<PAGE>

                                                                    EXHIBIT 10.1


             COMPENSATION OPTIONS TO PURCHASE EXCHANGEABLE SHARES OF

                          IMAGE PROCESSING SYSTEMS INC.
              (EXISTING UNDER THE LAWS OF THE PROVINCE OF ONTARIO)

                                   VOID AFTER

                                DECEMBER 17, 2001


         THIS CERTIFIES that, for value received, Sprott Securities Inc. (the
"Holder"), is the registered holder of 21,285 compensation options (the
"Compensation Options") which entitle the holder, subject to the terms and
conditions set forth in this Compensation Option Certificate, to purchase from
Image Processing Systems Inc. (the "Company"), up to 21,285 exchangeable shares
of the Company (the "Shares"), at any time until 5:00 p.m. (Toronto time) on
December 17, 2001 (the "Time of Expiry") on payment of $26.40 per Share (the
"Exercise Price"). The number of Shares which the Holder is entitled to acquire
upon exercise of the Compensation Options and the Exercise Price are subject to
adjustment as hereinafter provided.

1.       EXERCISE OF COMPENSATION OPTIONS

         (a)     ELECTION TO PURCHASE. The rights evidenced by this certificate
                 may be exercised by the Holder in whole or in part and in
                 accordance with the provisions hereof by delivery of an
                 Election to Purchase in substantially the form attached hereto
                 as Schedule 1, properly completed and executed, together with
                 payment of the Exercise Price for the number of Shares
                 specified in the Election to Purchase at the office of the
                 Company at 221 Whitehall Drive, Markham, Ontario, L3R 9T1, or
                 such other address in Canada as may be notified in writing by
                 the Company (the "Company Office"). In the event that the
                 rights evidenced by this certificate are exercised in part, the
                 Company shall, contemporaneously with the issuance of the
                 Shares issuable on the exercise of the Compensation Options so
                 exercised, issue to the Holder a Compensation Options
                 Certificate on identical terms in respect of that number of
                 Shares in respect of which the Holder has not exercised the
                 rights evidenced by this certificate.

         (b)     EXERCISE. The Company shall, on the date it receives a duly
                 executed Election to Purchase and the Exercise Price for the
                 number of Shares specified in the Election to Purchase (the
                 "Exercise Date"), issue that number of Shares specified in the
                 Election to Purchase.

         (c)     SHARE CERTIFICATES. As promptly as practicable after the
                 Exercise Date, the Company shall issue and deliver to the
                 Holder, registered in such name or names as the Holder may
                 direct or if no such direction has been given, in the name of
                 the Holder, a certificate or certificates for the number of
                 Shares specified in the Election to Purchase. To the extent
                 permitted by law, such exercise shall be
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                 deemed to have been effected as of the close of business on the
                 Exercise Date, and at such time the rights of the Holder with
                 respect to the number of Compensation Options which have been
                 exercised as such shall cease, and the person or persons in
                 whose name or names any certificate or certificates for Shares
                 shall then be issuable upon such exercise shall be deemed to
                 have become the holder or holders of record of the Shares
                 represented thereby.

         (d)     FRACTIONAL SHARES. No fractional Shares shall be issued upon
                 exercise of any Compensation Options and no payments or
                 adjustment shall be made upon any exercise on account of any
                 cash dividends on the Shares issued upon such exercise. If any
                 fractional interest in a Share would, except for the provisions
                 of the first sentence of this Section 1(d), be deliverable upon
                 the exercise of a Compensation Options, the Company shall, in
                 lieu of delivering the fractional share therefor, pay to the
                 Holder an amount in cash equal to the Fair Market Value (as
                 hereinafter defined) of such fractional interest.

         (e)     CORPORATE CHANGES

                 (i)    Subject to paragraph 1(e)(ii) hereof, if, after December
                        22, 2000 and prior to the Time of Expiry, the Company
                        shall be a party to any reorganization, merger,
                        dissolution or sale of all or substantially all of its
                        assets, whether or not the Company is the surviving
                        entity, the number of Compensation Options evidenced by
                        this certificate shall be adjusted so as to apply to the
                        securities to which the holder of that number of Shares
                        of the Company subject to the unexercised Compensation
                        Options would have been entitled by reason of such
                        reorganization, merger, dissolution or sale of all or
                        substantially all of its assets (the "Event"), and the
                        Exercise Price shall be adjusted to be the amount
                        determined by multiplying the Exercise Price in effect
                        immediately prior to the Event by the number of Shares
                        subject to the unexercised Compensation Options
                        immediately prior to the Event, and dividing the product
                        thereof by the number of securities to which the holder
                        of that number of Shares subject to the unexercised
                        Compensation Options would have been entitled to by
                        reason of such Event.

                 (ii)   If the Company is unable to deliver securities to the
                        Holder pursuant to the proper exercise of a Compensation
                        Options, the Company may satisfy such obligations to the
                        Holder hereunder by paying to the Holder in cash the
                        difference between the Exercise Price of all unexercised
                        Compensation Options granted hereunder and the Fair
                        Market Value of the securities to which the Holder would
                        be entitled to upon exercise of all unexercised
                        Compensation Options. Adjustments under this
                        subparagraph (e) or (subject to subparagraph (o)) any
                        determinations as to the Fair Market Value of any
                        securities shall be made by the board of directors of
                        the Company, or any committee thereof specifically
                        designated by the board of directors to be responsible
                        therefor, and any reasonable determination
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                        made by such board or committee thereof shall be binding
                        and conclusive, subject only to any disputes being
                        resolved by the Company's auditors, whose determination
                        shall be binding and conclusive.

         (f)     SUBDIVISION OR CONSOLIDATION OF SHARES

                 (i)    In the event that, after December 22, 2000 and prior to
                        the Time of Expiry, the Company shall subdivide its
                        outstanding exchangeable shares into a greater number of
                        Shares, the Exercise Price in effect immediately prior
                        to such subdivision shall be proportionately reduced,
                        and conversely, in case the outstanding exchangeable
                        shares of the Company shall be consolidated into a
                        smaller number of Shares, the Exercise Price in effect
                        immediately prior to such consolidation shall be
                        proportionately increased.

                 (ii)   Upon each adjustment of the Exercise Price as provided
                        herein, the Holder shall thereafter be entitled to
                        acquire, at the Exercise Price resulting from such
                        adjustment, the number of Shares (calculated to the
                        nearest tenth of a Share) obtained by multiplying the
                        Exercise Price in effect immediately prior to such
                        adjustment by the number of Shares which may be acquired
                        hereunder immediately prior to such adjustment and
                        dividing the product thereof by the Exercise Price
                        resulting from such adjustment.

         (g)     CHANGE OR RECLASSIFICATION OF SHARES. In the event that, after
                 December 22, 2000 and prior to the Time of Expiry, the Company
                 shall change or reclassify its outstanding exchangeable shares
                 into a different class of securities, the rights evidenced by
                 the Compensation Options shall be adjusted as follows so as to
                 apply to the successor class of securities:

                 (i)    the number of the successor class of securities which
                        the Holder shall be entitled to acquire as part of the
                        Shares shall be that number of the successor class of
                        securities which a holder of that number of Shares
                        subject to the unexercised Compensation Options
                        immediately prior to the change or reclassification
                        would have been entitled to by reason of such change or
                        reclassification; and

                 (ii)   the Exercise Price shall be determined by multiplying
                        the Exercise Price in effect immediately prior to the
                        change or reclassification by the number of Shares
                        subject to the unexercised Compensation Options
                        immediately prior to the change or reclassification, and
                        dividing the product thereof by the number of shares
                        determined in paragraph 1(g)(i) hereof.

         (h)     OFFERING TO SHAREHOLDERS. If and whenever at any time after
                 December 22, 2000 and prior to the Time of Expiry, the Company
                 shall fix a record date or if a date of entitlement to receive
                 is otherwise established (any such date being hereinafter
                 referred to in this Subsection 1(h) as the "record date") for
                 the issuance of rights,
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                 options or warrants to all or substantially all the holders or
                 the outstanding exchangeable shares of the Company entitling
                 them, for a period expiring not more than 45 days after such
                 record date, to subscribe for or purchase exchangeable shares
                 of the Company or securities convertible into or exchangeable
                 for exchangeable shares at a price per share or, as the case
                 may be, having a conversion or exchange price per share less
                 than 95% of the Fair Market Value (as hereinafter defined) on
                 such record date, the Exercise Price shall be adjusted
                 immediately after such record date so that it shall equal the
                 price determined by multiplying the Exercise Price in effect on
                 such record date by a fraction, of which the numerator shall be
                 the total number of exchangeable shares outstanding on such
                 record date plus a number equal to the number arrived at by
                 dividing the aggregate subscription or purchase price of the
                 total number of additional exchangeable shares offered for
                 subscription or purchase or, as the case may be, the aggregate
                 conversion or exchange price of the convertible or exchangeable
                 securities so offered by such Fair Market Value, and of which
                 the denominator shall be the total number of exchangeable
                 shares outstanding on such record date plus the total number of
                 additional exchangeable shares so offered (or into which the
                 convertible or exchangeable securities so offered are
                 convertible or exchangeable); exchangeable shares owned by or
                 held for the account of the Company or any subsidiary of the
                 Company shall be deemed not to be outstanding for the purpose
                 of any such computation; such adjustment shall be made
                 successively whenever such a record date is fixed; to the
                 extent that any rights or warrants are not so issued or any
                 such rights or warrants are not exercised prior to the
                 expiration thereof, the Exercise Price shall then be readjusted
                 to the Exercise Price which would then be in effect if such
                 record date had not been fixed or to the Exercise Price which
                 would then be in effect based upon the number of exchangeable
                 shares or conversion or exchange rights contained in
                 convertible or exchangeable securities actually issued upon the
                 exercise of such rights or warrants, as the case may be.

         (i)     CARRY OVER OF ADJUSTMENTS. No adjustment of the Exercise Price
                 shall be made if the amount of such adjustment shall be less
                 than 1% of the Exercise Price in effect immediately prior to
                 the event giving rise to the adjustment, provided, however,
                 that in such case any adjustment that would otherwise be
                 required then to be made shall be carried forward and shall be
                 made at the time of and together with the next subsequent
                 adjustment which, together with any adjustment so carried
                 forward, shall amount to at least 1% of the Exercise Price.

         (j)     NOTICE OF ADJUSTMENT. Upon any adjustment of the number of
                 Shares and upon any adjustment of the Exercise Price, then and
                 in each such case the Company shall give written notice thereof
                 to the Holder, which notice shall state the Exercise Price and
                 the number of Shares or other securities subject to the
                 unexercised Compensation Options resulting from such
                 adjustment, and shall set forth in reasonable detail the method
                 of calculation and the facts upon which such calculation is
                 based. Upon the request of the Holder there shall be
                 transmitted
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                 promptly to the Holder a statement of the firm of independent
                 chartered accountants retained to audit the financial
                 statements of the Company to the effect that such firm concurs
                 in the Company's calculation of the change.

         (k)     OTHER NOTICES. In case at any time after December 22, 2000 and
                 prior to the Time of Expiry:

                 (i)    the Company shall declare any dividend upon its
                        exchangeable shares payable in Shares;

                 (ii)   the Company shall offer for subscription pro rata to the
                        holders of its exchangeable shares any additional shares
                        of any class or other rights;

                 (iii)  there shall be any capital reorganization or
                        reclassification of the capital stock of the Company, or
                        consolidation, amalgamation or merger of the Company
                        with, or sale of all or substantially all of its assets
                        to, another corporation; or

                 (iv)   there shall be a voluntary or involuntary dissolution,
                        liquidation or winding- up of the Company,

                 then, in any one or more of such cases, the Company shall give
                 to the Holder (A) at least 10 days' prior written notice of the
                 date on which a record date shall be taken for such dividend,
                 distribution or subscription rights or for determining rights
                 to vote in respect of any such reorganization,
                 reclassification, consolidation, merger, amalgamation, sale,
                 dissolution, liquidation or winding-up and (B) in the case of
                 any such reorganization, reclassification, consolidation,
                 merger, sale, dissolution, liquidation or winding-up, at least
                 10 days' prior written notice of the date when the same shall
                 take place. Such notice in accordance with the foregoing clause
                 (A) shall also specify, in the case of any such dividend,
                 distribution or subscription rights, the date on which the
                 holders of exchangeable shares shall be entitled thereto, and
                 such notice in accordance with the foregoing clause (B) shall
                 also specify the date on which the holders of exchangeable
                 shares shall be entitled to exchange their exchangeable shares
                 for securities or other property deliverable upon such
                 reorganization, reclassification, consolidation, merger,
                 amalgamation, sale, dissolution, liquidation or winding-up, as
                 the case may be.


         (l)     SHARES TO BE RESERVED. The Company will at all times keep
                 available, and reserve if necessary under Canadian law, out of
                 its authorized exchangeable shares, solely for the purpose of
                 issue upon the exercise of the Compensation Options, such
                 number of Shares as shall then be issuable upon the exercise of
                 the Compensation Options. The Company covenants and agrees that
                 all Shares which shall be so issuable will, upon issuance, be
                 duly authorized and issued as fully paid and
<PAGE>

                 non-assessable. The Company will take all such actions as may
                 be necessary to ensure that all such Shares may be so issued
                 without violation of any applicable requirements of any
                 exchange upon which the exchangeable shares of the Company may
                 be listed or in respect of which the exchangeable shares are
                 qualified for unlisted trading privileges. The Company will
                 take all such actions are within its power to ensure that all
                 such Shares may be so issued without violation of any
                 applicable law.

         (m)     ISSUE TAX. The issuance of certificates for Shares upon the
                 exercise of Compensation Options shall be made without charge
                 to the Holder for any issuance tax in respect thereto, provided
                 that the Company shall not be required to pay any tax which may
                 be payable in respect of any transfer involved in the issuance
                 and delivery of any certificate in a name other than that of
                 the Holder.

         (n)     FAIR MARKET VALUE. For the purposes of any computation
                 hereunder, the "Fair Market Value" at any date shall be the
                 weighted average sale price per share for the exchangeable
                 shares of the Company for the 20 consecutive trading days
                 immediately before such date on The Toronto Stock Exchange or
                 such other stock exchange on which the exchangeable shares of
                 the Company may then be listed, or, if the shares or any other
                 security in respect of which a determination of Fair Market
                 Value is being made are not listed on any stock exchange, the
                 Fair Market Value shall be determined by the directors of the
                 Company, which determination shall be conclusive. The weighted
                 average price shall be determined by dividing the aggregate
                 sale price of all such shares sold on the said exchange during
                 the said 20 consecutive trading days by the total number of
                 such shares so sold.

2.       REPLACEMENT

         Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Compensation Options Certificate and,
if requested by the Company, upon delivery of a bond of indemnity satisfactory
to the Company (or, in the case of mutilation, upon surrender of this
Compensation Options Certificate), the Company will issue to the Holder a
replacement certificate (containing the same terms and conditions as this
Compensation Options Certificate).

3.       EXPIRY DATE

         The Compensation Options shall expire and all rights to purchase Shares
hereunder shall cease and become null and void at 5:00 p.m. (Toronto time) on
December 17, 2001.

4.       COVENANT

         So long as any Compensation Options remain outstanding the Company
covenants that it shall do or cause to be done all things necessary to maintain
its status as a reporting issuer not in default in the province of Ontario.
<PAGE>

5.       INABILITY TO DELIVER SHARES

         If for any reason, other than the failure or default of the Holder, the
Company is unable to issue and deliver the Shares or other securities as
contemplated herein to the Holder upon the proper exercise by the Holder of the
right to purchase any of the Shares covered by this Compensation Options
Certificate, the Company may pay, at its option and in complete satisfaction of
its obligations hereunder, to the Holder, in cash, an amount equal to the
difference between the Exercise Price and the Fair Market Value of such Shares
or other securities on the Exercise Date.

6.       GOVERNING LAW

         The laws of the Province of Ontario and the laws of Canada applicable
therein shall govern the Compensation Options.

7.       SUCCESSORS

         This Compensation Options Certificate shall enure to the benefit of and
shall be binding upon the Holder and the Company and their respective
successors.

         IN WITNESS WHEREOF the Company has caused this Compensation Options
Certificate to be signed by its duly authorized officers and its corporate seal
hereto affixed.

         DATED as of the 22nd day of December, 2000.


                                           IMAGE PROCESSING SYSTEMS INC.


                                           Per: /s/ RICHARD L. DISSLY
                                               ---------------------------------



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                                  SCHEDULE "1"

                              ELECTION TO EXERCISE


         The undersigned hereby irrevocably elects to exercise the number of
Compensation Options of Image Processing Systems Inc. set out below for the
number of Shares (or other property or securities subject thereto) as set forth
below:


<TABLE>
<S>                                                                      <C>
         (a)  Number of Compensation Options to be Exercised:
                                                                                -------------

         (b)  Number of Shares to be Acquired:
                                                                                -------------

         (c)  Exercise Price per Share:                                         $
                                                                                 -----------

         (d)  Aggregate Purchase Price [(B) MULTIPLIED BY (C)]                  $
                                                                                 -----------
</TABLE>


and hereby tenders a certified cheque, bank draft or cash for such aggregate
purchase price, and directs such Shares to be registered and a certificate
therefor to be issued as directed below.


         DATED this          day of                              ,           .
                    --------        ----------------------------   ---------


                                               SPROTT SECURITIES INC.


                                               Per:
                                                   -----------------------------


DIRECTION AS TO REGISTRATION

NAME OF REGISTERED HOLDER:
                                            ------------------------------------
ADDRESS OF REGISTERED HOLDER:
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