EXHIBIT 10.15
FIREARMS TRAINING SYSTEMS, INC.
STOCK OPTION AGREEMENT
SERIES B
Firearms Training Systems, Inc., a Delaware corporation (the "Company"),
hereby grants to Xxxxx X. Xxxxxx (the "Optionee") as of September 18, 1996 (the
"Option Date"), pursuant to the provisions of the Firearms Training Systems,
Inc. Stock Option Plan (the "Plan"), a non-qualified option to purchase from the
Company (the "Option") 213,000 shares of its Class A Common Stock, $0.00001 par
value ("Stock"), at the price of $5.40 per share upon and subject to the terms
and conditions set forth below. References to employment shall also mean an
agency or independent contractor relationship and references to employment by
the Company shall also mean employment by a Subsidiary. Capitalized terms not
defined herein shall have the meanings specified in the Plan.
1. Option Subject to Acceptance of Agreement. The Option shall be null
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and void unless the Optionee shall accept this Agreement by executing it in the
space provided below and returning such original execution copy to the Company.
2. Time and Manner of Exercise of Option.
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2.1. Maximum Term of Option. In no event may the Option be exercised, in
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whole or in part, after the ninth anniversary of the Option Date (the
"Expiration Date").
2.2. Exercise of Option. (a) Except as otherwise provided by Section 3.5
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below (relating to the occurrence of a change in control of the Company) and
Section 3.6 below (relating to certain restrictions contained in the Credit
Agreement, as defined below), the Option shall become exercisable on the ninth
anniversary of the Option Date unless the Option becomes exercisable at an
earlier date in accordance with the following schedule:
(i) a number of shares equal to one-third of the shares of Stock subject to
the Option on the Option Date multiplied by the Vesting Factor (as defined
below) shall become
exercisable on the 60th day following the close of the Company's fiscal year
ending in 1997;
(ii) (A) an additional number of shares equal to one-third of the shares of
Stock subject to the Option on the Option Date multiplied by the Vesting Factor
shall become exercisable on the 60th day following the close of the Company's
fiscal year ending in 1998, or (B) if a total of less than one-third of the
shares became exercisable under clause (i) above, two-thirds of the shares of
Stock subject to the Option on the Option Date, less any shares of Stock that
became exercisable pursuant to clause (i) above, shall become exercisable as of
such date if the sum of the Company's EBITDA for the fiscal years ending in 1997
and 1998 equals at least the sum of the 0000 XXXXXX Target and the 1998 EBITDA
Target; and
(iii) (A) an additional number of shares equal to one-third of the shares
of Stock subject to the Option on the Option Date multiplied by the Vesting
Factor shall become exercisable on the 60th day following the close of the
Company's fiscal year ending in 1999, or (B) if a total of less than two-thirds
of the shares became exercisable under clause (i) or (ii) above, all of the
shares of Stock subject to the Option on the Option Date, less any shares of
Stock that became exercisable pursuant to clauses (i) and (ii) above, shall
become exercisable as of such date if the sum of the Company's EBITDA for the
fiscal years ending in 1997, 1998 and 1999 equals at least the sum of the 1997
EBITDA Target, the 1998 EBITDA Target and the 1999 EBITDA Target.
(iv) For purposes of this subsection,
(A) the "Vesting Factor" with respect to any fiscal year shall be equal to
5 X ( (EBITDA/EBITDA Target) - 0.8 ),
provided that the Vesting Factor shall in no event be less than zero and shall
in no event exceed one;
(B) the term "EBITDA" shall have the same meaning assigned to such term in
the Recapitalization and Stock Purchase and Sale Agreement dated as of June 5,
1996
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among Firearms Training Systems International N.V., the Company and Centre
Capital Investors II, L.P. and certain related entities;
(C) the term "EBITDA Target" shall mean the 1997 EBITDA Target, 1998
EBITDA Target or 1999 EBITDA Target, as the context requires;
(D) "1997 EBITDA Target" shall be an amount equal to $32,086,000;
(E) "1998 EBITDA Target" shall be an amount equal to $43,758,000; and
(F) "1999 EBITDA Target" shall be an amount equal to $53,406,000.
(b) If the Optionee terminates employment with the Company by reason of
Disability, the Option shall be exercisable only to the extent it is exercisable
on the effective date of the Optionee's termination of employment and may
thereafter be exercised by the Optionee or the Optionee's Legal Representative
until the Expiration Date; provided that, if the Optionee shall terminate
employment by reason of Disability during the 60-day period after the close of
the Company's fiscal year ending in 1997, 1998 or 1999, the portion of the
Option that shall be considered exercisable as of the date of the Optionee's
termination of employment for purposes of this subsection shall be adjusted by
the Committee in accordance with subsection (a) above to the extent the Company
achieves the EBITDA Targets set forth in such subsection for such fiscal year.
(c) If the Optionee terminates employment with the Company by reason of
retirement on or after age 62 or with the consent of the Company, the Option
shall be exercisable only to the extent it is exercisable on the effective date
of the Optionee's termination of employment and may thereafter be exercised by
the Optionee or the Optionee's Legal Representative until the Expiration Date;
provided that, if the Optionee shall retire during the 60-day period after the
close of the Company's fiscal year ending in 1997, 1998 or 1999, the portion of
the Option that shall be considered exercisable as of the date of the Optionee's
retirement for purposes of this subsection shall be adjusted by the Committee in
accordance with subsection (a) above
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to the extent the Company achieves the EBITDA Targets set forth in such
subsection for such fiscal year.
(d) If the Optionee's employment with the Company terminates by reason of
the Optionee's death, the Option shall be exercisable only to the extent it is
exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until the Expiration Date; provided that, if the Optionee shall die during the
60-day period after the close of the Company's fiscal year ending in 1997, 1998
or 1999, the portion of the Option that shall be considered exercisable as of
the date of the Optionee's death for purposes of this subsection shall be
adjusted by the Committee in accordance with subsection (a) above to the extent
the Company achieves the EBITDA Targets set forth in such subsection for such
fiscal year.
(e) If the Optionee terminates employment with the Company for any reason
other than as described in subsection (b), (c) or (d) above, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's termination of employment and may thereafter be exercised by the
Optionee or the Optionee's Legal Representative until and including the earliest
to occur of (i) the date which is 90 days after the effective date of the
Optionee's termination of employment and (ii) the Expiration Date; provided
that, if the Optionee shall terminate employment pursuant to this subsection (e)
during the 60-day period after the close of the Company's fiscal year ending in
1997, 1998 or 1999, the portion of the Option that shall be considered
exercisable as of the date of the Optionee's termination of employment for
purposes of this subsection shall be adjusted by the Committee in accordance
with subsection (a) above to the extent the Company achieves the EBITDA Targets
set forth in such subsection for such fiscal year; and provided further that if
the Optionee's employment is terminated for Cause (as defined below), the Option
shall terminate automatically on the effective date of the Optionee's
termination of employment, and the Optionee shall be subject to the provisions
of Section 2.5.
(f) For purposes of this Agreement, "Cause" shall mean the Optionee's
willful and continued failure to substantially perform the Optionee's duties
with the Company (other than a failure resulting from the Optionee's
Disability), or the direct
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or indirect engaging in any activity which is contrary, inimical or harmful to
the interests of the Company or any Subsidiary, monetarily or otherwise, as
determined by a majority of the members of the Board, including (I) conduct
that, in the reasonable judgment of the Company, fails to conform with any
material standard of conduct applicable to the Company's executives, including
gross violations of material Company policies, (II) any act of dishonesty, (III)
commission of a felony, (IV) a significant violation of any statutory or common
law duty of loyalty to the Company, or (V) the disclosure or misuse of any
confidential or competitively sensitive information or trade secrets of the
Company or a Subsidiary or affiliate.
2.3. Method of Exercise. Subject to the limitations set forth in this
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Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the Company's satisfaction) either (i) in cash, (ii) by delivery
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and in each case for which the Optionee has good
title, free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i), (ii) and (iii), and
(2) by executing such documents as the Company may reasonably request. The
Committee shall have sole discretion to disapprove of an election pursuant to
any of clauses (ii) - (iv). Any fraction of a share of Stock which would be
required to pay such purchase price shall be disregarded and the remaining
amount due shall be paid in cash by the Optionee. No certificate representing a
share of Stock shall be delivered until the full purchase price therefor has
been paid.
2.4. Termination of Option. (a) In no event may the Option be exercised
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after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
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(b) In the event that rights to purchase all or a portion of the shares of
Stock subject to the Option expire or are exercised, cancelled or forfeited, the
Optionee shall, upon the Company's request, promptly return this Agreement to
the Company for full or partial cancellation, as the case may be. Such
cancellation shall be effective regardless of whether the Optionee returns this
Agreement. If the Optionee continues to have rights to purchase shares of Stock
hereunder, the Company shall, within 10 business days of the Optionee's delivery
of this Agreement to the Company, either (i) xxxx this Agreement to indicate the
extent to which the Option has expired or been exercised, cancelled or forfeited
or (ii) issue to the Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be substantially similar to this
Agreement in form and substance.
2.5 Termination of Option and Forfeiture of Option Gain. (a) If at any
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time prior to the earliest to occur of (i) the Expiration Date, (ii) the date
which is two years after the effective date of the Optionee's termination of
employment for any reason other than death and (iii) the date which is two years
after the Optionee exercises any portion of the Option, the Optionee:
(1) directly or indirectly (whether as principal, agent, independent
contractor, partner or otherwise) owns, manages, operates, controls,
participates in, performs services for, or otherwise carries on, a business
substantially similar to or competitive with the business conducted by the
Company or any Subsidiary (it being understood by the parties hereto that the
prohibited activities are not limited to any particular region because such
business may be engaged in effectively from any location in the United States);
provided, that nothing set forth in this Section 2.5(a)(1) shall prohibit the
Optionee from owning not in excess of 5% in the aggregate of any class of
capital stock of any corporation if such stock is publicly traded and listed on
any national or regional stock exchange or on the Nasdaq Stock Market; or
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(2) directly or indirectly induces or attempts to persuade any employee,
agent or customer of the Company or any Subsidiary to terminate such employment,
agency or business relationship in order to enter into any such relationship on
behalf of any other business organization in competition with the business
conducted by the Company or any Subsidiary;
(3) is terminated for Cause, or, in the event the Optionee is no longer
employed with the Company, directly or indirectly engages in any activity which
is contrary, inimical or harmful to the interests of the Company or any
Subsidiary, including the disclosure or misuse of any confidential or
competitively sensitive information or trade secrets of the Company or a
Subsidiary or affiliate; or
(4) participates in any activity not approved by the Board which
contributes to or results in the initiation of an action or transaction which,
if consummated, would result in a Change in Control of the Company,
then the Option shall terminate automatically on the date the Optionee engages
in such activity and (x) with respect to any shares of Stock owned by the
Optionee as the result of any exercise of the Option, the Optionee shall, within
five business days of receipt by the Optionee of a written demand therefor, sell
such shares to the Company at a price equal to the lesser of (i) the Fair Market
Value of a share of Stock on the date the Optionee engages in such activity and
(ii) the purchase price per share of Stock set forth in the first paragraph of
this Agreement, and (y) with respect to any shares of Stock acquired by the
Optionee as a result of any exercise of the Option which are not then owned as
of the date on which the Optionee engaged in such activity, the Optionee shall
pay the Company, within five business days of receipt by the Optionee of a
written demand therefor, an amount in cash determined by multiplying the number
of shares of Stock purchased pursuant to each exercise of the Option (without
reduction for any shares of Stock delivered by the Optionee or withheld by the
Company pursuant to Section 2.3 or Section 3.3) by the difference between (i)
the Fair Market Value of a share of Stock on the date of such exercise (or on
the date of any subsequent sale or other disposition, if greater) and (ii) the
purchase price per share of Stock set forth in the first paragraph of this
Agreement.
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(b) The Optionee may be released from the Optionee's obligations
under Sections 2.2(e) and 2.5(a) only if and to the extent the Committee
determines in its sole discretion that such a release is in the best interests
of the Company.
(c) The Optionee agrees that by executing this Agreement the Optionee
authorizes the Company and its Subsidiaries to deduct any amount or amounts owed
by the Optionee pursuant to Section 2.2(e) or 2.5(a) from any amounts payable by
the Company or any Subsidiary to the Optionee, including, without limitation,
any amount payable to the Optionee as salary, wages, vacation pay or bonus.
This right of setoff shall not be an exclusive remedy and the Company's or a
Subsidiary's election not to exercise this right of setoff with respect to any
amount payable to the Optionee shall not constitute a waiver of this right of
setoff with respect to any other amount payable to the Optionee or any other
remedy.
3. Additional Terms and Conditions of Option.
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3.1. Nontransferability of Option. The Option may not be transferred
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by the Optionee other than (i) by will or the laws of descent and distribution
or pursuant to beneficiary designation procedures approved by the Company or
(ii) as otherwise permitted under Rule 16b-3 under the Exchange Act. Except to
the extent permitted by the foregoing sentence, during the Optionee's lifetime
the Option is exercisable only by the Optionee or the Optionee's Legal
Representative. Except to the extent permitted by the foregoing, the Option may
not be sold, transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process. Upon any attempt to so sell,
transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the
Option, the Option and all rights hereunder shall immediately become null and
void.
3.2. Investment Representation and Restriction. The Optionee hereby
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represents and covenants that (a) any share of Stock purchased upon exercise of
the Option will be purchased for investment and not with a view to the
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), unless such purchase has been registered under
the Securities Act and any applicable state securities laws; (b) any subsequent
sale of any such shares shall be made either
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pursuant to an effective registration statement under the Securities Act and any
applicable state securities laws, or pursuant to an exemption from registration
under the Securities Act and such state securities laws; (c) to the extent
required by an agreement between one or more underwriters and the Company in
connection with an offering of shares of Stock pursuant to a registration
statement under the Securities Act, the Optionee shall not offer, sell, contract
to sell or otherwise dispose of any shares of Stock purchased upon exercise of
the Option for the period specified in such agreement; (d) to the extent
required by the terms of the Credit Agreement (as defined below), (I) this
Option and all shares of Stock purchased upon exercise of the Option shall be
subject to the terms of the Credit Agreement (as defined below) which may
require, among other things, that this Option and such shares be pledged in
support of the Obligations (as defined in the Credit Agreement), that the
Optionee subordinate amounts owed to him by the Company, if any, to the
Obligations, and/or that Centre Partners II, LLC or an affiliate thereof
("Centre") be granted sole voting and investment power with regard to the shares
when acquired by the Optionee, and (II) the Optionee shall execute from time to
time such pledge agreements, subordination agreements, irrevocable powers of
appointment to Centre or other instruments and to cause to be delivered such
certificates, opinions or supporting documentation as the Agent (as defined in
the Credit Agreement) may require to satisfy the Agent that this Option and the
shares are being acquired subject to the provisions of the Credit Agreement; (e)
all shares of Stock purchased upon exercise of the Option shall be subject to
the terms of the Management Shares Agreement among the Company, certain parties
affiliated with Centre, and certain directors, officers and employees of the
Company, of even date herewith and (f) if requested by the Company, the Optionee
shall submit a written statement, in form satisfactory to the Company, to the
effect that such representation (x) is true and correct as of the date of
purchase of any shares hereunder or (y) is true and correct as of the date of
any sale of any such shares, as applicable. As a further condition precedent to
any exercise of the Option, the Optionee shall comply with all regulations and
requirements of any regulatory authority having control of or supervision over
the issuance or delivery of the shares and, in connection therewith, shall
execute any documents which the Board or the Committee shall in its sole
discretion deem necessary or advisable.
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3.3. Withholding Taxes. (a) As a condition precedent to the
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delivery of Stock upon exercise of the Option, the Optionee shall, upon request
by the Company, pay to the Company in addition to the purchase price of the
shares, such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as
income or other withholding taxes (the "Required Tax Payments") with respect to
such exercise of the Option. If the Optionee shall fail to advance the Required
Tax Payments after request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.3(a), (2) delivery to the Company
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and in each case for which the Optionee has good
title, free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date the obligation to withhold or pay taxes first arises
in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) authorizing the Company to withhold whole shares of Stock which
would otherwise be delivered to the Optionee upon exercise of the Option having
a Fair Market Value, determined as of the Tax Date, equal to the Required Tax
Payments, (4) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise or (5) any
combination of (1), (2) and (3); provided, however, that if the Optionee
exercises the option on the Expiration Date, is employed as of such date, and
the shares of Stock are not traded on a national securities exchange or are not
quoted on the Nasdaq National Market as of such date, the Company shall take
reasonable efforts to permit an Optionee to use, in whole or in part, the method
described in clause (3) above. The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (2)-(5). Shares of Stock
to be delivered or withheld may not have a Fair Market Value in excess of the
minimum amount of the Required Tax Payments. Any fraction of a share of Stock
which would be required to satisfy any such obligation shall be disregarded and
the remaining amount due shall be paid in cash by the Optionee. No certificate
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representing a share of Stock shall be delivered until the Required Tax Payments
have been satisfied in full.
(c) Unless the Committee otherwise determines, if the Optionee is
subject to Section 16 of the Exchange Act, the following provisions shall apply
to the Optionee's election to deliver to the Company whole shares of Stock or to
authorize the Company to withhold whole shares of Stock purchasable upon
exercise of the Option in payment of all or a portion of the Optionee's tax
liability in connection with such exercise:
(1) The Optionee may deliver to the Company previously owned whole
shares of Stock in accordance with Section 3.3(b), if such delivery is in
connection with the delivery of shares of Stock in payment of the exercise price
of the Option.
(2) The Optionee may authorize the Company to withhold whole shares of
Stock purchasable upon exercise of the Option in accordance with Section 3.3(b);
provided, that the following provisions shall apply to such election:
(i) Such election may apply only to the Option or any or all options
held by the Optionee, shall be filed with the Committee at least six months
prior to the exercise date of the Option and may not take effect during the six-
month period beginning on the date of grant of the Option (other than in the
event of the Optionee's death) or (ii) such election (A) shall be subject to
approval by the Committee, (B) may not take effect during the six-month period
beginning on the date of grant of the Option (other than in the event of the
Optionee's death), (C) must be filed with the Committee during (or must be filed
with the Committee in advance of, but take effect during) the 10 business day
period beginning on the third business day following the date of release of the
Company's quarterly or annual summary statements of sales and earnings and (D)
the exercise of the Option must occur during such 10 business day period.
Unless the Committee otherwise determines, any election pursuant to clause (i)
may be revoked or changed only if such revocation or change is made at least six
months prior to the exercise of the Option. Any
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election made pursuant to clause (ii) may be revoked or changed prior to the
exercise of the Option during the 10 business day period.
3.4. Adjustment. In the event of any stock split, stock dividend,
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recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value on the exercise date over (B) the exercise
price of the Option. The decision of the Committee regarding any such
adjustment shall be final, binding and conclusive.
3.5. Change in Control. Notwithstanding any provision in this
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Agreement, in the event of the occurrence of a Change in Control as defined in
paragraph (b)(3) or (4) of Section 3.8 of the Plan in connection with which the
holders of Stock receive shares of common stock that are registered under
Section 12 of the Exchange Act, there shall be substituted for each share of
Stock available under this Plan, whether or not then subject to an outstanding
option, the number and class of shares into which each outstanding share of
Stock shall be converted pursuant to such Change in Control. In the event of
any such substitution, the purchase price per share of each option shall be
appropriately adjusted by the Committee, such adjustments to be made without an
increase in the aggregate purchase price or base price. In the event of the
occurrence of such a Change in Control, the Committee, in its sole discretion,
shall determine the extent to which additional shares of Stock subject to the
Option, if any, shall become exercisable based on its reasonable judgment
regarding whether or the extent to which the Company has achieved the EBITDA
Targets set forth in Section 2.2(a).
(2) Notwithstanding any provision in this Agreement, in the event of
the occurrence of a Change in Control pursuant to
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paragraph (b)(1) or (2) of Section 3.8 of the Plan, or in the event of the
occurrence of a Change in Control pursuant to paragraph (b)(3) or (4) of Section
3.8 of the Plan in connection with which the holders of Stock receive
consideration other than shares of common stock that are registered under
Section 12 of the Exchange Act, each outstanding option shall be surrendered to
the Company by the holder thereof, and each such option shall immediately be
cancelled by the Company, and the holder shall receive, within 10 business days
of the occurrence of a Change in Control pursuant to paragraph (b)(1) or (2) of
Section 3.8 of the Plan or within 10 business days of the approval of the
stockholders of the Company contemplated by paragraph (b)(3) or (4) of Section
3.8 of the Plan, a cash payment from the Company in an amount equal to the
number of shares of Stock then subject to such option that are exercisable as of
the date of the occurrence of such Change in Control, multiplied by the excess,
if any, of the Fair Market Value of a share of Stock on the date of occurrence
of the Change in Control over (ii) the purchase price per share of Stock subject
to the option. The Company may, but is not required to, cooperate with any
person who is subject to Section 16 of the Exchange Act to assure that any cash
payment in accordance with the foregoing to such person is made in compliance
with Section 16 and the rules and regulations thereunder.
3.6. Limitation on Exercisability in the Case of Default Under Credit
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Agreement. Notwithstanding any provision of this Agreement to the contrary, to
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the extent required by the terms of the credit agreement dated as of July 31,
1996 among the Company, the Lenders (as defined therein) and NationsBank, N.A.
(South) as Swingline Lender, Issuing Bank and Agent (as defined therein) for the
Lenders (as amended, supplemented or replaced from time to time, the "Credit
Agreement"), this Option shall not be exercisable while an "Event of Default" or
a "Default" (within the meaning of such terms as used in the Credit Agreement)
shall have occurred and is continuing.
3.7. Compliance with Applicable Law. The Option is subject to the
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condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Option may not
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be exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained, free of
any conditions not acceptable to the Company. The Company agrees to use
reasonable efforts to effect or obtain any such listing, registration,
qualification, consent or approval.
3.8. Delivery of Information to Optionee. The Company shall forward
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to the Optionee annual reports to shareholders and annual or quarterly financial
statements of the Company, including the consolidated balance sheet and related
consolidated statements of operations and cash flows for a fiscal year, fiscal
quarter or period of a fiscal year, as applicable, as soon as administratively
practicable after such materials are prepared and distributed or filed, as the
case may be, by the Company. The Optionees shall have the same rights as holders
of shares of Stock to notice with respect to annual or special meetings of
shareholders of the Company, and shall have the right to attend any such
meetings.
3.9. Delivery of Certificates. Upon the exercise of the Option, in
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whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.10. Option Confers No Rights as Stockholder. The Optionee shall
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not be entitled to any privileges of ownership with respect to shares of Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
record with respect to such delivered shares; and the Optionee shall not be
considered a stockholder of the Company with respect to any such shares not so
purchased and delivered.
3.11. Option Confers No Rights to Continued Employment. In no event
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shall the granting of the Option or its acceptance by the Optionee give or be
deemed to give the Optionee any right to continued employment by the Company or
any affiliate of the Company.
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3.12. Decisions of Board or Committee. The Board or the Committee
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shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board or the Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.
3.13. Company to Reserve Shares. The Company shall at all times
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prior to the expiration or termination of the Option reserve and keep available,
either in its treasury or out of its authorized but unissued shares of Stock,
the full number of shares subject to the Option from time to time.
3.14. Agreement Subject to the Plan. This Agreement is subject to
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the provisions of the Plan and shall be interpreted in accordance therewith.
The Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
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4.1. Designation as Nonqualified Stock Option. The Option is hereby
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designated as not constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. (a) As used herein, employment by
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the Company shall include employment by an affiliate of the Company. References
in this Agreement to sections of the Code shall be deemed to refer to any
successor section of the Code or any successor internal revenue law.
(b) As used herein, the term "Legal Representative" shall include an
executor, administrator, legal representative, guardian or similar person and
the term "Permitted Transferee" shall include any transferee pursuant to a
transfer permitted under Section 3.4 of the Plan and Section 3.1 hereof or (ii)
designated pursuant to beneficiary designation procedures approved by the
Company.
4.3. Successors. This Agreement shall be binding upon and inure to
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the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of
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the Optionee, acquire any rights hereunder in accordance with this Agreement or
the Plan.
4.4. Notices. All notices, requests or other communications provided
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for in this Agreement shall be made, if to the Company, to Firearms Training
Systems, Inc., 0000 XxXxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000, Attention:
Corporate Secretary, and if to the Optionee, to Xxxxx X. Xxxxxx at his most
recent home address on file with the Company. All notices, requests or other
communications provided for in this Agreement shall be made in writing either
(a) by personal delivery to the party entitled thereto, (b) by facsimile with
confirmation of receipt, (c) by mailing in the United States mails to the last
known address of the party entitled thereto or (d) by express courier service.
The notice, request or other communication shall be deemed to be received upon
personal delivery, upon confirmation of receipt of facsimile transmission or
upon receipt by the party entitled thereto if by United States mail or express
courier service; provided, however, that if a notice, request or other
communication sent to the Company is not received during regular business hours,
it shall be deemed to be received on the next succeeding business day of the
Company.
4.5. Governing Law. This Agreement, the Option and all
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determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Delaware and construed in accordance therewith without giving
effect to principles of conflicts of laws.
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4.6. Counterparts. This Agreement may be executed in two
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counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
FIREARMS TRAINING SYSTEMS, INC.
By:/s/ Xxxxxx Xxxxxxx /s/ Xxxxxxxx X. Xxxxx
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Name: Xxxxxx Xxxxxxx Xxxxxxxx X. Xxxxx
Title: Chairman of Secretary
the Board
Accepted this 18th day of
September, 1996.
/s/ Xxxxx X. Xxxxxx
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Optionee
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