**Exhibit4.1**

 

**OPTION AGREEMENT**

 

OPTION AGREEMENT dated this *** day of ******, 2001between **QSoundLabs, Inc.**, a body corporate, continued under the laws of theProvince of Alberta, having its head office at 400 – 3115 12thStreet NE, Calgary, AB T2E 7J2 (the “Company”) and  *******  (the “Optionee”);

 

WHEREAS the Optionee is an employee, officer, directoror consultant of the Company, and the Company is desirous of granting anincentive option to the Optionee to purchase common shares without par value inthe capital of the Company;

 

In consideration of the premises and of the mutualcovenants and agreements herein contained, the parties hereby covenant andagree each with the other as follows:

 

1.                                       Grantof Option.   The Company herebygrants to the Optionee under the 1998 Stock Option****Plan****(“Plan”) the irrevocableoption to purchase common shares without par value in the capital of theCompany, or any part thereof, as follows (“Option”):

Number of shares:                                                               *****

Exercise price:                                                                                  *****per share

Expiry Date:

Vesting:

 

2.                                       Exerciseof Option.   Subject to section 5.hereof, the Optionee may exercise the Option at any time or from time to timeby giving written notice to the Company substantially in the form attachedhereto as Schedule “A” and delivering to the Company a certified cheque in anamount equal to the number of common shares in respect of which the Option isbeing exercised multiplied by the exercise price specified in section 1.hereof.

 

3.                                       Optionee’sRepresentation. The Optionee hereby confirms and represents that he/she isan employee, officer, director or consultant of or for the Company (“ServiceProvider”), as the case may be, at the date hereof.

 

4.                                       OtherRemuneration.   This Agreement shallnot preclude or limit the Company from paying, or the Optionee from accepting,compensation or other remuneration for any work or services performed by theOptionee for the Company.

 

5.                                       Entitlementto Exercise                        Notwithstanding any other provision hereof, the Optionee shall only be entitled toexercise the Option while a Service Provider of the Company or any of itssubsidiaries or during a period commencing on the date of notice given byeither Company or Optionee to the other party, of termination of Optionee as aService Provider of the Company or any of its subsidiaries and ending on theearlier of 30 days thereafter and the Expiry Date, or on such later date as maybe determined by the Board of Directors.

 

6.                                       Exerciseby Personal Representative   In theevent of the Optionee’s death while a Service Provider of the Company or any ofits subsidiaries, the personal representative of the Optionee shall be entitledto exercise the Option in whole or in part as to any shares not previouslypurchased hereunder by giving written notice to the Company and paying the purchaseprice to the Company during a period commencing on the date of death of theOptionee and ending on the earlier of one year thereafter and the Expiry Date,or on such later date as may be determined by the Board of Directors.

 

7.                                       FullyPaid Shares   All common sharespurchased by the Optionee hereunder shall be fully paid and non-assessablecommon shares.

 

8.                                       Adjustment   The number of common shares subject to theOption shall be increased or decreased proportionately in the event of thesubdivision or consolidation of common shares of the Company, and in any eventa corresponding adjustment shall be made changing the number of sharesdeliverable upon the exercise of the Option without change in the total priceapplicable to the unexercised portion of the option, but with a correspondingadjustment in the price for each share covered by the Option.  In case the Company is reorganized or mergedor

 

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consolidated oramalgamated with another corporation, appropriate provisions shall be made forthe continuance of the Option and to prevent its dilution or enlargement.

 

9.                                       NoRegistration  The Optioneeunderstands that the common shares to be issued pursuant to the option may notbe registered under the United States Securities Act of 1933 (the “Act”) in relianceupon an exemption from the registration requirements thereof pursuant toSection 4(2) of the Act.  The Optioneeagrees to execute and deliver any and all documents at the time of exercise ofthe Option as may be necessary to assure compliance with U.S. federal and statesecurities laws.  The Optioneeunderstands that QSound Labs, Inc. shall not be required to register any commonshares acquired by the Optionee and that the Optionee may be required to holdsuch common shares indefinitely in the absence of registration or an exemptionfrom registration under the United States federal or state securities laws.

 

10.                                 LegendThe Optionee acknowledges that all common shares issued pursuant hereto maybear the following legends (which may be modified from time to time in suchmanner as the Corporation’s attorneys recommend):

 

“THESECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED STATESFEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OROTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAYTHE SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUTREGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL ORSTATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM,SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE EVIDENCED BY ANOPINION OF SECURITYHOLDER’S COUNSEL, ACCEPTABLE TO THE CORPORATION, THAT NOVIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSEDTRANSFER OR ASSIGNMENT.”

 

“THE SECURITIESREPERSENTED HEREBY MAY NOT BE SOLD TO A RESIDENT OF THE  PROVINCE OF ALBERTA WITHIN ONE YEAR FROM THEDATE OF ISSUANCE.”

 

11.                                 Amendment   If the approval of the Company’sshareholders to any amendment to this Agreement shall be required by theprevailing policies of the regulatory securities bodies having jurisdictionover the Company, then any amendment made to this agreement shall be subject tothe approval of the shareholders of the Company.

 

12.                                 Timeof the Essence  Time shall be essencehereof.

 

13.                                 Transfer  Upon the approval of the Plan Administrator,the Option may be transferred in accordance with the provisions of the Plan.

 

**IN WITNESS WHEREOF**the parties hereto have executed there presents on the day and year first abovewritten.

 

QSOUND LABS, INC.

 
| Per:     |   |    |   |   |
|----------|--------|---------|--------|--------|
|     |   |    |   |
|     |   |    |   |
|     |   |    |   |
| OPTIONEE |   | WITNESS |   |

 

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**SCHEDULEA**

QSound Labs, Inc. 

400 – 3115 12thStreet N.E.

Calgary, AB

T2E 7J2

 

Attention:  Secretary

 

Dear Sirs:

 

Re:  Exerciseof Stock Option

 

The undersigned, being the holder of an option topurchase common shares of QSound Labs, Inc. (the “Company”) does hereby electto exercise such option to the extent of the purchase of                           commonshares at the exercise prices of$                    pershare  and does hereby tender to theCompany the total purchase price of $                    therefor.

 

The undersigned acknowledges that if common sharesissued pursuant hereto may not be registered pursuant to applicable securitieslaws of the United States, any certificate representing such shares will bear alegend in a form which may be approved by the Company’s counsel and theundersigned consents to the imposition of any such legend.

 

Yours truly,

 

 

OPTIONEE

 

 

DATED this         dayof                               ,200      .

 

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