James Carlo Wilson, 24, was struck outside of his former in Frenchman’s Way, South Shields, in the early hours of March 29, 2016, and died in hospital in Newcastle three days after the incident.
An inquest into his death has had heard that Mr Wilson was shot by an attenuating energy projectile (AEP) - a type of rubber bullet - before another police marksman fired a single round from a firearm a few seconds later.
Police had gone to the scene after Mr Wilson told them he had a 9mm pistol and planned to shoot officers who approached,
Witness Syed Miah, 27, told the hearing that he had known Mr Wilson for just a month but that they had become very good friends.
On the night of the shooting he was staying at the home of Mr Wilson's former girlfriend Kayleigh Reay, in Frenchman's Way, as a guest while he found his own property.
The dad-of-two said Mr Wilson and Ms Reay appeared to be having an argument by phone, to which he was not party and did not get involved.
He told the inquest he only looked out of a window to see what was happening when he saw police blue lights and realised “things were getting serious”.
Although only being able to see Mr Wilson from behind, he said he looked "like he had no cares."
He added: "I heard a loud bang and James dropped to the floor within seconds.
"My head was all over the place. I put on one shoe and I think that I ran out of the house to see James but the police stopped me."
Previously, witness Michaela Gorman told the inquest that Mr Wilson,of Candlish Street, South Shields, giggled as he was hit by the AEP.
Ms Gorman, 25, told the hearing his reaction made her think the bullet had missed him.
But moments later she heard him cry out ‘ah’ when has was struck by a second, fatal shot.
Giving evidence on the fourth day of the inquest, she said she was watching him from a window at her sister Ms Reay’s house in Frenchman’s Way, South Shields.
Mr Wilson was pacing from side to side, talking to police on what she took to be a mobile phone on loudspeaker in a pocket.
During the call, she heard him tell officers he had a gun – but did not see the weapon herself.
Of the moment he – she said: "He pointed his hand towards them as though he did (have a gun).
"He had been telling police that he had a gun and I was shouting out of the window for him to drop it but he didn’t.
"Just a little giggle but I didn’t hear him say anything. I didn’t know that it had hit him, I thought that he had skipped it."
Ms Gorman added: "It all happened so quick. I heard him shot, then lying in the road. Then 'ah', he was in pain then."
Of the alleged weapon, she said: "He didn’t have it pointed towards police all the time."
Cross examined by Sam Faulks, representing Mr Wilson’s family, Ms Gorman said she believed Mr Wilson’s action were a 'cry for help'.
She added: "He didn’t seem to care, he wasn’t frightened when they were standing in front of him with guns.
"I don’t think that he thought it would go the way it did."
The hearing continues on Thursday.