-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OSqF2SS1bAyulIhG6uIDEervFI9E9fYy5e2zLIMn0XYOpvI+uZkWWzXlJA/Fdn/M Xgxslmq2Jgb/Bk7ntaeMmw== 0000931763-96-000638.txt : 19960906 0000931763-96-000638.hdr.sgml : 19960906 ACCESSION NUMBER: 0000931763-96-000638 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960925 FILED AS OF DATE: 19960904 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN SOFTWARE INC CENTRAL INDEX KEY: 0000713425 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 581098795 STATE OF INCORPORATION: GA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12456 FILM NUMBER: 96625634 BUSINESS ADDRESS: STREET 1: 470 E PACES FERRY RD NE CITY: ATLANTA STATE: GA ZIP: 30305 BUSINESS PHONE: 4042614381 MAIL ADDRESS: STREET 1: 470 EAST PACES FERRY ROAD NE CITY: ATLANTA STATE: GA ZIP: 30305 DEF 14A 1 DEFINITIVE NOTICE & PROXY SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 AMERICAN SOFTWARE, INC. ----------------------------------------------------- (Name of Registrant as Specified In Its Charter) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a- 6(i)(3). [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange ActRule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: Notes: 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 Hotel Nikko Atlanta, 3300 Peachtree Road, N.E., Atlanta, Georgia, on Wednesday, September 25, 1996 at 4:00 p.m. for the following purposes: 1. To elect four directors of the Company, two of whom will be elected by the holders of Class A Common Shares, and two 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 1991 Employee Stock Option Plan to increase the base number of Class A Common Shares that may be subject to options granted under that Plan from 2,150,000 Shares to 2,400,000 Shares. 3. To transact such other business as may properly come before the meeting. Only shareholders of the Company of record at the close of business on August 12, 1996 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 September 4, 1996 IMPORTANT We hope you will attend the shareholders' meeting. In order that there may be a proper representation at the meeting, each shareholder is requested to send in his or her proxy in the enclosed envelope, which requires no postage if mailed in the United States. Attention by shareholders to this request will reduce the Company's expense in soliciting proxies. PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS OF AMERICAN SOFTWARE, INC. ---------------- TO BE HELD AT THE HOTEL NIKKO ATLANTA 3300 PEACHTREE ROAD, N.E. ATLANTA, GEORGIA ON SEPTEMBER 25, 1996 This Proxy Statement is furnished to Class A shareholders by the Board of Directors of AMERICAN SOFTWARE, INC., 470 East Paces Ferry Road, N.E., Atlanta, Georgia 30305 (the "Company"), in connection with the solicitation by the Board of Directors of proxies for use at the Annual Meeting of Shareholders on Wednesday, September 25, 1996, at 4:00 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 September 4, 1996. 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 -- Election of David H. Gambrell and Thomas R. Williams as Class A Directors. FOR -- Adoption of proposed amendment to the Company's 1991 Employee Stock Option Plan to increase the base number of Class A Common Shares that may be subject to options granted under that Plan from 2,150,000 Shares to 2,400,000 Shares. In addition, a properly executed and returned proxy card gives the authority to vote in accordance with the proxy-holders' best judgment on such other business as may properly come before the meeting. 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 August 12, 1996 as the record date for determining the holders of common stock entitled to notice of and to vote at the meeting. On August 12, 1996 the Company had outstanding and entitled to vote a total of 17,491,766 Class A Common Shares ("Class A shares") and 4,819,289 Class B Common Shares ("Class B shares"). Other than in the election of directors, in which holders of Class A shares and Class B shares vote as separate classes, each outstanding Class A share is entitled to one-tenth vote per share and each outstanding Class B share is entitled to one vote per share on all matters to be brought before the meeting. The Class A directors and the Class B directors will be elected by a majority of the votes cast by the respective classes. The increase in the number of shares authorized under the 1991 Employee 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 1 approved or ratified by a majority vote of the outstanding shares (adjusted as described above). A one-third quorum of 5,830,589 Class A shares and of 1,606,430 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. SECURITY OWNERSHIP Five Percent Shareholders. The only persons known by the Company to own beneficially more than 5% of the outstanding shares of common stock of either class of the Company are those set forth below. Unless otherwise noted, this information is as of July 31, 1996.
TITLE SHARES OF NAME AND ADDRESS OF BENEFICIALLY PERCENT CLASS BENEFICIAL OWNER OWNED OF CLASS(1) ----- ------------------------------- ------------ -------- Class A Shares James C. Edenfield 40,125(2)(3) 0.2%(4)(5) c/o American Software, Inc. 470 East Paces Ferry Road, N.E. Atlanta, Georgia 30305 Thomas L. Newberry 30,125(2)(6) 0.2%(4)(5) c/o American Software, Inc. 470 East Paces Ferry Road, N.E. Atlanta, Georgia 30305 State of Wisconsin Investment 1,630,000 9.0% Board P. O. Box 7842 Madison, Wisconsin 53707 Class B Shares James C. Edenfield 2,583,352 53.6% Thomas L. Newberry 2,235,937 46.4%
- -------- (1) Based on a total of 17,490,516 Class A shares outstanding and 589,340 Class A shares that may be purchased under options exercisable within 60 days, for an aggregate of 18,079,856 Class A shares deemed outstanding. (2) Does not include the Class B shares beneficially owned by Mr. Edenfield and Dr. Newberry, which shares are convertible into Class A shares on a share for share basis. (3) Represents shares that may be acquired upon the exercise of stock options exercisable within 60 days. (4) For all matters except the election of directors, which involves class voting, Messrs. Edenfield and Newberry together beneficially own approximately 73% of the combined, weighted voting rights of the outstanding Class A and Class B shares. See "Record Date and Voting of Securities," above. (5) If their respective Class B shares were converted into Class A shares, Mr. Edenfield would beneficially own 11.5% of the outstanding Class A shares and Dr. Newberry would beneficially own 9.9% of the outstanding Class A shares. (6) Includes 28,000 shares that may be acquired upon the exercise of stock options exercisable within 60 days. 2 Directors and Executive Officers. The following table shows the shares of common stock of the Company, both Class A and Class B, beneficially owned by each nominee for director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group as of July 31, 1996. The statements as to securities beneficially owned are, in each instance, based upon information provided by the person(s) concerned.
SHARES PERCENT NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS OR DESCRIPTION OF GROUP -------------------------- ---------------------- CLASS A CLASS B CLASS A(1) CLASS B - ------------------------ --------- ---------- ---------- ------- DIRECTORS: James C. Edenfield............ 40,125(2)(3) 2,583,352 0.2%(4)(5) 53.6% Thomas L. Newberry............ 30,125(2)(6) 2,235,937 0.2%(4)(5) 46.4% David H. Gambrell............. 25,618(7) -0- 0.1% -- Thomas R. Williams............ 18,400(7) -0- 0.1% -- NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS: J. Michael Edenfield.......... 37,983(8) -0- 0.2% -- Paul DiBono, Jr............... 16,000(9) -0- 0.1% -- All directors and executive officers as a group (9 per- sons)........................ 181,469(2)(10) 4,819,289 1.1% 100%
- -------- (1) Based on a total of 17,490,516 Class A shares outstanding and 589,340 Class A shares that may be purchased under options exercisable within 60 days, for an aggregate of 18,079,856 Class A shares deemed outstanding. (2) Does not include the Class B shares beneficially owned by Mr. Edenfield and Dr. Newberry, which shares are convertible into Class A shares on a share for share basis. (3) Represents shares that may be acquired upon the exercise of stock options exercisable within 60 days. (4) For all matters except the election of directors, which involves class voting, Messrs. Edenfield and Newberry together beneficially own approximately 73% of the combined, weighted voting rights of the outstanding Class A and Class B shares. See "Record Date and Voting of Securities," above. (5) If their respective Class B shares were converted into Class A shares, Mr. Edenfield would beneficially own 11.5% of the outstanding Class A shares and Dr. Newberry would beneficially own 9.9% of the outstanding Class A shares. (6) Includes 28,000 shares that may be acquired upon the exercise of stock options exercisable within 60 days. (7) Includes 16,000 shares subject to options exercisable within 60 days. (8) Includes 35,453 shares subject to options exercisable within 60 days. (9) Includes 15,000 shares subject to options exercisable within 60 days. (10) Includes 163,796 shares subject to options exercisable within 60 days. 3 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires the Company's executive officers and directors, and persons who own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the "Commission"). Officers, directors and holders of more than 10% of the Class A shares are required by regulations promulgated by the Commission to furnish the Company with copies of all Section 16(a) forms they file. Based upon a review by the Company of filings made under Section 16(a) of the Exchange Act, not all of the reports required to be filed during fiscal 1996 were filed on a timely basis. The Company is aware of the following Form 5 reports that were filed with the Commission by directors of the Company after their respective due dates: James C. Edenfield (single report, which reported gift of stock), Thomas L. Newberry (single report, which reported two stock option grants received and one gift of stock), David H. Gambrell (single report, which reported two stock option grants received) and Thomas R. Williams (single report, which reported two stock option grants received). All of such reports have been filed at this time. Based upon its review of the copies of filings received by it, the Company believes that since May 1, 1995 all other Section 16(a) filing requirements applicable to its directors, officers and greater than 10% beneficial owners were complied with. ELECTION OF DIRECTORS The directors of the Company are elected annually to hold office until the election and qualification of their successors at the next Annual Meeting. Of the four directors to be elected, two are to be elected by the holders of the outstanding Class A shares and two are to be elected by the holders of the outstanding Class B shares. The persons named in the enclosed proxy card intend to vote Class A shares for the election of David H. Gambrell and Thomas R. Williams, the Class A director nominees. In the event either 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. 4 It is anticipated that Messrs. Edenfield and Newberry, who together own all of the Class B shares, will vote their Class B shares in favor of the election of Messrs. Edenfield and Newberry as Class B directors. Thus, it is expected that Messrs. Edenfield and Newberry will continue to serve as the Class B directors.
YEAR FIRST ELECTED NAME OF NOMINEE AGE PRICIPAL OCCUPATION DIRECTORSHIPS DIRECTOR --------------- --- --------------------------------- -------- Partner, Gambrell & Stolz, L.L.P., David H. Gambrell (1) 66 Attorneys, Atlanta, GA. 1983 Thomas R. Williams(2) 67 President, The Wales Group, Inc.; 1989 director of BellSouth Corporation, Georgia Power Company, National Life Insurance Company of Vermont, ConAgra, Inc. and AppleSouth, Inc.; a trustee of The Fidelity Group of Mutual Funds; and retired director, Equifax, Inc. and National Service Industries, Inc. Chairman of the Board of American Thomas L. Newberry(3) 63 Software, Inc. 1971 James C. Edenfield (4) 61 President, Chief Executive Officer and 1971 Treasurer of American Software, Inc. and American Software USA, Inc.
- -------- (1) Mr. Gambrell has been a practicing attorney since 1952, and is a partner in the firm of Gambrell & Stolz, L.L.P., counsel to the Company. He served as a member of the United States Senate from the State of Georgia in 1971 and 1972. Mr. Gambrell holds a Bachelor of Science degree from Davidson College and a J.D. from the Harvard Law School. (2) Mr. Williams is currently the President of The Wales Group, Inc., a closely held corporation engaged in investments and venture capital. He has held such position since 1987. In addition to the above directorships, Mr. Williams was a director of Southern Bell from 1980 to 1983 and is a former Chairman of the Board of First Wachovia Corporation, First National Bank of Atlanta and First Atlanta Corporation. He holds a Bachelor of Science degree in Industrial Engineering from the Georgia Institute of Technology and a Master of Science degree in Industrial Management from the Massachusetts Institute of Technology. (3) 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., an Atlanta-based applications software development and sales company, 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. (4) Mr. Edenfield is a co-founder of the Company and has served as Chief Executive Officer since November 1989, and as Co-Chief Executive Officer for more than five years 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. He holds a Bachelor of Industrial Engineering degree from the Georgia Institute of Technology. From May 1, 1995 to April 30, 1996, the Board of Directors held four formal meetings and acted by unanimous written consent on five occasions. 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. 5 The Board of Directors has an Audit Committee, which consists of Messrs. Gambrell (Chairman) and Williams. The functions of the Audit Committee include recommending independent public accountants to the Company, reviewing the scope and results of the independent public accountants' audit, and monitoring the adequacy of the Company's accounting, financial and operating controls. The Audit Committee held one meeting during fiscal 1996. The Company has a 1991 Employee Stock Option Plan Committee, consisting of Messrs. Edenfield and Newberry. During fiscal 1996, this Committee met or acted by written consent 23 times. The members of this Committee are not eligible to participate in the Plan which they are administering. The functions of this Committee are to grant options and establish the terms of those options, as well as to construe and interpret the Plan and to adopt rules in connection therewith. The Company has a Compensation Committee, consisting of Messrs. Williams (Chairman) and Gambrell, described below in "Certain Information Regarding Executive Officers and Directors--Report on Executive Compensation." The Compensation Committee met or acted by written consent on eight occasions during fiscal 1996, including three actions relating solely to stock option grants. The Board has no nominating committee, or any other committee performing similar functions. THE BOARD OF DIRECTORS RECOMMENDS THAT CLASS A SHAREHOLDERS VOTE "FOR" MESSRS. GAMBRELL AND WILLIAMS. 6 CERTAIN INFORMATION REGARDING EXECUTIVE OFFICERS AND DIRECTORS EXECUTIVE COMPENSATION The following table provides certain summary information concerning compensation paid or accrued by the Company to or on behalf of the Company's Chief Executive Officer and the two other executive officers of the Company (determined as of April 30, 1996) whose annual compensation exceeded $100,000 during fiscal 1996 (referred to herein as the "named executive officers") for the fiscal years ended April 30, 1994, 1995 and 1996: SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS/NUMBER ALL ANNUAL BONUS OR OF OPTION OTHER NAME AND PRINCIPAL FISCAL SALARY OTHER ANNUAL SHARES COMPENSATION POSITION YEAR ($) COMPENSATION($) GRANTED ($)(1)(2) ------------------ ------ ------- --------------- ------------- ------------ James C. Edenfield 1996 434,500 -0- 18,000 -0- President and Chief 1995 434,500 -0- 48,000 -0- Executive Officer(3) 1994 434,500 -0- -0- 44 J. Michael Edenfield 1996 240,000 -0- 16,000 -0- Executive Vice President/ 1995 240,000 18,850(4) 106,062 -0- Chief Operating Officer(3) 1994 51,600 237,168(4)(5) 12,000 449 Paul DiBono, Jr. 1996 126,250 -0- 10,000 -0- Senior Vice President 1995 117,500 -0- 60,000 -0- 1994 113,333 -0- 10,000 176
- -------- (1) This column reflects Company contributions for the accounts of these individuals under the Company's Profit Sharing Plan. (2) The aggregate amount of perquisites and other personal benefits,securities or property, given to each named executive officer, valued on the basis of aggregate incremental cost to the Company, was less than either $50,000 or 10% of the total annual salary and bonus for that executive officer during each of these years. (3) James C. Edenfield is the father of J. Michael Edenfield. (4) These amounts consist of sales commissions earned while J. Michael Edenfield was in his former position of Senior Vice President, Sales and Marketing, prior to his promotion to Executive Vice President/Chief Operating Officer; the amounts shown for fiscal 1995 were earned in fiscal 1994. (5) J. Michael Edenfield became an executive officer of the Company in fiscal 1994. STOCK OPTION PLANS The Company has granted stock options pursuant to four stock option plans. Two of these plans, the Incentive Stock Option Plan (the "Incentive Plan") and the Nonqualified Stock Option Plan (the "Nonqualified Plan"), were terminated effective August 22, 1991 (the "Terminated Plans"), at which time the shareholders of the Company approved two new option plans: The 1991 Employee Stock Option Plan (the "Employee Option Plan") and the Directors and Officers Stock Option Plan (the "D&O Option 7 Plan"). Options outstanding under the Terminated Plans remain in effect, but no new options may be granted under those plans. The Employee Option Plan is proposed to be amended and is described in "Amendment of Employee Option Plan" below. The following sections describe the other three stock option plans. Incentive Stock Option Plan. On January 13, 1983 the Company adopted and the shareholders approved the Incentive Plan. The Incentive Plan was designed to qualify as an "incentive stock option plan" under Section 422 of the Internal Revenue Code of 1986 (the "Code"). As incentive stock options, options granted under the Incentive Plan are subject to substantially the same terms as incentive stock options that may be granted under the Employee Plan and the D&O Plan. As of April 30, 1996, there were outstanding under the Incentive Plan options to purchase 6,513 shares of Class A stock. Nonqualified Stock Option Plan. Effective June 3, 1986 the Company adopted the Nonqualified Plan. Options granted under the Nonqualified Plan do not receive the favorable tax treatment afforded to incentive stock options. Options granted under this plan were not, however, subject to restrictions on exercise price and other restrictions applicable to incentive stock options. Other terms of these options are, in general, substantially the same as incentive stock options granted by the Company. As of April 30, 1996, there were outstanding under the Nonqualified Plan options to purchase 46,063 shares of Class A stock. The D&O Option Plan. The aggregate number of Class A shares subject to options that may be granted under the D&O Option Plan is 900,000 Shares. As of April 30, 1996, there were outstanding under the D&O Option Plan options to purchase 435,937 shares. Under the D&O Option Plan, the Compensation Committee may grant (i) an incentive stock option, (ii) a nonqualified option or (iii) an incentive stock option and a nonqualified option at the same time. All incentive options will have terms that will comply with the provisions of Section 422 of the Code. The aggregate fair market value, determined at the time of grant, of the Shares with respect to which one or more incentive stock options are exercisable for the first time by any individual optionee during any calendar year under the D&O Option Plan (and under the Incentive Stock Option Plan) may not exceed $100,000. The term of each option will be set at the time of grant by the Committee granting the option, but no option may have a term in excess of ten years (five years in the case of incentive options granted to holders of 10% or more of the Class A stock ("10% Stockholders")). Under the D&O Option Plan, options may be granted to Directors and officers of the Company or its subsidiaries. See "Certain Information Regarding Executive Officers and Directors--Director Compensation" for a description of the formula by which non-employee Directors automatically receive options under the D&O Option Plan on a semi-annual basis. The option price per Class A share is fixed by the applicable Committee in granting the option, but for incentive stock options will not be less than 100% of the fair market value of a Class A share at the time the option is granted (110% for options granted to a 10% Stockholder). Options will be exercisable in such manner, at such time or times (including any installments) and subject to such terms, conditions or limitations as are fixed by the applicable Committee, in its sole discretion, when the options are granted. 8 No option granted under any of the stock option plans will be transferable by the optionee otherwise than by will, by the laws of descent and distribution or by a qualified domestic relations order. During an optionee's lifetime, an option under any of the stock option plans may only be exercised by him or her or his or her guardian or legal representative. Stock Option Committees. Prior to termination of the Incentive Plan and the Nonqualified Plan on August 22, 1991, these Plans were administered by the Stock Option Committee, consisting of Mr. Edenfield and Dr. Newberry. As discussed in "Amendment of Employee Option Plan--Administration," Messrs. Edenfield and Newberry also comprise the Employee Option Plan Committee. The D&O Option Plan is administered by the Compensation Committee, consisting of Messrs. Gambrell and Williams. The members of these Committees are not eligible to participate in the Plan which they are administering, except pursuant to the formula option grant program for non-employee directors under the D&O Option Plan. The Compensation Committee and the Employee Stock Option Committee consist of "disinterested persons" as defined in Rule 16b-3 under the Exchange Act. 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 their respective Plans and to adopt rules in connection therewith. STOCK OPTION GRANTS The following table sets forth information with respect to options granted during fiscal 1996 under the D&O Option Plan to each of the named executive officers who received option grants under that Plan. No options were granted to such executive officers during fiscal 1996 under the Employee Option Plan. OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS -------------------------------------------------------- POTENTIAL REALIZED PERCENT OF VALUE AT ASSUMED TOTAL ANNUAL RATES OF MARKET VALUE AT OPTIONS STOCK PRICE END OF 10 YEARS GRANTED TO FAIR MARKET APPRECIATION FOR ASSUMING 5%/10% NUMBER OF EMPLOYEES EXERCISE OR VALUE ON OPTION TERM (2) PER ANNUM OPTIONS IN FISCAL BASE PRICE EXPIRATION DATE OF ------------------ COMPOUNDED NAME GRANTED(1) 1996 (PER SHARE) DATE GRANT 5% 10% INCREASE - ---- ---------- ---------- ----------- ---------- ----------- ------------------ --------------- --- James C. Edenfield...... 18,000 2% $4.02 02/20/2006 $4.02 $45,540 / $115,380 $6.55 / $10.43 J. Michael Edenfield.... 16,000 2% $4.02 02/20/2006 $4.02 $40,480 / $102,560 $6.55 / $10.43 Paul DiBono, Jr......... 10,000 1% $4.02 02/20/2006 $4.02 $25,300 / $ 64,100 $6.55 / $10.43
- -------- (1) Such options may not be exercised earlier than one year after the date of grant. Options vest ratably over a period of four years. (2) These amounts represent certain assumed rates of appreciation only. Actual gains, if any, on stock option exercises are dependent on the future performance of the Company's Class A shares and overall market conditions. The amounts reflected in this table may not necessarily be achieved. 9 STOCK OPTION EXERCISES AND OUTSTANDING OPTIONS The following table contains information, with respect to the named executive officers, regarding stock options outstanding as of April 30, 1996. No stock options were exercised by these executive officers during fiscal 1996.
NUMBER OF VALUE OF UNEXERCISED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT 04/30/96 AT 04/30/96 EXERCISABLE/ EXERCISABLE/ NAME UNEXERCISABLE UNEXERCISABLE(1) ---- ------------------- -------------------- James C. Edenfield..................... 40,125 / 54,000 $90,671 / $115,639 J. Michael Edenfield................... 35,453 / 95,547 $99,983 / $242,504 Paul DiBono, Jr........................ 15,000 / 55,000 $41,250 / $138,594
- -------- (1) The market price of Class A shares on April 30, 1996 was $5.50 per share. 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 between him and the Company on January 17, 1983. This contract provided for an annual base salary of $434,500, payable monthly, plus expenses and normal employee fringe benefits. In addition, the contract provided for an annual bonus of 5% of the increase of each fiscal year's pre-tax earnings over the pre-tax earnings of the preceding fiscal year. Although this contract expired at the end of fiscal 1995, the Board of Directors, after consulting with the Compensation Committee, determined that these contract terms would continue through fiscal 1996 while the Compensation Committee and Mr. Edenfield met to establish a new employment contract and compensation terms. Accordingly, during fiscal 1996, Mr. Edenfield's salary remained at $434,500. He received no bonus under the bonus formula. As discussed below under "Report on Executive Compensation", the Compensation Committee is continuing to work toward a new employment contract, which is expected to be finalized during fiscal 1997. Meanwhile, Mr. Edenfield continues to be compensated on the same basis as applied under his previous employment contract. Pursuant to written plans, J. Michael Edenfield and Paul DiBono had the potential to receive certain cash bonuses, stock options and other compensation, the amounts of which were determined based upon fiscal 1996 performance standards. During fiscal 1996, neither of these individuals received bonuses under their respective bonus plans. For fiscal 1997, the bonus plans for these officers will be unique, with 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. CERTAIN TRANSACTIONS The Company leases one of its office facilities from a partnership that is owned entirely by Messrs. Edenfield and Newberry under a lease expiring December 31, 1996. The Company incurred expenses of approximately $291,000 and $301,000 in fiscal 1995 and 1996, respectively, pursuant to this lease. The current rental rate is $17.06 per square foot. This rate is subject to annual cost of living adjustments. Management believes that the terms of the lease are fair to the Company. It is anticipated that prior to December 31, 1996 Messrs. Edenfield and Newberry will meet with the independent members of the Board of Directors to determine whether the Company will continue to lease that building and, if so, on what terms. 10 DIRECTOR COMPENSATION During fiscal 1996, the Company compensated Dr. Newberry, the Chairman of the Board, at the rate of $18,000 per annum, and other Directors who are not employed by the Company at the rate of $12,000 per annum, plus $600 for each half-day or $1,200 for each full day meeting of the Board of Directors or any committee of the Board that they attended. Directors are eligible to receive stock option grants under the Company's D&O Option Plan, adopted in 1991. Under the terms of that Plan, Directors who are not employed by the Company automatically receive stock option grants of 5,000 shares each, effective at six-month intervals, on each October 31 and April 30, with exercise prices equal to the market price on those respective dates. 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. Under this program, Messrs. Gambrell, Newberry and Williams each received options to purchase an aggregate of 10,000 shares in fiscal 1996. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Messrs. Gambrell and Williams have been selected by the Board of Directors to serve on the Compensation Committee. Mr. Gambrell and James R. McGuone, Secretary of the Company, are partners in the firm of Gambrell & Stolz, L.L.P., general counsel to the Company. Legal fees in the amount of $476,578 were paid by the Company to that firm during calendar year 1995 for legal services rendered as general counsel to the Company, in addition to $18,000 in Director fees paid during that year for Mr. Gambrell's serving as a Director and as a member of Board Committees. REPORT ON EXECUTIVE COMPENSATION The following is the report of the Compensation Committee of the Board of Directors of American Software, Inc. for the fiscal year ended April 30, 1996. Meetings. The Compensation Committee has met four times formally and has conferred informally a number of times during fiscal year 1996, among the members of the Committee, as well as with management and the Board of Directors, concerning its authority and responsibilities. Compensation of Chief Executive Officer. The Compensation Committee has the responsibility and authority to review and establish compensation for the Chief Executive Officer of the Company, including his participation in the Directors and Officers Stock Option Plan and the re-evaluation and negotiation of his employment contract. The current employment contract of the Chief Executive Officer, which was in effect since 1983, expired on April 30, 1995. Since that time, the Compensation Committee has recommended, and the Board has approved, that the Chief Executive Officer's compensation package be maintained at the pre-fiscal 1996 level. The members of the Compensation Committee have met with the Chief Executive Officer, who has indicated a preference that his future compensation be premised upon more performance-based and deferred compensation elements than is presently the case. The Committee expects to finalize its compensation proposal with the Chief Executive Officer during the current fiscal year. The continued participation of the Chief Executive Officer in the Directors and Officers Stock Option Plan during fiscal 1997 will be determined by the Compensation Committee based upon its authority to grant options under that Plan. 11 As stated above, the Chief Executive Officer's cash compensation in fiscal year 1996, both salary and bonus, was determined under the terms of his prior employment contract. Under the terms of that contract, the Chief Executive Officer received no bonus in fiscal year 1996, because the bonus is calculated as a percentage of the increase in pre-tax earnings from the previous year, and there was no such increase. The Chief Executive Officer received a grant of a stock option on February 20, 1996, consisting of 18,000 shares exercisable at the then-current market price, or $4.02, with a term of ten years. This option was granted under the Directors and Officers Stock Option Plan, administered by the Compensation Committee. The terms and size of this option, which was a nonqualified stock option, were based upon the Committee's evaluation of the performance of the Chief Executive Officer, the over-all extent of his compensation and incentive package and the terms and size of options granted to other officers. Other Executive Officers. The Compensation Committee has responsibility for the review of compensation of other executive officers of the Company, including certain executive officers of operating subsidiaries. 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 that regard, the Compensation Committee consults with the Chief Executive Officer. Through its oversight and control of the Directors and Officers 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/or 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. The bonus plans for each of the most highly compensated executive officers (other than the Chief Executive Officer) reflect this approach. Stock option grants under the Directors and Officers Stock Option Plan are utilized as both a motivating and a compensating factor. Because the performance of executive officers can substantially influence overall Company performance, in several instances 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 various occasions during fiscal 1996, the Compensation Committee exercised its authority under the Directors and Officers Stock Option Plan to grant options to various executive officers of the Company, including the Chief Executive Officer, as discussed above. In each instance, the terms 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-term objectives and to maintain their overall compensation at competitive levels. During fiscal 1997, 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. The 12 Compensation Committee will continue its investigation of compensation arrangements in peer group companies as guides for future consultations with the Board of Directors and the Chief Executive Officer. Limitations on Deductibility of Executive Compensation. Since 1994, the Omnibus Budget Reconciliation Act of 1993 has limited the deductibility of executive compensation paid by publicly held corporations to $1 million per employee, subject to various exceptions, including compensation based on performance goals. The deductibility limitation does not apply to compensation based on performance goals where (1) the performance goals are established by a compensation committee which is comprised solely of two or more outside directors; (2) the material terms are disclosed to shareholders and approved by majority vote of the stockholders eligible to vote thereon before the compensation is paid; and (3) before the compensation is paid, the compensation committee certifies that the performance goals and other material terms have been satisfied. The Company has not adopted a policy with respect to deductibility of compensation since no executive officer currently receives, or has previously received, taxable income in excess of $1 million per year from the Company. The Compensation Committee will monitor compensation levels closely, particularly in areas of incentive compensation. If the Company's performance continues to improve, incentive compensation also can be expected to increase and it may become necessary to adopt a long-term incentive compensation plan in compliance with the foregoing criteria. BY THE COMPENSATION COMMITTEE: Thomas R. Williams, Chairman David H. Gambrell AMENDMENT OF EMPLOYEE OPTION PLAN GENERAL On June 28, 1996, the Board of Directors approved, subject to shareholder approval, an amendment to the Employee Option Plan which would increase the base number of Class A shares that may be subject to options granted under the Employee Option Plan by 250,000 shares, from 2,150,000 shares to 2,400,000 shares. The Employee Option Plan currently provides that only 2,853,709 Class A shares may be issued pursuant to options under the Employee Option Plan, consisting of the 2,150,000 base number of authorized shares, plus 703,709 shares transferred from prior stock option plans due to lapsed options. Of this amount, as of July 31, 1996, 71,799 of these shares have been purchased pursuant to the exercise of stock options and 2,226,683 shares were subject to outstanding options, leaving only 555,227 shares available for new options. The proposed amendment would increase the number of available shares under the Employee Option Plan to 805,227 shares as of July 31, 1996. The Board of Directors believes that there currently is an adequate number of shares available for option grants under the D&O Option Plan (430,063 shares available as of July 31, 1996). The following summary of the Employee Option Plan is qualified in its entirety by reference to the full text of the Employee Option Plan, which governs in the event of any conflict. Copies of the Plan are available from the Company, upon written request, to the attention of Pat McManus, Investor Relations, 470 East Paces Ferry Road, Atlanta, Georgia 30305. 13 PURPOSE OF PLAN The purpose of the Employee Option Plan is to promote the interests of the Company by providing eligible employees with incentives to become owners of the Company's Class A shares and thereby enable them to benefit directly from the Company's growth, development and financial success. SHARES SUBJECT TO THE PLAN As of July 31, 1996, there were 555,227 Class A shares available for option grants under the Employee Option Plan and 2,226,683 Class A shares subject to outstanding options granted under the Employee Option Plan. The terms of the Plan provide that if an option expires or is canceled without having been fully exercised, the shares subject to the unexercised portion of such option will be available for future grant. ADMINISTRATION The Employee Option Plan is administered by a committee of the Board of Directors that consists of Messrs. Edenfield and Newberry. The members of the Committee are not (and have not been for at least one year prior to joining that Committee) eligible to receive options under the Plan. The Board appoints the members of the Committee, fills vacancies on the Committee and has the power to replace members of the Committee with other eligible persons at any time. The Committee is authorized to grant options under the Plan, to determine the terms and conditions of such options and to otherwise administer the Plan. ELIGIBILITY All employees (approximately 600 persons as of July 31, 1996), other than executive officers and Directors of the Company, are eligible to participate in the Employee Option Plan. EXERCISE PRICE The exercise price per share of any option granted under the Plan is set in each case by the Committee. For incentive stock options granted under the Plan, the exercise price must be at least 100% of the fair market value of Class A stock 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 of Common Stock on the date upon which the option is granted. As of the close of business on July 31, 1996, the market value of Class A stock was $4.00 per share. TERMS OF OPTIONS Options granted pursuant to the Plan generally expire on the tenth anniversary of the respective option's grant date. EXERCISE OF OPTIONS Options granted pursuant to the Plan generally become exercisable in equal portions over a four-year period. Upon the exercise of an option, the optionee may either make payment in full in cash to the Company of the exercise price therefor and any required tax withholding payment or may deliver to the Company a properly executed exercise notice, together with irrevocable instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds to pay the exercise price. 14 NON-ASSIGNABILITY OF OPTIONS An option granted under the Plan is not transferable other than by will, the applicable laws of descent and distribution, or a qualified domestic relations order. 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 each of the Plans, upon termination of employment, options remain exercisable for 90 days, or 12 months if termination results from death or disability, but in any event not beyond the original option term. In the case of retirement, the Committee has the discretion to permit the exercise of options more than 90 days beyond termination of employment. CHANGE OF CONTROL Currently, option agreements relating to options granted under the Plan generally provide that in the event of a dissolution, liquidation or sale of substantially all of the assets of the Company or a merger or consolidation in which the Company is not the surviving corporation, the options terminate, except that immediately prior to such an event, the options become fully exercisable without regard to vesting requirements. RIGHTS AS A STOCKHOLDER; STATUS OF EMPLOYEE No person shall have any rights or privileges of a stockholder 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 Following is a brief summary of the principal federal income tax consequences of the grant and exercise of an option under the Employee Option Plan and the subsequent disposition of Class A stock acquired upon such exercise. Under the Plan, at the time of grant the Committee designates each option either as 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 ordinary income to the optionee, and the Company will generally be entitled to a deduction in an equal amount. 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 and depending upon the holding period of such shares of Option Stock, equal to the difference between the selling price and the tax basis of the shares of Option Stock sold. The tax basis for this purpose will equal the sum of the exercise price and the amount of ordinary income realized by the optionee as a result of such exercise. 15 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 sale of option shares. TERMINATION The Employee Option Plan terminates on May 12, 2001, unless sooner terminated by the Board. Except as expressly contemplated by the terms of the Plan, no amendment, discontinuance or termination of the Plan will have any effect on options outstanding thereunder at the time of termination. OTHER OPTION PLANS In addition, the Company has three other stock option plans: the Incentive Stock Option Plan, Nonqualified Stock Option Plan, and the D&O Option Plan. None of these Plans are proposed for amendment. In 1991, the Incentive Stock Option Plan and the Nonqualified Stock Option Plan were replaced by the Employee Option Plan and the D&O Option Plan. As of July 31, 1996 there were outstanding under the other Plans options to purchase the following numbers of shares: Incentive Stock Option Plan -- 6,513 Shares Nonqualified Stock Option Plan -- 46,063 Shares D&O Option Plan -- 435,937 Shares
To the extent that any of the options under the first two of these plans terminate or expire unexercised, the unused option shares automatically become available under the Employee Option Plan. The terms of options granted under the other option plans are substantially similar to the terms of options granted under the Employee Option Plan. 16 BOARD RECOMMENDATION The Board of Directors believes it is in the best interest of the Company 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 recommends the adoption of the proposed stock option plan amendment to the shareholders of the Company. The affirmative vote of a majority of the combined Class A and Class B shares in attendance or represented by proxy and entitled to vote at the Shareholders Meeting is required for 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 Messrs. Edenfield and Newberry) are voted in favor of these amendments, no additional affirmative votes will be required. Messrs. Edenfield and Newberry intend to vote their Class A and Class B shares in favor of these amendments. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT. 17 STOCK PRICE PERFORMANCE GRAPH The graph below reflects the cumulative stockholder return (assuming the reinvestment of dividends) on the Company's Class A shares compared to the return of the NASDAQ Composite Index and two peer group indices for the periods indicated. The graph reflects the investment of $100 on April 30, 1991 in the Company's Class A shares, the NASDAQ Stock Market--U.S. Companies ("NASDAQ Composite Index") and in two peer group indices. The Company's first peer group ("Peer Group One") consists of twelve application software companies whose shares are quoted on NASDAQ and which are considered to be competitors of the Company in one or more major product areas. The Company's second peer group ("Peer Group Two") is the Robertson Stephen & Company Software Index, which is an index of the stock price performance of 74 software companies maintained by Robertson Stephen & Company, an investment banking firm. LOGO
4/30/88 4/30/89 4/30/90 4/30/91 4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 ------- ------- ------- ------- ------- ------- ------- ------- ------- American Software, Inc.. $47 $86 $107 $100 $143 $ 56 $ 53 $ 40 $ 53 NASDAQ Composite........ $72 $84 $ 84 $100 $121 $139 $155 $180 $257 Peer Group One.......... $54 $77 $ 94 $100 $119 $108 $109 $181 $343 Peer Group Two.......... $59 $66 $ 77 $100 $125 $118 $150 $215 $331
18 INDEPENDENT AUDITORS The Board of Directors has selected KPMG Peat Marwick LLP, who were auditors for fiscal 1996, to continue as independent auditors of the Company. Representatives of KPMG Peat Marwick LLP are expected to attend the Shareholders Meeting. 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. SHAREHOLDER PROPOSALS Proposals of shareholders intended to be presented to the 1997 Annual Meeting of Shareholders must be forwarded in writing and received at the principal executive offices of the Company no later than May 7, 1997, directed to the attention of the Secretary, for consideration for inclusion in the Company's proxy statement for the 1997 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 1996 Annual Report of the Company are being mailed to shareholders together with this Proxy Statement, proxy card and Notice of Annual Meeting of Shareholders. Additional copies may be obtained from Pat McManus, Investor Relations, 470 East Paces Ferry Road, Atlanta, Georgia 30305. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 30, 1996, 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 AUGUST 12, 1996, 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 September 4, 1996 19 AMERICAN SOFTWARE, INC. PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD SEPTEMBER 25, 1996 AT 4:00 P.M. HOTEL NIKKO ATLANTA . 3300 PEACHTREE ROAD, N.E., ATLANTA, GEORGIA FOR HOLDERS OF CLASS A COMMON STOCK 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 September 25, 1996 and at any adjournment or adjournments thereof, in the transaction of such business as may properly come before the meeting, and particularly the proposals stated below, all in accordance with and as more fully described in the accompanying Proxy Statement. It is understood that this proxy may be revoked at any time insofar as it has not been exercised and that the shares may be voted in person if the undersigned attends the meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING PROPOSALS: 1. ELECTION OF CLASS A DIRECTORS. Two Class A directors to be elected. Nominees: David H. Gambrell [ ] FOR [ ] WITHHOLD AUTHORITY Thomas R. Williams [ ] FOR [ ] WITHHOLD AUTHORITY 2. AMENDMENT TO 1991 EMPLOYEE STOCK OPTION PLAN. To increase the base number of shares that may be subject to options under that Plan from 2,150,000 shares to 2,400,000 shares. [ ] FOR [ ] AGAINST [ ] ABSTAIN THE CLASS A SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED SHAREHOLDER ON THE REVERSE OF THIS PROXY CARD, OR IF NO DIRECTION IS GIVEN, THEY WILL BE VOTED FOR EACH OF THE ABOVE PROPOSALS. IN THEIR DISCRETION, THE PROXYHOLDERS ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. Dated:_______________________1996. __________________________________ Signature ---------------------------------- Signature if held jointly IMPORTANT: Please sign this Proxy exactly as your name or names appear hereon. If shares are held jointly, signatures should include both names. Executors, administrators, trustees, guardians and others signing in a representative capacity should please give their full titles. PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----