<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Firearms Training Systems, 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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
(FATS LOGO)
FIREARMS TRAINING SYSTEMS, INC.
7340 MCGINNIS FERRY ROAD
SUWANEE, GEORGIA 30024
September 13, 1999
To Our Stockholders:
On behalf of the Board of Directors and management of Firearms Training
Systems, Inc., I cordially invite you to the Annual Meeting of Stockholders to
be held on September 24, 1999, at 10:00 a.m., at the Marriott Hotel, 475
Technology Parkway, Norcross, GA 30092.
At the Annual Meeting, stockholders will be asked to elect three (3)
directors of the Company, all of whom are currently directors of the Company. In
addition, stockholders will be asked to approve an increase of the Company's
authorized shares of Class B Common Stock from 2,200,000 shares to 6,200,000
shares. Information about these persons, the increase in authorized shares and
certain other matters is contained in the accompanying Proxy Statement. A copy
of the Company's 1999 Annual Report to Stockholders, which contains financial
statements and other important information about the Company's business, is also
enclosed.
It is important that your shares of stock be represented at the meeting,
regardless of the number of shares you hold. You are encouraged to specify your
voting preferences by marking and dating the enclosed proxy card. However, if
you wish to vote for reelecting the directors, all you need to do is sign and
date the proxy card.
Please complete and return the proxy card in the enclosed envelope whether
or not you plan to attend the meeting. If you do attend and wish to vote in
person, you may revoke your proxy at that time.
We hope you are able to attend, and look forward to seeing you.
Sincerely,
(/s/ Peter A. Marino)
Peter A. Marino
CHIEF EXECUTIVE OFFICER AND PRESIDENT
<PAGE> 3
FIREARMS TRAINING SYSTEMS, INC.
7340 MCGINNIS FERRY ROAD
SUWANEE, GEORGIA 30024
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 24, 1999
To the Stockholders of
Firearms Training Systems, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Firearms
Training Systems, Inc. will be held at 10:00 a.m. on Friday, September 24, 1999,
at the Marriott Hotel, 475 Technology Parkway, Norcross, GA 30092, for the
following purposes:
1. To elect three of the nine directors constituting the Board of Directors
to serve for three years and until their successors are elected and qualified;
2. To approve an amendment to the Certificate of Incorporation of the
Company increasing the number of authorized shares of Class B Non-voting Common
Stock from 2,200,000 shares to 6,200,000 shares; and
3. Such other matters as may properly come before the meeting and any
adjournment or postponement thereof.
Only stockholders of record on August 31, 1999, are entitled to notice of
and to vote at the Annual Meeting and any adjournment or postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS,
(/s/John A. Morelli)
John A. Morelli
SECRETARY
Suwanee, Georgia
September 13, 1999
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE FILL IN,
DATE, SIGN, AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED BUSINESS
REPLY ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. THE
PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE PRESENT AT
THE ANNUAL MEETING, YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND
EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
<PAGE> 4
PROXY STATEMENT
DATED SEPTEMBER 13, 1999
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 24, 1999
This Proxy Statement is furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors of Firearms Training Systems,
Inc. ("FATS" or the "Company") for use at FATS' 1999 Annual Meeting of
Stockholders ("Annual Meeting") to be held on Friday, September 24, 1999,
including any postponement, adjournment, or adjournments thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting. The Company's
principal offices are located at 7340 McGinnis Ferry Road, Suwanee, Georgia
30024. The cost of soliciting proxies will be borne by the Company. Proxies will
be solicited through the use of the mails by the directors, officers and
employees of the Company. Management intends to mail this Proxy Statement and
the accompanying form of proxy to stockholders on or about September 13, 1999.
Only stockholders of record at the close of business on August 31, 1999
(the "Record Date"), are entitled to notice of and to vote in person or by proxy
at the Annual Meeting. As of the Record Date, there were 19,058,946 shares of
Class A Voting Common Stock, $.000006 par value per share ("Common Stock") of
FATS outstanding and entitled to vote at the Annual Meeting. The presence of a
majority of such shares is required, in person or by proxy, to constitute a
quorum for the conduct of business at the Annual Meeting. Each outstanding share
of Common Stock is entitled to one vote on any matter submitted for vote by the
stockholders.
Proxies in the accompanying form, duly executed and returned to the
management of the Company, and not revoked, will be voted at the Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by the stockholder
at any time prior to the voting of the proxy by delivery of a subsequently dated
proxy, by written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the Annual Meeting and voting in person.
Proxies that are executed but which do not contain any specific
instructions will be voted for the election of all the nominees for directors
specified herein and in the discretion of the persons appointed as proxies on
any other matter that may properly come before the Annual Meeting or any
postponement, adjournment or adjournments thereof, including any vote to
postpone or adjourn the Annual Meeting.
A copy of the Company's 1999 Annual Report to Stockholders which includes
financial statements, but which does not constitute part of the proxy
solicitation material, is being furnished herewith to each shareholder of record
as of the close of business on August 31, 1999. Additional copies of the 1999
Annual Report to Stockholders and copies of the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1999 will be provided free of charge
upon written request to:
FIREARMS TRAINING SYSTEMS, INC.
7340 McGINNIS FERRY ROAD
SUWANEE, GEORGIA 30024
ATTN: INVESTORS RELATIONS DEPARTMENT
If the person requesting the Form 10-K was not a stockholder of record on
August 31, 1999, the request must include a representation that the person was a
beneficial owner of Common Stock on that date. Copies of any exhibits to the
Form 10-K will also be furnished on request and upon payment of the Company's
expenses in furnishing the exhibits.
<PAGE> 5
OWNERSHIP OF STOCK BY DIRECTORS, EXECUTIVE OFFICERS
AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Class A Voting Common Stock ("Common Stock") and Class B Non-voting
Common Stock ("Class B Stock") as of August 31, 1999 by: (i) each person (or
group of affiliated persons) who is known by the Company to own beneficially
more than 5% of the outstanding shares of Common Stock; (ii) each of the
Company's directors; (iii) the Company's chief executive officer and each of the
other employees included in the Summary Compensation Table; and (iv) the
Company's current directors and officers as a group. Except as indicated in the
footnotes to the table, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock indicated as being
beneficially owned by them.
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON CLASS B
STOCK STOCK
BENEFICIALLY BENEFICIALLY
OWNED(2) OWNED(3)
NAME OF BENEFICIAL OWNER(1) NUMBER % NUMBER %
--------------------------- ------------ ---- ------------- -----
<S> <C> <C> <C> <C>
Centre Capital Investors II, L.P. 6,104,451 32.0% 3,237,932 68.1%
Centre Partners Coinvestment, L.P. 903,016 4.7% 458,121 9.6%
Centre Capital Offshore Investors II, L.P. 1,209,596 6.3% 641,668 13.5%
Centre Capital Tax-exempt Investors II, L.P. 682,428 3.6% 361,944 7.6%
Centre Partners Management LLC(4) 8,076,500 42.4% 4,241,544 89.2%
Centre Partners II LLC(5) 9,470,672 49.7% 4,753,502 100.0%
THIN International(6) 2,454,478 12.9% - -
Peter A. Marino(7) 195,883 * - -
Juan C.G. de Ledebur(7) 78,483 * - -
Robert F. Mecredy(7) 53,500 * - -
Caryl G. Marsh(7) 8,684 * - -
John A. Morelli(7) 2,980 * - -
Lester Pollack(8) - - - -
William J. Bratton 13,735 * - -
Gilbert F. Decker 6,868 * - -
Craig I. Fields 34,470 * - -
Frank S. Jones 6,334 * - -
Jonathan H. Kagan(9) - - - -
Scott Perekslis(10) 9,005 * - -
Paul J. Zepf(11) 10,506 * - -
All current directors and executive officers as a
group (13 individuals)(12) 423,902 2.2% - -
</TABLE>
- ------------------------------------
* Less than 1%
(1) The address of Centre Capital Investors II, L.P., Centre Partners
Coinvestment, L.P., Centre Capital Tax-exempt Investors II, L.P. (together
with Centre Capital Offshore Investors II, L.P., the "Centre
Partnerships"), Centre Partners Management LLC ("Centre Management") and
Centre Partners II, LLC (together with Centre Capital Offshore Investors
II, L.P., the "Centre Entities") is 30 Rockefeller Plaza, New York, New
York 10020; the address of Centre Capital Offshore Investors II, L.P. is
c/o Reid Management, Cedar House, 41 Cedar Avenue, Box HM 1179, Hamilton,
Bermuda; and the address of THIN International N.V. ("THIN International")
is Landhuis Joonchi, Koya Richard J. Beaujan z/n, P.O. Box 837, Curacao,
Netherlands Antilles.
(2) Based on 19,058,946 shares of Common Stock outstanding on August 31, 1999.
Calculation of percentage of beneficial ownership assumes the exercise of
all options exercisable within 60 days of August 31, 1999 only by the
respective named shareholder.
2
<PAGE> 6
(3) The Centre Partnerships shown as beneficially owning Class B Stock own all
outstanding shares of such stock and have entered into a binding agreement
by which each has agreed not to exercise the right to convert Class B Stock
for Common Stock provided by the Restated Certificate of Incorporation, if
as a result of such conversion, the Centre Partnerships would hold, of
record, or beneficially with power to vote, more than 50% of the shares of
Common Stock outstanding immediately following such conversion unless
concurrently with such conversion the shares of Common Stock are
transferred to an unaffiliated person. Included within the shares of Class
B Stock are 3,058,933 warrants currently exercisable into shares of Class B
Stock.
(4) Information regarding ownership of Common Stock by the Centre Entities is
included herein in reliance on information set forth in a Form 4 filed by
the Centre Entities in December 1998 with the Securities Exchange
Commission (the "Commission"), reflecting ownership as of November 30, 1998
as well as information set forth in Schedule 13G filed by the Centre
Entities in February, 1999. Pursuant to a Management Agreement, Centre
Capital Investors II, L.P., Centre Partners Offshore Investors II, L.P. and
Centre Capital Tax-exempt Investors II, L.P. have delegated voting and
investment power with respect to the Common Stock beneficially owned by
them to Centre Management and investment power over such shares of
nonvoting Class B Stock; accordingly, the aggregate security ownership of
those Centre Entities is reflected for Centre Management as well.
(5) As general partner of Centre Partners Coinvestment, L.P. and general
partner of the general partner of Centre Capital Investors II, L.P., Centre
Partners Offshore Investors II, L.P. and Centre Capital Tax-exempt
Investors II, L.P., Centre Partners II LLC ("Centre Partners") is reflected
as beneficially owning the Common Stock and Class B Stock owned by those
Centre Entities. In addition, pursuant to certain co-investment
arrangements, Centre Partners has been delegated voting and investment
power with respect to an additional 571,181 shares of Common Stock and
53,837 warrants. In addition, included within the shares of Class B Stock
are 3,058,933 warrants currently exercisable into shares of Class B Stock.
(6) Information regarding ownership of Common Stock by THIN International is
included herein in reliance on information set forth in a Form 4 filed by
THIN International in August 1998 with the Commission, reflecting ownership
as of July 31, 1998. Mr. GH Thyssen-Bornemisza, a Swiss national resident
in Monaco and chairman of TBG Holdings N.V., may be deemed to have sole
voting and dispositive power over the Common Stock owned by THIN
International.
(7) Messrs. Marino, de Ledebur, Marsh, Mecredy and Morelli's beneficial
ownership includes exercisable options for 95,396 shares, 23,665 shares,
8,684 shares, 21,652 shares and 3,454 shares, respectively. In addition,
Messrs. Marino, de Ledebur, Mecredy and Morelli's beneficial ownership
includes 2,215 shares, 1,034 shares, 1,138 shares and 980 shares,
respectively held in a 401(k) plan for the benefit of each officer, over
which each officer has been delegated voting and investment power. For Mr.
Morelli, includes 2,000 shares of Common stock owned by his wife for which
he disclaims any beneficial ownership.
(8) Excludes 8,076,500 shares of Common Stock and 1,522,624 shares of Class B
Stock and 2,718,920 warrants currently exercisable into Class B Stock for
which Centre Management has been delegated voting and/or investment power
and 9,470,672 shares of Common Stock and 1,694,569 shares of Class B Stock
and 3,058,933 warrants currently exercisable into shares of Class B Stock
for which Centre Partners is reflected as having beneficial ownership. Mr.
Pollack is a Managing Director of each of Centre Management and Centre
Partners and, as such, may be deemed to have voting and investment power
over such shares of Common Stock and investment power over such shares of
nonvoting Class B Stock. Mr. Pollack disclaims any beneficial ownership of
such shares of Common Stock and Class B Stock.
(9) Excludes 8,076,500 shares of Common Stock and 1,522,624 shares of Class B
Stock and 2,718,920 warrants currently exercisable into Class B Stock for
which Centre Management has been delegated voting and/or investment power
and 9,470,672 shares of Common Stock and 1,694,569 shares of Class B Stock
and 3,058,933 warrants currently exercisable into shares of Class B Stock
for which Centre Partners is reflected as having beneficial ownership. Mr.
Kagan is a Managing Director of each of Centre Management and Centre
Partners and, as such, may be deemed to have voting and investment power
over such shares of Common Stock and investment power over such shares of
nonvoting Class B
3
<PAGE> 7
Stock. Mr. Kagan disclaims any beneficial ownership of such shares of
Common Stock and Class B Stock.
(10) Includes 9,005 shares of Common Stock held in a 401(k) plan for the benefit
of Mr. Perekslis, 467 shares of Series A preferred stock and 2,524 warrants
currently exercisable into shares of Class B Stock, over which Mr.
Perekslis has delegated voting and investment authority to Centre Partners
pursuant to certain co-investment arrangements.
(11) Excludes 8,076,500 shares of Common Stock and 1,522,624 shares of Class B
Stock and 2,718,920 warrants currently exercisable into Class B Stock for
which Centre Management has been delegated voting and/or investment power
and 9,470,672 shares of Common Stock and 1,694,569 shares of Class B Stock
and 3,058,933 warrants currently exercisable into shares of Class B Stock
for which Centre Partners is reflected as having beneficial ownership. Mr.
Zepf is a Managing Director of each of Centre Management and Centre
Partners and, as such, may be deemed to have voting and investment power
over such shares of Common Stock and investment power over such shares of
nonvoting Class B Stock. Mr. Zepf disclaims any beneficial ownership of
such shares of Common Stock and Class B Stock. Includes 10,506 shares of
Common Stock held in a 401(k) plan for the benefit of Mr. Zepf, 468 shares
of Series A Preferred Stock, and 3,028 warrants currently exercisable into
shares of Class B Stock, over which Mr. Zepf has delegated voting and
investment authority to Centre Partners pursuant to certain co-investment
arrangements.
(12) Excludes 8,076,500 shares of Common Stock and 1,522,654 shares of Class B
Stock and 2,718,920 warrants currently exercisable for Class B Stock for
which Centre Management has been delegated voting and/or investment power
and 9,470,672 shares of Common Stock and 1,694,569 shares of Class B Stock
and 3,058,933 warrants currently exercisable into shares of Class B Stock
for which Centre Partners is reflected as having beneficial ownership, for
which Messrs. Pollack, Kagan and Zepf may be deemed to have voting and/or
investment power based on their serving as a Managing Director of such
entities. Messrs. Pollack, Kagan and Zepf disclaim beneficial ownership of
such shares of Common Stock and Class B Stock. Includes 19,511 shares of
Common Stock held in 401(k) plans for the benefit of Messrs. Perekslis and
Zepf, over which each such individual has delegated voting and investment
authority to Centre Partners pursuant to certain co-investment
arrangements.
4
<PAGE> 8
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
AND INFORMATION REGARDING DIRECTORS
(ITEM NUMBER 1 ON THE PROXY CARD)
The by-laws of FATS provide that the Board of Directors shall consist of
not less than one director, with the exact number being set from time to time by
the Board. The Restated Certificate of Incorporation of the Company divides the
Board of Directors into three classes, as nearly equal in number as possible,
each of which is elected for a three year term. Class III directors, consisting
of the three nominees shown below, each of whom is currently serving as a
director of the Company, will stand for election at the 1999 Annual Meeting for
three-year terms expiring at the Annual Meeting of Stockholders in 2002 or until
their successors are elected and qualified. The terms of the other six directors
listed below will continue as indicated. The Board currently consists of nine
directors.
Directors are elected by a plurality of the votes cast by the holders of
shares of Common Stock entitled to vote for the election of directors at a
meeting at which a quorum is present. A quorum will be present for the Annual
Meeting when the holders of a majority of the shares outstanding on the Record
Date are present in person or by proxy. Proxies submitted which contain
abstentions or broker non-votes are included in determining whether a quorum is
present, but will not affect the outcome of the vote. Unless otherwise indicated
on a proxy, all duly executed proxies granted by the holders of Common Stock
will be voted individually at the Annual Meeting for the election of each
nominee. Each nominee has indicated that he will serve if elected, but if the
situation should arise that any nominee is no longer able or willing to serve,
the proxy may be voted for the election of such other person as may be
designated by the Board of Directors. Each person elected as a director shall
serve a three-year term that continues until the Annual Meeting of Stockholders
in the third year of his term and until his successor, if there is to be one, is
duly elected and qualified.
<TABLE>
<S> <C>
PAUL J. ZEPF MANAGING DIRECTOR,
CENTRE PARTNERS MANAGEMENT LLC
</TABLE>
Paul J. Zepf, age 34, has served as a Director of the Company since July
31, 1996. Since 1998, Mr. Zepf has been a Managing Director of Centre Partners
Management LLC and a Managing Director of Corporate Advisors, L.P. From 1995 to
1998, Mr. Zepf was a Principal of Centre Partners Management LLC and a Principal
of Corporate Advisors, L.P. Mr. Zepf also served as a Vice President of
Corporate Advisors, L.P. from 1993 to 1995. Mr. Zepf also serves as a Director
of LaSalle Re Limited, BUCA, Inc. and Nationwide Credit, Inc. Mr. Zepf is a
member of the Compensation Committee and is a member of the Option Subcommittee
of the Compensation Committee of the Board of Directors.
<TABLE>
<S> <C>
CRAIG I. FIELDS CORPORATE DIRECTOR
</TABLE>
Craig I. Fields, age 53, has served as a Director of the Company since
September 17, 1996. From 1994 until the present, Dr. Fields has served on
various boards of directors, including the boards of ENSCO, Projectavision,
Inc., Alliance Gaming Corporation, Perot Systems, Network Solution and Music
Holdings Corp. From 1990 to 1994, Dr. Fields served as Chairman and Chief
Executive Officer of the Microelectronics and Computer Technology Corporation, a
for-profit research and development consortium involved in information
technology. Dr. Fields is Chairman of the Defense Science Board. Mr. Fields is a
member of the Compensation Committee and is a member of the Option Subcommittee
of the Compensation Committee of the Board of Directors.
<TABLE>
<S> <C>
GILBERT F. DECKER CORPORATE DIRECTOR
</TABLE>
Gilbert F. Decker, age 62, has served as a Director of the company since
December 31, 1997. Prior to becoming a private consultant in 1997, Mr. Decker
was the Assistant Secretary of the Army, Research, Development and Acquisition
from 1994 to 1997. Prior to 1994, Mr. Decker held positions of Chief Executive
Officer and President in Xeruca Holding, Inc., Acurex Corporation and Penn
Central Federal Systems Company. Mr. Decker has served on the boards of several
government and public organizations including the
5
<PAGE> 9
Army Science Board, Air Force Studies board, Defense Science Board and
Engineering Advisory board to Johns Hopkins University. Mr. Decker is a member
of the Audit Committee of the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY VOTE "FOR" THE PROPOSAL TO ELECT PAUL J. ZEPF, CRAIG I. FIELDS AND
GILBERT F. DECKER AS CLASS III DIRECTORS OF THE COMPANY TO HOLD OFFICE UNTIL THE
2002 ANNUAL MEETING OF STOCKHOLDERS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND
QUALIFIED.
The following Class I directors were elected in fiscal 1998 and their
present terms expire with the Annual Meeting of Stockholders in 2000:
<TABLE>
<S> <C>
PETER A. MARINO CHIEF EXECUTIVE OFFICER AND PRESIDENT
FIREARMS TRAINING SYSTEMS, INC.
</TABLE>
Peter A. Marino, age 57, has served as a Director of the Company since
September 17, 1996 and became Chief Executive Officer and President on October
15, 1996. Prior to joining the Company, Mr. Marino served as Senior Vice
President of Raytheon E-Systems, Inc. from 1991 to 1996. Mr. Marino previously
served as President and Chief Operating Officer of Fairchild Industries and
prior to such service was President and Chief Operating Officer of Lockheed
Electronics Co., Inc. Prior to such service, Mr. Marino held various positions
at the Central Intelligence Agency, including Director of the Office of
Technical Services. Mr. Marino serves as a director of Space Imaging, Inc. and
is a member of the Defense Science Board.
<TABLE>
<S> <C>
LESTER POLLACK MANAGING DIRECTOR
CENTRE PARTNERS MANAGEMENT LLC
</TABLE>
Lester Pollack, age 66, has served as a Director of the Company since July
31, 1996 and as Chairman of the Board since September 17, 1996. Mr. Pollack has
served as Managing Director of Centre Partners Management LLC since 1995. Mr.
Pollack has been Senior Managing Director of Corporate Advisors, L.P., the
general partner of Corporate Partners, L.P. and Corporate Offshore Partners,
L.P., since 1988 and was a Managing Director of Lazard Freres & Co. LLC from
1995 to 1998 (prior thereto a General Partner) and Chief Executive Officer of
Centre Partners, L.P. since 1986. Mr. Pollack also serves as a director of
LaSalle Re Limited, Parlex Corporation, Rembrandt Photo Services, Nationwide
Credit Inc., and Tidewater, Inc. Mr. Pollack is a member of the Compensation
Committee of the Board of Directors.
<TABLE>
<S> <C>
SCOTT PEREKSLIS PRINCIPAL
CENTRE PARTNERS MANAGEMENT LLC
</TABLE>
Scott Perekslis, age 31, has served as a Director of the Company since July
31, 1996. Mr. Perekslis also served as a Vice President of the Company from July
31, 1996 through July 18, 1997. Since 1995, Mr. Perekslis has been a Principal
of Centre Partners Management LLC and a Principal of Corporate Advisors, L.P.
From 1991 to 1995, Mr. Perekslis was an Associate of Corporate Advisors, L.P.
Mr. Perekslis also serves as a director of Hyco International, Inc. and KIK
Corporation Holdings, Inc. Mr. Perekslis is a member of the Compensation
Committee of the Board of Directors.
The following Class II directors were elected in fiscal 1999 and their
present terms expire with the Annual Meeting of Stockholders in 2001:
<TABLE>
<S> <C>
WILLIAM J. BRATTON CHIEF OPERATING OFFICER AND PRESIDENT
CARCO GROUP, INC.
</TABLE>
William J. Bratton, age 51, has served as a Director of the Company since
September 17, 1996. Mr. Bratton has been the President and Chief Operating
Officer of CARCO Group, Inc. since 1998. From 1996 to 1997, Mr. Bratton served
as Vice Chairman of First Security Services Corporation and President of its new
subsidiary First Security Consulting, Inc. From 1994 to 1996, Mr. Bratton served
as Police Commissioner of the City of New York. In 1992 he served as
Superintendent in Chief of the Boston Police Department and was appointed Police
Commissioner of the Boston Police Department in 1993. From 1990 to 1992,
6
<PAGE> 10
Mr. Bratton served as Chief of the New York City Transit Police. Mr. Bratton
also serves as a director of Rite-Aid Corporation and First Security Services
Corporation.
<TABLE>
<S> <C>
JONATHAN H. KAGAN MANAGING DIRECTOR
CENTRE PARTNERS MANAGEMENT LLC
</TABLE>
Jonathan H. Kagan, age 43, has served as a Director of the Company since
July 31, 1996. Mr. Kagan also served as Secretary of the Company from July 31,
1996 through July 18, 1997. Mr. Kagan has served as Managing Director of Centre
Partners Management LLC since 1995. Mr. Kagan has been a Managing Director of
Corporate Advisers, L.P. since 1990. Mr. Kagan was associated with Lazard Freres
& Co. LLC from 1980 to 1998 and was a Managing Director from 1995 to 1998 (prior
thereto a General Partner). Mr. Kagan also serves as a Director of Jeepers!
Inc., Hyco International, Inc. and Staff Leasing, Inc. Mr. Kagan is a member of
the Audit Committee of the Board of Directors.
<TABLE>
<S> <C>
FRANK S. JONES CORPORATE DIRECTOR
</TABLE>
Frank S. Jones, age 70, has served as a Director of the Company since April
16, 1998. Mr. Jones has served as assistant dean at the Harvard Business School,
a group brand manager at a consumer products company, and as Ford Professor of
Urban Affairs at the Massachusetts Institute of Technology from which he retired
in 1992. Mr. Jones also serves as a Director of Polaroid Corporation and
Scientific Games Holdings Corporation. Mr. Jones is a member of the Audit
Committee of the Board of Directors.
DIRECTORS' COMPENSATION
Each director of the Company who is not an employee of the Company is
entitled to receive annual compensation of $20,000, payable quarterly. In
addition, directors of the Company are reimbursed for their reasonable expenses
incurred in attending meetings of the Board of Directors or committees thereof.
In fiscal 1998, Messrs. Fields, Bratton and Decker were granted options (with
exercise prices ranging from $5.1875 to $11.75 per share) to purchase 13,000,
3,500 and 16,600 shares of Common Stock, respectively in connection with their
serving as directors of the Company which options in the case of Mr. Fields
included 3,000 options granted in connection with services he also rendered
pursuant to a consulting agreement. In fiscal 1999, Messrs. Fields, Bratton,
Decker and Jones were granted options (with exercise prices ranging from $7.3125
to $7.625 per share) to purchase 11,000, 1,000, 1,000 and 16,600 shares of
Common Stock respectively, in connection with their serving as directors of the
Company, which options in the case of Mr. Fields included 10,000 options granted
in connection with services he also rendered pursuant to a consulting agreement.
Directors who are also employees of the Company are not separately compensated
for their services as directors.
Pursuant to the Securities Purchase Agreement dated November 13, 1998 with
Centre Capital Investors II, L.P., Centre Partners Coinvestment, L.P., Centre
Capital Tax-Exempt Investors II, L.P., and Centre Capital Offshore Investors II,
L.P., Messrs. Pollack, Kagan, Perekslis and Zepf, directors of the Company who
are affiliated with the Centre Partnerships agreed to receive in lieu of annual
director's fees of $20,000, for each director, options to purchase at $1.03125
per share an aggregate of 106,700 shares of Class A Common Stock, exercisable in
equal quarterly installments beginning December 31, 1998 which such directors
assigned to Centre Partners Management LLC. As of August 31, 1999, 80,025 shares
of Class A Common Stock were exercisable from this grant.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company meets on a regular basis to
supervise, review, and direct the business and affairs of the Company. During
the Company's 1999 fiscal year, the Board held five meetings and also approved
actions through TWO unanimous consents of the Board of Directors in lieu of a
meeting. The Board of Directors has established an Audit, a Compensation and a
Strategic Planning Committee, to which it has assigned certain responsibilities
in connection with the governance and management of the
7
<PAGE> 11
Company's affairs. The Company has no standing nominating committee or other
committee performing similar functions and such functions are performed by the
Board of Directors.
Each of the current directors attended at least 75% of the total number of
meetings of the Board and the committees on which he served during the period he
served in such position.
Audit Committee. The Board of Directors established the Audit Committee in
September 1996 to: (i) make recommendations concerning the engagement of
independent public accounts; (ii) review with the independent public accountants
the plans for and scope of the audit, the audit procedures to be utilized and
the results of the audit; (iii) approve the professional services provided by
the independent public accountants; (iv) review the independence of the
independent public accountants; and (v) review the adequacy and effectiveness of
the Company's internal accounting controls. Messrs. Kagan, Decker and Jones are
the members of the Audit Committee. During the Company's 1999 fiscal year, the
Audit Committee held one meeting.
Compensation Committee. The Board of Directors established the
Compensation Committee in September 1996 to determine compensation of the
Company's executive officers and to administer the Company's Stock Option Plan.
Messrs. Pollack, Perekslis, Fields and Zepf are the members of the Compensation
Committee. During the Company's 1998 fiscal year, the Compensation Committee
held one meeting.
Option Subcommittee. The Board of Directors established the Option
Subcommittee of the Compensation Committee to consider and approve all
compensation items which qualify as performance-based compensation within the
meaning of Section 162(m)(4)(c) of the Internal Revenue Code, including without
limitation, all grants of stock options pursuant to the Company's Stock Option
Plan. Messrs. Fields and Zepf are members of the Option Subcommittee. During the
Company's 1999 fiscal year, the Option Subcommittee together with its
predecessor committee held three meetings and also approved actions through two
unanimous consents of the Compensation Committee in lieu of a meeting.
Strategic Planning Committee. The Board of Directors established the
Strategic Planning Committee in January 1999 to provide guidance, evaluation and
planning for strategic issues facing the Company. Messrs. Marino, Decker, Fields
and Kagan are members of the Strategic Planning Committee. During the Company's
1999 fiscal year, the Strategic Planning Committee did not hold a meeting.
EXECUTIVE COMPENSATION
The following table sets forth all compensation earned for services
rendered to the Company in all capacities during the fiscal years ended March
31, 1999, 1998 and 1997 by the Company's chief executive
8
<PAGE> 12
officer and each of the Company's other four most highly compensated executive
officers serving at March 31, 1999 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
--------------------------- ------ ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Peter A. Marino(1) 1999 350,000 -- 4,800(4) 21,000 --
President and Chief Executive Officer 1998 350,000 150,000 6,865(4) -- --
1997 148,076 75,000 -- 707,160 324,448(2)
Robert F. Mecredy 1999 158,000 -- 4,740(4) 20,000 --
Executive Vice President 1998 155,000 120,000 2,435(4) 10,000 --
1997 144,179 175,000(3) 3,093(4) 182,600 --
Juan C. G. de Ledebur 1999 135,000 -- 4,050(4) 22,000 --
Vice President, Sales and Marketing 1998 145,000 110,000 2,417(4) 10,000 --
1997 156,477 135,000(3) 7,115(4)(6) 212,148 --
Caryl G. Marsh 1999 133,901 -- -- 23,000(5) --
Vice President, Operations 1998 78,495 20,000 -- 22,000 --
1997 6,642 6,000 -- -- --
John A. Morelli 1999 84,950 -- 2,482(4) 13,000(5) --
CFO 1998 72,000 6,000 1,170(4) 3,000 --
1997 42,250 6,000 -- 9,960
</TABLE>
- ------------------------------------
(1) Mr. Marino became the Company's President and Chief Executive Officer on
October 15, 1996.
(2) Mr. Marino received a bonus of $155,000 and 36,852 shares of common stock
valued at $119,880 in connection with his employment agreement, Mr. Marino,
also, was reimbursed for moving expenses of $49,568
(3) Messrs. de Ledebur and Mecredy received transition bonuses as part of the
Company's Recapitalization of $50,000 each,
(4) Matching contributions made by the Company to its 401(k) plan.
(5) Messrs. Marsh and Morelli had 22,000 and 3,000 option shares, respectively,
repriced at $3.253 per share during fiscal 1999 (they were not executive
officers at the time).
(6) Provision of automobile allowance for Mr. de Ledebur of $4,800 in 1997.
9
<PAGE> 13
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
NO. OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERMS *
OPTION/SARS EMPLOYEES IN EXERCISE OR EXPIRATION --------------------
GRANTED FISCAL YEAR BASE PRICE DATE 5% 10%
----------- ------------ ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Peter A. Marino 10,000(1) 1.20% $ 7.625 04/17/05 31,041 72,340
6,000(1) 0.73% 8.000 04/17/05 19,541 45,538
5,000(1) 0.60% 12.000 04/17/05 24,426 56,923
Robert F. Mecredy 10,000(1) 1.20% 7.625 04/17/05 31,041 72,340
5,000(1) 0.60% 8.000 04/17/05 16,284 37,949
5,000(1) 0.60% 12.000 04/17/05 24,426 56,923
Juan C. G. de Ledebur 10,000(1) 1.20% 7.625 04/17/04 25,932 58,832
7,000(1) 0.84% 8.000 04/17/05 22,798 53,128
5,000(1) 0.60% 12.000 04/17/05 24,426 56,923
Caryl G. Marsh 3,000(1) 0.36% 1.781 12/11/08 2,946 7,257
1,000(1) 0.12% 3.253 04/17/04 1,106 2,510
6,000(1) 0.73% 3.253 01/09/05 7,946 18,517
20,000(1) 2.42% 3.253 06/25/05 26,486 61,724
15,000(1) 1.81% 3.253 12/11/05 19,864 46,293
John A. Morelli 8,000(1) 0.96% 1.781 12/11/08 7,857 19,351
5,000(1) 0.60% 3.253 06/25/05 6,621 15,431
3,000(1) 0.36% 3.253 12/11/08 5,380 13,252
</TABLE>
- ------------------------------------
* These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on future performance of
the Common Stock and overall market conditions. There can be no assurance that
the amounts reflected in these columns will be achieved or if achieved, will
exist at the time of any option exercise.
(1) Options are generally exerciseable as follows: (i) 33 1/3% on the first
anniversary of the option issue date (the "option date"), (ii) 33 1/3% on
the second anniversary of the option date, and (iii) 33 1/3% on the third
anniversary of the option date.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NO. OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR END AT FISCAL YEAR END (1)
------------------------------- -------------------------------
EXERCISEABLE UNEXERCISEABLE EXERCISEABLE UNEXERCISEABLE
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Peter A. Marino 95,396 632,764 -- --
Robert F. Mecredy 12,652 190,948 -- --
Juan C. G. de Ledebur 23,665 220,483 -- --
Caryl G. Marsh 8,684 36,316 -- --
John A. Morelli 3,454 22,506 -- --
</TABLE>
- ------------------------------------
(1) As required by the rules of the Securities and Exchange Commission, the
value of unexercised in-the-money options is calculated based on the closing
sales price of the Company's Common Stock on The Nasdaq Stock Market as of
the last business day of its fiscal year, March 31, 1999, which was $1.03125
per share.
10
<PAGE> 14
EMPLOYMENT AND RELATED MATTERS
Employment Agreement with Mr. Marino. The Company has entered into an
employment agreement with Mr. Marino with an initial term expiring March 31,
2002, with automatic one-year extensions thereafter unless terminated by either
party. Pursuant to the agreement, Mr. Marino serves as Chief Executive Officer
and President at an annual base salary of $350,000, subject to review and annual
increases as approved by the Board of Directors. Mr. Marino also is eligible for
annual bonuses based on the Company reaching targeted EBITDA levels for each
fiscal year, with a maximum of $225,000 in bonus payable for each fiscal year
(or such greater amount as determined by the Board of Directors). In connection
with the execution of the employment agreement, in fiscal 1997 Mr. Marino
received a bonus of $155,000, was granted 36,852 shares of Common Stock and was
granted options to purchase 707,160 shares of Common Stock, consisting of Series
A Options for 353,580 shares and Series B Options for 353,580 shares. The
Company also paid Mr. Marino's reasonable expenses in relocating to the Atlanta
area. Pursuant to the employment agreement, Mr. Marino agreed to purchase 61,420
shares of Common Stock at approximately $3.25 per share. Mr. Marino also is
subject to a covenant not to compete with the Company during the period of his
employment with the Company or any period during which he receives payments from
the Company pursuant to the employment agreement and for a period of two years
thereafter.
Employment Agreement with Mr. Morelli. The Company has entered into an
employment agreement with Mr. Morelli with the term expiring September 30, 2000
subject to certain change of control restrictions. Pursuant to the agreement,
Mr. Morelli serves as Chief Financial Officer, Treasurer and Secretary at an
annual base salary of $105,000, subject to review and annual increases as
approved by the Board of Directors. Mr. Morelli also is eligible for annual
bonuses based on the discretion of the Board of Directors Compensation
Committee. Mr. Morelli also is subject to a covenant not to compete with the
Company during the period of his employment with the Company or any period
during which he receives payments from the Company pursuant to the employment
agreement and for a period of two years thereafter.
Non-Competition Agreements. The Company has entered into an Agreement to
Limit Future Competition with each current member of senior management of the
Company and other key employees. Pursuant to such agreements each such employee
has agreed, for a period of two years following the termination of employment
with the Company, not to: (i) be employed by specified businesses in an
executive capacity; (ii) use or permit to be used his executive skills,
knowledge or expertise for the benefit of any such business; and (iii) use or
permit to be used competitively sensitive information received while employed by
the Company for the benefit of any such business.
CERTAIN TRANSACTIONS
On April 24, 1998, the Centre Partnerships pursuant to a written agreement
exchanged certain shares of Class A Voting Common Stock owned by each of them
for an equal number of shares of Class B Non-voting Common Stock in the amounts
as shown under "OWNERSHIP OF STOCK BY DIRECTORS, EXECUTIVE OFFICERS AND
PRINCIPAL STOCKHOLDERS." In connection with such agreement, the Centre
Partnerships each agreed not to exercise the right to convert Class B Stock for
Common Stock provided by the Restated Certificate of Incorporation if, as a
result of such conversion, the Centre Partnerships would hold of record, or
beneficially, with power to vote, more than 50% of the shares of Class A Common
Stock outstanding immediately following such conversion unless concurrently with
such conversion the shares of Class A Common Stock are transferred to an
unaffiliated person. The transaction, which was approved by the Board of
Directors was carried out in order to permit the Company to engage in
acquisition transactions after expiration of two years which could be accounted
for as a pooling under generally accepted accounting principles and is believed
by the Company to have been of no monetary value to the Centre Partnerships.
On November 13, 1998 the Centre Partnerships entered into a Securities
Purchase Agreement with the Company whereby the Centre Partnerships, for
$3,000,030 purchased 18,182 units of a security comprised of 18,182 shares of
Series B Preferred Stock (the "Preferred Stock") and 2,909,120 in the aggregate
of non-detachable warrants to purchase Class B non-Voting Common Stock ("Class B
stock") with an exercise price of $1.03125. Each unit of the security includes
one share of Preferred Stock and 160 warrants, and the security
11
<PAGE> 15
bears a dividend of 8% per annum payable quarterly in additional units of the
security. The Preferred Stock is subject to mandatory redemption on November 13,
2003 at the liquidation value thereof. It is also subject to redemption at the
option of the holder in the event of a change of control of the Company as
defined.
On June 1, 1999 certain subsidiaries of the Company established a revolving
line of credit in the amount of $3,000,000 with a financial institution with a
maturity date of May 26, 2000. The payment of obligations under the Subsidiary
Line are guaranteed by the Centre Partnerships as well as by the Company and
certain of its subsidiaries.
In exchange for such guarantees certain of the Centre Partnerships received
an aggregate fee of $50,000 in cash and would be entitled to be paid an
additional aggregate funding fee of $250,000 in the event any payments were made
by certain Centre Partnerships to the financial institution.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Pollack, Fields, Perekslis and Zepf served as members of the
Company's Compensation Committee during the 1999 fiscal year. While Mr. Pollack
is Chairman of the Board and Mr. Perekslis was a Vice President of the Company
through July 18, 1997, none is otherwise an employee, officer or former employee
or officer of the Company or its subsidiaries.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has provided the following report:
The compensation policies of the Company have been developed to link the
compensation of executive officers with the development of enhanced value for
the Company's stockholders. Through the establishment of both short-term and
long-term incentive plans and the use of base salary and performance bonus
combinations, the Company seeks to align the financial interests of its
executive officers with those of its stockholders.
PHILOSOPHY AND COMPONENTS
In designing its compensation programs, the Company follows its belief that
compensation should reflect both the Company's recent performance and the value
created for stockholders, while also supporting the broader business strategies
and long-range plans of the Company. In doing so, the compensation programs
reflect the following general characteristics:
* The Company's financial performance and, in particular, that of the
individual.
* An annual incentive arrangement that generates a portion of compensation
based on the achievement of specific performance goals in relation to the
Company's internal budget and strategic initiatives, with superior performance
resulting in enhanced total compensation.
The Company's executive compensation is based upon the components listed
below, each of which is intended to serve the overall compensation philosophy:
BASE SALARY. Base salary is intended to be set at a level that
approximates the competitive amounts paid to executive officers of similar
businesses in structure, size, and industry orientation. Competitive amounts are
determined informally through a review of published compensation surveys and
proxy statements of other companies, including some, but not all, of the
companies in the peer group selected for purposes of the stock performance graph
set forth elsewhere in this Proxy Statement.
INCENTIVE COMPENSATION. In accordance with the Company's philosophy of
tying a substantial portion of the overall compensation of its executive
officers to the achievement of specific performance goals, an incentive plan has
been developed for the executive officers. The Company's incentive plan is
designed to reward superior performance with total compensation above
competitive levels. On the other hand,
12
<PAGE> 16
if performance goals are not achieved and the Company suffers as a result,
compensation of affected executive officers may fall below competitive levels.
STOCK OPTIONS. The Company periodically considers awards to its executive
officers of stock options granted under the terms of its Stock Option Plan.
Options are awarded by the Option Subcommittee to selected executive officers
and other persons in recognition of outstanding contributions they may have made
(or are being motivated to make) to the Company's growth, development, or
financial performance. The awarding of options is designed to encourage
ownership of the Company's Common Stock by its executive officers, thereby
aligning their personal interests with those of our shareholders.
The Compensation Committee reviews and determines the compensation of the
executive officers of the Company with this philosophy on compensation as its
basis. While promoting initiative and providing incentives for superior
performance on behalf of the Company for the benefit of its shareholders, the
Compensation Committee also seeks to assure that the Company is able to compete
for and retain talented personnel who will lead the Company in achieving levels
of growth and financial performance that will enhance shareholder value over the
long-term as well as short-term.
CEO COMPENSATION
Effective October 15, 1996, the Company entered into an employment
agreement with Mr. Marino as Chief Executive Officer and President for a term
that extends to March 31, 2002, and is renewable for successive one-year terms
thereafter unless either party chooses not to renew. Details about that
agreement are provided under "Executive Compensation -- Employment and Related
Matters" above.
The Compensation Committee believes that the compensation terms of Mr.
Marino's employment agreement are consistent with and reflect the Company's
executive compensation philosophy. The base salary provided to Mr. Marino is
consistent with what the Compensation Committee believes is competitive in the
Company's industry, and the opportunities for bonus compensation are tied to the
Company's performance in terms of value to its stockholders. Additionally, the
options that have been granted to Mr. Marino are subject to vesting over a
period of years.
The Compensation Committee
Lester Pollack * Craig I. Fields * Scott Perekslis * Paul J. Zepf
13
<PAGE> 17
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of The Nasdaq National Market (U.S.) and the cumulative
total return for a group of companies consisting of Apollo Group Inc., CBT Group
Plc, Evans & Sutherland Computer Corporation, Imax Corporation, Learning Tree
International, Orbital Sciences Corporation, REMEC Inc. and the Wyman-Gordon
Company, for the period commencing November 27, 1996, the date that the
Company's Common Stock became publicly traded, and ending on March 31, 1999.
Note: The proxy graph for fiscal year 1997 included both Flightsafety
International, Inc. and National Education Corporation; however, neither of
these companies currently has securities which are traded and they have been
excluded from the Peer Group.
<TABLE>
<CAPTION>
FIREARMS TRAINING PEER GROUP NASDAQ STOCK MARKET
----------------- ---------- -------------------
<S> <C> <C> <C>
11/27/96 100.000 100.000 100.000
12/31/96 86.239 106.969 100.288
3/31/97 91.743 93.492 94.903
6/30/97 100.917 130.781 112.021
9/30/97 45.872 147.24 139.946
12/31/97 38.073 141.727 121.986
3/31/98 66.055 163.094 142.597
6/30/98 18.349 150.134 147.185
9/30/98 5.046 95.430 133.525
12/31/98 10.321 121.464 173.235
3/31/99 7.569 97.130 193.584
</TABLE>
- ------------------------------------
Graph reflects $100 invested on November 27, 1996 and the reinvestment of
any dividends in (i) Company Common Stock, (ii) the common stocks of the group
of companies identified above that have been selected by the Company as its
peers, and (iii) the Nasdaq Stock Market -- Composite index.
* To be completed before final proxy submission.
14
<PAGE> 18
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
DESCRIPTION OF CLASS B NON-VOTING COMMON STOCK
The authorized capital stock of the Company currently consists of
68,060,000 shares of Class A Common Stock, par value $0.000006 per share (the
"Class A Common Stock"), 2,200,000 shares of Class B Non-voting Common Stock,
par value $0.000006 per share ("Class B Common Stock"), and 200,000 shares of
preferred stock, par value $0.10 per share (the "Preferred Stock") of which
38,000 shares have been designated as Series A Preferred Stock. The following
summary of certain provisions of the Company's capital stock describes the
material provisions, but does not purport to be complete and is subject to, and
qualified in its entirety by, the Certificate of Incorporation and the By-laws
of the Company and by the provisions of applicable law.
Holders of shares of Class B Common Stock are not entitled to vote on any
matter submitted to a vote of stockholders, except as may be explicitly required
by statute in particular situations. Each share of Class B Common Stock is
convertible at any time for no additional consideration, at the option of its
holder and upon notice to the Company of such election, into one share of Class
A Common Stock. Holders of Class B Common Stock are not entitled to preemptive
rights.
Holders of shares of Class A Common Stock and Class B Common Stock are
entitled to receive ratably such dividends as may be declared by the Board out
of funds legally available for such purpose, subject to the rights of the
holders of any Preferred Stock that may be outstanding. No dividends may be
declared or paid in cash or property on any share of any Class of common stock,
unless simultaneously the same dividend is declared or paid on each share of the
other Class of common stock.
Upon liquidation, dissolution or winding-up of the Company, the holders of
Class A Common Stock and Class B Common Stock are entitled to share ratably in
all assets available for distributions after payment in full of liabilities and
preferences applicable to the holders of any then outstanding Preferred Stock.
There are no redemption or sinking fund provisions applicable to the Class B
Common Stock. The rights, preferences and privileges of holders of Class B
Common Stock are subject to the terms of any series of Preferred Stock that the
Company may issue in the future.
PROPOSED INCREASE IN AUTHORIZED CLASS B NON-VOTING COMMON STOCK
Pursuant to the Securities Purchase Agreement with the Centre Partnerships
as described above under "Certain Transactions", the Company has issued and sold
18,182 shares of its Series A Preferred Stock and Warrants to purchase an
aggregate of 2,909,120 shares of the Company's Class B Common Stock. The Company
covenanted under the Securities Purchase Agreement that it would use its best
efforts to take all action necessary, desirable or appropriate to have, reserve
and keep available at all times out of the Company's authorized but unissued
shares of capital stock the full number of shares of Class B Common Stock
issuable upon exercise of the Warrants and any additional Warrants issuable in
respect of dividends on the Preferred Stock, and the full number of Class A
Common Stock into which such shares are convertible. Since the Company has only
2,200,000 authorized shares of Class B Common Stock of which 1,694,569 are
currently outstanding, there are not sufficient authorized shares of Class B
Common Stock should the presently outstanding Warrants and additional Warrants
required to be issued in connection with future Preferred Stock dividends
(constituting approximately 3.4 million shares) be exercised.
The Board of Directors in a meeting held on November 11, 1998, declared it
advisable that the Certificate of Incorporation of the Corporation be amended so
that, as amended, the first paragraph of Article Fourth shall read as follows:
"The Corporation is authorized to issue three classes of shares to be
designated as Preferred Stock, Class A Common Stock and Class B Non-Voting
Common Stock. The total number of shares of Preferred Stock the Corporation
shall have authority to issue shall be 36,000, $.10 par value, and the
total number of shares of Class A Common Stock the Corporation shall have
the authority to issue shall be 68,060,000, $.000006 par value, and the
total number of shares of Class B Non-Voting Common Stock the Corporation
shall have the authority to issue shall be 6,200,000, $.000006 par value."
and that such amendment be submitted to the stockholders of the corporation for
approval.
15
<PAGE> 19
The Board of Directors believes it is desirable to authorize additional
shares of Class B Common Stock in order to comply with the covenants in the
Securities Purchase Agreement and to avoid the penalties which may arise from an
action for specific performance or other remedies if the Company fails to comply
with the covenant.
The Board of Directors has no current intention of issuing any shares of
Class B Common Stock other than in order to comply with the terms of the
Securities Purchase Agreement.
Approval of the Amendment will require the affirmative vote of a majority
of the outstanding shares of the Company's Class A Common Stock entitled to vote
thereon.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY VOTE "FOR" THE PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION OF THE
COMPANY INCREASING THE NUMBER OF AUTHORIZED SHARES OF CLASS B NON VOTING COMMON
STOCK.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee,
appoints each year the firm that will serve as the Company's independent public
accountants. The Board has appointed Arthur Andersen LLP, which firm served as
independent public accountants for the Company during the past fiscal year, to
serve as such accountants for the current fiscal year. Such appointment is not
subject to ratification or other vote by the stockholders.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting of Stockholders, with opportunity to make a statement if he or
she desires to do so, and is expected to be available to respond to appropriate
questions.
STOCKHOLDER PROPOSALS
Stockholders who desire to submit to the Company proposals for inclusion in
the Company's proxy materials for the 2000 Annual Meeting of Stockholders of
Firearms Training Systems, Inc. must submit such proposals to the Secretary of
the Company for receipt by the Secretary on or prior to April 1, 2000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("1934 Act") requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Commission and the Nasdaq National Market reports of ownership and
changes in ownership of Common Stock and other equity securities of the Company.
Directors, executive officers and greater than ten percent stockholders are
required by the rules promulgated by the Commission to furnish the Company with
copies of all forms they file pursuant to Section 16(a) of the 1934 Act.
Based solely on review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that during fiscal 1999, all filings required by Section 16 (a)
of the 1934 Act applicable to its directors, executive officers and greater than
ten percent beneficial owners were made on a timely basis.
16
<PAGE> 20
OTHER MATTERS
Management does not intend to present to the Annual Meeting any business
other than the items stated in the "Notice of Annual Meeting of Stockholders"
and knows of no other business to be presented for action at the meeting. If,
however, any other business should properly come before the meeting or any
adjournments thereof, it is intended that all management proxies will be voted
with respect thereto in accordance with the best judgment of the persons named
in the proxies.
FIREARMS TRAININGS SYSTEMS, INC.
BY ORDER OF THE BOARD OF DIRECTORS,
/S/ JOHN A. MORELLI
John A. Morelli
SECRETARY
Dated: September 13, 1999
17
<PAGE> 21
FTSCM-PS-99
<PAGE> 22
FIREARMS TRAINING SYSTEMS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 24, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having received notice of the Annual Meeting of Stockholders
and revoking all prior proxies, hereby appoints Peter A. Marino and John A.
Morelli, and each of them, attorneys or attorney of the undersigned, with full
power of substitution in each of them, for and in the name of the undersigned,
to attend the Annual Meeting of Stockholders of Firearms Training Systems, Inc.
(the "Company") to be held Friday, September 24, 1999, at 10:00 A.M., Eastern
Time, and any postponement or adjournment thereof, and to vote and act upon the
following matters in respect of all shares of common stock of the Company that
the undersigned would be entitled to vote or act upon, with all powers the
undersigned would possess, if personally present.
The shares represented by this proxy will be voted as directed by the
undersigned and as indicated herein. IF NO DIRECTION IS GIVEN WITH RESPECT TO
THE ELECTION OF DIRECTORS OR THE DISCRETIONARY AUTHORITY OF THE PROXIES TO VOTE
UPON OTHER PROPER BUSINESS, THIS PROXY WILL BE VOTED FOR SUCH ELECTION, AND THE
PROXIES, IN THEIR DISCRETION, WILL VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
Attendance of the undersigned at the meeting or any postponement or adjournment
will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate at such meeting the intention of the undersigned to vote
such shares in person.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
USING THE ENCLOSED ENVELOPE.
IF SHARES ARE HELD BY MORE THAN ONE OWNER, EACH MUST SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS, AND OTHERS SIGNING IN
A REPRESENTATIVE CAPACITY SHOULD GIVE THEIR FULL TITLES.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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[X]PLEASE MARK VOTES
AS IN THIS EXAMPLE
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<S> <C>
- ----------------------------------------------------- 1. ELECTION OF DIRECTORS:
FIREARMS TRAINING SYSTEMS, INC. To re-elect each of the
- ---------------------------------------------------- following nominees,
as a director of the
Company, for a term of
three years:
For All Withhold For All
Mark box at right if an address [ ] Nominees Except
change or comment has been noted [ ] [ ] [ ]
on the reverse side of this card. Gilbert F. Decker
Craig I. Fields
Paul J. Zepf
CONTROL NUMBER: NOTE: If you do not wish your shares voted "For"
RECORD DATE SHARES: a particular nominee(s), mark the "For All Except" box
strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
For Against Abstain
[ ] [ ] [ ]
2. TO APPROVE AN AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
THE COMPANY INCREASING THE NUMBER
OF AUTHORIZED SHARES FOR CLASS B
NON-VOTING COMMON STOCK FROM
--------------------- 2,200,000 SHARES TO 6,200,000 SHARES.
Please be sure to sign and date Date
this Proxy. ---------------------
- ----------------------------------------------------- For Against Abstain
[ ] [ ] [ ]
3. TO VOTE, IN THE PROXIES' DISCRETION,
- --------Stockholder sign here----Co-owner sign here-- UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING
OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
DETACH CARD DETACH CARD
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