**EXHIBIT 10.4**

**FORM OF SERIES K STOCKOPTION AGREEMENT DATED AS OF MAY 1, 2003 BETWEEN THE****COMPANY AND CERTAIN OF ITS EMPLOYEES**

FIREARMS TRAINING SYSTEMS,INC.STOCK OPTION AGREEMENTSERIES K

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”), anon-qualified option to purchase from the Company (the “Option”) ______ 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 forthbelow. 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 meaningsspecified in the Plan.

1.          Option Subject to Acceptance ofAgreement. 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, inwhole 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 3.5 below (relating to a change in control of the Company), the Option shall become exercisablewith 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 andone-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 isexercisable 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 terminates employment with theCompany 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 LegalRepresentative until the Expiration Date.

(c)        If the Optionee terminatesemployment 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 employmentand may thereafter be exercised by the Optionee or the Optionee’s Legal Representative until the Expiration Date.

(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 onthe 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.

(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 beexercisable 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 tooccur 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’s employment is terminated by the Company for Cause, the Option shallterminate 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 theOptionee’s duties with the Company (other than a failure resulting from the Optionee’s Disability), or the direct or indirect engaging in any activity which is contrary, inimical or harmful to the interests of the Company or anySubsidiary, 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 theCompany’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) thedisclosure 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 thelimitations 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 bepurchased 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 leastsix 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 thedate 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 ashare 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 purchaseprice therefore 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 ExpirationDate.

(b)        In the event that rights to purchase all or a portion of theshares 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. Suchcancellation 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 ofthis 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.

2.5.      Termination of Option and Forfeiture of Option Gain. (a) If at any time prior to the earliest to occur of (i) the Expiration Date, (ii) the date which is twoyears 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, theOptionee:

(1) directly or indirectly (whether as principal, agent, independent contractor, partner or otherwise) owns, manages, operates, controls, participatesin, 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 notlimited to any particular region because such business may be engaged in effectively from any location worldwide); provided, that nothing set forth in this Section 2.5(a)(1) shall prohibit the Optionee from owning not in excess of 5% in theaggregate 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

(2) directly or indirectly induces or tempts 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 suchrelationship on behalf of any other business organization in competition with the business conducted by the Company or any Subsidiary;

(3) is terminated forCause, 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 misuseof any confidential or competitively sensitive information or trade secrets of the Company or a Subsidiary or affiliate; or

(4) participates in any activity notapproved 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 of such date 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 therefore, 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 were subsequently sold or otherwisedisposed of by the Optionee prior to 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 therefore, an amount in cash determined by multiplying the number of shares of Stock purchased pursuant to each exercise of the Option (withoutreduction 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 ofany 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.

(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 determinesin 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 toSection 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 anexclusive 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 amountpayable to the Optionee or any other remedy.

3.          AdditionalTerms and Conditions of Option.

3.1.      Nontransferability ofOption. 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 permittedunder 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 extentpermitted 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 anyattempt 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 ofStock 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 beenregistered 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 statementunder 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 andthe 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 ofthe 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 thedate 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 andrequirements 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 deemnecessary or advisable.

3.3.      Withholding Taxes. (a) As acondition precedent to the 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, underall 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 toadvance 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 thefollowing 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 whichthe 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 firstarises 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 havinga 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). The Committee shall have sole discretion to disapprove of an election pursuant to any of clauses (2)-(5); 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, theCompany shall take reasonable efforts to permit an Optionee to use, in whole or in part, the method described in clause (3) above. Shares of Stock to be delivered or withheld may not have a Fair Market Value in excess of the minimum amount of theRequired 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 representing a share of Stockshall 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 electionto 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 suchexercise:

(1)        The Optionee may deliver to the Company previously ownedwhole 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 accordancewith 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 dateof 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) maynot 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 takeeffect 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 such10 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 election madepursuant 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 anystock 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 aregular 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 resultin 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 suchsecurity (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, bindingand conclusive.

3.5.      Change in Control. (a) Notwithstandingany 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 registeredunder 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 numberand 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 theCommittee, 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 inthe 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 Section12 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 ofa 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 fromthe Company in an amount equal to the number of shares of Stock then subject to such 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 purchaseprice 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 andregulations thereunder.

3.6.      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 anyother 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 orapproval 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.

3.7.      Delivery of Information to Optionee. The Company shall forward to theOptionee 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 orperiod 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 tonotice with respect to annual or special meetings of shareholders of the Company, and shall have the right to attend any such meetings.

3.8.      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 certificatesrepresenting 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, except as otherwise provided in Section 3.3.

3.9.      Option Confers No Rights as Stockholder. The Optionee shall not beentitled 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 withrespect 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.

3.10.   Option Confers No Rights to Continued Employment. In no event shall the granting of the Option or its acceptance by the Optionee give or be deemed togive the Optionee any right to continued employment by the Company or any affiliate of the Company.

3.11.   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 andconclusive.

3.12.   Company to Reserve Shares. The Company shall at all timesprior 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.

3.13.   Agreement Subject to the Plan. This Agreement is subject to the provisions of the Plan andshall 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 section422 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 personand 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 theCompany.

4.3.      Successors. This Agreement shall be bindingupon 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 thisAgreement 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 UnitedStates 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 uponpersonal 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 tothe 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 ofthe 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 maybe 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 6th day ofMay, 2003.

 

 

 

 

 

 

 

 

 

 

Optionee