As reported by the Company’s Form 10-Q for the quarterly period ended June 30, 2004, the parties settled the matter on terms that will not require a payment by any of the defendants, inasmuch as the settlement consideration will be paid entirely by insurance proceeds. In an order dated June 10, 2004, the court approved this settlement.

By the Notice of Pendency and Proposed Settlement of Class Action, a settlement hearing will be held on June 10, 2004, at 9:00 a.m., before the Honorable Robert S. Lasnik, United States District Judge, at the United States Courthouse, Western District of Washington, 9th Floor Courtroom, 1010 South Fifth Avenue, Seattle, Washington 98104 (the “Settlement Hearing”). The purpose of the Settlement Hearing will be to determine: (1) whether the proposed settlement of the claims in the Litigation for the sum of $1,185,000 in cash, plus accrued interest, should be approved as fair, reasonable and adequate to the Class, and therefore whether the Litigation should be dismissed with prejudice; (2) whether the proposed plan to distribute the settlement proceeds (the “Plan of Allocation”) is fair and equitable to the Class Members; and (3) whether the application by Lead Counsel for an award of attorneys’ fees, expenses and interest should be approved. The Court may adjourn or continue the Settlement Hearing without further notice to the Class.

According to the docket, on May 3, 2002, the plaintiffs filed a Consolidated and Amended Complaint, and on July 12, 2002, defendant Onyx Software Corporation filed a motion to dismiss the consolidated and amended complaint. On February 20, 2003, the Court entered the Order by U.S. District Judge Robert S. Lasnik granting in part and denying in part defendant’s motion to dismiss. The plaintiffs then filed a First Consolidated and Amended Complaint, and on March 1, 3004, the a Stipulation of Settlement was filed.

The original complaint charges Onyx and certain of its officers and directors with violations of the Securities Exchange Act of 1934. On Jan. 19, 2001, Onyx announced the acquisition of Revenue Lab and, after the close of the market, hosted a conference call to discuss the acquisition and the Company's business and prospects. Later, Onyx reported favorable, but false, financial results. The complaint alleges that during the Class Period, Onyx made misleading statements about its business and issued false and misleading financial results, causing its stock to be artificially inflated. As a result of this inflation, Onyx was able to complete a secondary offering of 2.5 million shares at $13.50 per share, raising net proceeds of $31.5 million on Feb. 7, 2001. Then, on April 3, 2001, just weeks after this offering was completed, Onyx revealed that its 1stQ01 results would be sharply lower than the market had been led to expect with revenues of only $26-$27 million and a large loss. The stock dropped below $3 per share on this news. Later, on Aug. 10, 2001, after the market closed, defendants revealed that Onyx's 4thQ00 results had been materially misstated and would have to be restated. After this announcement, Onyx's stock price dropped to as low as $3.70 on Aug. 13, 2001 compared to the Class Period high of $17.25.