Exhibit 10.2
ONYX SOFTWARE CORPORATION
STOCK OPTION AGREEMENT
I. OPTION GRANT. As approved by the Committee, ONYX SOFTWARE CORPORATION, a
Washington corporation (the "Company"), hereby grants a nonqualified
stock option to purchase a total of one hundred and thirty-five thousand
(135,000) shares of Common Stock of the Company, par value $0.01 per
share (the "Common Stock"), as of January 20, 2005 ("Grant Date") to
XXXXXX X. XXXXXXXX (the "Optionee"), subject in all respects to the
terms and provisions of this Stock Option Agreement (the "Option") and
the Company's 1998 Stock Incentive Compensation Plan (the "Plan"), a
copy of which is attached and incorporated into this Stock Option
Agreement by reference. This Option shall be governed by, and construed
in accordance with, the laws of the state of Washington without regard
for principles of conflict of laws.
II. VESTING SCHEDULE. This Option shall vest and become exercisable at a
rate of 2.0833% per month, commencing one month after the Grant Date,
with the result that the Option shall be fully vested and exercisable
four years after the Grant Date.
A. Acceleration Upon Qualifying Termination. If Optionee's
employment with the Company is terminated as a result of a
Qualifying Termination, this Option shall, upon the effectiveness
of the Release executed by Optionee, automatically vest and
become exercisable for that portion of this Option that would
have vested if Optionee had remained in the employment of the
Company through and including the first anniversary of the date
of such termination of employment.
B. Acceleration Upon Death or Disability. If Optionee's employment
with the Company is terminated as a result of Optionee's death or
Disability, this Option shall, upon the effectiveness of the
Release executed by Optionee (or her personal representative if
applicable), automatically vest and become exercisable for that
portion of this Option that would have vested if Optionee had
remained in the employment of the Company through and including
the first anniversary of the date of such termination of
employment.
C. Acceleration Upon Corporate Transaction. In the event of a
Corporate Transaction, that portion of this Option that is at the
time outstanding shall automatically accelerate so that this
Option shall, immediately prior to the specified effective date
for the Corporate Transaction, become 100% vested and
exercisable. Notwithstanding the foregoing, this Option shall not
so accelerate, however, if and to the extent that this Option is,
in connection with the Corporate Transaction, either to be
assumed by the successor corporation or parent thereof (the
"Successor Corporation") or to be replaced with a comparable
option for the purchase of shares of the capital stock of the
Successor Corporation.
The determination of option comparability shall be made by the
Committee, and its determination shall be conclusive and binding. If
this Option is not assumed by the Successor Corporation, or if it is
replaced with a comparable option for the purchase of shares of the
capital stock of the Successor Corporation, it shall terminate and cease
to remain outstanding immediately following the consummation of the
Corporate Transaction, or the granting of the comparable option, as
applicable.
D. Acceleration Upon Qualifying Termination Following Change of
Control. If Optionee's employment with the Company is terminated
as a result of a Qualifying Termination occurring within 24
months after a Change of Control (or if pursuant to Section 14(c)
of the Employment Agreement, such employment is deemed to have
been terminated as a result of a Qualifying Termination occurring
within 24 months after a Change of Control), upon the
effectiveness of the Release executed by Optionee, the portion of
the Option that is then outstanding and unvested shall
automatically fully vest and become immediately exercisable.
III. PRICE. The Option exercise price per share (the "Exercise Price") as
determined by the Committee is $3.365 which is equal to the fair market
value of a share of Company Common Stock. The Exercise Price shall be
paid by delivery of cash or, subject to the discretion of the Committee,
by delivery of an approved equivalent to cash.
IV. PURCHASE FOR INVESTMENT. This Option may not be exercised if the
issuance of shares of Common Stock pursuant to an exercise would
constitute a violation of any applicable federal or state securities or
other law or valid regulation. Any other provision of this Option
notwithstanding, the obligation of the Company to issue shares pursuant
to an exercise of the Option shall be subject to all applicable laws,
rules and regulations and such approval by any regulatory body as may be
required. The Company reserves the right to restrict, in whole or in
part, the delivery of shares prior to the satisfaction of all legal
requirements relating to the issuance of such shares, to their
registration, qualification or listing or to an exemption from
registration, qualification or listing. Notwithstanding the foregoing,
the Company reaffirms its obligations pursuant to Sections 6(f) and 6(g)
of the Employment Agreement.
V. NON-ASSIGNABILITY. The Option may not be transferred or hypothecated in
any manner and shall only be exercisable by the Optionee or her legal
representative. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors, and assigns of the
Optionee.
VI. EXERCISE.
A. Upon the termination of Optionee's employment with the Company,
this Option shall be exercisable, to the extent of the number of
shares purchasable by Optionee that are vested at the date of
such termination after giving effect to the vesting acceleration
provisions of this Option if applicable and, for subparts (a) and
(b) below, contingent on the effectiveness of the Release and the
Optionee's continuing compliance in all material respects with
such Release, only (a) within one year after such termination if
the Optionee's termination is coincident with the Optionee's
death or Disability, (b) within 180 days
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after a Qualifying Termination (unless such Qualifying
Termination has occurred (or pursuant to Section 14(c) of the
Employment Agreement is deemed to have occurred) within 24 months
of a Change of Control in which this Option was assumed by the
Successor Corporation, in which case this Option shall remain
exercisable until the one-year anniversary of such Qualifying
Termination) or (c) within 90 days of the date that Optionee
ceases to be an employee, director, officer, consultant, agent,
advisor or independent contractor of the Company or a subsidiary
(collectively, "Service") if Optionee's employment is terminated
for any other reason, but in no event later than the remaining
Term of the Option. Any portion of this Option exercisable at the
time of the Optionee's death may be exercised by the personal
representative of the Optionee's estate or the person(s) to whom
the Optionee's rights under the Option have passed by will or the
applicable laws of descent and distribution. This Option may be
exercised only for whole shares of Common Stock. Any unvested
portion of this Option (after giving effect to the acceleration
provisions of this Option) shall expire and will be immediately
canceled upon cessation of Optionee's Service. Any unexercised
portion of this Option shall expire and will be immediately
canceled upon the earlier of the end of the Term or, if
applicable, the date specified above in subparts (a), (b) or (c).
All shares subject to any such canceled portion shall no longer
be available for purchase or issuance under this Option. In
connection with any proposed same day exercise and sale
transaction to be completed through Optionee's
personally-selected broker, the Company will agree to use
commercially reasonable efforts to assure such broker that shares
will be timely delivered upon exercise of this Option, and
payment of the exercise price therefor, in accordance with the
terms hereof.
B. This Option may not be exercised more than ten (10) years from
the Grant Date (the "Term"), and may be exercised during the Term
only in accordance with the terms and provisions set forth
herein.
C. This Option may be exercised for all or part of the shares
eligible for exercise by presenting a written notice (the
"Notice") to the Company that this Option is exercised in strict
accordance with the terms and provisions of this Option. The
Company shall determine in good faith whether or not the Notice
complies with the terms and provisions of this Option. Such
Notice shall identify this Option, state the number of shares as
to which the Option is exercised and be signed by the Optionee.
Delivery of the cash or cash equivalent in payment for the shares
to be purchased pursuant to the exercise of this Option shall
accompany the Notice. If the Optionee is deceased, the Notice
shall be signed, and if the Optionee has a Disability, it may be
signed, by the Optionee's legal representatives or beneficiaries,
and in all instances shall be accompanied by evidence
satisfactory to the Company and its transfer agent of the right
of such person or persons to exercise this Option.
D. The Optionee shall make arrangements satisfactory to the Company
for the satisfaction of any withholding tax obligations that
arise in connection with her Option. The Company shall not be
required to issue any shares of Common Stock until such
obligations are satisfied.
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VII. EFFECT OF CHANGE IN COMMON STOCK SUBJECT TO OPTION. If the outstanding
shares of Common Stock shall at any time be changed or exchanged by
declaration of a stock dividend, split-up, combination of shares, or
recapitalization, the number and kind of shares subject to this Option,
and the Exercise Price, shall be appropriately and equitably adjusted so
as to maintain the proportionate number of shares subject to this Option
and the Exercise Price in relation to the change in stock; provided,
however, that no adjustment shall be made by reason of the distribution
of subscription rights on outstanding stock. Any such adjustment of
shares subject to this Option shall be rounded down to the nearest whole
number of shares and in no event shall the Company be required to issue
fractional shares or provide any consideration to Optionee related to
the forfeiture of any putative fractional shares.
VIII. ADMINISTRATION; AMENDMENT OR ALTERATION. This Option shall be
administered by the Committee. The Committee shall have exclusive
authority, in its discretion, to determine all matters relating to this
Option, including all terms, conditions, restrictions and limitations of
this Option. The Committee shall also have exclusive authority to
interpret the Option and may from time to time adopt, and change, rules
and regulations for the Option's administration. The Committee's
interpretation of the Option and its rules and regulations, and all
actions taken and determinations made by the Committee pursuant to the
Option, shall be conclusive and binding on all parties involved or
affected. The Committee may delegate administrative duties to such of
the Company's officers as it so determines.
Without limiting the foregoing, the Committee may amend or alter this
Option, except that no amendment or alteration shall be made which would
impair the rights of the Optionee hereunder, without her consent, and,
except further, this Option shall be subject to the requirement that,
if, at any time the Committee shall determine, in its discretion, that
the listing, registration or qualification of the stock issuable or
transferable upon exercise thereof upon any securities exchange or under
any state or federal law or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, the granting of this Option or the issue, transfer, or
purchase of shares hereunder, this Option may not be exercised in whole
or in part unless such listing, registration, qualification, consent, or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee. All determinations made and all actions
taken by the Committee with respect to this Option shall be made or
taken, as applicable, in good faith.
IX. OPTION NOT A SERVICE CONTRACT. This Option is not an employment contract
and nothing in this Option shall be construed as giving Optionee any
right to be retained in the employ of the Company or limit the Company's
right to terminate the employment or services of Optionee.
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X. OTHER AGREEMENTS. In the event of any discrepancy between this Stock
Option Agreement and the Employment Agreement, the terms of the
Employment Agreement shall prevail.
XI. NO RIGHTS AS A SHAREHOLDER. The Optionee, or a transferee of the
Optionee, shall have no rights as a shareholder with respect to any
Common Stock covered by the Option until such person becomes entitled to
receive such Common Stock by filing a Notice, paying the Exercise Price
pursuant to the terms of this Option and receiving a share certificate
from the Company for such Common Stock.
XII. DEFINITIONS. If not elsewhere defined, the following definitions shall
be applicable for this Option:
"Board" means the Company's Board of Directors.
Notwithstanding Section 2.3 of the Plan, "Cause" means any one of the
following: (i) a willful and continued failure to perform the Optionee's
duties and responsibilities as President and Chief Executive Officer,
other than a failure resulting from the Optionee's complete or partial
incapacity due to physical or mental illness or impairment, after there
has been delivered to the Optionee a written demand for performance from
the Board that describes the basis for the Board's belief that the
Optionee has not performed her duties and provides the Optionee with
(thirty) 30 days (or such longer period of time as may be granted by the
Board in its sole discretion) to take corrective action, (ii) a willful
act by the Optionee that constitutes gross misconduct and that results
in material harm to the Company, (iii) a willful breach by the Optionee
of a material provision of this Agreement or (iv) a material and willful
violation of a federal or state law or regulation applicable to the
business of the Company that results in material harm to the Company.
For purposes of this Agreement, no act, or failure to act, on the
Optionee's part shall be deemed "willful" unless done, or omitted to be
done, by the Optionee not in good faith and without reasonable belief
that the Optionee's action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Optionee shall not be deemed
to have been terminated for Cause unless and until the Company provides
written notice to the Optionee by providing a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board (other than the Optionee), and including
at least a majority of the independent members of the Board (as defined
in Nasdaq Rule 4200(a)(15)) (the "Independent Directors"), as it may be
amended from time to time), at a meeting of the Board called and held
for such purpose (after reasonable notice to the Optionee and an
opportunity for the Optionee, together with counsel, to be heard before
the Board) finding that, in the good-faith opinion of the Board, the
Optionee was guilty of conduct set forth above and specifying the
particulars thereof in reasonable detail. If the Company does not give
Optionee notice of termination for Cause within sixty (60) days
following the date an Independent Director first has actual knowledge of
the material facts giving rise to the basis for such termination, the
Company shall be deemed to have irrevocably waived the right to give
notice on such basis unless Optionee consents in writing to an extension
of such sixty (60) day period. For purposes of the foregoing waiver
provision, the Optionee shall have the burden of proving actual
knowledge of an Independent Director of the material facts giving rise
to the basis for such termination.
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"Change of Control" means any of the following events: (i) consummation
of any merger or consolidation or reorganization of the Company in which
the Company is not the continuing or surviving entity, or pursuant to
which shares of the Common Stock are converted into cash, securities or
other property, if (and only if) following such merger or, consolidation
or reorganization, the holders of the Company's outstanding voting
securities immediately prior to such merger or, consolidation or
reorganization own less than a majority of the outstanding voting
securities of the surviving entity or members of the Company's board of
directors immediately prior to such merger, consolidation or
reorganization do not constitute a majority of the board of directors of
the surviving entity; (ii) 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 majority-owned subsidiary corporation of
the Company; (iii) approval by the holders of the Common Stock of any
plan or proposal for the liquidation or dissolution of the Company; (iv)
acquisition by any person or group of beneficial ownership (as defined
in the Securities Exchange Act of 1934, as amended) of more than 50% of
the Company's outstanding voting securities; or (v) if those individuals
who are directors of the Company on the date of the Optionee's
employment (the "Incumbent Board") cease to constitute a majority of the
Company's directors, provided that individuals whose election as
directors was approved by the Incumbent Board shall be considered
members of the Incumbent Board.
"Committee" means the Board's Compensation Committee.
"Corporate Transaction" means any of the following events: (i)
Consummation of any merger or consolidation of the Company in which the
Company is not the continuing or surviving corporation, or pursuant to
which shares of the Common Stock are converted into cash, securities or
other property, if following such merger or consolidation the holders of
the Company's outstanding voting securities immediately prior to such
merger or consolidation own less than a majority of the outstanding
voting securities of the surviving corporation; (ii) 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 majority-owned
subsidiary corporation of the Company; or (iii) Approval by the holders
of the Common Stock of any plan or proposal for the liquidation or
dissolution of the Company.
Notwithstanding Section 2.7 of the Plan, "Disability" means that the
Optionee, at the time the notice of termination for disability is given
to her by the Company, has been unable to perform the Optionee's
essential duties under the Employment Agreement (after reasonable
accommodations have been made for Optionee) for a period of not less
than four consecutive months as a result of the Optionee's incapacity
due to physical or mental illness. In the event that the Optionee
resumes the performance of substantially all of the Optionee's duties
under the Employment Agreement before the termination of the Optionee's
employment for disability becomes effective, the notice of termination
shall automatically be deemed to have been revoked.
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"Employment Agreement" means that certain employment agreement entered
into by and between the Company and Optionee on June 7, 2004 and amended
as of January 20, 2005.
"Qualifying Termination" means either that: (i) the Company terminates
the Optionee's employment for any reason other than Cause, Disability or
death; or (ii) the Optionee notifies the Company in writing that she
will terminate her employment with the Company in response to a
"Constructive Termination." Constructive Termination is defined as (a) a
material reduction of the Optionee's duties, responsibilities, or
authorities or a material adverse change in the prestige of Optionee's
title, including without limitation, if the Optionee is required to
report to any individual other than the Board, if the Optionee is not
the highest ranking officer of the Company's ultimate parent entity or
if Optionee is assigned material duties or material responsibilities
that are not normally associated with the position of President and
Chief Executive Officer of a company of similar size and market
capitalization to the Company, (b) a reduction by the Company of the
then current Base Compensation of the Optionee, (c) a relocation of the
Company's headquarters of more than 35 miles from its location on the
date hereof or a change in the Optionee's principal business location to
a location other than the corporate headquarters, (d) a failure of the
Board to nominate Optionee as a director of the Company; provided,
however, that the replacement of Optionee as Chairman of the Board shall
not constitute a Constructive Termination or (e) a breach by the Company
of a material provision of this Agreement. If the Company cures such
Constructive Termination within 10 days after its receipt of the
Optionee's written notice, then Optionee will not be able to terminate
her employment in a Qualifying Termination based on the event(s) in
question. Each provision of this Agreement that provides for payments to
be paid or material benefits to be provided to Optionee shall be deemed
to be a material provision of this Agreement. If the Optionee does not
give the Company notice that she will terminate her employment as a
result of a Constructive Termination within sixty (60) days following
the date she has actual knowledge of the material facts giving rise to
the basis for such termination, the Optionee shall be deemed to have
irrevocably waived the right to give notice on such basis unless the
Company consents in writing to an extension of such period. For purposes
of the foregoing waiver provision, the Company shall have the burden of
proving actual knowledge of the Optionee of the material facts giving
rise to the basis for such termination.
"Release" means the Optionee's release and waiver of claims in the form
required by the Employment Agreement.
[Signature Page Follows]
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ONYX SOFTWARE CORPORATION
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Chief Legal Officer
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If the following acknowledgment and acceptance is not executed within ten (10)
days of the effective date of this Option, it shall lapse and be treated for all
purposes as if it were never granted.
The Optionee acknowledges and represents that she is familiar with and
understands the terms and provisions of this Option. The Optionee hereby accepts
this Option subject to all the terms and provisions contained herein. The
Optionee hereby agrees to accept as binding, conclusive, and final all decisions
and interpretations of the Committee upon any questions arising under the
Option.
Dated:
WITNESS: OPTIONEE:
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