Telescope Innovations : Material Contract - Stock Option Plan

TELESCOPE INNOVATIONS CORP.

STOCK OPTION PLAN

1. PURPOSE OF THE PLAN
   The purpose of the Plan is to provide Eligible Persons with an opportunity to purchase Shares and to benefit from the appreciation in the value of the Shares. The Plan will provide an increased incentive for those individuals to contribute to the future growth, success and prosperity of the Company, thus enhancing the value of the Shares for the benefit of all of the Company's shareholders and increasing the ability of the Company and any Affiliate to attract and retain skilled and motivated individuals.
2. INTERPRETATION

2.1. Definitions

In the Plan, the following terms shall have the following meanings:

"Associate" means an associate as defined in the Securities Act (British Columbia); "Affiliate" has the meaning set out in the Corporations Act;

"Blackout Period" means an interval of time (i) when any trading guidelines of the Company, as amended from time to time, restrict Participants from trading in any securities of the Company because they may be in possession of confidential information; or (ii) when the Company has determined that one or more Participants may not trade any securities of the Company because they may be in possession of confidential information;

"Board" means the board of directors of the Company and any committee of the board of directors to which any or all authority, rights, powers and discretion with respect to the Plan has been delegated;

"Business Day" means a day that is not a Saturday, Sunday or a statutory or public holiday and any other day on which the banks are not regularly open for business in the jurisdiction where the Company has its head office;

"Cause" means any act, omission or course of conduct recognized as cause under applicable law, including, without limitation, embezzlement, theft, fraud, wilful failure to follow any lawful directive of the Company and wilful misconduct detrimental to the interests of the Company;

"Company" means Telescope Innovations Corp. and its successors;

"Consultant" means a person, company, partnership or other entity, other than an Employee, Officer or Director, that is engaged to provide on an ongoing basis, consulting, technical, management or other services (other than services in relation to a distribution) to the Company or an Affiliate of the Company under a written contract with

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the Company or an Affiliate of the Company, and otherwise meets the definition of "consultant" contained in NI 45-106 and, and includes, for an individual consultant, a company, partnership or other entity of which the individual consultant is an employee, shareholder or partner;

"Corporations Act" means the British Columbia Business Corporations Act, as amended or replaced from time to time;

"Director" means a director of the Company or an Affiliate of the Company;

"Disability" means any disability with respect to a Participant which the Board, in its sole and unfettered discretion, considers likely to permanently prevent the Participant from:

1. being employed or engaged by the Company, an Affiliate of the Company or another employer, in a position the same as or substantially similar to that in which the Participant was last employed or engaged by the Company or an Affiliate of the Company;
2. acting as a director or officer of the Company or an Affiliate of the Company or another company; or
3. engaging in any substantial gainful activity by reason of any medically determinable mental or physical impairment that can be expected to result in death or that has lasted or can be expected to last a continual period of not less than 12 months;

"Disinterested Shareholders" means the shareholders of the Company, including holders of any non-voting and subordinate voting shares of the Company, but excluding:

1. Insiders to whom Options may be issued under the Plan; and
2. Associates of those Insiders;

"Discounted Market Price" means the price that is lower than the greater of the closing price of the Company's Shares on (a) the trading day prior to the date of grant of the Options; and (b) the date of the Option grant;

"Eligible Person" means a bona fide Director, Officer, Employee, Consultant, and any "permitted assign" within the meaning of NI 45-106;

"Employee" means an employee (whether full-time or part-time) of the Company or an Affiliate of the Company, or a Management Company Employee;

"Exchange" means the Canadian Securities Exchange or, if the Shares are not listed and posted for trading on the Canadian Securities Exchange, the most senior stock exchange in Canada on which the Shares are listed and posted for trading;

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"Expiry Date" means the date set by the Board under Section 3.1 of the Plan, as the last date on which an Option may be exercised by the Participant;

"Grant Date" means the date specified in an Option Agreement as the date on which an Option is granted;

"Insider" means:

1. an insider as defined in the Securities Act, other than a person who is an insider solely by virtue of being a director or senior officer of an Affiliate; and
2. an Associate of any person who is an insider under section (a);

"Management Company Employee" means an individual employed by a person providing management services to the Company which are required for the ongoing successful operation of the business enterprise of the Company;

"NI 45-106" means Canadian National Instrument 45-106 - Prospectus and Registration Exemptions;

"Officer" means an executive officer (as that term is defined in NI 45-106) of the Company or an Affiliate of the Company;

"Option" means an option to purchase Shares granted pursuant to the Plan;

"Option Agreement" means an agreement, in the form attached hereto as Schedule A, whereby the Company grants an Option to a Participant;

"Option Price" means the per Share exercise price specified in an Option Agreement to be paid to acquire Option Shares, adjusted from time to time in accordance with the provisions of Section 5;

"Option Shares" means the aggregate number of Shares which a Participant may purchase under an Option;

"Participant" means an Eligible Person granted an Option pursuant to the Plan and his or her heirs, executors and administrators and, subject to the policies of the Exchange, a Participant may also be a company wholly-owned by an individual eligible for an Option grant pursuant to the Plan;

"Plan" means this Telescope Innovations Corp. Stock Option Plan, as amended from time to time in accordance with the provisions hereof;

"Securities Act" means the Securities Act (British Columbia), as amended or replaced from time to time;

"Shares" means the Common Shares in the capital of the Company as constituted on the date of the Plan provided that, in the event of any adjustment pursuant to Section 5,

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"Shares" shall thereafter mean the shares or other property resulting from the events giving rise to the adjustment;

"Unissued Option Shares" means the number of Shares, at a particular time, which have been allotted for issuance upon the exercise of an Option but which have not been issued, as adjusted from time to time in accordance with the provisions of Section 5, such adjustments to be cumulative; and

"Vested" means that an Option has become exercisable in respect of a number of Option Shares by the Participant pursuant to the terms of the Option Agreement and the Plan.

1. Number and Gender
   The Plan shall be read with all changes in number and gender required by the context.
2. Sections
   A reference to a Section includes all subsections and paragraphs in that Section, unless the context otherwise requires.
3. Currency

Unless the context otherwise requires or the Board determines otherwise, all references to currency shall be to the lawful money of Canada.

3. GRANT OF OPTIONS AND ADMINISTRATION OF THE PLAN

3.1. Option Terms

The Board may from time to time authorize the grant of Options to Eligible Persons on the terms and subject to the conditions set out herein and any additional terms and conditions as are set out in the Option Agreement, all as determined by the Board in its sole and unfettered discretion. Notwithstanding the foregoing, if the Shares are, at the time of grant, listed and posted for trading on the Exchange:

1. the Option Price under each Option shall be not less than the Discounted Market Price on the Grant Date or such other minimum price as may be required by the Exchange;
2. the Expiry Date for each Option shall be set by the Board at the time of issue of the Option and shall not be more than ten years after the Grant Date, subject to extension in connection with a Blackout Period, as provided in Section 4.5; and
3. Options shall not be assignable or transferable by the Participant, except to the extent necessary to enable Options that have Vested at the time of death of a Participant to be exercised by the legal personal representatives or beneficiary(ies) of the Participant as contemplated in Section 4.4(a).

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For greater certainty, the Board shall not be permitted to amend the Option Price, and Options may not be re-priced, except as set out in Section 5 of the Plan.

1. Limits on Shares Issuable on Exercise of OptionsSubject to Section 5.1,
2. 1. the maximum number of Shares that may be issuable pursuant to Options granted under the Plan shall be a number equal to 10% of the number of issued and outstanding Shares;
   2. unless approved by a majority of the Disinterested Shareholders,
   3. 1. the aggregate number of Shares issuable pursuant to Options granted to Insiders pursuant to the Plan and all of the Company's other previously established and outstanding or proposed share compensation arrangements and grants may not exceed 10% of the issued and outstanding Shares on a non-diluted basis at any time;
      2. the aggregate number of Shares issued to Insiders pursuant to the Plan and all of the Company's other previously established and outstanding or proposed share compensation arrangements and grants within any 12 month period may not exceed 10% of the issued and outstanding Shares on a non-diluted basis; and
      3. the aggregate number of Shares issuable to any one Participant pursuant to the Plan and all of the Company's other previously established and outstanding or proposed share compensation arrangements and grants within any 12 month period may not exceed 5% of the issued and outstanding Shares on a non-diluted basis; and
   4. the aggregate number of Shares issuable pursuant to Options granted to any one Consultant pursuant to the Plan and all of the Company's other previously established and outstanding or proposed share compensation arrangements and grants within any 12 month period may not exceed 2% of the issued and outstanding Shares on a non-diluted basis.
3. Option Agreements
   Each Option will be evidenced by the execution of an Option Agreement. Each Participant shall have the option to purchase from the Company the Option Shares at the time and in the manner set out in the Plan and in the Option Agreement applicable to that Participant. In the case of Options granted to Employees, Consultants or Management Company Employees, each Option Agreement will contain a representation of the Company and the Participant that the Participant is a bona fide Employee, Consultant or Management Company Employee, as the case may be. The execution of an Option Agreement shall constitute conclusive evidence that the grant of Options to the Participant has been completed in compliance with the Plan.

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