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EXHIBIT 10.22
FIREARMS TRAINING SYSTEMS, INC.
STOCK OPTION AGREEMENT
SERIES C-2
Firearms Training Systems, Inc., a Delaware corporation (the
"Company"), hereby grants to ______________ (the "Optionee") as of November 11,
1998 (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") 26,675 shares of its Class A Common Stock,
$0.000006 par value ("Stock"), at the price of $1.03125 per share upon and
subject to the terms and conditions set forth below. 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
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.
2.1. Maximum Term of Option. In no event may the Option be
exercised, in whole or in part, after the seventh anniversary of the Option Date
(the "Expiration Date").
2.2. Exercise of Option. (a) Except as otherwise provided in
Section 3.4 below (relating to a change in control of the Company), the Option
shall become exercisable with respect to twenty-five percent (25%) of the shares
of Stock subject to the Option on December 31, 1998, an additional twenty-five
percent (25%) of the shares of Stock subject to the Option on March 31, 1999, an
additional twenty-five percent (25%) of the shares of Stock subject to the
Option on June 30, 1999, and an additional twenty-five percent (25%) of the
shares of Stock subject to the Option on September 30, 1999.
(b) If the Optionee ceases to be a director of the Company for
any reason and is not replaced as a director within sixty (60) days by another
nominee who is an
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employee, principal or affiliate of Centre Partners Management, LLC, the Option
shall be exercisable only to the extent it is exercisable on the effective date
of the Optionee's ceasing to be a director and may thereafter be exercised by
the Optionee or the Optionee's Legal Representative or his permitted assignee
pursuant to Section 3.1(b) until the Expiration Date. If the Optionee is so
replaced as a director, the Option shall continue as to any portion thereof
which has not previously become exercisable and become exercisable with respect
to such remaining portion of the Stock subject to the Option on the dates set
forth in subsection (a) above by the Optionee's permitted assignee pursuant to
Section 3.1(b).
2.3. Method of Exercise. Subject to the limitations set forth
in this 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 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, canceled 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) ▇▇▇▇ this Agreement to
indicate the extent to which the Option has expired or been exercised, canceled
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.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. (a) Subject to subsection
(b) below, the Option may not be transferred 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.
(b) Notwithstanding subsection (a), the Optionee shall have
the right at any time to transfer this Option to Centre Partners Management,
LLC, or any entity that is an affiliate thereof or is managed thereby.
3.2. Investment Representation and Restrictions. The Optionee
hereby represents and covenants that (a) any share of Stock purchased upon
exercise of the Option will be
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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 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; and (d) 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.
3.3. Adjustment. In the event of any stock split, stock
dividend, 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
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(B) the exercise price of the Option. The decision of the Committee regarding
any such adjustment shall be final, binding and conclusive.
3.4. Change in Control. (a) Notwithstanding any provision in
this 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, the Option shall immediately be exercisable in
full and there shall be substituted for each share of Stock subject to the
Option the number and class of shares into which each such 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 the Option shall be appropriately
adjusted by the Committee, such adjustment to be made without an increase in the
aggregate purchase price or base price.
(b) Notwithstanding any provision in this Agreement, in the
event of the occurrence of a Change in Control pursuant to 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,
the Option shall be surrendered to the Company by the holder thereof and shall
immediately be canceled by the Company, and the Optionee 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 the Option, 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.
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3.5. Compliance with Applicable Law. The Option is subject to
the 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 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.
3.6. Delivery of Certificates. Upon the exercise of the
Option, in 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.
3.7. Option Confers No Rights as Stockholder. The Optionee
shall 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.
3.8. Option Confers No Rights to Continue to Serve as a
Director. In no event shall the granting of the Option or its acceptance by the
Optionee give or be deemed to give the Optionee any right to continue to serve,
to be elected or reelected to serve or to be nominated to serve as a director of
the Company.
3.9. Decisions of Board or Committee. The Board or the
Committee 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.
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3.10. Company to Reserve Shares. The Company shall at all
times 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.
3.11. Agreement Subject to the Plan. This Agreement is subject
to 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.
4.1. Designation as Nonqualified Stock Option. The Option is
hereby 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 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 (i)
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 the benefit of any successor or successors of the Company and any
person or persons who shall, upon the death of the Optionee, acquire any rights
hereunder in accordance with this Agreement or the Plan and any permitted
assignee pursuant to Section 3.1(b).
4.4. Notices. All notices, requests or other communications
provided for in this Agreement shall be made,
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if to the Company, to Firearms Training Systems, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Secretary, and if to the Optionee,
to ______________, c/o Centre Partners Management, LLC, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. 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
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.
4.6. Counterparts. This Agreement may be executed in two
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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & CEO
Accepted this 11th day of
November, 1998.
Optionee