EXHIBIT 7.1 Form of Stock Option Agreement
DIGITAL XXXXXXX.XXX INC.
STOCK OPTION AGREEMENT
DIGITAL XXXXXXX.XXX INC., AN ONTARIO CORPORATION (THE "COMPANY") HAS
GRANTED TO (THE "OPTIONEE"), AN OPTION TO PURCHASE A TOTAL OF () COMMON SHARES
(THE "SHARES"), AT THE PRICE DETERMINED AS PROVIDED HEREIN, ALL UPON THE TERMS
AND CONDITIONS HEREOF.
1. GRANT OF THE OPTION. The Grant of the option (this "Option") is subject
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in all respects to the terms, definitions and provisions of the Stock Option
Plan (the "Plan") adopted by the Company, which is incorporated herein by
reference. The terms defined in the Plan shall have the same defined meanings
herein.
2. EXERCISE PRICE. The exercise price is in the lawful currency of Canada
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($) for each common share, which price is not less than 100% of the fair market
value per Share on the date of grant, subject to all applicable discounts as
permitted by the Rules of The Toronto Stock Exchange.
3. EXERCISE OF OPTION. In accordance with the terms of the Plan, this
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Option shall be exercisable during its term in accordance with the provisions of
Section 7 of the Plan as follows;
(a) Right to Exercise
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(i) This Option shall be exercisable to the extent of 25% 12 months
from the date of the Grant.
(ii) This Option shall be exercisable to the extent of 25% 24 months
from the date of the Grant.
(iii) This Option shall be exercisable to the extent of 25% 36 months
from the date of the Grant.
(iv) This Option shall be exercisable to the extent of 25% 48 months
from the date of the Grant.
(iii) This Option may not be exercised for a fraction of a share.
(iv) In the event of the Optionee's termination of service, the
exercisability of the Option is governed by Section 6 below and
Section 8 of the Plan.
(b) Method of Exercise. This Option shall be exercisable by written
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notice which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such Shares as may be required by the Company pursuant to the provisions of
the Plan. Such written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company. The
written notice shall be accompanied by payment of the exercise price.
No shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares may then be
listed.
4. METHOD OF PAYMENT. Payment of the exercise price shall be by cash,
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certified cheque or stock certificates (in negotiable form) representing common
shares of the Company having a fair market value equal to the exercise price of
the shares with respect to which the Option is being exercised.
5. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
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issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
provincial securities or other law or regulation. As a condition to the
exercise of this Option, the Company may require the Optionee to make any
representation and warranty to the Company as may be required by any applicable
law or regulation.
6. TERMINATION OF STATUS AS AN EMPLOYEE. If the Optionee ceases to serve as
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an employee, he/she may, but only within thirty (30) days after the date he/she
ceased to be an Employee of the Company, exercise this Option to the extent that
she was entitled to exercise it at the date of such termination. To the extent
that he/she was not entitled to exercise this option at the date of such
termination, or if he/she does not exercise this Option within the time
specified herein, the Option shall terminate.
7. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 6
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above, if the Optionee is unable to continue as an Employee of the Company as a
result of his/her total and permanent disability he/she may, but only within
twelve (12) months from the date of termination, exercise his/her Option to the
extent she was entitled to exercise it at the date of such termination, or if
he/she does not exercise such Option (which he/she was entitled to exercise)
within the time specified herein, the Option shall terminate.
8. DEATH OF OPTIONEE. In the event of the death of the Optionee:
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(a) during the term of this Option and while an Employee of the Company
and having been in continuous status as an Employee since the date of grant of
the Option, the Option may be exercised, at any time within twelve (12) months
following the date of death, by the Optionee's wholly owned personal holding
company, the Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent of the right to
exercise that would have accrued had the Optionee continued living twelve (12)
months after the date of death; or
(b) within thirty (30) days after the termination of the Optionee's
continuous status as an Employee, the Option may be exercised, at any time
within three (3) months following the date of death, by the Optionee's personal
holding company, the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the date of termination.
9. REPRESENTATIONS OF OPTIONEE. The Optionee hereby confirms and represents
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that:
(i) he/she is an Employee of the Company, or any of its subsidiaries or
its affiliates;
(ii) he/she has no outstanding incentive stock options to purchase shares
of the Company.
10. ADJUSTMENTS IN SHARES. If prior to the exercise of the Option at any
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time or from time to time, there shall be any reorganization of the capital
stock of the Company by way of stock split, consolidation, subdivision, merger,
amalgamation or otherwise or payment of any stock dividends, then there shall
automatically be an adjustment in either or both of the number of Shares of the
Company which may be purchased pursuant hereto or the price at which such Shares
may be purchased by corresponding amounts, so that the Optionee's rights
hereunder shall thereafter be as reasonably as possible equivalent to the rights
originally granted to the Optionee. The Board of Directors of the Company shall
have the sole and exclusive power to make the adjustments as it considers
necessary and desirable.
11. CORPORATE TRANSACTIONS. In the event the Shares are exchanged for
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securities, cash or other property of any other corporation or entity as the
result of a reorganization, merger or consolidation in which the Company is not
the surviving corporation, the dissolution or liquidation of the Company, or the
sale of all or substantially all the assets of the Company, the Board of
Directors or the board of directors of any successor corporation or entity may,
in its discretion, as to outstanding options (a) accelerate the exercise date or
dates of such options, (b) upon written notice to the holders thereof, provided
the options have been accelerated pursuant to paragraph (a) above, terminate all
such options prior to consummation of the transaction unless exercised within a
prescribed period, (c) provide for payment of an amount equal to the excess of
the fair market value, as determined by the Board of Directors or such board,
over the Option Price of such shares as of the date of the transaction, in
exchange for the surrender of the right to exercise such options, or (d) provide
for the assumption of such options, or the substitution therefor of new options,
by the successor corporation or entity.
12. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
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any manner except (i) to a personal holding company wholly owned by the
Optionee, or (ii) by will or by the laws of descent or distribution and may be
exercised during the lifetime of the Optionee only by him or such personal
holding company. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
13. TERM OF OPTION. This Option may not be exercised more than years from
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the date of grant of this Option, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
DATE OF GRANT: , 2001
DIGITAL XXXXXXX.XXX INC.
Per: _______________________________
President
The Optionee acknowledges receipt of a copy of the Plan, a copy of
which is annexed hereto, and represents that he is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board of Directors
upon any questions arising under the Plan.
Dated: , 2001
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