FORM OF  INCENTIVE STOCK OPTION AGREEMENT  FOR KEY EMPLOYEES

THIS AGREEMENT is made and entered into this    day
of                        ,            , by and between ULTIMATE
ELECTRONICS, INC. (the
"Company") and                        (the "Optionee") (together, the "Parties").

RECITALS:

A.    On
July 17, 2000, after approval by the Company's stockholders, the Board of Directors of the Company adopted the 2000 Equity Incentive Plan (the "2000 Plan")
pursuant to which Employees of the Company may receive options to purchase Common Stock of the Company.

B.
The Board of Directors intends that the 2000 Plan conform to the requirements of Section 422 of the United States Internal Revenue Code of 1986, as amended (the "Code"), in
order that certain options granted under the 2000 Plan may be "incentive stock options" within the definition of that term in said Section 422.

C.
The Optionee has been selected to receive an incentive stock option pursuant to the 2000 Plan.

D.
The Optionee is desirous of obtaining the incentive stock option on the terms and conditions herein contained.

IT
IS THEREFORE agreed by and between the Parties, for and in consideration of the premises and the mutual covenants herein contained and for other good and valuable consideration, as
follows:

1.    The
Company hereby confirms and acknowledges that it has granted to the Optionee, on                        , an option to
purchase            shares of Common Stock of the
Company (the "Option") upon the terms and conditions herein set forth and subject to the terms and conditions of the 2000 Plan.

2.    The
purchase price of the shares which may be purchased pursuant to the Option is
$                              per share, which is, in the opinion of the Company, the
fair market value of the shares on the date the Option was granted as specified in Paragraph 1.

3.    The
Option shall continue for ten years after the date of grant set forth in paragraph 1 unless sooner terminated or modified under the provisions of this
Agreement or the 2000 Plan, and shall automatically expire at midnight on the tenth anniversary of the date of such grant.

4.    The
Option may be exercised by the Optionee to purchase the total number of shares specified in Paragraph 1 as follows:



The
Optionee need not exercise any part of the option when it becomes exercisable, but may accrue the fractional increments described above and exercise them in any later period, prior to expiration
of the Option.

5.    If
the Optionee's employment with the Company or a participating subsidiary of the Company is terminated for Cause, as defined in the 2000 Plan, the Option shall
thereafter terminate and the Company shall have the right to repurchase any or all Shares purchased by the Optionee upon the exercise of Options within the immediately preceding twelve-month period at
the Option Price, or, if the Optionee no longer holds such shares, the Company shall have the right to receive from the Optionee payment of that amount per share equal to the sale price of such shares
minus the Option

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Price. If the Optionee's employment is terminated because the Optionee dies, the Option may be exercised by those entitled to do so under the Optionee's will or by the laws of descent or distribution
within twelve months following the Optionee's death, but not thereafter (provided that such exercise must occur by the date which is ten years from the date of the grant set forth in
Paragraph 1). If the Optionee's employment is terminated because the Optionee becomes disabled (within the meaning of Section 22(e)(3) of the Code), the Option may be exercised within
twelve months following the Optionee's disability, but not thereafter (provided that the exercise must occur by the date which is ten years from the date of the grant set forth in Paragraph 1).
If the Optionee terminates his employment with the Company in a manner determined by the Board, in its sole discretion, to constitute retirement, the Option held by the Participant, to the extent then
exercisable as provided in Paragraph 4, shall remain exercisable after the termination of the Optionee's employment for a period of three months (but in no event beyond that date which is ten
years from the date of grant set forth in Paragraph 1). If the employment of the Optionee is terminated (which for this purpose means that the Optionee is no longer employed by the Company)
within the Option Period for any reason other than cause, retirement, disability or the Optionee's death, the Option, to the extent then exercisable as provided in Paragraph 4, shall remain
exercisable after the termination of his or her employment for a period of three months (but in no event beyond that date which is ten years from the date of grant set forth in Paragraph 1). If
the Option is not exercised during the applicable period, it shall be deemed to have been forfeited and of no further force or effect.

6.    Upon
exercise of the Option, or disposition of the underlying share or shares, the Optionee shall make appropriate arrangements with the Company to provide for the amount
of additional withholding, if any, required by applicable federal and state tax laws. The Company may withhold from any payment due or transfer made under any Option or from any compensation or other
amount owing to Optionee the amount (in cash, shares of Common Stock, other securities, or other property, as determined by the Company) of any applicable withholding taxes in respect of an Option,
its exercise, or any payment or transfer under an Option and to take such other action as may be necessary in the opinion of Company to satisfy all obligations for the payment of such taxes. With
respect to the issuance to Optionee of shares of Common Stock pursuant to an Option, at the discretion of the Company, Optionee may be required to pay to Company in cash the amount of any taxes
required to be withheld with respect to such shares or, in lieu thereof, at the discretion of the Company, the Company shall have the right to retain (or the Optionee may be offered the opportunity to
elect to tender) the number of shares whose fair market value, in the reasonable determination of the Company, equals the amount required to be withheld.

7.Noncompete.



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8.    The
Option may not be exercised by anyone other than the Optionee or, in the event of disability or incapacity, by his or her guardian or legal representative, during his
or her lifetime. In the event of his or her death, the Option may be exercised by the personal representative of the Optionee's estate or, if no personal representative has been appointed, by the
successor or successors in interest determined under the Optionee's will or under the applicable laws of descent and distribution. The Option may not be assigned or transferred during the lifetime of
the Optionee, either voluntarily or involuntarily, including execution, levy, garnishment, attachment, pledge or bankruptcy, and any attempt to do so shall render the Option and any unexercised
portion thereof, at the discretion of the Company, null and void and unenforceable by the Optionee.

9.    The
Option may be exercised in whole or in part by delivering to the Company written notice of exercise, in a form satisfactory to the Company, together with payment in
full for the shares being purchased upon such exercise.

10.  The
Company will, upon receipt of said notice and payment and within such period of time as it determines in its sole discretion, issue or cause to be issued to the
Optionee (or to his or her personal representative or other person entitled thereto) a stock certificate for the number of shares purchased thereby.

11.  The
Company, in its discretion, may file and maintain effective with the Securities and Exchange Commission a Registration Statement on Form S-8 under
the Securities Act of 1933, as amended (the "Act"), covering the sale of the optioned shares to Optionee upon exercise of the Option. If, at the time of exercise, the Company does not have an
effective Registration Statement on file covering the sale of the optioned shares, the Optionee represents and agrees that: (i) the Option shall not be exercisable unless the purchase of
optioned shares upon the exercise of the Option is pursuant to an applicable effective registration statement under the Act, or unless in the opinion of counsel for the Company, the proposed purchase
of such optioned shares would be exempt from the registration requirements of the Act, and from the qualification requirements of any state securities law; (ii) upon exercise of the Option, he
will acquire the optioned shares for his or her own account for

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investment and not with any intent or view to any distribution, resale or other disposition of the optioned shares; (iii) he will not sell or transfer the optioned shares, unless they are
registered under the Act, except in a transaction that is exempt from registration under the Act, and each certificate issued to represent any of the optioned shares shall bear a legend calling
attention to the foregoing restrictions and agreements. The Company may require, as a condition of the exercise of the Option, that the Optionee sign such further representations and agreements as it
reasonably determines to be necessary or appropriate to assure and to evidence compliance with the requirements of the Act.

12.  In
consideration of the granting by the Company of the Option, the Optionee hereby affirms that he or she has a present intention to remain in the employ and service of
the Company for the period that this Option continues. This affirmation, however, shall confer no right on the Optionee to continue in the employ of the Company, nor interfere in any way with the
right of the Company to discharge the Optionee at any time for any reason whatsoever, with or without cause and with or without notice.

13.  The
Optionee shall have no rights as a stockholder with respect to the shares of Common Stock which may be purchased pursuant to the Option until such shares are issued
to the Optionee.

14.  In
the event of a "change of control" (as such term is defined in the 2000 Plan), the 2000 Plan Committee (as such term is defined in the 2000 Plan), or the board of
directors of any corporation assuming the obligations of the Company, shall have the power and discretion to prescribe the terms and conditions for the exercise of, or modification of, any outstanding
Options, including, but not limited to, the complete or partial acceleration of the date of exercise of the Options, or the exchange or conversion of the Company's options for options to acquire
securities of the surviving or acquiring corporation, or the payment or distribution in respect of outstanding Options (or the portion thereof that is currently exercisable) in the cancellation
thereof.

15.  THIS
AGREEMENT IS ENTERED INTO AND SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO. JURISDICTION AND VENUE SHALL BE IN
THE FEDERAL OR STATE COURTS OF COLORADO. The Optionee acknowledges having read and understands the following Colorado law and agrees that the covenants of this Agreement are entered into pursuant to
§ 2(a), (b) and (d) of C.R.S. § 8-2-113, which provides as follows:

Colorado
Revised Statutes § 8-2-113
Unlawful to Intimidate Workmen



16.  All
agreements, covenants, conditions and provisions contained in this Agreement are severable, and in the event, for any reason, any of them shall be held to be invalid
by a final judgment of any court of competent jurisdiction or any arbitration panel, such invalidity shall not affect any other

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agreement, covenant, condition or provision of this Agreement not held so invalid, and each such other agreement, covenant, condition and provision, to the full extent consistent with law, shall
continue in
full force and effect and this Agreement shall be interpreted as if such invalid agreement, covenant, condition or provision was not contained herein.

The
terms and conditions contained in the 2000 Plan, and as it may be amended from time to time hereafter, are incorporated into and made a part of this Agreement by reference, as if the
same were set forth herein in full, and all provisions of the Option are made subject to any and all terms of the 2000 Plan.

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IN
WITNESS WHEREOF, the parties have hereunto affixed their signatures in acknowledgment and acceptance of the above terms and conditions on the date first above mentioned.

| |  | ULTIMATE ELECTRONICS, INC.
| |  | --------------------------
| |  | By:                       
| |  | OPTIONEE                  
| |  | By:                       

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