EXHIBIT
        10.4

       

      AEROGROW
        INTERNATIONAL, INC.

       

      2005
        EQUITY COMPENSATION PLAN

       

      SECTION
        1.  PURPOSE

       

      This
        plan
        shall be known as the "AeroGrow International, Inc. 2005 Equity Compensation
        Plan" (the "Plan"). The purpose of the Plan is to promote the interests of
        AeroGrow International, Inc. (the "Company") and the Company's stockholders
        by
        (i) attracting and retaining key officers, employees and directors of, and
        consultants to, the Company; (ii) motivating such individuals by means of
        performance-related incentives to achieve long-range performance goals; (iii)
        enabling such individuals to participate in the long-term growth and financial
        success of the Company; (iv) encouraging ownership of stock in the Company
        by
        such individuals; and (v) linking their compensation to the long-term interests
        of the Company and its stockholders. With respect to any awards granted under
        the Plan that are intended to comply with the requirements of "performance-based
        compensation" under Section 162(m) of the Code, the Plan shall be interpreted
        in
        a manner consistent with such requirements.

       

      SECTION
        2.  DEFINITIONS

       

      As
        used
        in the Plan, the following terms shall have the meanings set forth
        below:

       

      (a)     "AWARD"
        shall mean any Option or Restricted Share Award granted under the Plan to
        a
        Participant by the Committee (or the Board) pursuant to such terms, conditions,
        restrictions and/or limitations, if any, as the Committee (or the Board)
        may
        establish.

       

      (b)     "AWARD
        AGREEMENT" shall mean any written agreement, contract or other instrument
        or
        document evidencing any Award, which may, but need not, be executed or
        acknowledged by a Participant.

       

      (c)     "BOARD"
        shall mean the board of directors of the Company.

       

      (d)     "CHANGE
        IN CONTROL" shall mean, unless otherwise defined in the applicable Award
        Agreement, any of the following events:

       

      (i)     An
        acquisition (other than directly from the Company) of any voting securities
        of
        the Company (the "Voting Securities") by any "Person" (as the term Person
        is
        used for purposes of Section 13(d) or 14(d) of the Exchange Act) immediately
        after which such Person has "Beneficial Ownership" (within the meaning of
        Rule
        13d-3 promulgated under the Exchange Act) of forty percent (40%) or more
        of the
        combined voting power of the then outstanding Voting Securities; provided,
        however, that in determining whether a Change in Control has occurred, Voting
        Securities which are acquired in a "Non-Control Acquisition" (as hereinafter
        defined) shall not constitute an acquisition which would cause a Change in
        Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an
        employee benefit plan (or a trust forming a part thereof) maintained by the
        Company;

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (ii)     The
        individuals who, as of the date hereof, are members of the Board (the "Incumbent
        Board"), cease for any reason to constitute at least a majority of the Board;
        provided, however, that if the election or nomination for election by the
        Company's stockholders of any new director was approved by a vote of a majority
        of the Incumbent Board, such new director shall, for purposes of this Agreement,
        be considered as a member of the Incumbent Board; provided, further, however,
        that no individual shall be considered a member of the Incumbent Board if
        (1)
        such individual initially assumed office as a result of either an actual
        or
        threatened "Election Contest" (as described in Rule 14a-11 promulgated under
        the
        Exchange Act) or other actual or threatened solicitation of proxies or consents
        by or on behalf of a Person other than the Board (a "Proxy Contest") including
        by reason of any agreement intended to avoid or settle any Election Contest
        or
        Proxy Contest or (2) such individual was designated by a Person who has entered
        into an agreement with the Company to effect a transaction described in clause
        (i) or (iii) of this paragraph; or

       

      (iii)     Approval
        by stockholders of the Company of:

       

      (A)     A
        merger,
        consolidation or reorganization involving the Company, unless,

       

      (1)     The
        stockholders of the Company immediately before such merger, consolidation
        or
        reorganization, own, directly or indirectly, immediately following such merger,
        consolidation or reorganization, at least seventy-five percent (75%) of the
        combined voting power of the outstanding Voting Securities of the corporation
        (the "Surviving Corporation") in substantially the same proportion as their
        ownership of the Voting Securities immediately before such merger, consolidation
        or reorganization;

       

      (2)     The
        individuals who were members of the Incumbent Board immediately prior to
        the
        execution of the agreement providing for such merger, consolidation or
        reorganization constitute at least two-thirds of the members of the board
        of
        directors of the Surviving Corporation; and

       

      (3)     No
        Person
        (other than the Company, any employee benefit plan (or any trust forming
        a part
        thereof) maintained by the Company or the Surviving Corporation, or any Person
        who, immediately prior to such merger, consolidation or reorganization, had
        Beneficial Ownership of forty percent (40%) or more of the then outstanding
        Voting Securities) has Beneficial Ownership of forty percent (40%) or more
        of
        the combined voting power of the Surviving Corporation's then outstanding
        Voting
        Securities.

       

      (B)     A
        complete liquidation or dissolution of the Company; or

       

      (C)     An
        agreement
        for the sale or other disposition of all or substantially all of the assets
        of
        the Company to any Person.

       

      Notwithstanding
        the foregoing, a Change in Control shall not be deemed to occur solely because
        any Person (the "Subject Person") acquired Beneficial Ownership of more than
        the
        permitted amount of the outstanding Voting Securities as a result of the
        acquisition of Voting Securities by the Company which, by reducing the number
        of
        Voting Securities outstanding, increased the proportional number of shares
        Beneficially Owned by the Subject Person, provided that if a Change in Control
        would occur (but for the operation of this sentence) as a result of the
        acquisition of Voting Securities by the Company, and after such share
        acquisition by the Company, the Subject Person becomes the Beneficial Owner
        of
        any additional Voting Securities Beneficially Owned by the Subject Person,
        then
        a Change in Control shall occur.

       

      
        
          
          

        

        
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      (e)     "CODE"
        shall mean the Internal Revenue Code of 1986, as amended from time to
        time.

       

      (f)     "COMMITTEE"
        shall mean a committee of the Board which shall eventually be composed entirely
        of Non-Employee Directors, each of whom shall be a "Non-Employee Director"
        for
        purposes of Exchange Act Section 16 and Rule 16b-3 thereunder and an "outside
        director" for purposes of Section 162(m) and the regulations promulgated
        under
        the Code.

       

      (g)     "CONSULTANT"
        shall mean any consultant to the Company.

       

      (h)     "DIRECTOR"
        shall mean a member of the Board.

       

      (i)     "EMPLOYEE"
        shall mean a current or prospective officer or employee of the
        Company.

       

      (j)     "EXCHANGE
        ACT" shall mean the Securities Exchange Act of 1934, as amended from time
        to
        time.

       

      (k)     "FAIR
        MARKET
        VALUE" with respect to the Shares, shall mean, for purposes of a grant of
        an
        Award as of any date, (i) the closing sales price of the Shares on the Nasdaq
        SmallCap Market, or any other exchange or quotation system on which the Shares
        are traded, on such date, or in the absence of reported sales on such date,
        the
        closing sales price on the immediately preceding date on which sales were
        reported or (ii) in the event there is no public market for the Shares on
        such
        date, the fair market value as determined, in good faith, by the Committee
        in
        its sole discretion, and for purposes of a sale of a Share as of any date,
        the
        actual sales price on that date.

       

      (l)     "INCENTIVE
        STOCK OPTION" shall mean an option to purchase Shares from the Company that
        is
        granted under Section 6 of the Plan and that is intended to meet the
        requirements of Section 422 of the Code or any successor provision
        thereto.

       

      (m)     "NON-QUALIFIED
        STOCK
        OPTION" shall mean an option to purchase Shares from the Company that is
        granted
        under Section 6 or 8 of the Plan and is not intended to be an Incentive Stock
        Option.

       

      (n)     "NON-EMPLOYEE
        DIRECTOR" shall mean a member of the Board who is not an officer or employee
        of
        the Company.

       

      (o)     "OPTION"
        shall mean an Incentive Stock Option or a Non-Qualified Stock
        Option.

       

      
        
          
          

        

        
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      (p)     "OPTION
        PRICE" shall mean the purchase price payable to purchase one Share upon the
        exercise of an Option.

       

      (q)     "PARTICIPANT"
        shall mean any Employee, Director, Consultant or other person who receives
        an
        Award under the Plan.

       

      (r)     "PERSON"
        shall mean any individual, corporation, partnership, limited liability company,
        associate, joint-stock company, trust, unincorporated organization, government
        or political subdivision thereof or other entity.

       

      (s)     "RESTRICTED
        SHARE" shall mean any Share granted under Section 7 or 8 of the
        Plan.

       

      (t)     "SEC"
        shall mean the Securities and Exchange Commission or any successor
        thereto.

       

      (u)     "SECTION
        16" shall mean Section 16 of the Exchange Act and the rules promulgated
        thereunder and any successor provision thereto as in effect from time to
        time.

       

      (v)     "SECTION
        162(M)" shall mean Section 162(m) of the Code and the regulations promulgated
        thereunder and any successor or provision thereto as in effect from time
        to
        time.

       

      (w)      "SHARES"
        shall mean shares of the common stock, $0.001 par value, of the
        Company.

       

      SECTION
        3.  ADMINISTRATION

       

      3.1  Authority
        of Committee.
        The
        Plan shall be administered by the Committee, which shall be appointed by
        and
        serve at the pleasure of the Board; provided, however, with respect to Awards
        to
        Directors who are members of the Committee, all references in the Plan to
        the
        Committee shall be deemed to be references to the Board. Subject to the terms
        of
        the Plan and applicable law, and in addition to other express powers and
        authorizations conferred on the Committee by the Plan, the Committee shall
        have
        full power and authority in its discretion to: (i) designate Participants;
        (ii)
        determine the type or types of Awards to be granted to a Participant; (iii)
        determine the number of Shares to be covered by, or with respect to which
        payments, rights, or other matters are to be calculated in connection with
        Awards; (iv) determine the timing, terms, and conditions of any Award; (v)
        accelerate the time at which all or any part of an Award may be settled or
        exercised; (vi) determine whether, to what extent, and under what circumstances
        Awards may be settled or exercised in cash, Shares, other securities, other
        Awards or other property, or canceled, forfeited, or suspended and the method
        or
        methods by which Awards may be settled, exercised, canceled, forfeited, or
        suspended; (vii) determine whether, to what extent, and under what circumstances
        cash, Shares, other securities, other Awards, other property, and other amounts
        payable with respect to an Award shall be deferred either automatically or
        at
        the election of the holder thereof or of the Committee; (viii) interpret
        and
        administer the Plan and any instrument or agreement relating to, or Award
        made
        under, the Plan; (ix) except to the extent prohibited by Section 6.2, amend
        or
        modify the terms of any Award at or after grant with the consent of the holder
        of the Award; (x) establish, amend, suspend, or waive such rules and regulations
        and appoint such agents as it shall deem appropriate for the proper
        administration of the Plan; and (xi) make any other determination and take
        any
        other action that the Committee deems necessary or desirable for the
        administration of the Plan, subject to the exclusive authority of the Board
        under Section 11 hereunder to amend or terminate the Plan.

       

      
        
          
          

        

        
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      3.2  Committee
        Discretion Binding.
        Unless
        otherwise expressly provided in the Plan, all designations, determinations,
        interpretations, and other decisions under or with respect to the Plan or
        any
        Award shall be within the sole discretion of the Committee, may be made at
        any
        time and shall be final, conclusive, and binding upon all Persons, including
        the
        Company, any Participant and any holder or beneficiary of any
        Award.

       

      3.3  Action
        by the Committee.
        The
        Committee shall select one of its members as its Chairperson and shall hold
        its
        meetings at such times and places and in such manner as it may determine.
        A
        majority of its members shall constitute a quorum. All determinations of
        the
        Committee shall be made by not less than a majority of its members. Any decision
        or determination reduced to writing and signed by all of the members of the
        Committee shall be fully effective as if it had been made by a majority vote
        at
        a meeting duly called and held. The exercise of an Option or receipt of an
        Award
        shall be effective only if an Award Agreement shall have been duly executed
        and
        delivered on behalf of the Company following the grant of the Option or other
        Award. The Committee may appoint a secretary and may make such rules and
        regulations for the conduct of its business, as it shall deem
        advisable.

       

      3.4  Delegation.
        Subject
        to the terms of the Plan and applicable law, the Committee may delegate to
        one
        or more officers or managers of the Company, or to a Committee of such officers
        or managers, the authority, subject to such terms and limitations as the
        Committee shall determine, to grant Awards to, or to cancel, modify or waive
        rights with respect to, or to alter, discontinue, suspend, or terminate Awards
        held by Participants who are not officers or directors of the Company for
        purposes of Section 16 or who are otherwise not subject to such
        section.

       

      3.5  No
        Liability.
        No
        member of the Board or Committee shall be liable for any action taken or
        determination made in good faith with respect to the Plan or any Award granted
        hereunder.

       

      SECTION
        4.  SHARES
        AVAILABLE FOR AWARDS

       

      4.1  Shares
        Available.
        Subject
        to the provisions of Section 4.2 hereof, the stock to be subject to Awards
        under
        the Plan shall be the Shares of the Company and the maximum number of Shares
        with respect to which Awards may be granted under the Plan shall be 1,505,000,
        which includes 195,131 Shares with respect to which awards under the AeroGrow
        International, Inc. 2003 Stock Option Plan ("2003 Plan") were authorized
        but not
        granted. Notwithstanding the foregoing and subject to adjustment as provided
        in
        Section 4.2, the maximum number of Shares with respect to which Awards may
        be
        granted under the Plan shall be increased by the number of Shares with respect
        to which Options or other Awards were granted under the 2003 Plan, as of
        the
        effective date of this Plan, but which terminate, expire unexercised, or
        are
        settled for cash, forfeited or canceled without the delivery of Shares under
        the
        terms of the 2003 Plan after the effective date of this Plan. The number
        of
        Shares to which Awards may be granted under the Plan may not be increased
        unless
        such increase is approved by at least a majority of the outstanding
        Shares.

       

      
        
          
          

        

        
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      If,
        after
        the effective date of the Plan, any Shares covered by an Award granted under
        this Plan, or to which such an Award relates, are forfeited, or if such an
        Award
        is settled for cash or otherwise terminates, expires unexercised, or is canceled
        without the delivery of Shares, then the Shares covered by such Award, or
        to
        which such Award relates, or the number of Shares otherwise counted against
        the
        aggregate number of Shares with respect to which Awards may be granted, to
        the
        extent of any such settlement, forfeiture, termination, expiration, or
        cancellation, shall again become Shares with respect to which Awards may
        be
        granted. In the event that any Option or other Award granted hereunder is
        exercised through the delivery of Shares or in the event that withholding
        tax
        liabilities arising from such Award are satisfied by the withholding of Shares
        by the Company, the number of Shares available for Awards under the Plan
        shall
        be increased by the number of Shares so surrendered or withheld.

       

      4.2  Adjustments.
        In the
        event that the Committee determines that any dividend or other distribution
        (whether in the form of cash, Shares, other securities, or other property)
        recapitalization, stock split, reverse stock split, reorganization, merger,
        consolidation, split-up, spin-off, combination, repurchase, or exchange of
        Shares or other securities of the Company, issuance of warrants or other
        rights
        to purchase Shares or other securities of the Company, or other similar
        corporate transaction or event affects the Shares such that an adjustment
        is
        determined by the Committee, in its sole discretion, to be appropriate, then
        the
        Committee shall, in such manner as it may deem equitable (and, with respect
        to
        Incentive Stock Options, in such manner as is consistent with Section 422
        of the
        Code and the regulations thereunder): (i) adjust any or all of (1) the aggregate
        number of Shares or other securities of the Company (or number and kind of
        other
        securities or property) with respect to which Awards may be granted under
        the
        Plan; (2) the number of Shares or other securities of the Company (or number
        and
        kind of other securities or property) subject to outstanding Awards under
        the
        Plan; and (3) the grant or exercise price with respect to any Award under
        the
        Plan, provided that the number of Shares subject to any Award shall always
        be a
        whole number; (ii) if deemed appropriate, provide for an equivalent award
        in
        respect of securities of the surviving entity of any merger, consolidation
        or
        other transaction or event having a similar effect; or (iii) if deemed
        appropriate, make provision for a cash payment to the holder of an outstanding
        Award.

       

      4.3  Sources
        of Shares Deliverable Under Awards.
        Any
        Shares delivered pursuant to an Award may consist, in whole or in part, of
        authorized and unissued Shares or of issued Shares that have been reacquired
        by
        the Company.

       

      SECTION
        5.  ELIGIBILITY

       

      Any
        Employee, Director or Consultant shall be eligible to be designated a
        Participant; provided, however, that Non-Employee Directors shall only be
        eligible to receive Awards granted consistent with Section 8.1.

       

      SECTION
        6.  STOCK
        OPTIONS

       

      6.1  Grant.
        Subject
        to the provisions of the Plan, the Committee shall have sole and complete
        authority to determine the Participants to whom Options shall be granted,
        the
        number of Shares subject to each Award, the exercise price and the conditions
        and limitations applicable to the exercise of each Option. The Committee
        shall
        have the authority to grant Incentive Stock Options or Non-Qualified Stock
        Options or to grant both types of Options. In the case of Incentive Stock
        Options, the terms and conditions of such grants shall be subject to and
        comply
        with such rules as may be prescribed by Section 422 of the Code, as from
        time to
        time amended, and any regulations implementing such statute. A person who
        has
        been granted an Option under this Plan may be granted additional Options
        under
        the Plan if the Committee shall so determine; provided, however, that to
        the
        extent the aggregate Fair Market Value (determined at the time the Incentive
        Stock Option related thereto is granted) of the Shares with respect to which
        all
        Incentive Stock Options related to such Option are exercisable for the first
        time by an Employee during any calendar year (under all plans described in
        subsection (d) of Section 422 of the Code of the Company) exceeds $100,000
        (or
        such higher amount as is permitted in the future under Section 422(d) of
        the
        Code), such Options shall be treated as Non-Qualified Stock
        Options.

       

      
        
          
          

        

        
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      6.2  Price.
        The
        Committee in its sole discretion shall establish the Option Price at the
        time
        each Option is granted. The Option Price of an Option may not be less than
        100%
        of the Fair Market Value of the Shares with respect to which the Option is
        granted on the date of grant of such Option. Notwithstanding the foregoing
        and
        except as permitted by the provisions of Section 4.2 and Section 11 hereof,
        the
        Committee shall not have the power to (i) amend the terms of previously granted
        Options to reduce the Option Price of such Options, or (ii) cancel such Options
        and grant substitute Options with a lower Option Price than the canceled
        Options.

       

      6.3  Term.
        Subject
        to the Committee's authority under Section 3.1 and the provisions of Section
        6.5, each Option and all rights and obligations thereunder shall expire on
        the
        date determined by the Committee and specified in the Award Agreement. The
        Committee shall be under no duty to provide terms of like duration for Options
        granted under the Plan. Notwithstanding the foregoing, no Option that relates
        to
        such Option shall be exercisable after the expiration of five (5) years from
        the
        date such Option was granted.

       

      6.4  Exercise.

       

      (a)     Each
        Option shall be exercisable at such times and subject to such terms and
        conditions as the Committee may, in its sole discretion, specify in the
        applicable Award Agreement or thereafter. The Committee shall have full and
        complete authority to determine, subject to Section 6.5 herein, whether an
        Option will be exercisable in full at any time or from time to time during
        the
        term of the Option, or to provide for the exercise thereof in such installments,
        upon the occurrence of such events and at such times during the term of the
        Option as the Committee may determine.

       

      (b)     The
        Committee may impose such conditions with respect to the exercise of Options,
        including without limitation, any relating to the application of federal,
        state
        or foreign securities laws or the Code, as it may deem necessary or advisable.
        The exercise of any Option granted hereunder shall be effective only at such
        time as the sale of Shares pursuant to such exercise will not violate any
        state
        or federal securities or other laws.

       

      (c)     An
        Option
        may be exercised in whole or in part at any time, with respect to whole Shares
        only, within the period permitted thereunder for the exercise thereof, and
        shall
        be exercised by written notice of intent to exercise the Option, delivered
        to
        the Company at its principal office, and payment in full to the Company at
        the
        direction of the Committee of the amount of the Option Price for the number
        of
        Shares with respect to which the Option is then being exercised.

       

      
        
          
          

        

        
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      (d)     Payment
        of
        the Option Price shall be made in cash or cash equivalents, or, at the
        discretion of the Committee, (i) in whole Shares valued at the Fair Market
        Value
        of such Shares on the date of exercise, together with any applicable withholding
        taxes, or (ii) by a combination of such cash (or cash equivalents) and such
        Shares; provided, however, that the optionee shall not be entitled to tender
        Shares pursuant to successive, substantially simultaneous exercises of an
        Option
        or any other stock option of the Company. Subject to applicable securities
        laws,
        an Option may also be exercised by (i) delivering a notice of exercise of
        the
        Option and simultaneously selling the Shares thereby acquired, pursuant to
        a
        brokerage or similar agreement approved in advance by proper officers of
        the
        Company, using the proceeds of such sale as payment of the Option Price,
        together with any applicable withholding taxes, or (ii) any other exercise
        method (including attestation of shares) approved by the Committee. Until
        the
        optionee has been issued the Shares subject to such exercise, he or she shall
        possess no rights as a stockholder with respect to such Shares.

       

      6.5  Ten
        Percent Stock Rule.
        Notwithstanding any other provisions in the Plan, if at the time an Option
        is
        otherwise to be granted pursuant to the Plan the optionee or rights holder
        owns
        directly or indirectly (within the meaning of Section 424(d) of the Code)
        Shares
        of the Company possessing more than ten percent (10%) of the total combined
        voting power of all classes of Stock of the Company, then any Incentive Stock
        Option to be granted to such optionee or rights holder pursuant to the Plan
        shall satisfy the requirement of Section 422(c)(5) of the Code, and the Option
        Price shall be not less than 110% of the Fair Market Value of the Shares
        of the
        Company, and such Option by its terms shall not be exercisable after the
        expiration of five (5) years from the date such Option is granted.

       

      SECTION
        7.  RESTRICTED
        SHARES

       

      7.1  Grant.

       

      (a)     Subject
        to the provisions of the Plan, the Committee shall have sole and complete
        authority to determine the Participants to whom Restricted Shares shall be
        granted, the number of Restricted Shares to be granted to each Participant,
        the
        duration of the period during which, and the conditions under which, the
        Restricted Shares may be forfeited to the Company, and the other terms and
        conditions of such Awards. The Restricted Shares shall be evidenced by Award
        Agreements in such form as the Committee shall from time to time approve,
        which
        agreements shall comply with and be subject to the terms and conditions provided
        hereunder and any additional terms and conditions established by the Committee
        that are consistent with the terms of the Plan.

       

      (b)     Each
        Restricted Share made under the Plan shall be for such number of Shares as
        shall
        be determined by the Committee and set forth in the Award Agreement containing
        the terms of such Restricted Share Award. The Award Agreement for employees
        may
        set forth a period of time during which the grantee must remain in the
        continuous employment of the Company in order for the forfeiture and transfer
        restrictions to lapse. If the Committee so determines, the restrictions may
        lapse during such restricted period in installments with respect to specified
        portions of the Shares covered by the Restricted Share Award. The Award
        Agreement may also, in the discretion of the Committee, set forth performance
        or
        other conditions that will subject the Shares to forfeiture and transfer
        restrictions. The Committee may, at its discretion, waive all or any part
        of the
        restrictions applicable to any or all outstanding Restricted Share
        Awards.

       

      
        
          
          

        

        
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      7.2  Delivery
        of Shares and Transfer Restrictions.
        At the
        time of a Restricted Share Award, a certificate representing the number of
        Shares awarded thereunder shall be registered in the name of the grantee.
        Such
        certificate shall be held by the Company or any custodian appointed by the
        Company for the account of the grantee subject to the terms and conditions
        of
        the Plan, and shall bear such a legend setting forth the restrictions imposed
        thereon as the Committee, in its discretion, may determine. The grantee shall
        have all rights of a stockholder with respect to the Restricted Shares,
        including the right to receive dividends and the right to vote such Shares,
        subject to the following restrictions: (i) the grantee shall not be entitled
        to
        delivery of the stock certificate until the expiration of the restricted
        period
        and the fulfillment of any other restrictive conditions set forth in the
        Award
        Agreement with respect to such Shares; (ii) none of the Shares may be sold,
        assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
        of during such restricted period or until after the fulfillment of any such
        other restrictive conditions; and (iii) except as otherwise determined by
        the
        Committee at or after grant, all of the Shares shall be forfeited and all
        rights
        of the grantee to such Shares shall terminate, without further obligation
        on the
        part of the Company, unless any restrictive conditions set forth in the Award
        Agreement relating to the Restricted Share Award are met. Any Shares, any
        other
        securities of the Company and any other property (except for cash dividends)
        distributed with respect to the Shares subject to Restricted Share Awards
        shall
        be subject to the same restrictions, terms and conditions as such restricted
        Shares.

       

      7.3  Termination
        of Restrictions.
        At the
        end of the restricted period and provided that any other restrictive conditions
        of the Restricted Share Award are met, or at such earlier time as otherwise
        determined by the Committee, all restrictions set forth in the Award Agreement
        relating to the Restricted Share Award or in the Plan shall lapse as to the
        restricted Shares subject thereto, and a stock certificate for the appropriate
        number of Shares, free of the restrictions and restricted stock legend, other
        than any legends required by applicable securities laws, shall be delivered
        to
        the Participant or the Participant's beneficiary or estate, as the case may
        be.

       

      SECTION
        8.  DIRECTOR
        AWARDS

       

      8.1  Awards
        to Non-Employee Directors.
        The
        Board may provide that all or a portion of a Non-Employee Director's annual
        retainer, meeting fees and/or other awards or compensation as determined
        by the
        Board, be payable (either automatically or at the election of a Non-Employee
        Director) in the form of Non-Qualified Stock Options or Restricted Shares.
        The
        Board shall determine the terms and conditions of any such Awards, including
        the
        terms and conditions which shall apply upon a termination of the Non-Employee
        Director's service as a member of the Board, and shall have full power and
        authority in its discretion to administer such Awards, subject to the terms
        of
        the Plan and applicable law.

       

      8.2  Awards
        of Restricted Shares to Directors.
        Grants
        of Restricted Shares to Directors in lieu of cash stipends, in whole or in
        part,
        shall have no minimum vesting period or restrictive period as may be determined
        in the sole discretion of the Committee.

       

      
        
          
          

        

        
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      SECTION
        9.  TERMINATION

       

      The
        Committee shall have the full power and authority to determine the terms
        and
        conditions that shall apply to any Award upon a termination of employment,
        consulting arrangement or directorship with the Company, including a termination
        by the Company with or without cause, by a Participant voluntarily, or by
        reason
        of death, disability or retirement, and may provide such terms and conditions
        in
        the Award Agreement or in such rules and regulations as it may
        prescribe.

       

      SECTION
        10.  CHANGE
        IN CONTROL

       

      Upon
        a
        Change in Control, all outstanding Awards shall vest, become immediately
        exercisable or payable and have all restrictions lifted. 

       

      SECTION
        11.  AMENDMENT
        AND TERMINATION

       

      11.1  Amendments
        to the Plan.
        The
        Board may amend, alter, suspend, discontinue, or terminate the Plan or any
        portion thereof at any time; provided that no such amendment, alteration,
        suspension, discontinuation or termination shall be made without stockholder
        approval if such approval is necessary to comply with any tax or regulatory
        requirement for which or with which the Board deems it necessary or desirable
        to
        comply; provided that any such waiver, amendment, alteration, suspension,
        discontinuance or termination that would adversely affect the rights of any
        Participants, or any holder or beneficiary, under any Award theretofore granted,
        shall not to that extent be effective without the consent of the affected
        Participant, holder, or beneficiary.

       

      11.2  Amendments
        to Awards.
        Subject
        to the restrictions of Section 6.2, the Committee may waive any conditions
        or
        rights under, amend any terms of, or alter, suspend, discontinue, cancel
        or
        terminate, any Award theretofore granted, prospectively or retroactively;
        provided that any such waiver, amendment, alteration, suspension,
        discontinuance, cancellation or termination that would adversely affect the
        rights of any Participants, or any holder or beneficiary of any Award
        theretofore granted, shall not to that extent be effective without the consent
        of the affected Participant, holder, or beneficiary.

       

      11.3  Adjustments
        of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
        Events.
        The
        Committee is hereby authorized to make adjustments in the terms and conditions
        of, and the criteria included in, Awards in recognition of unusual or
        nonrecurring events (including, without limitation, the events described
        in
        Section 4.2 hereof) affecting the Company or the financial statements of
        the
        Company, or of changes in applicable laws, regulations, or accounting
        principles, whenever the Committee determines that such adjustments are
        appropriate in order to prevent dilution or enlargement of the benefits or
        potential benefits intended to be made available under the Plan.

       

      SECTION
        12.  GENERAL
        PROVISIONS

       

      12.1  Limited
        Transferability of Awards.
        Except
        as otherwise provided in the Plan, no Award shall be assigned, alienated,
        pledged, attached, sold or otherwise transferred or encumbered by a Participant,
        except by will or the laws of descent and distribution and/or as may be provided
        by the Committee in its discretion, at or after grant, in the Award Agreement.
        No transfer of an Award by will or by laws of descent and distribution shall
        be
        effective to bind the Company unless the Company shall have been furnished
        with
        written notice thereof and an authenticated copy of the will and/or such
        other
        evidence as the Committee may deem necessary or appropriate to establish
        the
        validity of the transfer.

       

      
        
          
          

        

        
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      12.2  Dividend
        Equivalents.
        In the
        sole and complete discretion of the Committee, an Award may provide the
        Participant with dividends or dividend equivalents, payable in cash, Shares,
        other securities or other property on a current or deferred basis. All dividend
        or dividend equivalents which are not paid currently may, at the Committee's
        discretion, accrue interest, be reinvested into additional Shares and paid
        to
        the Participant if and when, and to the extent that, payment is made pursuant
        to
        such Award. The total number of Shares available for grant under Section
        4 shall
        not be reduced to reflect any dividends or dividend equivalents that are
        reinvested into additional Shares.

       

      12.3  No
        Rights to Awards.
        No
        Person shall have any claim to be granted any Award, and there is no obligation
        for uniformity of treatment of Participants or holders or beneficiaries of
        Awards. The terms and conditions of Awards need not be the same with respect
        to
        each Participant.

       

      12.4  Share
        Certificates.
        All
        certificates for Shares or other securities of the Company delivered under
        the
        Plan pursuant to any Award or the exercise thereof shall be subject to such
        stop
        transfer orders and other restrictions as the Committee may deem advisable
        under
        the Plan or the rules, regulations and other requirements of the SEC or any
        state securities commission or regulatory authority, any stock exchange or
        other
        market upon which such Shares or other securities are then listed, and any
        applicable Federal or state laws, and the Committee may cause a legend or
        legends to be put on any such certificates to make appropriate reference
        to such
        restrictions.

       

      12.5  Withholding.
        A
        Participant may be required to pay to the Company and the Company shall have
        the
        right and is hereby authorized to withhold from any Award, from any payment
        due
        or transfer made under any Award or under the Plan, or from any compensation
        or
        other amount owing to a Participant the amount (in cash, Shares, other
        securities, other Awards or other property) of any applicable withholding
        or
        other taxes in respect of an Award, its exercise, or any payment or transfer
        under an Award or under the Plan and to take such other action as may be
        necessary in the opinion of the Company to satisfy all obligations for the
        payment of such taxes. The Committee may provide for additional cash payments
        to
        holders of Options to defray or offset any tax arising from the grant, vesting,
        exercise or payment of any Award.

       

      12.6  Award
        Agreements.
        Each
        Award hereunder shall be evidenced by an Award Agreement that shall be delivered
        to the Participant and may specify the terms and conditions of the Award
        and any
        rules applicable thereto. In the event of a conflict between the terms of
        the
        Plan and any Award Agreement, the terms of the Plan shall prevail.

       

      12.7  No
        Limit on Other Compensation Arrangements.
        Nothing
        contained in the Plan shall prevent the Company from adopting or continuing
        in
        effect other compensation arrangements, which may, but need not, provide
        for the
        grant of Options, Restricted Shares or other types of Awards provided for
        hereunder.

       

      
        
          
          

        

        
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      12.8  No
        Right to Employment.
        The
        grant of an Award shall not be construed as giving a Participant the right
        to be
        retained in the employ of the Company. Further, the Company may at any time
        dismiss a Participant from employment, free from any liability or any claim
        under the Plan, unless otherwise expressly provided in an Award
        Agreement.

       

      12.9  No
        Rights as Stockholder.
        Subject
        to the provisions of the Plan and the applicable Award Agreement, no Participant
        or holder or beneficiary of any Award shall have any rights as a stockholder
        with respect to any Shares to be distributed under the Plan until such person
        has become a holder of such Shares. Notwithstanding the foregoing, in connection
        with each grant of Restricted Shares hereunder, the applicable Award Agreement
        shall specify if and to what extent the Participant shall not be entitled
        to the
        rights of a stockholder in respect of such Restricted Shares.

       

      12.10  Governing
        Law.
        The
        validity, construction and effect of the Plan and any rules and regulations
        relating to the Plan and any Award Agreement shall be determined in accordance
        with the laws of the State of Colorado without giving effect to conflicts
        of
        laws principles.

       

      12.11  Severability.
        If any
        provision of the Plan or any Award is, or becomes, or is deemed to be invalid,
        illegal, or unenforceable in any jurisdiction or as to any Person or Award,
        or
        would disqualify the Plan or any Award under any law deemed applicable by
        the
        Committee, such provision shall be construed or deemed amended to conform
        to the
        applicable laws, or if it cannot be construed or deemed amended without,
        in the
        determination of the Committee, materially altering the intent of the Plan
        or
        the Award, such provision shall be stricken as to such jurisdiction, Person
        or
        Award and the remainder of the Plan and any such Award shall remain in full
        force and effect.

       

      12.12  Other
        Laws.
        The
        Committee may refuse to issue or transfer any Shares or other consideration
        under an Award if, acting in its sole discretion, it determines that the
        issuance or transfer of such Shares or such other consideration might violate
        any applicable law or regulation (including applicable non-U.S. laws or
        regulations) or entitle the Company to recover the same under Exchange Act
        Section 16(b), and any payment tendered to the Company by a Participant,
        other
        holder or beneficiary in connection with the exercise of such Award shall
        be
        promptly refunded to the relevant Participant, holder, or
        beneficiary.

       

      12.13  No
        Trust or Fund Created.
        Neither
        the Plan nor any Award shall create or be construed to create a trust or
        separate fund of any kind or a fiduciary relationship between the Company
        and a
        Participant or any other Person. To the extent that any Person acquires a
        right
        to receive payments from the Company pursuant to an Award, such right shall
        be
        no greater than the right of any unsecured general creditor of the
        Company.

       

      12.14  No
        Fractional Shares.
        No
        fractional Shares shall be issued or delivered pursuant to the Plan or any
        Award, and the Committee shall determine whether cash, other securities,
        or
        other property shall be paid or transferred in lieu of any fractional Shares
        or
        whether such fractional Shares or any rights thereto shall be canceled,
        terminated or otherwise eliminated.

       

      
        
          
          

        

        
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      12.15  Headings.
        Headings are given to the sections and subsections of the Plan solely as
        a
        convenience to facilitate reference. Such headings shall not be deemed in
        any
        way material or relevant to the construction or interpretation of the Plan
        or
        any provision thereof.

       

      SECTION
        13.  TERM
        OF THE PLAN

       

      13.1  Effective
        Date.
        The
        Plan shall be effective as of August ____, 2005, provided it has been approved
        by the Company's stockholders on or prior to August ____, 2006.

       

      13.2  Expiration
        Date.
        No new
        Awards shall be granted under the Plan after the tenth (10th) anniversary
        of the
        Effective Date. Unless otherwise expressly provided in the Plan or in an
        applicable Award Agreement, any Award granted hereunder may, and the authority
        of the Board or the Committee to amend, alter, adjust, suspend, discontinue,
        or
        terminate any such Award or to waive any conditions or rights under any such
        Award shall, continue after the tenth (10th) anniversary of the Effective
        Date.

       

       

      
        
          
          

        

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