UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
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(Amendment No.)
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American Software, Inc.
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(Name
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| x | Definitive Proxy Statement |
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AMERICAN SOFTWARE, INC.
(Name of Registrant asAs Specified In Its Charter)
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SEC 1913 (3-99)
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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 offices of the Company, 470 East Paces Ferry Road, Atlanta, Georgia 30305 on Wednesday,Monday, August 22, 200119, 2002 at 3:1:30 p.m. for the following purposes:
1. To elect eight directors of the Company, three of whom will be elected
by the holders of Class A Common Shares, and five of whom will be
elected by the holders of Class B Common Shares.
2. To consider and transact such other business as may properly come before
the meeting.
| 1. | To elect eight directors of the Company, three of whom will be elected by the holders of Class A Common Shares, and five of whom will be elected by the holders of Class B Common Shares. |
| 2. | To consider and vote upon an amendment to the Company’s 2001 Stock Option Plan to increase the number of Class A Common Shares that may be subject to options granted under that Plan from 2,000,000 Shares to 2,975,000 Shares. |
| 3. | To consider and transact such other business as may properly come before the meeting. |
Only shareholders of record of the Company at the close of business on July 12, 20012002 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 If shareholders are present at the meeting, their proxies may be withdrawn, and they may vote personally on all matters brought before the meeting, as described more fully in the enclosed Proxy Statement.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, 2001
2002
IMPORTANT
We encourage you to attend the shareholders'shareholders’ meeting. In order that there may be a proper representation at the meeting, each shareholder is requested to send inreturn 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'sCompany’s expense in soliciting proxies.
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
OF AMERICAN SOFTWARE, INC.
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TO BE HELD AT
AMERICAN SOFTWARE, INC.
470 EAST PACES FERRY ROAD
ATLANTA, GEORGIA
ON AUGUST 22, 2001
19, 2002
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"“Company”), in connection with the solicitation of proxies by the Board of Directors for use at the Annual Meeting of Shareholders on Wednesday,Monday, August 22, 200119, 2002 at 3:1:30 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, 2001.
2002.
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 Dennis Hogue, Dr. John J. Jarvis and Thomas R. WilliamsJames B. Miller, Jr. as Class A Directors.
| FOR—Adoption | of proposed amendment to the Company’s 2001 Stock Option Plan to increase the number of Class A Common Shares that may be subject to options granted under that Plan from 2,000,000 Shares to 2,975,000 Shares. |
In addition, a properly executed and returned proxy card gives the authority to vote in accordance with the proxy-holders'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 12, 20012002 as the record date for determining the holders of common stock entitled to notice of and to vote at the meeting. On July 12, 2001,2002, the Company had outstanding and entitled to vote a total of 18,697,10718,555,342 Class A Common Shares ("(“Class A shares"shares”) and 4,082,289 Class B Common Shares ("(“Class B shares"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 proposed increase in the number of Shares authorized under 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 6,232,3696,185,114 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.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, 2001.2002. 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.
Title of Class | Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class(1) | |||||
| CLASS A SHARES | James C. Edenfield c/o American Software, Inc. 470 East Paces Ferry Road, N.E. Atlanta, Georgia 30305 | 304,750 | (2)(3) | 1.6 | %(4) | |||
Thomas L. Newberry c/o American Software, Inc. 470 East Paces Ferry Road, N. E. Atlanta, Georgia 30305 | 178,000 | (2)(5) | 1.0 | %(4) | ||||
Dimensional Fund Advisors, Inc. 1299 Ocean Avenue, 11th Floor Santa Monica, California 90401 | 1,375,412 | (6) | 7.5 | % | ||||
Brown Capital Management, Inc. 1201 North Calvert Street Baltimore, Maryland 21202 | 3,160,000 | (7) | 17.1 | % | ||||
| CLASS B SHARES | James C. Edenfield | 2,146,352 | 52.6 | % | ||||
| Thomas L. Newberry | 1,935,937 | 47.4 | % |
| (1) | Based on a total of 18,455,256 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 |
| (3) | Includes 249,750 shares that may be acquired upon the exercise of |
| (4) | For all matters except the election of directors, which involves class voting, Mr. Edenfield and Dr. Newberry together beneficially own approximately 69.3% of the combined, weighted voting rights of the outstanding Class A and Class B |
| (5) | Includes 75,000 shares that may be acquired upon the exercise of stock options exercisable within 60 days. |
| (6) | Based on Schedule 13G dated February 12, 2002 reporting as of December 31, 2001. |
| (7) | Based on Schedule 13G dated February 5, 2002 reporting as of December 31, 2001. |
2 2001.
(7) Based on Schedule 13G amendment dated 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.
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Directors and Executive Officers.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, 2001.2002. 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 | 304,750(2)(3) | 2,146,352 | 1.6 | %(4) | 52.6 | % | ||||
| Thomas L. Newberry | 178,000(2)(5) | 1,935,937 | 1.0 | %(4) | 47.4 | % | ||||
| David H. Gambrell | 69,000(6) | -0- | 0.4 | % | — | |||||
| James B. Miller, Jr. | -0- | -0- | — | — | ||||||
| John J. Jarvis | 5,000(6) | -0- | — | — | ||||||
| Dennis Hogue | 5,000(6) | -0- | — | — | ||||||
| Thomas L. Newberry, V | 5,000(6) | -0- | — | — | ||||||
| J. Michael Edenfield | 282,000(6) | -0- | 1.5 | % | — | |||||
| Vincent C. Klinges | 108,250(7) | -0- | 0.6 | % | — | |||||
| Jeffrey W. Coombs | 81,500(8) | -0- | 0.4 | % | — | |||||
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (11 PERSONS) | 1,053,500(9) | 4,082,289 | 5.4 | % | 100 | % | ||||
| (1) | Based on a total of |
| (2) | Does not include the Class B shares beneficially owned by Mr. Edenfield and Dr. Newberry, which shares are convertible into Class |
| (3) | Includes 249,750 shares that may be acquired upon the exercise of stock |
| (4) | For all matters except the election of directors, which involves class voting, Mr. Edenfield and Dr. Newberry together beneficially own approximately 69.3% 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 10.8% of the outstanding Class A shares and Dr. Newberry would beneficially own 9.3% of the outstanding Class A shares. |
| (5) | Includes 75,000 shares subject to options exercisable within 60 days. |
| (6) | Represents shares subject to options exercisable within 60 days. |
| (7) | Includes 106,250 shares subject to options exercisable within 60 days. |
| (8) | Includes 81,000 shares subject to options exercisable within 60 days and 500 shares held by Jeffrey J. Coombs, son of Jeffrey W. Coombs. |
| (9) | Includes 893,000 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"“Exchange Act”) requires the Company'sCompany’s executive officers and directors, and persons who own more than 10% of a registered class of the Company's
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Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the "Commission"“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.
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Based upon a review by the Company of filings made under Section 16(a) of the Exchange Act, all 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 eight directors to be elected, three are to be elected by the holders of the outstanding Class A shares and five 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 Dennis Hogue, Dr. John J. Jarvis and Thomas R. Williams,James B. Miller, Jr., the Class A director nominees. In the event any 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 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 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 James C. Edenfield, and Thomas L. Newberry, will continue serving as 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
James B. Miller, Jr. was elected to the Board of Directors by the existing Board members effective June 1, 2001,in May 2002, and havehas not previously been candidatesa candidate for election at an annual meeting of shareholders. Mr. Miller was elected to fill the vacancy on the Board that resulted from the death of Thomas R. Williams in March 2002.
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.
Name of Nominee | Age | Principal Occupation; Directorships | Year First Elected Director | |||
CLASS A DIRECTORS: | ||||||
| Dennis Hogue(1) | 49 | President of Mercari Technologies | 2001 | |||
| John J. Jarvis(2) | 60 | Executive Director of The Logistics Institute—Asia Pacific | 2001 | |||
| James B. Miller, Jr.(3) | 62 | Founder, Chairman, President, and Chief Executive Officer of Fidelity National Corporation, the parent company of Fidelity National Bank | 2002 | |||
CLASS B DIRECTORS: | ||||||
| James C. Edenfield(4) | 67 | President, Chief Executive Officer and Treasurer of American Software, Inc. and American Software USA, Inc.; Chairman of Board of Directors of Logility, Inc. | 1971 | |||
| J. Michael Edenfield(5) | 44 | Senior Vice President of American Software, Inc. and President and Chief Executive Officer of Logility, Inc.; currently a Director of Logility, Inc. and INSIGHT, Inc. | 2001 | |||
| David H. Gambrell(6) | 72 | Partner, Gambrell & Stolz, L.L.P., Attorneys at law, Atlanta, Georgia | 1983 | |||
| Thomas L. Newberry(7) | 69 | Chairman of the Board of American Software, Inc. | 1971 | |||
| Thomas L. Newberry, V(8) | 35 | Founder and Chief Executive Officer of The 1% Club, Inc. | 2001 |
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| (1) | Mr. Hogue became Chief Executive Officer and President of |
| (2) | Dr. Jarvis is currently Executive Director of The Logistics Institute—Asia Pacific, which is a collaboration between the National University of Singapore and the Georgia Institute of Technology. From 1990 to 2001, he was Chair of the School of Industrial |
| (3) | Mr. Miller is currently the Chairman of the Board, President and Chief Executive Officer |
| (4) | James C. 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 |
| (5) | J. Michael Edenfield has served as President and Chief Executive Officer of Logility, Inc. |
| (6) | Mr. Gambrell has been a practicing attorney since 1952, and is a partner in the law firm of Gambrell & Stolz, L.L.P., |
| (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, |
| (8) | Thomas L. Newberry, V founded The 1% Club, Inc. in October 1992 and has acted as its Chief Executive Officer |
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CLASS A
SHAREHOLDERS VOTE "FOR"“FOR” MESSRS. HOGUE, JARVIS AND WILLIAMS.
MILLER.
From May 1, 20002001 through April 30, 2001,2002, the Board of Directors held fourfive 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.Miller. The Audit Committee held twothree meetings during fiscal 2001.2002. The Securities and Exchange Commission
andRules of the National Association of Securities Dealers have promulgated rules that(NASD) require audit committees to be composed of not less than three members who are "independent,"“independent,” as that term is defined in the rules. Three of the four Audit Committee members--Messrs.members—Messrs. Hogue, Jarvis and Williams--meetMiller—meet the definition of "independent"“independent” set forth in the newthose 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'sorganization’s consolidated gross revenues or $200,000 in any of the past three years is not considered "independent."“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 wouldis not be considered "independent"“independent” under the NASD rules. See Compensation“Compensation Committee Interlocks and Insider Participation,Participation” and “Audit Committee Report,” 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'sGambrell’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 newother Committee members.
The Company'sCompany’s Audit Committee Charter attached as Exhibit "A" hereto, outlines the composition requirements of the Audit Committee as described above, as well as its duties and responsibilities. Under the current charter, the primary responsibility of the Audit Committee is to oversee the Company'sCompany’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'accountants’ audit, monitoring the adequacy of the Company'sCompany’s accounting, financial and operating controls, reviewing from time to time the Company'sCompany’s periodic financial statements and other financial reports with management and with the independent auditors, and reviewing with management and the independent auditors the financial statements to be included in the Company'sCompany’s annual report.
Prior to the September 1, 2000 termination of the 1991 Employee Stock Option
Plan, the Board had a 1991 Employee Stock Option Plan Committee, consisting of
Messrs. Edenfield and Newberry. During fiscal 2001, this Committee met or
acted by written consent ten 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 were not eligible to participate in this Plan. The
functions of this Committee were 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 Dr. Thomas R. Williams,L. Newberry, 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 Dr. Thomas L. Newberry, administers grants to other employees.employees.The Special Stock Option Committee acted by written consent on one occasion during fiscal 2002. During fiscal 2001,2002, the
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Stock Option Committee met or acted by written consent ninethirteen times to grant stock options or take other actions with respect to the Company'sCompany’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.
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The Board has a Compensation Committee, consisting of Messrs. Williams
(Chairman)David H. Gambrell and Gambrell,Thomas L. Newberry, described below in "Certain“Certain Information Regarding Executive Officers and Directors--ReportDirectors—Report on Executive Compensation."” The Compensation Committee met or acted by written consent on two occasions during fiscal 2001.2002. The Board has no nominating committee or any other committee performing similar functions.
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'sCompany’s Chief Executive Officer and the other executive officers of the Company whose annual compensation exceeded $100,000 during fiscal 20012002 (referred to herein as the "named“named executive officers"officers”) for the fiscal years ended April 30, 2002, 2001 2000 and 1999:
2000:
SUMMARY COMPENSATION TABLE | ||||||||||||||
Name and Principal Position | Fiscal Year | Annual Salary ($) | Bonus or Other Annual Compensation ($) | Long-Term Compensation Awards/Number of Option Shares Granted | All Other Compensation ($)(1) | |||||||||
| James C. Edenfield | 2002 | 435,448 | 266,350 | 120,000 | 70,477 | (2)(3) | ||||||||
| President and Chief | 2001 | 435,448 | -0- | 120,000 | 97,226 | (3)(4) | ||||||||
| Executive Officer | 2000 | 435,448 | -0- | 90,000 | 113,618 | (3)(5) | ||||||||
| J. Michael Edenfield | 2002 | 259,200 | (7) | 100,205 | 150,000 | (8) | 2,040 | (9) | ||||||
| Executive Vice President; | 2001 | 259,200 | (7) | -0- | 130,000 | 4,690 | (9) | |||||||
| President of Logility, Inc. (6) | 2000 | 259,200 | (7) | -0- | 140,000 | (10) | 4,440 | (9) | ||||||
| Jeffrey W. Coombs | 2002 | 181,948 | 72,500 | (12) | 40,000 | -0- | ||||||||
| Senior Vice President of American | 2001 | 181,948 | 24,875 | 70,000 | 2,650 | |||||||||
| Software USA, Inc. (11) | 2000 | 175,948 | 15,000 | 30,000 | 2,400 | |||||||||
| Vincent C. Klinges | 2002 | 150,000 | (13) | 64,351 | 65,000 | 1,688 | ||||||||
| Chief Financial Officer of the Company | 2001 | 150,000 | (13) | -0- | 65,000 | 2,650 | ||||||||
| and of Logility, Inc. | 2000 | 119,225 | (13) | -0- | 65,000 | (14) | -0- | |||||||
| (1) | The aggregate amount of perquisites and other personal benefits, securities or |
| (2) | This amount includes $69,529 representing the economic benefit in fiscal 2002 of a split dollar life insurance policy acquired by the Company in fiscal 2000 on the life of Mr. Edenfield (the “split dollar policy”) |
| (3) | Each of these amounts includes $948 reimbursed to Mr. Edenfield for medical insurance coverage obtained through the Company and paid by him. |
| (4) | This amount includes $93,628 representing the economic benefit in fiscal 2001 |
| (5) | This amount includes $110,270 representing the economic benefit of the split dollar policy. |
| (6) | Logility, Inc. |
| (7) | All of the fiscal 2002, 2001 |
| (8) | Includes 20,000 stock option shares granted by Logility. |
| (9) | Each of these amounts includes $2,040 reimbursed to Mr. Edenfield for medical insurance coverage obtained through the Company and paid by him. |
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| (10) | Includes 45,000 stock option shares granted by Logility. |
| (11) | Mr. Coombs became Chief Operating Officer of American |
| (12) | $32,500 of this amount was paid during fiscal 2002 with respect to fiscal year 2001. |
| (13) | Thirty percent ($45,000) of Mr. Klinges’ salary shown in this table was paid by Logility in both fiscal 2002 and 2001 |
| (14) | Includes 5,000 stock option shares granted by Logility. |
Stock Option Plans
The Company has outstanding stock options granted pursuant to three stock option plans. The 1991 Employee Stock Option Plan (the "Employee“Employee Option Plan"Plan”) and the Directors and Officers Stock Option Plan (the "Directors“Directors and Officers Option Plan"Plan”) were adopted in 1991. These Plans were terminated effective September 1, 2000 and replaced by the 2001 Stock Option Plan (the "2001“2001 Option Plan"Plan”). Options outstanding under the Employee Option Plan and the Directors and Officers Option Plan remain in effect, but no new options may be granted under those plans. The following sections describe these three stock option plans.
1991 Employee Stock Option Plan. On August 22, 1991, the Company adopted the 1991 Employee Stock Option Plan. The Employee Option Plan was designed to provide certain key employees of the Company and its subsidiaries with additional incentives to increase their efforts on the Company'sCompany’s behalf and remain in the employ of the Company. Options to purchase Class A common shares were granted in the form of both incentive stock options and non-qualified stock options. Participants in this plan were selected from key personnel of the Company or a subsidiary, provided, however, that no director, officer or 10% shareholder of the Company was eligible to participate. The number of options granted under this plan was 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, 2001,2002, there were outstanding under the Employee Stock Option Plan options to purchase 2,048,4301,762,583 Class A shares.
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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 was designed to provide directors and officers of the Company and its subsidiaries with additional incentives to increase their efforts on the Company'sCompany’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 were granted in the form of both incentive stock options and non-
qualifiednon-qualified stock options. Participants in this plan were selected from among the directors and officers of the Company or a subsidiary. The number of options granted under this plan was determined with each grant. Further, each non-employee member of the Board of Directors received 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 was equal to the closing market price of the shares on the date of grant and were 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, 2001,2002, there were outstanding under the Directors and Officers Stock Option Plan options to purchase 1,208,4691,076,969 Class A shares.
2001 Stock Option Plan.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'sCompany’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-
employeenon-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
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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, 2001,2002, there were outstanding under the 2001 Option Plan options to purchase 511,2501,306,062 Class A shares. The 2001 Stock Option Committees.Plan is proposed to be amended and is more fully described in “Amendment of 2001 Stock Option Plan,” below.
Stock Option Committees. Prior to its termination, the Employee Stock Option Plan was administered by the 1991 Employee Stock Option Plan Committee, consisting of Mr. Edenfield and Dr. Newberry. Prior to its termination, the Directors and Officers Option Plan was administered by the Compensation Committee, consisting of Messrs. Gambrell and Williams.Committee. The 2001 Option Plan is administered by two separate committees: (i) the Special Stock Option Committee (comprised of Messrs.David H. Gambrell and Williams,Thomas L. Newberry, as members of the Compensation Committee) is responsible for option grants to officers and directors, and (ii) the Stock 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 2001 Stock 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.
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Stock Option Grants
The following table sets forth information with respect to options granted during fiscal 20012002 to each of the directors and named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants | ||||||||||||
Name | Number of Options Granted(1) | Percent of Total Options Granted to Employees and Directors in Fiscal 2002 | Exercise Price (Per Share)($) | Expiration Date | Potential Realized Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (2) 5% 10%($) | |||||||
| James C. Edenfield | 30,001 | 3.58 | % | 2.00 | 06/15/06 | 7,388 / 25,036 | ||||||
| 89,999 | 10.74 | % | 2.00 | 06/16/11 | 78,016 / 230,846 | |||||||
| J. Michael Edenfield | 130,000 | 15.52 | % | 2.00 | 06/15/11 | 112,691 / 333,448 | ||||||
| 20,000 | (3) | 12.10 | %(3) | 3.30 | 05/31/11 | 41,507 / 105,187 | ||||||
| Thomas L. Newberry | 3,000 | 0.36 | % | 1.60 | 07/31/11 | 3,019 / 7,650 | ||||||
| 3,000 | 0.36 | % | 1.45 | 10/31/11 | 2,736 / 6,933 | |||||||
| 3,000 | 0.36 | % | 2.80 | 01/30/12 | 5,283 / 13,387 | |||||||
| 3,000 | 0.36 | % | 3.30 | 04/30/12 | 12,452 / 31,556 | |||||||
| David H. Gambrell | 3,000 | 0.36 | % | 1.60 | 07/31/11 | 3,019 / 7,650 | ||||||
| 3,000 | 0.36 | % | 1.45 | 10/31/11 | 2,736 / 6,933 | |||||||
| 3,000 | 0.36 | % | 2.80 | 01/31/12 | 5,283 / 13,387 | |||||||
| 3,000 | 0.36 | % | 3.30 | 04/30/12 | 6,196 / 15,748 | |||||||
| Dr. John Jarvis | 5,000 | 0.60 | % | 1.85 | 06/01/11 | 5,817 / 14,742 | ||||||
| 3,000 | 0.36 | % | 1.60 | 07/31/11 | 3,019 / 7,650 | |||||||
| 3,000 | 0.36 | % | 1.45 | 10/31/11 | 2,736 / 6,933 | |||||||
| 3,000 | 0.36 | % | 2.80 | 01/31/12 | 5,283 / 13,387 | |||||||
| 3,000 | 0.36 | % | 3.30 | 04/30/12 | 6,226 / 15,778 | |||||||
| Dennis Hogue | 5,000 | 0.60 | % | 1.85 | 06/01/11 | 5,817 / 14,742 | ||||||
| 3,000 | 0.36 | % | 1.60 | 07/31/11 | 3,019 / 7,650 | |||||||
| 3,000 | 0.36 | % | 1.45 | 10/31/11 | 2,736 / 6,933 | |||||||
| 3,000 | 0.36 | % | 2.80 | 01/31/12 | 5,283 / 13,387 | |||||||
| 3,000 | 0.36 | % | 3.30 | 04/30/12 | 6,226 / 15,778 | |||||||
| Thomas L. Newberry, V | 5,000 | 0.60 | % | 1.85 | 06/01/11 | 5,817 / 14,742 | ||||||
| 3,000 | 0.36 | % | 1.60 | 07/31/11 | 3,019 / 7,650 | |||||||
| 3,000 | 0.36 | % | 1.45 | 10/31/11 | 2,736 / 6,933 | |||||||
| 3,000 | 0.36 | % | 2.80 | 01/31/12 | 5,283 / 13,387 | |||||||
| 3,000 | 0.36 | % | 3.30 | 04/30/12 | 6,226 / 15,778 | |||||||
| Vincent C. Klinges | 65,000 | 7.76 | % | 2.00 | 06/15/11 | 56,346 / 166,724 | ||||||
| Jeffrey W. Coombs | 40,000 | 4.77 | % | 2.00 | 05/23/11 | 37,280 / 106,749 | ||||||
| (1) | Such options may not be exercised earlier than one year after the date of |
| (2) | These amounts represent certain assumed rates of |
| (3) | This option was granted by Logility, Inc. The percentage represents the percentage of total options granted to all Logility employees. |
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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, 2001.
2002.
Name | Shares Acquired on Exercise(#) | Value Realized ($) | Number of Unexercised Options at 04/30/02 Exercisable/Unexercisable | Value of Unexercised In-the-Money Options at 04/30/02 Exercisable/Unexercisable(1)($) | ||||
| James C. Edenfield | -0- | 0.00 | 167,250 / 285,750 | 31,556 / 170,644 | ||||
| J. Michael Edenfield | -0- | 0.00 | 193,250 / 312,750 | 82,475 / 209,950 | ||||
| -0- | 0.00 | 65,000 / 50,000(2) | 18,218 / 6,073(2) | |||||
| Vincent C. Klinges | -0- | 0.00 | 66,250 / 153,750 | 22,805 / 101,805 | ||||
| -0- | 0.00 | 2,500 / 2,500(2) | -0- / -0-(2) | |||||
| Jeffrey W. Coombs | -0- | 0.00 | 66,000 / 116,750 | 4,668 / 118,903 |
| (2) | Represents number of unexercised stock options of Logility, Inc. The market price of Logility’s common stock on April 30, 2002 was $3.16. |
The following table discloses information with respect to the Company’s entire equity compensation program in effect as of April 30, 2002. All equity compensation plans of the Company have been approved by its Shareholders. See “Amendment of Stock Option Plan,” below, for a discussion of the proposal to amend the Company’s 2001 was $1.47.
(2) Represents number of unexercised stock options of Logility, Inc. The
market price of Logility's common stock on April 30, 2001 was $2.64.
Stock Option Plan.
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities as Reflected in the First Column) | ||
| 4,145,614 | $3.31 | 690,963 |
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 by 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'syear’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 2001.2002. Accordingly, during fiscal 2001,2002, Mr. Edenfield'sEdenfield’s salary was $434,500. He received noa bonus of $266,350 under the bonus formula with respect to fiscal 2001.2002. See "Report“Report on Executive Compensation"Compensation” for a detailed discussion of Mr. Edenfield'sEdenfield’s compensation in fiscal 20012002 and his compensation plan for fiscal 2002.
2003.
Pursuant to written plans, Jeffrey W. Coombs Paul DiBono, Jr. and Vincent C. Klinges had the potential to receive certain cash bonuses, the amounts of which were determined on the basis of fiscal 20012002 performance standards. Accordingly, Mr. Coombs received a bonus in the amount of $24,875$72,500 in fiscal 2001. Neither Mr. DiBono nor Mr. Klinges, however, qualified2002, of which $32,500 was for a bonus under
performance standards applicable duringearned but not paid with regard to fiscal year 2001. For fiscal 2002,2003, the bonus plans for Messrs. 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. Mr. DiBono retired fromThe compensation for J. Michael Edenfield is determined by the Company effective October 31, 2000.
Compensation Committee of the Board of Directors of Logility, Inc.
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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.Directors. The Company incurred expenses of approximately $300,000 in fiscal 2000, and approximately
$300,000 in fiscal 20012002 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.
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The Company and Logility have previously entered into various agreements (the "Intercompany Agreements"“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'sCompany’s Annual Report on Form 10-K for the fiscal year ended April 30, 2001,2002, filed with the Securities and Exchange Commission. In fiscal 2001,2002, Logility paid the following aggregate amounts to the Company under the terms of the Intercompany Agreements: Services Agreement--Agreement—$1,552,000;1,730,000; Facilities Agreement--Agreement—$763,000;509,031; and Marketing License Agreement--Agreement—$367,000.107,489. Under the Tax Sharing Agreement, Logility received no allocation of federal, state and local taxes for fiscal 2001.
2002.
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, 2001,2002, there was a payable from the Company to Logility in the amount of $2,916,000.
$1,085,000, arising from the Company’s collection of billings from mutual customers on behalf of Logility.
Director Compensation
During fiscal 2001,2002, 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'sCompany’s 2001 Option Plan, 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 upon their initial election and 3,000 shares each as of the end of each fiscal quarter, with exercise prices equal to the market price on 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 after the options become exercisable. Under this program, Messrs.David H. Gambrell Newberry and WilliamsThomas L. Newberry each received options to purchase an aggregate of 9,00012,000 shares in fiscal 2001.
2002.
Compensation Committee Interlocks and Insider Participation
Messrs.
Mr. Gambrell and WilliamsDr. Newberry have been selected by the Board of Directors to serve on the Compensation Committee. Mr. Gambrell is a partner in the law firm of Gambrell & Stolz, L.L.P., which performs legal services for the Company and Logility, and AmQUEST, Inc., a wholly-ownedmajority-owned subsidiary of the Company. Legal fees in the amount of $746,290$228,867 were paid by the Company (including fees paid by Logility and AmQUEST)Logility) to that firm during fiscal year 20012002 for legal services rendered, in addition to $16,800$18,300 in Director fees paid during that year for Mr. Gambrell'sGambrell’s service as a Director of the Company and as a member of Board Committees.
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, 2001.
Meetings.2002.
Meetings. The Compensation Committee met two times formally and conferred informally a number of times during fiscal year 2001.2002. Informal conferences have been held among the members of the Committee, as well as with
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the Chief Executive Officer, concerning the authority and responsibilities of the Committee. At the outset of fiscal 2002, the Committee consisted of Thomas R. Williams, as Chairman, and David H. Gambrell. Mr. Williams died in March 2002, and his position as a member and as Chairman of the Committee has been filled by Thomas L. Newberry.
Executive Compensation Philosophy.Philosophy. The Committee believes that a compensation program thatwhich 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'sCompany’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.
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.
Create a strong link between the executive'sexecutive’s compensation and the Company'sCompany’s annual and long-term financial performance.
.
Include above-average elements of financial risk through performance-
basedperformance-based incentive compensation that offers an opportunity for above-
averageabove-average financial reward to the executives.
Fiscal Year 20022003 Compensation of Chief Executive Officer.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 2002,2003, the Committee has again decided to continue the Chief Executive Officer'sOfficer’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'sCompany’s pre-tax earnings for fiscal 20022003 over the pre-tax earnings for fiscal 2001.2002. The Compensation Committee'sCommittee’s decision to continue this basis for compensation in fiscal 20022003 reflects the belief of the Committee and Mr. Edenfield that the Chief Executive Officer'sOfficer’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'sCompany’s shares, all shareholders, including Mr. Edenfield, share the benefits.
As described below under "Split-Dollar“Split-Dollar Insurance Agreement,"” Mr. Edenfield'sEdenfield’s compensation package also includes a split-dollar life insurance policy, established in fiscal 2000.
Fiscal Year 20012002 Compensation of the Chief Executive Officer.Officer. The Chief Executive Officer'sOfficer’s cash compensation in fiscal year 2001,2002, both salary and bonus, was determined under the terms of the compensation arrangement described above. Accordingly, theThe Chief Executive Officer did not receivereceived a bonus of $266,350 under the bonus formula 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 the
Directors and Officers Stock Option Plan, 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.2002. The participation of the Chief Executive Officer and other executive officers of the Company in the 2001 Stock Option Plan is determined by the Compensation Committee, acting as members of the Special Stock Option Committee, based upon its authority to grant options under that Plan. The Committee did not grantDuring fiscal 2002, the Chief Executive Officer was granted stock options covering 120,000 Class A shares pursuant to the current executive officers during fiscal 2001 under thisStock Option Plan.
Split-Dollar Insurance Agreement.Agreement. During the early part of fiscal 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-beneficiary and Mr. Edenfield'sEdenfield’s designee is co-beneficiary. This "Split Dollar"“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.
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Other Executive Officers.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
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The 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'sLogility’s Board of Directors. The American Software Compensation Committee, however, does retain the authority to grant stock options to these officers under the Company'sCompany’s 2001 Stock Option Plan.)
An exception to this rule is Vincent J. Klinges, Chief Financial Officer of both American Software and Logility, whose compensation is reviewed by this Committee.
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 this regard, the Compensation Committee also consults with the Chief Executive Officer. Through its oversight and control of the 2001 Stock 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 reflectreflected this approach.
approach in fiscal 2002, and are being formulated for fiscal 2003.
Stock option grants 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 June 22, 2000,27, 2002, the Special Stock Option Committee, consisting of the members of the Compensation Committee, exercised its authority under the Directors and Officers2001 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 2002, as required by its Charter,2003, 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.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 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'sCompany’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 structured to take advantage of the tax deductibility provided for plans qualifying under the Act of 1993.
BY THE COMPENSATION COMMITTEE:
Thomas L. Newberry, Chairman
David H. Gambrell
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Audit Committee Report
The following is the Report of the Audit Committee of the Board of Directors of American Software, Inc. for the fiscal year ended April 30, 2002.
The Committee notes with regret the death during the fiscal year of its longstanding Member, and Member of the Board of Directors, Thomas R. Williams, Chairman
David H. Gambrell
14
AUDIT COMMITTEE REPORT
Jr. Mr. Williams has been replaced on the Board, and on this Committee, by vote of the Company’s Board of Directors.
The Board of Directors has adopted a written audit committee charter a copyfor the Audit Committee. The Audit Committee’s job is one of whichoversight as set forth in that charter. It is attached as Exhibit "A" hereto. Undernot the current charter, the
primary responsibilityduty of the Audit Committee is to overseeprepare the Company's
financial reporting process on behalfstatements of the BoardCompany, to plan or conduct audits, or to determine that the financial statements of the Company are complete and reportaccurate and are in accordance with generally accepted accounting principles. The Company’s management is responsible for preparing the Company’s financial statements and for maintaining internal controls. The independent auditors are responsible for auditing the financial statements and for expressing an opinion as to whether those audited financial statements fairly present the financial position, results of the Committee's activitiesoperations, and cash flows to the Board. Company in conformity with generally accepted accounting principles.
In fulfilling its responsibilities with respect to the fiscal year 20012002 audit, the Audit Committee: . Reviewed(1) reviewed and discussed the audited financial statements for the fiscal year ended April 30, 20012002 with Company management and KPMG LLP ("KPMG"(“KPMG”), the Company's independent auditors;
. Discussedauditors of the Company; (2) discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit; and . Received(3) 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 theirthe independence of KPMG from the Company.
Based on the Audit Committee'sCommittee’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 Corporation's Annual Report on Form 10-K for the fiscal year ended April 30, 20012002 for filing with the Securities and Exchange Commission.
The Securities and Exchange Commission andrules of the National Association of Securities Dealers have promulgated rules that(NASD) require audit committees to be composed of not less than three members who are "independent,"“independent,” as that term is defined in the rules. Three of the four Audit Committee members--Messrs.members—Messrs. Hogue, Jarvis and Williams--meetMiller—are believed to meet the definition of "independent"“independent” set forth in these rules.
According to NASD rules, a director who is a partner in or controlling shareholder or executive officer of any business organization to which the new rules.Company made, or from which the Company received, payments that exceed 5% of the business organization’s consolidated gross revenues or $200,000, whichever is greater, 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 has received from the Company
compensation for legal servicespayments in excess of the threshold amount set forth in the NASD's definition of "independent."“independent.” Accordingly, Mr. Gambrell ordinarily
wouldis not be considered as an "independent" director for this purpose.“independent” under the NASD rules. However, there is an exception to the independence requirement that allows one director, who is not "independent"independent and is not a current employee or an immediate family member of a current employee, to serve on the Audit Committee if the Board of Directors, under exceptional and limited circumstances, determines that membership on the Committee by the individual is required in the best interest of the Company and its shareholders and the Board 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'sGambrell’s membership on the Committee is required in the best interest of the Company and its shareholders because his significant past experience serving on thisthe Committee and acting as its Chairman will be beneficial to the Committee.other Committee members. Therefore, the Board believeshas concluded that Mr. Gambrell mayshould continue to serve on the Audit Committee pursuant to this exception and has so advised the NASD.
BY THE AUDIT COMMITTEE:
exception.
David H. Gambrell (Chairman)
Dennis Hogue
John J. Jarvis
James B. Miller, Jr.
15
AMENDMENT OF STOCK OPTION PLAN
General
On May 20, 2002, the Board of Directors approved, subject to shareholder approval, an amendment to the American Software, Inc. 2001 Stock Option Plan (the “Plan”) which would increase the number of Class A shares that may be subject to options granted under the Plan by 975,000 shares, from 2,000,000 shares to 2,975,000 shares.
As of June 30, 2002, 875 shares have been issued pursuant to the exercise of stock options and 1,934,912 shares were subject to outstanding options, leaving only 64,213 shares available for new options. If approved, the proposed amendment would increase the number of available shares under the Plan to 1,039,213 shares as of June 30, 2002.
Under the Plan, the Company may grant options to executive officers or other key employees of the Company or any subsidiary, advisors or consultants to the Company or any subsidiary, or members of the Board of Directors. 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 is determined by the particular committee that administers such grants. See “Administration,” below. Option grants to nonemployee directors can only be nonqualified stock options, the number of which is fixed by the Plan as follows: each nonemployee director who is newly elected or appointed subsequent to the date on which the Plan became effective is granted an option to purchase 5,000 Class A shares upon his or her election or appointment, and thereafter is 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 summary of the Plan is qualified in its entirety by reference of the full text of the Plan, which governs in the event of any conflict. Copies of the Plan are available form the Company upon written request, to the attention of Pat McManus, Investor Relations, 470 East Paces Ferry Road, Atlanta, Georgia 30305.
Purpose of Plan
The purpose of the 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.
Shares Subject to the Plan
Currently, the Class A shares that may be issued under the Plan cannot 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.
As of June 30, 2002, there were 64,213 Class A shares available for option grants under the Plan, and 1,934,912 Class A shares subject to outstanding options granted under the Plan.
The Board or the applicable stock option committee makes or provides for such adjustments in the maximum number of shares, in the number of shares covered by outstanding options granted under the Plan, in the option exercise price applicable to any such options or in the kind of shares covered under the Plan (including
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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 optionees that otherwise would result from any stock dividend, stock split, combination, 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 administer the Plan, depending on whether the option grant is Nonexempt or Exempt. The Stock Option Committee, consisting of James C. Edenfield and Thomas R. Williams
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L. Newberry, administer the Nonexempt Grants. The Special Stock Option Committee consisting of David H. Gambrell and Thomas L. Newberry, as the members of the Compensation Committee, administer the Exempt Grants. The Board of Directors as a whole administers the Plan with respect to options granted to nonemployee Directors. The Board appoints the members of these Committees, fills vacancies on these Committees and has the power to replace members of these Committees with other eligible persons at any time. The Committees are 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 330 persons as of June 30, 2002, including employees of Logility, Inc. and the Company’s other subsidiaries) are eligible to participate in the Plan.
Exercise Price
The exercise price per share of any option granted under the Plan is 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% of the fair market value 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 may be only nonqualified stock options, the exercise price per share is equal 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, 2002, the market value of Class A shares was $3.28 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 are 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 forth in the option grant agreement relating to the options being exercised. Upon the exercise of an option, the optionee 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 optionee 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 its own shares); or (iii) by delivering to the Company a properly executed exercise notice, together with irrevocable instructions to a broker to sell the option shares and promptly deliver to the Company the amount of sale or loan proceeds to pay the exercise price.
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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 an optionee, options may be exercised only by such optionee or his guardian or legal representative.
Death, Disability, Retirement or Termination of Employment
Following an optionee’s termination of employment, options held by such person pursuant to the Plan are generally exercisable only with respect to the portions thereof in which the optionee is then vested. Under the Plan, if termination of employment is other than voluntary or by death or disability, options remain exercisable according to the time specified in the related Option Grant Agreement to 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 optionee’s death or disability. If termination of employment is voluntary, the optionee may not exercise the option following the date of termination. Voluntary termination of director status does not affect the exercisability term.
Change of Control
Currently, option agreements relating to options granted under the Plan generally provide for exercise of the option prior to normal vesting in the event the Company (i) 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 generally in the election 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 prior 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 of 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, including situations where continuing directors approve the addition of new directors.
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 confers upon an optionee 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 an incentive stock option or a nonqualified stock option, with differing tax consequences to the optionee and to the Company for each type of option.
Nonqualified Options
The grant of a nonqualified option will not result in any immediate tax consequence to the Company or the optionee. 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
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ordinary income to the optionee, and the Company generally will 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 an optionee.
Upon the subsequent disposition of shares acquired upon the exercise of an option (“Option Stock”), an optionee may realize short-term or long-term capital gain or loss (assuming such shares of Option Stock constitute capital assets in an optionee’s hands), 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 optionee 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 optionee. (However, in calculating income for purposes of computing an individual optionee’s alternative minimum tax, the favorable tax treatment generally accorded incentive stock options is not applicable.)
When an optionee sells Option Stock received upon the exercise of his incentive stock options, any amount he receives 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 realized in the year of the disposition in an amount equal to the difference between the fair market value of the shares on the date the option was exercised 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 shares 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 an optionee on the exercise or sale of Option Stock.
Termination
The 2001 Option Plan will terminate on May 16, 2010, unless sooner terminated by the Board of Directors. In general, no amendment, discontinuance or termination of the Plan will have any effect on options outstanding thereunder at the time of termination.
Other Option Plans
The Company has two other stock option plans with outstanding stock options, in addition to the 2001 Stock Option Plan: the 1991 Employee Stock Option Plan and the Directors and Officers Stock Option Plan. These plans were terminated effective September 1, 2001 and replaced by the 2001 Stock Plan. Options outstanding under the other plans remain in effect, but no new options may be granted under these plans. As of June 30, 2002, there were outstanding under the other plans options to purchase the following numbers of shares:
| 1991 Employee Stock Option Plan: | 1,762,583 Shares | |
| Directors and Officers Stock Option Plan: | 1,076,969 Shares |
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.
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Board Recommendation
The Board of Directors believes it is in the best interest of the Company and its shareholders to approve the proposed amendment so that the Company will be able to continue to provide adequate incentives and to attract and retain the services of competent personnel. Therefore, the Board of Directors recommends to the shareholders the adoption of the proposed amendment to the 2001 Stock Option Plan, increasing the authorized shares under the Plan from 2,000,000 to 2,975,000 shares.
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 approval of the amendment. 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 this amendment, 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE PROPOSED AMENDMENT TO THE 2001 STOCK OPTION PLAN.
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STOCK PRICE PERFORMANCE GRAPH
The graph below reflects the cumulative stockholder return (assuming the
reinvestment of dividends) on the Company'sCompany’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, 1996 in the Company'sCompany’s Class A shares, the Nasdaq Stock Market--U.S.Market—U.S. Companies ("(“Nasdaq Composite Index"Index”) and in a published industry peer group index. The peer group is the Robertson Stephens Hi-Tech Index--SoftwareIndex—Software Group, which is an index of the stock price performance of 67116 software companies maintained by Robertson Stephens & Company, an investment banking firm.
[STOCK PRICE PERFORMANCE GRAPH]
INDEPENDENT AUDITORS
General
During the fiscal year ended April 30, 2001,2002, the Company engaged KPMG LLP ("KPMG"(“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 the quarters ended July 31, 2000,2001, October 31, 20002001 and January 31, 2001,2002, 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 accounting, tax and financial reporting. KPMG has acted as independent certified public accountants for the Company since 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 will attend the 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 Audit Committee will recommend to the Board of Directors, hasat the annual meeting of the Board of Directors, that KPMG be appointed KPMG to act as the Company'sCompany’s independent auditors for the fiscal year ending April 30, 2002.
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2003. The annual meeting of the Board of Directors will be held immediately before the Annual Meeting of Shareholders.
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Principal Accounting Firm Fees
The aggregatefollowing table presents fees for professional audit services rendered by KPMG for the audit of the Company’s annual consolidated financial statements for fiscal 2002, and fees billed for other services rendered by KPMG. All amounts include fees for services provided to Logility, Inc. and other subsidiaries of the Company for the fiscal year ended April 30,
2001 for services rendered are as follows:
by KPMG.
| Audit fees, including out-of-pocket expenses | $ | 284,000 | |
| Financial information system design and implementation | 0 | ||
| All other fees, including out-of-pocket expenses: | |||
| Audit-related fees(1) | $ | 126,000 | |
| Other non-audit services(2) | 283,000 | ||
| Total all other fees | $ | 409,000 | |
| (1) | Audit-related fees consisted principally of |
| (2) | Other |
The Audit Committee has considered the compatibility of the non-audit services performed by and fees paid to KPMG in fiscal 20012002 and the proposed non-audit services and proposed fees for fiscal 20022003 and determined that such services and fees wereare compatible with the independence of the auditors. During fiscal 2001,2002, KPMG did not utilize any leased personnel in connection with the audit.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 20022003 Annual Meeting of Shareholders must be forwarded in writing and received at the principal executive offices of the Company no later than April 4, 2002,2003, directed to the attention of the Secretary, for considerationto be considered for inclusion in the Company'sCompany’s proxy statement for the 20022003 Annual Meeting of Shareholders. Any such proposals must comply in all respects with the rules and regulations of the Securities and Exchange Commission.
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 20012002 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.
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A COPY OF THE COMPANY'SCOMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 30, 2001,2002, 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 12, 2001,2002, 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, 2001
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EXHIBIT "A"
AMERICAN SOFTWARE, INC.
AUDIT COMMITTEE CHARTER
I. Organization.
There shall be an Audit Committee (the "Committee") selected by the Board of
Directors (the "Board") as soon as practicable, which shall be composed of not
less than three members of the Board, each of whom is independent of Company
management. Committee members shall be considered independent if they have no
relationship that may interfere with the exercise of their independence from
management and the Company. All Committee members, either at the time of their
appointment to the Committee or within a reasonable time thereafter, must be
able to read and understand fundamental financial statements, including the
Company's balance sheet, income statement, and cash flow statement. At least
one Committee member must have past employment experience in finance 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 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. In discharging its oversight role,
the Committee is empowered to investigate any matter brought to its attention,
with full access to all books, records, facilities, and personnel of the
Company and the power to retain outside counsel or other experts for this
purpose.
III. Responsibilities and Processes.
The primary responsibility of the Audit Committee is to oversee the
Company's financial reporting process on behalf of the Board and report the
results of the Committee's activities to the 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 order to best react to changing conditions and
circumstances. The Committee should take the appropriate 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 Audit Committee
in carrying out its oversight responsibilities. These processes are a guide
and may be supplemented by the Committee or the Board as it deems appropriate.
(1) The Audit Committee shall recommend annually to the Board of Directors
the accounting firm to be selected by the Board to act as independent
auditors of the Company, who shall be accountable to the Board and the
Committee as representatives of the Company'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 staffing and compensation.
Also, the Committee shall discuss with management, the internal
accountants, and the independent
A-1
auditors the adequacy and effectiveness of the 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 Committee shall from time to time review the periodic financial
statements and other financial reports of the Company with management,
and with the independent auditors. The Chair of the Committee may
represent the entire Committee for the purposes of any such review. The
Committee shall also discuss matters required to be communicated to the
Company by the independent 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 the annual report to shareholders if distributed prior
to the filing of Form 10-K), including their judgment about the
quality, not just acceptability, of accounting principles, the
reasonableness of significant judgments, and the clarity of the
disclosures in the financial statements. Also, the Committee shall
discuss the results of the annual audit and any other matters required
to be communicated to the Committee by the independent auditors under
generally accepted auditing standards.
A-2
2002
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FOLD AND DETACH HERE - -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
AMERICAN SOFTWARE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
AUGUST 22, 200119, 2002 AT 3:1:30 P.M.
AT THE OFFICES OF THE COMPANY
470 EAST PACES FERRY ROAD, N.E.
NE
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 22, 200119, 2002 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"“FOR” EACH OF THE FOLLOWING PROPOSAL:
PROPOSALS:
Election of Class A Directors.Directors. Three Class A Directors to be elected.
Nominees: Dennis Hogue [_]
| Nominees: | Dennis Hogue | ¨FOR | ¨WITHHOLD AUTHORITY | |||
| John J. Jarvis | ¨FOR | ¨WITHHOLD AUTHORITY | ||||
| James B. Miller, Jr. | ¨FOR | ¨WITHHOLD AUTHORITY |
Amendment to 2001 Employee Stock Option Plan. To increase the number of shares that may be subject to options under that Plan from 2,000,000 shares to 2,975,000 shares.
¨ FOR [_] WITHHOLD AUTHORITY
John J. Jarvis [_] FOR [_] WITHHOLD AUTHORITY
Thomas R. Williams [_] FOR [_] WITHHOLD AUTHORITY
FOLD AND DETACH HERE - -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
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 PROPOSAL.PROPOSALS. 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: ____________________, 2001
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 representativerepresentive capacity should please give their full titles.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED EVELOPE.
Dated:, 2002
Signature
Signature if held jointly