SONIC INNOVATIONS INC
EMPLOYMENT AGREEMENT
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<TYPE>EX-10.9
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<FILENAME>dex109.htm
<DESCRIPTION>EMPLOYMENT AGREEMENT
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<TITLE>Prepared by R.R. Donnelley Financial -- Employment Agreement</TITLE>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">Exhibit 10.9 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>SONIC INNOVATIONS, INC. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>EMPLOYMENT AGREEMENT </B></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Employment Agreement (the &#147;<B><I>Agreement</I></B>&#148;) is entered into by and between Sonic Innovations, Inc., a Delaware corporation (the
&#147;<B><I>Company</I></B>&#148;), and Kevin Ryan (the &#147;<B><I>Employee</I></B>&#148;) as of December &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">WHEREAS, the Company desires to employ the Employee on a part-time basis in the capacity of Chairman of the Board of Directors (the &#147;<B><I>Board</I></B>&#148;) of the Company, and
the Employee desires to accept such employment; and </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">WHEREAS the parties desire and agree to enter into an employment
relationship by means of this Agreement; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">NOW THEREFORE in consideration of the promises and mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is mutually covenanted and agreed by the parties as follows: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">1.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Position and Duties.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;The Employee shall be employed as Chairman of the Board, an officer position, reporting solely to the
Board but coordinating his efforts with those of the CEO, and assuming and discharging such duties and responsibilities as are commensurate with the Employee&#146;s position. The Employee shall perform his duties faithfully and to the best of his
ability and shall devote approximately 60% his business time and effort (except for permitted vacation periods and periods of illness and other incapacity) to the performance of his duties hereunder. The Employee may perform such duties at such
locations as he and the Board deem reasonably appropriate. The Employee shall commence employment with the Company effective January 1, 2002 (the &#147;<B><I>Effective Date</I></B>&#148;)<B>.</B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">2.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Term of Employment.&nbsp;&nbsp;&nbsp;&nbsp;</I></B>The Employee&#146;s employment with the Company shall continue until terminated by either party at
any time upon thirty days&#146; prior written notice for any or no reason. In the event of an involuntary termination for Cause or a voluntary termination for Good Reason, such notice period shall be deemed to have begun upon the delivery of a
notice under Section 7(a) or Section 7(d). The parties agree and acknowledge that this Agreement is an &#147;at will&#148; agreement and that no implied covenant or standard of practice will cause this Agreement to have any minimum period of
employment. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">3.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Compensation.</I></B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">(a)&nbsp;&nbsp;&nbsp;&nbsp;<I>Base Salary.</I>&nbsp;&nbsp;&nbsp;&nbsp;For all services to be rendered by the Employee to the Company while this Agreement is in effect,
the Employee shall receive a minimum annual base salary equal to $200,000.00 (the &#147;<B><I>Base Salary</I></B>&#148;), subject to applicable tax withholding and payable in accordance with the Company&#146;s normal payroll practices. The Base
Salary shall be reevaluated yearly but in no event reduced. </FONT></DIV> <P></P>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">(b)&nbsp;&nbsp;&nbsp;&nbsp;<I>Reimbursement of
Expenses</I>.&nbsp;&nbsp;&nbsp;&nbsp;The Company shall reimburse Employee for all out-of-pocket expenses reasonably incurred and paid by him in the performance of his duties pursuant to this Agreement, in accordance with Company policies adopted
from time to time. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="013" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2">4.</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2"><B><I>Options.</I></B> </FONT></DIV> </TD></TR></TABLE> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">(a)&nbsp;&nbsp;&nbsp;&nbsp;<I>First Option</I>.&nbsp;&nbsp;&nbsp;&nbsp;The Company shall grant to the Employee an incentive stock option (to the extent allowable) to purchase a total of 350,000 shares of the Company&#146;s Common Stock (the
&#147;<B><I>First Option</I></B>&#148;). The exercise price of the First Option shall equal the fair market value of a share of Common Stock as of the date of grant. Subject to the Employee&#146;s continued employment with the Company, the First
Option shall vest and become exercisable as to 1/48</FONT><FONT FACE="Times New Roman" SIZE="1"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><SUP></SUP> of the shares underlying the First Option on each monthly
anniversary of the Effective Date. Notwithstanding the foregoing, all of the then unvested portion of the First Option shall become vested and exercisable upon the occurrence of certain events as provided in Section 6(a) below. The form of stock
option agreement pertaining to the First Option is attached hereto as <B>Exhibit A</B>. <B></B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">(b)&nbsp;&nbsp;&nbsp;&nbsp;<I>Second Option.</I><B>&nbsp;&nbsp;&nbsp;&nbsp;</B>The Company shall grant to the Employee an incentive stock option (to the extent allowable) to purchase a total of 175,000 shares of the Company&#146;s Common
Stock (the &#147;<B><I>Second Option</I></B>&#148;). The exercise price of the Second Option shall equal the fair market value of a share of Common Stock as of the date of grant. Subject to the Employee&#146;s continued employment with the Company,
the Second Option shall vest and become exercisable as to 1/7 of the shares subject to the Second Option on the first annual anniversary of the Effective Date, and an additional 1/84</FONT><FONT FACE="Times New Roman"
SIZE="1"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><SUP></SUP> of the shares subject to the Second Option shall vest and become exercisable on each subsequent monthly anniversary of the Effective Date. Notwithstanding
the foregoing, (x) all of the then unvested portion of the Second Option shall become vested and exercisable immediately upon the earlier to occur of the following events, so long as such event occurs within two years of the Effective Date: (i) such
time as the closing sales price of the Company&#146;s Common Stock on the Nasdaq National Market (or such other established stock exchange or national market system on which the Company&#146;s Common Stock is listed) exceeds $10.00 per share for 30
consecutive trading days or (ii) the consummation of a Change of Control pursuant to which the holders of the Company&#146;s Common Stock receive consideration having a fair market value (as determined by the Board) of not less than $10.00 per share
and (y) a portion of the then unvested portion of the Second Option shall become vested and exercisable upon the occurrence of certain events as provided in Section 6(b) below. The form of stock option agreement pertaining to the Second Option is
attached hereto as <B>Exhibit B</B>. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">(c)&nbsp;&nbsp;&nbsp;&nbsp;<I>Third
Option.</I><B>&nbsp;&nbsp;&nbsp;&nbsp;</B>The Company shall grant to the Employee an incentive stock option (to the extent allowable) to purchase a total of 175,000 shares of the Company&#146;s Common Stock (the &#147;<B><I>Third
Option</I></B>&#148;). The exercise price of the Third Option shall equal the fair market value of a share as of the date of grant. Subject to the Employee&#146;s continued employment with the Company, the Third Option shall vest and become
exercisable as to 1/7 of the shares subject to the Third Option on the first annual anniversary of the Effective Date, and an additional 1/84</FONT><FONT FACE="Times New Roman" SIZE="1"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><SUP></SUP> of the shares subject to the Third Option shall vest and become exercisable on each subsequent monthly anniversary of the Effective Date. Notwithstanding the foregoing (x) all of the then unvested portion of the Third
Option shall become vested and exercisable immediately upon the earlier to occur of the </FONT></DIV> <P></P>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px"><FONT FACE="Times New Roman" SIZE="2">following events, so long as such event occurs within two years of the Effective Date: (i) such
time as the closing sales price of the Company&#146;s Common Stock on the Nasdaq National Market (or such other established stock exchange or national market system on which the Company&#146;s Common Stock is listed) exceeds $14.00 per share for 30
consecutive trading days or (ii) the consummation of a Change of Control pursuant to which the holders of the Company&#146;s Common Stock receive consideration having a fair market value (as determined by the Board) of not less than $14.00 per share
and (y) a portion of the then unvested portion of the Third Option shall become vested and exercisable upon the occurrence of certain events as provided in Section 6(b) below. The form of stock option agreement pertaining to the Third Option is
attached hereto as <B>Exhibit C</B>.<B></B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">5.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Other Benefits.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;The
Employee shall be entitled to participate in the employee benefit plans and programs that the Company makes available to its senior executives, subject to the rules and regulations applicable thereto, and subject to the Employee&#146;s right to
decline participation in any such plan or program for his convenience or for the benefit of the Company. The Company reserves the right to cancel or change the benefit plans and programs it offers to its senior executive employees at any time. If
not declined, the Employee will be eligible for vacation and sick leave in accordance with the policies in effect for senior executives during the term of this Agreement and such other benefits and perquisites as the Company generally provides to
its senior executives. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="013" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2"><B><I>6.</I></B></FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2"><B><I></I></B><B><I>Change of Control and Termination. </I></B> </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">(a)&nbsp;&nbsp;&nbsp;&nbsp;<I>Option Vesting in Connection with a Change of Control.</I>&nbsp;&nbsp;&nbsp;&nbsp;If, on or within 12 months after a &#147;Change of
Control&#148; (as defined below), Employee&#146;s employment with the Company or his status as Chairman of the Board terminates due to (i) a voluntary termination by the Employee for &#147;Good Reason&#148; (as defined below), where the grounds for
the Good Reason are not cured within 30 days following receipt of written notice from Employee specifying the grounds, or (ii) an involuntary termination by the Company other than for &#147;Cause&#148; (as defined below), death or
&#147;Disability&#148; (as defined below), then, subject to Employee executing and not revoking a standard form of mutual release of claims with the Company, 100% of the Shares subject to the First Option shall vest and become immediately
exercisable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">(b)&nbsp;&nbsp;&nbsp;&nbsp;<I>Option Vesting in Connection with a Termination Occurring Within
One Year.</I>&nbsp;&nbsp;&nbsp;&nbsp;If, prior to the first annual anniversary of the Effective Date, Employee&#146;s employment with the Company or his status as Chairman of the Board terminates due to (i) a voluntary termination by the Employee
for &#147;Good Reason&#148; (as defined below), where the grounds for the Good Reason are not cured within 30 days following receipt of written notice from Employee specifying the grounds, or (ii) an involuntary termination by the Company other than
for &#147;Cause&#148; (as defined below), death or &#147;Disability&#148; (as defined below), then, subject to Employee executing and not revoking a standard form of mutual release of claims with the Company, 1/7 of the Shares subject to the Second
Option and 1/7 of the Shares subject to the Third Option shall vest and become immediately exercisable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">(c)&nbsp;&nbsp;&nbsp;&nbsp;<I>Limitation on Payments.</I>&nbsp;&nbsp;&nbsp;&nbsp;In the event that any payment or benefit received or to be received by the Employee in connection with a Change of Control or the termination of the
Employee&#146;s employment (the &#147;<B><I>Total Payments</I></B>&#148;) would subject the Employee to the excise tax or any interest or penalties with respect to such excise tax (such excise tax, interest and penalties are </FONT></DIV> <P></P>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px"><FONT FACE="Times New Roman" SIZE="2">collectively referred to as the &#147;<B><I>Excise Tax</I></B>&#148;) imposed under Section
4999 of the Internal Revenue Code of 1986, as amended (the &#147;<B><I>Code</I></B>&#148;), and the net after-tax amount receivable by the Employee is less than the net after-tax amount that could otherwise be payable to the Employee without the
imposition of the Excise Tax, then to the extent necessary to eliminate the imposition of the Excise Tax, such Total Payments shall be reduced in the following order by the least amount which results in the Employee not being subject to the Excise
Tax: Total Payments payable in cash shall first be reduced (if necessary, to zero) and Total Payments in connection with any option shall next be reduced. For purposes of this limitation, no portion of the Total Payments shall be taken into account
that, in the opinion of tax counsel selected by the Company and reasonably acceptable to the Employee, does not constitute a &#147;parachute payment&#148; within the meaning of Section 280G(b)(2) of the Code, including by reason of Section
280G(b)(4)(A) (or successor provisions as then in effect). </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:27px; text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">7.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Definitions.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this Agreement, the following terms shall have the following meanings: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">(a)&nbsp;&nbsp;&nbsp;&nbsp;<I>Cause.</I>&nbsp;&nbsp;&nbsp;&nbsp;&#147;Cause&#148; shall mean (i) any act of personal dishonesty taken by the Employee in connection with
his responsibilities as an employee and intended to result in personal enrichment of himself or his associates at the expense of the Company or its stockholders, (ii) committing an act of fraud against the Company, (iii) conviction of, or plea of
<I>nolo contendere</I> to, a felony by the Employee, (iv) continued violations of the Employee&#146;s employment-related obligations which are willful and deliberate after there has been delivered to the Employee a written demand from the Board
regarding such activities or (v) willful refusal to carry out legally permissible instructions from the Board after the Employee has been given written notice of a failure to carry out such instructions and a reasonable opportunity to correct the
situation. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">(b)&nbsp;&nbsp;&nbsp;&nbsp;<I>Change of Control</I>.&nbsp;&nbsp;&nbsp;&nbsp;A &#147;Change of
Control&#148; shall mean (i) the sale, lease, conveyance or other disposition of all or substantially all of the Company&#146;s assets as an entirety or substantially as an entirety to any &#147;person&#148; (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934, as amended), entity or group of persons acting in concert; (ii) any &#147;person&#148; becoming the &#147;beneficial owner&#148; (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing 50% or more of the total voting power represented by the Company&#146;s then outstanding voting securities; (iii) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that
would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its controlling entity) at
least 50% of the total voting power represented by the voting securities of the Company or such surviving entity (or its controlling entity) outstanding immediately after such merger or consolidation; (iv) a change in the composition of the Board
occurring within a two (2)-year period, such that a majority of the then current Board members ceases to be comprised of individuals who either (a) have been Board members continuously since the beginning of such period, or (b) have been elected or
nominated for election as Board members during such period by at least a majority of the Board members described in clause (a) who were still in office at the time such election or nomination was approved by the Board. </FONT></DIV> <P></P>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">(c)&nbsp;&nbsp;&nbsp;&nbsp;<I>Disability.</I>&nbsp;&nbsp;&nbsp;&nbsp;A
&#147;Disability&#148; shall mean the Employee&#146;s inability to substantially perform his essential job functions as the result of a physical or mental disability as determined by a qualified physician or incapacity for a period of 180 days,
consecutive or otherwise, in any 360-day period. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">(d)&nbsp;&nbsp;&nbsp;&nbsp;<I>Good
Reason.</I>&nbsp;&nbsp;&nbsp;&nbsp;Resignation for &#147;Good Reason&#148; shall mean any of the following without the Employee&#146;s written consent: (i) any material diminution or material adverse change in the Employee&#146;s position with the
Company, duties, responsibilities or the positions that report directly to him, (ii) a reduction by the Company in Employee&#146;s Base Salary, (iii) a material reduction in the aggregate program of employee benefits and perquisites to which
Employee is entitled, (iv) the conviction of, or plea of <I>nolo contendere</I> to, a felony by the Company, except where the Employee has knowingly participated in such felony, (v) the failure of the Company to maintain an effective Directors and
Officers indemnification insurance policy that includes the Employee under its coverage, or (vi) continued violations of the Company&#146;s employment-related obligations to Employee which are willful and deliberate after there has been delivered to
the Board a written demand from the Employee regarding such activities. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">8.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Right to Advice of
Counsel</I></B><I>.</I>&nbsp;&nbsp;&nbsp;&nbsp;The Employee acknowledges that he has consulted with counsel and is fully aware of his rights and obligations under this Agreement and of the tax consequences thereof. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">9.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Invention Assignment Agreement</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;As a condition of the Employee&#146;s employment with the
Company, the Employee shall execute the Company&#146;s standard form of non-disclosure and assignment and inventions agreement<B>.</B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="013" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2">10.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Successors.</I></B></FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2"></FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">(a)&nbsp;&nbsp;&nbsp;&nbsp;<I>Company&#146;s Successors</I>.&nbsp;&nbsp;&nbsp;&nbsp;Any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of
the Company&#146;s business or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. For all purposes under this Agreement, the term &#147;Company&#148; shall include any successor to the Company&#146;s business or assets which executes and delivers the assumption agreement described in
this subsection (a) or which becomes bound by the terms of this Agreement by operation of law. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">(b)&nbsp;&nbsp;&nbsp;&nbsp;<I> Employee&#146;s Successors</I>.&nbsp;&nbsp;&nbsp;&nbsp;Without the written consent of the Company, the Employee shall not assign or transfer this Agreement or any right or obligation under this Agreement to
any other person or entity except trusts or other legal entities which exist primarily for the benefit of the Employee or his family. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="013" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2">11.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Notice</I></B></FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2"><B><I>Clause.</I></B> </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">(a)&nbsp;&nbsp;&nbsp;&nbsp;<I>Manner</I>. Any notice hereby required or permitted to be given shall be sufficiently given if in writing and upon mailing by registered or certified mail, postage prepaid, to </FONT></DIV> <P></P>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px"><FONT FACE="Times New Roman" SIZE="2">either party at the address of such party listed under such party&#146;s signature or such
other address as shall have been designated by written notice by such party to the other party. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:40px; text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">(b)&nbsp;&nbsp;&nbsp;&nbsp;<I>Effectiveness</I>.&nbsp;&nbsp;&nbsp;&nbsp;Any notice or other communication required or permitted to be given under this Agreement will be deemed given on the day when delivered in person, or the third business
day after the day on which such notice was mailed in accordance with Section 11(a). </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">12.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Governing
Law.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall be governed by and construed in accordance with the internal substantive laws, but not the choice of law rules, of the state of Utah. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">13.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Severability</I></B><I>.&nbsp;&nbsp;&nbsp;&nbsp;</I>The invalidity or unenforceability of any provision of this Agreement, or any terms hereof, shall not
affect the validity or enforceability of any other provision or term of this Agreement. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">14.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Integration.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise expressly provided otherwise herein, this Agreement represents the entire agreement and understanding between the parties as to the subject
matter herein and supersedes all prior or contemporaneous agreements, whether written or oral. No waiver, alteration, or modification of any of the provisions of this Agreement shall be binding unless in writing and signed by duly authorized
representatives of the parties hereto. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">15.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxes</I></B><I>.</I>&nbsp;&nbsp;&nbsp;&nbsp;All
payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">16.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Arbitration</I></B><I>.</I>&nbsp;&nbsp;&nbsp;&nbsp;Except for proceedings seeking injunctive relief, including, without limitation, allegations of misappropriation of trade secrets, copyright or patent
infringements, or breach of any anti-competition provisions of this Agreement, any controversy or claim arising out of or in relation to this Agreement, or the breach thereof, shall be settled by arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association (&#147;<B><I>AAA</I></B>&#148;), and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Arbitration of this Agreement shall include
all claims, regardless of whether the dispute arises during the term of the Agreement, at the time of termination or thereafter. Either party may initiate the arbitration proceedings, for which the provision is herein made, by notifying the opposing
party, in writing, of its demand to arbitrate. In any such arbitration there shall be appointed one arbitrator who shall be selected in accordance with the AAA Commercial Arbitration Rules. The place of arbitration shall be Salt Lake City, Utah. The
parties agree that the award of the arbitrator shall be the sole and exclusive remedy between them regarding any claims, counterclaims, issues or accounting presented or plead to the arbitrator; that the arbitrator shall be the final judge of both
law and fact in arbitration of disputes arising out of or relating to this Agreement, including the interpretation of the terms of this Agreement. The parties further agree it shall be the sole and exclusive duty of the arbitrator to determine the
arbitrability of issues in dispute and that neither party shall have recourse to the court of such a determination. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">6 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">17.&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Counterparts</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;This Agreement
may be executed by either of the parties hereto in one or more counterparts, none of which need contain the signature of more than one party hereto, and each of which shall be deemed to be an original, and all of which together shall constitute a
single agreement. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by a duly
authorized officer, as of the day and year first above written. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="100%"> <DIV STYLE="margin-left:13px; text-indent:-13px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">SONIC INNOVATIONS, INC.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="100%"> <DIV STYLE="margin-left:13px; text-indent:-13px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">By: /s/&nbsp;&nbsp;&nbsp;&nbsp;A<SMALL>NDREW</SMALL> G. R<SMALL>AGUSKUS</SMALL></FONT></DIV> </TD>
</TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="100%"> <DIV STYLE="margin-left:13px; text-indent:-13px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">Name: Andrew G. Raguskus</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="100%"> <DIV STYLE="margin-left:13px; text-indent:-13px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">Title: President and CEO</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="100%"> <DIV STYLE="margin-left:13px; text-indent:-13px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">/s/&nbsp;&nbsp;&nbsp;&nbsp;K<SMALL>EVIN</SMALL> R<SMALL>YAN</SMALL></FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="100%"> <DIV STYLE="margin-left:13px; text-indent:-13px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">KEVIN RYAN</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">7 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>EXHIBIT A </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>SONIC INNOVATIONS, INC. (the &#147;Company&#148;) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>2000 STOCK PLAN (the &#147;Plan&#148;)
</B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>STOCK OPTION AGREEMENT (the &#147;Agreement&#148;) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2"><B>Optionee: </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Name: Kevin Ryan </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Employee Social Security #: ###-##-####<B></B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">You have been
granted an option (the &#147;Option&#148;) to purchase Common Stock of the Company (the &#147;Shares&#148;), subject to the terms and conditions of the Plan (which is incorporated herein by reference) and this Stock Option Agreement, as follows:
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="top" WIDTH="29%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Grant Number</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="19%"> <DIV><FONT FACE="Times New Roman" SIZE="2">798</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="26%"> <DIV><FONT FACE="Times New Roman" SIZE="2">Exercise&nbsp;Price&nbsp;per&nbsp;Share</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="25%"> <DIV><FONT FACE="Times New Roman" SIZE="2">$4.20</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="29%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Date of Grant</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="19%"> <DIV><FONT FACE="Times New Roman" SIZE="2">January&nbsp;2,&nbsp;2002</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="26%"> <DIV><FONT FACE="Times New Roman" SIZE="2">Total&nbsp;Exercise&nbsp;Price</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="25%"> <DIV><FONT FACE="Times New Roman" SIZE="2">$1,470,000.00</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="29%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Vesting&nbsp;Commencement&nbsp;Date</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="19%"> <DIV><FONT FACE="Times New Roman" SIZE="2">January 1, 2002</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="26%"> <DIV><FONT FACE="Times New Roman" SIZE="2">Type of Option</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="25%"> <DIV><FONT FACE="Times New Roman" SIZE="2"><U>X</U>&nbsp;Incentive&nbsp;Stock&nbsp;Option</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="29%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Option Shares Granted</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="19%"> <DIV><FONT FACE="Times New Roman" SIZE="2">350,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="25%"> <DIV><FONT FACE="Times New Roman" SIZE="2">__Nonstatutory Stock</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="29%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Expiration Date</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="19%"> <DIV><FONT FACE="Times New Roman" SIZE="2">January 2, 2012</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>Vesting Schedule: </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Option is granted pursuant to Section 4(a) of the Employment Agreement, dated as of January 10, 2002, by and between the Company and you (the &#147;Employment Agreement&#148;), and
may be exercised, in whole or in part, in accordance with the following schedule: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Your Shares will vest over four years with
1/48</FONT><FONT FACE="Times New Roman" SIZE="1"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><SUP></SUP> of the Shares vesting on each monthly anniversary of the &#147;Vesting Commencement Date.&#148; </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Notwithstanding the foregoing, if, on or within 12 months after a &#147;Change of Control&#148; (as defined below), your employment with the
Company or your status as Chairman of the Board terminates due to (i) a voluntary termination by you for &#147;Good Reason&#148; (as defined below), where the grounds for the Good Reason are not cured within 30 days following receipt of written
notice from you specifying the grounds, or (ii) an involuntary termination by the Company other than for &#147;Cause&#148; (as defined below), death or &#147;Disability&#148; (as defined below), then, subject to you executing and not revoking a
standard form of mutual release of claims with the Company, 100% of the Shares shall vest and become immediately exercisable. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">1 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">For purposes of this Agreement, the following terms shall have the following meanings:
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">A.<I>&nbsp;&nbsp;&nbsp;&nbsp;Cause.</I>&nbsp;&nbsp;&nbsp;&nbsp;&#147;Cause&#148; shall mean (i) any act of personal dishonesty
taken by you in connection with your responsibilities as an employee and intended to result in personal enrichment of yourself or your associates at the expense of the Company or its stockholders, (ii) committing an act of fraud against the Company,
(iii) conviction of, or plea of <I>nolo contrendre</I> to, a felony by you, (iv) continued violations of your employment-related obligations which are willful and deliberate after there has been delivered to you a written demand from the Board
regarding such activities or (v) willful refusal to carry out legally permissible instructions from the Board after you have been given written notice of a failure to carry out such instructions and a reasonable opportunity to correct the situation.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">B.<I>&nbsp;&nbsp;&nbsp;&nbsp;Change of Control</I>.&nbsp;&nbsp;&nbsp;&nbsp;A &#147;Change of Control&#148; shall mean (i) the
sale, lease, conveyance or other disposition of all or substantially all of the Company&#146;s assets as an entirety or substantially as an entirety to any &#147;person&#148; (as such term is used in Section 13(d) of the Securities Exchange Act of
1934, as amended), entity or group of persons acting in concert; (ii) any &#147;person&#148; becoming the &#147;beneficial owner&#148; (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50%
or more of the total voting power represented by the Company&#146;s then outstanding voting securities; (iii) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its controlling entity) at least 50% of the total voting
power represented by the voting securities of the Company or such surviving entity (or its controlling entity) outstanding immediately after such merger or consolidation; (iv) a change in the composition of the Board occurring within a two (2)-year
period, such that a majority of the then current Board members ceases to be comprised of individuals who either (a) have been Board members continuously since the beginning of such period, or (b) have been elected or nominated for election as Board
members during such period by at least a majority of the Board members described in clause (a) who were still in office at the time such election or nomination was approved by the Board. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">C.<I>&nbsp;&nbsp;&nbsp;&nbsp;Disability.</I>&nbsp;&nbsp;&nbsp;&nbsp;A &#147;Disability&#148; shall mean your inability to substantially perform your essential job functions as the result
of a physical or mental disability as determined by a qualified physician or incapacity for a period of 180 days, consecutive or otherwise, in any 360-day period. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">D.<I>&nbsp;&nbsp;&nbsp;&nbsp;Good Reason.</I>&nbsp;&nbsp;&nbsp;&nbsp;Resignation for &#147;Good Reason&#148; shall mean any of the following without your written consent: (i) any
material diminution or material adverse change in your position with the Company, duties, responsibilities or the positions that report directly to you, (ii) a reduction by the Company in your Base Salary (as defined in the Employment Agreement),
(iii) a material reduction in the aggregate program of employee benefits and perquisites to which you are entitled, (iv) the conviction of, or plea of <I>nolo contendere</I> to, a felony by the Company, except where you have knowingly participated
in such felony, (v) the failure of the Company to maintain an effective Directors and Officers indemnification insurance policy that includes you under its coverage, or (vi) continued violations of the Company&#146;s employment-related obligations
to you which are willful and deliberate after there has been delivered to the Board a written demand from you regarding such activities. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">2 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>Termination Period: </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT
FACE="Times New Roman" SIZE="2">This Option may be exercised for three months after Optionee ceases to be a Service Provider as defined in the Plan. Upon the death or Disability of the Optionee, this Option may be exercised for twelve months after
Optionee ceases to be a Service Provider. In no event shall this Option be exercised later than the Expiration Date. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>Exercise: </B></FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Option is exercisable by delivery of an &#147;Exercise Notice&#148; to the Company&#146;s CFO. The Exercise Notice shall be accompanied
by payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee: cash; check; consideration received by the Company under a cashless option exercise program; surrender
of Company common stock which in the case of shares acquired upon exercise of an option, have been owned by the Optionee for more than six (6) months on the date of surrender; or with the Plan Administrator&#146;s consent, delivery of
Optionee&#146;s promissory note in a form agreeable to the Plan Administrator. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>General: </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT
FACE="Times New Roman" SIZE="2">This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of the Plan and
this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">The Plan,
this Agreement and the Employment Agreement con&shy;sti&shy;tute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">In the event of a conflict between the terms and conditions of the Plan and the terms and
conditions of this Agreement, the terms and conditions of the Plan shall prevail; provided, however, that the definitions set forth under &#147;Vesting Schedule&#148; of this Agreement shall be used in lieu of any directly conflicting definition set
forth in the Plan. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">If designated as an Incentive Stock Option (&#147;ISO&#148;), this Option is intended to qualify as an
Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated as a Nonstatutory Stock Option
(&#147;NSO&#148;). </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">3 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>OPTIONEE ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT DOES NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER AND SHALL NOT INTERFERE WITH OPTIONEE&#146;S RIGHT OR THE COMPANY&#146;S RIGHT TO TERMINATE OPTIONEE&#146;S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. </B></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV>
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<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="43%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2"><SMALL>OPTIONEE</SMALL>:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="43%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2"><SMALL>SONIC</SMALL> <SMALL>INNOVATIONS</SMALL>, <SMALL>INC</SMALL>.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="3%"> <DIV><FONT FACE="Times New Roman" SIZE="2">By:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="43%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">/s/&nbsp;&nbsp;&nbsp;&nbsp;K<SMALL>EVIN</SMALL> R<SMALL>YAN&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR NOSHADE
COLOR="#000000" ALIGN="left"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="3%"> <DIV><FONT FACE="Times New Roman" SIZE="2">By:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="43%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"> /s/&nbsp;&nbsp;&nbsp;&nbsp;A<SMALL>NDREW</SMALL> G. R<SMALL>AGUSKUS&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR
NOSHADE COLOR="#000000" ALIGN="left"></TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="43%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Kevin Ryan</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="43%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Andrew Raguskus, President &amp; CEO</B></FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="43%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Print Name</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="43%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Name and Title</B></FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">4 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>EXHIBIT B </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>SONIC INNOVATIONS, INC. (the &#147;Company&#148;) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>2000 STOCK PLAN (the &#147;Plan&#148;)
</B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>STOCK OPTION AGREEMENT (the &#147;Agreement&#148;) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2"><B>Optionee: </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Name:&nbsp;&nbsp;&nbsp;&nbsp;Kevin Ryan </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Employee Social Security #:&nbsp;&nbsp;&nbsp;&nbsp;###-##-####<B></B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">You have been granted an option (the &#147;Option&#148;) to purchase Common Stock of the Company (the &#147;Shares&#148;), subject to the terms and conditions of the Plan (which is
incorporated herein by reference) and this Stock Option Agreement, as follows: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="top" WIDTH="28%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Grant Number</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="17%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">799</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="25%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">Exercise&nbsp;Price&nbsp;per&nbsp;Share</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="28%"> <DIV><FONT FACE="Times New Roman" SIZE="2">$4.20</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="28%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Date of Grant</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="17%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">January&nbsp;2,&nbsp;2002</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="25%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">Total Exercise Price</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="28%"> <DIV><FONT FACE="Times New Roman" SIZE="2">$735,000.00</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="28%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Vesting&nbsp;Commencement&nbsp;Date</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="17%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">January 1, 2002</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="25%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">Type of Option</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="28%"> <DIV><FONT FACE="Times New Roman" SIZE="2"><U>X</U> Incentive&nbsp;Stock&nbsp;Option</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="28%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Option Shares Granted</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="17%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">175,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="28%"> <DIV><FONT FACE="Times New Roman" SIZE="2">__&nbsp;Nonstatutory&nbsp;Stock&nbsp;Option</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="28%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Expiration Date</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="17%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">January 2, 2012</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>Vesting Schedule: </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Option is granted pursuant to Section 4(b) of the Employment Agreement, dated as of January 10, 2002, by and between the Company and you (the &#147;Employment Agreement&#148;), and
may be exercised, in whole or in part, in accordance with the following schedule: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Your Shares will vest over seven years, the
first 1/7 on the date of the first anniversary of the &#147;Vesting Commencement Date,&#148; with an additional 1/84</FONT><FONT FACE="Times New Roman" SIZE="1"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><SUP></SUP> of
the Shares vesting on each subsequent monthly anniversary of the Vesting Commencement Date. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Notwithstanding the foregoing, (x)
all of the then unvested portion of the Option shall become vested and exercisable immediately upon the earlier to occur of the following events, so long as such event occurs within two years of the Vesting Commencement Date: (i) such time as the
closing sales price of the Company&#146;s Common Stock on the Nasdaq National Market (or such other established stock exchange or national market system on which the Company&#146;s Common Stock is listed) exceeds $10.00 per share for 30 consecutive
trading days or (ii) the consummation of a Change of Control pursuant to which the holders of the Company&#146;s Common Stock receive consideration having a fair market value (as determined by the Board) of not less than $10.00 per </FONT></DIV>
<P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">1 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2">share and (y) if, on or within 12 months after January 1, 2002, your employment with the Company or your status as
Chairman of the Board terminates due to (i) a voluntary termination by you for &#147;Good Reason&#148; (as defined below), where the grounds for the Good Reason are not cured within 30 days following receipt of written notice from you specifying the
grounds, or (ii) an involuntary termination by the Company other than for &#147;Cause&#148; (as defined below), death or &#147;Disability&#148; (as defined below), then, subject to you executing and not revoking a standard form of mutual release of
claims with the Company, 1/7 of the Shares shall vest and become immediately exercisable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">For purposes of this Agreement, the
following terms shall have the following meanings: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">A.&nbsp;&nbsp;&nbsp;&nbsp;<I>Cause.</I>&nbsp;&nbsp;&nbsp;&nbsp;&#147;Cause&#148; shall mean (i) any act of personal dishonesty taken by you in connection with your responsibilities as an employee and intended to result in personal
enrichment of yourself or your associates at the expense of the Company or its stockholders, (ii) committing an act of fraud against the Company, (iii) conviction of, or plea of <I>nolo contrendre</I> to, a felony by you, (iv) continued violations
of your employment-related obligations which are willful and deliberate after there has been delivered to you a written demand from the Board regarding such activities or (v) willful refusal to carry out legally permissible instructions from the
Board after you have been given written notice of a failure to carry out such instructions and a reasonable opportunity to correct the situation. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT
FACE="Times New Roman" SIZE="2">B.&nbsp;&nbsp;&nbsp;&nbsp;<I>Change of Control</I>.&nbsp;&nbsp;&nbsp;&nbsp;A &#147;Change of Control&#148; shall mean (i) the sale, lease, conveyance or other disposition of all or substantially all of the
Company&#146;s assets as an entirety or substantially as an entirety to any &#147;person&#148; (as such term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended), entity or group of persons acting in concert; (ii) any
&#147;person&#148; becoming the &#147;beneficial owner&#148; (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company&#146;s then
outstanding voting securities; (iii) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its controlling entity) at least 50% of the total voting power represented by the voting securities of the Company or such
surviving entity (or its controlling entity) outstanding immediately after such merger or consolidation; (iv) a change in the composition of the Board occurring within a two (2)-year period, such that a majority of the then current Board members
ceases to be comprised of individuals who either (a) have been Board members continuously since the beginning of such period, or (b) have been elected or nominated for election as Board members during such period by at least a majority of the Board
members described in clause (a) who were still in office at the time such election or nomination was approved by the Board. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">C.&nbsp;&nbsp;&nbsp;&nbsp;<I>Disability.</I>&nbsp;&nbsp;&nbsp;&nbsp;A &#147;Disability&#148; shall mean your inability to substantially perform your essential job functions as the result of a physical or mental disability as determined by a
qualified physician or incapacity for a period of 180 days, consecutive or otherwise, in any 360-day period. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">D.&nbsp;&nbsp;&nbsp;&nbsp;<I>Good Reason.</I>&nbsp;&nbsp;&nbsp;&nbsp;Resignation for &#147;Good Reason&#148; shall mean any of the following without your written consent: (i) any material diminution or material adverse change in your
position with the Company, duties, responsibilities or the positions that report directly to you, (ii) a </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">2 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2">reduction by the Company in your Base Salary (as defined in the Employment Agreement), (iii) a material reduction in the
aggregate program of employee benefits and perquisites to which you are entitled, (iv) the conviction of, or plea of <I>nolo contendere</I> to, a felony by the Company, except where you have knowingly participated in such felony, (v) the failure of
the Company to maintain an effective Directors and Officers indemnification insurance policy that includes you under its coverage, or (vi) continued violations of the Company&#146;s employment-related obligations to you which are willful and
deliberate after there has been delivered to the Board a written demand from you regarding such activities. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>Termination Period: </B></FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Option may be exercised for three months after Optionee ceases to be a Service Provider as defined in the Plan. Upon the death or
Disability of the Optionee, this Option may be exercised for twelve months after Optionee ceases to be a Service Provider. In no event shall this Option be exercised later than the Expiration Date. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>Exercise: </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Option is exercisable by delivery
of an &#147;Exercise Notice&#148; to the Company&#146;s CFO. The Exercise Notice shall be accompanied by payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:
cash; check; consideration received by the Company under a cashless option exercise program; surrender of Company common stock which in the case of shares acquired upon exercise of an option, have been owned by the Optionee for more than six (6)
months on the date of surrender; or with the Plan Administrator&#146;s consent, delivery of Optionee&#146;s promissory note in a form agreeable to the Plan Administrator. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2"><B>OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>General:
</B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by the Optionee. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">The Plan, this Agreement and the Employment Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail; provided, however, </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">3 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2">that the definitions set forth under &#147;Vesting Schedule&#148; of this Agreement shall be used in lieu of any
directly conflicting definition set forth in the Plan. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">If designated as an Incentive Stock Option (&#147;ISO&#148;), this
Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated
as a Nonstatutory Stock Option (&#147;NSO&#148;). </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>OPTIONEE ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT DOES NOT CONSTITUTE AN EXPRESS OR IMPLIED
PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER AND SHALL NOT INTERFERE WITH OPTIONEE&#146;S RIGHT OR THE COMPANY&#146;S RIGHT TO TERMINATE OPTIONEE&#146;S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
</B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="top" WIDTH="50%"> <DIV STYLE="margin-left:12px; text-indent:-12px"><FONT FACE="Times New Roman" SIZE="2">OPTIONEE:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="50%"> <DIV><FONT FACE="Times New Roman" SIZE="2">SONIC&nbsp;INNOVATIONS,&nbsp;INC.</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">/s/&nbsp;&nbsp;&nbsp;&nbsp;K<SMALL>EVIN</SMALL> R<SMALL>YAN</SMALL></FONT></DIV> <HR NOSHADE COLOR="#000000" ALIGN="left"><DIV
ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Kevin Ryan</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">By:&nbsp;&nbsp;&nbsp;&nbsp; /s/&nbsp;&nbsp;&nbsp;&nbsp;A<SMALL>NDREW</SMALL> G.
R<SMALL>AGUSKUS&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR NOSHADE WIDTH="89%" COLOR="#000000" ALIGN="left"><DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="1"><B>Andrew&nbsp;Raguskus,&nbsp;President&nbsp;&amp;&nbsp;CEO</B></FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Print Name</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Name and Title</B></FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">4 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>EXHIBIT C </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>SONIC INNOVATIONS, INC. (the &#147;Company&#148;) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>2000 STOCK PLAN (the &#147;Plan&#148;)
</B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>STOCK OPTION AGREEMENT (the &#147;Agreement&#148;) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2"><B>Optionee: </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Name:&nbsp;&nbsp;&nbsp;&nbsp;Kevin Ryan </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Employee Social Security #:&nbsp;&nbsp;&nbsp;&nbsp;###-##-####<B></B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">You have been granted an option (the &#147;Option&#148;) to purchase Common Stock of the Company (the &#147;Shares&#148;), subject to the terms and conditions of the Plan (which is
incorporated herein by reference) and this Stock Option Agreement, as follows: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="top" WIDTH="28%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Grant Number</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="18%"> <DIV><FONT FACE="Times New Roman" SIZE="2">800</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="25%"> <DIV><FONT FACE="Times New Roman" SIZE="2">Exercise&nbsp;Price&nbsp;per&nbsp;Share</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="27%"> <DIV><FONT FACE="Times New Roman" SIZE="2">$4.20</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="28%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Date of Grant</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="18%"> <DIV><FONT FACE="Times New Roman" SIZE="2">January&nbsp;2,&nbsp;2002</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="25%"> <DIV><FONT FACE="Times New Roman" SIZE="2">Total Exercise Price</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="27%"> <DIV><FONT FACE="Times New Roman" SIZE="2">$735,000.00</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="28%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Vesting&nbsp;Commencement&nbsp;Date</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="18%"> <DIV><FONT FACE="Times New Roman" SIZE="2">January 1, 2002</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="25%"> <DIV><FONT FACE="Times New Roman" SIZE="2">Type of Option</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="27%"> <DIV><FONT FACE="Times New Roman" SIZE="2"><U>X</U>&nbsp;Incentive&nbsp;Stock&nbsp;Option</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="28%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Option Shares Granted</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="18%"> <DIV><FONT FACE="Times New Roman" SIZE="2">175,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="27%"> <DIV><FONT FACE="Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;</U>&nbsp;Nonstatutory&nbsp;Stock&nbsp;Option</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="28%"> <DIV STYLE="margin-left:13px; text-indent:-13px"><FONT FACE="Times New Roman" SIZE="2">Expiration Date</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="18%"> <DIV><FONT FACE="Times New Roman" SIZE="2">January 2, 2012</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>Vesting Schedule: </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Option is granted pursuant to Section 4(c) of the Employment Agreement, dated as of January 10, 2002, by and between the Company and you (the &#147;Employment Agreement&#148;), and
may be exercised, in whole or in part, in accordance with the following schedule: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Your Shares will vest over seven years, the
first 1/7 on the date of the first anniversary of the &#147;Vesting Commencement Date,&#148; with an additional 1/84</FONT><FONT FACE="Times New Roman" SIZE="1"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><SUP></SUP> of
the Shares vesting on each subsequent monthly anniversary of the Vesting Commencement Date. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">Notwithstanding the foregoing, (x)
all of the then unvested portion of the Option shall become vested and exercisable immediately upon the earlier to occur of the following events, so long as such event occurs within two years of the Vesting Commencement Date: (i) such time as the
closing sales price of the Company&#146;s Common Stock on the Nasdaq National Market (or such other established stock exchange or national market system on which the Company&#146;s Common Stock is listed) exceeds $14.00 per share for 30 consecutive
trading days or (ii) the consummation of a Change of Control pursuant to which the holders of the Company&#146;s Common Stock receive consideration having a fair market value (as determined by the Board) of not less than $14.00 per </FONT></DIV>
<P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">1 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2">share and (y) if, on or within 12 months after January 1, 2002, your employment with the Company or your status as
Chairman of the Board terminates due to (i) a voluntary termination by you for &#147;Good Reason&#148; (as defined below), where the grounds for the Good Reason are not cured within 30 days following receipt of written notice from you specifying the
grounds, or (ii) an involuntary termination by the Company other than for &#147;Cause&#148; (as defined below), death or &#147;Disability&#148; (as defined below), then, subject to you executing and not revoking a standard form of mutual release of
claims with the Company, 1/7 of the Shares shall vest and become immediately exercisable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">For purposes of this Agreement, the
following terms shall have the following meanings: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">A.&nbsp;&nbsp;&nbsp;&nbsp;<I>Cause.</I>&nbsp;&nbsp;&nbsp;&nbsp;&#147;Cause&#148; shall mean (i) any act of personal dishonesty taken by you in connection with your responsibilities as an employee and intended to result in personal
enrichment of yourself or your associates at the expense of the Company or its stockholders, (ii) committing an act of fraud against the Company, (iii) conviction of, or plea of <I>nolo contrendre</I> to, a felony by you, (iv) continued violations
of your employment-related obligations which are willful and deliberate after there has been delivered to you a written demand from the Board regarding such activities or (v) willful refusal to carry out legally permissible instructions from the
Board after you have been given written notice of a failure to carry out such instructions and a reasonable opportunity to correct the situation. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT
FACE="Times New Roman" SIZE="2">B.&nbsp;&nbsp;&nbsp;&nbsp;<I>Change of Control</I>.&nbsp;&nbsp;&nbsp;&nbsp;A &#147;Change of Control&#148; shall mean (i) the sale, lease, conveyance or other disposition of all or substantially all of the
Company&#146;s assets as an entirety or substantially as an entirety to any &#147;person&#148; (as such term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended), entity or group of persons acting in concert; (ii) any
&#147;person&#148; becoming the &#147;beneficial owner&#148; (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company&#146;s then
outstanding voting securities; (iii) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its controlling entity) at least 50% of the total voting power represented by the voting securities of the Company or such
surviving entity (or its controlling entity) outstanding immediately after such merger or consolidation; (iv) a change in the composition of the Board occurring within a two (2)-year period, such that a majority of the then current Board members
ceases to be comprised of individuals who either (a) have been Board members continuously since the beginning of such period, or (b) have been elected or nominated for election as Board members during such period by at least a majority of the Board
members described in clause (a) who were still in office at the time such election or nomination was approved by the Board. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">C.&nbsp;&nbsp;&nbsp;&nbsp;<I>Disability.</I>&nbsp;&nbsp;&nbsp;&nbsp;A &#147;Disability&#148; shall mean your inability to substantially perform your essential job functions as the result of a physical or mental disability as determined by a
qualified physician or incapacity for a period of 180 days, consecutive or otherwise, in any 360-day period. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">D.<I>&nbsp;&nbsp;&nbsp;&nbsp;Good Reason.</I>&nbsp;&nbsp;&nbsp;&nbsp;Resignation for &#147;Good Reason&#148; shall mean any of the following without your written consent: (i) any material diminution or material adverse change in your
position with the Company, duties, responsibilities or the positions that report directly to you, (ii) a </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">2 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2">reduction by the Company in your Base Salary (as defined in the Employment Agreement), (iii) a material reduction in the
aggregate program of employee benefits and perquisites to which you are entitled, (iv) the conviction of, or plea of <I>nolo contendere</I> to, a felony by the Company, except where you have knowingly participated in such felony, (v) the failure of
the Company to maintain an effective Directors and Officers indemnification insurance policy that includes you under its coverage, or (vi) continued violations of the Company&#146;s employment-related obligations to you which are willful and
deliberate after there has been delivered to the Board a written demand from you regarding such activities. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>Termination Period: </B></FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Option may be exercised for three months after Optionee ceases to be a Service Provider as defined in the Plan. Upon the death or
Disability of the Optionee, this Option may be exercised for twelve months after Optionee ceases to be a Service Provider. In no event shall this Option be exercised later than the Expiration Date. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>Exercise: </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Option is exercisable by delivery
of an &#147;Exercise Notice&#148; to the Company&#146;s CFO. The Exercise Notice shall be accompanied by payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:
cash; check; consideration received by the Company under a cashless option exercise program; surrender of Company common stock which in the case of shares acquired upon exercise of an option, have been owned by the Optionee for more than six (6)
months on the date of surrender; or with the Plan Administrator&#146;s consent, delivery of Optionee&#146;s promissory note in a form agreeable to the Plan Administrator. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2"><B>OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>General:
</B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by the Optionee. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">The Plan, this Agreement and the Employment Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman"
SIZE="2">In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail; provided, however, that the definitions set forth under
&#147;Vesting Schedule&#148; of this Agreement shall be used in lieu of any directly conflicting definition set forth in the Plan. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">3 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:27px"><FONT FACE="Times New Roman" SIZE="2">If designated as an Incentive Stock Option (&#147;ISO&#148;), this Option is intended to
qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated as a Nonstatutory
Stock Option (&#147;NSO&#148;). </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"><B>OPTIONEE ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT DOES NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER AND SHALL NOT INTERFERE WITH OPTIONEE&#146;S RIGHT OR THE COMPANY&#146;S RIGHT TO TERMINATE OPTIONEE&#146;S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. </B></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="bottom" WIDTH="50%"> <DIV><FONT FACE="Times New Roman" SIZE="1">OPTIONEE:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="50%"> <DIV><FONT FACE="Times New Roman" SIZE="1">SONIC&nbsp;INNOVATIONS,&nbsp;INC.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">/s/&nbsp;&nbsp;&nbsp;&nbsp;K<SMALL>EVIN</SMALL> R<SMALL>YAN</SMALL></FONT></DIV> <HR NOSHADE COLOR="#000000" ALIGN="left"><DIV
ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Kevin Ryan</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/&nbsp;&nbsp;&nbsp;&nbsp;A<SMALL>NDREW</SMALL> G.
R<SMALL>AGUSKUS&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR NOSHADE WIDTH="89%" COLOR="#000000" ALIGN="left"><DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="1"><B>&nbsp;&nbsp;&nbsp;&nbsp;Andrew&nbsp;Raguskus,&nbsp;President&nbsp;&amp;&nbsp;CEO</B></FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Print Name</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>&nbsp;&nbsp;&nbsp;&nbsp;Name and Title</B></FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">4 </FONT></DIV>

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