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INFORMATION CONCERNING SOLICITATION AND VOTING

GENERAL INFORMATION ABOUT THE MEETING

Who May Vote

Voting Rights of Common Stock

Voting Your Proxy

Matters to be Presented

Changing Your Vote

Cost of This Proxy Solicitation

How Votes are Counted

Abstentions and Broker Non-Votes

Our Voting Recommendations

Deadline for Receipt of Stockholder Proposals

PROPOSAL ONE: ELECTION OF DIRECTORS

Nominees

Vote Required

EXECUTIVE OFFICERS

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

Board Independence

Committees of the Board of Directors

Audit Committee

Nominating and Corporate Governance Committee

Director Qualifications

Identification and Evaluation of Nominees for Directors

Compensation Committee

Compensation Committee Interlocks and Insider Participation

Annual Meeting Attendance

Communicating with the Board of Directors

Code of Ethics

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

Fees Billed By Deloitte & Touche LLP During Last Two Fiscal Years

Vote Required

Recommended Vote

EXECUTIVE COMPENSATION AND OTHER MATTERS

Option Grants in Last Fiscal Year

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

Employment, Change of Control and Severance Agreements

Directors’ Compensation

Section 16(a) Beneficial Ownership Reporting Compliance

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Other Related Party Transactions

COMPENSATION COMMITTEE REPORT

Compensation Philosophy

Components of Executive Compensation

Base Salary

Annual Cash Incentives

Long-Term Equity Incentives

CEO Compensation for Fiscal 2005

Compensation in Excess of $1 Million Per Year

AUDIT COMMITTEE REPORT

PERFORMANCE GRAPH

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS

The enclosed Proxy is solicited on behalf of the Board of Directors of Epicor Software Corporation (“Epicor” or the “Company”), for use at the Annual Meeting of Stockholders to be held on May 30, 2006 at 10:00 a.m. local time, and at any postponement or adjournment thereof. The Annual Meeting will be held at the Irvine Marriott Hotel located at 18000 Von Karman Ave., Irvine, CA 92612. The purposes of the Annual Meeting are set forth in the accompanying Notice of Annual Meeting of Stockholders.

These proxy solicitation materials and the enclosed Annual Report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A, for the fiscal year ended December 31, 2005, including financial statements, were first mailed on or about May 2, 2006 to all stockholders entitled to vote at the meeting. Our principal executive offices are located at 18200 Von Karman Avenue, Suite 1000, Irvine, California 92612, and our telephone number is (949) 585-4000.

Who May Vote

Stockholders of record at the close of business on April 17, 2006 (“Record Date”) are entitled to notice of and to vote at the Annual Meeting of Stockholders. The Company has one (1) class of equity securities outstanding, designated Common Stock, $.001 par value (“Common Stock”). At the Record Date, 55,899,458 shares of Common Stock, which includes 1,085,557 shares of Common Stock held by the Company as treasury shares, were issued and outstanding.

Voting Rights of Common Stock

Each share of Common Stock outstanding at the record date will be entitled to one (1) vote with respect to each proposal herein and any other matter that properly may come before the Annual Meeting of Stockholders. A total of 54,813,901 votes, which excludes 1,085,557 treasury shares, are eligible to be cast at the Annual Meeting.

Voting Your Proxy

If a broker, bank or other nominee holds your shares, you will receive instructions from them that you must follow in order to have your shares voted.

Internet and telephone voting may be available in the instructions from your broker, bank or other nominee. If a bank, broker or other nominee holds your shares and you wish to attend the meeting and vote in person, you must obtain a “legal proxy” from the record holder of the shares giving you the right to vote the shares.

If you hold your shares in your own name as a holder of record, you may instruct the proxy holders how to vote your common stock by using the toll free telephone number, the Internet voting site listed on the proxy card, or by signing, dating and mailing the proxy card in the postage paid envelope that we have provided. Of course, you may also choose to attend the meeting and vote your shares in person. Specific instructions for using the telephone and

Internet voting systems are on the proxy card. The telephone and Internet voting systems will be available until 11:59 p.m. (Central Time) on May 29, 2006. Whichever of these methods you select to transmit your instructions, the proxy holders will vote your shares in accordance with those instructions. If you sign and return a proxy card without giving specific voting instructions, your shares will be voted as recommended by our Board of Directors.

Matters to be Presented

We are not aware of any matters to be presented other than those described in this Proxy Statement. If any matters not described in the Proxy Statement are properly presented at the meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the meeting is adjourned, the proxy holders can vote your shares on the new meeting date as well, unless you have revoked your proxy instructions, as described below under “Changing Your Vote.”

Changing Your Vote

To revoke your proxy instructions if you are a holder of record, you must (i) advise our Corporate Secretary in writing before the proxy holders vote your shares, (ii) deliver later proxy instructions before the proxy holders vote your shares, or (iii) attend the meeting and vote your shares in person. If your shares are held by a bank, broker or other nominee, you must follow the instructions provided by the bank, broker or nominee.

Cost of This Proxy Solicitation

We will pay the cost of this proxy solicitation. We may, on request, reimburse brokerage firms and other nominees for their expenses in forwarding proxy materials to beneficial owners. In addition to soliciting proxies by mail, we expect that our directors, officers and employees may solicit proxies in person or by telephone or facsimile. None of these individuals will receive any additional or special compensation for doing this, although we will reimburse these individuals for their reasonable out-of-pocket expenses.

How Votes are Counted

The Annual Meeting will be held if a majority of the outstanding shares of Common Stock entitled to vote are represented in person or by proxy at the meeting. If you have returned valid proxy instructions or attend the meeting in person, your Common Stock will be counted for the purpose of determining whether there is a quorum, even if you wish to abstain from voting on some or all matters at the meeting.

Abstentions and Broker Non-Votes

Shares that are voted “WITHHELD” or “ABSTAIN” are treated as being present for purposes of determining the presence of a quorum and as entitled to vote on a particular subject matter at the Annual Meeting. If you hold your shares through a broker, bank or other nominee and you do not provide instructions on how to vote, your broker or other nominee may have authority to vote your shares on certain matters, including Proposals 1 and 2. If you hold your common stock through a bank, broker or other nominee, the broker may be prevented from voting shares held in your account on some proposals (not including Proposals 1 and 2) (a “broker non-vote”) unless you have given voting instructions to the bank, broker or nominee. Shares that are subject to a broker non-vote are counted for purposes of determining whether a quorum exists but not for purposes of determining whether a proposal has passed.

Our Voting Recommendations

When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in

accordance with the instructions of the stockholder. However, if no specific instructions are given, the shares will be voted in accordance with the following recommendations of our Board of Directors:

“FOR” the election of the Director nominees to the Board of Directors;

“FOR” ratification of McGladrey & Pullen, LLP as our independent auditors for fiscal year ending December 31, 2006

Deadline for Receipt of Stockholder Proposals

Stockholders may present proposals for action at a future meeting only if they comply with the requirements of the proxy rules established by the Securities and Exchange Commission (SEC) and our bylaws. Stockholder proposals that are intended to be included in our Proxy Statement and form of Proxy relating to the meeting for our 2007 Annual Meeting of Stockholders under rules set forth in the Securities Exchange Act of 1934, as amended (the Securities Exchange Act) must be received by us no later than January 2, 2007 to be considered for inclusion.

If a stockholder intends to submit a proposal or nomination for director for our 2007 Annual Meeting of Stockholders that is not to be included in Epicor’s Proxy Statement and form of Proxy relating to the meeting, the stockholder must give us notice in accordance with the requirements set forth in Epicor’s bylaws between 45 days and 90 days prior to the meeting, unless less than 55 days notice of the 2007 Annual Meeting of Stockholders is given, in which case stockholder notice must be received by Epicor no later than the 10th day following the date that notice of such meeting is given to stockholders. Epicor’s bylaws require that certain information and acknowledgments with respect to the proposal and the stockholder making the proposal be set forth in the notice. A copy of the relevant bylaw provision is available upon written request to Epicor Software Corporation, 18200 Von Karman Avenue, Suite 1000, Irvine, California 92612, Attention: Corporate Secretary. You can also access our SEC filings, including our Annual Report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A, on our website at www.epicor.com.

Nominees

Currently, there are five (5) members of the Board of Directors. Accordingly, at the Annual Meeting of Stockholders, five (5) directors are to be elected by the holders of Common Stock. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the Company’s five (5) nominees named below. All nominees are currently directors of the Company. If any Company nominee is unable or declines to serve as a director at the time of the Annual Meeting of Stockholders, the proxies will be voted for a nominee designated by the present Board of Directors to fill the vacancy. The Company is not aware of any nominee who will be unable to or will decline to serve as a director. The term of office for each person elected as a director will continue until the next Annual Meeting of Stockholders or until the earlier of his death, resignation or removal.

Name

Position

L. George Klaus

Michael Kelly*

Thomas F. Kelly*

Harold D. Copperman

Robert H. Smith

*Messrs. Thomas Kelly and Michael Kelly are unrelated to each other.

The Board of Directors recommends a vote “FOR” the election of all of the nominees listed above.

L. George Klaus

George Klaus has been a Director of the Company and has served as Chief Executive Officer of the Company since February 1996 and Chairman of the Board since September 1996. Mr. Klaus also served as President of the Company from February 1996 through November 1999 and from June 2001 to July, 2005. From July 1993 through October 1995, Mr. Klaus served as President, Chief Executive Officer and Chairman of the Board of Frame Technology, Inc., a software company that produces software tools for authoring, managing and distributing business-critical documents. Mr. Klaus is also a member of the Information and Computer Science CEO Advisory Board for the University of California, Irvine.

Michael Kelly

Michael Kelly joined Epicor’s board in September 2005 with over 30 years of global experience in banking, finance, technology, and public accounting. Mr. Kelly is currently chairman and CEO of Kinsale Associates, a merchant bank. Prior to that time he was CEO of Cape Semiconductor Inc., a fabless semiconductor company providing analog and mixed signal solutions to a variety of industries. Prior to joining Cape, Mr. Kelly was vice-chairman and senior managing director of Broadview International, LLC, an international technology investment banking firm and a division of Jefferies Inc. At Broadview, in addition to his focus on key technology sectors including semiconductors, telecom and capital equipment, Mr. Kelly was responsible for Broadview’s operations and activities in Asia. Previously, Mr. Kelly was a managing director of Flemings, an international investment bank; a partner with Touche Ross, a national CPA firm; and an executive with Granger Associates, an international telecommunications company. Mr. Kelly

currently serves Chairman of the board of Adept Technology, Inc., a controls for factory automation company. Kelly holds a Bachelor of Arts degree in accounting, a Master of Business Administration and is a certified public accountant.

Thomas F. Kelly

Thomas Kelly has been a Director of the Company since January 2000. Since January 2006, Mr. Kelly has been President and CEO of Encentuate, Inc., an enterprise access security company. Prior to that, from September 2004 through December 2005, Mr. Kelly was associated with Trident Capital as an EIR (Entrepreneur in Residence). In such EIR capacity, from March through September 2005, Mr. Kelly also held the title of Chief Executive Officer and member of the Board of Directors of Transware Limited and its holding company parent, Eastchase Limited. Transware provides localization and translation services to enterprises and e-learning content suppliers, supporting translation in 80 languages. Prior to that, he was Chairman and Chief Executive Officer of BlueStar Solutions, Inc., an enterprise resource planning software hosting company, from January 2001 to September 2004, at which time BlueStar was acquired by ACS, Inc. From July 1998 through December 2000, Mr. Kelly was Chairman and Chief Executive Officer of Blaze Software, Inc., a provider of rules-based e-business software that enables personalized interaction across an enterprise’s electronic contact points. From March 1996 through March 1998, Mr. Kelly was employed at Cirrus Logic, Inc. as Executive Vice President and Chief Financial Officer, and then subsequently Chief Operating Officer. From September 1993 through December 1995, Mr. Kelly served as Executive Vice President and Chief Financial Officer of Frame Technology Corporation, a software company that produces software tools for authoring, managing and distributing business-critical documents. Mr. Kelly is also a director of FEI Company (NASDAQ: FEIC), a manufacturer of particle and ion beam imaging and analysis solutions for the semiconductor and science markets and a director of Sendmail, Inc., a private email security company.

Harold D. Copperman

Harold Copperman has been a director of the Company since July 2001. Mr. Copperman is currently the CEO and President of HDC Ventures, Inc., a management and investment group focusing on enterprise systems, software and services. From 1993 through 1999, Mr. Copperman served as Senior Vice President and Group Executive of the Products Divisions at Digital Equipment Corporation where he was responsible for the company’s six computer systems business units and worldwide manufacturing and distribution. Mr. Copperman was formerly a director of America Online, Inc. (1989-1993) and 800 Software (1992-1993) and currently sits on the Boards of Avocent Corporation (NASDAQ: AVCT), AXS-One Inc. (AMEX: AXO) and a number of other private companies in the information technology business.

Robert H. Smith

Mr. Smith has been a director of the Company since May 2003. Mr. Smith has over forty years of experience in financial management with leading technology companies. From 1963 at the onset of his career at Honeywell, Inc., Mr. Smith has held a number of executive positions in operations, finance and administration with Memorex Corporation and Control Data Corporation. In 1982, Mr. Smith joined R. R. Donnelley & Sons Company (NYSE: DNY), a leading provider of financial printing and communications as executive vice president, finance and chief financial officer. Mr. Smith

went on to become president of Maxwell Graphics in 1986. In 1996, Mr. Smith joined Novellus Systems, Inc., as executive vice president, finance and administration and chief financial officer. Mr. Smith also served on the board of directors of Novellus until his retirement in 2002. Since 1990, Mr. Smith has been a member of the board of directors of Cirrus Logic, Inc. (NASDAQ: CRUS), serves on the company’s compensation committee, and also serves as chairman of the audit committee. In 2003, Mr. Smith joined the board of directors of PLX Technology (NASDAQ: PLXT) a provider of high-speed connectivity equipment in the semiconductor industry and also joined the board of Virage Logic (NASDAQ: VIRL), a single source provider of semiconductor IP platforms. In 2005, Mr. Smith joined the Board of ON Semiconductor (Nasdaq: ONNN) a leading global supplier of power and data-management semiconductors and standard semiconductor components.

Vote Required

The five (5) nominees for director receiving the highest number of affirmative votes from holders of shares entitled to be voted for them shall be elected as directors. Votes withheld from any director are counted for purposes of determining the presence or absence of a quorum, but have no other legal effect under Delaware law. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF THE COMPANY’S FIVE (5) NOMINEE DIRECTORS. Unless otherwise marked, proxies solicited by the Company will be voted FOR the election of the Company’s five (5) nominee directors.

Name

Position

Mark Duffell

Michael Piraino

Mark Duffell

Since July 2005, Mark Duffell has served as Epicor’s President and Chief Operating Officer. Prior to July 2005, he served as Epicor’s Executive Vice President and general manager for the Enterprise Solutions Group and International Operations. Mr. Duffell joined Epicor Software Corporation in 1996 and brought nearly a decade of International sales management experience to the company. In his previous position as executive vice president and general manager of the Enterprise Solutions Group and the International operations, Mr. Duffell was responsible for all aspects of Epicor’s Enterprise Solutions Group in the Americas and all International Operations. Before overseeing Epicor’s International business affairs he served as vice president of EMEA and then of North American sales.

Michael Piraino

Michael Piraino joined Epicor Software Corporation as Senior Vice-President and Chief Financial Officer in May, 2003, bringing 28 years experience in senior executive and financial roles. In July 2005, he was promoted to Executive Vice President. Mr. Piraino spent more than nine years at Deloitte & Touche LLP, and has held senior finance positions at a number of public companies including Winn Enterprises, Total Pharmaceutical Care, and Syncor International. Prior to joining Epicor, Mr. Piraino founded CEO Resources L.L.C., a premier executive resource management company providing small to medium high-growth companies with interim CEO services, corporate finance and M&A advisory services and integration strategies. Before that, he held the position of president and COO at Enfrastructure, a full-service business and technology infrastructure provider for high-growth companies.

Board Independence

The Board of Directors has determined that each of its current directors, including all nominee directors, except the Chief Executive Officer, has no material relationship with Epicor and is independent within the meaning of the NASDAQ Stock Market, Inc. director independence standards, as currently in effect.

Committees of the Board of Directors

The Board of Directors has Audit, Nominating and Corporate Governance, and Compensation Committees. Each of these committees has adopted a written charter. All members of the committees are appointed by the Board of Directors, and are independent directors. The following describes each committee and its function, its current membership and the number of meetings held during fiscal year 2005.

Audit Committee

The Audit Committee currently consists of Messrs. Tom Kelly, Smith, and Copperman, each of whom is independent within the meaning of the NASDAQ Stock Market, Inc. director independence standards, as currently in effect. Mr. Dixon was also a member of the Audit Committee through September 2005. The Board of Directors has determined that Mr. Tom Kelly is an “audit committee financial expert” as defined in SEC rules. The Audit Committee held five (5) meetings during fiscal year 2005. Mr. Kelly serves as Chairman of the Audit Committee.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee consists of Messrs. Tom Kelly, Copperman and Smith, each of whom is independent within the meaning of the NASDAQ Stock Market, Inc. director independence standards, as currently in effect. Mr. Smith serves as chair of the Nominating and Corporate Governance Committee and also as the Lead Director.

Director Qualifications

The Nominating and Corporate Governance Committee uses a variety of criteria to evaluate the qualifications and skills necessary for members of our Board of Directors. Under these criteria, members of the Board of Directors should have the highest professional and personal ethics and values, consistent with longstanding Epicor values and standards. They should have broad experience at the policy-making level in business, government, education, technology or public interest. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a reasonable number that permits them, given their individual circumstances, to perform responsibly all director duties. Each director must represent the interests of all stockholders.

Identification and Evaluation of Nominees for Directors

The Nominating and Corporate Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director. The Nominating and Corporate Governance Committee regularly assesses the appropriate size of the Board of Directors, and whether any vacancies on the Board of Directors are expected due to retirement or otherwise. In the event

that vacancies are anticipated, or otherwise arise, the Nominating and Corporate Governance Committee considers various potential candidates for director. Candidates may come to the attention of the Nominating and Corporate Governance Committee through current members of the Board of Directors, professional search firms, stockholders or other persons. These candidates are evaluated at regular or special meetings of the Nominating and Corporate Governance Committee, and may be considered at any point during the year. As described above, the Nominating and Corporate Governance Committee considers properly submitted stockholder recommendations for candidates for the Board of Directors. In evaluating such recommendations, the Nominating and Governance Committee uses the qualifications standards discussed above and seeks to achieve a balance of knowledge, experience and capability on the Board of Directors.

Compensation Committee

The Compensation Committee consists of Messrs. Tom Kelly, Michael Kelly and Smith each of whom is independent within the meaning of the NASDAQ Stock Market, Inc. director independence standards, as currently in effect. Mr. Dixon was also a member of the Compensation Committee through September 15, 2005. The Compensation Committee held five (5) meetings during fiscal year 2005 and acted by unanimous consent on several occasions. The Compensation Committee also met in January 2006, following the end of fiscal year 2005, to review fiscal year 2005 compensation and set fiscal year 2006 compensation. Mr. Smith serves as Chair of the Compensation Committee.

Compensation Committee Interlocks and Insider Participation

During fiscal year 2005, no member of the Compensation Committee was an officer or employee of Epicor, and no member of the Compensation Committee has been at any time in the past an officer of Epicor. During fiscal year 2005, no member of the Compensation Committee or executive officer of Epicor served as a member of the Board of Directors or Compensation Committee of any entity that has an executive officer serving as a member of our Board of Directors or Compensation Committee.

Annual Meeting Attendance

The Company’s policy is to invite, but not require directors to attend annual meetings of Epicor stockholders. One (1) director attended the 2005 annual meeting of stockholders.

Communicating with the Board of Directors

Epicor’s policy is that shareholders may communicate with the Board of Directors, by submitting an email to bod@epicor.com, or by writing to us at Epicor Software Corporation, Attention: Board of Directors, 18200 Von Karman Avenue, Suite 1000, Irvine, California 92612. Stockholders who would like their submission directed to a member of the Board of Directors may so specify, and the communication will be forwarded. All other stockholder communications related to the Board and the Company’s business are forwarded directly to the entire Board of Directors by the General Counsel of the Company.

Code of Ethics

The Board of Directors has adopted a Worldwide Code of Business Conduct and Code of Ethics, which is applicable to the Company, including the Chief Executive Officer, Chief Financial Officer and all officers of the Company. The Board has also adopted separate Corporate Governance Guidelines, which contains provisions specifically applicable to directors.

statements; or (ii) any matter that was either the subject of a disagreement or a reportable event.

Fees Billed By Deloitte & Touche LLP During Last Two Fiscal Years

The following table sets forth the approximate aggregate fees billed to Epicor during fiscal years 2005 and 2004 by Deloitte & Touche LLP:

Vote Required

If a quorum is present, the affirmative vote of a majority of the shares present and entitled to vote at the Annual Meeting will be required to ratify the appointment of McGladrey & Pullen LLP as our independent auditors. Abstentions will have the effect of a vote “against” the ratification of McGladrey & Pullen LLP as our independent auditors. Broker non-votes will have no effect on the outcome of the vote.

Recommended Vote

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF MCGLADREY & PULLEN LLP AS EPICOR’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2006.

Name and Principal
Position

L. George Klaus

Chairman of the Board and Chief Executive Officer

Michael A. Piraino

Executive Vice President and Chief Financial Officer

Mark A. Duffell

President and Chief Operating Officer

On July 19, 2005, the compensation committee of the board of directors granted to Mr. Duffell the right to receive 80,000 shares of restricted stock for a purchase price equal

to the par value of such stock. The grant was made in connection with Mr. Duffell’s promotion to President and Chief Operating Officer of the Company. The grant was effective immediately and the restrictions on the stock lifted over time with 25% of the shares vesting on the first anniversary of the grant and the remaining 75% of the shares vesting quarterly thereafter over the next three years such that they are fully vested after 4 years. The value of Mr. Duffell’s 80,000 shares of restricted stock at December 31, 2005, was $1,130,320, which was determined by multiplying the number of restricted shares times $14.13, the closing price of the Company’s common stock on December 31, 2005, net of the consideration paid for the restricted shares. The restricted stock is entitled to the same dividends as are paid to the common stock generally.

Individual Grants

Name

L. George Klaus

Michael A. Piraino

Mark A. Duffell

number of shares covered by both exercisable and unexercisable stock options outstanding as of December 31, 2005. Also reported are the values for “in the money” options that represent the positive spread between the exercise prices of any of such existing stock options and the closing sale price of the Company’s Common Stock as of December 31, 2005.

Name

L. George Klaus

Michael A. Piraino

Mark A. Duffell

Employment, Change of Control and Severance Agreements

The Company entered into an offer letter with L. George Klaus when he joined the Company as President and Chief Executive Officer in February 1996. The offer letter initially provided for a base salary of $500,000, together with an annual bonus on a fiscal year basis of up to $250,000 based on a performance plan. The offer letter also initially provided that Mr. Klaus could earn an additional incentive bonus of up to $250,000 upon fulfillment of certain performance criteria. Mr. Klaus’ base salary has been increased since the time he joined the Company and his bonus plan also has been modified. See “COMPENSATION COMMITTEE REPORT — CEO Compensation for Fiscal 2005.”

provided for his receipt of additional benefits in the event of a Change in Control of the Company as defined in the management retention agreement. Among other things, Mr. Klaus also will receive twelve months coverage under the Company’s benefit plans and a payment to offset the effect of any excise taxes required to be paid on account of his receipt of severance payments and benefits.

The target bonus may increase to $320,000 if the performance targets are exceeded.

Directors’ Compensation

In 2005, the Companies paid each non-employee director of the Company a $12,000 annual retainer fee and a $6,000 fee for physical attendance at each board meeting. The board meeting fee is $3,000 per meeting if attendance is via phone. Beginning in 2005, non-employee members of the Board’s Audit, Nominating and Governance Committee and Compensation Committees were also paid a $3,000 fee for attendance at each committee meeting. Additionally, the Chairperson of the Audit, Nominating and Governance and Compensation Committee received yearly retainer fees of $12,000, $8,000 and $8,000, respectively for fulfilling such roles and which retainers were paid out quarterly. Beginning with his selection in April 2005, the Lead Director, Robert Smith, received a quarterly $2500 retainer for fulfilling such role.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act requires our executive officers, directors and ten percent stockholders to file reports of ownership and changes in ownership with the SEC. The same persons are required to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of such forms, we believe that all our executive officers, directors and five percent stockholders complied with the applicable filing requirements, except for one Form 4 filing made on behalf of Robert Smith, which Form 4 was inadvertently filed one day late on June 1, 2005 following the memorial day holiday in order to report several transactions resulting from an exercise of options and the subsequent sale of such common stock.

Except for the compensation agreements and other arrangements that are described under “Change of Control and Severance Agreements” and the transactions described below, there was not during fiscal year 2005 nor is there currently proposed, any transaction or series of similar transactions to which Epicor was or is to be a party in which the amount involved exceeds $60,000 and in which any director, nominee for director, executive officer, five percent stockholder or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.

Other Related Party Transactions

George Klaus, the Company’s Chairman and CEO, is currently engaged to be married to one of the Company’s Executive Vice Presidents. The Executive Vice President to whom Mr. Klaus is engaged is not an “executive officer” of the Company, and she reports directly to the President and Chief Operating Officer of the Company and not directly to Mr. Klaus. In addition, following a thorough board review of the relationship, the Board has determined that, so long as Mr. Klaus remains in this relationship, all employment and compensation matters relating to her will be made by the President and COO, subject to review and approval by the Chair of the Audit Committee or the entire Audit Committee of the Board, rather than Mr. Klaus. She is currently compensated at a level that the Company believes is comparable to other employees in similar positions of responsibility at the Company.

On February 13, 2003, the Company completed a private placement of 300,000 shares of newly created Series D Preferred Stock resulting in gross proceeds to the Company of $5,730,000. The Company sold the shares, each of which is convertible into 10 shares of the Company’s common stock, to investment funds associated with Trident Capital (“Trident”, collectively, the “Trident Funds”), a venture capital firm in which one of the Company’s former directors, Donald R. Dixon, serves as managing director, pursuant to a Series D Preferred Stock Purchase Agreement dated as of February 11, 2003 between the Company and Trident. Mr. Dixon is a managing director of Trident Capital, Inc., which is the general partner of Trident Capital, L.P., which is the general partner of Trident Capital Partners Fund -I, L.P. and Trident Capital Partners Fund -I, C.V.; Mr. Dixon is also a member of Trident Capital Management -V, LLC, which is the general partner of Trident Capital Fund-V, L.P., Trident Capital Fund-V Principals Fund, L.P., Trident Capital Fund-V Affiliates Fund, L.P., Trident Capital Fund-V Affiliates Fund (Q), L.P. and Trident Capital Parallel Fund-V, C.V.

The price of the Series D Preferred Stock was determined to be $19.10, reflecting the Company’s common stock closing price of $1.91 on February 10, 2003, the day preceding the purchase agreement.

Certain of the Trident Funds, acquired a total of 61,735 shares of Series C Preferred Stock; 25,415 shares were acquired on May 30, 1995 at a purchase price of $78.70 per share and 36,320 shares were acquired on March 5, 2003 at a purchase price of $19.10 per share. These shares were convertible at any time at the election of the holder on a 10-for-1 basis into common stock.

On November 12, 2004, certain of the Trident Funds effected a conversion of 131,842 shares of Series D Preferred Stock (convertible 10-for-1) into 1,318,420 shares of common stock, leaving a balance of 168,158 shares of

Series D Preferred Stock that had not been converted. In addition, on November 12, 2004, certain of the Trident Funds effected a conversion of 61,735 shares of Series C Preferred Stock (convertible 10-for-1) into 617,350 shares of common stock, and no longer own any shares of Series C Preferred Stock. On August 3, 2005, certain of the Trident Funds effected a conversion of the remaining 168,158 shares of Series D Convertible Preferred Stock convertible (10-for 1), into 1,681,580 shares of common stock, and no longer own any shares of Series D Preferred Stock.

The following is the report of the Compensation Committee of the Board of Directors with respect to the compensation paid to our executive officers during fiscal year 2005. Actual compensation earned during fiscal year 2005 by the persons named in the Summary Compensation table is shown in the Summary Compensation Table.

Compensation Philosophy

Epicor’s philosophy in setting compensation policies for executive officers is to align overall compensation with performance. The Compensation Committee approves and regularly evaluates Epicor’s compensation policies applicable to the executive officers, including the chief executive officer, and reviews the performance of these officers. The Compensation Committee strongly believes that executive compensation should be directly linked to continuous improvements in corporate performance and increases in stockholder value and has adopted the following guidelines for compensation decisions:

The Compensation Committee also believes that it is in the best interests of stockholders for Epicor’s executive officers have equity stakes in Epicor in order to align the financial interests of executive officers with those of stockholders.

Components of Executive Compensation

The compensation program for our executive officers consists of the following components:

Base Salary

The Board of Directors reviewed and approved fiscal year 2005 salaries for our Chief Executive Officer and other executive officers named in the Summary Compensation Table at the beginning of the fiscal year. Base salaries were established by the Board of Directors based upon each individual’s employment agreements as well as competitive compensation data, and each person’s job responsibilities, level of experience, individual performance and contribution to the business. In making base salary decisions, the Board of Directors exercised its discretion and judgment based upon these factors and no specific formula was applied to determine the weight of each factor. The Compensation Committee periodically reviews and uses, as appropriate, market compensation information obtained through

surveys of technology companies and customized surveys through the help of an independent consulting firm. This information is used to evaluate relative market position and to assist in designing guidelines with respect to compensation.

Annual Cash Incentives

Annual incentive bonuses for executive officers and other officers of the Company are intended to reflect the Board of Directors’ belief that a significant portion of the compensation of each executive officer should be contingent upon the performance of Epicor, as well as the individual contribution of each executive officer. To carry out this philosophy, the Company has established a cash bonus plan for executives and key employees. Payment of bonuses is dependent on the Company’s achieving specific performance criteria for the fiscal year. The performance criteria include a Company operating revenue target and a Company profit before taxes goal. One half of the bonus is based on achieving the operating revenue goal and the other half is tied to achieving the profit before taxes goal. Potential cash bonuses under the plan range from 5 percent to 100 percent of an individual’s base salary and can exceed 100 percent of base salary if greater than 100 percent of the performance criteria are achieved. Bonuses are paid if 75 percent of either the operating revenue or profit before taxes goals are met. The annual target level of the annual bonuses that the executive officers were eligible to receive varied from 50 to 60 percent of base salaries.

The profit and revenue targets are established on the basis of annual budget and forecasts developed by management and approved by the Compensation Committee. This operating plan is developed on the basis of (i) the Company’s performance for the prior fiscal year, (ii) estimates of sales revenue for the plan year based upon recent market conditions, trends and competition and other factors that, based on historical experience, are expected to affect the level of sales that can be achieved, (iii) historical operating costs and cost savings that management believes can be realized, (iv) competitive conditions faced by the Company, and (v) additional expenditures beyond prior fiscal years. By taking all of these factors into account, including market conditions, the earnings goal and revenue targets are determined. Given the variety of employment alternatives in both established and start-up high technology companies, the Compensation Committee concluded that the bonus plan could assist the Company in retaining and motivating its key management employees.

As a result of this performance-based bonus program, executive compensation, and the proportion of each executive’s total cash compensation that is represented by incentive or bonus income, may increase in those years in which the Company’s profitability increases. The variable compensation bonus plan is intended to motivate and reward executive officers by directly linking the amount of any cash bonus to specific company-based performance targets and specific individual-based performance targets. The Compensation Committee evaluates the performance of the executive officers and Epicor and approves a performance rating based upon the results of its evaluation after the end of the fiscal year. In fiscal 2005, the persons named in the Summary Compensation Table were paid the bonus amounts shown in the Summary Compensation Table as we exceeded our corporate performance targets for revenue and profit during fiscal year 2005.

Long-Term Equity Incentives

The Board provides our executive officers with long-term incentive compensation through grants of options to purchase our Common Stock and/or grants of restricted stock subject to a right of repurchase which lapses over time. The goal of the long-term equity incentive program is to align the interests of executive officers with those of Epicor’s stockholders and to provide each executive officer with a significant incentive to manage Epicor from the perspective of an owner with an equity stake in the business. It is the belief of the Board that equity awards directly motivate an executive to maximize long-term stockholder value. The equity awards also utilize vesting periods that encourage key executives to continue in our employ. The Board considers each equity award individually and subjectively at the time of the grant, reviewing factors such as the performance of the executive officer, the anticipated future contribution toward the attainment of our long-term strategic performance goals and the number of other equity awards held by each executive officer at the time of the new grant. In fiscal year 2005, executive officers were not granted any stock options to purchase shares of our Common Stock and were granted an aggregate of 120,000 shares of restricted stock in connection with promotions described in the section entitled “Employment, Change of Control and Severance Arrangements.”

CEO Compensation for Fiscal 2005

The principal components of compensation for the Chief Executive Officer for fiscal 2005 included base salary and bonus. L. George Klaus, the Company’s Chief Executive Officer, received a salary of $736,403 during fiscal 2005. Mr. Klaus’ base salary was negotiated as part of his compensation package when he joined the Company in February 1996 and has been subsequently increased on an annual basis. Mr. Klaus’ base salary increased by six percent (6%) percent over his salary at December 31, 2004.

Mr. Klaus also received a bonus of $681,173 for fiscal 2005. Mr. Klaus’ bonus plan for fiscal 2005 provided for a target bonus of $441,842. As described above, one half of the target bonus was based on achieving an operating revenue goal for the Company, the other half was based upon the Company achieving a profit before taxes goal and additional amounts could be earned if the Company exceeded 100 percent of the operating revenue and profit goals. Bonuses are paid if 75 percent of either the operating revenue or profit before taxes goals are met based on objective formulas. For 2005, Mr. Klaus received a bonus for 200 percent of his operating revenue bonus

target and 108 percent of his net income bonus target due to the Company’s strong financial performance in fiscal year 2005, which exceeded targeted expectations.

During the fiscal year 2005, the Compensation Committee evaluated Mr. Klaus’s holdings of Epicor stock, stock options and restricted stock, including an evaluation of previously granted stock options and restricted stock purchase rights. Mr. Klaus was not granted any stock options or restricted stock during the fiscal year ended December 31, 2005.

Compensation in Excess of $1 Million Per Year

Section 162(m) of the Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to public companies for compensation over $1 million paid to any of the Company’s Chief Executive Officer and four other most highly compensated executive officers. Certain performance-based compensation, however, is specifically exempt from the deduction limit. The Company does not currently have a policy that requires or encourages the Compensation Committee to qualify stock options or restricted stock awarded to executive officers for deductibility under Section 162(m) of the Internal Revenue Code. However, the Compensation Committee does consider the net cost to the Company in making all compensation decisions and is currently investigating the possibility of implementing programs that would allow for deductibility under Section 162(m).

VOTE BY INTERNET—www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

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If you would like to reduce the costs incurred by Epicor Software Corporation in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years.

VOTE BY PHONE 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we’ve provided or return to Epicor Software Corporation, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.

        For    Withhold    For All        

        All        All            Except         

To withhold authority to vote, mark “For All Except”

and write the nominee’s number of the line below.

01)   L. George Klaus, 02)  Michael Kelly,

03)   Thomas F. Kelly, 04)  Harold D. Copperman and

05)   Robert H. Smith

Vote on Proposals

2.     Appointment of McGladrey & Pullen LLP as Independent Accountants—To ratify the appointment of McGladrey & Pullen LLP as independent accountants for the year ending December 31, 2006.

3.     To transact such other business as may properly come before the meeting or any postponements or adjournments.

For    Against    Abstain

¨              ¨              ¨

For    Against    Abstain

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