ASSET PURCHASE AGREEMENT

Exhibit 2.1

A SSET P URCHASE A GREEMENT

BY AND AMONG

H EARING Life USA, I NC ., AS B UYER

AND

H EARING A SSOCIATES OF P ENSACOLA , P.A.

A S S ELLER

AND

S TEVE R. C HARLTON

AND

C AROL W HITCOMB P OWELL , P H D, CCCA

Effective as of

October 5, 2007

A SSET P URCHASE A GREEMENT

BY AND AMONG

H EARING Life USA, I NC .

AND

H EARING A SSOCIATES OF P ENSACOLA , P.A.

AND

S TEVE R. C HARLTON

AND

C AROL W HITCOMB P OWELL , P H D, CCCA

T ABLE OF C ONTENTS

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S CHEDULES AND E XHIBITS

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (the “ Agreement ”) is effective as of October 5, 2007 (the “ Effective Date ”), by and among HEARINGLife USA, Inc., a Delaware corporation (the “ Buyer ”), and Hearing Associates of Pensacola, P.A., a Florida professional association (the “ Company ” or the “ Seller ”), and Steve R. Charlton and Carol Whitcomb Powell, PhD, CCCCA, the shareholders of the Company (the “Shareholders”).

RECITALS

The Company desires to sell, and the Buyer desires to acquire from the Company, certain of the assets of the Company on the terms and subject to the conditions set forth in this Agreement.

AGREEMENT

NOW THEREFORE, in consideration of the mutual agreements, representations, warranties and covenants set forth below, the Buyer, the Seller and the Shareholders agree as follows:

DEFINITIONS & TERMS OF USE

Definitions . As used in this Agreement, the following terms have the following meanings:

“ Affiliate ” means, with respect to any Person, any member of such Person’s family, and all other Persons controlling, controlled by, or under common control with such Person.

“ Benefit Arrangement ” is defined as any benefit arrangement, obligation, custom, or practice, whether or not legally enforceable, to provide benefits, other than salary, as compensation for services rendered, to present or former directors, employees, agents, or independent contractors, other than any obligation, arrangement, custom or practice that is a Seller Plan, including, without limitation, employment agreements, consulting agreements, severance agreements, executive compensation arrangements, incentive programs or arrangements, sick leave, vacation pay, severance pay policies, salary continuation for disability, consulting, or other compensation arrangements, workers’ compensation, retirement, deferred compensation, bonus, stock option or purchase, hospitalization, medical insurance, life insurance, tuition reimbursement or scholarship programs, any plans subject to Section 125 of the Code, and any plans providing benefits or payments in the event of a change of control, change in ownership, or sale of a substantial portion (including all or substantially all) of the assets of any business or portion thereof, in each case with respect to any employee of the Company.

“Bill of Sale” means the Bill of Sale and Assignment in substantially the form attached hereto as Exhibit A .

“ Business ” means the Company’s business of the sale and support of hearing aids and related equipment and accessories.

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“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code §4980B.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Competitive Business ” means an entity that sells and supports hearing aids and related equipment and accessories within a thirty (30) mile radius of any of the Seller’s existing locations or, with respect to the Seller, any locations opened during either of the Shareholders’ employment with the Buyer and at which either Shareholder has rendered substantial services and with respect to any individual Shareholder, any locations opened while the Shareholder was employed by Buyer and at which the Shareholder has rendered substantial services.

“ Contract ” means any agreement, contract, lease, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding.

“Employment Agreement” means the Employment Agreement in substantially the form attached hereto as Exhibit B , which the Shareholders will enter into with the Buyer .

“ Encumbrance ” means any charge, claim, debt, community property interest, condition, equitable interest, Lien, option, pledge, security interest, personal property lease (whether operational or financial), mortgage, right of way, easement, encroachment, servitude, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.

“ ERISA ” is defined as the Employee Retirement Income Security Act of 1974, as amended, and all regulations and rules issued thereunder, or any successor law.

“ ERISA Affiliate ” is defined as any Person that, together with the Company, would be or was at any time treated as a single employer under Section 414 of the Code or Section 4001 of ERISA and any general partnership of which the Company is or has been a general partner.

“ Governmental Body ” means any (a) federal, state, local, municipal, foreign, or other government authority or subdivision thereof; (b) governmental or quasi-governmental authority of any nature; or (c) other body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

“ Guaranty ” mean the Guaranty in substantially the form attached hereto as Exhibit E , which Sonic Innovations, Inc. will execute for the benefit of the Seller.

“ Intellectual Property ” means all forms of intellectual property rights and protections throughout the world, whether currently existing or hereafter developed or acquired and whether now known or hereafter recognized, and whether arising under United States or foreign common or statutory law, granted by contract, license, or otherwise and including, without limitation, all (a) Internet domain names, trademarks, service marks, trade names, trade dress, slogans, logos, together with all adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith; and (b) trade secrets, know-how, technical information,

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customer and supplier lists, pricing and cost information, and business and marketing plans and proposals.

“ Knowledge ” means actual knowledge assuming reasonable investigation and due inquiry. Knowledge with respect to a corporation is deemed to be the actual knowledge of any of its officers or directors.

“Leased Premises” means the premises leased by the Company, as more particularly described in Schedule 2.19 .

“ Legal Requirement ” means any federal, state, local, municipal, foreign, international, multi-national, or other administrative Order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty in effect on the date of this Agreement.

“ Liability ” means, with respect to any Person, any liability, payable or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be reflected or disclosed on the financial statements of such Person or the notes thereto.

“ Licenses ” means any license, sublicense or other Contract by which the Company has granted any rights to a third party to use any Intellectual Property or any license, sublicense or other contract by which a third party has granted rights to the Company to use any Intellectual Property.

“ Lien ” means any mortgage, pledge, lien, encumbrance, charge, or other security interest other than (a) liens for Taxes not yet due and payable, (b) purchase money liens and liens securing rental payments under capital lease arrangements, and (c) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.

“ Order ” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.

“ Ordinary Course of Business ” means an action taken by a Person if:

(a) such action is consistent with the standard course of conduct of a Person operating in a similar industry or business in the ordinary course of the normal day-to-day, month-to-month or year-to-year operations of such Person; and

(b) such action is not required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority).

“ Person ” means any individual, partnership, limited liability company, corporation, association, joint stock company, trust, joint venture, unincorporated organization, other legal entity or governmental entity or any department, agency or political subdivision thereof.

“ Proceeding ” means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought,

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conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

“ Promissory Note ” means the Promissory Note in substantially the form attached hereto as Exhibit C .

“ Real Property ” means all of the leasehold interests in real estate and other real property interests that are owned or leased by the Company and used or useful in the conduct of the Business.

“ Security Agreement ” means the Security Agreement in substantially the form attached hereto as Exhibit D , pursuant to which the Buyer will grant a security interest in the Assets to the Seller.

“ Seller Benefit Arrangement ” is defined as any Benefit Arrangement sponsored or maintained by the Company or with respect to which the Company or any ERISA Affiliate has or may have any Liability as of the Effective Date, in each case with respect to any employee of the Company.

“ Seller Plan ” is defined as, as of the Effective Date, any Employee Benefit Plan (as defined in Section 3(3) of ERISA) for which the Company is the “plan sponsor” (as defined in Section 3(16)(B) of ERISA) or any Employee Benefit Plan currently or formerly maintained by the Company or to which the Company or any ERISA Affiliate is obligated to make payments (including any Multiemployer Plan), in each case with respect to any employee of the Company.

“ Tax ” means any tax or similar governmental charge, duty, impost, license or registration fee, custom duty or levy (including without limitation income taxes, franchise taxes, capital stock taxes, license taxes, profit taxes, transfer taxes or fees, registration taxes, sales taxes, use taxes, gross receipts taxes, value added taxes, employment taxes, excise taxes, ad valorem taxes, property taxes, environmental taxes (including taxes under Code Section 59A), real property taxes, personal property taxes, withholding taxes, payroll taxes, employment taxes, severances taxes, stamp taxes, occupation taxes, premium taxes, social security (or similar) taxes, unemployment taxes, disability taxes, alternative or add-on minimum taxes, estimated taxes or windfall profit taxes or other tax of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner) together with any related penalties, fines, additions to tax or interest, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person, imposed by any Governmental Body.

“ Tax Return ” means any return (including any information return), report, statement, schedule, attachment, notice, form, estimate, claim for refund, or declaration relating to Taxes required to be filed with any Governmental Body in connection with the determination, assessment, collection or payment of any Tax, including any amendment thereof.

“ Threatened ” means any demand or statement that has been made (orally or in writing) or any notice that has been given (orally or in writing), or any other event that has occurred or any other circumstances that exist, that would lead a prudent Person to conclude that a claim, Proceeding, dispute, action, or other matter is likely to be asserted, commenced, taken, or otherwise pursued in the future.

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Certain Other Definitions . The following terms are defined in the Sections of the Agreement indicated:

ARTICLE I.

T HE B ASIC F RAMEWORK OF THE T RANSACTION

1.1 Sale and Transfer of Assets . Subject to the terms and conditions of this Agreement, at the Effective Date, the Company will sell, assign, grant, transfer and deliver (or will cause to be sold, assigned, granted, transferred or delivered) to the Buyer or any permitted successor or assign of the Buyer, and the Buyer or any permitted successor or assign of the Buyer will purchase and accept from the Company as of the Effective Date, free and clear of all Encumbrances (except as may otherwise be provided for herein), all of the Company’s right, title and interest in and those assets owned and used by the Company in the Business as described herein (collectively, the “ Assets ”). The Assets shall include the following:

(a) all inventory, a list of which is attached hereto as Schedule 1.1(a) (the “ Inventory ”);

(b) all tangible personal property, including that listed on Schedule 1.1(b );

(c) all fixed assets including, furniture, equipment, computer hardware and assignable software and similar types of equipment, including those listed on Schedule 1.1(c );

(d) collectible accounts receivable in the amount of $25,000;

(e) the Company’s Contracts listed on Schedule 1.1(e) , the “ Assumed Contracts ”);

(f) to the extent assignable, all permits and licenses currently held by the Company in connection with the Assets or the Company and used in the Business as listed on Schedule 1.1(f) ;

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(g) to the extent assignable, all Intellectual Property that is owned, used or licensed by the Company and in each case is material to, necessary for or used in the conduct of the Business as conducted or currently proposed to be conducted as listed on Schedule 1.1(g) ;

(h) all claims of the Company against third parties relating to the Assets, whether known or unknown, contingent or noncontingent, including all such claims listed in Schedule 1.1(h );

(i) to the extent assignable, the Company’s right to the Leased Premises;

(j) all rights of the Company’s claims for refunds and rights to offset in respect thereof, relating to the Assets;

(k) all of the Company’s information and data related to the Assets, including, without limitation, all materials and files, sales and marketing materials, patient files, lists of clients and potential clients, lists of suppliers and potential suppliers, and warranties and warranty information, subject to the confidentiality requirements of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and applicable state law related to patient files, records or protected information;

(l) all books and records relating to the Assets or the Business, employee, consultant and other personnel records and executed copies of the Assumed Contracts (Seller shall retain or continue to have access to books and records necessary to prepare its tax returns);

(m) the Company’s right to the name “Hearing Associates of Pensacola,” and variations of the foregoing;

(n) to the extent assignable, all of the Company’s telephone and facsimile numbers, domain names and Internet addresses, including without limitation, those items listed on Schedule 1.1(n) ; and

(o) all other assets not referred to above that are listed or reflected on the Financial Statements and not identified as Excluded Assets.

1.2 Excluded Assets . Notwithstanding the foregoing, the assets, properties, rights and interests of the Company listed on Schedule 1.2 attached hereto, shall be retained by the Company (the “ Excluded Assets ”).

1.3 Assumed Liabilities . Except as expressly set forth in this Section 1.3, the Buyer assumes no Liabilities of the Company, whether such Liabilities are or may be direct or indirect, absolute or contingent, or relating to the Business. On the terms and subject to the conditions hereof on the Effective Date, Buyer shall assume and agree to pay, perform and discharge, as and when due, the following (all of which are referred to collectively as “ Assumed Liabilities ”).

(a) Lease obligations for the Leased Premises;

(b) Lease obligations for a photocopy machine;

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(c) All obligations, responsibilities and Liabilities relating to or arising out of or incurred in connection with performance after the Effective Date of the Assumed Contracts, excluding Liabilities attributable to any failure by the Company to comply with the terms thereof;

(d) Any other Liabilities as set forth on Schedule 1.3(d) ; provided that the Buyer will not assume and will not be liable for, and the Company will retain and will remain solely liable for and obligated to discharge, all of the debts, obligations, and other Liabilities of any nature whatsoever arising from such Liabilities prior to the Effective Date;

(e) Seller’s obligations to Seller’s employees for “paid time off” accrued but unused as of the Effective Date, but only to the extent such paid time off is identified with respect to particular employees and set forth on Schedule 1.3(e); and

(f) Seller’s obligation to provide services (but not parts or materials) for office visits during the initial warranty period of manufacturers’ warranties for hearing aids sold by Seller prior to the Effective Date.

Except as set forth in (a), (b), (c), (d), (e), and (f) above, the Buyer will not assume and will not be liable for, and the Company will retain and will remain solely liable for and obligated to discharge, all of the debts, Contracts, and other Liabilities of any nature whatsoever of the Company or relating to (i) the ownership or operation of the Company at any time, (ii) the ownership or operation of the Assets, prior to the Effective Date, and (iii) the Assumed Contracts, prior to the Effective Date, whether known or unknown, accrued or not accrued, fixed or contingent (collectively, the “ Excluded Liabilities ”).

1.4 Purchase Price, Terms of Payment, and Closing Deliveries .

(a) The purchase price for the Assets will be paid by the Buyer by delivery to the Company of one million four hundred thousand dollars ($1,400,000) (the “ Purchase Price ”) in accordance with the following payment schedule:

(i) Seven hundred thousand dollars ($700,000) will be paid at the Effective Date in immediately available funds; and

(ii) the remaining $700,000 will be paid to the Company in two equal payments of $350,000 each to be paid on the first and second anniversaries of the Effective Date. The obligation to make these payments will be evidenced by the Promissory Note, which has been delivered concurrently with the execution of this Agreement. All payments due under the Promissory Note are subordinated to all of the Buyer’s loans and other obligations to Silicon Valley Bank (“Bank”) existing now or later. Neither this paragraph nor the payment terms of the Promissory Note may be amended or modified without the prior written consent of the Bank.

(b) The Seller will deliver the Bill of Sale concurrently with the execution of this Agreement.

(c) The Buyer and the Shareholders will execute the Employment Agreement concurrently with the execution of this Agreement

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(d) The Buyer will deliver the Security Agreement concurrently with the execution of this Agreement.

(e) Sonic Innovations will deliver the Guaranty concurrently with the execution of this Agreement.

1.5 Allocation . The Purchase Price will be allocated as mutually agreed by the Company and by the Buyer among the Assets for purposes of complying with the requirements of Section 1060 of the Code and the regulations thereunder (and any similar provision of state, local or foreign law, as appropriate). The Buyer and the Company shall report, act and file Tax Returns (including, but not limited to, Internal Revenue Service Form 8594) in all respects and for all purposes consistent with such allocation of the Purchase Price. If any Tax authority challenges such allocation, the party receiving notice of such challenge will give the other party prompt written notice thereof and the parties will cooperate in order to preserve the effectiveness of such allocation. The Company, timely and properly, shall prepare, execute, file and deliver all such documents, forms and other information as the Buyer may reasonably request to prepare such allocation. Any required appraisals or valuations will be paid for by the Buyer. Neither the Buyer nor any Seller shall take any position (whether in audits, Tax Returns or otherwise), which is inconsistent with such allocation unless required to do so by applicable law. Notwithstanding anything contained herein to the contrary, the Buyer and the Seller agree that in the event the allocation of the Purchase Price to the covenant not to compete set forth in Section 5.7 exceeds five (5%) of the Purchase Price or $70,000 (the “Allocation Cap”), the Buyer will pay to the Seller an additional amount equal to twenty percent (20%) of the amount the allocation exceeds the Allocation Cap (the “Allocation Payment”). The Buyer will also pay the Seller an additional amount equal to fifteen percent (15%) of the Allocation Payment. Such payments will be made within fifteen (15) days of the date the allocation is mutually agreed upon by the Buyer and the Seller.

1.6 No Appraisal Rights. No shareholder of the Company has exercised, or notified the Company of his, her or its intent to exercise, any dissenter’s rights pursuant to applicable law, including the right to receive payment in connection with the sale of all or substantially all of the Company’s Assets.

ARTICLE II.

R EPRESENTATIONS AND W ARRANTIES OF THE C OMPANY AND T HE S HAREHOLDERS

Each of the Company and Shareholders, jointly and severally, represents and warrants for the benefit of the Buyer as follows:

2.1 Organization and Good Standing; Ownership .

(a) The Company is a professional association duly organized, validly existing, and in good standing under the laws of the State of Florida and has (a) the corporate power to carry on the Business as it is now being conducted and (b) all licenses, permits and other authorizations necessary to own the Assets. The Company is not registered as a foreign corporation in any jurisdiction. The Company has no subsidiaries.

(b) The authorized capital stock of the Company consists of 100 shares of Common Stock, with $1.00 par value. 100 shares of Common Stock are issued and outstanding. Schedule 2.1(b) sets forth a complete and accurate list of the shareholders and

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each shareholder’s ownership interest in the Company as of the Effective Date. These shareholders are the only shareholders of the Company and will be, as of the Effective Date, the record and beneficial owners and holders of the shares owned by each of them as set forth in the Schedule. Each shareholder has the exclusive right to vote his or her shares of capital stock of the Company. There are no Contracts relating to the issuance, sale or transfer of any capital stock or other securities (including any options, warrants, convertible securities or other right to purchase or acquire capital stock) of the Company. None of the capital stock of the Company was issued in violation of the Securities Act of 1933, as amended, or any other Legal Requirement.

2.2 Tax Matters . The Company has timely filed all Tax Returns that it was required to file. All such Tax Returns were correct and complete in all respects and were prepared in substantial compliance with all applicable laws and regulations. All Taxes owed by the Company (whether or not shown or required to be shown on any Tax Return) have been paid. The Company is not currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Liens on any of the assets of the Company that arose in connection with any failure (or alleged failure) to pay any Tax. No Shareholder or director or officer (or employee responsible for Tax matters) of the Company expects any authority to assess any additional Taxes for any period for which Tax Returns have been filed. There are no pending or Threatened Proceedings concerning the Company’s Liability with respect to any Taxes related to the Business and there are no outstanding waivers or extensions of statutes of limitations with respect to the assessment of Taxes.

2.3 Legal Proceedings, Etc. Except as set forth in Schedule 2.3 , there is no litigation, Proceeding, or governmental investigation pending or, to the best of the Company’s and the Shareholders’ Knowledge, Threatened relating to any of the Assets or the Business, or the transactions contemplated by this Agreement. The Company is not a party to or subject to the provisions of any judicial decree or judgment or any Order of any Governmental Body relating to any of the Assets, the Business, or the transactions contemplated by this Agreement.

2.4 Intellectual Property .

(a) With respect to each item of Intellectual Property listed on Schedule 1.1(g),: (i) the Company either owns and possesses all right, title, and interest in and to, or has the right to use, the item, free and clear of any Encumbrance or other restriction; (ii) the item is not subject to any outstanding injunction, judgment, Order, decree, ruling, or charge; and (iii) no Proceeding is pending or, to the best of the Company’s and the Shareholders’ Knowledge, Threatened which challenges the legality, validity, enforceability, use, or ownership of the item.

(b) Each item of the Intellectual Property listed on Schedule 1.1(g) will be owned or available for use by the Buyer on identical terms and conditions immediately subsequent to the Effective Date without any action on the part of the Buyer and without the payment by the Buyer of any transfer or other fee resulting from this transaction. Except as set forth in attached Schedule 2.4(b) , there