, shall be incurred by Onyx, the Parties shall mutually
determine any fees to be paid to Onyx by Onyx Japan for the provision
of such services.


6.2 Prime shall provide Onyx Japan with a sales network and relevant
connections, press and PR connections, market information and advice
on effective Japanese operations. Prime shall also assist Onyx Japan
with the localization and creation of localized Japanese versions of
Onyx products, including provision of technical resources and staff.
Prime shall provide Onyx Japan and its partner and customers with
consulting and system integration services and will be one of the main
system integrators for Onyx Japan's implementations. In the event the
services to be provided by Prime hereunder, with the exception of such
minor services as mutually agreed upon by the Parties, require that
any efforts or out-of-pocket costs, including, but not limited to,
salaries and any other payments and costs relating to Prime's
employees to be seconded or transferred to Onyx Japan, or costs
related to system integration, system management, development thereof
or localizing of Onyx's products, shall be incurred by Prime, the
Parties shall mutually determine any fees to be paid to Prime by Onyx
Japan for the carrying out of such services.


7 Intellectual Property


7.1 Onyx Japan will enter into a Distribution Agreement, which is mutually
acceptable to the Parties, with Onyx providing for the license of all
Intellectual Property owned by


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Onyx relevant to the Joint Venture ("Onyx Intellectual Property")
within the Territory and the payment of reasonable compensation to
Onyx by Onyx Japan.


7.2 All right, title and interest in and to any Intellectual Property
provided, supplied or licensed by Onyx, or proprietary rights relating
thereto, and the media on which the same are furnished, provided,
supplied or licensed by Onyx, including any developments, adaptations,
versions or modifications shall, to such extent, belong exclusively to
Onyx or its exclusive suppliers at all times. Any Intellectual
Property developed independently by Onyx Japan without any reference
or connection to Onyx Intellectual Property or Confidential
Information whatsoever and without any reference or connection to
Intellectual Property owned by, or Confidential Information of Prime
relevant to the Joint Venture whatsoever will be the property of Onyx
Japan ("Onyx Japan Intellectual Property"). Onyx shall be entitled, at
its option, to non-exclusive perpetual world-wide or regional licenses
to use, modify, adapt or develop Onyx Japan Intellectual Property with
reasonable charge based on the fair market standard.


7.3 All right, title and interest in and to any Intellectual Property
provided, supplied or licensed by Prime, or proprietary rights
relating thereto, and the media on which the same are furnished,
provided, supplied or licensed by Prime, including any developments,
adaptations, versions or modifications shall, to such extent, belong
exclusively to Prime or its exclusive suppliers at all times. Prime
shall be entitled, at its option, to non-exclusive perpetual
world-wide or regional licenses to use, modify, adapt or develop Onyx
Japan Intellectual Property with reasonable charge based on the fair
market standard.


7.4 Both Parties acknowledge that this Agreement and any license granted
by Prime or Onyx to Onyx Japan under Clauses 7.2 or 7.3 above does not
and shall not grant rights to any Party to use the software or
Intellectual Property for any purpose other than in pursuance of the
Onyx Japan Joint Venture. All Intellectual Property will be treated as
Confidential Information by the Parties unless (i) there is a label or
mark to indicate that the information or Intellectual Property is not
to be treated as proprietary and/or confidential, (ii) it is agreed
otherwise in writing by the provider of such Confidential Information
or (iii) the contrary is clearly implied by the nature of the
Intellectual Property and the context of its use.


8 Operation and Management


8.1 Each Party agrees to take all actions necessary to ensure that Onyx
Japan shall be operated in accordance with, and complies with the
terms of, this Agreement and applicable law and shall vote all Shares
held by it to give complete and timely effect to the terms of this
Agreement.


8.2 Onyx Japan shall be constituted with seven Directors and at least two
Statutory Auditors as per the Articles of Incorporation. Of these,
Onyx shall nominate 4 Directors and Prime shall nominate 3 Directors.
Mr. Tadashi Sensu shall be one of Prime's initial 3 Directors. Onyx
and Prime shall be entitled to nominate one Statutory Auditor each.
One additional Statutory Auditor shall be elected at the annual
general meeting of Shareholders of Onyx Japan with regard to the first
period for settlement of accounts. Should the shareholding ratio
between Onyx and Prime be altered by the transfer of Shares by Prime
to any third party without the written approval of Onyx, the number of
Directors shall be adjusted to reflect the proportional


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shareholdings of each Party. The Parties specifically agree that,
notwithstanding any other provision contained in this Agreement, they
shall complete all necessary procedures to effect in a timely manner
the adjustment to the Board contemplated by this Clause, including but
not limited to, Board and/or Shareholders meetings and amendment of
the Articles of Incorporation. If Prime's shareholding falls to below
15% of the total issued capital of Onyx Japan pursuant to a decision
to sell to a third party without written approval from Onyx prior to
such sale, Prime shall no longer be entitled to nominate a
Representative Director. In such case, Prime shall cause the
Representative Director nominated by it to resign from the position of
Representative Director, and shall indemnify Onyx Japan for reasonable
expenses incurred by Onyx Japan or compensation necessary with regard
to the removal of such Representative Director, except for any
retirement allowance or other remuneration to be paid by Onyx Japan to
such Representative Director pursuant to the applicable internal rules
of Onyx Japan. Such rules shall be determined by mutual agreement
between the Parties.


8.3 Pursuant to the Interim Agreement, the Chairman of Onyx Japan
initially shall be Howard Hawk of Onyx, and the President of Onyx
Japan initially shall be Hitoshi Nagata of Prime, each of whom shall
be the initial Representative Director of Onyx Japan. The
aforementioned officers shall serve until the appointment of a
successor by Onyx to Mr. Nagata as President and Representative
Director. Upon the appointment of such successor, Mr. Hawk shall
forthwith resign and Mr. Nagata shall be appointed as the Chairman and
Representative Director of Onyx Japan and entitled to remain in such
office. Thereafter, all officers shall be selected by the Board of
Directors. Notwithstanding the foregoing, Mr. Nagata may resign at any
time from the position of President and Representative Director
subject to Onyx's consent, which shall not be unreasonably withheld,
and in such event Prime shall then appoint an alternative President
and Representative Director. After Mr. Nagata is appointed as the
Chairman and Representative Director, Mr. Nagata may resign at any
time, and Prime shall nominate an alternative Representative Director
who shall serve as Executive Vice President. The Parties shall
complete all necessary procedures, ...