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                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
the 7th day of June, 2004 by and between Janice Anderson (the "Executive") and
Onyx Software Corporation, a Washington corporation (the "Corporation").

            The Corporation desires to employ the Executive as the Corporation's
President and Chief Executive Officer and Executive desires to accept such
employment.

            The Corporation and the Executive desire to set forth the terms of
the Executive's employment on the terms and conditions provided herein.

            For ease of reference, this Agreement is divided into the following
parts, which begin on the pages indicated:

FIRST PART:   TERM OF EMPLOYMENT, DUTIES AND SCOPE, COMPENSATION AND BENEFITS
              DURING EMPLOYMENT; BOARD OF DIRECTORS
              (Sections 1 - 12 beginning on page 2)

SECOND PART:  COMPENSATION AND BENEFITS IN CASE OF TERMINATION
              (Sections 13 - 17 beginning on page 9)

THIRD PART:   TRADE SECRETS, ASSIGNMENT OF INVENTIONS, SUCCESSORS, MISCELLANEOUS
              PROVISIONS, SIGNATURE PAGE
              (Sections 18 - 20 beginning on page 16)

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FIRST PART:   TERM OF EMPLOYMENT, DUTIES AND SCOPE, COMPENSATION AND BENEFITS
              DURING EMPLOYMENT; BOARD OF DIRECTORS

SECTION 1. TERM OF EMPLOYMENT

(a)   Basic Rule. The Corporation agrees to employ the Executive and the
      Executive agrees to remain in employment with the Corporation as the
      Corporation's President and Chief Executive Officer, from June 7, 2004
      until the earlier of:

      (1)   The date of the Executive's death; and

      (2)   The date when the Executive's employment terminates pursuant to
            Subsection (b), (c) or (d) below.

(b)   Early Termination or Resignation. The Corporation may terminate the
      Executive's employment at any time and for any or no reason, with or
      without Cause (as defined below), by giving the Executive thirty (30)
      days' advance written notice; provided, however, that the Corporation's
      Board of Directors (the "Board") may excuse the Executive from any or all
      of her duties during this period. The Executive may terminate the
      Executive's employment at any time and for any or no reason by giving the
      Corporation not less than thirty (30) days' advance written notice. In the
      event of such termination, the Executive shall be entitled to compensation
      and benefits on the terms and subject to the conditions detailed in the
      Second Part of this Agreement. For purposes of this Agreement, Executive's
      last day of employment with the Corporation (or any of its affiliates)
      shall be referred to herein as the "Termination Date."

(c)   Termination for Cause. The Corporation may terminate the Executive's
      employment at any time for Cause shown. For all purposes under this
      Agreement, "Cause" shall mean (1) a willful and continued failure to
      perform the Executive's duties and responsibilities as President and Chief
      Executive Officer, other than a failure resulting from the Executive's
      complete or partial incapacity due to physical or mental illness or
      impairment, after there has been delivered to the Executive a written
      demand for performance from the Board that describes the basis for the
      Board's belief that the Executive has not performed her duties and
      provides the Executive 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, (2) a willful act by the Executive that constitutes
      gross misconduct and that results in material harm to the Corporation, (3)
      a willful breach by the Executive of a material provision of this
      Agreement or (4) a material and willful violation of a federal or state
      law or regulation applicable to the business of the Corporation that
      results in material harm to the Corporation. For purposes of this
      Agreement, no act, or failure to act, on the Executive's part shall be
      deemed "willful" unless done, or omitted to be done, by the Executive not
      in good faith and without reasonable belief that the Executive's action or
      omission was in the best interest of the Corporation. Notwithstanding the
      foregoing, the Executive shall not be deemed to have been terminated for
      Cause unless and until the Corporation provides written notice to the
      Executive by providing a copy of a resolution duly adopted by the
      affirmative vote of not less than three-quarters of the

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      entire membership of the Board (other than the Executive), 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 Executive and an opportunity
      for the Executive, together with counsel, to be heard before the Board)
      finding that, in the good-faith opinion of the Board, the Executive was
      guilty of conduct set forth above and specifying the particulars thereof
      in reasonable detail. If the Corporation does not give Executive 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 Corporation shall be
      deemed to have irrevocably waived the right to give notice on such basis
      unless Executive consents in writing to an extension of such sixty (60)
      day period. For purposes of the foregoing waiver provision, the Executive
      shall have the burden of proving actual knowledge of an Independent
      Director of the material facts giving rise to the basis for such
      termination.

(d)   Termination for Disability. The Corporation may terminate the Executive's
      employment for Disability by giving the Executive written notice. For all
      purposes under this Agreement, "Disability" shall mean that the Executive,
      at the time the notice is given, has been unable to perform the
      Executive's essential duties under this Agreement (after reasonable
      accommodations have been made for Executive) for a period of not less than
      four consecutive months as a result of the Executive's incapacity due to
      physical or mental illness. In the event that the Executive resumes the
      performance of substantially all of the Executive's duties under this
      Agreement before the termination of the Executive's employment under this
      Section becomes effective, the notice of termination shall automatically
      be deemed to have been revoked.

(e)   Other Offices. Unless the Corporation requests otherwise, upon termination
      of the Executive's employment for any reason, the Executive shall be
      deemed to have immediately resigned from all positions as an officer or
      director with the Corporation (and its affiliates) as of the Termination
      Date.

(f)   Termination of Agreement. This Agreement shall expire when all obligations
      of the parties hereunder have been satisfied.

SECTION 2. DUTIES AND SCOPE OF EMPLOYMENT

(a)   Position. The Corporation agrees to employ the Executive for the term of
      employment under this Agreement in the position of President and Chief
      Executive Officer. The Executive shall be the Corporation's highest
      ranking officer and shall report directly to the Board. All other senior
      executives of the Corporation shall report to Executive. The Executive
      shall be given such duties, responsibilities and authorities as are
      normally associated with or appropriate to this position.

(b)   Obligations. During the term of employment under this Agreement, the
      Executive shall continue to devote the Executive's full business efforts
      and time to the business and affairs of the Corporation as needed to carry
      out her duties and responsibilities hereunder,

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      subject to the overall supervision of the Board. The foregoing shall not
      preclude the Executive from engaging in appropriate civic, charitable or
      religious activities or from devoting a reasonable amount of time to
      private investments or from serving on the boards of directors of other
      entities, as long as such activities and service do not interfere or
      conflict with the Executive's responsibilities to the Corporation.

SECTION 3. BASE COMPENSATION

During the term of employment under this Agreement, the Corporation agrees to
pay the Executive as compensation for services a base salary at the annual rate
of Three Hundred and Fifty Thousand Dollars ($350,000) or at such higher rate as
the Corporation may determine from time to time. Such salary shall be payable
semi-monthly in accordance with the standard payroll procedures of the
Corporation. Beginning in January 2005, the Executive's base salary shall be
reviewed annually and increased, to the extent appropriate in the sole
discretion of the Compensation Committee of the Board, based upon the
Executive's performance. The annual compensation specified in this Section 3,
together with any increases in such compensation that the Corporation may grant
from time to time, is referred to in this Agreement as "Base Compensation."

SECTION 4. LEVERAGED COMPENSATION PLAN

As a member of the executive team, the Executive will participate each year in
the Corporation's annual incentive compensation plan (the "Leveraged
Compensation Plan") on the terms provided in this Section 4.

(a)   Establishment of Financial and Business Goals. The Executive's leveraged
      compensation will be determined based upon the Corporation's achievement
      of designated financial and business goals (the "Bonus Goals") that are
      believed in good faith to be achievable given the Corporation's
      competitive and marketplace position, and that are established in good
      faith, after consultation with the Executive, by the Compensation
      Committee of the Board no later than sixty (60) days after the
      commencement of the Executive's employment and no later than sixty (60)
      days after the beginning of each fiscal year thereafter. Achievement of
      the Bonus Goals as set forth in the Leveraged Compensation Plan is
      referred to herein as "On-Target Performance."

(b)   Target Amounts. Under the Leveraged Compensation Plan, for each fiscal
      year of employment hereunder, the Executive will be eligible to receive a
      target incentive bonus of sixty-five percent (65%) of her Base
      Compensation for On-Target Performance and up to a maximum of one hundred
      percent (100%) of her Base Compensation for performance exceeding the
      On-Target Performance as provided in the Leveraged Compensation Plan. The
      Leveraged Compensation Plan shall also provide for appropriate incentive
      bonuses of less than sixty-five percent (65%) of her Base Compensation for
      achieving less than the On-Target Performance.

(c)   2004 Leveraged Compensation. For 2004, the foregoing target incentive
      bonus amounts shall be prorated from the date of the Executive's
      commencement of employment.

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(d)   Leveraged Compensation in Year of Death, Disability or Qualifying
      Termination. If Executive's employment with the Corporation is terminated
      as a result of her death, her Disability, or a Qualifying Termination (as
      defined below), Executive shall be entitled to receive a partial-year
      bonus equal to the prorated (to the Termination Date) portion of the bonus
      Executive would have received under the Leveraged Compensation Plan based
      on the Corporation's actual performance in relation to the Bonus Goals for
      the completed fiscal year in which such termination occurs had Executive
      remained employed by the Corporation through the end of the Corporation's
      applicable fiscal year. Such bonus shall be paid no later than ten (10)
      days after the date on which the time for completion of the Bonus Goals
      has lapsed and the amount of such bonus is therefore calculable by the
      Corporation.

(e)   Most Favorable Application to Executive. The Leveraged Compensation Plan
      as applied to Executive shall be no less favorable (in terms of target
      incentive bonus percentages) to Executive than is its application to any
      other senior executive of the Corporation (other than sales executives and
      any other special compensation arrangements approved or recommended by
      Executive).

SECTION 5. RELOCATION BONUS AND EXPENSES

The Executive shall receive a bonus (the "Relocation Bonus") of seventy-five
thousand dollars ($75,000) (less applicable withholding and payroll taxes),
payable within fourteen (14) days of the first day of the Executive's
commencement of employment, for the purpose of covering any of Executive's
incidental expenses associated with her relocation to Seattle, Washington which
are not reimbursed pursuant to the ultimate sentence of this paragraph
(regardless of Executive's actual relocation expenses and without requiring
Executive to submit evidence of such expenditures). In the event that the
Executive is not employed with the Corporation at the one- year anniversary of
the first day of the Executive's commencement of employment, the Executive shall
be required to repay to the Corporation twenty five percent (25%) of the
Relocation Bonus, net of income and employment taxes paid or payable thereon,
for each three-month period during the previous year in which the Executive was
not so employed (or such pro-rated amount for any partial period). In the event
that the Executive is not employed with the Corporation as a result of a
Qualifying Termination (as defined in Section 13 of this Agreement) or due to
the death or Disability of Executive, no such repayment shall be required. In
addition, the Corporation shall reimburse the Executive for certain specific
relocation expenses in the amounts and on the terms set forth on Exhibit A, upon
presentation of an itemized account and appropriate supporting documentation,
all in accordance with the Corporation's generally applicable policies.

SECTION 6. STOCK OPTIONS

(a)   Initial Grants. Subject to Executive's execution of an appropriate option
      letter agreement (reflecting the option terms provided herein) the "Option
      Agreement") with the Corporation, the Executive shall receive the
      following option grants on her first day of commencement of employment
      (the "Initiation Date"), with each such grant to be made outside of the
      Corporation's stock option plans, but to have substantially the same terms

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      and provisions as provided in the Corporation's 1998 Stock Incentive
      Compensation Plan (the "1998 Plan"):

      (1)   a nonqualified stock option to purchase three hundred thousand
            (300,000) shares of the Corporation's Common Stock, at an exercise
            price equal to the fair market value of the Corporation's common
            stock on the Initiation Date, as defined in the 1998 Plan (the "Fair
            Market Value"), of which twenty-five percent (25%) of the shares
            covered by the option shall vest on the one-year anniversary of the
            Initiation Date, and an additional 2.0833% shall vest at the end of
            each month thereafter, with the result that one hundred percent
            (100%) of the options are vested four years from the Initiation Date
            (the "Standard Vesting Schedule");

      (2)   a nonqualified stock option to purchase fifty thousand (50,000)
            shares of the Corporation's Common Stock, at an exercise price equal
            to the Fair Market Value on the Initiation Date, which option shall
            vest on the four-year anniversary of the Initiation Date, or sooner,
            based on the Corporation's 2004 financial performance in relation to
            the TARSAP metrics set forth on Exhibit B;

      (3)   a nonqualified stock option to purchase one hundred twenty-five
            thousand (125,000) shares of the Corporation's Common Stock, at an
            exercise price of Five Dollars and Fifty Cents ($5.50), which option
            shall vest according to the Standard Vesting Schedule; and

      (4)   a nonqualified stock option to purchase one hundred twenty-five
            thousand (125,000) shares of the Corporation's Common Stock, at an
            exercise price of Eleven Dollars and Fifty Cents ($11.50), which
            option shall vest according to the Standard Vesting Schedule.

(b)   Automatic Future Grants. Subject to Executive's continued employment with
      the Corporation on the applicable date of grant, and to execution of
      Option Agreements, the Executive shall receive a nonqualified option grant
      to purchase one hundred thirty-five thousand (135,000) shares of the
      Corporation's Common Stock on the first anniversary of the Initiation
      Date, and additional nonqualified option grants on each of the second and
      third anniversaries of the Initiation Date, each of which shall be to
      purchase one hundred thousand (100,000) shares of the Corporation's Common
      Stock. Each such additional grant shall be made pursuant to the 1998 Plan,
      at an exercise price equal to the Fair Market Value on the date of such
      grant and shall vest monthly over four years, at the rate of 2.0833% per
      month, commencing one month after the date of each such grant.

(c)   Additional Potential Future Grants. Executive shall be eligible for
      additional option grants as may be provided by the Compensation Committee
      of the Board (in its sole discretion) from time to time.

(d)   Other Terms of Options. Each of the foregoing options shall have a ten
      (10) year term, provided that, subject to Sections 13-15 of this
      Agreement, such option term and the vesting of the option shall be subject
      to, among other things, Executive's continued employment with the
      Corporation. For the avoidance of doubt, upon any termination of

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      Executive's employment for any reason, there shall not be any automatic
      termination or forfeiture by Executive of stock options vested as of the
      Termination Date as a result of such termination (other than by virtue of
      the expiration of the term and exerciseability period of such vested stock
      options following such termination). In addition, in the event of a
      Corporate Transaction (as defined in the 1998 Plan), the acceleration and
      vesting terms of Section 11.2 of the 1998 Plan shall apply to any stock
      options granted to Executive hereunder in addition to, and not in lieu of,
      the provisions of Section 14.

(e)   Changes in Capitalization. For the avoidance of doubt, all share numbers
      with respect to options and future option grants shall be adjusted as
      provided in Section 11.1 of the 1998 Plan, provided that any such
      adjustment shall be no less favorable to the Executive than adjustments
      made for other senior executives of the Corporation.

(f)   Registration Statement. The Corporation covenants that the issuance of all
      shares issuable upon the exercise of any option granted to Executive shall
      be registered pursuant to an applicable registration form and in
      furtherance thereof, the Corporation agrees to file a Form S-8, or other
      applicable registration form, with respect to the issuance of all shares
      to be issued upon the exercise of any stock options granted to Executive
      not covered by an effective registration statement on Form S-8. Such
      registration statement shall be filed no later than the first date on
      which any options granted to Executive pursuant to Section 6(a) become
      vested. The Corporation represents and warrants to Executive that its
      current registration statements on Form S-8 cover the issuance of all
      shares issuable upon exercise of the options to be granted to Executive
      from the 1998 Plan pursuant to Section 6(b).

(g)   Applicable Laws, Regulations and Rules. The grant of all options and the
      issuance of all shares of the Corporation's Common Stock upon exercise of
      such options shall be in compliance in all material respects with all
      applicable laws, regulations and rules, as well as with the Corporation's
      Restated Articles of Incorporation and Restated Bylaws and with the 1998
      Plan.

SECTION 7. EXECUTIVE BENEFITS AND SUPPLEMENTAL LIFE INSURANCE ALLOWANCE

During the term of employment under this Agreement, the Executive (and her
eligible dependents and family members) shall be eligible to participate in the
executive benefit plans and executive compensation programs maintained by the
Corporation on a basis no less favorable than that applicable to the
Corporation's other senior executives (and their dependents and family members),
including, without limitation, 401(k) and employee stock purchase plans, life,
disability, medical, dental, vision, accident and other insurance programs,
transportation fringe benefit plans, paid vacations, and similar plans or
programs, subject in each case to the generally applicable terms and conditions
of the plan or program in question and to the discretion and determinations of
any person, committee or entity administering such plan or program. The
Corporation's benefit plans and compensation programs are described on Exhibit
F. The Executive shall be entitled to four weeks of paid vacation per year. In
addition, the Corporation shall reimburse the Executive (on a grossed-up basis
such that the Executive receives the amount of the reimbursement on a net basis
after the payment of any income taxes payable by Executive on such amount) for
her actual cost (based upon normal rates) of additional insurance reasonably

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acceptable to the Corporation such that the aggregate of such additional
insurance plus the insurance provided for under the Corporation's benefit plans
is in an aggregate amount equal to three times her Base Compensation as in
effect from time to time (the "Supplemental Life Insurance Allowance").

SECTION 8. PROFESSIONAL EXPENSES

The Corporation shall reimburse the Executive for bona fide continuing education
expenses and expenses associated with professional organizations of which
Executive is or becomes a member, up to a maximum of ten thousand dollars
($10,000) per year upon presentation of an itemized account and appropriate
supporting documentation, all in accordance with the Corporation's generally
applicable policies. It is understood that this allowance is not intended to
cover executive education programs that the Executive may deem appropriate to
take and that the Board shall in good faith consider reimbursement for such
programs; provided that this shall not prevent Executive from using such
allowance for any such programs.

SECTION 9. BUSINESS EXPENSES AND TRAVEL

During the term of employment under this Agreement, the Executive shall be
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with the Executive's duties hereunder. The
Corporation shall reimburse the Executive for such expenses upon presentation of
an itemized account and appropriate supporting documentation, all in accordance
with the Corporation's generally applicable policies.

SECTION 10. INDEMNIFICATION AND INSURANCE

During the term of employment under this Agreement, the Executive shall be
covered by the Corporation's directors' and officers' insurance policy (which
shall provide coverage of not less than Five Million Dollars ($5,000,000)) and
shall receive indemnification as a corporate officer and director of the
Corporation to the maximum extent extended to the other officers and directors
of the Corporation. The Executive and the Corporation shall enter into the
Corporation's standard form of indemnification agreement, a copy of which is
attached as Exhibit C (the "Indemnification Agreement").

SECTION 11. BOARD OF DIRECTORS

As of the Initiation Date, the Executive shall be appointed to fill a vacancy on
the Board, and to serve as the Chairman of the Board, for a term expiring at the
Corporation's next annual meeting of shareholders. So long as the Executive
continues to hold the position of Chief Executive Officer, the Corporation shall
nominate the Executive to be elected to the Board of Directors.

SECTION 12. LEGAL EXPENSES

Provided that the Executive commences employment with the Corporation, the
Corporation shall reimburse the Executive for up to fifteen thousand dollars
($15,000) in documented legal and accounting expenses incurred by the Executive
prior to the Initiation Date in association with the negotiation and execution
of this Agreement.

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SECOND PART: COMPENSATION AND BENEFITS IN CASE OF TERMINATION

SECTION 13. QUALIFYING TERMINATION

In the event that, during the term of this Agreement, the Executive's employment
terminates in a Qualifying Termination, as defined in Subsection (a), then,
following the effective date (the "Trigger Date") of a release and waiver of
Claims substantially in the form attached as Exhibit D (the "Release"), the
Executive shall be entitled to receive the payments and benefits described in
Subsections (b), (c), (d) and (e); provided, however, that all such additional
payments and benefits shall be subject to the Executive's continuing compliance
in all material respects with the terms of the Release, Sections 5, 13(g) and 18
of this Agreement and the Confidentiality Agreement (as defined below). In
addition, Executive shall be entitled to the compensation, benefits, unpaid
bonuses, reimbursements and other amounts payable under the terms of the First
Part of this Agreement for the period through and including the Termination
Date, which payments shall be paid in accordance with the Corporation's standard
practices.

(a)   Qualifying Termination. A Qualifying Termination occurs if:

      (1)   The Corporation terminates the Executive's employment for any reason
            other than Cause, Disability or death; or

      (2)   The Executive notifies the Corporation in writing that she will
            terminate her employment with the Corporation in response to a
            "Constructive Termination." Constructive Termination is defined as
            (i) a material reduction of the Executive's duties,
            responsibilities, or authorities or a material adverse change in the
            prestige of Executive's title, including without limitation, if the
            Executive is required to report to any individual other than the
            Board, if the Executive is not the highest ranking officer of the
            Corporation's ultimate parent entity or if Executive 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 Corporation, (ii) a reduction by the Corporation of the then
            current Base Compensation of the Executive, (iii) a relocation of
            the Corporation's headquarters of more than 35 miles from its
            location on the date hereof or a change in the Executive's principal
            business location to a location other than the corporate
            headquarters, (iv) a failure of the Board to nominate Executive as a
            director of the Corporation; provided, however, that the replacement
            of Executive as Chairman of the Board shall not constitute a
            Constructive Termination or (v) a breach by the Corporation of a
            material provision of this Agreement. If the Corporation cures such
            Constructive Termination within 10 days after its receipt of the
            Executive's written notice, then Executive 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
            Executive shall be deemed to be a material provision of this
            Agreement. If the Executive does not give the Corporation 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

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            basis for such termination, the Executive shall be deemed to have
            irrevocably waived the right to give notice on such basis unless the
            Corporation consents in writing to an extension of such period. For
            purposes of the foregoing waiver provision, the Corporation shall
            have the burden of proving actual knowledge of the Executive of the
            material facts giving rise to the basis for such termination.

(b)   Severance. In the event of a Qualifying Termination, the Corporation shall
      pay to the Executive as severance, subject to and conditioned upon the
      execution by Executive of the Release, the following amounts on the
      following terms:

      (1)   an aggregate amount equal to the Executive's Base Compensation in
            effect on the Termination Date, with such amount payable
            semi-monthly in pro-rata installments commencing with the first
            payroll date after the Trigger Date and continuing for the ensuing
            twelve (12) months (the "Severance Term") in accordance with the
            Corporation's standard payroll procedures; plus

      (2)   an additional amount equal to the following:

                  (i) if such termination occurs during any fiscal year ending
after December 31, 2005, an aggregate amount equal to one hundred percent (100%)
of the Executive's actual, earned bonus under the Leveraged Compensation Plan
for the fiscal year prior to the fiscal year in which the Qualifying Termination
occurs; or

                  (ii) if such termination occurs during any fiscal year ending
on or before December 31, 2005, an aggregate amount equal to the greater of (i)
one hundred percent (100%) of the Executive's actual, earned bonus under the
Leveraged Compensation Plan for the fiscal year prior to the fiscal year in
which the Qualifying Termination occurs or (ii) sixty-five percent (65%) of the
Executive's Base Compensation in effect on the date of such Qualifying
Termination;

with any such amount under this subsection (2) payable semi-monthly in pro-rata
installments commencing with the first payroll date after the Trigger Date and
continuing for the remainder of the Severance Term in accordance with the
Corporation's standard payroll procedures.

(c)   Life Insurance and Health Plan Coverage. Beginning on the Termination Date
      and ending at the earlier of (1) the expiration of the Severance Term, or
      (2) Executive's being offered comparable coverage by a subsequent
      employer, the Executive (and, where applicable, the Executive's
      dependents) shall be entitled to continue participation at the
      Corporation's expense in (1) the group term life insurance plan and (2) in
      the health care plan for executives maintained by the Corporation, through
      COBRA, with coverage the same as if the Executive were still an executive
      of the Corporation. The coverage provided under this Subsection (c) shall
      run concurrently with and shall be offset against any continuation
      coverage under Part 6 of Title I of the Executive Retirement Income
      Security Act of 1974, as amended. Where applicable, the Executive's
      compensation for purposes of such plans shall be deemed to be equal to the
      Executive's compensation (as defined in such plans) in effect on the
      Termination Date. To the extent that the Corporation finds it undesirable
      to cover the Executive (or, where applicable, the

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      Executive's dependents) under the group life insurance and health plans of
      the Corporation, the Corporation shall provide the Executive (or, where
      applicable, the Executive's dependents), at the Corporation's own expense,
      with the same level of coverage under individual policies. The Corporation
      will also provide and pay for Group Term Insurance conversion under the
      Corporation's Group Term Life Plan for the Severance Term. In the event
      that the Executive secures employment during the Severance Term, the
      Executive shall make reasonably diligent efforts to secure replacement
      insurance provided by such subsequent employment and will notify the
      Corporation promptly of the effective date of such coverage. At the end of
      the Severance Term, the Executive may take over COBRA payments for any
      remaining COBRA period, provided that the Executive is not yet covered by
      another healthcare plan.

(d)   Supplemental Life Insurance Allowance Continuation. The Corporation shall
      continue to pay Executive the Supplemental Life Insurance Allowance on a
      monthly basis during the Severance Term.

(e)   Vesting and Exerciseability of Stock Options. As of the Termination Date
      (regardless of the basis for termination), all stock options not
      previously vested will cease vesting; provided, however, that following a
      Qualifying Termination, there shall be an automatic vesting as of the
      Trigger Date of that portion of the Executive's outstanding options that
      would have vested if Executive had remained in the employment of the
      Corporation through and including the first anniversary of the Termination
      Date. All stock options shall remain exerciseable for a period of 180 days
      following a Qualifying Termination.

(f)   Conditions to Receipt of Payments and Benefits. As a condition to the
      receipt of the payments and benefits described in this Section 13, the
      Executive shall be required to execute (and not revoke) the Release. The
      Executive's continued receipt of payments and benefits described in this
      Section 13 shall also be subject to the Executive's ongoing compliance in
      all material respects with the terms of the Release, Sections 5, 13(g) and
      18 of this Agreement and the Confidentiality Agreement (as defined below).

(g)   Noncompetition and Nonsolicitation and Nondisparagement by Executive. In
      view of the Executive's position and her access to Confidential
      Information (as defined below), the Executive agrees by accepting this
      Agreement that the Executive shall not, during the Executive's employment
      with the Corporation and for a period of twelve (12) months after any
      termination thereof (regardless of the basis of such termination and
      regardless of whether any severance benefits are to be paid to Executive
      hereunder), without the Corporation's prior written consent, directly or
      indirectly, alone or as a partner, joint venturer, officer, director,
      employee, consultant, agent or stockholder (other than a less than five
      percent (5%) stockholder of a publicly traded company), (i) engage in any
      activity that is in competition with the business, the products or
      services of the Corporation, (ii) directly or indirectly solicit or hire
      any of the Corporation's employees or consultants, (iii) hire any of the
      Corporation's employees or consultants if the Executive is engaged in any
      activity which is in competition with the business, the products or
      services of the Corporation, (iv) directly or indirectly solicit any of
      the Corporation's employees or consultants on behalf of any business or
      entity that is in competition with the business, products or services of
      the Corporation, (v) directly or

                                      -11-
<PAGE>

      indirectly solicit any customers of the Corporation on behalf of any
      business or entity that is in competition with the business, products or
      services of the Corporation, (vi) actively encourage employees or
      consultants to leave the Corporation, (vii) make (or direct anyone to
      make) any negative or derogatory comment to any third party, including
      current employees, consultants, customers and prospects of the Corporation
      and the press, regarding the Corporation, its business or related
      activities, or the relationship between the Corporation and Executive or
      (viii) otherwise breach her Confidential Information obligations.
      Notwithstanding the foregoing, nothing herein shall restrict the Executive
      from employment with any entity which is in competition with the
      Corporation, if (a) the business unit of such entity which competes with
      the Corporation is not a principal business of such entity and (b) if the
      Executive's duties with respect to such entity do not involve the
      activities that are in competition with the Corporation. For the avoidance
      of doubt, the phrase "in competition with the business, the products or
      services of the Corporation" shall mean that the applicable activity,
      business or entity offers a software product or service in the areas of
      sales force automation, customer sales and service or marketing automation
      (provided that at such time the Corporation is in such business) or
      competes directly with any of the other primary proprietary software
      products or services then marketed and sold by the Corporation; provided
      that in no event shall any activity, business or entity that competes only
      with a non-proprietary product or service incorporated into the
      Corporation's product or service, and not with the Corporation's
      proprietary software products or services themselves, be deemed to be "in
      competition with the business, the products or services of the
      Corporation."

(h)   Nondisparagement by Corporation. The Corporation agrees that, for a period
      of twelve (12) months following the termination of Executive, the Board
      shall not, and that the Board shall use its reasonable efforts to cause
      the executive officers of the Corporation not to, make (or direct anyone
      to make) any negative or derogatory comment to any third party, including
      current employees, consultants, customers and prospects of the Corporation
      and the press regarding the Executive or the relationship between the
      Corporation and the Executive.

(i)   No Mitigation. Except as provided in Section 13(c), the Executive shall
      not be required to mitigate the amount of any payment or benefit
      contemplated by this Section 13, nor shall any such payment or benefit be
      reduced by any earnings or benefits that the Executive may receive from
      any other source.

SECTION 14. QUALIFYING TERMINATION FOLLOWING A CHANGE OF CONTROL

(a)   Option Acceleration and Exerciseability upon Qualifying Termination
      Following a Change of Control. Notwithstanding anything to the contrary in
      Section 13, in the event of a Qualifying Termination occurring within
      twenty-four (24) months after a Change of Control (as defined below), (i)
      one hundred percent (100%) of the shares subject to any options then held
      by Executive shall immediately vest as of the Trigger Date and (ii) all
      options then held by Executive shall remain exerciseable for a term of one
      year following the date of such Qualifying Termination.

                                      -12-
<PAGE>

(b)   Severance Following a Change of Control. Notwithstanding anything to the
      contrary in Section 13, in the event of a Qualifying Termination occurring
      within twenty-four (24) months after a Change of Control (as defined
      below), (i) the amounts payable pursuant to Section 13(b)(1) shall be one
      hundred fifty percent (150%) of the Executive's Base Compensation in
      effect on the Trigger Date, (ii) the Severance Term for purposes of
      Sections 13(c) and (d) shall be eighteen (18) months rather than twelve
      (12) months and (iii) the aggregate amounts payable pursuant to Section
      13(b)(2) shall, in lieu of the amounts provided therein, be equal to one
      hundred fifty percent (150%) of the amount otherwise provided in such
      Section 13(b)(2). Amounts payable pursuant to this Section 14(b) shall be
      paid semi-monthly in pro-rata installments commencing on the first payroll
      date after the Trigger Date and continuing for a period of twelve months;
      provided, however, that Executive may elect to receive up to one-third of
      the aggregate amounts payable pursuant to this Section 14(b) in a lump sum
      payment no later than ten (10) days after the Trigger Date, with the
      remainder paid out ratably over a period of twelve months as provided
      above.

(c)   Potential Change of Control. For purposes of this Section 14, the
      Executive's employment shall be deemed to have been terminated as a result
      of a Qualifying Termination within twenty-four (24) months after a Change
      of Control if (i) the Executive's employment is terminated in a Qualifying
      Termination prior to an impending Change of Control and such termination
      was at the request or direction of another party (the "Other Party") who
      has entered into a definitive and binding agreement with the Corporation
      the consummation of which would constitute a Change of Control, (ii) the
      Executive terminates her employment as a result of a Constructive
      Termination prior to a Change of Control and the circumstance or event
      which constitutes a Constructive Termination occurs at the request or
      direction of such Other Party or (iii) the Executive's employment is
      terminated by the Corporation without Cause prior to a Change of Control
      that is consummated within six (6) months after such termination, and the
      Executive demonstrates that such termination is otherwise in connection
      with or in anticipation of such Change of Control.

(d)   Additional Benefits and Payments. Except where otherwise expressly
      provided, the benefits and payments provided in this Section 14 shall be
      in addition to and not in lieu of the benefits and payments described in
      Section 13.

(e)   Definition of Change of Control. For purposes of this Section 14, a
      "Change of Control" means any of the following events: (i) consummation of
      any merger or consolidation or reorganization of the Corporation in which
      the Corporation 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 Corporation'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 Corporation'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 Corporation's assets

                                      -13-
<PAGE>

      other than a transfer of the Corporation's assets to a majority-owned
      subsidiary corporation of the Corporation; (iii) approval by the holders
      of the Common Stock of any plan or proposal for the liquidation or
      dissolution of the Corporation; (iv) acquisition by any person or group of
      beneficial ownership (as defined in the Securities Exchange Act of 1934,
      as amended) of more than fifty percent (50%) of the Corporation's
      outstanding voting securities; or (v) if those individuals who are
      directors of the Corporation on the date of the Executive's employment
      (the "Incumbent Board") cease to constitute a majority of the
      Corporation's directors, provided that individuals whose election as
      directors was approved by the Incumbent Board shall be considered members
      of the Incumbent Board.

SECTION 15. TERMINATION FOR DEATH OR DISABILITY

(a)   Payments and Benefits Through Termination Date. Upon any termination of
      Executive's employment with the Corporation as a result of Executive's
      death or Disability, Executive shall be entitled to the compensation,
      benefits, unpaid bonuses, reimbursements and other amounts payable under
      the terms of the First Part of this Agreement for the period through and
      including the Termination Date, which payments shall be paid in accordance
      with the Corporation's standard practices. Additionally, the Corporation
      shall continue to pay for life insurance for Executive (if she is
      Disabled) and health insurance (for Executive (except in the case of her
      death) and for Executive's dependents) for one year following the
      Termination Date.

(b)   Option Acceleration and Exerciseability upon Death or Disability.
      Notwithstanding anything to the contrary herein, upon any termination of
      Executive's employment with the Corporation as a result of Executive's
      death or Disability, (i) there also shall be an automatic vesting as of
      the Trigger Date of any and all portion of the Executive's outstanding
      options that would have vested if Executive had remained in the employment
      of the Corporation through and including the first anniversary of the
      Termination Date and (ii) all options then held by Executive shall remain
      exerciseable for a term of one year following the Termination Date.

(c)   Disability and Death Benefits. In addition, upon any termination of
      Executive's employment with the Corporation as a result of Executive's
      death or Disability, Executive shall be entitled to any disability or
      death benefits to which the Executive (or her estate or beneficiary(s))
      may be entitled as a result of termination of her employment on account of
      Disability or death.

SECTION 16. LIMITATION ON PAYMENTS

(a)   In the event that it is determined that any payment or distribution of any
      type to or for the benefit of the Executive made by the Corporation, by
      any of its affiliates, by any person who acquires ownership or effective
      control or ownership of a substantial portion of the Corporation's assets
      (within the meaning of Section 280G of the Internal Revenue Code of 1986,
      as amended, and the regulations thereunder (the "Code")) or by any
      affiliate of such person, whether paid or payable or distributed or
      distributable pursuant to the terms of an employment agreement or
      otherwise, would be subject to the excise tax imposed by

                                      -14-
<PAGE>

      Section 4999 of the Code or any interest or penalties with respect to such
      excise tax (such excise tax, together with any such interest or penalties,
      being collectively referred to as the "Excise Tax"), then such payments or
      distributions or benefits shall be payable either:

      (1)   in full; or

      (2)   as to such lesser amount that would result in no portion of such
            payments or distributions or benefits being subject to the Excise
            Tax;

whichever amount shall, on an after-tax basis, be greater.

(b)   Unless the Executive and the Corporation agree otherwise in writing, any
      determination required under this Section 16 shall be made in writing by
      the Corporation's independent accountant, or at the Corporation's
      election, another nationally recognized public accounting firm acceptable
      to both the Corporation and the Executive (the "Accountant"), whose
      determination shall be conclusive and binding. The Executive and the
      Corporation shall furnish the Accountant such documentation and documents
      as the Accountant may reasonably request in order to make a determination
      and to the extent consistent with applicable standards and practice
      generally accepted among practitioners (including, without limitation, as
      such standards may be applied to the Corporation's own financial reporting
      and as such standards and practice are determined by the Accountant), the
      Accountant shall make such determination in the manner most favorable to
      the Executive. The Corporation shall bear all costs that the Accountant
      may reasonably incur in connection with performing any calculations
      contemplated by this Section 16.

SECTION 17. OTHER TERMINATIONS UNDER THIS PART

If termination of employment, actual or constructive, is not described in
Sections 13, 14 or 15, then the Executive is entitled only to the compensation,
benefits, unpaid bonuses, reimbursements and other amounts payable under the
terms of the First Part of this Agreement for the period preceding the
Termination Date, which payments shall be paid in accordance with the
Corporation's standard practices. The payments under this Agreement shall fully
discharge all responsibilities of the Corporation to the Executive upon
termination of the Executive's employment. This Section 17 applies, without
limitation, to any termination of employment initiated by the Executive (except
an Executive-initiated termination that constitutes a Qualifying Termination),
termination of the Executive for Cause, and any constructive termination that
does not constitute a Constructive Termination.

                                      -15-
<PAGE>

THIRD PART:    TRADE SECRETS, ASSIGNMENT OF INVENTIONS SUCCESSORS, MISCELLANEOUS
               PROVISIONS, SIGNATURE PAGE

SECTION 18. EMPLOYEE CONFIDENTIALITY AND INVENTION AGREEMENT

The Executive agrees to execute and abide by the Corporation's standard form of
Employee Confidentiality and Invention Agreement, a copy of which is attached
hereto as Exhibit E (the "Confidentiality Agreement"). The Executive
acknowledges and agrees that such agreement shall survive indefinitely any
termination of the Executive's employment with the Corporation, however caused.

SECTION 19. SUCCESSORS

(a)   Corporation's Successors. The Corporation shall require any successor
      (whether direct or indirect and whether by purchase, lease, merger,
      consolidation, liquidation or otherwise) to all or substantially all of
      the Corporation's business and/or assets, by an agreement in substance and
      form satisfactory to the Executive, to assume this Agreement and to agree
      expressly to perform this Agreement in the same manner and to the same
      extent as the Corporation would be required to perform it in the absence
      of a succession. The Corporation's failure to obtain such agreement prior
      to the effectiveness of a succession shall be a breach of this Agreement
      and shall entitle the Executive to all of the compensation and benefits
      (upon the effectiveness of the Release) to which the Executive would have
      been entitled hereunder if the Executive's employment had been
      involuntarily terminated by the Corporation without Cause, on the date
      when such succession becomes effective. For all purposes under this
      Agreement, the term "Corporation" shall include any successor to the
      Corporation's business and/or assets that executes and delivers the
      assumption agreement described in this Subsection (a) or that becomes
      bound by this Agreement by operation of law.

(b)   Executive's Successors. This Agreement and all rights of the Executive
      hereunder shall inure to the benefit of, and be enforceable by, the
      Executive's personal or legal representatives, executors, administrators,
      successors, heirs, distributees, devisees and legatees.

SECTION 20. MISCELLANEOUS PROVISIONS

(a)   Waiver. No provision of this Agreement shall be modified, waived or
      discharged unless the modification, waiver or discharge is agreed to in
      writing and signed by the Executive and by an authorized officer of the
      Corporation (other than the Executive). No waiver by either party of any
      breach of, or of compliance with, any condition or provision of this
      Agreement by the other party shall be considered a waiver of any other
      condition or provision or of the same condition or provision at another
      time.

(b)   Whole Agreement. No agreements, representations or understandings (whether
      oral or written and whether express or implied) that are not expressly set
      forth in this Agreement, any Option Agreement between the Corporation and
      the Executive, the Confidentiality

                                      -16-
<PAGE>

      Agreement and the Indemnification Agreement have been made or entered into
      by either party with respect to the subject matter hereof.

(c)   Notice. Notices and all other communications contemplated by this
      Agreement shall be in writing and shall be deemed to have been duly given
      when personally delivered, when mailed by U.S. registered or certified
      mail, return-receipt requested and postage-prepaid or when sent by a
      nationally recognized overnight courier. In the case of the Executive,
      mailed or couriered notices shall be addressed to the Executive at the
      home address that the Executive most recently communicated to the
      Corporation in writing. In the case of the Corporation, mailed or
      couriered notices shall be addressed to its corporate headquarters, and
      all notices shall be directed to the attention of its Chief Legal Officer.

(d)   No Setoff. There shall be no right of setoff or counterclaim with respect
      to any claim, debt or obligation, against payments to the Executive under
      this Agreement.

(e)   Choice of Law. The validity, interpretation, construction and performance
      of this Agreement shall be governed by the laws of the state of
      Washington. Jurisdiction and venue for any claims arising under this
      Agreement shall lie exclusively in King County, Washington State, USA.

(f)   Severability. The invalidity or unenforceability of any provision or
      provisions of this Agreement shall not affect the validity or
      enforceability of any other provision hereof, which shall remain in full
      force and effect.

(g)   No Assignment of Benefits. The rights of any person to payments or
      benefits under this Agreement shall not be made subject to option or
      assignment, either by voluntary or involuntary assignment or by operation
      of law, including, without limitation, bankruptcy, garnishment, attachment
      or other creditor's process, and any action in violation of this
      Subsection (g) shall be void.

(h)   Employment at Will; Limitation of Remedies. The Corporation and the
      Executive acknowledge that the Executive's employment is at will, as
      defined under applicable law. If the Executive's employment terminates for
      any reason, the Executive shall not be entitled to any payments, benefits,
      damages, awards or compensation other than as provided by this Agreement.

(i)   Employment Taxes. All payments made pursuant to this Agreement shall be
      subject to withholding of applicable taxes.

(j)   Arbitration of Disputes. Any controversy or claim arising out of or
      relating to this Agreement (or the breach thereof) shall be settled by
      final, binding and non-appealable arbitration in Seattle, Washington by
      three arbitrators. Subject to the following provisions, the arbitration
      shall be conducted in accordance with the rules of the American
      Arbitration Association (the "Association") then in effect. One of the
      arbitrators shall be appointed by the Corporation, one shall be appointed
      by the Executive, and the third shall be appointed by the first two
      arbitrators. If the first two arbitrators cannot agree on the third
      arbitrator within 30 days of the appointment of the second arbitrator,
      then the third arbitrator shall be appointed by the Association. Any

                                      -17-
<PAGE>

      award entered by the arbitrators shall be final, binding and nonappealable
      and judgment may be entered thereon by either party in accordance with
      applicable law in any court of competent jurisdiction. This arbitration
      provision shall be specifically enforceable. The arbitrators shall have no
      authority to modify any provision of this Agreement or to award a remedy
      for a dispute involving this Agreement other than a benefit specifically
      provided under or by virtue of this Agreement. In the event the subject
      matter of the arbitration proceedings is whether or not the Executive was
      terminated for Cause, and the Executive prevails on substantially all
      material issues of such claim, the Corporation shall be responsible for
      (a) fees of the American Arbitration Association and the arbitrators or
      (b) any expenses relating to the conduct of the arbitration (including the
      Executive's reasonable attorneys' fees and expenses). In the event the
      subject matter of the arbitration proceedings is other than whether or not
      the Executive was terminated for Cause, the Executive shall be entitled to
      recover the monies contemplated above if she is awarded a material amount
      under such claim or otherwise prevails on substantially all material
      issues of such claim or if such claim is brought by the Corporation,
      Executive successfully defends against substantially all of the material
      allegations of such claim. Except as otherwise provided above, each party
      shall be responsible for its own expenses relating to the conduct of the
      arbitration (including reasonable attorneys' fees and expenses) and shall
      share the fees of the American Arbitration Association equally. Nothing in
      this paragraph shall be construed as precluding the Corporation from
      bringing a civil action in court for injunctive relief or other equitable
      relief relating to the breach or threatened breach of the agreements set
      forth in Section 12(g) of this Agreement or in the Confidentiality
      Agreement, provided that if a court determines that the Corporation is not
      entitled to such relief, the Corporation shall reimburse the Executive for
      her reasonable attorney's fees and expenses incurred in the defense of
      such action.

(k)   Discrepancy Between this Agreement and Other Agreements. In the event of
      any discrepancy between this Agreement and any other agreement between the
      Corporation and Executive (including, without limitation, the Option
      Agreements, the Indemnification Agreement, the Confidentiality Agreement
      and the 1998 Plan), the terms of this Agreement shall prevail.

                                      -18-
<PAGE>

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Corporation by its duly authorized officer, as of the day and year first
above written. The Executive has consulted (or has had the opportunity to
consult) with her own counsel (who is other than the Corporation's counsel)
prior to execution of this Agreement.

                                    EXECUTIVE

                                         /s/ Janice P. Anderson
                                         ---------------------------------------
                                                    Janice P. Anderson

                                    ONYX SOFTWARE CORPORATION

                                    By: /s/ Paul B. Dauber
                                        ----------------------------------------
                                    Name: Paul B. Dauber
                                    Its: Chief Legal Officer

                                      -19-