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                                  EXHIBIT 10.4

                              GRANT OF STOCK OPTION


Date of Grant:  As of August 21, 1997

         THIS GRANT, dated as of the date of grant first stated above (the "Date
of Grant"), is delivered by Ampace Corporation, a Delaware corporation (the
"Company") to Bruce W. Jones, (the "Grantee"), who is a director of the Company.

         WHEREAS, the Board of Directors of the Company (the "Board") on August
21, 1997 approved the grant of this option; and

         WHEREAS, the Board desires to grant the stock options documented
herein.

         NOW, THEREFORE, the parties hereto intending to be legally bound
hereby, agree as follows:

         1. Grant of Option.

         Subject to the terms and conditions hereinafter set forth, the Company
hereby grants to the Grantee, as of the Date of Grant, an option to purchase up
to 50,000 shares of Stock at a price of $1.00 per share, which is equal to the
closing price of the Common Stock on the Date of Grant. Such option is
hereinafter referred to as the "Option" and the shares of stock purchasable upon
exercise of the Option are hereinafter sometimes referred to as the "Option
Shares." The Option shall vest if the Company realizes net income of at least
$500,000 for the fiscal year ended December 31, 1997 as reported on the
Company's audited financial statements for such year. Notwithstanding the
foregoing, if any event (a "Change of Control") described in Section 5(d) of the
Employment and Stock Option Agreement dated February 25, 1995 between the
Grantee and the Company (the "Agreement") shall occur, (i) the Company shall
provide the Grantee written notice of such Change of Control and (ii) the Option
shall automatically accelerate and become fully exercisable. In addition, upon a
Change of Control described in Section 5(d)(v)(i) of the Agreement, the portion
of the Option that is not exercised shall be assumed by, or replaced with
comparable options by, the surviving corporation. Any replacement options shall
entitle the Grantee to receive the same amount and type of securities as the
Grantee would have received as a result of the Change of Control had the Grantee
exercised the Option immediately prior to the Change of Control.

         2. Termination of Option.

         (a) Except as otherwise provided herein, the Option and all rights
hereunder with respect thereto, to the extent such rights shall not have been
exercised, shall terminate and become null and void after the expiration of ten
(10) years from the Date of Grant (the "Option Term").


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         (b) In the event of the disability or death of the Grantee, or if the
Grantee no longer serves as a director of the Company, the Option may be
exercised during the following period, but only to the extent that the Option
was outstanding on any such date of disability or death or cessation of service:
(i) the one-year period following the date of disability (within the meaning of
Section 22(e)(3) of the Code); (ii) the six-month period following the date of
issuance of letters testamentary or letters of administration to the executor or
administrator of a deceased Grantee, but not later than one year after the
Grantee's death; and (iii) the one-year period following the date on which
service as director of the Company ceases. In no event, however, shall any such
period extend beyond the Option Term.

         (c) In the event of the death of the Grantee, the Option may be
exercised by the Grantee's legal representative(s), but only to the extent that
the Option would otherwise have been exercisable by the Grantee.

         (d) Notwithstanding any other provisions set forth herein, if the
Grantee shall commit any act of malfeasance or wrongdoing affecting the Company
or any subsidiary of the Company, any unexercised portion of the Option shall
immediately terminate and be void.

         3. Exercise of Option.

         (a) The Grantee may exercise the Option at any time after vesting, with
respect to all or any part of the number of Option Shares by giving the
Secretary of the Company written notice of intent to exercise. The notice of
exercise shall specify the number of Option Shares as to which the Option is to
be exercised and the date of exercise thereof, which date shall be at least five
days after the giving of such notice unless an earlier time shall have been
mutually agreed upon.

         (b) Full payment (in U.S. Dollars) by the Grantee of the option price
for the Option Shares purchased shall be made on or before the exercise date
specified in the notice of exercise in cash, or, with the prior written consent
of the Board, in whole or in part through the surrender of previously acquired
shares of Stock at their fair market value on the exercise date.

         On the exercise date specified in the Grantee's notice or as soon
thereafter as is practicable, the Company shall cause to be delivered to the
Grantee, a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued Stock or reacquired Stock, as the Company
may elect) upon full payment for such Option Shares. The obligation of the
Company to deliver Stock shall, however, be subject to the condition that if at
any time the Committee shall determine in its discretion that the listing,
registration or qualification of the Option or the Option Shares upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the Option or the issuance or purchase of
Stock thereunder, the Option may not be exercised in whole or in part unless
such listing, registration, 


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qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.

         (c) If the Grantee fails to pay for any of the Option Shares specified
in such notice or fails to accept delivery thereof, the Grantee's right to
purchase such Options Shares may be terminated by the Company. The date
specified in the Grantee's notice as the date of exercise shall be deemed the
date of exercise of the Option, provided that payment in full for the Option
Shares to be purchased upon such exercise shall have been received by such date.

         4. Adjustment of and Changes in Stock of the Company.

         In the event of a reorganization, recapitalization, change of shares,
stock split, spin-off, stock dividend, reclassification, subdivision or
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or shares of capital stock of the Company, the
Board shall make such adjustment as it deems appropriate in the number and kind
of shares of Stock subject to the Option or in the option price as provided
under the Plan; provided, however, that no such adjustment shall give the
Grantee any additional benefits under the Option.

         5. No Rights of Stockholders.

         Neither the Grantee nor any personal representatives shall be, or shall
have any of the rights and privileges of, a stockholder of the Company with
respect to any shares of Stock purchasable or issuable upon the exercise of the
Option, in whole or in part, prior to the date of exercise of the Option.

         6. Non-Transferability of Option.

         During the Grantee's lifetime, the Option hereunder shall be
exercisable only by the Grantee or any guardian or legal representative of the
Grantee, and the Option shall not be transferable except, in case of the death
of the Grantee, by will or the laws of descent and distribution, nor shall the
Option be subject to attachment, execution or other similar process. In the
event of (a) any attempt by the Grantee to alienate, assign, pledge, hypothecate
or otherwise dispose of the Option, except as provided for herein, or (b) the
levy of any attachment, execution or similar process upon the rights or interest
hereby conferred, the Company may terminate the Option by notice to the Grantee
and it shall thereupon become null and void.

         7. Amendment of an Option.

         The Option may be amended by the Board at any time (i) if the Board
determines, in its sole discretion, that amendment is necessary or advisable in
the light of any addition to or change in the Code or in the regulations issued
thereunder, or any federal or state securities law or other law or regulation,
which change occurs after the Date of Grant and by its terms applies to the


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Option; or (ii) other than in the circumstances described in clause (i), with
the consent of the Grantee.

         8. Notice.

         Any notice to the Company provided for in this statement shall be
addressed to it in care of its Secretary at its executive offices at 201
Perimeter Park, Suite A, Knoxville, Tennessee 37922, and any notice to the
Grantee shall be addressed to the Grantee at the current address shown on the
records of the Company. Any notice shall be deemed to be duly given if and when
properly addressed and posted by registered or certified mail, postage prepaid.

         9. Governing Law.

         The validity, construction, interpretation and effect of this
instrument shall exclusively be governed by and determined in accordance with
the law of the State of Tennessee, except to the extent preempted by federal
law, which shall to the extent govern.

         IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute and attest this grant of Option, and to apply the corporate seal
hereto, and the Grantee has placed his signature hereon, effective as of the
Date of Grant.


                                       AMPACE CORPORATION


                                       By:/s/ Jay N. Taylor
                                          -------------------------------------
                                          Title: President
                                          ACCEPTED AND AGREED TO:


                                       /s/ Bruce W. Jones
                                       ----------------------------------------
                                                      Grantee


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