(b)    *Reimbursement ofExpenses*.    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 adoptedfrom time to time.   4. ***Options.***(a)    *First Option*.    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’s Common Stock (the“***First Option***”). 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’s continued employment with the Company, the FirstOption shall vest and become exercisable as to 1/48th of the shares underlying the First Option on each monthlyanniversary 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 stockoption agreement pertaining to the First Option is attached hereto as **Exhibit A**. **** (b)    *Second Option.***    **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’s CommonStock (the “***Second Option***”). 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’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 1/84th of the shares subject to the Second Option shall vest and become exercisable on each subsequent monthly anniversary of the Effective Date. Notwithstandingthe 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) suchtime as the closing sales price of the Company’s Common Stock on the Nasdaq National Market (or such other established stock exchange or national market system on which the Company’s Common Stock is listed) exceeds $10.00 per share for 30consecutive trading days or (ii) the consummation of a Change of Control pursuant to which the holders of the Company’s Common Stock receive consideration having a fair market value (as determined by the Board) of not less than $10.00 per shareand (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 isattached hereto as **Exhibit B**.  (c)    *ThirdOption.***    **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’s Common Stock (the “***ThirdOption***”). 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’s continued employment with the Company, the Third Option shall vest and becomeexercisable as to 1/7 of the shares subject to the Third Option on the first annual anniversary of the Effective Date, and an additional 1/84th 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 ThirdOption shall become vested and exercisable immediately upon the earlier to occur of the 2 
 following events, so long as such event occurs within two years of the Effective Date: (i) suchtime as the closing sales price of the Company’s Common Stock on the Nasdaq National Market (or such other established stock exchange or national market system on which the Company’s Common Stock is listed) exceeds $14.00 per share for 30consecutive trading days or (ii) the consummation of a Change of Control pursuant to which the holders of the Company’s Common Stock receive consideration having a fair market value (as determined by the Board) of not less than $14.00 per shareand (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 isattached hereto as **Exhibit C**.**** 5.    ***Other Benefits.***    TheEmployee 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’s right todecline 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. Ifnot 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 toits senior executives.   ***6.*** *********Change of Control and Termination.*** (a)    *Option Vesting in Connection with a Change of Control.*    If, on or within 12 months after a “Change ofControl” (as defined below), Employee’s employment with the Company or his status as Chairman of the Board terminates due to (i) a voluntary termination by the Employee for “Good Reason” (as defined below), where the grounds forthe 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 “Cause” (as defined below), death or“Disability” (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 immediatelyexercisable.  (b)    *Option Vesting in Connection with a Termination Occurring WithinOne Year.*    If, prior to the first annual anniversary of the Effective Date, Employee’s employment with the Company or his status as Chairman of the Board terminates due to (i) a voluntary termination by the Employeefor “Good Reason” (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 thanfor “Cause” (as defined below), death or “Disability” (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 SecondOption and 1/7 of the Shares subject to the Third Option shall vest and become immediately exercisable.  (c)    *Limitation on Payments.*    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 theEmployee’s employment (the “***Total Payments***”) 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 3 
 collectively referred to as the “***Excise Tax***”) imposed under Section4999 of the Internal Revenue Code of 1986, as amended (the “***Code***”), 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 theimposition 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 ExciseTax: 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 accountthat, in the opinion of tax counsel selected by the Company and reasonably acceptable to the Employee, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code, including by reason of Section280G(b)(4)(A) (or successor provisions as then in effect).  7.    ***Definitions.***    For purposes of this Agreement, the following terms shall have the following meanings:  (a)    *Cause.*    “Cause” shall mean (i) any act of personal dishonesty taken by the Employee in connection withhis 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*nolo contendere* to, a felony by the Employee, (iv) continued violations of the Employee’s employment-related obligations which are willful and deliberate after there has been delivered to the Employee a written demand from the Boardregarding 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 thesituation.  (b)    *Change of Control*.    A “Change ofControl” shall mean (i) the sale, lease, conveyance or other disposition of all or substantially all of the Company’s assets as an entirety or substantially as an entirety to any “person” (as such term is used in Section 13(d) ofthe Securities Exchange Act of 1934, as amended), entity or group of persons acting in concert; (ii) any “person” becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities ofthe Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities; (iii) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation thatwould 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) atleast 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 Boardoccurring 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 ornominated 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. 4 
 (c)    *Disability.*    A“Disability” shall mean the Employee’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.  (d)    *GoodReason.*    Resignation for “Good Reason” shall mean any of the following without the Employee’s written consent: (i) any material diminution or material adverse change in the Employee’s position with theCompany, duties, responsibilities or the positions that report directly to him, (ii) a reduction by the Company in Employee’s Base Salary, (iii) a material reduction in the aggregate program of employee benefits and perquisites to whichEmployee is entitled, (iv) the conviction of, or plea of *nolo contendere* 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 andOfficers indemnification insurance policy that includes the Employee under its coverage, or (vi) continued violations of the Company’s employment-related obligations to Employee which are willful and deliberate after there has been delivered tothe Board a written demand from the Employee regarding such activities.  8.    ***Right to Advice ofCounsel****.*    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.  9.    ***Invention Assignment Agreement***.    As a condition of the Employee’s employment with theCompany, the Employee shall execute the Company’s standard form of non-disclosure and assignment and inventions agreement**.**  10.    ***Successors.***  (a)    *Company’s Successors*.    Any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all ofthe Company’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 suchobligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business or assets which executes and delivers the assumption agreement described inthis subsection (a) or which becomes bound by the terms of this Agreement by operation of law.  (b)    *Employee’s Successors*.    Without the written consent of the Company, the Employee shall not assign or transfer this Agreement or any right or obligation under this Agreement toany other person or entity except trusts or other legal entities which exist primarily for the benefit of the Employee or his family.   11.    ***Notice*** ***Clause.*** (a)    *Manner*. 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 5 
 either party at the address of such party listed under such party’s signature or suchother address as shall have been designated by written notice by such party to the other party.  (b)    *Effectiveness*.    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 businessday after the day on which such notice was mailed in accordance with Section 11(a).  12.    ***GoverningLaw.***    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.  13.    ***Severability****.    *The invalidity or unenforceability of any provision of this Agreement, or any terms hereof, shall notaffect the validity or enforceability of any other provision or term of this Agreement.  14.    ***Integration.***    Except as otherwise expressly provided otherwise herein, this Agreement represents the entire agreement and understanding between the parties as to the subjectmatter 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 authorizedrepresentatives of the parties hereto.  15.    ***Taxes****.*    Allpayments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.  16.    ***Arbitration****.*    Except for proceedings seeking injunctive relief, including, without limitation, allegations of misappropriation of trade secrets, copyright or patentinfringements, 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 commercialarbitration rules of the American Arbitration Association (“***AAA***”), and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Arbitration of this Agreement shall includeall 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 opposingparty, 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. Theparties 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 bothlaw 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 thearbitrability of issues in dispute and that neither party shall have recourse to the court of such a determination. 6 
 17.    ***Counterparts***.    This Agreementmay 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 asingle agreement.  WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by a dulyauthorized officer, as of the day and year first above written.   SONIC INNOVATIONS, INC.By: /s/    ANDREW G. RAGUSKUSName: Andrew G. RaguskusTitle: President and CEO   /s/    KEVIN RYANKEVIN RYAN7 
 **EXHIBIT A** **SONIC INNOVATIONS, INC. (the “Company”)** **2000 STOCK PLAN (the “Plan”)** **STOCK OPTION AGREEMENT (the “Agreement”)** **Optionee:** Name: Kevin Ryan  Employee Social Security #: ###-##-####**** You have beengranted an option (the “Option”) to purchase Common Stock of the Company (the “Shares”), subject to the terms and conditions of the Plan (which is incorporated herein by reference) and this Stock Option Agreement, as follows: Grant Number  798  Exercise Price per Share  $4.20Date of Grant  January 2, 2002  Total Exercise Price  $1,470,000.00Vesting Commencement Date  January 1, 2002  Type of Option  X Incentive Stock OptionOption Shares Granted  350,000     __Nonstatutory StockExpiration Date  January 2, 2012       **Vesting Schedule:** 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 “Employment Agreement”), andmay be exercised, in whole or in part, in accordance with the following schedule:  Your Shares will vest over four years with1/48th of the Shares vesting on each monthly anniversary of the “Vesting Commencement Date.”  Notwithstanding the foregoing, if, on or within 12 months after a “Change of Control” (as defined below), your employment with theCompany or your status as Chairman of the Board terminates due to (i) a voluntary termination by you for “Good Reason” (as defined below), where the grounds for the Good Reason are not cured within 30 days following receipt of writtennotice from you specifying the grounds, or (ii) an involuntary termination by the Company other than for “Cause” (as defined below), death or “Disability” (as defined below), then, subject to you executing and not revoking astandard form of mutual release of claims with the Company, 100% of the Shares shall vest and become immediately exercisable. 1 
 For purposes of this Agreement, the following terms shall have the following meanings: A.*    Cause.*    “Cause” shall mean (i) any act of personal dishonestytaken 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 *nolo contrendre* 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 Boardregarding 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. B.*    Change of Control*.    A “Change of Control” shall mean (i) thesale, lease, conveyance or other disposition of all or substantially all of the Company’s assets as an entirety or substantially as an entirety to any “person” (as such term is used in Section 13(d) of the Securities Exchange Act of1934, as amended), entity or group of persons acting in concert; (ii) any “person” becoming the “beneficial owner” (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’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 votingsecurities 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 votingpower 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)-yearperiod, 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 Boardmembers 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.  C.*    Disability.*    A “Disability” shall mean your inability to substantially perform your essential job functions as the resultof 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.  D.*    Good Reason.*    Resignation for “Good Reason” shall mean any of the following without your written consent: (i) anymaterial 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 *nolo contendere* to, a felony by the Company, except where you have knowingly participatedin 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’s employment-related obligationsto you which are willful and deliberate after there has been delivered to the Board a written demand from you regarding such activities. 2 
 **Termination Period:** 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 afterOptionee ceases to be a Service Provider. In no event shall this Option be exercised later than the Expiration Date.  **Exercise:** This Option is exercisable by delivery of an “Exercise Notice” to the Company’s CFO. The Exercise Notice shall be accompaniedby 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; surrenderof 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’s consent, delivery ofOptionee’s promissory note in a form agreeable to the Plan Administrator.  **OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION ORDISPOSING OF THE SHARES.** **General:** 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 andthis Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.  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 withrespect to the subject matter hereof.  In the event of a conflict between the terms and conditions of the Plan and the terms andconditions of this Agreement, the terms and conditions of the Plan shall prevail; provided, however, that the definitions set forth under “Vesting Schedule” of this Agreement shall be used in lieu of any directly conflicting definition setforth in the Plan.  If designated as an Incentive Stock Option (“ISO”), this Option is intended to qualify as anIncentive 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(“NSO”). 3 
 **OPTIONEE ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT DOES NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUEDENGAGEMENT AS A SERVICE PROVIDER AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.** OPTIONEE:     SONICINNOVATIONS, INC.By: /s/    KEVIN RYAN           By:  /s/    ANDREW G. RAGUSKUS          **Kevin Ryan**     **Andrew Raguskus, President & CEO**  **Print Name**     **Name and Title**4 
 **EXHIBIT B** **SONIC INNOVATIONS, INC. (the “Company”)** **2000 STOCK PLAN (the “Plan”)** **STOCK OPTION AGREEMENT (the “Agreement”)** **Optionee:** Name:    Kevin Ryan  Employee Social Security #:    ###-##-####**** You have been granted an option (the “Option”) to purchase Common Stock of the Company (the “Shares”), subject to the terms and conditions of the Plan (which isincorporated herein by reference) and this Stock Option Agreement, as follows:  Grant Number 799 Exercise Price per Share $4.20Date of Grant January 2, 2002 Total Exercise Price $735,000.00Vesting Commencement Date January 1, 2002 Type of Option X Incentive Stock OptionOption Shares Granted 175,000   __ Nonstatutory Stock OptionExpiration Date January 2, 2012     **Vesting Schedule:** 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 “Employment Agreement”), andmay be exercised, in whole or in part, in accordance with the following schedule:  Your Shares will vest over seven years, thefirst 1/7 on the date of the first anniversary of the “Vesting Commencement Date,” with an additional 1/84th ofthe Shares vesting on each subsequent monthly anniversary of the Vesting Commencement Date.  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 theclosing sales price of the Company’s Common Stock on the Nasdaq National Market (or such other established stock exchange or national market system on which the Company’s Common Stock is listed) exceeds $10.00 per share for 30 consecutivetrading days or (ii) the consummation of a Change of Control pursuant to which the holders of the Company’s Common Stock receive consideration having a fair market value (as determined by the Board) of not less than $10.00 per 1 
 share and (y) if, on or within 12 months after January 1, 2002, your employment with the Company or your status asChairman of the Board terminates due to (i) a voluntary termination by you for “Good Reason” (as defined below), where the grounds for the Good Reason are not cured within 30 days following receipt of written notice from you specifying thegrounds, or (ii) an involuntary termination by the Company other than for “Cause” (as defined below), death or “Disability” (as defined below), then, subject to you executing and not revoking a standard form of mutual release ofclaims with the Company, 1/7 of the Shares shall vest and become immediately exercisable.  For purposes of this Agreement, thefollowing terms shall have the following meanings:  A.    *Cause.*    “Cause” shall mean (i) any act of personal dishonesty taken by you in connection with your responsibilities as an employee and intended to result in personalenrichment 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 *nolo contrendre* to, a felony by you, (iv) continued violationsof 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 theBoard after you have been given written notice of a failure to carry out such instructions and a reasonable opportunity to correct the situation.  B.    *Change of Control*.    A “Change of Control” shall mean (i) the sale, lease, conveyance or other disposition of all or substantially all of theCompany’s assets as an entirety or substantially as an entirety to any “person” (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“person” becoming the “beneficial owner” (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’s thenoutstanding 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 continuingto 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 suchsurviving 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 membersceases 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 Boardmembers described in clause (a) who were still in office at the time such election or nomination was approved by the Board.  C.    *Disability.*    A “Disability” shall mean your inability to substantially perform your essential job functions as the result of a physical or mental disability as determined by aqualified physician or incapacity for a period of 180 days, consecutive or otherwise, in any 360-day period.  D.    *Good Reason.*    Resignation for “Good Reason” shall mean any of the following without your written consent: (i) any material diminution or material adverse change in yourposition with the Company, duties, responsibilities or the positions that report directly to you, (ii) a 2 
 reduction by the Company in your Base Salary (as defined in the Employment Agreement), (iii) a material reduction in theaggregate program of employee benefits and perquisites to which you are entitled, (iv) the conviction of, or plea of *nolo contendere* to, a felony by the Company, except where you have knowingly participated in such felony, (v) the failure ofthe Company to maintain an effective Directors and Officers indemnification insurance policy that includes you under its coverage, or (vi) continued violations of the Company’s employment-related obligations to you which are willful anddeliberate after there has been delivered to the Board a written demand from you regarding such activities.  **Termination Period:** This Option may be exercised for three months after Optionee ceases to be a Service Provider as defined in the Plan. Upon the death orDisability 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.  **Exercise:** This Option is exercisable by deliveryof an “Exercise Notice” to the Company’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’s consent, delivery of Optionee’s promissory note in a form agreeable to the Plan Administrator.  **OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.** **General:** This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and maybe 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.  The Plan, this Agreement and the Employment Agreement constitute the entire agreement of the parties with respect to the subject matter hereof andsupersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof.  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, 3 
 that the definitions set forth under “Vesting Schedule” of this Agreement shall be used in lieu of anydirectly conflicting definition set forth in the Plan.  If designated as an Incentive Stock Option (“ISO”), thisOption 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 treatedas a Nonstatutory Stock Option (“NSO”).  **OPTIONEE ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT DOES NOT CONSTITUTE AN EXPRESS OR IMPLIEDPROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.** OPTIONEE:  SONIC INNOVATIONS, INC./s/    KEVIN RYAN**Kevin Ryan**  By:     /s/    ANDREW G.RAGUSKUS            **Andrew Raguskus, President & CEO****Print Name**  **Name and Title**4 
 **EXHIBIT C** **SONIC INNOVATIONS, INC. (the “Company”)** **2000 STOCK PLAN (the “Plan”)** **STOCK OPTION AGREEMENT (the “Agreement”)** **Optionee:** Name:    Kevin Ryan  Employee Social Security #:    ###-##-####**** You have been granted an option (the “Option”) to purchase Common Stock of the Company (the “Shares”), subject to the terms and conditions of the Plan (which isincorporated herein by reference) and this Stock Option Agreement, as follows:  Grant Number 800 Exercise Price per Share $4.20Date of Grant January 2, 2002 Total Exercise Price $735,000.00Vesting Commencement Date January 1, 2002 Type of Option X Incentive Stock OptionOption Shares Granted 175,000       Nonstatutory Stock OptionExpiration Date January 2, 2012     **Vesting Schedule:** 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 “Employment Agreement”), andmay be exercised, in whole or in part, in accordance with the following schedule:  Your Shares will vest over seven years, thefirst 1/7 on the date of the first anniversary of the “Vesting Commencement Date,” with an additional 1/84th ofthe Shares vesting on each subsequent monthly anniversary of the Vesting Commencement Date.  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 theclosing sales price of the Company’s Common Stock on the Nasdaq National Market (or such other established stock exchange or national market system on which the Company’s Common Stock is listed) exceeds $14.00 per share for 30 consecutivetrading days or (ii) the consummation of a Change of Control pursuant to which the holders of the Company’s Common Stock receive consideration having a fair market value (as determined by the Board) of not less than $14.00 per 1 
 share and (y) if, on or within 12 months after January 1, 2002, your employment with the Company or your status asChairman of the Board terminates due to (i) a voluntary termination by you for “Good Reason” (as defined below), where the grounds for the Good Reason are not cured within 30 days following receipt of written notice from you specifying thegrounds, or (ii) an involuntary termination by the Company other than for “Cause” (as defined below), death or “Disability” (as defined below), then, subject to you executing and not revoking a standard form of mutual release ofclaims with the Company, 1/7 of the Shares shall vest and become immediately exercisable.  For purposes of this Agreement, thefollowing terms shall have the following meanings:  A.    *Cause.*    “Cause” shall mean (i) any act of personal dishonesty taken by you in connection with your responsibilities as an employee and intended to result in personalenrichment 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 *nolo contrendre* to, a felony by you, (iv) continued violationsof 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 theBoard after you have been given written notice of a failure to carry out such instructions and a reasonable opportunity to correct the situation.  B.    *Change of Control*.    A “Change of Control” shall mean (i) the sale, lease, conveyance or other disposition of all or substantially all of theCompany’s assets as an entirety or substantially as an entirety to any “person” (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“person” becoming the “beneficial owner” (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’s thenoutstanding 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 continuingto 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 suchsurviving 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 membersceases 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 Boardmembers described in clause (a) who were still in office at the time such election or nomination was approved by the Board.  C.    *Disability.*    A “Disability” shall mean your inability to substantially perform your essential job functions as the result of a physical or mental disability as determined by aqualified physician or incapacity for a period of 180 days, consecutive or otherwise, in any 360-day period.  D.*    Good Reason.*    Resignation for “Good Reason” shall mean any of the following without your written consent: (i) any material diminution or material adverse change in yourposition with the Company, duties, responsibilities or the positions that report directly to you, (ii) a 2 
 reduction by the Company in your Base Salary (as defined in the Employment Agreement), (iii) a material reduction in theaggregate program of employee benefits and perquisites to which you are entitled, (iv) the conviction of, or plea of *nolo contendere* to, a felony by the Company, except where you have knowingly participated in such felony, (v) the failure ofthe Company to maintain an effective Directors and Officers indemnification insurance policy that includes you under its coverage, or (vi) continued violations of the Company’s employment-related obligations to you which are willful anddeliberate after there has been delivered to the Board a written demand from you regarding such activities.  **Termination Period:** This Option may be exercised for three months after Optionee ceases to be a Service Provider as defined in the Plan. Upon the death orDisability 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.  **Exercise:** This Option is exercisable by deliveryof an “Exercise Notice” to the Company’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’s consent, delivery of Optionee’s promissory note in a form agreeable to the Plan Administrator.  **OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.** **General:** This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and maybe 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.  The Plan, this Agreement and the Employment Agreement constitute the entire agreement of the parties with respect to the subject matter hereof andsupersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof.  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“Vesting Schedule” of this Agreement shall be used in lieu of any directly conflicting definition set forth in the Plan. 3 
 If designated as an Incentive Stock Option (“ISO”), this Option is intended toqualify 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 NonstatutoryStock Option (“NSO”).  **OPTIONEE ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT DOES NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUEDENGAGEMENT AS A SERVICE PROVIDER AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.** OPTIONEE:  SONIC INNOVATIONS, INC./s/    KEVIN RYAN**Kevin Ryan**  By:        /s/    ANDREW G.RAGUSKUS          **    Andrew Raguskus, President & CEO****Print Name**  **    Name and Title**4