<PAGE>
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:
[X] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
GOLF TRAINING SYSTEMS, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
--------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------
- --------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] 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:
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Notes:
<PAGE>
GOLF TRAINING SYSTEMS, INC.
3400 Corporate Way
Suite G
Duluth, Georgia 30136
(770) 623-6400
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 25, 1996
----------------------
To the Shareholders of Golf Training Systems, Inc.:
The Annual Meeting of Shareholders (the "Annual Meeting") of Golf
Training Systems, Inc. (the "Company") will be held at the Northeast Atlanta
Hilton, 5993 Peachtree Industrial Blvd., Norcross, Georgia 30092 on Monday,
November 25, 1996 at 9:00 a.m., for the purpose of acting upon the following
matters:
1. Classification of Board of Directors. To amend the Company's
------------------------------------
Certificate of Incorporation to divide the Board of Directors into
three (3) classes of Directors (Proposal 1).
2. Election of Directors. To elect seven (7) Directors to the Board of
---------------------
Directors to serve either (i) until the next Annual Meeting of
Shareholders in 1997 or (ii) until the annual Meeting of Shareholders
at which the term of the class to which the Director has been chosen
expires, if the Board is classified pursuant to Proposal 1, and in
each case continuing thereafter until the successors of such Directors
have been elected and qualified (Proposal 2).
3. Amendments to Stock Option Plan. To increase the number of shares of
-------------------------------
common stock authorized for issuance and to remove certain exercise
and vesting requirements for Director Options under the Company's 1994
Stock Option Plan (Proposal 3).
<PAGE>
4. Other Business. To consider such other business as may properly
--------------
come before the Annual Meeting or any adjournments thereof.
The Board of Directors has set October 11, 1996 as the record date for
the Annual Meeting. Only shareholders of record at the close of business on the
record date will be entitled to notice of and to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS CAREFULLY READ EACH OF THE
PROPOSALS AS MORE PARTICULARLY DESCRIBED IN THE ATTACHED PROXY STATEMENT.
YOUR PROXY IS IMPORTANT. WHETHER OR NOT A SHAREHOLDER PLANS TO ATTEND THE
ANNUAL MEETING, PLEASE VOTE BY MARKING THE PROPOSALS, SIGNING AND MAILING THE
PROXY TO THE COMPANY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE.
YOUR PROXY MAY BE REVOKED, IF YOU CHOOSE, AT ANY TIME PRIOR TO THE VOTE BEING
TAKEN ON THE MATTER AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ Wayne C. McDonald
----------------------------
Wayne C. McDonald
Chairman of the Board and
Chief Executive Officer
-2-
<PAGE>
GOLF TRAINING SYSTEMS, INC.
-----------------------
PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held November 25, 1996
PROXY SOLICITATION AND VOTING
General
This Proxy Statement is being furnished in connection with the solicitation
by the Board of Directors of Proxies from the shareholders of Golf Training
Systems, Inc. (the "Company") for use at the Annual Meeting of Shareholders (the
"Annual Meeting").
The enclosed Proxy is for use at the Annual Meeting if a shareholder is
unable to attend the Annual Meeting in person or wishes to have his shares voted
by Proxy, even if he attends the Annual Meeting. Any Proxy may be revoked by
the person giving it at any time before its exercise, by notice to the Secretary
of the Company, by submitting a Proxy having a later date, or by such person
appearing at the Annual Meeting and electing to vote in person. All shares
represented by valid Proxies received pursuant to this solicitation and not
revoked before their exercise, will be voted in the manner specified therein.
If a Proxy is signed and no specification is made, the shares represented by the
Proxy will be voted in favor of each of the Proposals described below and in
accordance with the best judgment of the persons exercising the Proxy with
respect to any other matters properly presented for action at the Annual
Meeting.
This Proxy Statement and the enclosed Proxy are being mailed to the
Company's shareholders on or about October __, 1996.
<PAGE>
Record Date and Outstanding Shares
The Board of Directors has set October 11, 1996 as the record date for the
Annual Meeting. Only shareholders of record at the close of business on the
record date will be entitled to notice of and to vote at the Annual Meeting. As
of the record date, there were 2,982,987 shares of common stock of the Company
issued and outstanding.
Quorum and Voting Rights
A quorum for the transaction of business at the Annual Meeting consists of
the holders of the majority of the outstanding shares of common stock of the
Company entitled to vote at the Annual Meeting present in person or represented
by Proxy.
Each share of common stock of the Company is entitled to one vote on each
matter to come before the Annual Meeting. Proposal 1 to be voted on at the
Annual Meeting requires the affirmative vote of a majority of the shares of
common stock of the Company present in person or represented by Proxy. Proposal
2 to be voted on at the Annual Meeting requires the affirmative vote of a
plurality of the shares of common stock of the Company present in person or
represented by Proxy. Proposal 3 to be voted on at the Annual Meeting requires
the affirmative vote of a majority of the shares of common stock of the Company
present in person or represented by Proxy.
Solicitation of Proxies
In addition to this solicitation by mail, the officers and employees of the
Company, without additional compensation, may solicit Proxies in favor of the
Proposals, if deemed necessary, by personal contact, letter, telephone or other
means of communication. Brokers, nominees and other custodians and fiduciaries
will be requested to forward Proxy solicitation material to the beneficial
owners of the shares of common stock of the Company where appropriate, and the
Company will reimburse them for their reasonable expenses incurred in connection
with such transmittals. The costs of solicitation of Proxies for the Annual
Meeting will be borne by the Company.
-2-
<PAGE>
CLASSIFICATION OF DIRECTORS
(PROPOSAL 1)
General
The General Corporation Law of the State of Delaware permits a corporation
to divide its board of directors into up to three (3) classes, with each class
roughly equal in numbers, whereby the term of office of only one class of
directors expires on the date of each Annual Meeting of Shareholders. The
Company proposes to divide its Board of Directors into three (3) classes, the
term of office of the first Class of Directors would expire at the first Annual
Meeting of Shareholders after their election; the term of office of the second
Class of Directors would expire at the second Annual Meeting of Shareholders
after their election; and the term of office of the third Class of Directors
would expire at the third Annual Meeting of Shareholders after their election.
After the expiration of the initial one year, two year or three year terms of
office of each Class of Directors, each Class of Directors would be subject for
election to a three year term.
If Proposal 1 is adopted, the Company's Certificate of Incorporation will
be amended, by the addition of a new Article Eleventh, to divide the Board of
Directors, which currently consists of seven members, into three classes,
designated Class One, Class Two, and Class Three. The Class One Directors would
serve until the Annual Meeting of Shareholders to be held in 1997, the Class Two
Directors would serve until the Annual Meeting of Shareholders to be held in
1998, and the Class Three Directors would serve until the Annual Meeting of
Shareholders to be held in 1999, and each Class of Directors would serve until
their successors are duly elected and qualified or until their earlier
resignation, retirement, death, disqualification or removal from office. As a
result, only one Class of Directors would be elected at each Annual Meeting of
Shareholders commencing in 1997, with the other Classes continuing their
respective terms.
If the Company's Board of Directors is classified, the General Corporation
Law of the State of Delaware provides that members of such classified Board of
Directors may only be removed for cause, unless the Certificate of Incorporation
provides otherwise. The Board has not proposed that the Company's Articles of
Incorporation be amended to permit removal of Directors without cause. The
Company's Bylaws regarding removal
-3-
<PAGE>
of Directors will be amended by the Board to conform to Delaware law if Proposal
1 is adopted.
The Company's Bylaws will be amended by the Board, if Proposal 1 is
adopted, to provide that a vacancy on the Board, including a vacancy created by
an increase in the number of Directors, may be filled by a majority of the
Directors then in office, though less than a quorum, and that any new Director
elected to fill a vacancy on the Board will serve the remainder of the full term
of the class in which the vacancy incurred, rather than until the next Annual
Meeting of Shareholders, and that decrease in the number of Directors shall
shorten the term of any Director then in office.
Other Considerations Relating to Proposal 1
The proposal to classify the Company's Board of Directors is not the result
of the Board of Directors current knowledge of any specific effort by any party
obtain control of the Company by means of a merger, tender offer, solicitation
in opposition to management, or otherwise, or by any person's effort to
accumulate the Company's securities. However, the classification of the
Company's Board would be viewed by a potential acquiror as an anti-takeover
measure since a solicitation in opposition to management could take two Annual
Meeting of Shareholders to obtain at least a majority of the directorships of
the Company.
The present Board of Directors believes that the classification of the
Board into three Classes of Directors will (i) promote continuity of management,
because approximately one-third of the Board of Directors would be subject to
election each year and approximately two-thirds of the remaining Directors, at
any one time, would have at least one year's experience as Directors of the
Company and (ii) moderate the pace of change on the Board of Directors by
extending the time required to elect a majority of Directors from one to two
years. The present Board of Directors believes it is in the best interest of
the Company and its shareholders to promote continuity of management and
stability of the Company's business plan in order to attract qualified employees
to carry out its business plan.
There has been a trend in the securities markets toward the accumulation of
substantial stock positions in a publicly-held corporation as a prelude to
proposing a
-4-
<PAGE>
takeover or a restructuring and sale of all or part of the assets of
corporation, or other similar extraordinary corporate actions. Such actions are
often taken without advance notice to, or consultation with, management of the
corporation. In many cases, the acquiror seeks representation on the
corporation's board of directors in order to increase the likelihood that its
proposal will be implemented by the corporation. If the corporation resists the
efforts of the acquiror to obtain representation on its board of directors, the
acquiror may commence a proxy contest to have its nominees elected to the board,
in place of certain directors or the entire board. In some cases, the acquiror
may not truly be interested in taking over the corporation, but uses the threat
of a proxy fight and/or a takeover bid for the corporation as a means of
obtaining for itself a special benefit, which may not be available to all of the
corporation's shareholders.
The Company's Board of Directors believes that the potential threat of
removal of management in a takeover situation would severely curtail
management's ability to negotiate effectively with a potential acquiror.
Management would be deprived of the time and information necessary to evaluate
the takeover or acquisition proposal, to study alternative proposals and to
develop and ensure that the best price is obtained in any transaction involving
the Company which may ultimately be undertaken. Proposal 1 will help ensure
that the Company's Board, if confronted by a proposal from an acquiror of a
significant block of the Company's securities, will have sufficient time to
review the proposal and consider an alternative to the proposal. Proposal 1 is
intended also to encourage persons seeking to acquire control of the Company to
initiate such action through arms-length negotiations with the Company's Board
of Directors, who would then be in a position to negotiate a transaction which
is fair to all shareholders. Although a takeover or change in the Company's
Board, proposed and effected without prior consultation or negotiation with the
Board, would not necessarily be detrimental to the Company and its
shareholders, the present Board of Directors believes that the benefits of
seeking to protect its ability to negotiate with unsolicited third party
proposals to takeover or restructure the Company outweigh the disadvantages of
discouraging some proposals.
If Proposal 1 is adopted, it would also make it more difficult for a new or
existing shareholder to change the composition of the Board of Directors, even
if the shareholder believes such change would be desirable. Furthermore,
adoption of Proposal 1 would significantly extend the time required to make any
-5-
<PAGE>
change in the composition of the Board of Directors, as compared to the present
Board of Directors, and may tend to discourage any takeover or restructuring bid
for the Company. With a classified Board of Directors, it would normally take at
least two Annual Meeting of Shareholders for holders of the Company's voting
stock to make a controlling change in the composition of the Board of Directors,
since approximately one-third of the Directors will be elected at each Annual
Meeting. Since the adoption of Proposal 1 would increase the amount of time
required for a takeover bid to obtain control of the Company without the
cooperation of the Board of Directors, even if the acquiror were to acquire a
majority of the Company's outstanding securities, it may tend to discourage
certain tender offers, perhaps including some tender offers which some
shareholders may feel will be in their best interests. Proposal 1 may tend to
discourage accumulations of large blocks of the Company's voting stock from
purchasers whose objective is to have such stock repurchased by the Company at a
premium, and the adoption of Proposal 1 may also tend to reduce temporary
fluctuations in the market price of the Company's common stock which may be
caused by such accumulations.
ELECTION OF DIRECTORS
(PROPOSAL 2)
General
The members of the Board of Directors of the Company are elected by the
shareholders. The number of Directors is determined by resolution of the Board
of Directors. The Board of Directors has, by resolution, fixed the number of
Directors at seven. The Annual Meeting is being held to elect seven Directors
of the Company to serve either (i) until the next Annual Meeting of Shareholders
in 1997 or (ii) until the Annual Meeting of Shareholders at the term of the
class to which the Director has been chosen expires, if the Board is classified
pursuant to Proposal 1, and in each case continuing thereafter until the
successor of such Directors have been elected and qualified. In the event
Proposal 1 is adopted, then, effective as of the effective date of the amendment
to the Company's Certificate of Incorporation, the one year terms of the
nominees, if elected as Directors, will be automatically classified and extended
as follows:
-6-
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------
NAME CLASS TERM EXPIRATION DATE
- ---------------------------------------------------
<S> <C> <C>
George P. Lee III One 1997
Parker Smith One 1997
- ---------------------------------------------------
Nicholas J. Aquilino Two 1998
Wayne C. McDonald Two 1998
Richard E. White Two 1998
- ---------------------------------------------------
Daniel A. Gordon Three 1999
Thomas W. Tripp Three 1999
- ---------------------------------------------------
</TABLE>
It is intended that each Proxy solicited on behalf of the Board of
Directors will be voted only for the election of the designated nominees. At
this time, the Board of Directors knows of no reason why a nominee might be
unable to serve, but if that should occur before the Annual Meeting, it is
intended that the Proxies will be voted for the election of such other person or
persons as the Board of Directors may recommend.
The Board of Directors of the Company presently consists of the seven
members who are the nominees for election as named below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO ELECT AS
DIRECTORS THE PERSONS NAMED BELOW.
Nominees
The following sets forth the name, age and principal occupation of each
nominee for election as a Director and the period during which he has previously
served as a Director.
Wayne C. McDonald, age 48, has been Chairman of the Board and Chief
Executive Officer of the Company since the Company's inception in June 1991.
Mr. McDonald was president, chief executive officer and a director of
Cornerstone Products,
-7-
<PAGE>
Inc., a company that developed and marketed point-of-sale products and programs
in the sports industry since 1986. Cornerstone Products, Inc. managed programs
for the National Basketball Association, Major League Baseball International,
the National Hockey League, the Indianapolis Motor Speedway, the Brickyard 400
and the United States Olympic Committee.
George P. Lee, III, age 38, has been President and Chief Operating Officer
of the Company since July 1993, has been a Director of the Company since its
inception in June 1991, and from its inception to July 1993 was the Company's
Vice President-Operations. From November 1990 to June 1991, Mr. Lee was self-
employed in the construction business. From 1979 to November 1990, Mr. Lee held
various positions with P.R. Orton, Inc., a general contractor and developer,
including vice president and general manager.
Nicholas J. Aquilino, age 58, has been a Director of the Company since the
Company's inception in June 1991 and has been Secretary of the Company since
August 1994. Mr. Aquilino was a partner of Aquilino & Welsh, patent counsel to
the Company, from 1967 to January 1993, when he became Of Counsel to such law
firm.
Daniel A. Gordon, age 57, has been a Director of the Company since June
1996. Mr. Gordon has been the owner/principal since 1992 of Corporate Growth
Services, which provides consulting support services to business in the early
stages of development. Mr. Gordon has also been chairman of the board of
directors since 1993 of New Paradign Software Corp., a publicly held developer
of computer systems integration software. From 1989 to 1992, Mr. Gordon served
as president of Coin Banking Systems, Inc., which had been the banking system
division of Coin Financial Systems, Inc., a financial software company. Mr.
Gordon served as chairman and chief executive officer of Coin Financial Systems,
Inc. from 1984 to 1989.
Parker Smith, age 52, has been a Director of the Company since August
1994. Mr. Smith founded Golf Products International, Inc., a promoter of
companies and products related to golf, of which he is a principal stockholder
and president, in August 1993. Mr. Smith also has been the principal of Sports
Opportunities, a promoter and planner of media conferences and golf events since
1980, and of Sports Opportunities International, Inc., a consulting business and
advertising agency engaged in providing
-8-
<PAGE>
publicity, promotion and marketing strategy since 1973. He was a senior editor
of Golf Magazine from 1971 to 1973.
Thomas W. Tripp, age 43, was elected by the Board of Directors as a
Director of the Company in October 1996 to fill a vacancy on the Board. Mr.
Tripp is the owner and principal of Thomas W. Tripp, CPA, P.C. He was Chief
Financial Officer of the Company from April 1995 to February 1996 on a part-time
basis. Mr. Tripp has also been a financial officer of several other public and
non-public companies since June 1991, providing these services on a part-time
basis. Prior to June 1991, Mr. Tripp was a senior manager with Ernst & Young.
Richard E. White, age 44, has been a Director of the Company since August
1994. Mr. White is a founder and has been chief executive officer of Strategic
Merchandising Associates, a sports industry consulting firm, since April 1994.
Mr. White was president of Major League Baseball Properties, the licensing,
marketing and publishing arm of Major League Baseball, from 1988 to April 1994.
Meetings of the Board of Directors
The Board of Directors of the Company had six meetings during the 1996
fiscal year.
-9-
<PAGE>
Executive Compensation
- ----------------------
The following table sets forth a summary of the compensation paid to or
accrued on behalf of the chief executive officer and the other executive officer
of the Company whose aggregate compensation exceeded $100,000 for services
rendered during fiscal years ended June 30, 1996 and June 30, 1995. No other
executive officer of the Company received compensation in excess of $100,000
during the fiscal years ended June 30, 1996 and June 30, 1995.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
--------------------------------------- ----------
Securities
Name and Other Annual Underlying All Other
Principal Fiscal Compensation Options Compensation
Position Year Salary ($) Bonus ($) ($)(1) (#) ($)
- --------------------- ------ --------- -------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wayne C. McDonald 1996 $102,000 0 0 10,000 0
Chairman and Chief 1995 110,360 0 0 10,000 0
Executive Officer
George P. Lee, III 1996 $102,000 0 0 10,000 0
President and Chief
Operating Officer
</TABLE>
(1) Compensation does not include any perquisites and other personal benefits
which may be derived from business-related expenditures that in the
aggregate do not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported for such person.
The following table sets forth certain information regarding the grant
of stock options in the 1996 fiscal year to the persons named in the Summary
Compensation Table and the value of options held by such persons at the end of
such fiscal year.
-10-
<PAGE>
Option Grants in Last Fiscal Year
Individual Grants
<TABLE>
<CAPTION>
Number of Exercise
Securities % of Total Options or
Underlying Options Granted to Employees Base Price
Table Granted (#) in Fiscal Year ($/Sh) Expiration Date
- ------------------ ------------------ -------------------- ---------- ---------------
<S> <C> <C> <C> <C>
Wayne C. McDonald 10,000 31% $3.875 January 30, 2006
George P. Lee, III 10,000 31% $3.875 January 30, 2006
</TABLE>
The following table sets forth certain information regarding the
exercise of stock options in the 1996 fiscal year by the persons named in the
Summary Compensation Table and the value of options held by such persons at the
end of such fiscal year.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options
FY-End (#) at FY-End ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name or Exercise (#) $ Unexercisable Unexercisable
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wayne C. McDonald 0 0 16,000/20,000 0
George P. Lee 0 0 16,000/20,000 0
</TABLE>
Employment Agreements
- ---------------------
In September 1994, the Company entered into an employment agreement
with Wayne C. McDonald, the Chairman and Chief Executive Officer of the Company,
and with George P. Lee, III, the President and Chief Operating Officer of the
Company. Each agreement has a term of three years and provides for a base
-11-
<PAGE>
salary $125,000 per annum during the term of the agreement. The agreements
provide that each executive officer shall be entitled to an annual bonus
pursuant to the terms and conditions of a bonus plan to be established by the
Board of Directors, the terms and conditions of which have yet to be determined.
The agreements also provide that the executive officers will not compete with
the Company during the term of the agreements and for a period of two years
thereafter.
Director Compensation
- ---------------------
Directors are reimbursed for expenses actually incurred in connection
with each meeting of the Board of Directors or any committee thereof attended.
Stock Option Plan and Director Stock Options
- --------------------------------------------
The Company's Stock Option Plan covers 230,000 shares of the Company's
common stock pursuant to which employees, officers and Directors of, and
consultants or advisors to, the Company and any subsidiary corporation are
eligible to receive incentive stock options and/or non-qualified stock options.
The Stock Option Plan, which expires in September 2004, is administered by the
Board of Directors or the Compensation Committee of the Board of Directors. The
purposes of the Plan are to insure the retention of existing executive
personnel, key employees, Directors, consultants and advisors and to provide
additional incentive by permitting such individuals to participate in the
ownership of the Company. The Company issued 225,000 stock options, in the
aggregate, to 18 recipients.
The provisions of the Stock Option Plan provide for the automatic
grant of stock options to purchase shares of common stock (the "Director
Options") to Directors of the Company who are not employees or principal
stockholders of the Company ("Eligible Directors"). On December 31, 1994, each
Eligible Director received a Director Option to purchase 10,000 shares of common
stock. Future Eligible Directors of the Company are entitled to be granted a
Director Option to purchase 10,000 shares of common stock on the date that such
person is first elected or appointed a Director ("Initial Director Option").
Further, commencing on the day immediately following the date of the Annual
Meeting of Shareholders for the Company's fiscal year ending June 30, 1995, each
Eligible Director is entitled to be granted a Director Option to purchase 5,000
-12-
<PAGE>
shares of common stock ("Automatic Grant"), other than Eligible Directors who
receive an Initial Director Option since the last Automatic Grant, on the day
immediately following the date of each Annual Meeting of Shareholders
thereafter, as long as each Eligible Director is a member of the Board of
Directors. The exercise price for each share subject to a Director Option shall
be equal to the fair market value of the common stock on the date of grant.
Director Options are exercisable in four equal annual installments commencing
one year from the date the option is granted and will expire the earlier of ten
years from the date of grant or 90 days after the termination of the Director's
service on the Board of Directors. Presently, Eligible Directors for Director
Options are Messrs. Aquilino, Gordon, Smith, Tripp and White.
Compliance with Section 16(a) of the Securities and Exchange Act of 1934.
- ------------------------------------------------------------------------
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers and Directors, and persons who own 10% or more of the
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. Officers,
Directors and 10% or more stockholders are required by the Securities and
Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company, during the fiscal year ended June 30,
1996, all Directors, officers or 10% shareholders complied with all Section
16(a) filing requirements.
-13-
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
shares of the Company's common stock owned as of the record date (i) by each
person who beneficially owns more than 5% of the shares of the Company's common
stock, (ii) by each of the Company's Directors, and (iii) by all Directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Number of Percentage
Name of Beneficial Owner(1) Shares(2) Ownership(2)
- ------------------------------------ ------------- -------------
<S> <C> <C>
Wayne C. McDonald 145,701(3) 4.8%
Chairman and Chief Executive
Officer
George P. Lee, III 147,701(4) 4.9%
President, Chief Operating Officer
and Director
Nicholas J. Aquilino 36,612(5) 1.2%
Director
Daniel A. Gordon 0(6) 0
Director
Parker Smith 20,336(5)(7)
Director *
Thomas W. Tripp 6,000(6)(8) *
Director
Richard E. White 3,750(5) *
Director
All Directors and executive 360,100(9) 14.6%
officers as a group
(7 persons)
- ------------------------
</TABLE>
*Less than 1%
-14-
<PAGE>
(1) Except as otherwise indicated, the persons named in the above table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them. The information as to beneficial ownership has been
furnished by the respective persons listed in the above table. Except as
otherwise indicated, the address of each beneficial owner is 3400 Corporate Way,
Suite G, Duluth, Georgia 30136.
(2) Based on 2,982,987 shares outstanding as of the record date, and that
shares underlying outstanding options or warrants exercisable within 60 days of
the record date are deemed to be outstanding for purposes of calculating the
percentage owned by holder.
(3) Includes 16,000 shares issuable upon exercise of outstanding stock options.
(4) Includes 16,000 shares issuable upon exercise of outstanding stock options
and 1,000 shares issuable upon exercise of outstanding warrants.
(5) Includes 3,750 shares issuable upon exercise of outstanding Director
Options.
(6) Excludes 10,000 shares issuable upon exercise of outstanding Director
Options, which are currently not exercisable within 60 days of the record date.
(7) Consists of shares issuable upon exercise of outstanding warrants held by
Golf Products International, Inc., of which Mr. Smith is a principal stockholder
and president.
(8) Consists of 6,000 shares issuable upon exercise of outstanding stock options
(9) Includes 17,586 shares issuable upon exercise of outstanding warrants and
38,000 shares issuable upon exercise of outstanding stock options. Includes
11,250 shares issuable upon exercise of outstanding Director Options.
-15-
<PAGE>
CERTAIN TRANSACTIONS
In August 1994, the Company entered into a Plan of Merger with Gruv-A-
Swing, Inc. pursuant to which Gruv-A-Swing, Inc. merged with and into the
Company. Prior to the merger (i) the stockholders of Gruv-A-Swing, Inc. were
Wayne C. McDonald, the Chairman of the Board and Chief Executive Officer of the
Company, George P. Lee, III, the President and Chief Operating Officer of the
Company, J. Don Sircy, a stockholder of the Company, Nicholas J. Aquilino,
Secretary and a Director of the Company and Steven J. Bartkowski, a stockholder
of the Company, and (ii) Gruv-A-Swing, Inc. owned an aggregate of 845,878 shares
of common stock (5,100,000 shares of Class B common stock prior to the
recapitalization and reverse stock split) of the Company. These shares were
acquired in November 1991, at the time of the commencement of the Company's
operations, in consideration of the assignment by Gruv-A-Swing, Inc. to the
Company of certain assets, including the patent and trademark rights relating to
The Coach and an agreement in principle with David Leadbetter relating to his
endorsement of The Coach. Pursuant to the Plan of Merger, the stockholders of
Gruv-A-Swing, Inc. received an aggregate of 422,939 shares of common stock of
the Company in consideration of the cancellation of the 845,878 shares of common
stock held by Gruv-A-Swing, Inc. The effect of the merger and related
recapitalization was to cause the stock ownership in the Company by the former
stockholders of Gruv-A-Swing, Inc. to be held directly by such individuals (and
not indirectly through Gruv-A-Swing, Inc.), to reduce such ownership interest by
50% and to eliminate the dual classes of Common Stock and, accordingly, the
liquidation preference held by the holders of the Class A common stock.
In May 1994, the Company entered into an agreement with golf instructor
David Leadbetter pursuant to which Mr. Leadbetter agreed to endorse certain of
the Company's products in exchange for a royalty based on a percentage of the
net sales actually received by the Company from the sale of The Leadbetter
Collection products. Mr. Leadbetter is a shareholder of the Company. During
the fiscal year ended June 30, 1996, the Company paid royalties aggregating
$68,750 to Mr. Leadbetter.
The Company believes that each of the foregoing transactions was on terms
at least as favorable to the Company as those that could have been obtained from
nonaffiliated third parties.
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<PAGE>
AMENDMENTS TO 1994 STOCK OPTION PLAN
(PROPOSAL 3)
The Board of Directors had determined that the Company should increase from
230,000 shares to 600,000 shares the number of shares of common stock authorized
for issuance under the Company's 1994 Stock Option Plan, pursuant to which
employees, officers and Directors of, and consultants or advisors to, the
Company are eligible to receive incentive stock options and/or non-qualified
stock options. The Stock Option Plan expires in September 2004. The purposes
of the Plan are to insure the retention of existing executive personnel, key
employees, Directors, consultants, advisors and to provide an additional
incentive for permitting such individuals to participate in the ownership of the
Company. As of October 11, 1996, the Company issued 225,000 stock options, in
the aggregate, to 18 recipients.
In addition, the Board of Directors has determined that Director Options
issued under the Plan should be exercisable upon the date of grant and should
expire ten years from the date of grant. The Plan presently provides that
Director Options shall be exercisable in four equal annual installments
commencing one year from the date the option is granted and expire the earlier
of ten years after the date of grant or 90 days after termination of the
Director's service on the Board.
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<PAGE>
SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the Company's Proxy
Statement for the 1996 Annual Meeting of Shareholders must be received at the
principal offices of the Company not later than August 25, 1997.
OTHER MATTERS
At the time of the preparation of this Proxy Statement, the Company was not
aware of any matters to be presented for action at the Annual Meeting other than
the Proposals referred to herein. If other matters are properly presented for
action at the Annual Meeting, it is intended that the persons named as Proxies
will vote or refrain from voting in accordance with their best judgment on such
matters.
ANNUAL REPORT
Copies of the 1996 Annual Report are being mailed to all shareholders
together with this Proxy Statement.
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