<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
A.D.A.M. SOFTWARE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
[LETTERHEAD OF A.D.A.M. SOFTWARE, INC.]
August , 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of A.D.A.M. Software, Inc. to be held on September 28, 1999 at the Crowne Plaza
Hotel, 6345 Powers Ferry Road, N.W., Atlanta, Georgia 30339. The meeting will
begin promptly at 9:00 a.m., local time, and we hope that it will be possible
for you to attend.
The items of business are listed in the following Notice of Annual Meeting
and are more fully addressed in the Proxy Statement provided herewith.
Please date, sign and return your proxy card in the enclosed envelope at
your convenience to assure that your shares will be represented and voted at the
Annual Meeting even if you cannot attend. If you attend the annual meeting, you
may vote your shares in person even though you have previously signed and
returned your proxy.
On behalf of your Board of Directors, thank you for your continued support
and interest in A.D.A.M. Software, Inc.
Sincerely,
/s/ ROBERT S. CRAMER, JR.
--------------------------------------
Robert S. Cramer, Jr.
Chairman of the Board, Chief
Executive Officer and Co-Founder
<PAGE>
[Logo]
- --------------------------------------------------------------------------------
A.D.A.M. SOFTWARE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 28, 1999
- --------------------------------------------------------------------------------
The Annual Meeting of Shareholders of A.D.A.M. Software, Inc. (the
"Company") will be held at the Crowne Plaza Hotel, 6345 Powers Ferry Road, N.W.,
Atlanta, Georgia 30339, on Thursday, September 28, 1999 at 9:00 a.m., local
time, for the following purposes:
(i) To elect three directors to serve until the 2001 Annual Meeting of
Shareholders and one director to serve until the 2000 Annual Meeting of
Shareholders;
(ii) To amend the articles of incorporation of the Company to reflect a name
change to adam.com, Inc.
(iii) To amend the A.D.A.M. Software, Inc. 1992 Stock Option Plan to increase
the number of shares issuable pursuant to the Plan to 3,000,000;
(iv) To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending March 31,
2000; and
(v) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only the holders of record of Common Stock of the Company at the close of
business on August 20, 1999 are entitled to notice of and to vote at the Annual
Meeting of Shareholders and any adjournment thereof. A list of shareholders as
of the close of business on August 20, 1999 will be available at the Annual
Meeting of Shareholders for examination by any shareholder, his agent or his
attorney.
Your attention is directed to the Proxy Statement provided with this Notice.
By Order of the Board of Directors,
/s/ ROBERT S. CRAMER, JR.
--------------------------------------
Robert S. Cramer, Jr.
Chairman of the Board and
Chief Executive Officer
Atlanta, Georgia
August , 1999
- --------------------------------------------------------------------------------
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND
THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
- --------------------------------------------------------------------------------
<PAGE>
A.D.A.M. SOFTWARE, INC.
1600 RiverEdge Parkway, Suite 800
Atlanta, Georgia 30328
- --------------------------------------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 28, 1999
- --------------------------------------------------------------------------------
The 1999 Annual Meeting of Shareholders (the "Annual Meeting") of A.D.A.M.
Software, Inc. (the "Company") will be held on September 28, 1999, for the
purposes set forth in the Notice of Annual Meeting of Shareholders attached
hereto. The enclosed form of proxy is solicited by the Board of Directors of the
Company (the "Board" or "Board of Directors") and the cost of the solicitation
will be borne by the Company. When the proxy is properly executed and returned,
the shares it represents will be voted as directed at the Annual Meeting or any
adjournment thereof or, if no direction is indicated, such shares will be voted
in favor of the proposals set forth in the Notice of Annual Meeting of
Shareholders attached hereto. Any shareholder giving a proxy has the power to
revoke it at any time before it is voted. All proxies delivered pursuant to this
solicitation are revokable at any time at the option of the persons executing
them by giving written notice to the Secretary of the Company, by delivering a
later-dated proxy or by voting in person at the Annual Meeting.
RECORD DATE
Only shareholders of record as of the close of business on August 20, 1999
(the "record date") will be entitled to vote at the Annual Meeting. As of that
date, the Company had outstanding shares of Common Stock, $.01 par
value, excluding shares held in treasury by the Company ("Common Stock").
Shareholders of record as of the close of business on August 20, 1999 are
entitled to one vote for each share of Common Stock held. No cumulative voting
rights are authorized and dissenters' rights for shareholders are not applicable
to the matters being proposed. It is anticipated that this Proxy Statement and
the accompanying proxy will first be mailed to shareholders of the Company on or
about August , 1999.
VOTING AND PROXIES
The presence in person or by proxy of holders of a majority of the shares of
Common Stock outstanding on the record date will constitute a quorum for the
transaction of business at the Annual Meeting or any adjournment thereof. The
affirmative vote of a plurality of the shares present in person or by proxy and
entitled to vote is required to elect directors. The affirmative vote of the
holders of a majority of the votes represented by the outstanding shares of
Common Stock, whether or not present at the Annual Meeting, is required for
approval and adoption of the proposal to amend the Company's articles of
incorporation. With respect to any other matter that may properly come before
the Annual Meeting, the approval of any such matter would require a greater
number of votes cast in favor of the matter than the number of votes cast
opposing such matter. Shares held by nominees for beneficial owners will be
counted for purposes of determining whether a quorum is present if the nominee
has the discretion to vote on at least one of the matters presented even if the
nominee may not exercise discretionary voting power with respect to other
matters and voting instructions have not been received from the beneficial owner
(a "broker non-vote"). Broker non-votes will not be counted as votes for or
against matters presented for shareholder consideration, except that a broker
non-vote will have the effect of a vote against the proposal to amend the
Company's Articles of Incorporation. Abstentions with respect to a proposal are
counted for purposes of establishing a quorum. If a quorum is present,
abstentions have no effect on the outcome of any vote, except that an abstention
will have the effect of a vote against the proposal to amend the Company's
Articles of Incorporation.
<PAGE>
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ELECTION OF DIRECTORS
(ITEM 1)
- --------------------------------------------------------------------------------
Under the Bylaws of the Company, the number of directors constituting the
Board is fixed at no greater than nine. The Bylaws divide the Board into three
classes with the directors in each class serving a term of three years. There
are three directors, Robert S. Cramer, Jr., Anthony J. Gatti and John W.
McClaugherty who have been nominated to stand for reelection as directors until
the annual meeting of shareholders in 2002. In addition to the three nominees,
there are six directors continuing to serve on the Board whose terms expire in
2000 and 2001.
Except as otherwise provided herein, the proxy solicited hereby cannot be
voted for the election of a person to fill a directorship for which no nominee
is named in this Proxy Statement. The Board has no reason to believe that any of
the nominees for the office of director will be unavailable for election as a
director. However, if at the time of the Annual Meeting any of the nominees
should be unable to serve or, for good cause, will not serve, the persons named
in the proxy will vote as recommended by the Board to elect substitute nominees
recommended by the Board. In no event, however, can a proxy be voted to elect
more than four directors.
The following list sets forth the names of the three nominees for election
and reelection to the Board to serve until the annual meeting of shareholders in
2002, or until their successors are duly elected and qualified. Such list also
contains, as to each nominee and incumbent director, certain biographical
information, a brief description of principal occupation and business experience
during the past five years, directorships of companies (other than the Company)
presently held, and certain other information, which information has been
furnished by the respective individuals.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR ROBERT S. CRAMER, JR., ANTHONY
J. GATTI AND JOHN W. MCCLAUGHERTY TO HOLD OFFICE UNTIL THE ANNUAL MEETING OF
SHAREHOLDERS IN 2001 OR UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
NOMINEES FOR ELECTION--TERM EXPIRING IN 2002
ROBERT S. CRAMER, JR. (Age 39) Mr. Cramer, a co-founder of the Company, has
served as Chairman of the Board and a Director since the Company's inception in
March 1990, and Chief Executive Officer since September 1996. From 1987 to 1992,
he served as Chairman of the Board of Directors of Medical Legal Illustrations,
Inc. ("MLI"). In 1989, Mr. Cramer served as an Executive Editor and Co-Publisher
of Atlanta Computer Spectrum, a regional technology publication he helped to
create. Also, since 1994 Mr. Cramer has served as Chairman of the Board of the
Atlanta Task Force for the Homeless, a community-wide non profit organization
working with and on the behalf of homeless people.
ANTHONY J. GATTI. (Age 51) Dr. Gatti has been a Director of the Company
since May 1993. Dr. Gatti has been a doctor of podiatric medicine in private
practice since 1974. He is Chief Executive Officer and a director of the
Marietta Podiatry Group, a preferred provider organization offering podiatry
services to major health providers, and a director of several other national and
state podiatric medicine groups. In addition, Dr. Gatti is Chief Executive
Officer of Millennium Design, a medical software company.
JOHN W. MCCLAUGHERTY. (Age 39) Mr. McClaugherty, a co-founder of the
Company, has served as a Director of the Company since its inception in March
1990. Currently, Mr. McClaugherty serves as President of J.S.K., Inc., a
provider of medical illustrations to the legal profession. Mr. McClaugherty
served as Chief Executive Officer of the Company from its inception until March
1994. Prior thereto, Mr. McClaugherty was the Vice President of Sales and
Marketing and a director of MLI from March 1985 until March 1990.
5
<PAGE>
DIRECTORS CONTINUING IN OFFICE UNTIL 2000
LINDA B. DAVIS Ms. Davis has been a Director of the Company since September
1998. (Age 56) Ms. Davis is the General Manager of the Science and Nursing
Division of Addison Wesley, Longman ("Addison Wesley") a position she has held
since September 1997. She joined Addison Wesley in 1990 as Vice President of
Product Development and was subsequently promoted to Vice President and
Editorial Director of the Math, Physics and Statistics Division. Previously, Ms.
Davis was Vice President and Director of Development at W.H. Freeman/Scientific
American Books from 1986 to 1990.
DANIEL S. HOWE. (Age 39) Mr. Howe has been a Director of the Company since
December 1996. Mr. Howe has been President of DSH Enterprises, Inc., a real
estate development and investment company since January 1990.
FRANCIS J. TEDESCO. (Age 55) Dr. Tedesco has been a Director of the
Company since July 1996. He has served as Chief Executive Officer of Health
Sciences University and as President of the Medical College of Georgia ("MCG")
since 1988, and has been a Professor of Medicine at MCG since 1981. He also is a
consultant to Dwight David Eisenhower Medical Center--Fort Gordon, Georgia;
Veterans Administration Medical Center--Augusta, Georgia and Walter Reed Army
Medical Center--Washington, D.C. Prior to coming to MCG in 1978, Dr. Tedesco
held academic appointments beginning in 1971 at the Hospital of the University
of Pennsylvania; Washington University School of Medicine, St. Louis, Missouri;
and University of Miami School of Medicine. Dr. Tedesco currently serves on the
Board of Directors and is Vice President of the Georgia Division of the American
Cancer Society, and he is a director of URO Health, a medical products
manufacturer.
DIRECTORS CONTINUING IN OFFICE UNTIL 2001
SALLY D. ELLIOTT. (Age 46) Ms. Elliott, a director of the Company since
June 1993, has been consultant focusing on publishing, education and new media
since January 1998. Ms. Elliott served as President of Addison Wesley's Consumer
Publishing Group, formerly known as Benjamin/Cummings Publishing Company
("Benjamin/Cummings"), a publisher of college textbooks and a subsidiary of
Addison Wesley, from July 1991 to December 1997. Prior thereto, Ms. Elliott
served as General Manager of Benjamin/Cummings from June 1989 to June 1991 and
Editorial Director of Benjamin/Cummings from June 1987 to June 1989.
HAMILTON M. JORDAN. (Age 54) Mr. Jordan, a Director of the Company since
October 1997, has managed a strategic planning and consulting company focused
primarily on health, education and media since 1993. Previously, Mr. Jordan
served as Vice Chairman of Whittle Communications, a media and advertising
technology company from 1990 to 1993, and was the Chief Executive Officer and
founder of the ATP Tour, a men's professional tennis international governing
body, from 1986 to 1990. Mr. Jordan served in The White House from 1977 until
1980 as Chief of Staff to President Carter.
GREGORY M. SWAYNE. (Age 41) Mr. Swayne, a co-founder of the Company, has
served as Vice Chairman of the Company since March 1997 and as a Director since
March 1990. Previously, he served as President of the Company from March 1990
until March 1997 and Vice President of Production from March 1990 to March 1998.
As the original founder of MLI, a predecessor to the Company, he served as
President from 1985 until February 1992, and as a director of MLI from 1985
until the merger of MLI and the Company in May 1992. Mr. Swayne is a master
degreed medical illustrator who completed a three year graduate program in
medical illustration that required him to participate in all the first year
medical school courses (including gross anatomy, histology, embryology and
neuroanatomy) as well as a full year of direct surgical observation and
illustration.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended March 31, 1999 ("fiscal 1999"), the Board held
five meetings. Each director that served during fiscal 1999 attended at least
75% of all Board meetings and the aggregate number of meetings held by all
committees on which the individual director served in fiscal 1999.
6
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has standing Audit, Stock Repurchase and Compensation/Stock Option
Committees that assist it in discharging its responsibilities. These committees,
their members and functions are discussed below.
The Audit Committee, which held one meeting during fiscal 1999, is
responsible for recommending independent accountants, reviewing with the
accountants the scope and results of the audit engagement, and consulting with
independent accountants and management with regard to the Company's accounting
methods and control procedures. The Audit Committee is composed of Ms. Elliott
and Mr. Howe.
The Stock Repurchase Committee, which held no meetings during fiscal 1999,
is responsible for the Company's repurchase of its own shares pursuant to the
Stock Repurchase Program. The Stock Repurchase Committee is composed of Messrs.
Cramer (Chairman), Howe and Swayne.
The Compensation/Stock Option Committee, which held one meeting during
fiscal 1999, is responsible for reviewing recommendations from the Chairman of
the Board of Directors with regard to the compensation of officers of the
Company and reporting to the Board of Directors its recommendations with regard
to such compensation and is responsible for operating and administering the
Company's 1991 Employee Stock Option Plan and its Amended and Restated 1992
Stock Option Plan. The Compensation/ Stock Option Committee is composed of Dr.
Gatti and Mr. Howe.
COMPENSATION OF DIRECTORS
To date, Directors have not received cash compensation for their services as
directors of the Company. During fiscal 1999, no options to purchase Common
Stock were granted to non-employee directors of the Company.
- --------------------------------------------------------------------------------
APPROVAL OF NAME CHANGE
(ITEM 2)
- --------------------------------------------------------------------------------
The Board has unanimously approved an amendment to Article I of the
Company's articles of incorporation that would result in a change in the
Company's name to adam.com, Inc. The proposed amendment would amend Article I of
the Company's articles of incorporation to read:
"The name of the Corporation is adam.com, Inc."
The Board has determined that a change in the Company's name is advisable
due to the Company's decision in January 1999 to re-focus its business toward
providing health, medical and wellness information online. Prior to January
1999, the Company's business principally consisted of the creation of visual
anatomy and health information content delivered to end-users though a variety
of distribution mediums, including CD-ROM, broadcast, Internet licensing and
print. In January 1999, the Company shifted its business focus to the online
dissemination of consumer health information which lead to the launch of the
Company's www.adam.com website in May 1999. The Board has decided that a change
of the Company's name will serve to emphasize the Company's new business
strategy.
The change in the Company's name will not affect the validity of currently
outstanding stock certificates. The Company's current shareholders will not be
required to surrender or exchange any stock certificates that they now hold and
should not send such certificates to the Company or its transfer agent. In
addition, the change in the Company's name will not affect the trading of its
stock on the Nasdaq National Market under the symbol "ADAM."
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO EFFECT A CORPORATE NAME CHANGE
TO ADAM.COM, INC. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED
UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
7
<PAGE>
- --------------------------------------------------------------------------------
APPROVAL OF AMENDMENT TO THE A.D.A.M. SOFTWARE, INC.
1992 STOCK OPTION PLAN
(ITEM 3)
- --------------------------------------------------------------------------------
At the 1999 annual meeting, the shareholders will be asked to approve an
amendment (the "Amendment") to the A.D.A.M. Software, Inc. 1992 Stock Option
Plan (the "Plan") increasing the number of shares of common stock authorized
under the plan from the 1,400,000 previously authorized to 3,000,000 shares. The
Company is proposing the Amendment because at July 31, 1999 there were no shares
available for the making of additional grants under the Plan. In addition, the
Company has granted options to purchase 331,445 shares that are not reserved
under the Plan.
The reservation of additional shares is needed in order for the Company to
continue to offer long-term incentive compensation to its employees, independent
contractors and newly elected directors and to align their interests with those
of stockholders. The inability of the Company to issue additional stock options
could have a material adverse effect on its ability to attract and retain the
high-demand employees necessary to execute the Company's new business
strategies. Set forth below is a summary of the material provisions of the Plan.
The Plan authorizes the granting of incentive and non-incentive options to
purchase the Common Stock of the Company to Employees of the Company and certain
other persons, such as non-employee directors. The Plan is administered by a
committee of the Board (the "Plan Committee") which has the responsibility for
determining the exercise price and term of the options granted. Incentive stock
options are generally priced at the fair market value of the Common Stock, as
determined by the Board or the Plan Committee, on the date of grant. The
exercise price for non-incentive stock options is determined by the Board or the
Plan Committee, but may not be less than $.01 or the minimum price required by
applicable state law or the Company's articles of incorporation or bylaws. None
of these provisions of the Plan will be altered if the Amendment is approved.
The Company has previously filed with the Securities and Exchange Commission
a registration statement on Form S-8 (the "Form S-8") to register the shares
issuable pursuant to options granted under the Plan. If the Amendment is
approved, the Company intends to amend the previously-filed Form S-8 to include
the additional shares reserved for issuance under the Plan as amended.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE A.D.A.M. SOFTWARE, INC. 1992 STOCK OPTION PLAN TO INCREASE THE NUMBER
OF SHARES ISSUABLE UNDER THE PLAN TO 3,000,000. PROXIES RECEIVED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A
CONTRARY CHOICE.
- --------------------------------------------------------------------------------
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 4)
- --------------------------------------------------------------------------------
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has appointed the firm of PricewaterhouseCoopers LLP to serve as
independent auditors of the Company for fiscal 2000, subject to ratification of
this appointment by the shareholders of the Company. PricewaterhouseCoopers LLP
has served as independent auditors of the Company for many years and is
considered by management of the Company to be well qualified. The Company has
been advised by PricewaterhouseCoopers LLP that neither it nor any member
thereof has any financial interest, direct or indirect, in the Company or any of
its subsidiaries in any capacity. One or more representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting, will have an
opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
8
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS OF
THE COMPANY FOR FISCAL 2000. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
COMMON STOCK OWNERSHIP BY MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of shares of common
stock as of August 10, 1999 for (1) directors of adam.com, (2) the Named
Executive Officers, (3) the directors and executive officers of adam.com as a
group and (4) each shareholder of adam.com holding more than a 5% interest in
adam.com. Unless otherwise indicated in the footnotes, all of such interests are
owned directly, and the indicated person or entity has sole voting and
disposition power. The number of shares represents (a) the number of shares of
common stock the person beneficially owns plus (b) the number of shares issuable
upon exercise of currently exercisable options and warrants.
<TABLE>
<CAPTION>
NUMBER
OF SHARES
NAME AND ADDRESS OF BENEFICIALLY
BENEFICIAL OWNER(1) OWNED PERCENT OF CLASS(2)
- ---------------------------------------------------------------------------------- ----------- ---------------------
<S> <C> <C>
Robert S. Cramer(3)............................................................... 642,590 13.8%
Gregory M. Swayne(4).............................................................. 254,187 5.5
Brian Co(5)....................................................................... -- --
Linda B. Davis.................................................................... -- --
Sally D. Elliott(6)............................................................... 3,333 *
Dr. Anthony J. Gatti(7)........................................................... 200,000 4.3
Daniel S. Howe(8)................................................................. 27,333 *
Hamilton M. Jordan(6)............................................................. 9,677 *
John W. McLaugherty(9)............................................................ 28,202 *
Francis J. Tedesco, M.D........................................................... -- --
Addison-Wesley Longman............................................................ 700,000 15.2
James D. Oelschlager(10).......................................................... 418,750 9.1
Firestone Tire and Rubber Master Trust(11)........................................ 356,250 7.7
Scott M. Smith(12)................................................................ 272,500 5.9
All executive officers and directors as a group
(9 persons)(13)................................................................. 1,186,322 25.1%
</TABLE>
- ------------------------
* Less than 1%.
(1) Unless otherwise indicated, the addresses of the persons listed is c/o
adam.com, 1600 River Edge Parkway, Suite 800, Atlanta, Georgia 30328.
(2) Assumes 4,438,507 shares outstanding, excluding shares held in treasury by
adam.com. Except as indicated in the footnotes set forth below, the persons
named in the table, to adam.com's knowledge, have sole voting and investment
power with respect to all shares of common stock shown as beneficially owned
by them. The number of shares shown as owned by, and the voting power of,
individual shareholders include shares which are not currently outstanding
but which such shareholders are entitled to acquire or will be entitled to
acquire within 60 days. Such shares are deemed to be outstanding for the
purpose of computing the percentage of outstanding common stock owned by the
particular shareholder, but are not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person.
9
<PAGE>
(3) Includes 48,833 shares issuable upon exercise of outstanding options and
42,938 shares issuable upon exercise of outstanding warrants.
(4) Includes 13,333 shares issuable upon exercise of outstanding options.
(5) Mr. Co was appointed president of the Company on July 16, 1999.
(6) Represents shares issuable upon exercise of outstanding options.
(7) Includes 108,500 shares jointly held by Dr. Gatti and his wife. Dr. Gatti
shares voting and dispositive power with respect to the 108,500 shares and
disclaims beneficial ownership of such shares. Includes 70,250 shares held
by Anthony J. Gatti, D.P.M., P.C. Money Pension Plan of which Dr. Gatti is
Trustee and over which Dr. Gatti holds sole voting and dispositive power.
Dr. Gatti disclaims beneficial ownership of such shares. Includes 16,250
shares held by Anthony J. Gatti, D.P.M., P.C. Profit Sharing Plan, of which
Dr. Gatti is Trustee and over which Dr. Gatti holds sole voting and
dispositive power. Dr. Gatti disclaims beneficial ownership of such shares.
Dr. Gatti's address is c/o A.D.A.M. Software, Inc., 1600 RiverEdge Parkway,
Suite 800, Atlanta, Georgia 30328.
(8) Represents 9,333 shares issuable upon exercise of outstanding options.
(9) Includes 2,000 shares issuable upon exercise of outstanding options.
(10) Includes 356,250 shares held by the Firestone Tire and Rubber Master Trust
(the "Firestone Trust"), for which Oak Associates, of which Mr. Oelschlager
is President, is the fund manager. Includes 12,500 shares held by the Oak
Associates Profit Sharing Plan and Trust, of which Mr. Oelschlager is the
trustee. Mr. Oelschlager's address is c/o Oak Associates, 3875 Embassy
Parkway, Suite 250, Akron, Ohio 44333. The information included in the table
is based upon a Schedule 13G filed with the Securities and Exchange
Commission on February 11, 1997.
(11) The Firestone Trust's address is Chemical Bank, as trustee for Firestone
Rubber and Tire Master Trust (R.D. 4615504) c/o Oak Associates, 3875 Embassy
Parkway, Suite 250, Akron, Ohio 44333. The information included in the table
is based upon a Schedule 13G filed with the Securities and Exchange
Commission on February 11, 1997.
(12) Mr. Smith's address is c/o Camelot Management Corp., 10 Glenville Street,
Greenwich, Connecticut 06831-3638. The information included in the table is
based upon a Schedule 13G filed with the Securities and Exchange Commission
on February 11, 1999.
(13) Includes 73,499 shares issuable upon exercise of outstanding options and
42,938 shares issuable upon exercise of outstanding warrants.
10
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth certain information relating to the compensation
earned during fiscal 1999, fiscal 1998 and the fiscal year ended March 31, 1997
("fiscal 1997") by our Chief Executive Officer and each of the other highest
paid executive officers whose total annual salary and bonus exceeded $100,000
during fiscal 1999 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- -------------------
SECURITIES ALL
FISCAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)
- ------------------------------------------------- ----------- ---------- ------------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
Robert S. Cramer, Jr............................. 1999 $ 164,000 -- 225,000(2) $ 1,906
Chief Executive Officer 1998 155,000 -- 120,000(3) 2,111
1997 155,000 -- -- 2,111
Gregory M. Swayne................................ 1999 $ 159,000 -- 220,000(2) $ 2,039
Vice Chairman 1998 155,000 -- 120,000(3) 2,257
1997 155,000 -- -- 4,185
</TABLE>
- ------------------------
(1) Represents life insurance premiums paid on behalf of such executive
officers.
(2) Includes 195,000 shares subject to previously-granted options repriced and
reissued on January 14, 1999.
(3) Options to purchase these shares were repriced and reissued on January 14,
1999.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding stock options granted to
the Named Executive Officers during fiscal 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE OR FOR OPTION TERM (1)
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION --------------------------
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE)(1) DATE 5%($) 10%($)
- ----------------------------- ----------- ------------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Cramer, Jr......... 30,000 4.2% $ 3.69 4/20/08 $ 180,319 $ 287,127
195,000(2) 27.6 5.25 1/14/09 1,667,581 2,655,344
Gregory M. Swayne............ 25,000 3.5 $ 3.69 4/20/08 $ 150,266 $ 186,425
195,000(2) 27.6 5.25 1/14/09 1,667,581 2,655,344
</TABLE>
- ------------------------
(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates of
appreciation on the common stock over the term of the options. These numbers
do not take into account plan provisions providing for termination of the
option following termination of employment or nontransferability.
(2) Represents previously-granted options repriced and reissued on January 14,
1999.
11
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
TABLE
The following table shows the number and value of exercisable and
unexercisable options held by adam.com's Named Executive Officers as of the end
of fiscal 1999. No stock appreciation rights were outstanding in fiscal 1999. In
addition, no stock options were exercised during fiscal 1999.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE MONEY
NUMBER OF UNEXERCISED OPTIONS/SARS
OPTIONS AT FISCAL AT FISCAL YEAR-END ($)
YEAR-END (#) EXERCISABLE/
NAME EXERCISABLE/UNEXERCISABLE UNEXERCISABLE(2)
- --------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
Robert S. Cramer, Jr........................................... 42,167/238,333(1) $ 21,083/109,716
Gregory M. Swayne.............................................. 42,167/233,333 21,083/100,667
</TABLE>
- ------------------------
(1) Does not include warrants to purchase 42,938 shares of common stock issued
in connection with the Subordinated Bridge Notes.
(2) The closing price of our common stock on March 31, 1999 was $5.50.
We have not awarded stock appreciation rights to any employee, we have no
long-term incentive plans, as that term is defined in SEC regulations, and we
have no defined benefit or actuarial plans covering any of our employees.
COMPENSATION OF DIRECTORS
To date, directors have not received cash compensation for their services as
directors of adam.com. During fiscal 1999, no non-employee directors of adam.com
were granted options to purchase common stock.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with Messrs. Cramer and Swayne.
Each agreement is currently scheduled to expire on December 31, 1999 (the
"Expiration Date") and is automatically renewable for successive one-year
periods unless written notice of non-renewal is given by either party. Each
agreement also may be terminated by us with or without cause or upon the
employee's death or inability to perform his duties on account of a disability
for a period of twelve consecutive months or by the employee. If any agreement
is terminated prior to the Expiration Date for any reason, except by the
employee, by us for cause or upon the employee's death or disability, we must
continue to pay the employee's base salary and bonus either (1) for the period
from the date of termination through the Expiration Date if the agreement is
terminated prior to the first anniversary thereof or (2) for the two year period
following the date of termination if the agreement is terminated after the first
anniversary thereof. If the agreement is terminated because of the death or
disability of the employee, we must pay the employee or his beneficiaries his
base salary and bonus for a period of one year following the date of
termination; provided, however, that, in the case of termination for disability,
we may elect, in lieu of making such payments, to provide the employee with
disability insurance coverage. The agreements provide for a minimum base salary
of $120,000 for each of Messrs. Cramer and Swayne, and for annual discretionary
bonuses. Each agreement also contains a two year noncompetition, customer and
employee nonsolicitation and confidentiality provision. In addition, we have
executed Employee Confidentiality, Nondisclosure and Noncompetition Agreements
with all of our employees.
REPORT ON REPRICING OF OPTIONS
We granted certain options to our employees to purchase our common stock on
various dates since 1991. Some of these options were cancelled and new options
were granted on January 14, 1999. The
12
<PAGE>
repricing of options reflects the consistent application of the policy of our
Compensation Committee regarding stock options. The Compensation Committee and
Board of Directors believe that to provide maximum incentive to employees,
including senior executives, incentive options should be granted at exercise
prices equal to or not materially in excess of the market price of our common
stock. As a result of this policy, options granted by the Board and approved by
the Compensation Committee at various dates since 1991 were cancelled and new
options were granted on January 14, 1999. The options were cancelled and new
options were granted in order to more accurately reflect the market value of our
common stock, determined by reference to the closing price of the stock as
reported by the Nasdaq Stock Market on that date.
The following table sets forth information concerning all repricings of
options to purchase our common stock held by our executive officers during the
last ten completed fiscal years.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES ORIGINAL OPTION
UNDERLYING MARKET PRICE OF EXERCISE PRICE TERM REMAINING
OPTIONS STOCK AT TIME AT TIME NEW EXERCISE AT DATE OF
NAME DATE REPRICED(#) OF REPRICING($) OF REPRICING($) PRICE($) REPRICING
- ---------------------------------- --------- ----------- --------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Cramer.................. 1/14/99 20,000 $ 5.25 $ 8.80 $ 5.25 1 Year
Chief Executive Officer 1/14/99 75,000 5.25 8.50 5.25 7 Years
1/14/99 20,000 5.25 6.00 5.25 8 Years
1/14/99 20,000 5.25 7.00 5.25 8 Years
1/14/99 20,000 5.25 8.00 5.25 8 Years
1/14/99 20,000 5.25 9.00 5.25 8 Years
1/14/99 20,000 5.25 10.00 5.25 8 Years
Gregory M. Swayne................. 1/14/99 20,000 $ 5.25 $ 8.80 $ 5.25 1 Year
Vice Chairman 1/14/99 75,000 5.25 8.50 5.25 7 Years
1/14/99 20,000 5.25 6.00 5.25 8 Years
1/14/99 20,000 5.25 7.00 5.25 8 Years
1/14/99 20,000 5.25 8.00 5.25 8 Years
1/14/99 20,000 5.25 9.00 5.25 8 Years
1/14/99 20,000 5.25 10.00 5.25 8 Years
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1999 our Compensation Committee consisted of Dr. Gatti and Mr.
Howe. During fiscal 1999, we did not engage in any transactions with the members
of the Compensation Committee. No member of the Compensation Committee was an
officer or employee of adam.com or any of our subsidiaries during fiscal 1999 or
any time prior thereto.
CERTAIN TRANSACTIONS
During fiscal 1999, we sold approximately $353,000 of product to AWL, a
shareholder of adam.com. Linda B. Davis, one of our directors, is an affiliate
of Addison Wesley. In addition, we earned royalty revenues of approximately
$248,000 during fiscal 1999 related to Benjamin/Cummings, a subsidiary of
Addison Wesley.
It is our policy that all future transactions, if any, with affiliated
parties will be approved by the disinterested members of our Board of Directors
(or a committee thereof) or by the shareholders of adam.com.
13
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation/Stock Option Committee (the "Compensation Committee"),
which is composed of two non-employee directors, is responsible for developing
and making recommendations to the Board with respect to the Company's
compensation plans and policies for the Company's executive officers as well as
the Board of Directors. In carrying out this responsibility, the Compensation
Committee approves the design of all compensation plans applicable to executive
officers and directors, reviews and approves performance goals, establishes
award opportunities, oversees the ongoing operation of the various plans and
makes recommendations to the Board regarding certain of these matters. In
addition, the Compensation Committee, pursuant to authority delegated by the
Board, determines on an annual basis the base salaries to be paid to the Chief
Executive Officer and each of the other executive officers. The Compensation
Committee also, in conjunction with the Board, reviews compensation policies
applicable to executive officers as well as directors and considers the
relationship of corporate performance to that compensation.
EXECUTIVE OFFICER COMPENSATION PHILOSOPHY
The objectives of the Company's executive compensation program are to:
- Support the achievement of desired Company performance; and
- Provide compensation that will attract and retain superior talent and
reward performance.
In carrying out these objectives, the Compensation Committee considers
current corporate performance, the potential for future performance gains,
whether shareholder value has been or will be enhanced, and competitive market
conditions for executives in similar positions at local, regional and national
software companies having similar revenues and number of employees. Those
factors are evaluated and considered for each officer on an annual basis,
including consideration of the contribution made by each officer over the prior
fiscal year. The Company's compensation package for its officers includes both
short-term and long-term features in the form of base salary, variable
compensation keyed to Company performance and stock options which are granted
periodically at the discretion of the Compensation Committee. As a result, the
Company's executive compensation provides an overall level of compensation
opportunity that is competitive with software companies of comparable size and
complexity. The Compensation Committee will use its discretion to set executive
compensation at a level that, in its judgment, is warranted by external,
internal or individual circumstances.
The Compensation Committee also endorses the position that stock ownership
by management and stock-based performance compensation arrangements are
beneficial in aligning management's and shareholders' interests in the
enhancement of shareholder value. The Chairman of the Board and Chief Executive
Officer and the Vice Chairman of the Board are relatively substantial
shareholders in the Company and are thus motivated to act on behalf of all
shareholders to optimize overall Company performance.
EXECUTIVE OFFICER COMPENSATION
The Company's executive officer compensation is comprised of base salary,
grants under the 1991 Employee Stock Option Plan and the Amended and Restated
1992 Stock Option Plan, and various benefits, including medical plans which are
generally available to employees of the Company.
BASE SALARY. Base salaries for the Company's key executive officers are
established under employment contracts. The salaries are reviewed annually and
are approved by the Compensation Committee. In determining base salaries, the
Compensation Committee takes into consideration individual experience and
performance as well as other circumstances particular to the Company.
VARIABLE COMPENSATION. Variable compensation is keyed to Company
performance for officers and is based on achievement of pre-established targets
relative to the Company's budget which includes sales
14
<PAGE>
growth, expense control and profitability and the timely development and market
reception of new products.
STOCK OPTION PROGRAM. The grant of stock options is designed to align the
interests of executive officers with those of shareholders in the Company's
long-term performance. Options granted under the plans have an exercise price
equal to at least 100% of the fair market value of the Company's Common Stock on
the date of grant and expire not later than ten years from the date of grant. It
has been the practice of the Committee to grant stock options which vest ratably
over a three-year period from the date of the grant. Option awards for officers
other than the Chief Executive Officer are based on recommendations made by the
Chief Executive Officer and on the Committee's assessment of how the respective
individual contributes to the Company. The factors considered in this assessment
are identical to those set forth in the Compensation/Stock Option Committee
Philosophy, Base Salary and Variable Compensation paragraphs above.
OTHER BENEFITS. The Company provides medical benefits to executive
officers. These benefits are comparable to those generally available to company
employees. The Company also funds life insurance policies on the behalf of its
executive officers. The amount funded under the policies and the amount of
insurance provided to the executive is commensurate with the executive's salary
and level of responsibility.
COMPENSATION OF THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Mr. Cramer serves as the Chairman of the Board and Chief Executive Officer
under an employment contract, dated December 21, 1994, which was approved by the
Compensation Committee. Under the employment contract. Mr. Cramer's compensation
is principally composed of a minimum base salary of $120,000 and annual
discretionary bonuses.
During fiscal 1999, the Company made contributions to a life insurance
policy on the behalf of Mr. Cramer. The value of the benefit related to such
policy was estimated to be $2,000,000.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT. The Omnibus Budget
Reconciliation Act of 1993 placed certain limits on the deductibility of
non-performance based executive compensation for a company's employees, unless
certain requirements are met. The Compensation/Stock Option Committee does not
believe that there is a risk of losing deductions under the new law. However, in
the future, the Compensation/Stock Option Committee intends to consider
carefully any plan or compensation arrangement that might result in the
disallowance of compensation deductions that may be lost versus the broader
interests of the Company to be served by paying adequate compensation for
services rendered, before adopting any plan or compensation arrangement.
The Compensation Committee believes that its compensation philosophies are
suited to retaining and rewarding executives who contribute to the success of
the Company in achieving its business objectives and increasing stockholder
value. The Company further believes that the program strikes an appropriate
balance among the interests and needs of the Company, its stockholders and its
executives.
The Compensation/Stock Option Committee
Anthony J. Gatti, M.D.
Daniel S. Howe
THE FOREGOING REPORTS SHOULD NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF
1934 (TOGETHER, THE "ACTS"), EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY
INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED
FILED UNDER SUCH ACTS.
15
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following stock price performance graph compares the Company's
performance to the Nasdaq Stock Market--U.S. and the Hambrecht & Quist
Technology Index. The stock price performance graph assumes an investment of
$100 in the Company and the Hambrecht & Quist Technology Index on November 10,
1995 and an investment of $100 in the Nasdaq Stock Market--U.S. on October 31,
1995 and further assumes the reinvestment of all dividends. Stock price
performance, presented quarterly for the period from November 10, 1995 through
March 31, 1999 is not necessarily indicative of future results.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C> <C>
A.D.A.M. SOFTWARE, INC. H&Q TECHNOLOGY NASDAQ STOCK MARKET U.S.
Nov-95 100.00 100.00 100.00
Dec-95 54.17 93.40 101.80
Mar-96 41.67 95.20 106.57
Jun-96 25.00 101.98 115.25
Sep-96 29.17 108.26 119.36
Dec-96 21.88 116.08 125.26
Mar-97 16.67 110.65 118.46
Jun-97 19.27 133.18 140.17
Sep-97 24.48 161.41 163.88
Dec-97 23.96 136.10 153.48
Mar-98 23.96 164.79 179.62
Jun-98 28.13 168.71 184.56
Sep-98 21.88 149.97 166.70
Dec-98 25.26 211.69 216.27
Mar-99 45.83 230.55 241.74
</TABLE>
THE STOCK PRICE PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE ACTS EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE
BE DEEMED FILED UNDER SUCH ACT.
16
<PAGE>
OTHER MATTERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires executive officers and directors
of the Company and persons who beneficially own more than ten percent of the
Company's Common Stock to file with the Securities and Exchange Commission
certain reports, and to furnish copies thereof to the Company, with respect to
each such person's beneficial ownership of the Company's equity securities.
Based solely upon a review of the copies of such reports furnished to the
Company and certain representations of such persons, all such persons have
complied with the applicable reporting requirements.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP has audited the accounts of the Company and its
subsidiaries for fiscal year 1999 and has been appointed by the Board of
Directors to continue in that capacity for the Company's fiscal year ending
March 31, 2000. A representative of PricewaterhouseCoopers LLP will be present
at the Annual Meeting, will have the opportunity to make a statement and will be
available to respond to appropriate questions.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report of the Company for fiscal 1999, including audited
financial statements, accompanies this Proxy Statement. The Annual Report does
not form any part of the material for the solicitation of proxies.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE, AT THE WRITTEN REQUEST OF ANY
SHAREHOLDER OF RECORD AS OF THE CLOSE OF BUSINESS ON AUGUST 20, 1999, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 1999,
INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, EXCEPT THE EXHIBITS THERETO. The
Company will provide copies of the exhibits, should they be requested by
eligible shareholders, and the Company may impose a reasonable fee for providing
such exhibits. Request for copies of the Company's Annual Report on Form 10-K
should be mailed to:
A.D.A.M. Software, Inc., d/b/a adam.com
1600 RiverEdge Parkway, Suite 800
Atlanta, Georgia 30328
Attention: Corporate Secretary
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at the Company's 2000
Annual Meeting of Shareholders must be received by the Company on or before May
31, 2000 to be eligible for inclusion in the Proxy Statement and form of proxy
to be distributed by the Board of Directors in connection with such meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In an
effort to have as large a representation at the meeting as possible, special
solicitation of proxies may, in certain instances, be made
17
<PAGE>
personally or by telephone, telegraph or mail by one or more employees of the
Company. The Company also will reimburse brokers, banks, nominees and other
fiduciaries for postage and reasonable clerical expenses of forwarding the proxy
material to their principals who are beneficial owners of the Company's Common
Stock.
<TABLE>
<S> <C> <C>
By Order of the Board of Directors,
---------------------------------------------
Robert S. Cramer, Jr.
Chairman of the Board and
Chief Executive Officer
</TABLE>
Atlanta, Georgia
August , 1999
18
<PAGE>
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
ON SEPTEMBER 28, 1999
The undersigned hereby appoints Robert S. Cramer, Jr. and Gregory M. Swayne
and each of them, proxies, with full power of substitution and resubstitution,
for and in the name of the undersigned, to vote all shares of common stock of
A.D.A.M. Software, Inc. which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders to be held on Thursday,
September 28, 1999, at 9:00 a.m., local time, at the Crowne Plaza Hotel, 6345
Powers Ferry Road, N.W., Atlanta, Georgia 30339, or at any adjournment thereof,
upon the matters described in the accompanying Notice of Annual Meeting of
Shareholders and Proxy Statement, receipt of which is hereby acknowledged, and
upon any other business that may properly come before the Annual Meeting of
Shareholders or any adjournment thereof. Said proxies are directed to vote on
the matters described in the Notice of Annual Meeting of Shareholders and Proxy
Statement as follows, and otherwise in their discretion upon such other business
as may properly come before the Annual Meeting of Shareholders or any
adjournment thereof.
1. To elect three (3) directors to serve until the 2002 Annual Meeting of
Shareholders:
/ / FOR all nominees listed (except as marked below to the contrary)
Robert S. Cramer, Jr. Anthony J. Gatti John W. McClaugherty
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
/ / WITHHOLD AUTHORITY to vote for all nominees listed.
2. To approve the proposal to amend the Company's articles of incorporation to
effect a corporate name change to adam.com, Inc.
/ / FOR / / AGAINST / / ABSTAIN
3. To approve the proposal to amend the A.D.A.M. Software, Inc. 1992 Stock
Option Plan to increase the number of shares reserved for issuance under the
Plan to 3,000,000.
/ / FOR / / AGAINST / / ABSTAIN
4. To ratify the appointment of Price Waterhouse LLP as the Company's
independent auditors for fiscal 2000.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR THE ABOVE-STATED PROPOSALS.
DATE: _______________________, 1999
___________________________________
___________________________________
Signature of Shareholder
Please sign exactly as your name or
names appear hereon. For more than
one owner as shown above, each
should sign. When signing in a
fiduciary or representative
capacity, please give full title.
If this proxy is submitted by a
corporation, it should be executed
in the full corporate name by a
duly authorized officer, if a
partnership, please sign in
partnership name by authorized
person.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING ON
SEPTEMBER 28, 1998. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF
YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
