EXHIBIT
        10.2

      


      AEROGROW
        INTERNATIONAL, INC.

      2003
        AMENDED STOCK OPTION PLAN

       

      WHEREAS,
        AeroGrow International, Inc., a Nevada corporation, desires to award incentive
        and nonqualified stock options to certain of its officers, other key employees
        (including key employees who are directors), non-employee directors and
        consultants in the Company;

       

      NOW
        THEREFORE, the AeroGrow International, Inc., 2003 Stock Option Plan is hereby
        adopted, amended on August 3, 2005 to be effective as of the first grant
        of
        options hereunder, under the following terms and conditions:

       

      1.    Purpose

       

      This
        AeroGrow International, Inc., 2003 Stock Option Plan (the "Plan") is intended
        to
        provide a means whereby AeroGrow International, Inc., (the "Company") may,
        through the grant of incentive stock options and nonqualified stock options
        (collectively, the "Options") to purchase common shares of the Company ("Common
        Stock") to officers, other key employees (including key employees who are
        directors), non-employee directors of the Company and consultants of the
        Company
        (collectively "Key Individuals") attract and retain such Key Individuals
        and
        motivate them to exercise their best efforts on behalf of the Company and
        of any
        related corporation ("Related Corporation"), as defined below.

       

      For
        purposes of the Plan, a Related Corporation shall mean either a "subsidiary
        corporation" of the Company, as defined in section 424(f) of the Internal
        Revenue Code of 1986, as amended (the "Code"), or the "parent corporation"
        of
        the Company, as defined in section 424(e) of the Code. Further, as used in
        the
        Plan, (i) the term "incentive stock option" ("ISO") shall mean an option
        which,
        at the time such option is granted under the Plan, qualifies as an ISO within
        the meaning of section 422 of the Code and is designated as an ISO in the
        "Option Agreement" (as defined in Section 8 hereof); and (ii) the term
        "nonqualified stock option" ("NQSO") shall mean an option which, at the time
        such option is granted, does not qualify as an ISO, and is designated as
        an NQSO
        in the Option Agreement.

       

      2.    Administration

       

      The
        Plan
        shall be administered by the Company's Stock Option Committee (the "Committee"),
        if the Board chooses to appoint such a Committee. If appointed, the Committee
        shall consist of not less than three directors of the Company who shall be
        appointed by, and shall serve at the pleasure of, the Company's Board of
        Directors (the "Board"). Each member of the Committee, while serving as such,
        shall be deemed to be acting in his capacity as a director of the Company.
        If
        the Board chooses not to appoint such a Committee, the Plan shall be
        administered by the Board itself and references in this Plan to "Committee"
        shall be read as references to the Board.

       

      The
        Committee shall have full authority, subject to the terms of the Plan, to
        select
        the Key Individuals to be granted ISOs and/or NQSOs under the Plan, to grant
        Options on behalf of the Company, and to set the date of grant and the other
        terms of such Options. The Committee also shall have the authority to establish
        such rules and regulations, not inconsistent with the provisions of the Plan,
        for the proper administration of the Plan, and to amend, modify, or rescind
        any
        such rules and regulations, and to make such determinations, and interpretations
        under, or in connection with, the Plan, as it deems necessary or advisable.
        All
        such rules, regulations, determinations, and interpretations shall be binding
        and conclusive upon the Company, its stockholders and its employees and
        directors, and upon their respective legal representatives, beneficiaries,
        successors, and assigns and upon all other persons claiming under or through
        any
        of them.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      No
        member
        of the Board or the Committee shall be liable for any action or determination
        made in good faith with respect to the Plan or any Option granted under
        it.

       

      3.    Eligibility

       

      The
        class
        of employees, directors and consultants who shall be eligible to receive
        Options
        under the Plan shall be the Key Individuals of the Company and/or of a Related
        Corporation. More than one Option may be granted to a Key Individual under
        the
        Plan.

       

      4.    Stock

       

      Options
        may be granted under the Plan to purchase up to a maximum of 400,000 shares
        of
        the Company's Common Stock, $.001 par value, subject to adjustment as
        hereinafter provided. Shares issuable under the Plan may be authorized but
        unissued shares or reacquired shares, and the Company may purchase shares
        required for this purpose, from time to time, if it deems such purchase to
        be
        advisable.

       

      If
        any
        Option granted under the Plan expires or otherwise terminates for any reason
        whatever (including, without limitation, the Key Individual's surrender thereof)
        without having been exercised, the shares subject to the unexercised portion
        of
        the Option shall continue to be available for the granting of Options under
        the
        Plan as fully as if the shares had never been subject to an Option.

       

      Shares
        issued as ISOs under the Plan and Option, shall be expressly subject to the
        Shareholder Agreement, attached hereto as Exhibit "A" and by this reference
        incorporated herein, until such time that the Company has closed a firmly
        underwritten public offering of shares pursuant to a registration statement
        filed under the Securities Act of 1933, as amended, whereby such Shareholder
        Agreement and restrictions therein shall lapse. Shares issued as NQSOs shall
        be
        subject to the same restrictions in the Shareholder Agreement, unless at
        the
        time of grant, the Board, in its sole and absolute discretion determines
        that
        the Option can authorize issuance of the Shares without restriction, or shall
        be
        issued subject to the restrictions of a different stock restriction agreement
        adopted by the Board at that time. Notwithstanding anything to the contrary,
        the
        Key Individual may not sell, assign, transfer, pledge, hypothecate or otherwise
        dispose of or encumber Shares, or any interest therein, unless he or she
        has
        complied with all applicable requirements of the Securities Act of 1933 and
        applicable state securities laws, in addition to the all of the restrictions
        described herein.

       

      5.    Granting
        of Options

       

      From
        time
        to time until the expiration or earlier suspension or discontinuance of the
        Plan, the Committee may, on behalf of the Company, grant to Key Individuals
        under the Plan such Options as it determines are warranted; provided, however,
        the Key Individuals who are nonemployee directors may not be granted ISOs
        and
        that grants of ISOs and NQSOs shall be separate and not in tandem. In making
        any
        determination as to whether a Key Individual shall be granted an Option and
        as
        to the number of shares to be covered by such Option, the Committee shall
        take
        into account the duties of the Key Individual, his present and potential
        contributions to the success of the Company or a Related Corporation, the
        tax
        implications to the Company and the Key Individual of any Options granted,
        and
        such other factors as the Committee shall deem relevant in accomplishing
        the
        purposes of the Plan. Moreover, the Committee may provide in the Option that
        said Option may be exercised only if certain conditions, as determined by
        the
        Committee, are fulfilled.

       

      
        
          
          

        

        
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      As
        to any
        Key Individual under consideration for the grant of an Option hereunder,
        the
        Board in its discretion may direct that the grant of the Option, or its
        effective date of grant, shall be delayed until the date that the Company
        obtains a permit to issue stock under this Plan and Option from the State
        of
        Colorado (if it is determined by the Board that such permit is
        required).

       

      Subject
        to the terms and conditions of this Plan and the Option Agreement between
        the
        Company and Key Individual, Options granted as ISOs under the Plan and Option,
        shall be subject to the Shareholder Agreement, attached hereto as Exhibit
        "A"
        and by this reference incorporated herein, until such time that the Company
        has
        closed a firmly underwritten public offering of shares pursuant to a
        registration statement filed under the Securities Act of 1933, as amended,
        whereby such Shareholder Agreement and restrictions therein shall lapse.
        Notwithstanding anything to the contrary, the Key Individual may not sell,
        assign, transfer, pledge, hypothecate or otherwise dispose of or encumber
        Options, or any interest therein, unless he or she has complied with all
        applicable requirements of the Securities Act of 1933 and applicable state
        securities laws, in addition to the all of the restrictions described
        herein.

       

      6.    Annual
        Limit

       

      (a)    ISOs

       

      The
        aggregate fair market value (determined as of the date the ISO is granted)
        of
        the Common Stock with respect to which ISOs are exercisable for the first
        time
        by a Key Individual during any calendar year (under this Plan and any other
        ISO
        plan of the Company or a Related Corporation) shall not exceed $100,000.
        If an
        Option intended as an ISO is granted to a Key Individual and such Option
        may not
        be treated in whole or in part as an ISO pursuant to the $100,000 limitation,
        such Option shall be treated as an ISO to the extent that it may be so treated
        under such limitation and as a NQSO as to the remainder. For purposes of
        determining whether an ISO would cause such limitation to be exceeded, ISOs
        shall be taken into account in the order granted.

       

      (b)    NQSOs

       

      The
        annual limits set forth above for ISOs shall not apply to NQSOs.

       

      
        
          
          

        

        
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      7.    Terms
        and Conditions of Options

       

      The
        Options granted pursuant to the Plan shall expressly specify whether they
        are
        ISOs or NQSOs. In addition, the Options granted pursuant to the Plan shall
        include expressly or by reference the following terms and conditions, as
        well as
        such other provisions not inconsistent with the provisions of this Plan and,
        for
        ISOs granted under this Plan, the provisions of section 422(b) of the Code,
        as
        the Committee shall deem desirable.

       

      (a)    Number
        of Shares

       

      The
        Option shall state the number of shares to which the Option
        pertains.

       

      (b)    Price

       

      The
        Option shall state the Option price which shall be determined and fixed by
        the
        Committee in its discretion but, in the case of an ISO, shall not be less
        than
        the higher of 100 percent (110 percent in the case of a more-than-10-percent
        stockholder, as discussed in paragraph (j) below) of the fair market value
        of
        the optioned shares of Common Stock, or the par value thereof, on the date
        the
        ISO is granted and, in the case of an NQSO, shall not be less than the par
        value
        thereof, on the date the NQSO is granted.

       

      The
        fair
        market value of the optioned shares of Common Stock shall be arrived at by
        a
        good faith determination of the Committee and shall be--

       

      (1)    the
        mean
        between the highest and lowest quoted selling price, if there is a market
        for
        the Common Stock on a registered securities exchange or on an over-the-counter
        market, on the date of grant;

       

      (2)    the
        weighted average of the means between the highest and lowest sales on the
        nearest date before and the nearest date after the date of grant, if there
        are
        no sales on the date of grant but there are sales on dates within a reasonable
        period both before and after the date of grant;

       

      (3)    the
        mean
        between the bid and asked prices, as reported by the National Quotation Bureau
        on the date of grant, if actual sales are not available during a reasonable
        period beginning before and ending after the date of grant; or

       

      (4)    if
        (1)
        through (3) above are not applicable, such other method of determining fair
        market value as shall be authorized by the Code, or the rules or regulations
        thereunder, and adopted by the Committee.

       

      Where
        the
        fair market value of the optioned shares of Common Stock is determined under
        (2)
        above, the average of the means between the highest and lowest sales on the
        nearest date before and the nearest date after the date of grant is to be
        weighted inversely by the respective numbers of trading days between the
        selling
        dates and the date of grant (i.e., the valuation date), in accordance with
        Treas. Reg. § 20.2031-2(b)(1).

       

      (c)    Term

       

      
        
          
          

        

        
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      (1)    ISOs.
        Subject
        to earlier termination as provided in paragraphs (e), (f), and (g) below
        and in
        Section 9 hereof, the term of each ISO shall be not more than 10 years (five
        years in the case of a more-than-l0-percent stockholder, as discussed in
        paragraph (j) below) from the date of grant.

       

      (2)    NQSOs.
        Subject
        to earlier termination as provided in paragraphs (e), (f), and (g) below
        and in
        Section 9 hereof, the term of each NQSO shall be not more than 10 years from
        the
        date of grant.

       

      (d)    Exercise

       

      Options
        shall be exercisable in such installments and on such dates as the Committee
        may
        specify; provided that the Committee may accelerate the exercise date of
        any
        outstanding Options, in its discretion, if it deems such acceleration to
        be
        desirable. Any Option shares, the right to the purchase of which has accrued,
        may be purchased at any time up to the expiration or termination of the Option.
        Exercisable Options may be exercised, in whole or in part, from time to time
        by
        giving written notice of exercise to the Company at its principal office,
        specifying the number of shares to be purchased and accompanied by payment
        in
        full of the aggregate Option price for such shares. Only full shares shall
        be
        issued under the Plan, and any fractional share which might otherwise be
        issuable upon exercise of an Option granted hereunder shall be
        forfeited.

       

      The
        Option price shall be payable in cash or by personal check, bank draft or
        postal
        or express money order.

       

      (e)    Termination
        of Employment

       

      If
        a Key
        Individual's employment by the Company (and Related Corporations) or, for
        non-employee directors, service as a director, is terminated by either party
        prior to the expiration date fixed for his Option for any reason other than
        death or disability, such Option may be exercised, to the extent of the number
        of shares with respect to which the Key Individual could have exercised it
        on
        the date of such termination, or to any greater extent permitted by the
        Committee, by the Key Individual at any time prior to the earlier of (i)
        the
        expiration date specified in such Option, or (ii) an accelerated termination
        date determined by the Committee, in its discretion and set forth in the
        Option
        Agreement; except that, subject to Section 9 hereof, such accelerated
        termination date shall not be earlier than the date of the Key Individual's
        termination of employment or cessation of service as a director, and in the
        case
        of ISOs, such accelerated termination date shall not be earlier than three
        (3)
        months after such termination of employment.

       

      (f)    Exercise
        upon Disability of Key Individual

       

      If
        a Key
        Individual becomes disabled (within the meaning of section 22(e)(3) of the
        Code)
        during his employment or service as a non-employee director and, prior to
        the
        expiration date fixed for his Option, his employment or service as a
        non-employee director is terminated as a consequence of such disability,
        such
        Option may be exercised, to the extent of the number of shares with respect
        to
        which the Key Individual could have exercised it on the date of such
        termination, or to any greater extent permitted by the Committee, by the
        Key
        Individual at any time prior to the earlier of (i) the expiration date specified
        in such Option, or (ii) an accelerated termination date determined by the
        Committee, in its discretion, and set forth in the Option Agreement; except
        that, subject to Section 9 hereof, such accelerated termination date shall
        not
        be earlier than the date of the Key Individual's termination of employment
        or
        cessation of service as a non-employee director by reason of disability,
        and in
        the case of ISOs, such accelerated termination date shall not be earlier
        than
        six (6) months after such termination of employment. In the event of the
        Key
        Individual's legal disability, such Option may be so exercised by the Key
        Individual's representative.

       

      
        
          
          

        

        
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      (g)    Exercise
        upon Death of Key Individual

       

      If
        a Key
        Individual dies during his employment or service as a non-employee director,
        and
        prior to the expiration date fixed for his Option, or if a Key Individual
        whose
        employment or service as a non-employee director is terminated for any reason,
        dies following his termination of employment or cessation of service as a
        non-employee director but prior to the earlier of (i) the expiration date
        fixed
        for his Option, or (ii) the expiration of the period determined under paragraphs
        (e) and (f) above and set forth in the Option Agreement, to the extent of
        the
        number of shares with respect to which the Key Individual could have exercised
        it on the date of his death, or to any greater extent permitted by the
        Committee, by the Key Individual's estate, personal representative or
        beneficiary who acquired the right to exercise such Option by bequest or
        inheritance or by reason of the death of the Key Individual. Such post-death
        exercise may occur at any time prior to the earlier of (i) the expiration
        date
        specified in such Option or (ii) an accelerated termination date determined
        by
        the Committee, in its discretion, and set forth in the Option Agreement;
        except
        that, subject to Section 9 hereof, such accelerated termination date shall
        not
        be earlier than one year after the date of death.

       

      (h)    Non-Transferability

       

      No
        Option
        shall be assignable or transferable by the Key Individual other than by will
        or
        by the laws of descent and distribution, and during the lifetime of the Key
        Individual, the Option shall be exercisable only by him or by his guardian
        or
        legal representative. If the Key Individual is married at the time of exercise
        and if the Key Individual so requests at the time of exercise, the certificate
        or certificates shall be registered in the name of the Key Individual and
        the
        Key Individual's spouse, jointly, with right of survivorship.

       

      (i)    Rights
        as a Stockholder

       

      A
        Key
        Individual shall have no rights as a stockholder with respect to any shares
        covered by his Option until the issuance of a stock certificate to him for
        such
        shares.

       

      (j)    Ten
        Percent Stockholder

       

      If
        the
        Key Individual owns more than 10 percent of the total combined voting power
        of
        all shares of stock of the Company or of a Related Corporation at the time
        an
        ISO is granted to him, the Option price for the ISO shall be not less than
        110
        percent of the fair market value of the optioned shares of Common Stock on
        the
        date the ISO is granted, and such ISO, by its terms, shall not be exercisable
        after the expiration of five years from the date the ISO is granted. The
        conditions set forth in this paragraph shall not apply to NQSOs.

       

      
        
          
          

        

        
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      (k)    Listing
        and Registration of Shares

       

      Each
        Option shall be subject to the requirement that, if at any time the Committee
        shall determine, in its discretion, that the listing, registration, or
        qualification of the shares of Common Stock covered thereby 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 granting of such Option or the purchase of shares of
        Common
        Stock thereunder, or that action by the Company or by the Key Individual
        should
        be taken in order to obtain an exemption from any such requirement, no such
        Option may be exercised, in whole or in part, unless and until such listing,
        registration, qualification, consent, approval, or action shall have been
        effected, obtained, or taken under conditions acceptable to the Committee.
        Without limiting the generality of the foregoing, each Key Individual or
        his
        legal representative or beneficiary may also be required to give satisfactory
        assurance that shares purchased upon exercise of an Option are being purchased
        for investment and not with a view to distribution, and certificates
        representing such shares may be legended accordingly.

       

      (1)    Withholding
        and Use of Shares to Satisfy Tax Obligations

       

      The
        obligation of the Company to deliver shares of Common Stock upon the exercise
        of
        any Option (or cash in lieu thereof) shall be subject to any applicable federal,
        state or local tax withholding requirements.

       

      If
        the
        exercise of any Option is subject to the withholding requirements of applicable
        federal tax law, the Committee, in its discretion, may permit the Key Individual
        to satisfy the federal withholding tax, in whole or in part, by electing
        to have
        the Company withhold shares of Common Stock subject to the exercise (or by
        returning previously acquired shares of Common Stock to the Company). Shares
        of
        Common Stock shall be valued, for purposes of this paragraph, at their fair
        market value on the date the amount attributable to the exercise of the Option
        is includable in income by the Key Individual under section 83 of the Code
        (the
        "Determination Date").

       

      If
        shares
        of Common Stock acquired by the exercise of an ISO are used to satisfy the
        withholding requirement described above, such shares of Common Stock must
        have
        been held by the Key Individual for a period of not less than the holding
        period
        described in section 422(a)(1) of the Code as of the Determination
        Date.

       

      The
        Committee shall adopt such withholding rules as it deems necessary to carry
        out
        the provisions of this paragraph.

       

      8.    Option
        Agreement -- Other Provisions

       

      Options
        granted under the Plan shall be evidenced by written documents ("Option
        Agreements") in such form as the Committee shall from time to time approve,
        and
        containing such provisions not inconsistent with the provisions of the Plan
        (and, for ISOs granted pursuant to the Plan, not inconsistent with section
        422(b) of the Code), as the Committee shall deem advisable. The Option
        Agreements shall indicate whether the Option is an ISO or NQSO; provided,
        however, if the Option is not designated in the Option Agreement as an ISO
        or
        NQSO, the Option shall constitute an ISO if it complies with the terms of
        section 422 of the Code, and otherwise, it shall constitute an NQSO. Each
        Key
        Individual shall enter into, and be bound by, such an Option Agreement, as
        soon
        as practicable after the grant of an Option.

       

      
        
          
          

        

        
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      9.    Capital
        Adjustments

       

      The
        number of shares which may be issued under the Plan, as stated in Section
        4
        hereof, and the number of shares issuable upon exercise of outstanding Options
        under the Plan (as well as the Option price per share under such outstanding
        Options), shall, in accordance with the provisions of section 424(a) of the
        Code, be adjusted to reflect any stock dividend, stock split, share combination,
        or similar change in the capitalization of the Company. In the event any
        such
        change in capitalization cannot be reflected in a straight mathematical
        adjustment of the number of shares issuable upon the exercise of outstanding
        Options (and a straight mathematical adjustment of the exercise price thereof),
        the Committee shall make such adjustments as are appropriate to reflect most
        nearly such straight mathematical adjustment. Such adjustments shall be made
        only as necessary to maintain the proportionate interest of Optionees, and
        preserve, without exceeding, the value of Options.

       

      In
        the
        event of a corporate transaction (as that term is described in section 424(a)
        of
        the Code and the Treasury Regulations issued thereunder as, for example,
        a
        merger, consolidation, acquisition of property or stock, separation,
        reorganization, or liquidation), each outstanding Option shall be assumed
        by the
        surviving or successor corporation; provided, however, that, in the event
        of a
        proposed corporate transaction, the Committee may terminate all or a portion
        of
        the outstanding Options if it determines that such termination is in the
        best
        interests of the Company. If the Committee decides to terminate outstanding
        Options, the Committee shall give each Key Individual holding an Option to
        be
        terminated not less than seven days' notice prior to any such termination
        by
        reason of such a corporate transaction, and any such Option which is to be
        so
        terminated may be exercised (if and only to the extent that it is then
        exercisable) up to, and including the date immediately preceding such
        termination. Further, as provided in Section 7(d) hereof, the Committee,
        in its
        discretion, may accelerate, in whole or in part, the date on which any or
        all
        Options become exercisable.

       

      The
        Committee also may, in its discretion, change the terms of any outstanding
        Option to reflect any such corporate transaction, provided that, in the case
        of
        ISOs, such change is excluded from the definition of a "modification" under
        section 424(h) of the Code.

       

      10.    Amendment
        or Discontinuance of the Plan

       

      (a)    In
        General

       

      The
        Board, pursuant to a written resolution, from time to time may suspend or
        discontinue the Plan or amend it in any respect whatsoever; except that,
        without
        the approval of the stockholders (given in the manner set forth in paragraph
        (b)
        below)--

       

      (1)    the
        class
        of employees eligible to receive ISOs shall not be changed;

       

      (2)    the
        maximum number of shares of Common Stock with respect to which ISO's may
        be
        granted under the Plan shall not be increased, except as permitted under
        Section
        9 hereof; and

       

      
        
          
          

        

        
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      (3)    the
        duration of the Plan under Section 16 hereof with respect to any ISO's granted
        hereunder shall not be extended.

       

      (b)    Manner
        of Stockholder Approval

       

      The
        approval of stockholders must comply with all applicable provisions of the
        corporate charter, bylaws, and applicable state law prescribing the method
        and
        degree of stockholder approval required for the issuance of corporate stock
        or
        options. If the applicable state law does not prescribe a method and degree
        of
        stockholder approval in such case, the approval of stockholders must
        occur--

       

      (1)    By
        a
        method and in a degree that would be treated as adequate under applicable
        state
        law in the case of an action requiring stockholder approval (i, e., an action
        on
        which stockholders would be entitled to vote if the action were taken at
        a duly
        held stockholders' meeting); or

       

      (2)    By
        a
        majority of the votes cast at a duly held stockholders' meeting at which
        a
        quorum representing a majority of all outstanding voting stock is, either
        in
        person or by proxy, present and voting on the Plan.

       

      11.    Absence
        of Rights

       

      Neither
        the adoption of the Plan nor any action of the Board or the Committee shall
        be
        deemed to give any individual any right to be granted an Option, or any other
        right hereunder, unless and until the Committee shall have granted such
        individual an Option, and then his rights shall be only such as are provided
        by
        the Option Agreement.

       

      Any
        Option under the Plan shall not entitle the holder thereof to any rights
        as a
        stockholder of the Company prior to the exercise of such Option and the issuance
        of the shares pursuant thereto. Further, notwithstanding any provisions of
        the
        Plan or the Option Agreement with a Key Individual who is an employee of
        the
        Company, the Company and any Related Corporation shall have the right, in
        its
        discretion but subject to any employment contract entered into with the Key
        Individual, to retire the Key Individual at any time pursuant to its retirement
        rules or otherwise to terminate his employment at any time for any reason
        whatsoever.

       

      12.    Indemnification
        of Board and Committee

       

      Without
        limiting any other rights of indemnification which they may have from the
        Company and any Related Corporation, the members of the Board and the member
        of
        the Committee shall be indemnified by the Company against all costs and expenses
        reasonably incurred by them in connection with any claim, action, suit, or
        proceeding to which they or any of them may be a party by reason of any action
        taken or failure to act under, or in connection with, the Plan, or any Option
        granted thereunder, and against all amounts paid by them in settlement thereof
        (provided such settlement is approved by legal counsel selected by the Company)
        or paid by them in satisfaction of a judgment in any such action, suit, or
        proceeding, except a judgment based upon a finding of willful misconduct
        or
        recklessness on their part. Upon the making or institution of any such claim,
        action, suit, or proceeding, the Board or Committee member shall notify the
        Company in writing, giving the Company an opportunity, at its own expense,
        to
        handle and defend the same before such Board or Committee member undertakes
        to
        handle it on his own behalf.

       

      
        
          
          

        

        
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      13.    Application
        of Funds

       

      The
        proceeds received by the Company from the sale of Common Stock pursuant to
        Options granted under the Plan shall be used for general corporate purposes.
        Any
        cash received in payment for shares upon exercise of an Option to purchase
        Common Stock shall be added to the general funds of the Company and shall
        be
        used for its corporate purposes.

       

      14.    Stockholder
        Approval

       

      This
        Plan
        shall become effective on the later of January 2, 2003 (the date the Plan
        was
        adopted by the Board); provided, however, that if the Plan is not approved
        by
        the stockholders, in the manner described in Section 10(b) hereof, within
        12
        months before or after the date the Plan was adopted by the Board, ISO's
        granted
        hereunder shall be null and void and no additional Options shall be granted
        hereunder. The Plan shall remain effective as to NQSOs.

       

      15.    No
        Obligation to Exercise Option

       

      The
        granting of an Option shall impose no obligation upon a Key Individual to
        exercise such Option.

       

      16.    Termination
        of Plan

       

      Unless
        earlier terminated as provided in the Plan, the Plan and all authority granted
        hereunder shall terminate absolutely at 12:00 midnight on January 1, 2013,
        which
        date is within 10 years after the date the Plan was adopted by the Board,
        or the
        date the Plan was approved by the stockholders of the Company, whichever
        is
        earlier, and no Options hereunder shall be granted thereafter. Nothing contained
        in this Section, however, shall terminate or affect the continued existence
        of
        rights created under Options issued hereunder, and outstanding on the date
        set
        forth in the preceding sentence, which by their terms extend beyond such
        date.

       

      17.    Governing
        Law

       

      The
        Plan
        shall be governed by the applicable Code provisions to the maximum extent
        possible. Otherwise, the laws of the State of Colorado shall govern the
        operation of, and the rights of Key Individuals under, the Plan, and Options
        granted thereunder.

       

       

      
        
          
          

        

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