Form of Series I Stock Option Agreement


  EXHIBIT 10.2
 FORM OF SERIES I STOCK
OPTION AGREEMENT DATED AS OF MAY 1, 2003 BETWEEN THE COMPANY AND ITS OUTSIDE DIRECTORS
 FIREARMS TRAINING SYSTEMS, INC.
STOCK OPTION
AGREEMENT
SERIES I
 Firearms Training Systems, Inc., a Delaware corporation (the “Company”), hereby grants to ________________
(the “Optionee”) as of May 1, 2003 (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”) 300,000 shares of its Class A Common Stock, $0.000006 par value (“Stock”), at the price of $0.40 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 thirty three and one-third percent (33-1/3%) of the shares of Stock subject to the Option on the first anniversary of the Option Date, and an additional thirty three and
one-third percent (33-1/3%) of the shares of Stock subject to the Option on each of the second and third anniversaries of the Option Date on a cumulative basis, so that the Option is
exercisable with respect to one hundred percent (100%) of the shares of Stock subject to the Option on the third anniversary of the Option Date.
 (b)        If the Optionee ceases to be a director of 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 ceasing to be a 
 







  director and may thereafter be exercised by the Optionee or the Optionee’s Legal Representative until the Expiration Date.
 (c)        If the Optionee ceases to be a director of the Company 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.
 (d)        If the Optionee ceases to be a director of the Company for any
reason other than as described in subsection (b) or (c) above, 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 until and including the earliest to occur of (i) the date which is 180 days after the effective date of the Optionee’s ceasing to be a director and (ii) the Expiration Date. Notwithstanding the
foregoing, with respect to an Optionee who has never provided services to the Company as an employee thereof, the Option shall be exercisable with respect to all of the Stock subject to the Option on the Option Date if the Optionee ceases to be a
director pursuant to this subsection (d) for any reason other than (i) the Optionee’s failure properly to perform his duties as a director of the Company, or (ii) under circumstances which, if the Optionee were an employee of the Company, would
constitute termination for Cause (as defined in the Plan).
 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, the form of which is set forth on Exhibit A to this Agreement,
specifying the number of whole shares of Stock to be purchased and accompanied by payment therefore 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 Optionee shall pay the remaining amount due in cash. No certificate representing a share of
Stock shall be delivered until the full purchase price therefore has been paid.
 
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  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.

(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) mark 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.
 3.          Additional Terms and Conditions of Option.
 3.1.      Nontransferability of Option. 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.
 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 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; (d) if requested by the 
 
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  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 (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, all outstanding options shall immediately be exercisable in full and 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 Committee shall appropriately adjust the purchase price per share of
each option, such adjustments 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, 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 
 
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  (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, multiplied by the excess, if any, of (i) 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.
 3.5.      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 therefore. 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.
 4.4.      Notices.
All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to Firearms Training Systems, Inc., 7340 McGinnis Ferry Road, Suwanee, Georgia 30024, Attention: Corporate Secretary, and if to the
Optionee, to __________ __________, _________________, _____________________, ____ ____________, ________________. 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 
 
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  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.
 
	 
 
 
 	  
 	  
 	 
 
 
 
	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	 Ronavan R Mohling
 Chairman of the Board & Chief Executive Officer
 

  

	 Accepted this ____ day of
 May, 2003
 	  
 	  
 	 
 
 
 
	  
 	  
 	  
 	  
 	  
 
	 
 	  
 	  
 	  
 	  
 
	 Optionee
 	  
 	  
 	  
 	  
 

  
 
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