<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
Commission Only (as Permitted by
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ONYX SOFTWARE CORPORATION
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
CALCULATION OF REGISTRATION FEE
<TABLE>
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- -------------------------------------------------------------------------------------------
<CAPTION>
Per unit price or
other underlying
Title of each value of
class of Aggregate number transaction
securities to of securities to computed pursuant Proposed maximum
which transaction which transaction to Exchange Act aggregate value of
applies: applies: Rule 0-11: transaction: Total fee paid:
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<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
</TABLE>
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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<PAGE>
[LOGO OF ONYX SOFTWARE CORPORATION]
April 28, 2000
Dear Onyx Shareholders:
I am pleased to invite you to Onyx's annual meeting of shareholders. The
meeting will be at 10:00 a.m. on Wednesday, May 31, 2000 at the Hyatt Regency
Bellevue at Bellevue Place, 900 Bellevue Way N.E., Bellevue, Washington.
At the meeting, you will be asked to elect six directors to the Onyx board
of directors, approve an amendment to our 1998 Employee Stock Purchase Plan and
transact any business properly presented at the meeting. You also will have the
opportunity to hear what has happened in our business in the past year and to
ask questions. You will find other detailed information about Onyx and our
operations, including our Annual Report on Form 10-K and our audited financial
statements, enclosed with the 1999 annual report to shareholders.
We hope you can join us on May 31. Whether or not you can attend, please
read the enclosed proxy statement. When you have done so, please mark your
votes on the enclosed proxy card, sign and date the proxy card, and return it
to us in the enclosed envelope. Your vote is important, so please return your
proxy card promptly.
Sincerely,
/s/ Brent R. Frei
Brent R. Frei
President, Chief Executive Officer
and Chairman of the Board
<PAGE>
[Onyx Logo]
3180--139th Avenue S.E.
Suite 500
Bellevue, Washington 98005-4081
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Wednesday, May 31, 2000
----------------
April 28, 2000
Dear Onyx Shareholders:
On Wednesday, May 31, 2000, Onyx Software Corporation will hold its annual
meeting of shareholders at the Hyatt Regency Bellevue at Bellevue Place, 900
Bellevue Way N.E., Bellevue, Washington. The annual meeting will begin at
10:00 a.m. Only shareholders who owned stock at the close of business on the
record date, April 12, 2000, can vote at this meeting or any adjournment or
postponement that may take place. At the annual meeting we will ask you to:
. Elect six directors to our board of directors as more fully described in
the accompanying proxy statement;
. Approve an amendment to our 1998 Employee Stock Purchase Plan; and
. Transact any other business properly presented at the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSALS
DESCRIBED IN THE PROXY STATEMENT.
At the meeting, we will also report on our 1999 business results and other
matters of interest to shareholders.
To ensure your representation at the annual meeting, you are urged to
complete, sign, date and return the enclosed proxy card as soon as possible in
the enclosed postage-prepaid envelope. Your stock will be voted in accordance
with the instructions you give on your proxy card. You may, of course, attend
the annual meeting and vote in person even if you have previously returned
your proxy card.
The approximate date of mailing this proxy statement and accompanying proxy
card is April 28, 2000.
By order of the board of directors,
/s/ Brent R. Frei
Brent R. Frei
President, Chief Executive Officer
and
Chairman of the Board
PLEASE NOTE THAT ATTENDANCE AT THE ANNUAL MEETING WILL BE LIMITED TO
SHAREHOLDERS AS OF THE RECORD DATE, OR THEIR AUTHORIZED REPRESENTATIVES,
AND GUESTS OF ONYX.
<PAGE>
ONYX SOFTWARE CORPORATION
----------------
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The board of directors of Onyx Software Corporation is sending you this
proxy statement in connection with its solicitation of proxies for use at its
2000 annual meeting of shareholders. The annual meeting will be held at the
Bellevue Hyatt Regency at Bellevue Place, 900 Bellevue Way N.E., Bellevue,
Washington on Wednesday, May 31, 2000 at 10:00 a.m. We intend to give or mail
to shareholders definitive copies of this proxy statement and accompanying
proxy card on or about April 28, 2000.
Record Date and Outstanding Shares
Only those shareholders who owned common stock at the close of business on
April 12, 2000, the record date for the annual meeting, can vote. At that date,
there were 36,171,231 issued and outstanding shares of common stock.
Quorum
A quorum for the annual meeting is a majority of the outstanding shares of
common stock entitled to vote, whether in person or by proxy, at the annual
meeting.
Revocability of Proxies
If you give your proxy to us, you have the power to revoke it at any time
before it is exercised. Your proxy may be revoked by:
. notifying the secretary of Onyx in writing before the annual meeting;
. delivering to the secretary of Onyx before the annual meeting a signed
proxy with a later date; or
. attending the annual meeting and voting in person.
Solicitation of Proxies
We retained ChaseMellon Consulting Services, New York, NY, to help solicit
proxies. We will pay the cost of their services, which is estimated at
approximately $5,000, plus expenses. In addition to soliciting by mail, our
directors, officers and employees may solicit proxies by telephone, facsimile
or otherwise. Our directors, officers and employees will not be additionally
compensated for this solicitation but may be reimbursed for out-of-pocket
expenses they incur. Brokerage firms, fiduciaries and other custodians who
forward soliciting material to the beneficial owners of shares of common stock
held of record by them will be reimbursed for the reasonable expenses they
incur in forwarding the material.
Voting
You are entitled to one vote for each share of common stock you hold. In the
election of directors, the directors who receive the greatest number of
affirmative votes cast by holders of common stock present, whether in person or
by proxy, and entitled to vote at the annual meeting, will be elected to the
board. You are not entitled to cumulate votes in electing directors. Approval
of the amendment to the 1998 Employee Stock Purchase Plan requires that the
votes in favor exceed the votes against such proposal.
1
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If your shares are represented by proxy, they will be voted in accordance
with your directions. If your proxy is signed and returned without any
direction given, your shares will be voted according to our recommendation. We
are not aware, as of the date of this proxy statement, of any matters to be
voted on at the annual meeting other than as stated in this proxy statement and
the accompanying notice of annual meeting of shareholders. If any other matters
are properly brought before the annual meeting, the enclosed proxy gives
discretionary authority to the persons named in it to vote the shares in their
best judgment.
Abstentions and broker non-votes will have no effect on the proposals to be
voted on at the annual meeting since they will not represent votes cast at the
annual meeting for the purpose of voting on such proposals.
If the annual meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the annual meeting all proxies will be voted in the
same manner as the proxies would have been voted at the original convening of
the annual meeting, except for any proxies that have at that time effectively
been revoked or withdrawn, notwithstanding that they may have been effectively
voted on the same or any other matter at a previous meeting.
PROPOSAL 1: ELECTION OF DIRECTORS
Our bylaws currently provide for up to eleven directors. Our board currently
consists of eight directors, Messrs. Bingham, Elmore, Frei, Hoag, Koontz,
Roberts, Santell and Stevenson, all of whose terms will expire at the 2000
annual meeting. Messrs. Hoag and Stevenson will resign from the board
concurrent with the annual meeting and will not stand for reelection. Effective
upon the annual meeting, our bylaws will provide for six directors.
Our board of directors is to be divided into three classes at the 2000
annual meeting. At each subsequent annual meeting of shareholders, successor
directors will be elected to replace those whose terms have expired. Following
the 2000 annual meeting, in order to create a staggered board, the director
elected to serve in Class 1 will serve from the time of election and
qualification until the first annual meeting following election and until a
successor has been duly elected and qualified, the directors elected to serve
in Class 2 will serve from the time of election and qualification until the
second annual meeting following election and until their successors have been
duly elected and qualified, and the directors elected to serve in Class 3 will
serve from the time of election and qualification until the third annual
meeting following election and until their successors have been duly elected
and qualified. Beginning with the 2001 annual meeting, all future directors
will serve from the time of election and qualification until the third annual
meeting following election and until their successors have been duly elected
and qualified. Any additional directorships resulting from an increase in the
number of directors will be distributed among the three classes so that, as
nearly as possible, each class will consist of an equal number of directors.
This classification of the board of directors may have the effect of delaying
or preventing a change in control or in management. Our officers serve at the
discretion of the board of directors. There are no family relationships among
any of our directors or executive officers.
Information is provided below with respect to all nominees for the board of
directors. Unless otherwise instructed, the persons named in the accompanying
proxy intend to vote shares represented by properly executed proxies FOR the
six nominees to the board named below. Although the board anticipates that
Messrs. Bingham, Elmore, Frei, Koontz, Roberts and Santell will be available to
serve as directors, should any of them not accept the nomination, or otherwise
be unwilling or unable to serve, it is intended that the proxies will be voted
for the election of a substitute nominee or nominees designated by the board.
Nominees for Election
Class 1 directors (terms to expire in 2001)
William B. Elmore, age 46, has served as a director of Onyx since 1996.
Since 1995, Mr. Elmore has been a member of Foundation Capital Management,
L.L.C., the general partner of Foundation Capital, L.P., a
2
<PAGE>
venture capital firm focused on early-stage information technology companies.
From 1987 to 1995, he was a general partner of Inman & Bowman, a venture
capital firm. Mr. Elmore serves on the boards of directors of Commerce One,
Inc. and Wind River Systems, Inc., as well as several privately held companies.
Mr. Elmore received his B.S. and M.S. in electrical engineering from Purdue
University and his M.B.A. from Stanford University.
Paul G. Koontz, age 39, has served as a director of Onyx since 1997. Since
1996, Mr. Koontz has been a member of Foundation Capital Management, L.L.C.,
the general partner of Foundation Capital, L.P. From 1995 to 1996, he was with
Sutter Hill Ventures and, in 1994, he was the initial Vice President of
Marketing of Netscape Communications Corporation. From 1987 to 1994, Mr. Koontz
was with Silicon Graphics, Inc., where he held a number of positions, including
Director of Marketing. From 1983 to 1987, he held various marketing and
management positions with Hewlett-Packard Corporation in the United States and
Europe. Mr. Koontz serves on the boards of directors of NetZero, Inc., as well
as several privately held companies. Mr. Koontz received his B.S. in mechanical
engineering from Princeton University and his Masters in engineering management
from Stanford University.
Class 2 directors (terms to expire in 2002)
H. Raymond Bingham, age 54, has served as a director of Onyx since 1999.
Since April 1999, Mr. Bingham has been Chief Executive Officer, and from 1993
to April 1999, he was Chief Financial Officer and Executive Vice President, of
Cadence Design Systems, Inc. From 1988 to 1993, Mr. Bingham was Executive Vice
President and Chief Financial Officer of Red Lion Hotels and Inns. From 1984 to
1988, he was Managing Director of Agrico Overseas Investment Company, a
subsidiary of The Williams Companies, Inc. Mr. Bingham serves on the boards of
directors of Integrated Measurement Systems, Inc., Legato Systems, Inc. and
Tenfold Corp. Mr. Bingham received his B.S. in economics from Weber State
College and his M.B.A. from the Harvard Business School.
Daniel R. Santell, age 41, has served as a director of Onyx since 1994.
Since July 1999, Mr. Santell has been Chief Executive Officer of Q Strategies,
Inc. From July 1996 to July 1999, he was the Vice President of Worldwide
Services for InterWorld Corporation. From 1995 to 1996, he was Director of the
North American Client Services Division for SSA Corporation. From 1992 to 1996,
he was Vice President of Product Development of Platinum Software, and from
1983 to 1992, he was a Manager at Andersen Consulting LLP. Mr. Santell received
his B.S.E. from Purdue University and his M.B.A. from the University of
Washington.
Class 3 directors (terms to expire in 2003)
Brent R. Frei, age 34, is a cofounder of Onyx and has served as a director
since 1994. From 1991 to February 1994, Mr. Frei was a Programmer Analyst with
Microsoft's Information Technology Group, in which position he was involved in
creating international customer information systems. From 1989 to 1990, he was
a mechanical engineer with Motorola Corporation. Mr. Frei serves on the board
of directors of Pacific Edge Software, Inc. Mr. Frei received his B.S. in
engineering from Thayer School of Engineering at Dartmouth College.
Lee D. Roberts, age 47, has served as a director of Onyx since 1999. Since
May 1998, Mr. Roberts has been Chief Executive Officer, and from May 1997 to
May 1998, he was President, of FileNET Corp. Prior to joining FileNET, Mr.
Roberts served in a variety of sales, marketing, product and general management
roles at IBM for more than 20 years. Mr. Roberts received his B.S. in Biology
and his B.A. in Economics from California State University at San Bernadino and
his M.B.A. from the University of California at Riverside.
Information on Committees of the Board of Directors and Meetings
The board has an audit committee and a compensation committee. The board
currently has no nominating committee.
3
<PAGE>
The audit committee makes recommendations to our board of directors
regarding the selection of independent auditors, reviews the scope, results and
costs of audit and other services provided by our independent auditors and
reviews and evaluates our auditing and control functions. Messrs. Bingham, Hoag
and Koontz currently constitute the audit committee. The audit committee met
four times in 1999.
The compensation committee reviews and approves the compensation and
benefits for our executive officers and directors. The compensation committee
also administers our stock option plans and our employee stock purchase plan.
Messrs. Elmore and Koontz constitute the compensation committee. The
compensation committee met four times in 1999.
During 1999, there were five meetings of the Board, one of which was held
telephonically. With the exception of Mr. Bingham, each of Onyx's directors
attended 75% or more of the total number of board meetings held during that
director's service on the board. All directors except Messrs. Bingham and
Koontz attended at least 75% of the meetings held by committees on which they
serve.
Compensation Committee Interlocks and Insider Participation
Currently, no member of the compensation committee is an officer or employee
of Onyx. No member of the compensation committee serves as a member of the
board of directors or compensation committee of any entity that has one or more
executive officers serving as a member of our board of directors or
compensation committee.
Compensation of Directors
Nonemployee directors are entitled to receive $1,000 for each board of
directors meeting attended in person, $500 for each board meeting attended
telephonically, $500 for each committee meeting attended in person and $250 for
each committee meeting attended telephonically. To date, none of our
nonemployee directors has elected to receive these payments. Directors are also
reimbursed for reasonable expenses they incur in attending meetings of the
board of directors and its committees.
In November 1994, we granted Mr. Santell, an Onyx director, a nonqualified
stock option to purchase 100,000 shares of common stock at an exercise price of
$0.06 per share. In January 1999, we granted Mr. Bingham, an Onyx director, a
nonqualified stock option to purchase 100,000 shares of common stock at an
exercise price of $4.50 per share, plus an annual grant over the next five
years, commencing in 2000, of an additional 10,000 shares at an exercise price
equal to the fair market value on the date of the grant. In each of July and
October 1999, we granted Mr. Roberts, an Onyx director, a nonqualified stock
option to purchase 50,000 shares of common stock at a per share exercise price
of $9.91 for the July grant and $11.10 for the October grant. We currently
intend to make comparable option grants to future nonemployee directors.
Directors of Onyx are eligible to participate in our 1998 Stock Incentive
Compensation Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 1, 2000, certain information
regarding the beneficial ownership by:
. each person known to us to own beneficially 5% or more of our
outstanding voting securities, based on publicly available information;
. each of our officers for whom information is provided under "Executive
Compensation" in this proxy statement;
. each of our directors; and
. all of our directors and executive officers as a group.
4
<PAGE>
On March 1, 2000, we had 35,977,926 shares of common stock outstanding. To
our knowledge, the beneficial owners listed below have sole voting and
investment power with respect to the shares shown as beneficially owned. Shares
of common stock subject to options exercisable currently or within 60 days are
deemed outstanding for purposes of computing the percentage ownership of the
person holding the option, but are not deemed outstanding for purposes of
computing the percentage ownership of any other person. Where applicable, the
information in this section is adjusted to reflect the 2-for-1 split of our
common stock effected March 1, 2000.
<TABLE>
<CAPTION>
Shares of Onyx Common Stock
-----------------------------
Number of Shares
Name and Address of Beneficial Owners (1) Beneficially Owned Percentage
----------------------------------------- ------------------ ----------
<S> <C> <C>
Executive Officers
Brent R. Frei................................ 3,190,302 8.87%
Michael D. Racine (2)........................ 2,232,312 6.20
Eben W. Frankenberg (3)...................... 1,601,624 4.45
Mary A. Reeder (4)........................... 235,102 *
Sarwat H. Ramadan (5)........................ 93,062 *
Keith D. Brown............................... 81,702 *
Other Directors
H. Ray Bingham (6)........................... 20,000 *
William B. Elmore (7)........................ 2,732,700 7.60
Jay C. Hoag (8).............................. 910,100 2.53
Paul G. Koontz (9)........................... 2,633,804 7.32
Lee D. Roberts (6)........................... 50,000 *
Daniel R. Santell (10)....................... 100,000 *
Todd A. Stevenson............................ 3,830,002 10.65
All directors and executive officers as a
group (14 persons) (11)..................... 15,536,604 42.43
Other Principal Shareholders
Brian J. Janssen (12)........................ 3,287,790 9.14
Entities Affiliated with Foundation Capital
Management, L.L.C. (13)..................... 2,520,910 7.01
</TABLE>
- --------
* Less than 1% of the outstanding shares of common stock.
(1) The address for Messrs. Frei and Racine is c/o Onyx Software Corporation,
3180--139th Avenue S.E., Suite 500, Bellevue, WA 98005. The address for
Mr. Stevenson is 2000 1st Avenue, No. 1702, Seattle, Washington 98112.
The address for Messrs. Elmore and Koontz and Foundation Capital
Management, L.L.C. is 70 Willow Road, Suite 200, Menlo Park, CA 94025.
The address for Mr. Janssen is 1000 Lakeside Ave. S., Seattle, WA 98144.
(2) Includes 698,000 shares held jointly with Mr. Racine's spouse, 140,600
shares held by the Michael Racine Generation-Skipping Trust of 1998 and
140,600 shares held by the Mary Racine Generation-Skipping Trust of 1998,
trusts for the benefit of Mr. Racine's children. Mr. Racine disclaims
beneficial ownership of such shares.
(3) Includes 50,000 shares held by the Eben Whitfield Frankenberg Generation-
Skipping Trust of 1998 and 50,000 shares held by the Sarah Shaw
Frankenberg Generation-Skipping Trust of 1998, trusts for the benefit of
Mr. Frankenberg's children. Mr. Frankenberg disclaims beneficial
ownership of such shares.
(4) Includes 235,000 shares subject to options exercisable currently or
within 60 days of March 1, 2000.
(5) Includes 32,500 shares subject to an option exercisable currently or
within 60 days of March 1, 2000. Mr. Ramadan's services as Chief
Financial Officer, Vice President, Secretary and Treasurer ended on April
28, 2000.
(6) Represents shares subject to an option exercisable currently or within 60
days of March 1, 2000.
5
<PAGE>
(7) Represents 2,520,910 shares held by entities affiliated with Foundation
Capital Management, L.L.C., 166,492 shares held by the Elmore Family
Trust, of which Mr. Elmore is trustee, and 45,298 shares held by Elmore
Family Investments, L.P., of which Mr. Elmore is general partner. Mr.
Elmore is a member of Foundation Capital Management, L.L.C., the general
partner and a manager of the entities affiliated with Foundation Capital
Management, L.L.C. Mr. Elmore disclaims beneficial ownership of the
shares held by the entities affiliated with Foundation Capital
Management, L.L.C., except to the extent of his pecuniary interest
arising from his interest in Foundation Capital Management II, L.L.C.
(8) Represents 910,100 shares held by entities affiliated with Technology
Crossover Management II, L.L.C. Mr. Hoag is a managing member of
Technology Crossover Management II, L.L.C., the general partner of each
of the entities affiliated with Technology Crossover Management II,
L.L.C. Mr. Hoag disclaims beneficial ownership of the shares held by
entities affiliated with Technology Crossover Management II, L.L.C.,
except to the extent of his pecuniary interest arising from his interest
in Technology Crossover Management II, L.L.C.
(9) Includes 2,520,910 shares held by entities affiliated with Foundation
Capital Management, L.L.C. Mr. Koontz is a member of Foundation Capital
Management, L.L.C., the general partner and a manager of the entities
affiliated with Foundation Capital Management, L.L.C. Mr. Koontz
disclaims beneficial ownership of the shares held by the entities
affiliated with Foundation Capital Management, L.L.C., except to the
extent of his pecuniary interest arising from his interest in Foundation
Capital Management II, L.L.C.
(10) Includes 20,000 shares subject to an option exercisable currently or
within 60 days of March 1, 2000.
(11) Includes 642,500 shares subject to options exercisable currently or
within 60 days of March 1, 2000.
(12) Includes 120,000 shares held by the Brian Janssen Generation-Skipping
Trust of 1998 and 120,000 shares held by the Traci Janssen Generation-
Skipping Trust of 1998, trusts for the benefit of Mr. Janssen's children.
Mr. Janssen disclaims beneficial ownership of such shares.
(13) Foundation Capital Management, L.L.C. is the general partner of
Foundation Capital, L.P. and the manager of Foundation Capital
Entrepreneurs Fund, L.L.C., the record holders of such shares, and thus
is deemed to beneficially own such shares. Messrs. Elmore and Koontz,
directors of Onyx, Kathryn Gould, James Andersen and Michael Schuh are
members of Foundation Capital Management, L.L.C.
ADDITIONAL INFORMATION
Executive Officers Who Are Not Directors
Eben W. Frankenberg, age 33, joined Onyx in January 1995 and has been Senior
Vice President of Sales and Marketing since November 1999, and was Vice
President of Sales from August 1995 to November 1999. From 1990 to December
1994, Mr. Frankenberg was a petroleum geophysicist for Amoco Production
Company, a developer of crude oil and natural gas, and Amoco Netherlands
Petroleum Co., a producer of petroleum. Mr. Frankenberg received his B.A. from
Dartmouth College and his M.S. from Stanford University.
Howard K. Hawk, age 37, has been Vice President of International Operations
of Onyx since August 1996. From 1989 to 1996, Mr. Hawk was Director of
International Information Technology of Microsoft. From 1985 to 1987, he was a
Senior Consultant with Andersen Consulting LLP. Mr. Hawk received his B.S. in
business administration with a concentration in information systems from the
University of Washington.
Michael D. Racine, age 42, has been Senior Vice President of Professional
Services of Onyx since November 1999, and was Vice President of Professional
Services from July 1994 to November 1999. From 1991 to July 1994, Mr. Racine
held various position with Microsoft's Information Technology Group, including
Project Manager in the development and deployment of a revenue consolidation
and reporting system. From 1987 to 1991, he was a Senior Consultant with
Andersen Consulting LLP. Mr. Racine received his B.A. from Utah State
University and his M.B.A. from the University of Oregon.
6
<PAGE>
Mary A. Reeder, age 41, has been Vice President of Product Development of
Onyx since June 1996. From 1989 to May 1996, Ms. Reeder worked for Microsoft,
where she was involved in product development, process management and emerging
technology. From 1987 to 1989, she was an independent consultant, developing
custom software. From 1985 to 1987, she was a Senior Programmer Analyst of Data
I/O Corporation, a manufacturer of engineering programming systems. Ms. Reeder
received her B.S. in computer science and her B.F.A. in graphic design from the
University of Washington.
EXECUTIVE COMPENSATION
Compensation Summary
The following table sets forth the compensation earned by our chief
executive officer and the other executive officers whose salary and bonus for
fiscal 1999 exceeded $100,000. Where applicable, the information in this
section is adjusted to reflect the 2-for-1 split of our common stock effected
on March 1, 2000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Awards
Compensation ------------
----------------- Securities
Name and Principal Bonus Underlying All Other
Position Year Salary($) ($)(1) Options(#) Compensation($)
------------------ ---- --------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Brent R. Frei........... 1999 $100,000 $21,563 -- --
President, Chief 1998 85,000 1,500 -- --
Executive Officer and
Chairman of the Board 1997 74,583 2,250 -- --
Sarwat H. Ramadan....... 1999 160,000 11,500 -- --
Former Chief Financial
Officer, Vice
President, Secretary 1998(3) 80,000 -- 340,000 $16,844(4)
and Treasurer (2) 1997 -- -- -- --
Eben W. Frankenberg..... 1999 100,000 34,376 -- --
Senior Vice President
of Sales and Marketing 1998 87,917 1,250 -- --
1997 74,583 2,250 -- --
Michael D. Racine....... 1999 100,000 19,593 -- --
Senior Vice President
of Professional
Services 1998 87,917 1,250 -- --
1997 74,583 2,250 -- --
Mary A. Reeder.......... 1999 100,000 -- 60,000 --
Vice President of
Product Development 1998 85,000 -- -- --
1997 78,750 750 80,000 --
Keith D. Brown.......... 1999 117,000 3,291 -- --
Former Vice President
of Marketing (5) 1998 114,083 1,250 80,000 --
1997(6) 23,410 -- 160,000 --
</TABLE>
- --------
(1) Represents bonus amounts paid in each fiscal year for service during the
fourth quarter of the previous fiscal year and the first three quarters of
that fiscal year. Does not include bonus amounts earned for service during
the fourth quarter of the applicable fiscal year, which amounts are
determined and paid at the end of the first quarter of the next succeeding
fiscal year.
(2) Mr. Ramadan's services as Chief Financial Officer, Vice President,
Secretary and Treasurer ended on April 28, 2000.
(3) Mr. Ramadan joined Onyx in June 1998. His compensation for 1998 reflects a
partial year of service.
(4) Represents expenses paid to Mr. Ramadan in connection with his relocation
to Seattle, Washington.
(5) Mr. Brown's services as Vice President of Marketing ended on December 31,
1999.
(6) Mr. Brown joined Onyx in October 1997. His compensation for 1997 reflects
a partial year of service.
7
<PAGE>
Option Grants
During fiscal 1999, we granted options to purchase a total of 3,325,768
shares of common stock under our stock option plans to our employees, directors
and consultants, including the individuals listed in the Summary Compensation
Table. No stock appreciation rights were granted during fiscal 1999.
The following table sets forth certain information with respect to stock
options granted to each of the individuals listed in the Summary Compensation
Table in fiscal 1999. In accordance with Securities and Exchange Commission
rules, potential realizable values for the following table are:
. net of exercise price before taxes;
. based on the assumption that our common stock appreciates at the annual
rates shown, compounded annually, from the date of grant until the
expiration of the term; and
. based on the assumption that the option is exercised at the exercise
price and sold on the last day of its term at the appreciated price.
These numbers are calculated based on Securities and Exchange Commission
requirements and do not reflect our projection or estimate of future stock
price growth. Actual gains, if any, on stock option exercises will depend on
the future performance of our common stock.
Option Grants in Fiscal 1999
<TABLE>
<CAPTION>
Potential
Realizable Value
Individual Grants at Assumed Annual
--------------------------------- Rates of Stock
Number of Percent of Price
Securities Total Options Appreciation for
Underlying Granted to Exercise Option Term
Options Employees in Price Expiration -----------------
Name Granted(#) Fiscal Year ($/share) Date 5%($) 10%($)
---- ---------- ------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Brent R. Frei........... -- -- -- -- -- --
Sarwat H. Ramadan....... -- -- -- -- -- --
Eben W. Frankenberg..... -- -- -- -- -- --
Michael D. Racine....... -- -- -- -- -- --
Mary A. Reeder.......... 60,000 1.80% $6.72 8/12/09 $253,570 $642,597
Keith D. Brown.......... -- -- -- -- -- --
</TABLE>
One-fourth of Ms. Reeder's options vest and become exercisable 18 months
after the grant date and an additional one-eighth of her options vest and
become exercisable every six months after the 18-month anniversary of the
grant.
8
<PAGE>
Fiscal Year-End Option Values
The following table presents information about options held by the executive
officers named in the Summary Compensation Table and the value of those options
as of December 31, 1999. The value of in-the-money options is based on the
closing price on December 31, 1999, net of the option exercise price.
Aggregated Option Exercises in 1999 and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares December 31, 1999(#) December 31, 1999($)
Acquired Value ------------------------- -------------------------
Name on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Brent R. Frei........... -- -- -- -- -- --
Sarwat H. Ramadan....... -- -- -- -- -- --
Eben W. Frankenberg..... -- -- -- -- -- --
Michael D. Racine....... 1,244 $ 24,196 248,756 -- $ 681,588 --
Mary A. Reeder.......... -- -- 218,750 181,250 4,095,938 $2,994,863
Keith D. Brown.......... 40,000 453,600 40,000 -- 722,800 --
</TABLE>
Employment Contracts
Pursuant to an employment agreement dated June 11, 1998, we agreed to
provide Mr. Ramadan with an annual salary of $160,000, participation in Onyx's
bonus program, insurance and other employee benefits, options to purchase
340,000 shares of common stock, which vest over a period of four and one-half
years, and a relocation allowance of up to $45,000 to cover relocation expenses
to the Seattle area.
As a result of the cessation of Mr. Ramadan's employment on April 28, 2000,
we agreed to pay Mr. Ramadan $160,000 and to accelerate the vesting of options
to purchase 85,000 shares, which are exercisable immediately.
RELATED TRANSACTIONS WITH EXECUTIVE OFFICERS, DIRECTORS AND 5% SHAREHOLDERS
Not applicable.
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE
The compensation committee of the board of directors (the "committee")
currently consists of William B. Elmore and Paul G. Koontz, both of whom are
nonemployee directors. The committee reviews and determines Onyx's executive
compensation objectives and policies, administers our stock option plans and
approves stock option grants. On an annual basis, the committee evaluates the
performance and compensation of our executive officers.
The committee's executive compensation philosophy is to pay competitively in
order to attract qualified executive personnel capable of leading Onyx in
achieving its business objectives; retain and motivate these executives to
superior performance; link individual compensation to individual and company
performance; and align executives' financial interests with those of our
shareholders.
Our executive compensation program includes the following components:
. competitive base salaries;
. annual bonuses that are structured to encourage executives to focus on
achieving important short-term and long-term corporate objectives; and
. long-term incentives, in the form of stock option grants, which provide
financial rewards on the same basis as those realized by Onyx's
shareholders.
9
<PAGE>
Base Salary. The base salary of the chief executive officer is set at an
amount the committee believes is competitive with salaries paid to executives
of companies of comparable size in similar industries and located within the
local area. In evaluating salaries, the committee considers knowledge of local
pay practices as reported in financial periodicals or otherwise accessible to
the committee, as well as the executive's existing equity position.
Additionally, a review of the chief executive officer's performance and a
general review of Onyx's financial and stock price performance are considered.
The base salary for executive officers is reviewed annually. The chief
executive officer's base salary was increased from $85,000 to $100,000
effective January 1, 1999.
Bonuses. All executives are eligible for cash bonuses based on the
attainment of both corporate and individual goals, with the maximum potential
bonus ranging from 25% to 100% of the executive's base salary. Upon achieving
these goals, bonus payment targets are set as a percentage of base compensation
depending on the executive officer's level of responsibility, with certain
adjustments reflecting individual performance. Bonus payments are presented in
the Summary Compensation Table under the heading "Bonus."
Stock Option Grants. Onyx provides its executive officers and other
employees with long-term incentives through its stock option plans. The
objective of the plans is to provide incentives to maximize shareholder value.
The committee relies on a variety of subjective factors when granting options,
which factors primarily relate to the responsibilities of the individual
officers, their expected future contribution, prior option grants and overall
equity position in Onyx. To encourage stock retention, all options are granted
as incentive stock options to the maximum extent possible under the Internal
Revenue Code. Options are typically granted at the then-current market price.
Prior to January 2000, option grants were typically subject to a four and one-
half year vesting period. After January 2000, option grants are typically
subject to a four-year vesting period.
Section 162(m) of the Internal Revenue Code limits the tax deductibility by
a corporation of compensation in excess of $1 million paid to the chief
executive officer and any other of its four most highly compensated executive
officers. However, compensation which qualifies as "performance-based" is
excluded from the $1 million limit The committee does not presently expect
total cash compensation payable for salaries to exceed the $1 million limit for
any individual executive. Onyx's stock option plans are designed to qualify as
performance-based compensation that is fully deductible by Onyx for income tax
purposes.
The committee believes that our compensation policies have been successful
in attracting and retaining qualified employees and in linking compensation
directly to corporate performance relative to our goals. The committee will
continue to monitor the compensation levels potentially payable under Onyx's
other compensation programs, but intends to retain the flexibility necessary to
provide total compensation in line with competitive practice, Onyx's
compensation philosophy, and Onyx's best interests.
COMPENSATION COMMITTEE
William D. Elmore
Paul G. Koontz
10
<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total shareholder
return for Onyx, the S&P 500 Index and the Application Software Index (as
reported by Microsoft Investor). The graph shows the value of $100 invested on
February 12, 1999 in our common stock, the S&P 500 Index and the Application
Software Index.
Comparison of Cumulative Total Return Among Onyx Software Corporation,
S&P 500 Index and the Application Software Index
[PERFORMANCE CHART OF DATA BELOW]
<TABLE>
<CAPTION>
Feb. 12, 1999 Dec. 31, 1999
----------------------------------------------------
<S> <C> <C>
Onyx $100.00 $284.62
----------------------------------------------------
S&P 500 $100.00 $117.16
----------------------------------------------------
Application Software Index
(as reported by Microsoft
Investor) $100.00 $173.81
</TABLE>
11
<PAGE>
PROPOSAL 2: AMENDMENT TO THE 1998 EMPLOYEE STOCK PURCHASE PLAN
The board of directors recommends a vote FOR approval of the
amendment to the 1998 Employee Stock Purchase Plan.
General
In 1998, the board of directors and shareholders adopted the 1998 Employee
Stock Purchase Plan. The purpose of the purchase plan is to enhance long-term
shareholder value by assisting employees in acquiring a stock ownership in us
and to encourage employees to remain in our service. On March 3, 2000, the
board of directors adopted, subject to shareholder approval, the amendment to
the purchase plan discussed in this proposal.
Amendment
Currently under the purchase plan, employees are not eligible to participate
in a future offering unless they have been employed for three months prior to
the offering. The amended plan requires employees to work for a certain minimum
period of time as specified by the plan administrator for a future offering.
The board of directors believes it is in our best interest to remove the
three-month service requirement so that employees will be eligible to
participate in future offerings as soon as they are hired.
Vote Required for Approval of Amendments
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the annual meeting will
be required to approve the amendment to the purchase plan.
Summary of the Amended and Restated 1998 Employee Stock Purchase Plan
A copy of the purchase plan, as proposed to be amended, is attached to this
proxy statement as Appendix A and is incorporated herein by reference. The
following description of the purchase plan as amended is a summary and does not
purport to be a complete description. See Appendix A for more detailed
information.
Description of the Purchase Plan. The purchase plan is an employee benefit
program that enables qualified employees to purchase shares of common stock
through payroll deductions at a 15% discount from market price, without
incurring broker commissions. To participate, an individual employee must (i)
have worked for Onyx or any of our subsidiaries for a certain minimum period of
time and (ii) be employed in a position with regular hours of 20 hours or more
per week. A participant is not eligible to continue his or her participation in
the purchase plan in the event such participant's employment is voluntarily or
involuntarily terminated, or if he or she owns or will own, as a result of such
participation, 5% or more of the combined voting power or value of all classes
of our stock or the stock of any related corporation. Our nonemployee directors
are not eligible to participate in the purchase plan. Approximately 450
employees are eligible to participate in the purchase plan.
The purchase plan is divided into two six-month offering periods, beginning
on January 1 and July 1 of each year. During these periods, participating
employees accumulate funds in an account used to buy common stock through
payroll deductions at a rate of not less than 1% or more than 10% of such
participant's base pay, commission and bonus during each payroll period in the
purchase period. At the end of each six-month offering period, the market price
is determined and the participating employees' accumulated funds are used to
purchase the appropriate number of whole shares of common stock. No participant
may purchase more than $25,000 in fair market value of common stock for any
calendar year under the purchase plan. The purchase price per share of common
stock under the purchase plan is the lesser of 85% of the per share fair market
value of the common stock on either the first or the last day of the offering
period. For the purpose of calculating the
12
<PAGE>
$25,000 per calendar year purchase limit, the purchase price is the fair market
value of the common stock on the first day of the offering period. On April 12,
2000, the closing price for our common stock on the Nasdaq National Market was
$22.75 per share.
Participants have no right to acquire Onyx shares under the purchase plan
after their employment is terminated. Upon a participant's termination of
employment for any reason on or prior to the last business day of an offering
period, the balance in such participant's account will be paid to the
participant or to his or her estate. Neither payroll deductions credited to a
participant's account nor any rights with regard to the purchase of shares
under the purchase plan may be assigned, transferred, pledged or otherwise
disposed of in any way by the participant, other than by will or the laws of
descent and distribution.
The common stock issued under the purchase plan may be either authorized but
unissued common stock or common stock now held or subsequently acquired by
Onyx.
Administration. The purchase plan is currently administered by the board of
directors. The board is authorized to administer and interpret the purchase
plan to make such rules and regulations as it deems necessary to administer the
purchase plan, so long as such interpretation, administration or application
with respect to purchases under the purchase plan corresponds to the
requirements of Section 423 of the Internal Revenue Code.
Amendment of the Purchase Plan. The board of directors has the power to
amend, suspend or terminate the purchase plan, except that the board may not
amend the purchase plan without shareholder approval if such approval is
required by Section 423 of the Code.
Federal Income Tax Consequences. Onyx intends that the purchase plan qualify
as an "employee stock purchase plan" under Section 423 of the Code. The
following discussion summarizes the material federal income tax consequences to
Onyx and the participants in connection with the purchase plan under existing
applicable provisions of the Code and the regulations under the Code. The
discussion is general in nature and does not address issues relating to the
income tax circumstances of any individual employee. The discussion is based on
federal income tax laws in effect on the date of this proxy statement and is
subject to possible future changes in the law. The discussion does not address
the consequences of state, local or foreign tax laws.
Under the Code, Onyx is deemed to grant participants an "option" on the
first day of each six-month offering period to purchase as many shares of
common stock as the participant will be able to purchase with the payroll
deductions credited to his or her account during the offering period. On the
last day of each six-month offering period, the market price is determined and
the participant is deemed to have exercised the "option" and purchased the
number of shares of common stock his or her accumulated payroll deductions will
purchase at the market price.
For favorable tax treatment, the common stock acquired under the purchase
plan may not be disposed of until the later of (i) two years after the deemed
"option" is granted (the first day of an offering period) and (ii) one year
after the deemed "option" is exercised and the common stock is purchased (the
last day of an offering period). Thus, the common stock must be held for at
least one and one-half years after it is purchased to gain favorable tax
treatment. When the common stock is disposed of after this period, the
participant realizes ordinary income to the extent of the lesser of (a) the
amount by which the fair market value of the common stock at the time the
deemed "option" was granted exceeded the "option price" and (b) the amount by
which the fair market value of the common stock at the time of the disposition
exceeded the "option price." "Option price" is determined as of the date of
grant and, therefore, is equal to 85% of the fair market value of the common
stock as of the first day of an offering period. Thus, the maximum amount of
gain taxable as ordinary income is the amount of the 15% discount measured as
of the first day of an offering period. Any further gain is taxed at capital
gain rates. If the sale price is less than the option price, there is no
ordinary income and the participant recognizes long-term capital loss.
13
<PAGE>
When a participant sells the common stock before the required holding period
expires, the participant recognizes ordinary income to the extent of the
different between the price actually paid for the common stock and the fair
market value of the common stock at the date the option was exercised (the last
day of an offering period), regardless of the price at which the common stock
is sold. If the sale price is less than the fair market value of the common
stock at the date of exercise, the participant will also have a capital loss
equal to such difference.
Even though a participant who meets the requisite holding period must treat
part of his or her gain on a disposition of the common stock as ordinary
income, Onyx may not take a business deduction for such amount. However, if a
participant disposes of common stock before the end of the requisite holding
period, the amount of income that the participant must report as ordinary
income qualifies as a business deduction for Onyx for the year of such
disposition.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Onyx's
officers, directors and persons who own more than 10% of a registered class of
Onyx's equity securities to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater-
than-10% shareholders are required by Securities and Exchange Commission
regulation to furnish Onyx with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it received, or
written representations from certain reporting persons that no forms were
required for those persons, Onyx believes that during 1999 all filing
requirements required by Section 16(a) applicable to its officers, directors
and greater-than-10% beneficial owners were complied with.
INDEPENDENT PUBLIC AUDITOR
Our board of directors has selected Ernst & Young LLP to serve as our
independent auditor in 2000. Ernst & Young LLP has been our independent auditor
since inception. A representative of Ernst & Young LLP will be present at the
annual meeting to respond to appropriate questions and will have the
opportunity to make a statement, if desired.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Under the Securities and Exchange Commission's proxy rules, shareholder
proposals that meet certain conditions may be included in Onyx's proxy
statement and form of proxy for a particular annual meeting. Shareholders that
intend to present a proposal at Onyx's 2001 annual meeting must give notice of
the proposal to Onyx no later than December 29, 2000 to be considered for
inclusion in the proxy statement and form of proxy relating to that meeting.
Shareholders that intend to present a proposal that will not be included in the
proxy statement and form of proxy must give notice of the proposal to Onyx no
fewer than 90 or more than 120 days prior to the one-year anniversary date of
the 2000 annual meeting. Receipt by Onyx of any such proposal from a qualified
shareholder in a timely manner will not guarantee its inclusion in Onyx's proxy
materials or its presentation at the 2001 annual meeting because there are
other requirements in the proxy rules.
14
<PAGE>
OTHER MATTERS
As of the date of this proxy statement, the board does not intend to
present, and has not been informed that any other person intends to present,
any matters for action at the annual meeting other than the matters
specifically referred to in this proxy statement. If other matters properly
come before the annual meeting, it is intended that the holders of the proxies
will act in accordance with their best judgment.
Copies of the Onyx 1999 Annual Report to Shareholders are being mailed to
shareholders, together with this proxy statement, form of proxy and notice of
annual meeting of shareholders. Additional copies may be obtained from the
Secretary of Onyx, 3180--139th Avenue N.E., Suite 500, Bellevue, Washington
98005-4081.
ONYX'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS INCLUDED WITH
ONYX'S 1999 ANNUAL REPORT TO SHAREHOLDERS.
By Order of the Board of Directors,
/s/ Brent R. Frei
Brent R. Frei
President, Chief Executive Officer
and
Chairman of the Board
Bellevue, Washington
April 28, 2000
15
<PAGE>
Appendix A
ONYX SOFTWARE CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE
The purposes of the Onyx Software Corporation 1998 Employee Stock Purchase
Plan (the "Plan") are (a) to assist employees of Onyx Software Corporation, a
Washington corporation (the "Company"), and its designated subsidiaries in
acquiring a stock ownership interest in the Company pursuant to a plan that is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended, and (b) to encourage employees
to remain in the employ of the Company and its subsidiaries.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth
below:
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Company's Compensation Committee.
"Company" means Onyx Software Corporation, a Washington corporation.
"Corporate Transaction" means either of the following events:
(a) Consummation of any merger or consolidation of the Company with or
into another corporation; or
(b) Consummation of any sale, lease, exchange or other transfer in one
transaction or a series of related transactions of all or substantially all
of the Company's assets other than a transfer of the Company's assets to a
Subsidiary Corporation.
"Designated Subsidiary" has the meaning set forth under the definition of
"Eligible Employee" in this Section 2.
"Eligible Compensation" means all regular cash compensation including
overtime, cash bonuses and commissions. Regular cash compensation does not
include severance pay, hiring and relocation bonuses, pay in lieu of vacations,
sick leave or any other special payments.
"Eligible Employee" means any employee of the Company or any domestic
Subsidiary Corporation or any other Subsidiary Corporation designated by the
Board or the Committee (each a "Designated Subsidiary"), who is in the employ
of the Company (or any Designated Subsidiary) on one or more Offering Dates and
who meets the following criteria:
(a) the employee does not, immediately after the option is granted, own
stock (as defined by the Code) possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company or of a Parent
Corporation or a Subsidiary Corporation of the Company;
(b) the employee's customary employment is for more than 20 hours per
week; provided, however, that the Plan Administrator may decrease this
minimum requirement for future Offering Periods; and
<PAGE>
(c) if specified by the Plan Administrator for future offerings, the
employee has been employed for a certain minimum period of time as of an
Offering Date; provided, however, that any such minimum employment period
may not exceed two years.
If the Company permits any employee of a Designated Subsidiary to participate
in the Plan, then all employees of that Designated Subsidiary who meet the
requirements of this paragraph shall also be considered Eligible Employees.
"Enrollment Period" has the meaning set forth in Section 7.1.
"ESPP Broker" has the meaning set forth in Section 10.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"New Purchase Date" has the meaning set forth in Sections 21.2 and 21.3.
"Offering" has the meaning set forth in Section 5.1.
"Offering Date" means the first day of an Offering.
"Offering Period" has the meaning set forth in Section 5.1.
"Option" means an option granted under the Plan to an Eligible Employee to
purchase shares of Stock.
"Parent Corporation" means any corporation, other than the Company, in an
unbroken chain of corporations ending with the Company, if, at the time of the
granting of the Option, each of the corporations, other than the Company, owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
"Participant" means any Eligible Employee who has elected to participate in
an Offering in accordance with the procedures set forth in Section 7.1 and who
has not withdrawn from the Plan or whose participation in the Plan is not
terminated.
"Plan" means the Onyx Software Corporation 1998 Employee Stock Purchase
Plan.
"Purchase Date" means the last day of each Purchase Period.
"Purchase Period" has the meaning set forth in Section 5.2.
"Purchase Price" has the meaning set forth in Section 6.
"Stock" means the common stock of the Company.
"Subscription" has the meaning set forth in Section 7.1.
"Subsidiary Corporation" means any corporation, other than the Company, in
an unbroken chain of corporations beginning with the Company, if, at the time
of the granting of the Option, each of the corporations, other than the last
corporation in the unbroken chain, owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
2
<PAGE>
SECTION 3. ADMINISTRATION
3.1 Plan Administrator
The Plan shall be administered by the Board or the Committee or, if and to
the extent the Board or the Committee designates an executive officer of the
Company to administer the Plan, by such executive officer (each, the "Plan
Administrator"). Any decisions made by the Plan Administrator shall be
applicable equally to all Eligible Employees.
3.2 Administration and Interpretation by the Plan Administrator
Subject to the provisions of the Plan, the Plan Administrator shall have the
authority, in its sole discretion, to determine all matters relating to Options
granted under the Plan, including all terms, conditions, restrictions and
limitations of Options; provided, however, that all Participants granted
Options pursuant to the Plan shall have the same rights and privileges within
the meaning of Code Section 423. The Plan Administrator shall also have
exclusive authority to interpret the Plan and may from time to time adopt, and
change, rules and regulations of general application for the Plan's
administration. The Plan Administrator's interpretation of the Plan and its
rules and regulations, and all actions taken and determinations made by the
Plan Administrator pursuant to the Plan, unless revised by the Board or the
Committee, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's other officers or employees as the Plan Administrator so determines.
SECTION 4. STOCK SUBJECT TO PLAN
Subject to adjustment from time to time as provided in Section 21, the
maximum number of shares of the Company's Stock which shall be available for
issuance under the Plan shall be 1,000,000(/1/) shares, plus an annual increase
to be added on the first day of the Company's fiscal year beginning in 2000
equal to the lesser of (a) 400,000(/1/) shares of Stock and (b) 1.2% of the
adjusted average common shares outstanding of the Company used to calculate
fully diluted earnings per share as reported in the Annual Report to
shareholders for the preceding year, or (c) a lesser amount determined by the
Board; provided, however, that any shares from any increases in previous years
that are not actually issued shall be added to the aggregate number of shares
available for issuance under the Plan. Shares issued under the Plan shall be
drawn from authorized and unissued shares or shares now held or subsequently
acquired by the Company.
SECTION 5. OFFERING DATES
5.1 Offering Periods
(a) Except as otherwise set forth below, the Plan shall be implemented by a
series of Offerings (each, an "Offering"). Offerings shall commence on January
1 and July 1 of each year and end on the next June 30 and December 31,
respectively, occurring thereafter (each, an "Offering Period"); provided,
however, that the first Offering Period shall begin on the day (the "IPO Date")
on which shares of the Company's Stock are first offered to the public in an
underwritten initial public offering of such Stock pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission (such day being the first trading day for the Stock on the Nasdaq
National Market, the New York Stock Exchange or other applicable trading
market), and shall end on June 30, 1999.
(b) Notwithstanding the foregoing, the Board may establish (i) a different
term for one or more Offerings and (ii) different commencing and ending dates
for such Offerings; provided, however, that an Offering Period may not exceed
five years; and provided, further, that if the Purchase Price may be less than
85% of the fair market value of the Stock on the Purchase Date, the Offering
Period may not exceed 27 months.
- --------
(/1/)Such number reflects the 2-for-1 stock split effected March 1, 2000.
3
<PAGE>
(c) In the event the first or the last day of an Offering Period is not a
regular business day, then the first day of the Offering Period shall be deemed
to be the next regular business day and the last day of the Offering Period
shall be deemed to be the last preceding regular business day. An employee who
becomes eligible to participate in the Plan after an Offering Period has
commenced shall not be eligible to participate in such Offering but may
participate in any subsequent Offering, provided that such employee is still an
Eligible Employee as of the commencement of any such subsequent Offering.
Eligible Employees may not participate in more than one Offering at a time.
5.2 Purchase Periods
Each Offering Period shall consist of one or more consecutive purchase
periods (each, a "Purchase Period"). The last day of each Purchase Period shall
be the Purchase Date for such Purchase Period. Except as otherwise set forth
below, each Purchase Period shall commence on January 1 and July 1 of each year
and end on the next June 30 and December 31, respectively, occurring
thereafter; provided, however, that the Purchase Period for the first Offering
shall commence on the IPO Date and end on June 30, 1999. Notwithstanding the
foregoing, the Board may establish (a) a different term for one or more
Purchase Periods and (b) different commencing and ending dates for any such
Purchase Period. In the event the first or last day of a Purchase Period is not
a regular business day, then the first day of the Purchase Period shall be
deemed to be the next regular business day and the last day of the Purchase
Period shall be deemed to be the last preceding regular business day.
5.3 Governmental Approval; Shareholder Approval
Notwithstanding any other provision of the Plan to the contrary, an Option
granted pursuant to the Plan shall be subject to (a) obtaining all necessary
governmental approvals and qualifications of the Plan and the issuance of
Options and sale of Stock pursuant to the Plan and (b) obtaining shareholder
approval of the Plan.
SECTION 6. PURCHASE PRICE
The purchase price (the "Purchase Price") at which Stock may be acquired in
an Offering pursuant to the exercise of all or any portion of an Option granted
under the Plan (the "Offering Exercise Price") shall be 85% of the lesser of
(a) the fair market value of the Stock on the Offering Date of such Offering
and (b) the fair market value of the Stock on the Purchase Date; provided,
however, that the Purchase Price for the first Offering Period that begins on
the IPO Date shall be the lesser of (a) 100% of the initial public offering
price per share of Stock, before underwriters' discounts or concessions, set
forth in that certain Underwriting Agreement between the Company and the
representatives of the underwriters when executed in connection with the
Company's initial public offering of the Stock and (b) 85% of the fair market
value of the Stock on the Purchase Date. The fair market value of the Stock on
the Offering Date or on the Purchase Date shall be the closing price for the
Stock as reported for such day by the Nasdaq National Market, the New York
Stock Exchange or other trading market on which the Company's Stock may then be
traded (the "Exchange"). If no sales of the Stock were made on the Exchange on
such day, fair market value shall mean the closing price for the Stock as
reported for the next preceding day on which sales of the Stock were made on
the Exchange. If the Stock is not listed on an Exchange, the Board shall
designate an alternative method of determining the fair market value of the
Stock.
SECTION 7. PARTICIPATION IN THE PLAN
7.1 Initial Participation
An Eligible Employee shall become a Participant on the first Offering Date
after satisfying the eligibility requirements and delivering to the Plan
Administrator during the enrollment period established by the Plan
Administrator (the "Enrollment Period") a subscription (the "Subscription"):
(a) indicating the Eligible Employee's election to participate in the
Plan;
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(b) authorizing payroll deductions and stating the amount to be deducted
regularly from the Participant's pay; and
(c) authorizing the purchase of Stock for the Participant in each
Purchase Period.
An Eligible Employee who does not deliver a Subscription as provided above
during the Enrollment Period shall not participate in the Plan for that
Offering Period or for any subsequent Offering Period unless such Eligible
Employee subsequently enrolls in the Plan by filing a Subscription with the
Company during the Enrollment Period for such subsequent Offering Period. The
Company may, from time to time, change the Enrollment Period for any future
Offering as deemed advisable by the Plan Administrator, in its sole discretion,
for the proper administration of the Plan.
7.2 Continued Participation
A Participant shall automatically participate in the next Offering Period
until such time as such Participant withdraws from the Plan pursuant to Section
11.2 or 11.3 or terminates employment as provided in Section 13.
SECTION 8. LIMITATIONS ON RIGHT TO PURCHASE SHARES
8.1 Number of Shares Purchased
The maximum number of shares of Stock that may be offered to a Participant
on any Offering Date shall be equal to $25,000 divided by the fair market value
of one share of Stock on the applicable Offering Date. Further, no Participant
shall be entitled to purchase Stock under the Plan (or any other employee stock
purchase plan that is intended to meet the requirements of Code Section 423
sponsored by the Company, a Parent Corporation or a Subsidiary Corporation)
with a fair market value exceeding $25,000, determined as of the Offering Date
for each Offering Period (or such other limit as may be imposed by the Code),
in any calendar year in which a Participant participates in the Plan (or other
employee stock purchase plan described in this Section 8.1).
8.2 Pro Rata Allocation
In the event the number of shares of Stock that might be purchased by all
Participants in the Plan exceeds the number of shares of Stock available in the
Plan, the Plan Administrator shall make a pro rata allocation of the remaining
shares of Stock in as uniform a manner as shall be practicable and as the Plan
Administrator shall determine to be equitable. Fractional shares may not be
issued under the Plan unless the Plan Administrator determines otherwise for
future Offering Periods.
SECTION 9. PAYMENT OF PURCHASE PRICE
9.1 General Rules
Subject to Section 9.11, Stock that is acquired pursuant to the exercise of
all or any portion of an Option may be paid for only by means of payroll
deductions from the Participant's Eligible Compensation. Except as set forth in
this Section 9, the amount of compensation to be withheld from a Participant's
Eligible Compensation during each pay period shall be determined by the
Participant's Subscription.
9.2 Percent Withheld
The amount of payroll withholding for each Participant for purchases
pursuant to the Plan during any pay period shall be at least 1% but shall not
exceed 10% of the Participant's Eligible Compensation for such pay period.
Amounts shall be withheld in whole percentages only.
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9.3 Payroll Deductions
Payroll deductions shall commence on the first payday following the Offering
Date and shall continue through the last payday of the Offering Period unless
sooner altered or terminated as provided in the Plan.
9.4 Memorandum Accounts
Individual accounts shall be maintained for each Participant for memorandum
purposes only. All payroll deductions from a Participant's Eligible
Compensation shall be credited to such account but shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.
9.5 No Interest
No interest shall be paid on payroll deductions received or held by the
Company.
9.6 Acquisition of Stock
On each Purchase Date of an Offering Period, each Participant shall
automatically acquire, pursuant to the exercise of the Participant's Option,
the number of shares of Stock arrived at by dividing the total amount of the
Participant's accumulated payroll deductions for the Purchase Period by the
Purchase Price; provided, however, that the number of shares of Stock purchased
by the Participant shall not exceed the number of whole shares of Stock so
determined, unless the Plan Administrator has determined for any future
Offering that fractional shares may be issued under the Plan; and provided,
further, that the number of shares of Stock purchased by the Participant shall
not exceed the number of shares for which Options have been granted to the
Participant pursuant to Section 8.1.
9.7 Refund of Excess Amounts
Any cash balance remaining in the Participant's account at the termination
of each Purchase Period shall be refunded to the Participant as soon as
practical after the Purchase Date without the payment of any interest;
provided, however, that if the Participant participates in the next Purchase
Period, any cash balance remaining in the Participant's account shall be
applied to the purchase of Stock in the new Purchase Period, provided such
purchase complies with Section 8.1.
9.8 Withholding Obligations
At the time the Option is exercised, in whole or in part, or at the time
some or all of the Stock is disposed of, the Participant shall make adequate
provision for federal and state withholding obligations of the Company, if any,
that arise upon exercise of the Option or upon disposition of the Stock. The
Company may withhold from the Participant's compensation the amount necessary
to meet such withholding obligations.
9.9 Termination of Participation
No Stock shall be purchased on behalf of a Participant on a Purchase Date if
his or her participation in the Offering or the Plan has terminated on or
before such Purchase Date.
9.10 Procedural Matters
The Company may, from time to time, establish (a) limitations on the
frequency and/or the number of any permitted changes in the amount withheld
during an Offering, as set forth in Section 11.1, (b) an exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars, (c)
payroll withholding in excess of the amount designated by a Participant in
order to adjust for delays or mistakes in the Company's processing of
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properly completed withholding elections and (d) such other limitations or
procedures as deemed advisable by the Company in its sole discretion that are
consistent with the Plan and in accordance with the requirements of Code
Section 423.
9.11 Leaves of Absence
During leaves of absence approved by the Company and meeting the
requirements of the applicable Treasury Regulations promulgated under the Code,
a Participant may elect to continue participation in the Plan by delivering
cash payments to the Plan Administrator on the Participant's normal paydays
equal to the amount of his or her payroll deduction under the Plan had the
Participant not taken a leave of absence. Currently, the Treasury Regulations
provide that a Participant may continue participation in the Plan only during
the first 90 days of a leave of absence unless the Participant's reemployment
rights are guaranteed by statute or contract.
SECTION 10. STOCK PURCHASED UNDER THE PLAN
10.1 ESPP Broker
If the Plan Administrator designates or approves a stock brokerage or other
financial services firm (the "ESPP Broker") to hold shares purchased under the
Plan for the accounts of Participants, the following procedures shall apply.
Promptly following each Purchase Date, the number of shares of Stock purchased
by each Participant shall be deposited into an account established in the
Participant's name with the ESPP Broker. A Participant shall be free to
undertake a disposition of the shares of Stock in his or her account at any
time but, in the absence of such a disposition, the shares of Stock must remain
in the Participant's account at the ESPP Broker until the holding period set
forth in Code Section 423 has been satisfied. With respect to shares of Stock
for which the holding periods set forth above have been satisfied, the
Participant may move those shares of Stock to another brokerage account of the
Participant's choosing or request that a stock certificate be issued and
delivered to him or her. Any dividends paid in the form of shares of Stock with
respect to Stock in a Participant's account shall be credited to such account.
A Participant who is not subject to payment of U.S. income taxes may move his
or her shares of Stock to another brokerage account of his or her choosing or
request that a stock certificate be delivered to him or her at any time,
without regard to the Code Section 423 holding period.
10.2 Notice of Disposition
By entering the Plan, each Participant agrees to promptly give the Company
notice of any Stock disposed of within the later of one year from the Purchase
Date and two years from the Offering Date for such Stock, showing the number of
such shares disposed of and the Purchase Date and Offering Date for such Stock.
This notice shall not be required if and so long as the Company has a
designated ESPP Broker.
SECTION 11. WITHHOLDING CHANGES AND VOLUNTARY WITHDRAWAL
11.1 Changes in Withholding Notices
(a) Unless otherwise determined by the Plan Administrator for a future
Offering, a Participant may not change his or her rate of payroll withholding
during an Offering Period, except that a Participant may cease contributions
during an Offering Period and have all payroll deductions accrued as of the
date of such notice to the Plan Administrator applied toward the purchase of
Stock on the Purchase Date. Notice of any such election must be delivered to
the Plan Administrator in such form and in accordance with such terms as the
Plan Administrator may establish for an Offering. Unless otherwise indicated,
discontinuance of payroll contributions during an Offering shall not result in
withdrawal from the Plan or any succeeding Offering therein.
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(b) A Participant may elect to increase or decrease the amount to be
withheld from his or her Eligible Compensation for future Offerings; provided,
however, that notice of such election must be delivered to the Plan
Administrator in such form and in accordance with such terms as the Plan
Administrator may establish for an Offering.
11.2 Withdrawal From an Offering
A Participant may withdraw from an Offering by signing and delivering to the
Company's Plan Administrator a written notice of withdrawal on a form provided
by the Company for such purpose. Such withdrawal must be elected at least ten
days prior to the end of the Purchase Period for which such withdrawal is to be
effective or by any other date specified by the Plan Administrator for any
future Offering. If a Participant withdraws after the Purchase Date for a
Purchase Period of an Offering, the withdrawal shall not affect Stock acquired
by the Participant in any earlier Purchase Periods. Unless otherwise indicated,
withdrawal from an Offering shall not result in a withdrawal from the Plan or
any succeeding Offering therein. A Participant is prohibited from again
participating in the same Offering at any time upon withdrawal from such
Offering. The Company may, from time to time, impose a requirement that the
notice of withdrawal be on file with the Plan Administrator for a reasonable
period prior to the effectiveness of the Participant's withdrawal.
11.3 Withdrawal From the Plan
A Participant may withdraw from the Plan by signing a written notice of
withdrawal on a form provided by the Company for such purpose and delivering
such notice to the Plan Administrator. Such notice must be delivered at least
ten days prior to the end of the Purchase Period for which such withdrawal is
to be effective or by any other date specified by the Plan Administrator for
any future Offering. In the event a Participant voluntarily elects to withdraw
from the Plan, the Participant may not resume participation in the Plan during
the same Offering Period, but may participate in any subsequent Offering under
the Plan by again satisfying the definition of Eligible Employee. The Company
may impose, from time to time, a requirement that the notice of withdrawal be
on file with the Plan Administrator for a reasonable period prior to the
effectiveness of the Participant's withdrawal.
11.4 Return of Payroll Deductions
Upon withdrawal from an Offering pursuant to Section 11.2 or from the Plan
pursuant to Section 11.3, the withdrawing Participant's accumulated payroll
deductions that have not been applied to the purchase of Stock shall be
returned as soon as practical after the withdrawal, without the payment of any
interest, to the Participant and the Participant's interest in the Offering
shall terminate. Such accumulated payroll deductions may not be applied to any
other Offering under the Plan.
SECTION 12. MARKET STANDOFF
In connection with the underwritten initial public offering by the Company
of its Common Stock, neither a Participant nor any beneficiary designated
pursuant to Section 14.2 shall sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose of or
transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to any Common Stock issued under the Plan for a
period of 180 days after the IPO Date, except that the foregoing provision
shall not apply in the event of the Participant's death or "disability" as that
term is defined in Section 22(e)(3) of the Code.
In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's Common Stock effected as a class without the Company's receipt of
consideration, any new, substituted or additional securities distributed with
respect to the purchased Common Stock shall be immediately subject to the
provisions of this Section 12.
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In order to enforce the limitations of this Section 12, the Company may
issue stop-transfer instructions to the ESPP Broker and/or the Company's
transfer agent until the end of the period ending 180 days after the IPO Date.
SECTION 13. TERMINATION OF EMPLOYMENT
Termination of a Participant's employment with the Company for any reason,
including retirement, death or the failure of a Participant to remain an
Eligible Employee, shall immediately terminate the Participant's participation
in the Plan. The payroll deductions credited to the Participant's account since
the last Purchase Date shall, as soon as practical, be returned to the
Participant or, in the case of a Participant's death, to the Participant's
legal representative or designated beneficiary as provided in Section 14.2, and
all of the Participant's rights under the Plan shall terminate. Interest shall
not be paid on sums returned to a Participant pursuant to this Section 13.
SECTION 14. RESTRICTIONS ON ASSIGNMENT
14.1 Transferability
An Option granted under the Plan shall not be transferable and such Option
shall be exercisable during the Participant's lifetime only by the Participant.
The Company will not recognize, and shall be under no duty to recognize, any
assignment or purported assignment by a Participant of the Participant's
interest in the Plan, of his or her Option or of any rights under his or her
Option.
14.2 Beneficiary Designation
The Plan Administrator may permit a Participant to designate a beneficiary
who is to receive any shares and cash, if any, from the Participant's account
under the Plan in the event the Participant dies after the Purchase Date for an
Offering but prior to delivery to such Participant of such shares and cash. In
addition, the Plan Administrator may permit a Participant to designate a
beneficiary who is to receive any cash from the Participant's account under the
Plan in the event that the Participant dies before the Purchase Date for an
Offering. Such designation may be changed by the Participant at any time by
written notice to the Plan Administrator.
SECTION 15. NO RIGHTS AS SHAREHOLDER UNTIL SHARES ISSUED
With respect to shares of Stock subject to an Option, a Participant shall
not be deemed to be a shareholder of the Company, and he or she shall not have
any rights or privileges of a shareholder. A Participant shall have the rights
and privileges of a shareholder of the Company when, but not until, a
certificate or its equivalent has been issued to the Participant for the shares
of Stock following exercise of the Participant's Option.
SECTION 16. LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN
The Plan is intended to provide Stock for investment and not for resale. The
Company does not, however, intend to restrict or influence any Participant in
the conduct of his or her own affairs. A Participant, therefore, may sell Stock
purchased under the Plan at any time he or she chooses, subject to compliance
with any applicable federal and state securities laws. A Participant assumes
the risk of any market fluctuations in the price of the Stock.
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SECTION 17. AMENDMENT OF THE PLAN
The Board may amend the Plan in such respects as it shall deem advisable;
provided, however, that, to the extent required for compliance with Code
Section 423 or any applicable law or regulation, shareholder approval will be
required for any amendment that will (a) increase the total number of shares as
to which Options may be granted under the Plan, (b) modify the class of
employees eligible to receive Options, or (c) otherwise require shareholder
approval under any applicable law or regulation.
SECTION 18. TERMINATION OF THE PLAN
The Plan shall continue in effect for ten years after the date of its
adoption by the Board. Notwithstanding the foregoing, the Board may suspend or
terminate the Plan at any time. During any period of suspension or upon
termination of the Plan, no Options shall be granted; provided, however, that
suspension or termination of the Plan shall have no effect on Options granted
prior thereto.
SECTION 19. NO RIGHTS AS AN EMPLOYEE
Nothing in the Plan shall be construed to give any person (including any
Eligible Employee or Participant) the right to remain in the employ of the
Company or a Parent or Subsidiary Corporation or to affect the right of the
Company or a Parent or Subsidiary Corporation to terminate the employment of
any person (including any Eligible Employee or Participant) at any time with or
without cause.
SECTION 20. EFFECT UPON OTHER PLANS
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Parent or Subsidiary
Corporation. Nothing in the Plan shall be construed to limit the right of the
Company, any Parent Corporation or Subsidiary Corporation to (a) establish any
other forms of incentives or compensation for employees of the Company, a
Parent Corporation or Subsidiary Corporation or (b) grant or assume options
otherwise than under the Plan in connection with any proper corporate purpose,
including, but not by way of limitation, the grant or assumption of options in
connection with the acquisition, by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, firm or
association.
SECTION 21. ADJUSTMENTS
21.1 Adjustment of Shares
In the event that, at any time or from time to time, a stock dividend, stock
split, spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to shareholders other than a normal cash dividend,
or other change in the Company's corporate or capital structure results in (a)
the outstanding shares, or any securities exchanged therefor or received in
their place, being exchanged for a different number or kind of securities of
the Company or of any other corporation or (b) new, different or additional
securities of the Company or of any other corporation being received by the
holders of shares of Stock, then (subject to any required action by the
Company's shareholders), the Board or the Committee, in its sole discretion,
shall make such equitable adjustments as it shall deem appropriate in the
circumstances in (i) the maximum number and kind of shares of Stock subject to
the Plan as set forth in Section 4 and (ii) the number and kind of securities
that are subject to any outstanding Option and the per share price of such
securities. The determination by the Board or the Committee as to the terms of
any of the foregoing adjustments shall be conclusive and binding.
Notwithstanding the foregoing, a dissolution or liquidation of the Company or a
Corporate Transaction shall not be governed by this Section 21.1 but shall be
governed by Sections 21.2 and 21.3, respectively.
10
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21.2 Dissolution or Liquidation of the Company
In the event of the proposed dissolution or liquidation of the Company, the
Offering Period then in progress shall be shortened by setting a new Purchase
Date (the "New Purchase Date"), and shall terminate immediately prior to the
consummation of such proposed dissolution or liquidation, unless provided
otherwise by the Board. The New Purchase Date shall be a specified date before
the date of the Company's proposed dissolution or liquidation. The Board shall
notify each Participant in writing, at least ten business days prior to the New
Purchase Date, that the Purchase Date for the Participant's Option has been
changed to the New Purchase Date and that the Participant's Option shall be
exercised automatically on the New Purchase Date, unless prior to such date the
Participant has withdrawn from the Offering Period or the Plan as provided in
Section 11 hereof.
21.3 Corporate Transactions
In the event of a Corporate Transaction, each outstanding Option shall be
assumed or an equivalent option substituted by the successor corporation or a
parent or subsidiary corporation of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option,
the Offering Period then in progress shall be shortened by setting a new
Purchase Date (the "New Purchase Date"). The New Purchase Date shall be a
specified date before the date of the Corporate Transaction. The Board shall
notify each Participant in writing, at least ten business days prior to the New
Purchase Date, that the Purchase Date for the Participant's Option has been
changed to the New Purchase Date and that the Participant's Option shall be
exercised automatically on the New Purchase Date, unless prior to such date the
Participant has withdrawn from the Offering Period or the Plan as provided in
Section 11 hereof.
21.4 Limitations
The grant of Options shall in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
SECTION 22. REGISTRATION; CERTIFICATES FOR SHARES
The Company shall be under no obligation to any Participant to register for
offering or resale under the Securities Act of 1933, as amended, or register or
qualify under state securities laws, any shares of Stock. The Company may issue
certificates for shares with such legends and subject to such restrictions on
transfer and stop-transfer instructions as counsel for the Company deems
necessary or desirable for compliance by the Company with federal and state
securities laws.
SECTION 23. EFFECTIVE DATE
The Plan's effective date is the date on which it is approved by the
Company's shareholders.
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PROXY
ONYX SOFTWARE CORPORATION
3180 - 139th AVE. S.E., SUITE 500, BELLEVUE, WA 98005-4081
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS MAY 31, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Brent R. Frei and Eben W. Frankenberg, or either
of them, with full powers of substitution, attorneys and proxies to vote all
shares of stock of the undersigned entitled to vote at the Annual Meeting of
Shareholders of Onyx Software Corporation to be held at the Hyatt Regency
Bellevue at Bellevue Place, 900 Bellevue Way N.E., Bellevue, Washington on
Wednesday, May 31, 2000 at 10:00 a.m. Pacific Standard Time and any adjournment
or postponement thereof with all powers the undersigned would possess if
personally present:
IMPORTANT - PLEASE COMPLETE, DATE AND SIGN ON THE OTHER SIDE
________________________________________________________________________________
.FOLD AND DETACH HERE.
<PAGE>
Please mark
your votes [X]
as indicated
The board of directors recommends a vote
"FOR ALL NOMINEES" in Item 1 and "FOR"
Item 2.
FOR all nominees WITHHOLD AUTHORITY
(except as listed to vote for
to contrary below) all nominees
[ ] [ ]
1. ELECTION OF 2. APPROVAL OF AMENDMENT TO
DIRECTORS 1998 EMPLOYEE STOCK
NOMINEES: H. Raymond Bingham PURCHASE PLAN
William B. Elmore
Brent R. Frei FOR AGAINST ABSTAIN
Paul G. Koontz [ ] [ ] [ ]
Lee D. Roberts
Daniel R. Santell THE PROXY WILL BE VOTED IN
ACCORDANCE WITH THE
(Instruction: To withhold authority to vote INSTRUCTIONS GIVEN. UNLESS
for any individual nominee(s) write the REVOKED OR OTHERWISE
name(s) of the nominee(s) on the line below.) INSTRUCTED, THE SHARES
REPRESENTED BY THIS PROXY
-------------------------------------------- WILL BE VOTED "FOR ALL
NOMINEES" IN ITEM 1 AND
"FOR" ITEM 2, AND WILL BE
VOTED IN ACCORDANCE WITH
THE DISCRETION OF THE
PROXIES UPON ALL OTHER
MATTERS THAT MAY PROPERLY
COME BEFORE THE MEETING OR
ANY ADJOURNMENT OR
POSTPONEMENT THEREOF. THE
BOARD OF DIRECTORS AT
PRESENT KNOWS OF NO OTHER
MATTERS TO BE BROUGHT
BEFORE THE MEETING.
[ ] I plan to attend the
annual meeting.
_____
| PLEASE DATE AND MAIL IN
| ENCLOSED POSTAGE-PAID
ENVELOPE.
Signature of Shareholder(s) ___________________________ Dated ____________, 2000
PLEASE SIGN AS YOUR NAME APPEARS. Trustees, Guardians, Personal and other
Representatives, please indicate full title. Receipt of the notice of meeting
and proxy statement is hereby acknowledged.
- --------------------------------------------------------------------------------
.FOLD AND DETACH HERE.
