Onvia DEF 14A 2005
SCHEDULE 14A INFORMATION
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Onvia Stockholder Letter
Dear Fellow Stockholders:
2004 was a very productive year for Onvia, Inc. The Company has aggregated a comprehensive database of tactical, hard-to-find intelligent business opportunities which are focused on the largest industry verticals. The breadth of the data allows for multiple products and pricing structures from the same content, to appeal to both large and small businesses. Onvia maintains its low cost structure through the use of sophisticated data collection techniques and technology.
2004 was a year focused on improving operations and expanding our strategic plan. Operationally, we continued to preserve capital, grow revenue, and control costs, while building a higher valued customer base with improved retention rates. The Company:
In 2004, the Company distributed approximately 642,000 public sector opportunities, an increase of 16% over the prior year. Our cost of data acquisition is kept low through the efficient use of technology, and the data contributions of our government agency partners. In 2004, we developed important strategic partnerships with 78 new government agencies up from 49 new agencies signed in 2003.
During 2004, we continued to migrate customers into higher value products and drive higher average annual subscription price (ASP), which reflects the average annual value of new and repeat transactions during the quarter. In the fourth quarter, ASP increased by 23% to $744 when compared to the same quarter in 2003. In the fourth quarter of 2004, high value subscribers and enterprise licensees comprised approximately 71% of total users compared to 62% in the same quarter in 2003. Onvia had approximately 25,800 subscribers and enterprise licensees as of December 31, 2004, an increase of approximately 5% over 2003.
In 2004 we reconstituted and expanded the Board of Directors to ensure financial oversight and enhanced expertise within our business focus. Roger L. Feldman, a significant shareholder, and James L. Brill, Chief Financial Officer of Diagnostics Products Corporation, a New York Stock Exchange company, joined the Board of Directors in March, filling the vacancies left by two original venture capital investors. In November, we added Robert G. Brown, former Group President of Harte-Hanks, and D. Van Skilling, former Chairman and Chief Executive Officer of Experian Information Systems, Inc. Our Board members and senior management team have increased their personal ownership positions in the Company in 2004, aligning their interests with those of our stockholders.
During 2004, Onvia began the process to comply with Section 404 of the Sarbanes-Oxley Act of 2002. Sarbanes-Oxley is the most far-reaching legislation affecting financial reporting, disclosure, and internal controls since the Securities Act of 1933. We will incur significant accounting and legal costs to audit, monitor and test our internal control processes to comply with the Act. In March 2005, the Securities and Exchange Commission extended the compliance date for Section 404 of Sarbanes-Oxley for non-accelerated filers such as Onvia. The extension delays the required compliance date by one year and Onvia will be required to be in compliance for our fiscal year ending December 31, 2006.
We have 50,000 square feet of office space available for sublease. Real estate leasing activities in Seattle are still slow, and we were unsuccessful in subleasing additional space during 2004. Due to the prevailing market conditions, we believe that subleasing our available space will take longer than previously estimated. Onvia has recorded an additional accrual of approximately $916,000, which assumes we will have all our idle space subleased during 2006. The idle lease accrual was approximately $7.5 million as of December 31, 2004.
During 2004, we evaluated our strategic strengths and weakness, and developed our future product roadmap. On top of our solid bid notification business, we have decided to invest in new products which we believe to be a logical extension of our existing product offering. This investment will expand our platform in both content and tools. We made this decision after careful consideration and market research. The Board has committed to a fiscally prudent plan that calls for $5.0 million of incremental spending in 2005. In 2005 we expect to release this next generation of products, recruit key executives, and focus our sales efforts on customer retention and migration to higher valued products.
We like the outlook for the Company. We have a solid business of distributing bid notifications to businesses that sell their products and services to the public sector. We had fourth quarter 2004 revenue growth rate of 26% compared to the same quarter in 2003, a base of approximately 25,800 subscribers and licenses, a database that delivered approximately 642,000 new government opportunities, a strong balance sheet, a good management team, and an experienced Board of Directors.
The success of 2004 would not have been possible without the hard work and dedication of the Companys employees and the Board of Directors. We also greatly appreciate the support and loyalty of our customers. Thank you.
Notice of Annual Stockholders Meeting
The Annual Stockholders Meeting of Onvia, Inc., a Delaware corporation, will be held on Friday, May 6, 2005, at 1:00 p.m. local time, at our principal executive offices located at 1260 Mercer Street, Seattle, Washington 98109, for the following purposes:
1. To elect two Class II directors to serve three year terms ending in 2008.
2. To transact such other business as may properly come before the meeting.
Stockholders entitled to vote at this meeting are those holders of record as of the close of business on March 21, 2005. The vote of each stockholder is important regardless of the number of shares held. Whether or not you plan to attend the meeting in person, please complete and return your proxy card or vote by telephone or via the internet by following the instructions on your proxy card. For ten days prior to the meeting, a complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder, for any purpose related to the meeting, during ordinary business hours at our principal offices located at 1260 Mercer Street, Seattle, Washington 98109.
By order of the Board of Directors,
Michael D. Pickett
Chairman of the Board, Chief Executive Officer,
April 8, 2005
1260 Mercer Street
Seattle, WA 98109
ANNUAL STOCKHOLDERS MEETING
May 6, 2005
Our Board of Directors is issuing this Proxy Statement to solicit proxies for the Annual Stockholders Meeting on May 6, 2005 at 1260 Mercer Street, Seattle, Washington. This Proxy Statement contains important information about the business matters that will be voted upon at the meeting. This Proxy Statement and proxy card were first sent to stockholders on or about April 8, 2005.
Stockholders eligible to vote at the meeting are those identified as owners of record at the close of business on the record date, March 21, 2005. Each outstanding share of common stock is entitled to one vote on all items presented at the meeting. At the close of business on March 21, 2005 the Company had 7,830,604 shares of common stock outstanding and entitled to vote.
Time and Place of the Annual Stockholders Meeting
The Annual Stockholders Meeting is being held on Friday, May 6, 2005 at 1:00 p.m. local time at our principal executive offices located at 1260 Mercer Street, Seattle, Washington 98109.
Multiple Proxy Cards
If you received more than one proxy card, it means that you hold shares in more than one account. Please sign and return all proxy cards to ensure that all of your shares are voted.
Proxies Not Returned and Broker Non-Votes
If your shares are held in your name, you must return your proxy, vote by telephone or via the internet, or attend the Annual Stockholders Meeting in person in order to vote on the proposal. If your shares are held in street name and you do not vote your proxy, your brokerage firm may either:
Under the rules that govern brokers who have record ownership of shares that are held in street name for their clients, brokers may vote such shares on behalf of their clients with respect to routine matters (such as the election of directors), but not with respect to non-routine matters. If the proposals to be acted upon at any meeting include both routine and non-routine matters, the broker may turn in a proxy card for uninstructed shares that vote FOR the routine matters, but the broker may not vote on non-routine matters in the absence of a client instruction. This is called a broker non-vote.
Broker non-votes will be counted for the purpose of determining the presence of a quorum, but will not be counted for the purpose of determining the number of votes cast.
We encourage you to provide instructions to your brokerage firm by completing and returning your proxy card. This ensures that your shares will be voted at the meeting.
Our Bylaws provide that a majority of all of the shares of stock entitled to vote, whether present in person or represented by proxy, shall constitute a quorum for the transaction of business at the meeting. Votes for and
against, abstentions, and broker non-votes will be counted as present for purposes of determining the presence of a quorum.
The accompanying proxy is solicited by our Board of Directors for use at the Annual Stockholders Meeting. We will bear the costs of soliciting proxies. In addition to soliciting stockholders by mail and through our employees, we may request banks, brokers, custodians, nominees, and fiduciaries to solicit customers for whom they hold shares of our common stock, and will reimburse them for their reasonable, out-of-pocket costs. We may use the services of our directors, officers, and others to solicit proxies, personally, by telephone or otherwise, without additional compensation. We have not retained the services of a proxy solicitor in connection with the Annual Shareholders Meeting.
Voting of Proxies
The shares represented by the proxy cards received, properly marked, dated, signed, and not revoked, will be voted at the Annual Stockholders Meeting. If the proxy card specifies a choice with respect to any matter to be acted on, the shares will be voted in accordance with that specified choice. Any proxy card which is returned but not marked will be voted FOR each of the director nominees and, as the proxy holders deem desirable, FOR any other matters that may come before the meeting. Broker non-votes will not be considered as voting with respect to any matter for which the broker does not have voting authority. A stockholder giving a proxy has the power to revoke his or her proxy at any time before it is exercised by delivering to the Secretary of the Company a written instrument revoking the proxy with a later date, or by attending the meeting and voting in person.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
We have a classified Board of Directors of seven members consisting of three Class I directors, two Class II directors, and two Class III directors, each of whom will serve until the Annual Stockholders Meetings to be held in 2007, 2005, and 2006, respectively. At each Annual Stockholders Meeting, directors are elected for a term of three years to succeed those directors whose terms expire at the Annual Stockholders Meeting dates.
On November 1, 2004, the Board of Directors appointed Robert G. Brown to serve as a Class III Director. Mr. Brown was recommended to the Companys Nominating and Governance Committee by director Jeffrey C. Ballowe. On November 19, 2004, the Board of Directors appointed D. Van Skilling to serve as a Class I Director. Mr. Skilling was recommended to the Companys Nominating and Governance Committee by our outside search firm.
Two Class II directors are to be elected at this Annual Stockholders Meeting. The Board of Directors has nominated current Class II directors Michael D. Pickett and Roger L. Feldman for election by the stockholders. If elected, the nominees will serve as directors until our 2008 Annual Stockholders Meeting. If any of the nominees declines to serve or becomes unavailable for any reason, or if a vacancy occurs before the election (although we know of no reason to anticipate that this will occur), the proxies may be voted for such substitute nominees as the Board of Directors may designate.
If a quorum representing a majority of all outstanding shares of our common stock is present and voting, either in person or by proxy, the nominees for Class II directors receiving the highest number of votes will be elected as Class II directors. Votes withheld from any nominee, abstentions, and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any effect on the outcome of the voting.
The Board of Directors unanimously recommends a vote FOR each of the nominees named above.
Class I Directors (Terms Expire at the 2007 Annual Stockholders Meeting)
Steven D. Smith, age 46, has served as a director of the Company since January 2000. Since December 2004, Mr. Smith has served as the Senior Managing Director of Ritchie Capital Management, a private equity investment company. From March 1997 to April 2003, Mr. Smith served as Managing Director of GE Equity, a private equity investment company and a subsidiary of GE Capital. From August 1990 to February 1997, Mr. Smith served in a variety of positions at GE Capital, most recently as Managing Director, Ventures. Mr. Smith holds a Bachelor of Business Administration from Southern Methodist University and a Master of Business Administration from The Wharton School of Business at the University of Pennsylvania.
James L. Brill, age 53, has served as a director of the Company since March 2004. Since July 1999, he has served as Vice President of Finance and Chief Financial Officer of Diagnostic Products Corporation, a medical diagnostics manufacturer. From August 1998 to June 1999, Mr. Brill served as Chief Financial Officer of Jafra Cosmetics International, a cosmetics manufacturer, and Vice President of Finance and Administration and Chief Financial Officer of Vertel Corporation from 1996 to 1998. Mr. Brill holds a Bachelor of Science from the United States Naval Academy and a Master of Business Administration from UCLA.
D. Van Skilling, age 71, has served as a director of the Company since November 2004. He has been President of Skilling Enterprises since March 1999. He retired in April 1999 as Chairman and CEO of Experian Information Systems Inc., positions he held since Experian was formed in 1996. Previously he was employed by TRW, Inc. for twenty-seven years and was Executive Vice President from 1989 to 1996. Mr. Skilling holds a Bachelor of Arts from Colorado College and a Master of Business Administration from Pepperdine University. He currently serves on the boards of directors of The Lamson and Sessions Company, First American Corporation, mcData Corporation, and The American Business Bank, and is Chairman of the Board of Trustees of Colorado College.
Class II Director Nominees (Terms Expire at the 2005 Annual Stockholders Meeting)
Michael D. Pickett, age 57, has served as a director of the Company since February 1999, as Chief Executive Officer and Chairman of the Board of the Company since April 2001 and from February 1999 to August 2000, and as President since September 2004. Mr. Pickett also served as President and Chief Operating Officer of the Company from August 2000 to April 2001. From July 1999 to August 2000, Mr. Pickett served as Chief Executive Officer of Hardware.com, Inc., an online source for total home improvement solutions, which was acquired by the Company in September 2000. From July 1997 to March 1999, Mr. Pickett was Chairman and Chief Executive Officer of Technology Solutions Network, LLC, a provider of turnkey technology solutions for small businesses. From October 1983 to February 1996, Mr. Pickett served in a variety of positions and most recently as Chairman, Chief Executive Officer, and President of Merisel, Inc., a wholesale distributor of computer hardware and software products and a provider of logistics services. Mr. Pickett holds a Bachelor of Arts in Business Administration from the University of Southern California.
Roger L. Feldman, age 43, has served as a director of the Company since March 2004. Mr. Feldman is a principal of West Creek Capital, an investment firm he co-founded in 1992. Prior to forming West Creek Capital, Mr. Feldman was an investment banker and an attorney. Mr. Feldman holds a Bachelor of Arts from the University of Pennsylvania and a Juris Doctor degree from Columbia Law School.
Class III Directors (Terms Expire at the 2006 Annual Stockholders Meeting)
Jeffrey C. Ballowe, age 49, has served as a director of the Company since December 1999. Before leaving Ziff Davis at the end of 1998, Mr. Ballowe led the launches of five magazines, ZDNet on the Web, ZDTV (now TechTV), and the initial ZD/Softbank investments in Yahoo!, Inc. Mr. Ballowe is the co-founder and past president of the not-for-profit Electronic Literature Organization and a member of the board of trustees of
Lawrence University. Currently Mr. Ballowe serves as a director of Verticalnet and as a member of the advisory board of Internet Capital Group. Mr. Ballowe holds a Bachelor of Arts from Lawrence University, a Master of Arts in French from the University of Wisconsin, and a Master of Business Administration from the University of Chicago.
Robert G. Brown, age 58, has served as director of the Company since November 2004. Mr. Brown is currently President of Brightwood Advisors, a private company providing business consulting to technology companies and investors. Prior to Brightwood Advisors, Mr. Brown was Group President with Harte-Hanks, a provider of direct marketing services, and President and CEO of ZD Market Intelligence, a division of Ziff Davis, Inc. Mr. Brown holds a Bachelor of Science in Industrial Engineering from Lehigh University and a Master of Business Administration from the Harvard Business School.
There are no family relationships among any of the directors or executive officers of the Company.
Determination of Director Independence
After review and consideration of the applicable legal standards for director independence, the Board of Directors has determined that each of the following directors is an independent director as defined in Marketplace Rule 4200(a)(15) of the National Association of Securities Dealers (the NASD):
Jeffrey C. Ballowe
James L. Brill
Robert G. Brown
Roger L. Feldman
D. Van Skilling
Steven D. Smith
These directors are referred to as Independent Directors in this Proxy Statement. The Board of Directors has also determined that each member of the three committees of the Board of Directors meets the independence requirements applicable to those committees prescribed by NASDAQ, the Securities and Exchange Commission (the SEC) and/or the Internal Revenue Service. The Board of Directors has further determined that Mr. Brill, a member of the Audit Committee, is an audit committee financial expert as such term is defined in Item 401(h) of Regulation S-K promulgated by the SEC.
Board Meetings and Committees
The Board of Directors met seven times during 2004, and all Board of Director and committee meetings were attended by every director, except for one Nominating and Governance Committee meeting missed by one director. The Board of Directors had a Compensation Committee, an Audit Committee, and a Nominating and Governance Committee in 2004.
Mr. Ballowe, Mr. Brill, and Mr. Smith were members of the Audit Committee during 2004, with Mr. Brill serving as the chairperson. Mr. Brill met the financial expert criteria under the NASDAQ requirements, and also met the audit committee financial expert criteria as described above. All other members of the Audit Committee are financially literate and are financially sophisticated based on their professional experiences. The Audit Committee retains our independent auditors, reviews their independence, reviews and approves the planned scope of our annual audit, reviews and approves any fee arrangements with our auditors, oversees their work, reviews and pre-approves any non-audit services that they may perform, reviews the adequacy of accounting and financial controls, reviews our critical accounting policies, and reviews and approves any related
party transactions. The Audit Committee met five times in 2004. For 2005, Mr. Brill, Mr. Smith, and Mr. Brown serve on the Audit Committee, with Mr. Brill serving as chairperson.
Mr. Ballowe, Mr. Brill, and Mr. Feldman were members of the Compensation Committee during 2004, with Mr. Ballowe serving as the chairperson. The Compensation Committee establishes and administers our policies regarding annual executive salaries, cash incentives, and long-term equity incentives. The Compensation Committee met two times in 2004. For 2005, Mr. Ballowe, Mr. Feldman, and Mr. Skilling serve on the Compensation Committee, with Mr. Ballowe serving as chairperson.
Mr. Ballowe, Mr. Brill, Mr. Feldman, and Mr. Smith were members of the Nominating and Governance Committee during 2004. The Nominating and Governance Committee was established in 2004. The Nominating and Governance Committee identifies and recruits individuals to serve as directors of the Company, makes recommendations to the Board of Directors regarding membership and chairs of the Boards committees, advises the Board of Directors with respect to matters of Board composition and procedures, develops and recommends to the Board of Directors corporate governance guidelines, considers nominations to the Board of Directors received from stockholders, monitors Company compliance with Onvias Code of Business Ethics and Conduct, and oversees the annual evaluation of the effectiveness of the Board of Directors and its committees. The Nominating and Governance Committee met three times in 2004. For 2005, Mr. Feldman, Mr. Skilling, and Mr. Brill serve on the Nominating and Governance Committee, with Mr. Feldman serving as chairperson. A copy of the Nominating and Governance Committee charter is not available on Onvias website, however, a copy was filed as an exhibit to last years Proxy Statement.
The Board of Directors has adopted procedures for nominating director candidates and considering nominees recommended by stockholders (the Nomination Procedures). The Nomination Procedures describe the process by which director candidates are selected, the qualifications that those candidates should possess, and the procedure for stockholders to submit recommendations for director nominees. The Nomination Procedures are administered by the Nominating and Governance Committee and are described below.
The Nominating and Governance Committee believes that candidates for director should meet certain minimum qualifications, including being able to read and understand financial statements, having substantial business experience, having high moral character and personal integrity, and having sufficient time to attend to their duties and responsibilities to the Company. Exceptional candidates who do not meet all of these criteria may still be considered. The Nominating and Governance Committee will also consider the potential directors independence, whether the member would be considered a financial expert as described in the applicable listing and SEC standards, and the diversity that the potential director would add to the Board of Directors in terms of gender, ethnic background, and professional experience.
The Nominating and Governance Committee identifies potential candidates through their members networks of contacts, by soliciting recommendations from other directors or executive officers, and engaging in a search firm to identify and screen suitable director nominees. After the Nominating and Governance Committee has identified a potential candidate, publicly available information about the person is collected and reviewed. If the Nominating and Governance Committee decides to further pursue the potential candidate after this initial review, contact is made with the person. If the potential candidate expresses a willingness to serve on the Board of Directors, interviews are conducted with the potential candidate and additional information is requested. Candidates are chosen by a majority vote of the members of the Nominating and Governance Committee for recommendation to the Board of Directors.
Director Nominations by Stockholders
The Nominating and Governance Committee will consider director candidates recommended by stockholders on the same basis as other candidates, provided that the following procedures are followed in submitting recommendations:
Every director of the Company receives an initial stock option grant of 4,000 shares of our common stock under our 2000 Directors Plan upon becoming a director, vesting over four years with a ten year term and with the exercise price equal to the fair market value as of the grant date. Each Independent Director receives an automatic annual stock option grant to purchase 1,000 shares of our common stock under the 2000 Directors Plan on the date of our Annual Stockholders Meeting, vesting in one year with a ten year term and with the exercise price equal to the fair market value as of the grant date. At the 2004 Annual Stockholders Meeting, Mr. Ballowe and Mr. Smith each received an option to purchase 1,000 shares of our common stock under our 2000 Directors Plan. Mr. Brill and Mr. Feldman each received an initial stock option grant under the 2000 Directors Plan to purchase 4,000 shares of our common stock on March 31, 2004. Mr. Brown and Mr. Skilling each received an initial stock option grant under the 2000 Directors Plan to purchase 4,000 shares of our common stock on November 1, 2004 and November 19, 2004, respectively.
The Board of Directors has instituted a policy to compensate each director who is an Independent Director as follows: (i) $5,000 per quarter if such director attended every Board of Directors meeting during such quarter or a prorated portion if all meetings during the requisite quarter were not attended; (ii) a stock option grant of 18,750 shares of the Companys common stock, vesting over four years with a ten year term and with the exercise price equal to the fair market value as of the grant date, under our Amended and Restated 1999 Stock Option Plan (1999 Plan) on the date on which such director first qualified as an Independent Director, followed by annual stock option grants of 5,000 shares, vesting over four years with a ten year term and with the exercise price equal to the fair market value as of the grant date, on each anniversary date of the 18,750 share grant; and (iii) a stock option grant of 15,000 shares of the Companys common stock, vesting over five years with a ten year term and with the exercise price of $2.50 above the closing price as of the grant date, under our 1999 Plan on the fifth anniversary date on which a director qualified as an Independent Director. In 2004, Mr. Ballowe and Mr. Smith each received compensation of $20,000 for attendance at Board of Directors meetings, Mr. Brill and Mr. Feldman each received $15,000, and Mr. Brown and Mr. Skilling each received $5,000. Mr. Ballowe received his fifth anniversary stock option grant of 15,000 shares under the 1999 Plan on December 20, 2004. Mr. Smith received an annual stock option grant of 5,000 shares under the 1999 Plan on April 1, 2004. Mr. Brill and Mr. Feldman each received a stock option grant of 18,750 shares under the 1999 Plan on March 31, 2004.
Mr. Brown and Mr. Skilling each received a stock option grant of 18,750 shares under the 1999 Plan on November 1, 2004 and November 19, 2004, respectively.
All directors are reimbursed for out-of-pocket expenses incurred in connection with activities as directors, including attendance at Board of Directors and committee meetings.
Stockholder Communications with Directors
We have established a communication mechanism so that our stockholders can communicate with our directors. Stockholders are welcome to communicate directly to the Board of Directors by contacting director, Chief Executive Officer, and President Mr. Pickett by email at firstname.lastname@example.org with a subject line noting Stockholder Communications to Michael Pickett or by writing to Michael D. Pickett, Onvia, Inc., 1260 Mercer Street, Seattle, Washington 98109, ATTN: Stockholder Communications. Mr. Pickett will relay all such stockholder communications to the entire Board of Directors, a Board committee, or an individual director, as deemed appropriate, at the next scheduled Board of Directors or committee meeting. No material action has been taken by the Board of Directors resulting from a stockholder communication.
Director Attendance at Annual Stockholders Meetings
It is the Companys policy to invite all directors to attend the Annual Stockholders Meeting each year. Mr. Pickett attended our 2004 Annual Stockholders Meeting and is planning to attend our 2005 Annual Stockholders Meeting.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 1, 2005, certain information with respect to the beneficial ownership of our common stock by (i) each stockholder known by us to be the beneficial owner of more than 5% of our common stock, (ii) each of our directors and nominees for director, (iii) the Named Executive Officers identified in the Summary Compensation Table, and (iv) all executive officers and directors as a group.
Michael D. Pickett, age 57, has served as Chief Executive Officer and Chairman of the Board of the Company since April 2001. Mr. Pickett has also served as President of the Company since September 2004.
Clayton W. Lewis, age 45, served as President and Chief Operating Officer of the Company from December 2001 until his departure in September 2004. Prior to becoming President and Chief Operating Officer, Mr. Lewis served as Vice President of Marketing from August 2000 to December 2001, Vice President of Business Affiliations from July 1999 to July 2000, and Director of Business Development from March 1999 to June 1999. From October 1995 to June 1998, Mr. Lewis served as Executive Vice President of ETC, a telecommunications company and a subsidiary of Telecommunications, Inc. From December 1989 to October 1995, Mr. Lewis was Senior Vice President of Business Development at RXL Pulitzer, the multimedia division of the Pulitzer Publishing Company. In addition, Mr. Lewis has held a variety of public positions including serving as chief of staff for a member of the United States Congress, and key roles in state government. Mr. Lewis holds a Bachelor of Arts in Business Administration from the University of Washington. Mr. Lewis resigned from Onvia on September 17, 2004. His resignation was not due to any disagreements with the Companys management or the Board.
Irvine N. Alpert, age 53, has served as Executive Vice President of the Company since July 2001. From February 1995 to July 2001, Mr. Alpert was the founder and Chief Executive Officer of ProjectGuides, Inc., an architecture, engineering, and construction market information service, which was acquired by Onvia in June 2001. From 1993 to 1995, Mr. Alpert served as President of RCI Environmental, Inc., a regional construction company. From 1990 to 1993, Mr. Alpert served as Vice President of Sales and Marketing for Hart Crowser, Inc., a regional geotechnical and environmental consulting firm. Mr. Alpert holds a Bachelor of Arts from the University of California, Santa Cruz and a Master of Environmental Planning from the University of California, Berkeley.
Matthew S. Rowley, age 41, has served as Chief Information Officer of the Company since July 2001. Prior to becoming Chief Information Officer of the Company, Mr. Rowley served as Vice President of Development from June 2001 to July 2001, Director of Site Development from December 2000 to June 2001, and Development Manager from August 2000 to December 2000. From November 1999 to August 2000, Mr. Rowley served as Director of Electronic Commerce of Hardware.com, Inc., an online source for total home improvement solutions, which was acquired by Onvia in September 2000. From May 1999 to November 1999, Mr. Rowley was Director of Electronic Commerce Operations of Multiple Zones International, a direct reseller of name-brand information technology products and services to small to medium businesses. From December 1997 to May 1999, Mr. Rowley served in a variety of positions and most recently as Program Manager, Internet Electronic Commerce Practice of BEST Consulting, an information technology firm specializing in electronic commerce solutions. From September 1988 to December 1997, Mr. Rowley served in a variety of positions and most recently as Project Manager, Lead Technical Engineer, and Systems Analyst at the Battelle Seattle Research Center and Pacific NW National Laboratory. Mr. Rowley holds a Bachelor of Arts from Seattle Pacific University.
Cameron S. Way, age 33, has served as Chief Accounting Officer and Controller of the Company since January 2003. Prior to becoming Chief Accounting Officer, Mr. Way served as Controller since September 2001, Assistant Controller from December 2000 to September 2001, and finance manager from August 1999 to December 2000. Mr. Way was an audit manager with PricewaterhouseCoopers LLP from January 1999 to August 1999 prior to joining the Company. Mr. Way holds a Bachelor of Arts from Claremont McKenna College.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, our executive officers, and persons who beneficially own more than 10% of our common stock to file initial reports of ownership and reports of changes in ownership of our common stock with the SEC. These people are required by SEC regulations to furnish us with copies of all Section 16(a) reports that they file.
To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations from certain reporting persons that no other reports were required, we believe that during 2004 all reporting persons complied with all applicable filing requirements.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation earned by (a) the person who served as our Chief Executive Officer during the fiscal year that ended December 31, 2004; (b) the four other most highly compensated individuals who served as executive officers during the fiscal year ended December 31, 2004 (together, the Named Executive Officers); and (c) the compensation received by the Named Executive Officers for the two preceding fiscal years.
Summary Compensation Table
Mr. Pickett and the Company entered into an employment agreement in March 2001 that provided for an annual base salary of $250,000. The employment agreement was subsequently amended in February 2002 to provide for an annual base salary of $120,000, an annual housing stipend, and a one-time bonus of $125,000 based on achievement of criteria or the occurrence of certain events determined by the Board of Directors, which was paid in June 2002. Mr. Picketts employment agreement was further amended in September 2002 to provide for an annual base salary of $177,900 and eliminate the housing stipend. Mr. Picketts salary was increased to $250,000 in May 2004. Upon termination of Mr. Picketts employment by the Company without cause or by Mr. Pickett for good reason, Mr. Pickett will receive a lump sum payment of $250,000 and 12 months of benefits and accelerated vesting of all unvested options granted under the 2000 Directors Plan. Upon a change in control transaction, 50% of the then unvested options granted under the 1999 Plan to Mr. Pickett shall vest, and the remaining unvested options shall vest and become exercisable upon termination of Mr. Picketts employment by the Company without cause or by Mr. Pickett for good reason within 12 months of a change in control transaction. On November 29, 2004, Onvia granted Mr. Pickett 600,000 stock options with an exercise price of $10.00.
Mr. Lewis and the Company entered into an employment agreement in September 2001 that provided for an annual base salary of $200,000. The employment agreement was subsequently amended in February 2002, after Mr. Lewis was designated as President and Chief Operating Officer in December 2001, to increase Mr. Lewiss annual salary to $220,000 and to provide for a bonus based on achievement of criteria determined by the Board of Directors. Mr. Lewis left the Company on September 17, 2004. No severance payment was paid in connection with Mr. Lewiss termination of employment.
Mr. Alpert and the Company entered into an employment agreement in February 2002 that provided for an annual base salary of $180,000. In addition, Mr. Alpert was granted options to purchase 16,900 shares of the Companys common stock, with vesting to begin immediately in 48 equal monthly installments, as long as Mr. Alpert is employed by the Company. On January 31, 2003, Mr. Alpert was granted options to purchase 30,000 shares of the Companys common stock, with vesting to begin immediately in 48 equal monthly installments, as long as Mr. Alpert is employed by the Company. Upon termination of Mr. Alperts employment by the Company without cause or by Mr. Alpert for good reason, Mr. Alpert will receive six months base salary, benefits, and accelerated vesting of all unvested options granted under the 1999 Plan. Upon a change in control transaction, 25% of the then unvested options granted to Mr. Alpert shall vest and the remaining unvested options shall vest and become exercisable upon termination of Mr. Alperts employment by the Company without cause or by Mr. Alpert for good reason within 12 months of a change in control transaction. Mr. Alpert and the Company also entered into a Commission and Bonus Plan in September 2001, which provides that Mr. Alpert will receive a commission on contracts that Mr. Alpert secures. On November 29, 2004, Onvia granted Mr. Alpert 100,000 stock options with an exercise price of $7.50.
Mr. Rowley and the Company entered into an employment agreement in September 2001 that provided for an annual base salary of $170,000, and a performance bonus of $85,000, which was paid in January 2002. In February 2002, Mr. Rowley was granted options to purchase 24,500 shares of the Companys common stock, with vesting to begin immediately in 48 equal monthly installments, as long as Mr. Rowley is employed by the Company. Upon termination of Mr. Rowleys employment by the Company without cause or by Mr. Rowley for
good reason, Mr. Rowley will receive six months base salary, benefits, and accelerated vesting of all unvested options granted under the 1999 Plan. Upon a change in control transaction, 25% of the then unvested options granted to Mr. Rowley shall vest and the remaining unvested options shall vest and become exercisable upon termination of employment by the Company without cause or by Mr. Rowley for good reason within 12 months of a change in control transaction. On November 29, 2004, Onvia granted Mr. Rowley 40,000 stock options. On January 26, 2005, Onvia granted Mr. Rowley 20,000 stock options with an exercise price of $7.50.
2004 STOCK OPTION GRANTS
The following table provides information with respect to stock options granted to the Named Executive Officers during 2004. In addition, as required by the SEC rules, the table sets forth the hypothetical gains that would exist for the options based on assumed rates of annual compound stock price appreciation during the option term. The exercise price may be paid in cash, in shares of common stock valued at fair market value on the exercise date or through a cashless exercise procedure involving a same-day sale of the purchased shares. No stock appreciation rights were granted to these individuals during the year.
The Board of Directors believed that the premium-priced stock options granted to the Named Executive Officers were critical to aligning the interests of such executives with stockholders because the only way premium-priced stock options benefit such executives is if stockholder value increases first. It was the intent of the Compensation Committee to provide incentives to the Named Executive Officers to remain employees of the Company for the long term. The new stock option grant will be Mr. Picketts sole incentive compensation package for the foreseeable future.
OPTIONS EXERCISED IN 2004, OPTIONS EXERCISEABLE AT FISCAL YEAR END, AND
OPTION VALUES AT FISCAL YEAR END
The following table provides certain stock option information with respect to each Named Executive Officer including: the shares acquired on stock option exercises in 2004 and the value realized on such exercises; the number of exercisable (not yet exercised) stock options at fiscal year end and their value; and the number of unexerciseable stock options at fiscal year end and their value. When calculating the value of in-the-money stock options, we are calculating the positive difference between the exercise price of a stock option and the market price of the shares subject to such option at the end of the fiscal year. The Company has not granted any stock appreciation rights.
EQUITY COMPENSATION PLAN INFORMATION
We currently maintain three compensation plans that provide for the issuance of our common stock to officers, directors, employees, and consultants. These consist of the 1999 Plan, the 2000 Directors Plan, and the 2000 Employee Stock Purchase Plan (ESPP), all of which have been approved by stockholders. The following table sets forth information regarding outstanding options and shares reserved for future issuance under the 1999 Plan and 2000 Directors Plan as of December 31, 2004. The ESPP has 300,000 shares reserved for purchase, and 261,299 shares available for purchase as of December 31, 2004.
During the year ended December 31, 2001, five securities class action suits were filed against Onvia, former executive officers Glenn S. Ballman and Mark T. Calvert, and Onvias lead underwriter, Credit Suisse First Boston (CSFB). The suits were filed in the United States District Court for the Southern District of New York on behalf of all persons who acquired securities of Onvia between March 1, 2000 and December 6, 2000. On or around April 19, 2002, these five suits were consolidated, a lead plaintiff was appointed, and the consolidated complaint was filed. The complaint charged defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (and Rule 10b-5 promulgated thereunder) and Sections 11 and 15 of the Securities Act of 1933, for issuing a Registration Statement and Prospectus that contained material misrepresentations and/or omissions. The complaint alleged that the Registration Statement and Prospectus were false and misleading because they failed to disclose (i) the agreements between CSFB and certain investors to provide them with significant amounts of restricted Onvia shares in the initial public offering (IPO) in exchange for excessive and undisclosed commissions; and (ii) the agreements between CSFB and certain customers under which the underwriters would allocate shares in the IPO to those customers in exchange for the customers agreement to purchase Onvia shares in the after-market at predetermined prices. The complaint sought an undisclosed amount of damages, as well as attorneys fees. On October 9, 2002, an order of dismissal without prejudice was entered, dismissing former officers Glenn S. Ballman and Mark T. Calvert. In June 2003, Onvia, along with most of the companies named as defendants in this litigation, accepted the proposal negotiated among plaintiffs, underwriters, and issuers. The major points of the settlement are: (1) insurers will provide a $1 billion
guaranty payable to plaintiffs; (2) companies will assign excess compensation claims against underwriters to plaintiffs; (3) companies will agree not to assert pricing claims or claims for indemnification against the underwriters; (4) companies and their officers and directors will be released from any further litigation relating to these claims; and (5) companies will agree to cooperate in any document discovery. A final settlement agreement has been negotiated, the court has issued preliminary approval subject to one modification relating to a bar order, and we are awaiting final court approval. If the final settlement is approved, Onvia will be released from any future liability under this lawsuit; therefore, we have not made an accrual for a loss contingency related to this suit. We have a $30 million directors and officers liability policy that would cover any award up to $30 million, subject to a $250,000 deductible. Onvia has incurred approximately $125,000 for attorneys fees in defense of this suit as of February 15, 2005. According to the terms of the settlement agreement, defense fees incurred after June 1, 2003 will be refunded if the final settlement is approved. Approximately $23,000 of the defense fees incurred to date were incurred after June 1, 2003 and would be refunded to Onvia if the final settlement is approved. In the event that the final settlement agreement is not approved and Onvia is found liable for damages, which we believe is a remote possibility, the $125,000 in attorneys fees already incurred would be applied to our deductible and we would be liable for the balance of any additional fees and awards in excess of those already paid up to our $250,000 deductible, and any award in excess of our $30 million liability policy.
On February 3, 2005, a lawsuit was filed against Onvia in King County, Washington. The complaint alleged that Onvia had sent an unsolicited facsimile to recipients in violation of the federal Telephone Consumer Protection Act, Washingtons facsimile law, and the Washington Consumer Protection Act. The plaintiff is seeking injunctive relief as well as incidental statutory damages of $500 per facsimile on behalf of the plaintiff and each member of the proposed class who received a facsimile on or about August 23, 2001. We send facsimiles to customers with whom we have an existing business relationship, or to vendors with whom our agency partners have an existing relationship. We believe that we have strong defenses and will defend against this lawsuit aggressively. At this time, the plaintiff class has not been certified.
In addition, from time to time the Company is subject to various other legal proceedings that arise in the ordinary course of business. While management believes that the disposition of these matters will not have a material adverse effect on the financial position, results of operations, or cash flows of the Company, the ultimate outcomes are inherently uncertain.
Loan to Former Officer
On April 10, 2000, the Company issued a loan to Kristen M. McLaughlin, Onvias former Chief Strategy Officer, for $350,000 at an annual interest rate of six percent. The loan is secured by Ms. McLaughlins 45,000 shares of the Companys common stock and is due on the earlier of the following: (1) April 10, 2005; (2) after a public offering of the Companys common stock in which the officer is a selling stockholder; or (3) the expiration of any lock-up period imposed by contract or securities laws following an acquisition of the Company. On March 30, 2001, Onvia and Ms. Laughlin entered into a retention agreement whereby Ms. McLaughlin was induced to remain as an employee of the Company in exchange for the note being turned into a nonrecourse loan. Until her termination of employment with Onvia in August 2002, Ms. McLaughlin paid down a portion of her promissory note, leaving approximately $270,954 as of March 1, 2005. On February 22, 2005, during the Companys open trading window, the Company entered into an arms length agreement with Ms. McLaughlin under which the Company will cancel the collateralized shares if the closing price of Onvias stock closes at a price at which the fair market value of the collateralized shares would be equivalent to the balance of the note between February 22, 2005 and April 10, 2005, the due date of the note. If Onvias stock fails to close at or above this value during this period, the Company will cancel the collateralized shares on April 11, 2005 at the closing price on that date. If the fair market value of the cancelled shares exceeds the balance of the note on the date of cancellation, Onvia will refund the excess value to Ms. McLaughlin. If the value of the shares is below the balance due on the note on the date of cancellation, Onvia will record a loss on the settlement of the note equivalent to the shortfall. Ms. McLaughlin retains the right to pay the balance of the note in cash up to the due date of the note.
The Company has entered into indemnification agreements with some of its officers and directors containing provisions that require the Company to indemnify such officers and directors against liabilities that may arise by reason of their status or service as officers or directors, and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. These indemnification agreements do not cover liabilities arising from willful misconduct of a culpable nature.
Other Related Party Transactions
There were no other related party transactions.
Notwithstanding anything to the contrary set forth in any of the Companys filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate future filings, including this Proxy Statement, in whole or in part, the Compensation Committee Report, the Audit Committee Report, and the Stock Performance Graph shall not be deemed to be incorporated by reference into any such filings.
COMPENSATION COMMITTEES POLICY ON EXECUTIVE COMPENSATION
The following describes the compensation policy existing during the fiscal year ended December 31, 2004, applicable to the Companys executive officers. The Compensation Committee is responsible for establishing and monitoring our general compensation policies and compensation plans, as well as the specific compensation levels for executive officers including the chief executive officer. The Compensation Committee reviews and establishes annual base salary levels, annual cash bonus opportunity levels, and long-term incentive opportunities for each executive officer. The executive officers were not present during, and did not participate in, deliberations or decisions involving their own compensation.
General Compensation Policy
Under the supervision of the Board of Directors, our compensation policy is designed to attract and retain qualified key executives critical to our growth and long-term success. It is the objective of the Board of Directors to have a portion of each executives compensation contingent upon our performance as well as upon the individuals personal performance. Accordingly, each executive officers compensation package is comprised of three elements: (i) base salary which reflects individual performance and expertise; (ii) variable bonus awards payable in cash and tied to the achievement of certain performance goals that the Board of Directors establishes from time to time for the Company; and (iii) long-term stock-based incentive awards which are designed to strengthen the mutuality of interests between the executive officers and our stockholders.
The summary below describes in more detail the factors that the Board of Directors considers in establishing each of the three primary components of the compensation package provided to the executive officers.
The level of base salary is established primarily on the basis of the individuals qualifications and relevant experience, the strategic goals for which he or she has responsibility, the compensation levels at similar companies, and the incentives necessary to attract and retain qualified management. Base salary is reviewed and potentially adjusted each year to take into account the individuals performance, any changes in responsibility, and to maintain a competitive salary structure. Company performance does not play a significant role in the determination of base salary.
Cash-Based Incentive Compensation
Cash bonuses are awarded on a discretionary basis to executive officers on the basis of their success in achieving designated individual goals and our success in achieving specific company-wide goals, such as customer satisfaction, revenue growth, and earnings growth.
Long-Term Incentive Compensation
Our stock option plans provide executives and other key employees with incentive to maximize long-term stockholder value. Awards under this plan by the Board of Directors take the form of stock options designed to give the recipient a significant equity stake and thereby closely align his or her interests with those of our stockholders. Factors considered in making such awards include the individuals position, his or her performance and responsibilities, and internal comparability considerations. The Board of Directors is not required to adhere strictly to these guidelines and may vary the size of the option grant made to each executive officer where it determines that the circumstances warrant alternative treatment.
Each option grant allows the executive officer to acquire shares of common stock at a fixed price per share (the fair market value on the date of grant or above) over a specified period of time (up to 10 years). The options typically vest in periodic installments over a four or five year period, contingent upon the executive officers continued employment with Onvia.
Compensation of the Chief Executive Officer
Michael D. Pickett has served as our Chief Executive Officer since April 2001. His base salary for the fiscal year ended December 31, 2004 was $250,000. Other than a $4,808 company wide one-week bonus paid to Mr. Pickett and the option grant described in the 2004 Option Grants table, no other compensation, bonus, commission, or stipend was paid to Mr. Pickett during 2004. Mr. Picketts compensation was determined by the Compensation Committee, which is comprised of all Independent Directors.
The factors discussed above in Base Salaries, Cash-Based Incentive Compensation, and Long-Term Incentive Compensation were applied in establishing the amount of Mr. Picketts base salary, bonus, and stock option grant. Significant factors in establishing Mr. Picketts base salary, bonus, and stock option grant were his previous experience as chairman, president, and chief executive officer of a publicly held company; the compensation levels at companies that compete with the Company for business and executive talent; and the Companys performance.
Deductibility of Executive Compensation
The Compensation Committee has considered the impact of Section 162(m) of the Internal Revenue Code adopted under the Omnibus Budget Reconciliation Act of 1993, which section disallows a deduction for any publicly held corporation for individual compensation exceeding $1 million in any taxable year for the CEO and four other most highly compensated executive officers, respectively, unless such compensation meets the requirements for the performance-based exception to Section 162(m). As the cash compensation paid by the Company to each of its executive officers is expected to be below $1 million and the Compensation Committee believes that options granted under the 1999 Plan to such officers will meet the requirements for qualifying as performance-based, the Compensation Committee believes that Section 162(m) will not affect the tax deductions available to the Company with respect to the compensation of its executive officers. It is the Compensation Committees policy to qualify, to the extent reasonable, its executive officers compensation for deductibility under applicable tax law. However, the Company may from time to time pay compensation to its executive officers that may not be deductible.
At the end of 2004 the Compensation Committee of the Board of Directors of the Company consisted of the following:
Jeffrey C. Ballowe, Chair
Roger L. Feldman
D. Van Skilling
In March 2004, Mr. Feldman and Mr. Brill replaced resigning directors Nancy J. Schoendorf and Kenneth A. Fox, respectively, on the Compensation Committee. In November 2004, Mr. Skilling replaced Mr. Brill. No member of the Compensation Committee or executive officer of the Company has a relationship that would constitute an interlocking relationship with executive officers or directors of another entity.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is composed of three Independent Directors and operates under a written charter adopted by the Board of Directors in March 2004. Until March 2004 the Audit Committee was composed of Nancy J. Schoendorf, Jeffrey C. Ballowe, and Steven D. Smith. In March 2004, James L. Brill replaced resigning director Nancy J. Schoendorf on the Audit Committee. In November 2004 Mr. Brown replaced Mr. Ballowe. Each of the 2004 and current members of the Audit Committee is an Independent Director.
The Audit Committee recommends to the Board of Directors the selection of an accounting firm to be engaged as our independent auditors. The independent auditors are responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Accounting Oversight Board (United States) and to issue a report thereon. Management is responsible for our internal controls and the financial reporting process. The Audit Committee is responsible for monitoring and overseeing these processes.
The Audit Committee held five meetings during 2004. The meetings were designed to facilitate and encourage communications between the Audit Committee, management, and our independent registered public accounting firm, Deloitte & Touche LLP. Management represented to the Audit Committee that our consolidated financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee reviewed and discussed the audited consolidated financial statements for fiscal year 2004 with management and the independent auditors.
The Audit Committee discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended.
The Audit Committee has received and reviewed the written disclosures and the letter from the independent auditors, Deloitte & Touche LLP as required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees. Additionally, the Audit Committee has discussed with Deloitte & Touche LLP the issue of its independence from the Company.
Based on its review of the audited consolidated financial statements and the various discussions noted above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004.
At the end of 2004 the Audit Committee of the Board of Directors of the Company consisted of the following:
James L. Brill, Chair
Robert G. Brown
Steven D. Smith
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
Deloitte & Touche LLP served as our independent registered public accounting firm in 2004 and 2003. Audit and audit-related fees aggregated $168,213 and $154,168 for the years ended December 31, 2004 and 2003, respectively and were composed of the following:
The aggregate fees billed for the audit of the Companys annual financial statements for the fiscal years ended December 31, 2004 and 2003 and for reviews of the Companys financial statements included in the Companys quarterly reports on Form 10-Q were $141,969 and $128,264, respectively.
The aggregate fees billed for audit related services for the fiscal years ended December 31, 2004 and 2003 were $3,465 and $2,480, respectively. These fees relate to services in conjunction with consultation on internal controls including Sarbanes-Oxley Section 404 for the fiscal year ended December 31, 2004 and the external review of audit working papers for the fiscal year ended December 31, 2003.
The aggregate fees billed for tax services for the fiscal years ended December 31, 2004 and 2003 were $22,779 and $23,424, respectively. These fees relate to various tax compliance and consulting services for the fiscal years ended December 31, 2004 and 2003.
All Other Fees
There were no other fees that are not included above for the fiscal years ended December 31, 2004 and 2003.
The Audit Committees charter provides that it shall pre-approve all audit and non-audit services. Our Audit Committee pre-approved all services provided by our auditor in 2004. The Audit Committee of the Board of Directors has considered the role of Deloitte & Touche LLP in providing non-audit services to the Company and has concluded that such services are compatible with Deloitte & Touche LLPs independence as our auditors.
Representatives of Deloitte & Touche LLP will be present at the Annual Stockholders Meeting and available to answer questions.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return data for our common stock since March 1, 2000 (the date of our initial public offering) to the cumulative return over such period of the NASDAQ National Market Composite Index and the Inter@Active Week Internet Index. The graph assumes that $100 was invested on March 1, 2000, in our common stock and in each of the comparative indices. The graph further assumes that such amount was initially invested in our common stock at a per share opening price of $210.00, the reverse split adjusted price on the date of our initial public offering. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
*Assumes $100 invested on March 1, 2000 in stock or index, including reinvestment of dividends.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors does not know of any business to be considered at the 2005 Annual Stockholders Meeting other than the proposal described in this Proxy Statement. If any other matter or matters are properly brought before the meeting, or any adjournment or postponement of the meeting, it is the intention of the person named in the accompanying form of proxy to vote the proxy on such matters in accordance with his or her best judgment.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL STOCKHOLDERS MEETING
A stockholder proposal must be addressed to the Secretary and received at the principal executive offices at 1260 Mercer Street, Seattle, Washington 98109 by the close of business on December 6, 2005 to be considered for inclusion in the proxy materials for the Companys 2006 Annual Stockholders Meeting.
For business to be brought before the Annual Stockholders Meeting by a stockholder, other than those proposals included in the proxy materials, the Companys Bylaws provide that notice of such business must be received at the Companys principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the previous years Annual Stockholders Meeting. The notice must specify the stockholders name, address, number of shares of the Company beneficially owned, a description of the desired business to be brought before the Annual Stockholders Meeting, and the reasons for conducting such business at the Annual Stockholders Meeting.
By order of the Board of Directors,
Michael D. Pickett
Chairman of the Board, Chief Executive Officer,
April 8, 2005
PROXY FOR ANNUAL STOCKHOLDERS MEETING
To Be Held On May 6, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ONVIA, INC.
The undersigned hereby appoints Michael D. Pickett as proxy for the undersigned, with full powers of substitution, with all the powers the undersigned would possess if personally present, to vote the stock of the undersigned in ONVIA, INC. at the Annual Stockholders Meeting to be held on May 6, 2005 at 1:00 p.m. local time, at Onvias executive offices at 1260 Mercer Street, Seattle, Washington 98109, and any adjournment or postponements thereof with all powers the undersigned would possess if personally present. The undersigned hereby revokes any proxy previously given with respect to such stock.
This proxy, if properly executed, will be voted in accordance with the instructions given. Unless revoked or otherwise instructed, the shares represented by this proxy will be voted FOR the director nominees in item 1 and will be voted in accordance with the discretion of the proxies upon all other matters which 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. PLEASE DATE AND MAIL IN THE ENCLOSED POSTAGE-PAID ENVELOPE, OR VOTE BY INTERNET OR TELEPHONE.
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THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THIS PROXY. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR AND OTHERWISE IN THE DISCRETION OF THE PERSON NAMED AS PROXY ON ALL OTHER MATTERS THAT PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.