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Exhibit 7(1)
[Bank of America(R)Logo]
Bank of America
NC-002-31-31
101 South Tryon Street
Charlotte, NC 28255
August 25, 2000
Centre Capital Investors II, L.P.
Centre Partners Coinvestment, L.P.
Centre Capital Offshore Investors II, L.P.
Centre Capital Tax-exempt Investors II, L.P.
c/o Mr. Scott Perekslis
Centre Partners Management, LLC
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
Re: Firearms Training Systems, Inc.
Dear Scott:
The purpose of this letter is to confirm our understanding regarding
the make up of the Board of Directors of Firearms Training Systems, Inc. (the
"Company"). As you know, the lenders (the "Lenders") under the Second Amended
and Restated Credit Agreement and Partial Exchange Agreement dated as of April
1, 2000 (the "Amended Agreement") closed today on a restructuring of the Company
and, as a result, have been issued Class A common stock of the Company
constituting a majority of the Class A common stock. Each of the addressees (the
"Centre Entities") also consummated exchange transactions with the Company and
accepted notes for certain indebtedness of the Company and its subsidiaries owed
to them, all as a part of the restructuring. As a result, the Centre Entities,
which were the owners of approximately 49% of the issued and outstanding Class A
common stock of the Company prior to the restructuring, remain significant
common shareholders of the Company. Furthermore, immediately prior to the
restructuring, the Centre Entities were assigned certain interests under the
predecessor of the Amended Agreement and are now Lenders under the Amended
Agreement.
The Lenders have also entered into a Voting Agreement which, among
other things, requires the Lenders to vote their common shares together upon the
request of the Required Lenders (as defined in the Amended Agreement).
In connection with the restructuring of the Company, we have agreed to
the following with respect to the Board of Directors of the Company:
1. At the request of Required Lenders before September 30, 2000,
three of the four directors of the Company affiliated with
Centre will resign on September 30, 2000.
2. As long as the Voting Agreement or any successor agreement is
in effect, the Required Lenders will cause the Lenders to vote
their shares subject to the Voting Agreement or its successor
for the election of a qualified person affiliated with the
Centre Entities (any existing or former members of the Board
affiliated with Centre being deemed qualified) nominated by
the Centre Entities such that one such person is serving on
the Board during such time.
3. The Lenders and the Centre Entities will cooperate in good
faith to identify and urge the selection of mutually
acceptable, qualified candidates to constitute a majority of
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the Board of Directors of the Company during the interim
before the next election of directors.
4. The Lenders and the Centre Entities will cooperate in good
faith to identify and urge the selection of a mutually
acceptable, qualified candidate to serve as an active Chairman
of the Board of Directors of the Company. A representative of
the management consultant to be retained by the Company
pursuant to the Amended Agreement shall be given due
consideration by the Lenders and the Centre Entities as a
candidate to serve as the Chairman of the Board of Directors
of the Company.
To evidence this understanding, we ask each of the Lenders and each of
the Centre Entities to execute this letter agreement acknowledging your
agreement to the foregoing and return it to the undersigned.
Sincerely,
/s/ Reinhard Freimuth
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Reinhard Freimuth
Vice President
Agreed to:
NON_CENTRE LENDERS:
BANK OF AMERICA, N.A., as Agent, and individually as
a Lender
By: /s/ Reinhard Freimuth
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Name: Reinhard Freimuth
Title: Vice President
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U.S. BANK NATIONAL ASSOCIATION
By: /s/ Michael J. Porcello
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Name: Michael J. Porcello
Title: Assistant Vice President
FIRST SOURCE FINANCIAL LLP, by First
Source Financial, Inc., as Agent/Manager
By: /s/ Jeffrey A. Cerny
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Name: Jeffrey A. Cerny
Title: Senior Vice President
BHF (USA) CAPITAL CORPORATION
By: /s/ Evon Contos and /s/ Nina Zhou
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Name: Evon Contos and Nina Zhou
Title: Managing Director and Associate
CENTRE ENTITIES, individually and as Lenders:
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CENTRE CAPITAL INVESTORS II, L.P. CENTRE
CAPITAL TAX-EXEMPT INVESTORS II, L.P.
CENTRE CAPITAL OFFSHORE INVESTORS II, L.P.
By: Centre Partners II, L.P., as General Partner
By: Centre Partners Management LLC, as
Attorney-in-Fact
By: /s/ Jonathan H. Kagan
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Managing Director
CENTRE PARTNERS COINVESTMENT, L.P.
By: Centre Partners II LLC, as General Partner
By: /s/ Jonathan H. Kagan
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Managing Director
.
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