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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
American Software, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
AMERICAN SOFTWARE, INC.
470 East Paces Ferry Road
Atlanta, Georgia 30305
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of AMERICAN
SOFTWARE, INC. will be held at the Grand Hyatt Atlanta in Buckhead, 3300
Peachtreeoffices of the Company, 470 East Paces
Ferry Road, Atlanta, Georgia 30305 on Thursday,Wednesday, August 24, 200022, 2001 at 4:003:30 p.m.
for the following purposes:
1. To elect foureight directors of the Company, twothree of whom will be elected
by the holders of Class A Common Shares, and twofive of whom will be
elected by the holders of Class B Common Shares.
2. To consider and vote upon adopting the Company's 2001 Stock Option Plan.
3. To consider and transact such other business as may properly come before
the meeting.
Only shareholders of record of the Company of record at the close of business on July
7, 200012, 2001 will be entitled to vote at the meeting.
Shareholders are requested to vote, date, sign and mail their proxies in the
form enclosed even though they now plan to attend the meeting. If shareholders
are present at the meeting, their proxies may be withdrawn, and they may vote
personally on all matters brought before the meeting, as described more fully
in the enclosed Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
James R. McGuone,
Secretary
August 2, 20002001
IMPORTANT
We encourage you to attend the shareholders' meeting. In order that there
may be a proper representation at the meeting, each shareholder is requested
to send in his or her proxy in the enclosed envelope, which requires no
postage if mailed in the United States. Attention by shareholders to this
request will reduce the Company's expense in soliciting proxies.
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
OF AMERICAN SOFTWARE, INC.
----------------
TO BE HELD AT
THE
GRAND HYATT ATLANTA
IN BUCKHEAD
3300 PEACHTREEAMERICAN SOFTWARE, INC.
470 EAST PACES FERRY ROAD
ATLANTA, GEORGIA
30305
ON AUGUST 24, 200022, 2001
This Proxy Statement is furnished to Class A shareholders by the Board of
Directors of AMERICAN SOFTWARE, INC., 470 East Paces Ferry Road, N.E.,
Atlanta, Georgia 30305 (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of proxies for use at the Annual Meeting of
Shareholders on Thursday,Wednesday, August 24, 200022, 2001 at 4:003:30 p.m., and at any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. This Proxy Statement
and accompanying proxy card and Notice of Annual Meeting are first being
mailed to shareholders on or about August 2, 2000.2001.
If the enclosed form of proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with its terms. If no choices
are specified, the proxy will be voted -
FOR - Electionvoted:
FOR--Election of David H. GambrellDennis Hogue, Dr. John J. Jarvis and Thomas R. Williams as
Class A Directors.
FOR - Adoption of the Company's proposed 2001 Stock Option Plan.
In addition, a properly executed and returned proxy card gives the authority
to vote in accordance with the proxy-holders' best judgment on such other
business as may properly come before the meeting or any adjournment thereof.
Any proxy given pursuant to this solicitation may be revoked, either in
writing furnished to the Secretary of the Company prior to the meeting or
personally by attendance at the meeting, by the person giving the proxy
insofar as the proxy has not been exercised at the meeting.
VOTING SECURITIES
Record Date and Voting of Securities
The Board of Directors has fixed the close of business on July 7, 200012, 2001 as
the record date for determining the holders of common stock entitled to notice
of and to vote at the meeting. On July 7, 2000,12, 2001, the Company had outstanding
and entitled to vote a total of 18,522,05118,697,107 Class A Common Shares ("Class A
shares") and 4,082,289 Class B Common Shares ("Class B shares").
Other than in the election of directors, in which holders of Class A shares
and Class B shares vote as separate classes, each outstanding Class A share is
entitled to one-tenth vote per share and each outstanding Class B share is
entitled to one vote per share on all matters to be brought before the
meeting. The Class A directors and the Class B directors will be elected by a
majority of the votes cast by the respective classes. The adoption of the 2001
Stock Option Plan requires the affirmative vote of a majority of the shares
represented at the meeting (adjusted as described above). Any other matter
submitted to the meeting must be approved or ratified by a majority vote of
the outstanding shares (adjusted as described above). A one-third quorum of
6,174,0176,232,369 Class A shares and of 1,360,763 Class B shares is required to be
present or represented by proxy at the meeting in order to conduct all of the
business expected to come before the meeting. A vote of abstention cast by any
shareholder on a particular action will be counted towards the quorum
requirement, but will not be counted as a vote for or against the action.
Security Ownership
Five Percent Shareholders. The only persons known by the Company to own
beneficially more than 5% of the outstanding shares of common stock of either
class of the Company are those set forth below. Unless otherwise noted, this
information is as of June 30, 2000.2001. The statements as to securities
beneficially owned are, in each instance, based upon information provided by
the person(s) concerned. Except as disclosed in the notes to the table, each
person has sole voting and investment power with respect to the entire number
of shares shown as beneficially owned by that person.
Shares Percent
Name and Address of Beneficial Beneficially of
Title of Class Beneficial Owner Owned Class(1)
-------------- ------------------------------------------------- ------------ --------
CLASS A SHARES James C. Edenfield............ 125,050(2)Edenfield........... 191,500(2)(3) 0.7%1.0%(4)
c/o American Software, Inc.
470 East Paces Ferry Road,
N. E.
Atlanta, Georgia 30305
Thomas L. Newberry............ 163,000(2)Newberry........... 173,000(2)(5) 0.9%(4)
c/o American Software, Inc.
470 East Paces Ferry Road,
N. E.
Atlanta, Georgia 30305
Brown Capital Management,
Inc........................... 2,979,100(6) 16.1%
809 Cathedral Street
Baltimore, Maryland 21201
Dimensional Fund Advisors,
Inc.......................... 1,258,512(7) 6.8%1,342,112(6) 7.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, California
90401
State of Wisconsin Investment
Board........................ 1,115,300(8) 6.0%
P. O. Box 7842
Madison, Wisconsin 53707Brown Capital Management,
Inc.......................... 3,160,000(7) 17.0%
1201 N. Calvert Street
Baltimore, MD 21202
CLASS B SHARES James C. Edenfield............Edenfield........... 2,146,352 52.6%
Thomas L. Newberry............Newberry........... 1,935,937 47.4%
- --------
(1) Based on a total of 18,521,87618,551,096 Class A shares outstanding, plus any shares
issuable pursuant to options held by the person in question which may be
exercised within 60 days.
(2) Does not include the Class B shares beneficially owned by Mr. Edenfield
and Dr. Newberry, which shares are convertible into Class A shares on a
share for share basis.
(3) Includes 53,250136,500 shares that may be acquired upon the exercise of stock
options exercisable within 60 days. Also includes 55,000 shares held by
the James C. and Norma T. Edenfield Foundation, Inc., as to which Mr.
Edenfield has shared voting and investment power.
(4) For all matters except the election of directors, which involves class
voting, Messrs. Edenfield and Newberry together beneficially own
approximately 69.0%69.1% of the combined, weighted voting rights of the
outstanding Class A and Class B shares. See "Record Date and Voting of
Securities," above. If their respective Class B shares were converted into
Class A shares, Mr. Edenfield would beneficially own 11.0%10.3% of the
outstanding Class A shares and Dr. Newberry would beneficially own 10.2%9.3% of
the outstanding Class A shares.
(5) Includes 60,00070,000 shares that may be acquired upon the exercise of stock
options exercisable within 60 days.
(6) Based on Schedule 13G dated February 10, 2000.2, 2001.
(7) Based on Schedule 13G dated February 3, 2000.
(8) Based on Schedule 13G amendment dated January 25, 2000.February 15, 2001. Of these shares,
Brown Capital Management, Inc. has sole voting power over 2,891,500 shares
and sole dispositive power over 3,160,000 shares.
2
Directors and Executive Officers. The following table shows the shares of
common stock of the Company, both Class A and Class B, beneficially owned by
each nominee for director, by each executive officer named in the Summary
Compensation Table and by all directors and executive officers as a group as
of June 30, 2000.2001. The statements as to securities beneficially owned are, in
each instance, based upon information provided by the person(s) concerned.
Except as disclosed in the notes to the table, each person has sole voting and
investment power with respect to the entire number of shares shown as
beneficially owned by that person.
Shares
Beneficially
Owned Percent of Class
----------------------- -------------------
Name of Beneficial Owner ------------------------ ------------------
or Description of Group Class A Class B Class A(1) Class B
------------------------ ------- --------- ---------- -------
James C. Edenfield.................. 125,050(2)Edenfield................. 191,500(2)(3) 2,146,352 0.7%1.0%(4) 52.6%
Thomas L. Newberry.................. 163,000(2)Newberry................. 173,000(2)(5) 1,935,937 0.9%(4) 47.4%
David H. Gambrell................... 50,000(6)Gambrell.................. 60,000(6) -0- 0.3% --
Thomas R. Williams.................. 50,000(6)Williams................. 60,000(6) -0- 0.3% --
John J. Jarvis..................... -0- -0- -- --
Dennis Hogue....................... -0- -0- -- --
Thomas L. Newberry, V.............. -0- -0- -- --
J. Michael Edenfield................ 99,250(6)Edenfield............... 155,500(6) -0- 0.5%0.8% --
Paul DiBono, Jr..................... 37,500(6)Jr. (7)............... 127,500(6) -0- 0.2%0.7% --
Vincent C. Klinges.................. 9,500(6)Klinges................. 50,750(8) -0- 0.1%0.3% --
Jeffrey W. Coombs (9).............. 29,750(10) -0- 0.2% --
ALL DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP (8(12 PERSONS)............. 539,300(2)(7).. 853,000(2)(11) 4,082,289 3.0%3.9% 100%
- --------
(1) Based on a total of 18,521,87618,551,096 Class A shares outstanding, plus any
shares issuable pursuant to options held by the person or group in
question whichthat may be exercised within 60 days.
(2) Does not include the Class B shares beneficially owned by Mr. Edenfield
and Dr. Newberry, which shares are convertible into Class A shares on a
share for share basis.
(3) Includes 53,250136,500 shares that may be acquired upon the exercise of stock
options exercisable within 60 days. Also includes 55,000 shares held by
the James C. and Norma T. Edenfield Foundation, Inc. as to which
Mr. Edenfield has shared voting and investment power.
(4) For all matters except the election of directors, which involves class
voting, Messrs.Mr. Edenfield and Dr. Newberry together beneficially own
approximately 69.0%69.1% of the combined, weighted voting rights of the
outstanding Class A and Class B shares. See "Record Date and Voting of
Securities," above. If their respective Class B shares were converted
into Class A shares, Mr. Edenfield would beneficially own 11.0%10.3% of the
outstanding Class A shares and Dr. Newberry would beneficially own 10.2%9.3%
of the outstanding Class A shares.
(5) Includes 60,00070,000 shares subject to options exercisable within 60 days.
(6) Represents shares subject to options exercisable within 60 days.
(7) Mr. DiBono retired from the Company effective October 31, 2000.
(8) Includes 359,50048,750 shares subject to options exercisable within 60 days.
(9) Mr. Coombs became Executive Vice President and Chief Operating Officer of
the American Software USA, Inc., a wholly-owned subsidiary of the
Company, effective June 18, 2001. Prior to that time, he served as Senior
Vice President of American Software USA, Inc.
(10) Includes 29,250 shares subject to options exercisable within 60 days.
Also includes 500 shares held by Jeffrey J. Coombs, minor son of Mr.
Coombs, as to which Mr. Coombs may be deemed to share voting and
investment power.
(11) Includes 694,500 shares subject to options exercisable within 60 days.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors, and persons who own
more than 10% of a registered class of the Company's
3
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission (the "Commission"). Officers, directors
and holders of more than 10% of the Class A shares are required under
regulations promulgated by the Commission to furnish the Company with copies
of all Section 16(a) forms they file.
Based upon a review by the Company of filings made under Section 16(a) of
the Exchange Act, not all of the reports required to be filed during fiscal
2000 were filed on a timely basis. The Company is aware of the following
report that was filed with the Commission by officers, directors and 10%
stockholders of the Company after its due date: Thomas L. Newberry (Annual
Statement of Beneficial Ownership of Securities with respect to a charitable
donation in fiscal 2000). To the Company's knowledge, James Modak, an officer
of the Company who resigned in fiscal 2000, has not made the required Section
16(a) filings with respect to stock options
3
exercised at the time of his departure and with respect to the resale of such
shares. Based upon its review of copies of filings received by it, the Company
believes that since May 1, 1999, all other Section 16(a) filing requirements applicable to its
directors, officers and greater than 10% beneficial owners were complied with.
ELECTION OF DIRECTORS
The directors of the Company are elected annually to hold office until the
election and qualification of their successors at the next Annual Meeting. Of
the foureight directors to be elected, twothree are to be elected by the holders of
the outstanding Class A shares and twofive are to be elected by the holders of
the outstanding Class B shares. The persons named in the enclosed proxy card
intend to vote Class A shares for the election of David H. GambrellDennis Hogue, Dr. John J.
Jarvis and Thomas R. Williams, the Class A director nominees. In the event eitherany
of these individuals should be unavailable to serve as a director, the proxy
will be voted in accordance with the best judgment of the person or persons
acting under it. The Board of Directors has no reason to believe that any
director nominees will be unavailable for election as a director.
It is anticipated that Messrs.Mr. Edenfield and Dr. Newberry, who together own all
of the Class B shares, will vote their Class B shares in favor of the election
of Messrs.James C. Edenfield, J. Michael Edenfield, David H. Gambrell, Dr. Thomas L.
Newberry and Thomas L. Newberry, V as Class B directors. Thus, it is expected
that Messrs.James C. Edenfield and Thomas L. Newberry will continue to serveserving as the Class
B directors and that J. Michael Edenfield, David H. Gambrell and Thomas L.
Newberry, V will be elected as Class B directors.
J. Michael Edenfield, Dennis Hogue, Dr. John J. Jarvis, and Thomas L.
Newberry, V were elected to the Board of Directors by the existing Board
members effective June 1, 2001, and have not previously been candidates for
election at an annual meeting of shareholders.
The nominees for director, their ages, their principal occupations for at
least the past five years, other public company directorships held by them and
the year each was first elected as a director of the Company are set forth
below.
Year First
Elected
Name of Nominee Age Principal Occupation; Directorships Director
--------------- --- ----------------------------------- ----------
CLASS A DIRECTORS:
David H. Gambrell(1) 70 Partner, Gambrell & Stolz, L.L.P., 1983
Attorneys-at-law, Atlanta, GA.Dennis Hogue(1) 48 Chief Executive Officer of Global 2001
Food Exchange.
John J. Jarvis(2) 59 Chair of the School of Industrial 2001
and System Engineering at the
Georgia Institute of Technology.
Thomas R. Williams(2) 71Williams(3) 72 President, The Wales Group, Inc. 1989
(management and financial advisory
services); currently a Director of
ConAgra, Inc., National Life Insurance
Company of Vermont, and Avado Brands,
Inc.; also a trustee of Fidelity Group
of Mutual Funds..
CLASS B DIRECTORS:
James C. Edenfield(3) 65Edenfield(4) 66 President, Chief Executive Officer 1971
and 1971 Treasurer of American Software,
Inc. and American Software USA,
Inc.; Chairman of Board of Directors
of Logility, Inc.
J. Michael Edenfield(5) 43 Senior Vice President of American 2001
Software, Inc. and President and
Chief Executive Officer of Logility,
Inc.; currently a Director of
Logility, Inc., INSIGHT, Inc.
David H. Gambrell(6) 71 Partner, Gambrell & Stolz, L.L.P., 1983
Attorneys at Law, Atlanta, Georgia.
Thomas L. Newberry(4) 67Newberry(7) 68 Chairman of the Board of American 1971
Software, Inc.
1971Thomas L. Newberry, V(8) 34 Founder and Chief Executive Officer 2001
of The 1% Club, Inc.
4
- --------
(1) Mr. Hogue became Chief Executive Officer of Global Food Exchange in
January 2001. Prior to joining Global Food Exchange, Mr. Hogue served as
President and Chief Executive Officer of E3 Corporation from December 1999
to December 2000. Prior to serving as President and Chief Executive
Officer of E3, Mr. Hogue served as Vice President of Sales from November
1996 until April 1997 and President of North America from April 1997 until
December 1999. He earned a Bachelor of Science degree in Psychology from
Florida State University in 1974.
(2) Dr. Jarvis is currently Chair of the School of Industrial and Systems
Engineering at the Georgia Institute of Technology, where he has been a
member of the faculty since 1968. Dr. Jarvis was co-founder of CAPS
Logistics, Inc., a provider of software and consulting services in
logistics, which was acquired by Baan NV in 1998. Dr. Jarvis has served as
President of the Institute of Industrial Engineers (IIE), President of the
Institute of Management Services (TIMS) and Secretary of the Operations
Research Society of America (ORSA). He has served on the Councils of ORSA
and TIMS and on the Boards of the Institute for Operations Research and
Management Sciences (INFORMS) and IIE. Dr. Jarvis earned a Bachelor of
Science degree in Industrial Engineering in 1963 and a Masters of Science
degree in Industrial Engineering in 1965, both from the University of
Alabama, and a Ph.D. from Johns Hopkins University in 1968.
(3) Mr. Williams is currently President of The Wales Group, Inc., a position
he has held since 1987. The Wales Group, Inc. is a closely held
corporation engaged in investments and venture capital. In addition to the
above directorships, Mr. Williams was a director of Southern Bell from
1980 to 1983 and is a former Chairman of the Board of First Wachovia
Corporation, First National Bank of Atlanta and First Atlanta Corporation.
He has also served as a trustee of Fidelity Group of Mutual Funds. He
holds a Bachelor of Science degree in Industrial Engineering from the
Georgia Institute of Technology and a Master of Science degree in
Industrial Management from the Massachusetts Institute of Technology.
(4) Mr. Edenfield is a co-founder of the Company and has served as Chief
Executive Officer since November 1989, and as Co-Chief Executive Officer
prior to that time. Prior to founding the Company, Mr. Edenfield held
several executive positions with and was a director of Management Science
America, Inc., an Atlanta-based applications software development and
sales company. He holds a Bachelor of Industrial Engineering degree from
the Georgia Institute of Technology. Mr. Edenfield is the father of J.
Michael Edenfield.
(5) Mr. Edenfield has served as President and Chief Executive Officer of
Logility, Inc., a majority-owned subsidiary of the Company, since January
1997. From June 1994 until October 1997, he served as Chief Operating
Officer of the Company. Mr. Edenfield has served as Executive Vice
President of the Company from June 1994 to the present. From May 1987 to
June 1994, Mr. Edenfield served in various positions with American
Software USA, Inc., a wholly-owned subsidiary of the Company. Mr.
Edenfield holds a Bachelor of Industrial Management degree from the
Georgia Institute of Technology.
(6) Mr. Gambrell has been a practicing attorney since 1952, and is a partner
in the law firm of Gambrell & Stolz, L.L.P., counsel to the Company. He
served as a member of the United States Senate from the State of Georgia
in 1971 and 1972. Mr. Gambrell holds a Bachelor of Science degree from
Davidson College and a J.D. from the Harvard Law School.
(2) Mr. Williams is currently the President of The Wales Group, Inc., a
closely held corporation engaged in investments and venture capital. He
has held such position since 1987. In addition to the above directorships,
Mr. Williams was a director of Southern Bell from 1980 to 1983 and is a
former Chairman of the Board of First Wachovia Corporation, First National
Bank of Atlanta and First Atlanta Corporation. He holds a Bachelor of
Science degree in Industrial Engineering from the Georgia Institute of
Technology and a Master of Science degree in Industrial Management from
the Massachusetts Institute of Technology.
(3) Mr. Edenfield is a co-founder of the Company and has served as Chief
Executive Officer since November 1989, and as Co-Chief Executive Officer
prior to that time. Prior to founding the Company, Mr. Edenfield
4
held several executive positions with and was a director of Management
Science America, Inc., an Atlanta-based applications software development
and sales company. He holds a Bachelor of Industrial Engineering degree
from the Georgia Institute of Technology.
(4)(7) Dr. Newberry is a co-founder of the Company and served as Co-Chief
Executive Officer of the Company until November 1989. Prior to founding
the Company, he held executive positions with several companies engaged in
computer systems analysis, software development and sales, including
Management Science America, Inc., where he was also a director. Dr.
Newberry holds Bachelor, Master of Science and Ph.D degrees in Industrial
Engineering from the Georgia Institute of Technology. He is the father of
Thomas L. Newberry, V.
(8) Mr. Newberry founded The 1% Club, Inc. in October 1992 and has acted as
its Chief Executive Officer since that time. The 1% Club sponsors programs
designed to assist entrepreneurs and their families in accomplishing their
goals. He is also the author of motivational books and audio programs
dedicated to improving performance in business operations and
salesmanship. Mr. Newberry earned a Bachelor of Science degree from
Georgia State University in 1989.
5
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CLASS A SHAREHOLDERS VOTE
"FOR" MESSRS. GAMBRELLHOGUE, JARVIS AND WILLIAMS.
From May 1, 19992000 through April 30, 2000,2001, the Board of Directors held four
meetings and acted by unanimous written consent on one occasion. No director
of the Company attended fewer than 75% of the total meetings of the Board of
Directors and committee meetings on which such Board member served and was
eligible to attend during this period.
The Board of Directors has an Audit Committee, which presently consists of
Messrs. Gambrell (Chairman), Hogue, Jarvis and Williams. The Audit Committee
held one meetingtwo meetings during fiscal 2000.2001. The Securities and Exchange Commission
and National Association of Securities Dealers have promulgated new rules regarding the
composition and function of audit committees for listed companies. These rulesthat
require audit committees to be composed of not less than three members who are
"independent," as that term is defined in the rules. Three of the four Audit
Committee members--Messrs. Hogue, Jarvis and Williams--meet the definition of
"independent" set forth in the new rules.
The rules provide that a director who is a partner in or controlling
shareholder or executive officer of any business organization to which the
Company made, or from which the Company received, payments that exceed the
greater of 5% of the business organization's consolidated gross revenues or
$200,000 in any of the past three years is not considered "independent." Mr.
Gambrell is a partner in the law firm of Gambrell & Stolz, L.L.P., which
provides legal services to the Company and received payments in excess of the
above threshold amount. Accordingly, Mr. Gambrell would not be considered
"independent" under the rules. See Compensation Committee Interlocks and
Insider Participation, below.
An exception to the independence requirement allows one non-independent
director who is not a current employee of the Company or an immediate family
member of a current employee to serve on the Audit Committee if the Board,
under limited circumstances, determines that membership on the Committee by
the individual is in the best interest of the Company and its shareholders,
provided that the Board discloses in the next annual proxy statement the
nature of the relationship and the reasons for its determination. The Board
has determined that Mr. Gambrell's membership on the Committee is in the best
interest of the Company and its shareholders because his experience serving as
Chairman of the Committee will benefit the new Committee members.
The Company's Audit Committee Charter, attached as it currently exists does not comply with the new composition
requirements. However, the rule regarding audit committee composition provides
for a transition period so that companies can restructure their audit
committees to comply with the new composition requirements. The Company
intends to restructure its audit committee in a manner that complies with the
new requirements within the transition period granted by the rule.
The new rules also require companies to adopt a written charter for their
audit committee thatExhibit "A" hereto,
outlines the composition requirements of the Audit Committee as described
above, as well as its duties and responsibilities. The Company
amended the written charter of its Audit Committee on May 16, 2000 in a manner
that it believes complies with these new requirements. Under the current charter,
the primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the Board. The functions of the Audit
Committee include making an annual recommendation of independent public
accountants to the Company, reviewing the scope and results of the independent
public accountants' audit, monitoring the adequacy of the Company's
accounting, financial and operating controls, reviewing from time to time the
Company's periodic financial statements and other financial reports with
management and with the independent auditors, and reviewing with management
and the independent auditors the Company's interim and annual
financial statements to be included in its public filings.
Thethe
Company's annual report.
Prior to the September 1, 2000 termination of the 1991 Employee Stock Option
Plan, the Board hashad a 1991 Employee Stock Option Plan Committee, consisting of
Messrs. Edenfield and Newberry. During fiscal 2000,2001, this Committee met or
acted by written consent 20ten times to grant stock options or take other
actions with respect to the Company's 1991 Employee Stock Option Plan. The
members of this Committee arewere not eligible to participate in this Plan. The
functions of this Committee arewere to grant options and establish the terms of
those options, as well as to construe and interpret the Plan and to adopt
rules in connection therewith.
Two different committees of the Board administer the 2001 Stock Option Plan,
depending on whether the option grant is to an officer or director or to other
employees. The Special Stock Option Committee, which consists of David H.
Gambrell and Thomas R. Williams, as members of the Compensation Committee,
administers stock option grants to executive officers and directors. The Stock
Option Committee, which consists of James C. Edenfield and Thomas L. Newberry,
administers grants to other employees. During fiscal 2001, the
6
Stock Option Committee met or acted by written consent nine times to grant
stock options or take other actions with respect to the Company's 2001 Stock
Option Plan. The Special Stock Option Committee did not meet or act by written
consent during fiscal 2001 because all stock option grants to officers and
directors during fiscal 2001 were made under the Directors and Officers Stock
Option Plan prior to its termination. The Directors and Officers Stock Option
Plan was administered by the Compensation Committee. The function of these
Committees is to grant options and establish the terms of those options, as
well as to construe and interpret the Plan and to adopt rules in connection
therewith.
The Board has a Compensation Committee, consisting of Messrs. Williams
(Chairman) and Gambrell, described below in "Certain Information Regarding
Executive Officers and Directors--Report on Executive Compensation." The
Compensation Committee met or acted by written consent on fourtwo occasions during
fiscal 2000.2001.
The Board has no nominating committee or any other committee performing
similar functions.
5
CERTAIN INFORMATION REGARDING EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and the other executive officers of the Company whose
annual compensation exceeded $100,000 during fiscal 20002001 (referred to herein
as the "named executive officers") for the fiscal years ended April 30, 2001,
2000 1999
and 1998:1999:
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Bonus or Awards/Number
Annual Other Annual of Option All Other
Name and Principal Fiscal Salary Compensation Shares Compensation
Position Year ($) ($) Granted ($)(1)(2)
- ----------------------------------- ------ ------- ------------ ------------- ------------
James C. Edenfield................. 2001 434,500 -0- 120,000 97,226(4)(5)
President and Chief 2000 434,500 -0- 90,000 $112,670(3)
President and Chief113,618(5)(6)
Executive Officer(3) 1999 434,500 -0- 123,000(4) -0-
Executive Officer(5) 1998 434,500 450,850 35,000 -0-123,000(7) 948(5)
J. Michael Edenfield............... 2000 259,200(7)2001 259,200(9) -0- 140,000(8) 2,400(9)130,000 4,690(10)(11)
Executive Vice 1999 240,000(7)2000 259,200(9) -0- 151,000(4)(10) -0-140,000(12) 4,440(11)(13)
President; President of 1998 240,000(7) 345,669(7) 70,000(10)1999 240,000(9) -0- 151,000(7)(14) 2,040(11)
Logility, Inc.(5)(6)(3)(8)
Paul DiBono, Jr.................... 2001 114,150 -0- 30,000 1,170(16)
Senior Vice President(15) 2000 155,052 -0- 30,000 2,324(9)
Senior Vice President2,324(16)
1999 143,951 10,000 90,000(4)90,000(7) -0-
1998 142,000 10,000Jeffrey W. Coombs.................. 2001 181,948 24,875 70,000 2,650(16)
Senior Vice 2000 175,948 15,000 30,000 2,400(16)
President of American 1999 164,799 35,000 67,000(7) -0-
Software USA, Inc.(17)
Vincent C. Klinges................. 2001 150,000(18) -0- 65,000 2,650(16)
Chief Financial Officer 2000 119,225(12)119,225(18) -0- 65,000(13)65,000(19) -0-
Chief Finance Officer(11)
1999 97,023 10,000 40,000(4) -0-
1998 19,48740,000(7) -0-
- --------
(1) The Company did not make any contributions for the accounts of these
individuals under the Company's Profit Sharing Plan.Plan during any of these
three years.
(2) The aggregate amount of perquisites and other personal benefits,
securities or property given to each named executive officer, valued on
the basis of aggregate incremental cost to the Company, was less than
either $50,000 or 10% of the total annual salary and bonus for that
executive officer during each of these years.
(3) Includes $110,270James C. Edenfield is the father of J. Michael Edenfield.
7
(4) This amount includes $93,628 representing the economic benefit in fiscal
2001 of thea split dollar life insurance policy acquired by the Company in
fiscal 2000 on the life of Mr. Edenfield. See "Report on Executive Compensation, Fiscal Year 2000
CompensationEdenfield (the "split dollar policy") and
$2,650 as the matching payment amount contributed by the Company into Mr.
Edenfield's 401(k) Plan account.
(5) Each of Chief Executive Officer." Alsothese amounts includes $948 reimbursed to Mr. Edenfield for
medical insurance coverage obtained through the Company and paid by him.
(6) This amount includes $110,270 representing the economic benefit of the
split dollar policy and $2,400 as the matching payment amount contributed
by the Company into Mr. Edenfield's 401(k) Plan account.
(4)(7) These stock options do not include other stock options granted in fiscal
1999 that were subsequently canceled pursuant to the stock option
repricing that occurred on August 31, 1998. The amounts of these options
were 35,000 shares for James C. Edenfield, 50,000 shares for J. Michael
Edenfield, 30,000 shares for Mr. DiBono, 67,000 shares for Mr. Coombs and
30,000 shares for Mr. Klinges.
(5) James C. Edenfield is the father of J. Michael Edenfield.
(6)(8) Logility, Inc. is an 85% owned-owned subsidiary of the Company.
(7)(9) All of the fiscal 2001, 2000 1999 and 19981999 annual salary amounts were paid by
Logility, Inc., a majority-owned subsidiary of the Company.
Of(10) This amount includes $2,650 as the 1998
bonusmatching payment amount $282,136 was paidcontributed by
the Company into Mr. Edenfield's 401(k) Plan account.
(11) Each of these amounts includes $2,040 reimbursed to Mr. Edenfield for
services prior to his
resignation as Chief Operating Officer ofmedical insurance coverage obtained through the Company in October 1997, and
$63,533 was paid by Logility, Inc.
(8)him.
(12) Includes 45,000 stock option shares granted by Logility, Inc.
6
(9)(13) This figureamount includes $2,400 as the matching payment amount contributed by
the Company into Mr. Edenfield's 401(k) Plan account.
(14) Includes 70,000 stock option shares granted by Logility, Inc.
(15) Mr. DiBono retired from the Company effective October 31, 2000.
(16) This amount represents the matching payment amount contributed by the
Company into the officer's 401(k) Plan account.
(10) These shares include 70,000 stock option shares granted by Logility,(17) Mr. Coombs became Chief Operating Officer of American Software USA, Inc.
in fiscal 1999 and 20,000 stock option shares granted by Logility, Inc.
in fiscal 1998.
(11) Mr. Klinges joined,
a wholly-owned subsidiary of the Company, effective June 18, 2001. His
compensation information is included in February 1998.
(12)this table for informational
purposes.
(18) Thirty percent ($36,379.50)45,000) of Mr. Klinges'Klinges salary was paid by Logility, Inc.
(13)in fiscal 2001 and thirty percent ($36,379.50) was paid by Logility, Inc.
in fiscal 2000.
(19) Includes 5,000 stock option shares granted by Logility, Inc.
Stock Option Plans
The Company has grantedoutstanding stock options granted pursuant to fourthree stock
option plans.
Two of these plans, the Incentive Stock Option Plan (the "Incentive Plan") and
the Nonqualified Stock Option Plan (the "Nonqualified Plan"), were terminated
effective August 22, 1991 (the "Terminated Plans"). At that time the
shareholders of the Company approved two new option plans: The 1991 Employee Stock Option Plan (the "Employee Option Plan")
and the Directors and Officers Stock Option Plan (the "Directors and Officers
Option Plan"). were adopted in 1991. These Plans which expire by their terms in 2001, will be replacedwere terminated effective
September 1, 2000 ifand replaced by the shareholders approve the proposed 2001 Stock Option Plan. See
"Proposed 2001 StockPlan (the "2001 Option
Plan" below.). Options outstanding under the Terminated PlansEmployee Option Plan and the Directors
and Officers Option Plan remain in effect, but no new options may be granted
under those plans. No new options will be granted under the Employee Option Plan or
the Directors and Officers Option Plan after August 31, 2000 if the
shareholders approve the 2001 Stock Option Plan at the August 24, 2000 Annual
Meeting. The following sections describe the four existingthese three stock option
plans.
Incentive Stock Option Plan. On January 13, 1983, the Company adopted and
the shareholders approved the Incentive Plan. The Incentive Plan was designed
to qualify as an "incentive stock option plan" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). As incentive stock
options, options granted under the Incentive Plan are subject to substantially
the same terms as incentive stock options that may be granted under the
Employee Option Plan and the Directors and Officers Option Plan. As of April
30, 2000, there were outstanding under the Incentive Plan options to purchase
400 Class A shares.
Nonqualified Stock Option Plan. Effective June 3, 1986, the Company adopted
the Nonqualified Plan. Options granted under the Nonqualified Plan do not
receive the favorable tax treatment afforded to incentive stock options.
Options granted under this Plan were not, however, subject to restrictions on
exercise price and other restrictions applicable to incentive stock options.
Other terms of these options are, in general, substantially the same as
incentive stock options granted by the Company. As of April 30, 2000, there
were outstanding under the Nonqualified Plan options to purchase 9,000 Class A
shares.
1991 Employee Stock Option Plan. On August 22, 1991, the Company adopted the
1991 Employee Stock Option Plan. The Employee Option Plan iswas designed to
provide certain key employees of the Company and its subsidiaries with
additional incentives to increase their efforts on the Company's behalf and
remain in the employ of the Company. Options to purchase Class A common shares
arewere granted in the form of both incentive stock options and non-qualified
stock options. Participants in this plan arewere selected from key personnel of
the Company or a subsidiary, provided, however, that no director, officer or
10% shareholder of the Company iswas eligible to participate. The number of
options granted under this plan iswas determined with each grant. Options are
exercisable at any time within the option period, but no more than ten years
from the date of grant. As of April 30, 2000,2001, there were outstanding under the
1991
Employee Stock Option Plan options to purchase 1,866,5822,048,430 Class A shares.
8
Directors and Officers Stock Option Plan. On August 22, 1991, the Company
adopted the Directors and Officers Stock Option Plan. The Directors and
Officers Option Plan iswas designed to provide directors and officers of the
Company and its subsidiaries with additional incentives to increase their
efforts on the Company's behalf and to remain in the employ of the Company or
to remain as directors of the Company. Options to purchase Class A common
shares arewere granted in the form of both incentive stock options and non-
qualified stock options. Participants in this plan arewere selected from among
the directors and officers of the Company or a subsidiary. The number of
options granted under this plan iswas determined with each grant. Further, each
non-employee member of the Board of 7
Directors receivesreceived an automatic grant of
nonqualified options to purchase 5,000 shares on April 30 and October 31 of
each year. The option price for such grant iswas equal to the closing market
price of the shares on the date of grant and arewere exercisable one year after
grant. Options are exercisable at any time within the option period, but no
more than ten years from the date of grant. As of April 30, 2000,2001, there were
outstanding under the Directors and Officers Stock Option Plan options to
purchase 870,4691,208,469 Class A shares.
2001 Stock Option Plan. The 2001 Option Plan became effective September 1,
2000. This plan is designed to attract and retain the best available talent
and encourage the highest level of performance by officers, employees,
directors, advisors and consultants, and to provide them with incentives to
put forth maximum efforts for the success of the Company's business. Options
to purchase Class A common shares are granted in the form of both incentive
stock options and non-qualified stock options. The number of options granted
under this plan is determined with each grant, except with respect to non-
employee directors, who receive grants of non-qualified options to purchase
5,000 shares upon election and 3,000 shares at the end of each fiscal quarter.
The price of such grants is equal to the closing market price of the shares on
the date of grant. Options are exercised at any time within the option period,
but no more than 10 years after the date of grant (or 5 years for incentive
stock options granted to any person who owns 10% or more of the combined
voting power of all classes of capital stock of the Company at the time of
grant). A total of 2,000,000 shares are authorized for issuance pursuant to
options granted under the 2001 Option Plan. As of April 30, 2001, there were
outstanding under the 2001 Option Plan options to purchase 511,250 Class A
shares.
Stock Option Committees. Prior to its termination, of the IncentiveEmployee Stock Option
Plan and the
Nonqualified Plan, these Plans werewas administered by the 1991 Employee Stock Option Plan Committee,
consisting of Mr. Edenfield and Dr. Newberry. Mr. Edenfield and Dr.
Newberry also comprisePrior to its termination, the 1991 Employee Stock Option Plan Committee. The
Directors and Officers Option Plan iswas administered by the Compensation
Committee, consisting of Messrs. Gambrell and Williams. If approved, theThe 2001
Stock Option Plan
will beis administered by two separate committees, one
committeecommittees: (i) the Special Stock Option
Committee (comprised of Messrs. Gambrell and Williams, as members of the
Compensation Committee) is responsible for option grants to officers and
directors, and (ii) the other committeeStock Option Committee (comprised of Mr. Edenfield and
Dr. Newberry) is responsible for other option grants.
The members of these Committees are not eligible to participate in the
portion of the Plan that they administer, except pursuant to the formula
option grant program for non-employee directors under the Directors and Officers2001 Option Plan.
Under the Plans, the functions of these Committees are to grant options and
establish the terms of those options, as well as to construe and interpret the
respective Plans and adopt rules in connection therewith.
9
Stock Option Grants
The following table sets forth information with respect to options granted
during fiscal 20002001 to each of the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
---------------------------- Potential
Realized Value at
Percent of Assumed Annual
Total Options Rates of Stock
Granted to Price
Number of Employees and Exercise Appreciation for
Options Directors in Price Expiration Option Term(2)($)
Name Granted(1) Fiscal 20002001 (Per Share)($) Date 5% 10%($)
- ------------------------ --------- ------------- -------------- ---------- -----------------
James C. Edenfield...... 90,000 7.95% 3.1625 05/19/2004 45,61385,640 4.68% 3.938 06/22/10 212,095 / 132,094537,490
34,360 1.88% 4.3318 06/22/05 23,853 / 69,077
J. Michael Edenfield.... 95,000 8.39% 2.875 05/19/2009 171,767130,000 7.11% 3.938 06/22/10 321,956 / 435,391
25,000(3) 6.02% 4.50 06/16/2009 70,751 / 179,296
20,000(3) 4.81% 10.00 12/20/2009 125,779 / 318,748815,901
Thomas L. Newberry...... 5,000 0.44% 3.06253,000 0.16% 3.25 10/29/2009 9,63231/10 6,132 / 24,408
5,000 0.44% 7.5015,539
3,000 0.16% 2.50 01/31/11 4,717 / 11,953
3,000 0.16% 1.47 04/28/2010 23,58430/11 2,773 / 59,7657,028
Thomas R. Williams...... 5,000 0.44% 3.06253,000 0.16% 3.25 10/29/2009 9,63231/10 6,132 / 24,408
5,000 0.44% 7.5015,539
3,000 0.16% 2.50 01/31/11 4,717 / 11,953
3,000 0.16% 1.47 04/28/2010 23,58430/11 2,773 / 59,7657,028
David H. Gambrell....... 5,000 0.44% 3.06253,000 0.16% 3.25 10/29/2009 9,63231/10 6,132 / 24,408
5,000 0.44% 7.5015,539
3,000 0.16% 2.50 01/31/11 4,717 / 11,953
3,000 0.16% 1.47 04/28/2010 23,58430/11 2,773 / 59,7657,028
Paul DiBono, Jr......... 30,000 2.65% 2.8751.64% 3.938 10/31/01(3) 5,907 / 11,814
Jeffrey W. Coombs....... 50,000 2.73% 4.50 05/19/2009 54,24210 56,601 / 137,460143,437
20,000 1.09% 1.906 11/22/10 59,934 / 151,884
Vincent C. Klinges...... 30,000 1.44% 2.875 05/19/2009 54,24265,000 3.56% 3.938 06/22/10 160,978 / 137,460
30,000 2.65% 2.9375 09/28/2009 55,531 / 140,472
5,000(3) 1.20% 10.00 12/20/2009 31,445 / 79,687407,950
- --------
(1) Such options may not be exercised earlier than one year after the date of
grant. Options vest ratably over a period of four years, except for
options granted to Messrs. Newberry, Gambrell and Williams as nonemployee
directors, which become fully exercisable after one year.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Company's Class A shares (and, in the case of the
Logility options granted to J. Michael Edenfield and Vincent C. Klinges,
Logility's common stock) and overall market conditions.
The amounts reflected in this table may not necessarily be achieved.
(3) These options represent grants of LogilityMr. DiBono retired from the Company effective October 31, 2000. His stock
options and the
percentage and fair market value information for these option grants
relate to Logility stock options and Logility Common Stock.
8expire one year after his retirement date.
10
Stock Option Exercises and Outstanding Options
The following table contains information, with respect to (i) the number of
stock options exercised during the last fiscal year, and the values realized
in respect thereof, by the named executive officers, and (ii) the number of
stock options and the value of said stock options held by the named executive
officers as of April 30, 2000.2001.
Number of Value of Number of Unexercised
Shares Unexercised Options In-the-Money SharesOptions
Acquired Value at 04/30/00 Options01 at 04/30/99
Acquired01
on Realized Exercisable/ Exercisable/
Name Exercise(#) ($) Unexercisable Unexercisable(1)($)
---- ----------- ----------------- ------------------- ---------------------------------------
James C. Edenfield(2)... 76,125 143,889 30,750Edenfield...... -0- 0.00 84,000 / 182,250 137,606249,000 -0- / 803,194-0-
J. Michael Edenfield(3). 106,062 1,342,389 37,750Edenfield.... -0- 0.00 99,250 / 208,250 179,313276,750 -0- / 977,313
-0-(4)
-0-(4) 27,500 0.00 46,250 / 107,500(4) 86,39868,750(2) -0- / 340,443(4)-0-
Paul DiBono, Jr.(5)..... 82,500 1,038,750 ....... -0- 0.00 127,500 / -0- -0- / 97,500-0-
Vincent C. Klinges...... -0- 0.00 25,000 / 130,000 -0- / 459,375
Vincent C. Klinges(6)... 10,000 125,000-0-
-0- 0.00 1,250 / 3,750(2) -0- / 90,000-0-
Jeffrey W. Coombs....... -0- 0.00 24,250 / 118,500 -0- / 418,110
-0-(4) -0-(4) -0- / 5,000(4) -0- / -0-(4)
- --------
(1)The market price of Class A shares on April 30, 20002001 was $7.50.$1.47.
(2) During fiscal 2000, Mr. Edenfield exercised options for 48,000 Class A
shares at an exercise priceRepresents number of $3.03 per share, and for 28,125 Class A
shares at an exercise price of $3.33 per share.
(3) During fiscal 2000, Mr. Edenfield exercised options for 106,062 Class A
shares at an exercise price of $2.75 per share.
(4) Represents shares acquired, value realized, unexercised stock options and
value of unexercised options of Logility, Inc. (5) During fiscal 2000, Mr. DiBono exercised options for 82,500 Class A shares
at an exerciseThe
market price of $2.75 per share.
(6) During fiscal 2000, Mr. Klinges exercised options for 10,000 Class A
shares at an exercise price of $2.75 per share.Logility's common stock on April 30, 2001 was $2.64.
Employment Agreement and Bonus Policy
From May 1, 1983 through April 30, 1995, the compensation of James C.
Edenfield, President and Chief Executive Officer of the Company, was
determined under an employment contract entered into betweenby him and the Company on
January 17, 1983. This contract provided for an annual base salary of
$434,500, payable monthly, plus expenses and normal employee fringe benefits.
In addition, the contract provided for an annual bonus of 5% of the increase
of each fiscal year's pre-tax earnings over the pre-tax earnings of the
preceding fiscal year. The contract expired at the end of fiscal 1995, and
since that time Mr. Edenfield has continued to be compensated on the same
basis as applied under the contract. The Board of Directors, after consulting
with the Compensation Committee, determined that the same contract terms would
continue through fiscal 2000.2001. Accordingly, during fiscal 2000,2001, Mr. Edenfield's
salary was $434,500. He received no bonus under the bonus formula with respect
to fiscal 2000. In addition, pursuant to a Split-Dollar Agreement entered into
by the Company and Mr. Edenfield, the Company purchased a variable universal
life insurance policy and a term life insurance policy on the life of Mr.
Edenfield for a premium cost of $200,000 in fiscal 2000.2001. See "Report on Executive Compensation" for a detailed
discussion of hisMr. Edenfield's compensation in fiscal 20002001 and fiscal 2001.2002.
Pursuant to written plans, J. Michael Edenfield,Jeffrey W. Coombs, Paul DiBono, Jr. and Vincent
C. Klinges had the potential to receive certain cash bonuses, stock
options and other compensation, the amounts of
which were determined on the basis of fiscal 20002001 performance standards.
NeitherAccordingly, Mr. Edenfield,Coombs received a bonus in the amount of $24,875 in fiscal
2001. Neither Mr. DiBono nor Mr. Klinges, however, qualified for a bonus under
performance standards applicable during fiscal 2000.2001. For fiscal 2001,2002, the
bonus plans for these officersMessrs. Coombs and Klinges again will have individualized
incentive goals tied to increases in revenues and/or net income, either
Company-wide or related to specific areas over which they have responsibility,
or both. The incentive plan of J. Michael Edenfield is
established byMr. DiBono retired from the Compensation Committee of the Logility Board of Directors.
9
Company effective October 31, 2000.
Certain Transactions
The Company leases one of its office facilities from a partnership that is
owned entirely by James C. Edenfield and Thomas L. Newberry under a lease that
by its terms expired December 31, 1996. An extension of that lease, on a
month-to-month basis, has been approved by the disinterested members of the
Board of Directors, pending negotiation of a new long-term lease. The Company
incurred expenses of approximately $300,000 in fiscal 1999,2000, and approximately
$300,000 in fiscal 20002001 pursuant to this lease. The current rental rate is
$17.00 per square foot. Management believes that the terms of the lease are
fair to the Company.
11
The Company and Logility have previously entered into various agreements
(the "Intercompany Agreements"), including a Services Agreement, a Facilities
Agreement, a Marketing License Agreement and a Tax Sharing Agreement. These
Agreements and the other Intercompany Agreements are further described in the
Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2000,2001,
filed with the Securities and Exchange Commission. In fiscal 2000,2001, Logility
paid the following aggregate amounts to the Company under the terms of the
Intercompany Agreements: Services Agreement--$1,007,000;1,552,000; Facilities
Agreement--$417,505;763,000; and Marketing License Agreement--$730,660.367,000. Under the Tax
Sharing Agreement, Logility received no allocation of federal, state and local
taxes for fiscal 2000.2001.
As a result of the various transactions between the Company and Logility,
amounts payable to and receivable from Logility arise from time to time. At
April 30, 2000,2001, there was a payable from the Company to Logility in the amount
of $2,204,000.$2,916,000.
Director Compensation
During fiscal 2000,2001, the Company compensated Dr. Newberry, the Chairman of
the Board, at the rate of $18,000 per annum, and other Directors who are not
employed by the Company at the rate of $12,000 per annum, plus $600 for each
half-day or $1,200 for each full day meeting of the Board of Directors or any
committee of the Board that they attended.
Directors are eligible to receive stock option grants under the Company's
Directors and Officers2001 Option Plan, adopted in 1991.which became effective September 1, 2000. Under the terms of
that Plan, newly-elected Directors who are not employed by the Company
automatically receive stock option grants of 5,000 shares each effective at six-month intervals, onupon their
initial election and 3,000 shares each October 31 and April 30,as of the end of each fiscal quarter,
with exercise prices equal to the market price on those respective dates.the dates of such grants.
These options become exercisable one year after the date of grant and expire
ten years after the date of grant. They do not terminate if the Director
ceases to serve on the Board of the Company.Company after the options become
exercisable. Under this program, Messrs. Gambrell, Newberry and Williams each
received options to purchase an aggregate of 10,0009,000 shares in fiscal 2000.2001.
Compensation Committee Interlocks and Insider Participation
Messrs. Gambrell and Williams have been selected by the Board of Directors
to serve on the Compensation Committee. Mr. Gambrell and James R. McGuone,
Secretary ofis a partner in the Company, are partners in thelaw
firm of Gambrell & Stolz, L.L.P., general counsel towhich performs legal services for the
Company, Logility and AmQUEST, Inc., a wholly-owned subsidiary of the Company.
Legal fees in the amount of $544,024$746,290 were paid by the Company (including fees
paid by Logility)Logility and AmQUEST) to that firm during fiscal year 20002001 for legal
services rendered, as general counsel to the Company
and to Logility, in addition to $17,600$16,800 in Director fees paid during that
year for Mr. Gambrell's servingservice as a Director of the Company and as a member
of Board Committees.
Report on Executive Compensation
The following is the report of the Compensation Committee of the Board of
Directors of American Software, Inc. for the fiscal year ended April 30, 2000.2001.
Meetings. The Compensation Committee has met two times formally and has conferred
informally a number of times during fiscal year 2000.2001. Informal conferences
have been held among the members of the Committee, as well as with the Chief
Executive Officer, concerning the authority and responsibilities of the
Committee.
10
Executive Compensation Philosophy. The Committee believes that a
compensation program whichthat enables the Company to attract, retain and motivate
outstanding executives will assist the Company in meeting its long-range
objectives, thereby serving the interests of the Company's shareholders. The
compensation program of the Company is designed to achieve the following
objectives:
. Provide compensation opportunities that are competitive with those of
companies of a similar size.
12
. Create a strong link between the executive's compensation and the
Company's annual and long-term financial performance.
. Include above-average elements of financial risk through performance-
based incentive compensation that offers an opportunity for above-
average financial reward to the executives.
Fiscal Year 20012002 Compensation of Chief Executive Officer. The Compensation
Committee has the responsibility and authority to review and establish
compensation for the Chief Executive Officer of the Company, including his
participation in stock option plans and the re-evaluation and negotiation of
his employment contract. In the previous three fiscal years, the Compensation
Committee and the Chief Executive Officer, James C. Edenfield, agreed to
extend his existing compensation arrangement on a year-to-year basis. For the
fiscal year 2001,2002, the Committee has again decided to continue the Chief
Executive Officer's current level of compensation, so that Mr. Edenfield will
continue to receive a base salary of $434,500 and a bonus equal to 5% of the
increase in the Company's pre-tax earnings for fiscal 20012002 over the pre-tax
earnings for fiscal 2000.2001. The Compensation Committee's decision to continue
this basis for compensation in fiscal 20012002 reflects the belief of the
Committee and Mr. Edenfield that the Chief Executive Officer's compensation
should continue to be tied substantially to growth in earnings and that the
existing compensation arrangement meets that objective.
In extending this basis for compensation of the Chief Executive Officer, the
Committee is expressing its view that Mr. Edenfield is paid a reasonable
current salary, and that any potential bonus is based on an important
corporate financial goal, growth in earnings, which aligns his interests with
those of other shareholders. Moreover, Mr. Edenfield is one of the largest
shareholders of the Company, and to the extent his performance as CEO
translates into an increase in the value of the Company's shares, all
shareholders, including Mr. Edenfield, share the benefits.
As described below under "Fiscal Year 2000 Compensation of the Chief
Executive Officer,"Split-Dollar Insurance Agreement," Mr. Edenfield's
compensation package also includes a split-dollar life insurance agreement,policy,
established in fiscal 2000.
Fiscal 2000.Year 2001 Compensation of the Chief Executive Officer. The Compensation Committee has metChief
Executive Officer's cash compensation in fiscal year 2001, both salary and
approvedbonus, was determined under the grantterms of the compensation arrangement
described above. Accordingly, the Chief Executive Officer did not receive a
bonus with respect to fiscal year 2001 as the Company did not have pre-tax
earnings in fiscal 2001. During fiscal 2001, the Chief Executive Officer was
granted stock options covering 120,000 Class A shares pursuant to Mr. Edenfield and to other executive officers of the Company under the
Directors and Officers Stock Option Plan, including the grant to Mr. Edenfield
of options to purchase 120,000 shares of Class A Common Stock on June 22,
2000.which was in effect at that time and
administered by this Committee. A portion of those stock options (32,208
shares) are classified as incentive stock options, the exercise price for
which is $4.33, or 10% above the market price of Class A shares on the date of
grant. The remaining option shares are nonqualified stock options, priced at
$3.9375 per share, which was the market price on the date of grant. The
participation of the Chief Executive Officer and other executive officers of
the Company in the 2001 Stock Option Plan if it is approved by the shareholders, will be determined by the Compensation
Committee, as members of the Special Stock Option Committee, based upon its
authority to grant options under that Plan. At this time, however, theThe Committee doesdid not anticipate that it
will grant further stock
options to the current executive officers during Fiscal 2001.
Fiscal Year 2000 Compensation of the Chief Executive Officer. The Chief
Executive Officer's cash compensation in fiscal year 2000, both salary and
bonus, was determined2001 under the terms of the compensation arrangement
described above. Accordingly, the Chief Executive Officer did not receive a
bonus with respect to fiscal year 2000 as the Company did not have pre-tax
earnings in fiscal 2000. The Chief Executive Officer was granted, during
fiscal 2000, stock options covering 90,000 Class A shares, pursuant to the
Directors and Officers Stock Option Plan which was in effect at that time, and
administered by this Committee.
11
Also, duringPlan.
Split-Dollar Insurance Agreement. During the early part of Fiscalfiscal year 2000,
the Committee completed its study of the long-range compensation plan for the
Chief Executive Officer of the Company and proposed that the Company provide
additional life insurance for the Chief Executive Officer, comparable to
coverage provided by other companies to their chief executives. Pursuant to
this plan, the Company purchased life insurance policies on the life of Mr.
Edenfield having a total face amount of $3,158,833, of which the Company is
the owner and co-
beneficiaryco-beneficiary and Mr. Edenfield's designee is co-beneficiary.
This "Split Dollar" plan provides obligations and benefits under which the
employer and employee divide not only the costs of the policies, but the
benefits thereunder, similar to such arrangements made between other like
companies and their chief executive officers. The policies are assets of the
Company, against which death benefits accrue to Mr. Edenfield.
Other Executive Officers. The Compensation Committee has responsibility for
the review of compensation of other executive officers of the Company,
including certain executive officers of operating subsidiaries. (The
13
American Software Compensation Committee does not have oversight over the
compensation of J. Michael Edenfield or any other Logility officers by
Logility, Inc., as their Logility compensation is established or reviewed by
the compensation committee of Logility's Board of Directors. The American
Software Compensation Committee, however, does retain the authority to grant
stock options to these officers under the Company's 2001 Stock Option Plan.)
To assist in this process, the Committee has reviewed compensation of officers
having similar responsibilities with peer group companies, based upon publicly
available information. In thatthis regard, the Compensation Committee also
consults with the Chief Executive Officer. Through its oversight and control
of the Directors
and Officers Stock2001 Option Plan, the Compensation Committee has direct authority over
the granting of stock options to executive officers. In addition, the
Compensation Committee assists the Chief Executive Officer in evaluating and
establishing executive bonus plans, which are customized for each executive
officer.
It has been the policy of the Company in consultation with the Compensation
Committee to base a substantial portion of executive officer compensation upon
the achievement of Company-wide and divisional goals, relating in some cases
to growth in revenues, in some cases to growth in net income and in some cases
to both of these factors, as well as other factors. Currently, these other
factors include the effectiveness of the executive officers in executing the
Company's plans for cutbacks and efficiencies in operations. The bonus plans
for each of the most highly compensated executive officers reflect this
approach.
Stock option grants under the Directors and Officers Stock Option Plan are utilized as both a motivating and a compensating
factor. Because the performance of executive officers can substantially
influence performance of the entire enterprise, grants of stock options have
been utilized to create greater incentives for improving Company performance,
which the Compensation Committee believes may positively influence the market
price for Company stock.
On May 19, 1999,June 22, 2000, the Compensation Committee exercised its authority under
the Directors and Officers Stock Option Plan, which was in effect at that
time, to grant new stock options to various executive officers of the Company,
including the Chief Executive Officer, as discussed above. In each instance,
the term and size of the options were intended and calculated by the
Compensation Committee to reward these officers for their prior performance,
to serve as incentive for promotion of Company profitability and other long-termlong-
term objectives and to maintain their overall compensation at competitive
levels.
During fiscal 2001,2002, as required by its Charter, the Compensation Committee
will continue to consult with the Chief Executive Officer with respect to
executive officer compensation packages, including salary, bonus, stock
options and fringe benefits, to ensure that compensation is appropriately
related to individual and Company performance, as well as to competitive
compensation standards and other relevant criteria.
Limitations on Deductibility of Executive Compensation. Since 1994, the
Omnibus Budget Reconciliation Act of 1993 has limited the deductibility of
executive compensation paid by publicly held corporations to $1 million per
employee, subject to various exceptions, including compensation based on
performance goals.
The deductibility limitation does not apply to compensation based on
performance goals where (1) the performance goals are established by a
compensation committee which is comprised solely of two or more outside
directors; (2) the material terms are disclosed to shareholders and approved
by majority vote of the
12
shareholders eligible to vote thereon before the compensation is paid; and (3)
before the compensation is paid, the compensation committee certifies that the
performance goals and other material terms have been satisfied. The Company has not adopted a policy with respect to deductibility of
compensation since no executive officer currently receives, or has previously
received, taxable income in excess of $1 million per year from the Company.
The Compensation Committee will continue to monitor compensation levels
closely, particularly in areas of incentive compensation. If the Company's
performance improves substantially, incentive compensation also can be
expected to increase and it may become necessary to adopt a long-term
incentive compensation plan in
compliance withstructured to take advantage of the foregoing criteria.tax
deductibility provided for plans qualifying under the Act of 1993.
BY THE COMPENSATION COMMITTEE:
Thomas R. Williams, Chairman
David H. Gambrell
PROPOSED ADOPTION OF THE 2001 STOCK OPTION PLAN
General
On May 16, 2000, the Board of Directors of the Company adopted the American
Software, Inc. 2001 Stock Option Plan (the "2001 Option Plan" or the "Plan").
If the shareholders approve the 2001 Option Plan at the Annual Meeting it will
become effective September 1, 2000. Upon such approval, after August 31, 2000
no further grants will be made under the stock option plans currently in
place, which are referred to elsewhere in this proxy statement as the 1991
Employee Option Plan and the Directors and Officers Option Plan. Grants that
may be made under the 2001 Option Plan are not currently determinable.
Under the 2001 Option Plan, the Company may grant options to executive
officers or other key employees of the Company or any subsidiary, an advisor
or consultant to the Company or any subsidiary, or a member of the Board of
Directors (collectively, "Grantees"). Option grants may be in the form of
Nonexempt Grants, which may not necessarily comply with the requirements of
Rule 16b-3 of the Securities Exchange Act of 1934 ("Rule 16b-3"), or Exempt
Grants, which are intended to comply with the requirements of Rule 16b-3.
Option grants to directors and to officers who are subject to Section 16 of
the Securities Exchange Act of 1934 are intended to comply with the
requirements of Rule 16b-3.
Options may be either incentive stock options or nonqualified stock options.
The number of options granted will be determined by the particular committee
that administers such grants. See "Administration," below. Option grants to
nonemployee directors shall be nonqualified stock options, the number of which
is fixed by the Plan as follows: each nonemployee director will be granted an
option to purchase 3,000 Class A shares as of the last day of each fiscal
quarter; each nonemployee director who is newly elected or appointed
subsequent to the date on which the Plan becomes effective will be granted an
option to purchase 5,000 Class A shares upon his or her election or
appointment, and thereafter will be granted an option to purchase 3,000 Class
A shares as of the last day of each fiscal quarter, beginning on the last day
of the first full fiscal quarter following his or her election or appointment.
The following is a summary of the material terms of the 2001 Option Plan.
This summary is qualified in its entirety by the reference to complete terms
of the Plan, as set forth in Exhibit "A" hereto.
Purpose of Plan
The purpose of the 2001 Option Plan is to attract and retain the best
available talent and encourage the highest level of performance by officers,
employees, directors, advisors and consultants, and to provide them with
incentives to put forth maximum efforts for the success of the Company's
business.
1314
Shares Subject to the Plan
The Class A shares that may be issued under the Plan will not exceed in the
aggregate 2,000,000 shares, subject to adjustment as provided below. Such
shares may be shares of original issuance or treasury shares. Any shares that
are subject to Stock Options granted under the Plan that are terminated,
expire unexercised, are forfeited or are surrendered will again be available
for issuance under the Plan.
The Board or the applicable stock option committee shall make or provide for
such adjustments in the maximum number of shares, in the number of shares
covered by outstanding Options granted under the 2001 Option Plan, in the
Option exercise price applicable to any such Options or in the kind of shares
covered under the Plan (including shares of another issuer), as the Board or
such committee, in its sole discretion, exercised in good faith, may determine
is equitably required to prevent dilution or enlargement of the rights of
Grantees that otherwise would result from any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital
structure of the Company, merger, consolidation, spin-off, reorganization,
partial or complete liquidation, issuance of rights or warrants to purchase
securities or any other corporate transaction or event having an effect
similar to any of the foregoing.
Administration
Two different committees of the Board will administer the Plan, depending on
whether the option grant is Nonexempt or Exempt. The Stock Option Committee,
which is expected to consist of James C. Edenfield and Thomas L. Newberry,
will administer the Nonexempt Grants. The Special Stock Option Committee,
which is expected to consist of David H. Gambrell and Thomas R. Williams, as
members of the Compensation Committee, will administer the Exempt Grants.AUDIT COMMITTEE REPORT
The Board of Directors has adopted a written audit committee charter, a copy
of which is attached as a whole will administerExhibit "A" hereto. Under the Plan with respect to options
granted to nonemployee directors. Memberscurrent charter, the
primary responsibility of the Special Stock OptionAudit Committee will be disinterested persons within the meaning of Rule 16b-3. The
Board will appoint the members of these Committees, fill vacancies on these
Committees and have the poweris to replace members of these Committees with
other eligible persons at any time. The Committees will be authorized to grant
options under the Plan, to determine the terms and conditions of such options
and to otherwise administer the Plans.
Eligibility
All executive officers, Directors and employees (approximately 667 persons
as of June 30, 2000, including employees of Logility, Inc. andoversee the Company's
other subsidiaries) will be eligible to participate in the Plan.
Exercise Price
The exercise price per share of any option granted under the Plan will be
set in each case by the respective Committee that administers the Plan or the
entire Board. For incentive stock options granted under the Plan, the exercise
price must be at least 100%financial reporting process on behalf of the fair market valueBoard and report the results of
Class A shares on the date of grant (110% for 10% shareholders). For nonqualified stock options
granted under the Plan, the exercise price may be less than the fair market
value per share on the date upon which the option is granted. For option
grants to Nonemployee Directors, which will be only nonqualified stock
options, the exercise price per share is equalCommittee's activities to the market value of the
Company's Class A shares on the date of grant. As of the close of business on
June 30, 2000, the market value of Class A shares was $5.125 per share.
Terms of Options
Options granted pursuant to the Plan generally will expire on the tenth
anniversary of the grant date, except for incentive stock options granted to
10% shareholders, which will expire on the fifth anniversary of the date of
grant.
Exercise of Options
Options granted pursuant to the Plan become exercisable according to the
terms of the Plan and at such times and under such conditions as determined by
the Committee that administers the Option and as set for the
14
in the Option Grant Agreement. Upon the exercise of an Option, the Grantee may
either make payment (i) in full by payment of cash to the Company equal to the
exercise price and any required tax withholding payment; (ii) by the transfer
to the Company of shares of Company stock owned by the Grantee for at least
six months having an aggregate fair market value per share at the date of
exercise equal to the aggregate option price (except at a time when the
Company is prohibited from purchasing or acquiring such shares of Common
Stock); or (iii) by delivering to the Company a properly executed exercise
notice, together with irrevocable instructions to a broker to promptly deliver
to the Company the amount of sale or loan proceeds to pay the exercise price.
Non-Assignability of Options
An Option granted under the Plan is not transferable other than by will or
the applicable laws of descent and distribution. During the lifetime of a
Grantee, options may be exercised only by such Grantee or his guardian or
legal representative.
Death, Disability, Retirement or Termination of Employment
Following a Grantee's termination of employment, Options held by such person
pursuant to the Plan are generally exercisable onlyBoard. In fulfilling its responsibilities
with respect to the portions thereof in whichfiscal year 2001 audit, the Grantee is then vested. UnderAudit Committee:
. Reviewed and discussed the Plan, if
termination of employment is other than voluntarily oraudited financial statements for the fiscal
year ended April 30, 2001 with Company management and KPMG LLP ("KPMG"),
the Company's independent auditors;
. Discussed with KPMG the matters required to be discussed by death or disability,
Options remain exercisable accordingStatement on
Auditing Standards No. 61 relating to the time specifiedconduct of the audit; and
. Received written disclosures and the letter from KPMG regarding its
independence as required by Independence Standards Board No. 1. The Audit
Committee discussed with KPMG their independence from the Company.
Based on the Audit Committee's review of the audited financial statements
and discussions with management and KPMG, the Audit Committee recommended to
the Board that the audited financial statements be included in the
Option Grant
AgreementCorporation's Annual Report on Form 10-K for the fiscal year ended April 30,
2001 for filing with the Securities and Exchange Commission.
The Securities and Exchange Commission and National Association of
Securities Dealers have promulgated rules that require audit committees to be
composed of not less than three members who are "independent," as that term is
defined in the extent the Option is vested on the date of termination, or
for three months if no time is specified. If termination results from death or
disability, options remain exercisable and continue to vest for 12 months
following the Grantee's death or disability. If termination of employment is
voluntary, the Grantee may not exercise the Option following the date of
termination. Voluntary termination of director status does not affect the
exercisability term.
Change of Control
The Company expects that Option Agreements relating to Options granted under
the Plan may provide for or may be amended to provide for exerciserules. Three of the Option prior to normal vestingfour Audit Committee members--Messrs.
Hogue, Jarvis and Williams--meet the definition of "independent" set forth in
the event the Company (i)new rules.
Mr. Gambrell is merged,
consolidated or reorganized into or with another company and, as a result,
less than two-thirds of the combined voting power of the then-outstanding
securities entitled to vote generallypartner in the electionlaw firm of directors ("Voting
Stock") of such corporation immediately after such transaction are held in the
aggregate by the holders of Voting Stock of the Company immediately priorGambrell & Stolz, L.L.P., which
provides legal services to
such transaction; (ii) sells or transfers all or substantially all of the
assets of the Company and as a result of such sale or transfer less than two-
thirds of the combined voting power of the then-outstanding Voting Stock
immediately after such sale or transfer is held in the aggregate by the
holders of Voting Stock ofhas received from the Company
immediately prior to such sale or
transfer; (iii) any person has become the beneficial owner of securities
representing 50% or more of the combined voting power of the then-outstanding
voting stock of the Company other than by gift or inheritance; or (iv) during
any period of two consecutive years, individuals who at the beginning of any
such period constitute the directors of the Company cease to constitute a
majority thereof, subject to certain exceptions.
Rights as a Shareholder; Status of Employee
No person shall have any rights or privileges of a shareholder of the
Company as to shares subject to an Option granted pursuant to the Plan until
such Option is exercised in accordance with the terms of the Plan.
Furthermore, nothing in the Plan or any agreement entered into pursuant
thereto will confer upon a Grantee any right to continue in the employment of
the Company or its subsidiaries.
Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of the grant and exercise of an Option under the Plan and the
subsequent disposition of Class A shares acquired upon such exercise. Under
the Plan, at the time of grant the respective Committee designates each option
either as an incentive stock option or a nonqualified stock option, with
differing tax consequences to the Grantee and to the Companycompensation for each type of
option.
15
Nonqualified Options. The grant of a nonqualified option will not result in
any immediate tax consequence to the Company or the Grantee. Upon exercise of
a nonqualified option granted under the Plan, the amount by which the fair
market value on the date of exercise of the shares received upon such exercise
exceeds the option price will be taxed as ordinary income to the Grantee, and
the Company will generally be entitled to a deduction in an equal amount in
the year the option is executed. Such amount will not be an item of tax
preference to a Grantee.
Upon the subsequent disposition of shares acquired upon the exercise of an
option ("Option Stock"), a Grantee may realize short-term or long-term capital
gain or loss (assuming such shares of Option Stock constitute capital assets
in an Grantee's hands and depending upon the holding period of such shares of
Option Stock) equal to the difference between the selling price and the tax
basis of the shares of Option Stock sold. The tax basis for this purpose will
equal the sum of the exercise price and the amount of ordinary income realized
by the Grantee as a result of such exercise.
Incentive Options. Neither the grant nor the exercise of an incentive stock
option will have any immediate tax consequences to the Company or the Grantee.
(However, in calculating income for purposes of computing an individual
Grantee's alternative minimum tax, the favorable tax treatment generally
accorded incentive stock options is not applicable.)
When a Grantee sells Option Stock received upon the exercise of his
incentive stock options, any amount he receiveslegal services in excess of the option price
will be taxed as a long-term capital gain at the maximum applicable tax rate
(and any loss will be a long-term capital loss) if he has held his shares for
at least two years from the date of granting the option to him and for at
least one year after the issuance of such shares to him. If the shares are not
held for more than two years from the date of granting the option to him or
are not held for more than one year after the issuance of such shares, (i)
ordinary income will be realizedthreshold amount set forth in
the yearNASD's definition of the disposition in"independent." Accordingly, Mr. Gambrell ordinarily
would not be considered as an amount
equal"independent" director for this purpose.
However, an exception to the difference between the fair market valueindependence requirement allows one director,
who is not "independent" and is not a current employee or an immediate family
member of the sharesa current employee, to serve on the dateAudit Committee if the option was exercisedBoard,
under exceptional and the option price, and (ii) either capital
gain or loss will be recognized in an amount equal to the difference between
the selling price and the fair market value of the shareslimited circumstances, determines that membership on the
date the
option was exercised. If the selling price is less than the fair market value
on the date the option is exercised, but more than the exercise price, (i)
ordinary income equal to the difference between the exercise price and the
fair market value on the date of exercise is recognized, and (ii) a capital
loss equal to the difference between the fair market value on the date of
exercise and the sales price results.
The Company is not permitted to take a deduction for federal income tax
purposes because of the granting or exercise of any incentive stock option,
except to the extent that ordinary income may be realized by a Grantee on the
sale of option shares.
Termination
The 2001 Option Plan will terminate on May 16, 2010, unless sooner
terminatedCommittee by the Board of Directors. Except as expressly contemplated by the
terms of the Plan, no amendment, discontinuance or termination of the Plan
will have any effect on options outstanding thereunder at the time of
termination.
16
Other Option Plans
The Company has three other stock option plans with outstanding stock
options, in addition to the proposed 2001 Option Plan: (1) the Incentive Stock
Option Plan; (2) the 1991 Employee Stock Option Plan; and (3) the Directors
and Officers Stock Option Plan. None of these Plans are proposed for
amendment. In 1991, the Incentive Stock Option Plan was replaced by the 1991
Employee Stock Option Plan and the Directors and Officers Stock Option Plan.
Upon shareholder approval or September 1, 2000, whichever occurs later, the
2001 Option Plan will replace the 1991 Employee Stock Option Plan and the
Directors and Officers Stock Option Plan. As of June 30, 2000, there were
outstanding under the other plans options to purchase the following numbers of
shares:
Incentive Stock Option Plan.............................. 400 Shares
1991 Employee Stock Option Plan.......................... 2,570,719 Shares
Directors and Officers Stock Option Plan................. 1,208,469 Shares
As of June 30, 2000, there were authorized shares remaining for further
stock option grants in the 1991 Employee Stock Option Plan and the Directors
and Officers Option Plan in the following amounts:
1991 Employee Stock Option Plan.......................... 1,085,282 Shares
Directors and Officers Stock Option Plan................. 37,282 Shares
Upon the effective date of the 2001 Option Plan, expected to be September 1,
2000, any authorized shares that are not subject to options under the 1991
Employee Stock Option Plan or the Directors and Officers Stock Option Plan, or
any prior plans, will no longer be available for option grants. Upon
termination of the 1991 Employee Option Plan and the Directors and Officers
Stock Option Plan, to the extent that any of the options granted under these
plans terminate or expire unexercised, the unused option shares will not be
available for options granted under the 2001 Option Plan.
Board Recommendation
The Board of Directors believes itindividual is required in the best interest of the Company
and its shareholders to approveand the 2001 Option Plan soBoard discloses in the next annual proxy
statement the nature of the relationship and the reasons for that
determination. The Board has determined that Mr. Gambrell's membership on the
Committee is required in the best interest of the Company and its shareholders
because his significant past experience serving on this Committee and acting
as its Chairman will be ablebeneficial to continue to provide adequate incentives and to attract and retain
the services of competent personnel.Committee. Therefore, the Board
of Directors
recommendsbelieves that Mr. Gambrell may continue to serve on the adoption ofAudit Committee
pursuant to this exception and has so advised the proposed 2001 Option Plan to the shareholders
of the Company.
The affirmative vote of a majority of the combined Class A and Class B
shares in attendance or represented by proxy and entitled to vote at the
Shareholders Meeting is required for adopting the Plan. This vote will be
adjusted for the relative Class A shares and Class B shares voting weights, as
described in "Voting Securities--Record Date and Voting of Securities," above.
If all of the Class B shares (which are held by Mr. Edenfield and Dr.
Newberry) are voted in favor of adopting the Plan, no additional affirmative
votes will be required. Mr. Edenfield and Dr. Newberry intend to vote their
Class A and Class B shares in favor of adopting the Plan.NASD.
BY THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTING THE 2001 STOCK
OPTION PLAN.
17AUDIT COMMITTEE:
David H. Gambrell (Chairman)
Dennis Hogue
John J. Jarvis
Thomas R. Williams
15
STOCK PRICE PERFORMANCE GRAPH
The graph below reflects the cumulative stockholder return (assuming the
reinvestment of dividends) on the Company's Class A shares compared to the
return of the Nasdaq Composite Index and a peer group index on a monthly
basis. The graph reflects the investment of $100 on April 30, 19951996 in the
Company's Class A shares, the Nasdaq Stock Market--U.S. Companies ("Nasdaq
Composite Index") and in a published industry peer group index. The peer group
is the Robertson Stephens Hi-Tech Index--Software Group, which is an index of
the stock price performance of 67 software companies maintained by Robertson
Stephens & Company, an investment banking firm.
[GRAPH APPEARS HERE]
DATE RS Software ASI NASDAQ
- ------------------------------------------------------
Apr-95 100.0 100.0 100.0
May-95 101.6 93.9 102.4
Jun-95 102.4 124.2 110.6
Jul-95 128.1 139.4 118.6
Aug-95 129.0 175.8 120.9
Sep-95 138.7 175.8 123.6
Oct-95 139.1 187.9 122.8
Nov-95 145.4 151.5 125.5
Dec-95 140.4 157.6 124.7
Jan-96 130.9 118.2 125.6
Feb-96 143.2 100.0 130.3
Mar-96 138.4 93.9 130.5
Apr-96 153.5 133.3 141.1
May-96 158.2 133.3 147.3
Jun-96 144.9 112.1 140.4
Jul-96 126.3 97.0 128.0
Aug-96 131.4 121.2 135.3
Sep-96 141.4 160.6 145.4
Oct-96 135.3 133.3 144.7
Nov-96 146.5 144.7 153.2
Dec-96 143.4 154.5 153.0
Jan-97 149.9 168.2 163.5
Feb-97 138.6 168.2 155.1
Mar-97 128.0 169.7 144.8
Apr-97 130.0 139.4 149.4
May-97 152.6 175.8 165.9
Jun-97 157.3 182.2 170.9
Jul-97 174.9 206.1 188.8
Aug-97 183.1 263.6 188.1
Sep-97 190.8 354.5 199.7
Oct-97 185.9 284.8 188.8
Nov-97 186.3 224.2 189.6
Dec-97 180.4 222.7 186.1
Jan-98 183.7 227.3 191.9
Feb-98 215.2 192.4 209.8
Mar-98 228.9 190.9 217.5
Apr-98 234.1 198.5 221.4
May-98 216.9 184.8 210.8
Jun-98 230.0 169.7 224.5
Jul-98 207.6 139.4 221.9
Aug-98 163.9 66.7 177.6
Sep-98 189.8 62.1 200.7
Oct-98 206.1 68.2 209.9
Nov-98 236.2 63.6 231.0
Dec-98 268.8 51.5 259.8
Jan-99 278.7 69.7 296.9
Feb-99 261.0 63.6 271.1
Mar-99 267.1 75.8 291.6
Apr-99 270.3 66.7 301.3
May-99 265.0 71.2 286.6
Jun-99 289.2 107.6 318.3
Jul-99 287.3 87.9 312.6
Aug-99 286.8 83.3 324.6
Sep-99 316.3 69.7 325.4
Oct-99 346.4 74.3 351.5
Nov-99 441.4 119.7 395.3
Dec-99 577.8 248.5 482.2
Jan-00 541.2 289.4 466.9
Feb-00 697.2 348.5 556.5
Mar-00 682.5 339.4 541.8
Apr-00 638.0 181.8 457.4[STOCK PRICE PERFORMANCE GRAPH]
Index 4/30/96 7/31/96 10/31/96 1/31/97 4/30/97
- ------- -------- -------- -------- -------- --------
American Software
Actual value 5.5000 4.0000 5.5000 6.9375 5.7500
Multipler 18.1818 18.1818 18.1818 18.1818 18.1818
100 base index 100.00 72.73 100.00 126.14 104.55
NASDAQ Composite
Actual value 1,190.52 1,080.59 1,221.51 1,379.85 1,260.76
Multipler 0.0840 0.0840 0.0840 0.0840 0.0840
100 base index 100.00 90.77 102.60 115.90 150.90
Robertson Stephens
Actual value 629.98 518.26 555.32 614.98 533.49
Multiplier 0.1587 0.1587 0.1587 0.1587 0.1587
100 base index 100.00 82.27 88.15 97.62 84.86
Index 7/31/97 10/31/97 1/31/98 4/30/98 7/31/98
- ------- -------- -------- -------- -------- --------
American Software
Actual value 8.5000 11.7500 9.3750 8.1875 5.7500
Multipler 18.1818 18.1818 18.1818 18.1818 18.1818
100 base index 154.55 213.64 170.45 148.86 104.55
NASDAQ Composite
Actual value 1,593.81 1,593.61 1,619.36 1,868.41 1,872.39
Multipler 0.0840 0.0840 0.0840 0.0840 0.0840
100 base index 133.88 133.86 136.02 156.94 157.27
Robertson Stephens
Actual value 717.73 762.76 753.97 960.43 851.94
Multiplier 0.1587 0.1587 0.1587 0.1587 0.1587
100 base index 113.93 121.08 119.68 152.45 135.23
Index 10/31/98 1/31/99 4/30/99 7/31/99 10/31/99
- ------- -------- -------- -------- -------- --------
American Software
Actual value 2.8125 2.8750 2.7500 3.6250 3.0625
Multipler 18.1818 18.1818 18.1818 18.1818 18.1818
100 base index 51.14 52.27 50.00 65.91 55.68
NASDAQ Composite
Actual value 1,771.39 2,505.89 2,542.86 2,638.49 2,966.43
Multipler 0.0840 0.0840 0.0840 0.0840 0.0840
100 base index 148.79 210.49 213.59 221.63 249.17
Robertson Stephens
Actual value 845.88 1,143.64 1,109.17 1,178.87 1,421.55
Multiplier 0.1587 0.1587 0.1587 0.1587 0.1587
100 base index 134.27 181.54 176.06 187.13 225.65
Index 1/31/00 4/30/00 7/31/00 10/31/00 1/31/01 4/30/01
- ------- -------- -------- -------- -------- -------- --------
American Software
Actual value 11.9375 7.5000 6.0000 3.2500 2.5000 1.4700
Multipler 18.1818 18.1818 18.1818 18.1818 18.1818 18.1818
100 base index 217.05 136.36 109.09 59.09 45.45 26.73
NASDAQ Composite
Actual value 3,940.35 3,860.66 3,766.99 3,369.63 2,772.73 2,116.24
Multipler 0.0840 0.0840 0.0840 0.0840 0.0840 0.0840
100 base index 330.98 324.28 316.42 283.04 232.90 177.76
Robertson Stephens
Actual value 2,220.83 2,618.15 999.27 1,054.44 1,222.39 1,038.02
Multiplier 0.1587 0.1587 0.1587 0.1587 0.1587 0.1587
100 base index 352.52 415.59 158.62 167.38 194.04 164.77
INDEPENDENT AUDITORS
The Board of Directors has selectedGeneral
During the fiscal year ended April 30, 2001, the Company engaged KPMG LLP
who were auditors("KPMG") to provide certain audit services, including the audit of the annual
financial statements, a review of the quarterly financial data furnished by
the Company to the SEC for fiscalthe quarters ended July 31, 2000, October 31, 2000
and January 31, 2001, services performed in connection with filing this Proxy
Statement and the Annual Report on Form 10-K by the Company with the SEC,
attendance at meetings with the Audit Committee and consultation on matters
relating to continueaccounting, tax and financial reporting. KPMG has acted as
independent auditors ofcertified public accountants for the Company for fiscal 2001.
Representativessince 1983. Neither
KPMG nor any of its associates has any relationship to the Company or any of
its subsidiaries except in its capacity as independent certified public
accountants.
The Company expects that representatives of KPMG LLP are expected towill attend the Shareholders Meeting.Annual
Meeting of Shareholders. These representatives will be available to respond to
appropriate questions raised orally and will be given the opportunity to make
a statement if they so desire. The Board of Directors has appointed KPMG to
act as the Company's independent auditors for the fiscal year ending April 30,
2002.
16
Principal Accounting Firm Fees
The aggregate fees billed to the Company for the fiscal year ended April 30,
2001 for services rendered are as follows:
Type of Services Amount of Fee
---------------- -------------
Audit Fees.............. $159,000
Financial Information
Systems Design and
Implementation Fees.... -0-
All Other Fees.......... $363,562
The Audit Committee has considered the compatibility of the non-audit
services performed by and fees paid to KPMG in fiscal 2001 and the proposed
non-audit services and proposed fees for fiscal 2002 and determined that such
services and fees were compatible with the independence of the auditors.
During fiscal 2001, KPMG did not utilize any leased personnel in connection
with the audit.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 20012002 Annual
Meeting of Shareholders must be forwarded in writing and received at the
principal executive offices of the Company no later than April 4, 2001,2002,
directed to the attention of the Secretary, for consideration for inclusion in
the Company's proxy statement for the 20012002 Annual Meeting of Shareholders. Any
such proposals must comply in all respects with the rules and regulations of
the Securities and Exchange Commission.
18
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matter for action at the Annual Meeting other than those
specifically referred to in this Proxy Statement. If other matters properly
come before the meeting, it is intended that the holders of the proxies will
act in respect thereto in accordance with their best judgment.
The cost of this solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, employees of the Company may solicit proxies
by telephone, in writing or in person. The Company may request brokerage
houses, nominees, custodians and fiduciaries to forward soliciting material to
the beneficial owners of stock held of record and will reimburse such persons
for any reasonable expense in forwarding the material.
Copies of the 20002001 Annual Report of the Company are being mailed to
shareholders together with this Proxy Statement, proxy card and Notice of
Annual Meeting of Shareholders. Additional copies may be obtained from Pat
McManus, Investor Relations, 470 East Paces Ferry Road, Atlanta, Georgia
30305.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED APRIL 30, 2000,2001, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO SHAREHOLDERS
BENEFICIALLY OR OF RECORD AT THE CLOSE OF BUSINESS ON JULY 7, 2000,12, 2001, ON
REQUEST TO PAT McMANUS, INVESTOR RELATIONS, 470 EAST PACES FERRY ROAD,
ATLANTA, GEORGIA 30305.
By Order of the Board of Directors,
James R. McGuone, Secretary
Atlanta, Georgia
August 2, 2000
192001
17
EXHIBIT A"A"
AMERICAN SOFTWARE, INC.
2001 STOCK OPTION PLAN
American Software, Inc., a Georgia corporationAUDIT COMMITTEE CHARTER
I. Organization.
There shall be an Audit Committee (the "Company""Committee"), hereby
establishes the American Software, Inc. 2001 Stock Option Plan (the "Plan"),
effective as of May 16, 2000, the date on which this Plan was adopted selected by the Board of
Directors (the "Board") as soon as practicable, which shall be composed of not
less than three members of the Company. No OptionsBoard, each of whom is independent of Company
management. Committee members shall be granted under this Plan
until (a) it has been approved byconsidered independent if they have no
relationship that may interfere with the affirmative voteexercise of shareholders holdingtheir independence from
management and the Company. All Committee members, either at the time of their
appointment to the Committee or within a majority in voting power of the Common Stock of the Company or (b) September
1, 2000, whichever shall occur later (the "Commencement Date"). Options may
notreasonable time thereafter, must be
granted under the Plan more than ten years after May 16, 2000.
1. Purpose. The purpose of the Plan isable to attractread and retain the best
available talent and encourage the highest level of performance by officers,
employees, directors, advisors and consultants, and to provide them with
incentives to put forth maximum efforts for the success ofunderstand fundamental financial statements, including the
Company's businessbalance sheet, income statement, and cash flow statement. At least
one Committee member must have past employment experience in orderfinance or
accounting, requisite professional certification in accounting or any other
comparable experience or background.
II. Statement of Policy.
The Audit Committee shall provide assistance to serve the best interests of the Company. Options granted
under the Plan may be Incentive Stock Options or Nonqualified Stock Options,
as such terms are hereinafter defined.
2. Definitions. The following terms, when used in the Plan with initial
capital letters, will have the following meanings:
(a) "Act" means the Securities Exchange Act of 1934 as in effect from
time to time.
(b) "Board" means the Board of Directors in
fulfilling its oversight responsibility to the shareholders, potential
shareholders, the investment community and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the Board. In
so doing, it is the responsibility of the Committee to maintain free and open
communication between the Committee, independent auditors, the internal
accountants and management of the Company. (c) "Change in Control" meansIn discharging its oversight role,
the occurrence, priorCommittee is empowered to the expiration of
an Option, ofinvestigate any of the following events:
(i) the Company is merged, consolidated or reorganized into ormatter brought to its attention,
with another corporation or other legal person,full access to all books, records, facilities, and as a
result of such merger, consolidation or reorganization less
than two-thirds of the combined voting power of the then-
outstanding securities entitled to vote generally in the
election of directors ("Voting Stock") of such corporation or
person immediately after such transaction are held in the
aggregate by the holders of Voting Stockpersonnel of the
Company immediately priorand the power to such transaction;
(ii) the Company sells or otherwise transfers all or substantially
all of its assets to another corporationretain outside counsel or other legal
person,experts for this
purpose.
III. Responsibilities and as a result of such sale or transfer less than
two-thirdsProcesses.
The primary responsibility of the combined voting power of the then-
outstanding Voting Stock of such corporation or person
immediately after such sale or transferAudit Committee is held in the
aggregate by the holders of Voting Stock of the Company
immediately prior to such sale or transfer;
(iii) there is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated
pursuant to the Act, disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Act) has become, after the effective date hereof, the
direct or indirect beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Act) of securities
representing 50% or more of the combined voting power of the
then-outstanding Voting Stock of the Company other than by
gift or inheritance;
(iv) the Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Act
disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a
change in control of the Company has occurred or will occur in
the future pursuant to any then-existing contract or
transaction; or
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(v) if, during any period of two consecutive years, individuals who
at the beginning of any such period constitute the directors of
the Company cease for any reason to constitute at least a
majority thereof; provided, however, that for purposes of this
clause (v) each director who is first elected, or first
nominated for election byoversee the
Company's stockholders, by a vote
of at least two-thirds of the directors of the Company (or a
committee thereof) then still in office who were directors of
the Company at the beginning of any such period will be deemed
to have been a director of the Company at the beginning of such
period; and provided further that this clause (v) shall not
commence applicability until such time as at least five
directors are serving concurrentlyfinancial reporting process on the Board, but shall apply
thereafter regardless of the number of directors.
Notwithstanding the foregoing provisions of clauses (iii) or (iv) above,
unless otherwise determined in a specific case by majority votebehalf of the Board a "Change in Control" will not be deemed to have occurred for purposes of
clause (iii) or clause (iv) above solely because (1)and report the
Company, (2) a
Subsidiary, or (3) any Company-sponsored employee stock ownership plan or any
other employee benefit planresults of the Company or any Subsidiary either files or
becomes obligatedCommittee's activities to file a report or a proxy statement under orthe Board. Management is responsible
for preparing the Company's financial statements and the independent auditors
are responsible for auditing those financial statements. In carrying out its
responsibilities, the Committee believes its policies and procedures should
remain flexible in responseorder to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) underbest react to changing conditions and
circumstances. The Committee should take the Act disclosing beneficial
ownership by it of shares of Voting Stockappropriate actions to set the
overall corporate "tone" for quality financial reporting, sound business risk
practices and ethical behavior.
The following are the principal recurring processes of the Company, whetherAudit Committee
in excess of
50% or otherwise, or because the Company reports thatcarrying out its oversight responsibilities. These processes are a change in control of
the Company has occurred or will occur in the future by reason of such
beneficial ownership or any increase or decrease thereof. For purposes of
clauses (i), (ii)guide
and (iii) above, for so long as the entity in question
maintains two classes of common stock substantially as currently maintainedmay be supplemented by the Company, the phrase "combined voting power of the then-outstanding Voting
Stock" shall be calculated by allocating to each Class A Common Share one vote
and by allocating to each Class B Common Share three votes.
(d) "Code" means the Internal Revenue Code of 1986, as in effect from
time to time.
(e) "Commencement Date" shall mean September 1, 2000 or the date the
shareholders of the Company approve the Plan, whichever occurs later.
(f) "Committee" shall refer to either the Stock Option Committee or the Special Stock Option Committee.
(g) "Common Stock" means the Class A Common Shares, $.10 par value, of
the Company or any security into which Class A Common Shares may be
changed by reason of any transaction or event of the type described in
Section 9.
(h) "Date of Grant" means the date specified by the Stock OptionBoard as it deems appropriate.
(1) The Audit Committee or the Special Stock Option Committee, as applicable, on which
a grant of Stock Options will become effective (which date will not be
earlier than the date on which such Committee takes action with respect
thereto).
(i) "Disability" means (i) with respect to a Grantee who is eligible to
participate in the Company's program of long-term disability insurance,
a condition with respect to which the Grantee is entitled to commence
benefits under such program of long-term disability insurance, and (ii)
with respect to all Grantees generally (including a Grantee who is
eligible to participate in the Company's program of long-term disability
insurance), a disability as determined under procedures established by
the relevant Committee or in any Option Grant Agreement.
(j) "Grantee" means a person who is selected by the Stock Option
Committee or the Special Stock Option Committee, as applicable, to
receive Stock Options and who is at that time (i) an executive officer
or other key employee of the Company or any Subsidiary, (ii) an advisor
or consultantshall recommend annually to the Company or any Subsidiary, or (iii) a memberBoard of Directors
the Board.
(k) "Incentive Stock Option" means an Option granted in accordance with
Section 422 of the Code.
(l) "Market Value" means last sale price as reported on any national
securities exchange or automated quotation system on which the Common
Stock is listed on the Date of Grant if such date is a trading day and,
if such date is not a trading day, on the immediately preceding date
which is a trading day.
A-2
(m) "Nonemployee Director" means a member of the Board who is not an
employee of the Company or any Subsidiary and who qualifies as a "Non-
Employee Director" within the meaning of Rule 16b-3.
(n) "Nonqualified Stock Option" means an Option other than an Incentive
Stock Option.
(o) "Option Grant Agreement" means the instrument by which the Company
grants an Optionaccounting firm to a Grantee, which instrument contains the particular
terms of such Option in addition to the terms set forth in the Plan.
(p) "Option Price" means the purchase price per share payable on exercise
of an Option.
(q) "Rule 16b-3" means Rule 16b-3 under Section 16 of the Act, as such
Rule is in effect from time to time.
(r) "Special Stock Option Committee" means a committee that at all times
consists of at least two Nonemployee Directors and all of whose members
qualify as "outside directors" within the meaning of Section 162(m) of
the Code, appointedbe selected by the Board to grant and administer Options granted
under Section 5.
(s) "Option" means the right to purchase shares of Common Stock upon
exercise of Stock option granted pursuant to Section 4, Section 5 or
Section 6.
(t) "Stock Option Committee" means the stock option committee appointed
by the Board to grant and administer Options granted under Section 4.
(u) "Subsidiary" means any corporation, partnership, joint venture or
other entity in which the Company owns or controls, directly or
indirectly, not less than 50% of the total combined voting power or
equity interests represented by all classes of stock issued by such
corporation, partnership, joint venture or other entity.
(v) "10-Percent Shareholder" means any person who at the time of the
grant of an Option owns capital stockact as independent
auditors of the Company, possessing more
than 10%who shall be accountable to the Board and the
Committee as representatives of the combined voting powerCompany's shareholders. The
Committee shall have authority to evaluate and replace the independent
auditors if appropriate. The Committee shall discuss with the auditors
their independence from management and the Company and the matters
included in the written disclosures required by the Independence
Standard Board.
(2) The Committee shall discuss with both the Company's internal
accountants and the independent auditors the overall scope and plans
for all audits, including the adequacy of all classes of capital stockstaffing and compensation.
Also, the Committee shall discuss with management, the internal
accountants, and the independent
A-1
auditors the adequacy and effectiveness of the Company.
3. Shares Available Under Plan.accounting and financial
controls, including the Company's system to monitor and manage business
risk, and legal and ethical compliance programs. Further, the Committee
shall meet separately with the internal accountants and the independent
auditors, with and without management present, to discuss the results of
their examinations.
(3) The shares of Common Stock that may be
issued under the Plan will not exceed in the aggregate 2,000,000 shares,
subject to adjustment as provided in Section 9. Such shares may be shares of
original issuance or treasury shares or a combination of the foregoing. Any
shares of Common Stock that are subject to Stock Options that are terminated,
expire unexercised, are forfeited or are surrendered will again be available
for issuance under the Plan.
4. Stock Options for Grantees--Nonexempt Grants. The Stock Option Committee mayshall from time to time authorize Option grants to any Grantee to purchase
sharesreview the periodic financial
statements and other financial reports of Common Stock upon such termsthe Company with management,
and conditions as suchwith the independent auditors. The Chair of the Committee may
determine in accordance withrepresent the provisions set forth below. Grants made byentire Committee for the Stock Option Committee pursuant to this Section 4 are not intended to
comply with or otherwise satisfy the requirements of Rule 16b-3.
(a) Each Option Grant Agreement shall specify the number of shares of
Common Stock to which it pertains.
(b) Each Option Grant Agreement shall specify the Option Price, which, in
the case of an Incentive Stock Option, shall be not less than 100% of
the Market Value per Share on the Date of Grant or, in the case of an
Incentive Stock Option granted to a 10% Shareholder, not less than 110%
of the Market Value per Share on the Date of Grant.
(c) Each Option Grant Agreement shall specify whether the Stock Option is
intended to be an Incentive Stock Option or a Nonqualified Stock Option.
A-3
(d) Each Option Grant Agreement may specify whether the Option Price will
be payable (i) in cash or by check acceptable to the Company, (ii) by
the transfer to the Company of shares of Common Stock owned by the
Grantee for at least six months having an aggregate fair market value
per share at the date of exercise equal to the aggregate Option Price,
or (iii) by a combination of such methods of payment; provided, however,
that the payment method described in clause (ii) shall not be available
at any time that the Company is prohibited from purchasing or acquiring
such shares of Common Stock. In the absencepurposes of any such specification,
only the payment method in clause (i)review. The
Committee shall be permitted. Any Option
Grant Agreement may provide for deferred payment of the Option Price
from the proceeds of sale through a bank or broker of some or all of the
shares to which such exercise relates.
(e) Each Option Grant Agreement shall specify the term of the Stock
Option, which in the case of an Incentive Stock Option granted to a 10%
Shareholder shall not be greater than five years and for all other Stock
Options shall not be greater than ten years.
(f) Each Option Grant Agreement shall specify thealso discuss matters required period or
periods (if any) of continuous service by the Grantee with the Company
or any Subsidiary and any other conditions to be satisfied before the
Stock Option or installments thereof will become exercisable, and any
Option Grant Agreement may provide, or may be amendedcommunicated to provide for the
earlier exercise of the Stock Option in the event of a Change in
Control.
(g) Each Stock Option granted pursuant to this Section 4 shall be subject
to the transfer restrictions set forth in Section 8.
(h) Each Option Grant Agreement shall be in the form of a written
instrument executed on behalf of the
Company by the Chief Executive
Officer or Chief Financial Officerindependent auditors under generally accepted auditing
standards.
(4) The Committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report
on Form 10-K (or another officer designated by the Board of Directors or by the Stock Option Committee) and deliveredannual report to shareholders if distributed prior
to the Granteefiling of Form 10-K), including their judgment about the
quality, not just acceptability, of accounting principles, the
reasonableness of significant judgments, and containing such further terms and provisions, consistent
with the Plan, asclarity of the
disclosures in the financial statements. Also, the Committee may approve.
5. Stock Options for Grantees--Exempt Grants. The Special Stock Option
Committee may from time to time authorize grants to any Grantee of options to
purchase shares of Common Stock upon such terms and conditions as it may
determine in accordance withshall
discuss the provisions set forth below. Grants made by
the Special Stock Option Committee pursuant to this Section 5 are intended to
comply with and otherwise satisfy the requirements of Rule 16b-3. To the
extent that (i) any provisionresults of the Plan applicable to an Option granted
pursuant to this Section 5, or (ii) any act of the Board, Stock Option
Committee or Special Stock Option Committee would cause such Option to fail to
satisfy or comply with any requirements of Rule 16b-3, such provision or act
will be deemed null and void for purposes of such Option.
(a) Each Option Grant Agreement shall specify the number of shares of
Common Stock to which it pertains.
(b) Each Option Grant Agreement shall specify the Option Price, which, in
the case of an Incentive Stock Option, shall be not less than 100% of
the Market Value per Share on the Date of Grant or, in the case of an
Incentive Stock Option granted to a 10% Shareholder, not less than 110%
of the Market Value per Share on the Date of Grant.
(c) Each Option Grant Agreement shall specify whether the Option is
intended to be an Incentive Stock Option or a Nonqualified Stock Option.
(d) Each Option Grant Agreement shall specify whether the Option Price
will be payable (i) in cash or by check acceptable to the Company, (ii)
by the transfer to the Company of shares of Common Stock owned by the
Grantee for at least six months having an aggregate fair market value
per share at the date of exercise equal to the aggregate Option Price,
or (iii) by a combination of such methods of payment; provided, however,
that the payment method described in clause (ii) shall not be available
at any time that the Company is prohibited from purchasing or acquiring
such shares of Common Stock. In the absence of any such specification,
only the payment method in clause (i) shall be permitted. Any Option
Grant Agreement may provide for deferred payment of the Option Price
from the proceeds of sale through a bank or broker of some or all of the
shares to which such exercise relates.
A-4
(e) Each Option Grant Agreement shall specify the term of the Option,
which in the case of an Incentive Stock Option granted to a 10%
Shareholder shall not be greater than five years and for all other
Options shall not be greater than ten years.
(f) Each Option Grant Agreement shall specify the required period or
periods (if any) of continuous service by the Grantee with the Company
or any Subsidiaryannual audit and any other conditionsmatters required
to be satisfied before the
Options or installments thereof will become exercisable, and any Option
Grant Agreement may provide, or may be amended to provide for the
earlier exercise of the Options in the event of a Change in Control.
(g) Each Option granted pursuant to this Section 5 shall be subjectcommunicated to the transfer restrictions set forth in Section 8.
(h) Each Option Grant Agreement shall be in the form of a written
instrument executed on behalf of the CompanyCommittee by the Chief Executive
Officer or Chief Financial Officer (or another officer designated by the
Board of Directors or by the Special Stock Option Committee) and
delivered to the Grantee and containing such further terms and
provisions, consistent with the Plan, as the Special Stock Option
Committee may approve.
6. Options for Nonemployee Directors.
(a) Each current Nonemployee Director will be granted a Nonqualified
Stock Option to purchase 3,000 shares of Common Stock as of the last day
of each fiscal quarter, provided that such individual has served
continuously as a Nonemployee Director during such quarter through the
close of business on such date. Such Option grants shall commence as of
the fiscal quarter-end immediately following the Commencement Date.
(b) Each Nonemployee Director newly elected or appointed to the Board on
or subsequent to the date on which the Shareholders approve this Plan
will be granted a Nonqualified Stock Option, effective upon his or her
initial election or other appointment to the Board, to purchase 5,000
shares of Common Stock, but issued not sooner than the Commencement
Date. Consistent with paragraph 6(a), each such Nonemployee Director
will also be granted an additional Nonqualified Stock Option to purchase
shares of Common Stock as of the last day of each fiscal quarter
following his or her Initial Option grant in accordance with paragraph
(a) of this Section 6, beginning on the fiscal quarter-end immediately
following the Commencement Date, provided that such individual has
served continually as a Nonemployee Director during such quarter through
the close of business on such date.
(c) Each Option Grant Agreement shall specify the Option Price, which
shall be equal to the Market Value on the Date of Grant. All Options
granted pursuant to this Section 6 shall contain the terms and
conditions set forth in paragraphs (a), (d), (e), (f), (g) and (h) of
Section 4. Options granted pursuant to this Section 6 are intended to
comply with and otherwise satisfy the requirements of Rule 16b-3. To the
extent that (i) any provision of the Plan applicable to an Option
granted pursuant to this Section 6 or (ii) any act of the Board, Stock
Option Committee or Special Stock Option Committee would cause such
Option to fail to satisfy or comply with any requirements of Rule 16b-3,
such provision or act will be deemed null and void for purposes of such
Option.
7. Exercise of Options.
(a) Any Option granted hereunder shall be exercisable according to the
terms of the Plan and at such times andindependent auditors under
such conditions as
determined by the Committee and set forth in the Option Grant Agreement.
Unless the Committee provides otherwise, vesting of Options shall be
tolled during any unpaid leave of absence. Options may not be exercised
for a fraction of a share of Common Stock.
(b) An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the
terms of the Option Grant Agreement) from the person entitled to
exercise the Option, and
(ii) full payment for the shares of Common Stock with respect to
which the Option is exercised, in the form permitted by the
Option Grant Agreement and the Plan.
A-5
(c) Shares issued upon exercise of an Option shall be issued in the name
of the Grantee, or, if requested by the Grantee, in the name of the
Grantee and his or her spouse. Until the shares of Stock are issued (as
evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with
respect to the Stock acquired upon exercise of the Option,
notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such shares of Common Stock promptly after the
Option is exercised. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the shares of
Common Stock are issued, except as provided in Section 9.
(d) Exercising an Option in any manner shall decrease the number of
shares thereafter available, both for purposes of the Plan and for sale
under the Option, by the number of shares as to which the Option is
exercised.
(e) If a Grantee received an Option as an employee or director of the
Company and ceases to be an employee or director, as the case may be, of
the Company, or if the Grantee received an Option as an advisor or
consultant to the Company and ceases to be such an advisor or
consultant, other than upon the Grantee's death or Disability, the
Grantee may exercise his or her Option within such period of time as is
specified in the Option Grant Agreement to the extent that the Option is
vested on the date of termination. In the absence of a specified time in
the Option Grant Agreement, the Option shall remain exercisable for
three months following the Grantee's termination (but in no event later
than the expiration of the term of such Option as set forth in the
Option Grant Agreement). Notwithstanding the foregoing, except in the
case of termination of employment in accordance with the retirement
policies of the Company, if a Grantee voluntarily terminates his
employment or voluntarily terminates his status as an advisor or
consultant, the Grantee may not exercise his or her Option following the
date of termination.
(f) If a Grantee ceases to be an employee, director, advisor or
consultant as a result of the Grantee's Disability, the Grantee may
exercise his or her Option within such period of time as is specified in
the Option Grant Agreement to the extent the Option is vested on the
date of exercise. In the absence of a specified time in the Option Grant
Agreement relating to Disability, the Option shall remain exercisable
and shall continue to vest for 12 months following the Grantee's
termination (but in no event later than the expiration of the term of
such Option as set forth in the Option Grant Agreement).
(g) If a Grantee dies while he remains an employee, director, advisor or
consultant of the Company, the Option may be exercised within such
period of time as is specified in the Option Grant Agreement to the
extent that the Option is vested on the date of exercise (but in no
event later than the expiration of the term of such Option as set forth
in the Option Grant Agreement). In the absence of a specified time in
the Option Grant Agreement, the Option shall remain exercisable and
shall continue to vest for 12 months following the Grantee's death. The
Option may be exercised by the executor or administrator of the
Grantee's estate or, if none, by the person(s) entitled to exercise the
Option under the Grantee's Will or the laws of descent and distribution.
(h) The Committee may at any time offer to buy out, for a payment in cash
or shares of Common Stock, an Option previously granted based on such
terms and conditions as the Committee shall establish and communicate to
the Grantee at the time that such offer is made.
8. Transferability. Except as otherwise expressly provided in the Option
Grant Agreement, or in any amendment to such agreement, no Option will be
transferable by a Grantee other than by will or the laws of descent and
distribution, and during the lifetime of the Grantee may be exercised only by
the Grantee.
9. Adjustments. The Board or the Stock Option Committee, with respect to
Options granted under Section 4, and the Board or the Special Stock Option
Committee, with respect to Options granted under Section 5, shall make or
provide for such adjustments in the maximum number of shares of Common Stock
specified in Section 3, in the number of shares of Common Stock covered by
outstanding Options granted hereunder, in the Option exercise price applicable
to any such Options or in the kind of shares covered thereby
A-6
(including shares of another issuer), as the Board or such Committee in its
sole discretion, exercised in good faith, may determine is equitably required
to prevent dilution or enlargement of the rights of Grantees that otherwise
would result from any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
merger, consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities or any
other corporate transaction or event having an effect similar to any of the
foregoing. Any fractional shares resulting from the foregoing adjustments may
be eliminated.
10. Withholding of Taxes. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any benefit
realized by a Grantee under the Plan, or is requested by any Grantee to
withhold additional amounts with respect to such taxes, and the amounts
available to the Company for such withholding are insufficient, it will be a
condition to the realization of such benefit that the Grantee make
arrangements satisfactory to the Company for payment of the balance of such
taxes required or requested to be withheld. In addition, if permitted by the
Stock Option Committee with respect to Options granted under Section 4, or by
the Special Stock Option Committee with respect to Options granted under
Section 5, a Grantee may elect to have any withholding obligation of the
Company satisfied, in whole or in part, by (i) authorizing the Company to
withhold from shares of Common Stock to be issued pursuant to any Option a
number of shares with an aggregate Market Value (as of the date the
withholding is effected) that would satisfy the minimum withholding amount
due, or (ii) transferring to the Company shares of Common Stock owned by the
Grantee with an aggregate Market Value (as of the date the withholding is
effected) that would satisfy the minimum withholding amount due.
11. Administration of the Plan.
(a) The Plan will be administered by the Stock Option Committee with
respect to Options granted under Section 4 and by the Special Stock
Option Committee with respect to Options granted under Section 5. For
purposes of any action taken by either Committee, a majority of the
members of that Committee will constitute a quorum, and the action of
the members present at any meeting at which a quorum is present, or acts
unanimously approved in writing, will be the acts of such Committee. The
Board of Directors as a whole shall administer the Plan with respect to
Options granted under Section 6.
(b) Subject to the allocation of administrative responsibilities set
forth in Section 11(a), the Stock Option Committee and the Special Stock
Option Committee have the full authority and discretion to administer
the Plan and to take any action that is necessary or advisable in
connection with the administration of the Plan, including without
limitation the authority and discretion to interpret and construe any
provision of the Plan or of any agreement, notification or document
evidencing the grant of an Option. The interpretation and construction
by the Stock Option Committee, the Special Stock Option Committee or the
Board of Directors, as applicable, of any such provision and any
determination by the respective Committee pursuant to any provision of
the Plan or of any such agreement, notification or document will be
final and conclusive. No member of the Board or of either Committee will
be liable for any such action or determination made in good faith.
(c) Notwithstanding the provisions of Section 11(b), if any authority,
discretion or responsibility granted to the Special Stock Option
Committee under the Plan would, if exercised or discharged by the
Special Stock Option Committee, cause the provisions of Section 5 or any
Option granted under Section 5 to fail to satisfy the requirements of
Rule 16b-3, such authority, discretion or responsibility may be
exercised by the Board to the same extent and with the same effect as if
exercised by the Special Stock Option Committee; provided, however, that
such act of the Board will not cause the provisions of Section 5 or any
Option granted under Section 5 to fail to satisfy the requirements of
Rule 16b-3 or cause any member of the Special Stock Option Committee to
cease to be a Nonemployee Director for purposes of Rule 16b-3.
A-7
12. Amendments, Etc.
(a) The Stock Option Committee, or the Special Stock Option Committee, as
applicable, or the Board of Directors as to grants under Section 6, may,
without the consent of the Grantee, amend any agreement evidencing an
Option granted under the Plan, or otherwise take action, to accelerate
the time or times at which the Option may be exercised, to extend the
expiration date of such Option, to waive any other condition or
restriction applicable to such Grantee or to the exercise of such
Option, to reduce the exercise price of such Option, to amend the
definition of a Change in Control to expand the events that would
constitute a Change in Control, even if such definition may be different
from that contained in the Plan, and may amend any such agreement in any
other respect with the consent of the Grantee.
(b) The Plan may be amended from time to time by the Stock Option
Committee or the Board but may not be amended without further approval
by the shareholders of the Company if such Plan amendment would result
in any grant or other transaction with respect to Options under Section
5 no longer satisfying the requirements of Rule 16b-3. Notwithstanding
the foregoing, the provisions of Section 6 that designate Nonemployee
Directors eligible to receive Options and specify the amount, Option
Price and timing of Option grants may be amended only by the Board and
may be amended no more than once every six months except to comply with
changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules and regulations thereunder. In the event
any law, or any rule or regulation issued or promulgated by the Internal
Revenue Service, the Securities and Exchange Commission, the National
Association of Securities Dealers, Inc., any stock exchange upon which
the Common Stock is listed for trading, or any other governmental or
quasi-governmental agency having jurisdiction over the Company, the
Common Stock or the Plan requires the Plan to be amended, or in the
event Rule 16b-3 is amended or supplemented (e.g., by addition of
alternative rules) or any of the rules under Section 16 of the Act are
amended or supplemented, in either event to permit the Company to remove
or lessen any restrictions on or with respect to Options, the Board of
Directors reserves the right to amend the Plan to the extent of any such
requirement, amendment or supplement, and all Options then outstanding
will be subject to such amendment.
(c) The Plan may be terminated at any time by action of the Board, but in
any event will terminate on the tenth anniversary of the effective date
of the Plan. The termination of the Plan will not adversely affect the
terms of any outstanding Option.
(d) The Plan will not confer upon any Grantee any right with respect to
continuance of employment or other service with the Company or any
Subsidiary, nor will it interfere in any way with any right the Company
or any Subsidiary would otherwise have to terminate a Grantee's
employment or other service at any time.
(e) The Plan shall be governed by and construed in accordance with the
internal laws of the State of Georgia.
AMERICAN SOFTWARE, INC.
By:
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Secretary
A-8generally accepted auditing standards.
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FOLD AND DETACH HERE
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AMERICAN SOFTWARE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
AUGUST 24, 200022, 2001 AT 4:003:30 P.M.
GRAND HYATT ATLANTA
IN BUCKHEAD
3300 PEACHTREEAT THE OFFICES OF THE COMPANY
470 EAST PACES FERRY ROAD, N.E.
ATLANTA, GEORGIA
FOR HOLDERS OF CLASS A COMMON SHARES
The undersigned hereby appoints James C. Edenfield and Thomas L. Newberry, or
either of them, attorneys and proxies, each with full power of substitution to
vote, in the absence of the other, all Class A Common Shares of AMERICAN
SOFTWARE, INC. held by the undersigned and entitled to vote at the Annual
Meeting of Shareholders to be held on August 24, 200022, 2001 and at any adjournment
or adjournments thereof, in the transaction of such business as may properly
come before the meeting, and particularly the proposals stated below, all in
accordance with and as more fully described in the accompanying Proxy
Statement.
It is understood that this proxy may be revoked at any time insofar as it has
not been exercised and that the shares may be voted in person if the
undersigned attends the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING PROPOSALS:PROPOSAL:
Election of Class A Directors. TwoThree Class A Directors to be elected.
Nominees: David H. Gambrell[_] FOR[_] WITHOLDDennis Hogue [_] FOR [_] WITHHOLD AUTHORITY
John J. Jarvis [_] FOR [_] WITHHOLD AUTHORITY
Thomas R. Williams[_] FOR[_] WITHOLDWilliams [_] FOR [_] WITHHOLD AUTHORITY
Adoption of the 2001 Stock Option Plan. To consider and adopt a new stock
option plan for the Company, named the "2001 Stock Option Plan," to replace
the plans currently in effect.
[_] FOR[_] AGAINST[_] ABSTAIN
FOLD AND DETACH HERE
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THE CLASS A SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED SHAREHOLDER ON THE REVERSE OF THIS PROXY CARD, OR IF NO DIRECTION
IS GIVEN, THEY WILL BE VOTED FOR EACH OF THE ABOVE PROPOSALS.PROPOSAL. IN THEIR DISCRETION, THE
PROXYHOLDERS ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
---------------------------------
Signature
---------------------------------
Signature if held jointly
Please vote, sign, date and
return this proxy card promptly,
using the enclosed envelope.
Dated: ____________________, 20002001
IMPORTANT:
Please sign this Proxy
exactly as your name or
names appear hereon. If
shares are held
jointly, signatures
should include both
names. Executors,
administrators,
trustees, guardians and
others signing in a
representative capacity
should please give
their full titles.