**Exhibit 10.1****ASSET PURCHASE AGREEMENT**This Asset Purchase Agreement (the “Agreement”) is made and entered into as of this 16th dayof June, 2005 (the “Effective Date”), by and between Sonus-USA, Inc., a Washington corporation(“Buyer”) and HearUSA, Inc., a Delaware corporation (“Seller”).**RECITALS****A.** Seller owns and operates certain retail hearing aid sales and service outlets in the Statesof Minnesota, Wisconsin, and Washington at the locations (the “Premises”) listed on theattached **Exhibit A**(the “Business”). **B.** Seller desires to sell and Buyer desires to purchase certain assets of Seller used in theBusiness in accordance with the terms and conditions contained herein.**AGREEMENTS****1.** **Assets to be Purchased.** Subject to the terms and the conditions set forth in thisAgreement, on the Closing Date, Seller shall sell, transfer and assign to Buyer and Buyeragrees to purchase, receive and accept from Seller, all of Seller’s right, title and interestin and to the following assets (the “Assets”): (a) All of the customer files, customer histories, and customer records associatedwith the Business (collectively, the “Customer Records”);  (b) The personal property listed on the attached **Exhibit B**(the “PersonalProperty”);  (c) All of the goodwill and going concern value associated with the Business (the“Goodwill”);  (d) To the extent transferable, Seller’s rights, if any, to any leaseholdimprovements located at the Premises (the “Leasehold Improvements”);  (e) All the rights and interests of Seller in, or pursuant to, the AssumedContracts (as herein defined) and leasehold interests in the Premises and leasestherefore set forth on **Exhibit E**(“Leases”); and  (f) To the extent transferable, all licenses and permits held by Seller relating tothe Business or operations of the Premises.**2.** **excluded assets.**Notwithstanding anything contained in Section 1, Buyer isnot purchasing Seller’s cash, bank deposits, promissory notes, certificates of deposit, andmarketable securities; Seller’s accounts receivable arising from and accounts payable incurredfor, the operation of the Business for the period prior to the Closing Date; any of Seller’sright, title and interest in and to any patents, copyrights, trademarks, know-how, tradesecrets, confidential or proprietary information, technical information, internet websites,service marks, trade names including the trade name “HearUSA” or “HEARx” and any variationthereof, licenses computer software, internet domain names, permits and other intangibleproperty rights and interests applied for, issued to or owned by Seller, whether registered orunregistered, or under which Seller is licensed; or any other assets owned by Seller that arenot used solely in connection with the Business. Buyer acknowledges that Seller shall retainall rights to use the trade names “HearUSA” and “HEARx”, and any variations thereof, and anyrelated service marks and trademarks and agrees that Buyer shall not use such trade names,service marks or trademarks following the Closing Date. **3.** **Purchase Price.**As consideration for its purchase of the Assets, Buyer shallpay to Seller a total price of **One Million One Hundred Thousand Dollars ($1,100,000)**, whichamount shall be subject to adjustment under certain circumstances as set forth herein (the“Purchase Price”). Subject to Section 12(e), Buyer shall pay the Purchase Price at theClosing by wire transfer of immediately available
 

 
funds in accordance with the written instructions of Seller. The Purchase Price shall beallocated among the Assets as follows: (a) For the Customer Records, $108,000;  (b) For the Personal Property, $120,000;  (c) For the Leasehold Improvements, $10,000;  (d) For the Assumed Contracts and licenses and permits, $1.00  (e) For the Restrictive Covenant set forth in Section 12(b), $200,000; and  (f) For the Seller’s Goodwill $661,999.The parties agree to report this transaction for federal and state tax purposes in accordance withthe allocations set forth in this Section 3.**4.** **prorations.** The income and expenses attributable to the operation of theBusiness before the Effective Time (as defined below in Section 13) shall be for the accountof Seller, and the income and expenses attributable to the operation of the Business on andafter the Effective Time shall be for the account of Buyer. All prorations of income andexpense between Seller and Buyer shall be made in accordance with generally acceptedaccounting principles as of the Effective Time, the proration to be estimated (such estimateto be provided to Buyer by Seller in writing five (5) days prior to the Closing Date) andpaid, insofar as feasible, on the Closing Date, with a final settlement ninety (90) days afterthe Closing Date. For purposes of calculating such prorations of income and expenses, incomeand expenses for products delivered before the Effective Time shall be for the account ofSeller and income and expenses for products delivered after the Effective Time (whetherordered before or after the Effective Time) shall be for the account of Buyer. **5.** **accounts receivable.**Seller’s accounts receivable arising or accruing beforethe Effective Time shall remain the property of Seller, and Buyer shall not acquire any rightor interest therein. Notwithstanding the foregoing, Seller’s accounts receivable shall notinclude any customer accounts where product has been ordered by a customer of Seller but hasnot been delivered as of the Effective Time. For example, Seller’s accounts receivable shallnot include hearing aid sales where a customer has made a down payment, but the hearing aidhas not been delivered as of the Effective Time. For a period of ninety (90) days afterClosing Date (the “Collection Period”), Buyer and Seller shall cooperate with each other anduse their respective commercially reasonable efforts to collect the account receivables of theBusiness in the ordinary course of business. All amounts collected from the Business’saccount debtors shall be applied to the oldest account first, unless such account debtordisputes an older account and designates the payment to a newer account. Any amounts relatingto the accounts receivable of Seller that are paid directly to Seller shall be retained bySeller. Buyer shall not discount, adjust or otherwise compromise any account receivable ofSeller and Buyer shall refer any disputed account receivable to Seller. Within ten (10) daysafter the end of each month, Buyer shall deliver to Seller a report showing account receivablecollections for the prior month and Buyer shall make a payment to Seller equal to the amountof all such collections. At the end of the Collection Period, any remaining accountsreceivable of Seller shall be returned to Seller for collection. **6.** **Representations and Warranties of Seller.**Seller hereby represents andwarrants to Buyer as follows: (a) Seller is a corporation duly organized, validly existing and in good standingunder the laws of the State of Delaware and has full corporate power and authority toenter into and perform its obligations under this Agreement. Seller is duly qualifiedto transact business as a foreign corporation and is in good standing in the states ofMinnesota, Wisconsin and Washington. All documents executed and to be executed bySeller and delivered in accordance with the terms of
 

 
  this Agreement have been duly authorized and are and will be valid obligations ofSeller, enforceable in accordance with their respective terms. (b) Seller owns the Assets to be sold hereunder and has good, valid and marketabletitle to such Assets free and clear of all liens, encumbrances, claims, third-partyinterests and charges whatsoever, except for (i) the security interests set forth on**Exhibit C**. Except as set forth on **Exhibit C**, Seller has the free and unrestrictedright to sell, transfer and assign such Assets in accordance with the terms of thisAgreement without the consent or approval of any other person, except for the AssumedContracts which require third-party consent for assignment to Buyer. (c) Except as set forth in **Exhibit D**, this Agreement, the transactions contemplatedhereby and the performance hereof by Seller does not and will not result in theviolation of any contract, undertaking or agreement to which Seller is a party or bywhich the Assets or the Business is bound. (d) There is no litigation or proceeding pending or, to Seller’s knowledge,threatened against or relating to Seller, the Assets or the Business, nor does Sellerknow of, or have any reasonable grounds to know of, any basis for any such action or ofany governmental investigation relating to Seller, the Assets or the Business. (e) No third parties have or have been granted any rights to inspect or use theCustomer Records (other than the customers themselves). (f) **Exhibit E**contains an accurate and complete list of all agreements, contracts,Leases and commitments to which the Seller is a party which are material to thefinancial condition or operations of the Business (the “Contracts”). By way ofexample, and not limitation, **Exhibit E**shall list all leases and payer contracts andagreements including those for private insurance, workers’ compensation, state medical,unions, or employer contracts (“Payer Agreements”). Except as expressly disclosed in**Exhibit E**, (i) each of the Contracts is freely assignable without the consent of anythird party; (ii) Seller has performed all material obligations required to beperformed by Seller to date under each such Contract; (iii) to Seller’s knowledge,neither Seller nor any other party is in default under any Contract; (iv) no event hasoccurred which, after the giving of notice or the lapse of time or otherwise, wouldconstitute a default, or result in a breach by Seller or, to Seller’s knowledge, anyother party, under any Contract; (v) each Contract is considered valid and binding onthe parties to it in accordance with its respective terms; and (vi) each Contract isterminable according to its terms without penalty, cost of liability (whether, express,implied or by operation of law) on notice not exceeding 30 calendar days. True,complete and correct copies of all Contracts referred to in the exhibits have beendelivered to Buyer; there are no amendments to or modifications of, or agreements ofthe parties relating to, any such Contracts which have not been delivered to Buyer. (g) Seller has provided to Buyer a true and complete copy of unaudited profit andloss statements for the Business for the period of September 2002 through May 31, 2005,copies of which are attached hereto as **Exhibit F**(the “Financial Statements”). TheFinancial Statements fairly present in all material respects the profits and losses ofthe Business as of the represented dates thereof. (h) Seller possesses all material permits and licenses that are necessary toconduct the Business in its present form. **Exhibit H**contains an accurate and completelist of all licenses and permits of the Seller which are material to the financialcondition or operations of the Business (the “Permits”). All of the Permits are infull force and effect, Seller is not in violation of any of the Permits and Seller hasnot received any notice that any of the Permits will lapse or be terminated by actionof any governmental authority or otherwise.
 

 
 (i) All purchase orders signed prior to the Closing Date for delivery of productsafter the Effective Time, which are being assumed by Buyer, arose out of bona fide,arms length transactions in the ordinary course of business.  (k) Without limiting the representations and warranties as to specific classes ofassets, the Assets are sufficient for the continued conduct of the Business immediatelyafter the Closing in substantially the same manner as conducted prior to the Closing.All of the tangible personal property included in the Assets has been maintained inaccordance with normal industry practice and in compliance in all material respectswith all applicable laws and requirements of applicable contracts and are in goodoperating condition, normal wear and tear excepted.  The foregoing representations and warranties shall survive the execution and delivery ofthis Agreement and the Closing in accordance with Section 15(a). **7.** **Representations and Warranties of Buyer.** Buyer hereby represents and warrants toSeller as follows: (a) Buyer is a corporation duly organized, validly existing and in good standingunder the laws of the State of Washington, and has full corporate power and authorityto enter into and perform its obligations under this Agreement.  (b) All documents executed and to be executed by Buyer and delivered in accordancewith the terms of this Agreement have been duly authorized and are and will be thevalid obligations of Buyer enforceable in accordance with their respective terms.  The foregoing representations and warranties shall survive the execution and delivery ofthis Agreement and the Closing in accordance with Section 15(a). **8.** **Conditions to Obligations of Buyer.** The obligations of Buyer hereunder shall besubject to the following: (a) The representations and warranties of Seller set forth in Section 6 shall betrue and correct in all material respects on the Closing Date;  (b) Seller shall have, from the Effective Date through the Closing Date, conductedthe Business only in the ordinary course, shall pay obligations of the Business as theybecome due, and shall use its reasonable best efforts to preserve the goodwill of theBusiness;  (c) There shall have occurred no material loss of, or damage or destruction to, anyof the Assets;  (d) No event shall have occurred between the Effective Date and Closing Date thathas a material adverse effect on the business, assets, results of operations andcondition (financial or otherwise) of the Business or the Assets;  (e) Seller shall have delivered all items pursuant to Section 13(b) hereof; and  (f) Seller shall have caused the valid termination of all employees of the Businessin accordance with the provisions of Section 14.**9.** **Condition to Obligations of Seller.** The obligations of Seller hereunder shall besubject to the following: (a) The representations and warranties of Buyer set forth in Section 7 hereof shallbe true and correct in all material respects on the Closing Date;  (b) Buyer shall have delivered all items pursuant to Section 13(a) hereof.
 

 
**10.** **Liabilities.**At the Closing, Buyer shall assume, and shall from the Closing Datethereafter pay, perform and discharge the following, but no other, liabilities and obligationsof Seller (such liabilities and obligations hereinafter collectively called the “AssumedLiabilities”): (a) Contracts. All liabilities and obligations of Sellerarising or accruing after the Effective Time under the Contracts specificallyset forth on the attached **Exhibit K**(together, the “Assumed Contracts”);  (b) Purchase Orders. Commitments of Seller to fill allorders for hearing aids and other products that are specifically set forth onthe attached **Exhibit L**; and  (c) Exchanges. All obligations of Seller with respect topatient exchanges of hearing aids and other products sold prior to the EffectiveTime; provided that Seller shall remain liable for patient refunds for hearingaids or other products sold and delivered prior to the Effective Time that arereturned in accordance with Seller’s normal return policy. For purposes hereof,an “exchange” shall include any return by a patient of a hearing aid or otherproduct for a refund for which Seller would be responsible hereunder if suchpatient purchases a hearing aid or other replacement product from Buyer withinthirty (30) days of such return.  Buyer shall not assume any other liabilities, obligations or undertakings of Seller of anykind or nature whatsoever, whether fixed or contingent, known or unknown, determined ordeterminable, due or not yet due. Seller shall be and remain responsible for allliabilities and obligations of Seller and the Business other than the Assumed Liabilities(the “Excluded Liabilities”), and Buyer shall have no responsibility therefore whatsoever. **11.** **termination events.**This Agreement may be terminated and the transactionscontemplated hereby may be abandoned as follows: (a) At any time, by the mutual written agreement of Buyer and Seller;  (b) By either Buyer or Seller, upon written notice to the other, if the other is inmaterial breach or default of its respective covenants, agreements, or otherobligations herein, or if any of its representations herein are not true and accuratein all material respects when made or when otherwise required by this Agreement to betrue and accurate, and such breach, default or failure, if curable, is not cured withinthirty (30) days of receipt of notice that such breach, default or failure exists orhas occurred;  (c) By either Buyer or Seller upon written notice to the other on or after July 31,2005 if any conditions to its obligations set forth in Sections 8 and 9, respectively,shall not have been satisfied on or before such date, provided that the failure of suchconditions shall not be the fault of the party seeking termination.  No party may terminate this Agreement after the Closing has occurred. If this Agreement isterminated pursuant to this Section 11, all obligations of the parties hereunder shallterminate, except for the obligations set forth in Section 12(f). Termination of thisAgreement shall not limit or impair any remedies that Buyer or Seller may have with respectto a breach or default by the other of its covenants, agreements or obligations hereunder. **12.** **Use of Customer Records; Restrictive Covenant; Sales Tax; Consents; FurtherAssurances.**   (a) Use of Customer Records. Except in connection with the operation ofBuyer’s business and as may otherwise be consented to by Buyer in writing, from and afterthe Closing Date Seller shall not
 

 
disclose or use any of the Customer Records in any way in connection with any business orsolicitation and will not disclose any of such information to any third parties except asrequired by law; provided, however, such covenant shall not apply to any independent hearingaid sellers that are affiliated with the HearUSA Hearing Care Network.(b) Restrictive Covenant. During the period commencing on the Closing Date andending three years thereafter, Seller will not, without the express written consent ofBuyer, directly or indirectly, commence, own, consult with, operate or otherwise beaffiliated in any way with any hearing aid sales and/or service business located within a25-mile radius of any of the Premises; provided, however, such covenant shall not apply toany independent hearing aid sellers that are affiliated with the HearUSA Hearing CareNetwork.(c) Remedies. Seller acknowledges that the restrictions contained in this Section12 are reasonable and necessary to protect the legitimate interests of Buyer, and that anyviolation of this Section 12 will result in irreparable injury to Buyer and that moneydamages would not provide an adequate remedy to Buyer, and, therefore, Buyer shall beentitled to preliminary and permanent injunctive relief in any court of competentjurisdiction and to an equitable accounting of all earnings, profits and other benefitsarising from such violation, which rights shall be cumulative and in addition to any otherrights or remedies to which the Buyer may be entitled. If any portion of the covenants oragreements contained in this Section 12 or the application thereof is held to be invalid orunenforceable, then the other portions of such covenants or agreements or the applicationthereof shall not be affected and shall be given full force and effect without regard to theinvalid or unenforceable portions. If any covenant or agreement herein is held to beunenforceable because of the area covered, the duration thereof, or the scope thereof, thenthe court making such determination shall have the power to reduce the area and/or durationand/or limit the scope thereof, and the covenant or agreement shall then be enforceable inits reduced form.(d) Sales and Use Tax. Seller and Buyer shall be jointly responsible for payment ofall sales or use tax assessable with respect to the transactions herein. The parties shallcooperate to obtain all exemptions from such taxes.(e) Consents.(i) Seller shall use its reasonable best efforts to obtain and deliver to Buyerprior to the Closing Date the consent of the landlords of the Premises to theassignment by the Seller to Buyer of the Lease for said Premises substantiallyin the form attached hereto as **Exhibit J**(the “Landlord Consent”). With respectto any written consents required for the assignment of the Assumed Contracts toBuyer including the Landlord Consents (the “Required Consents”) that are notobtained as of the Closing Date, Seller shall remain obligated to take allcommercially reasonable steps following the Closing as necessary to obtain theRequired Consents. As each Required Consent is obtained and each requirednotice is given, Seller shall promptly deliver a copy of such instrument toBuyer. Seller further agrees to respond promptly to all requests forinformation and documentation made by any party that must consent to thetransactions contemplated by this Agreement. If any such consent is notobtained, Seller shall cooperate with Buyer in any reasonable arrangementdesigned to keep such Assumed Contracts or Leases in effect and shall give Buyerthe benefit of such Assumed Contract or Lease including enforcement at the costand for the account of Buyer of any rights of Seller against the other partythereto.(ii) If on the Closing Date, Seller has delivered to Buyer less than all of theLandlord Consents required for the assignment of the Leases to Buyer, Buyershall pay to Seller at the Closing a pro rata portion of the Purchase Pricebased upon the percentage that the number of Landlord Consents delivered at theClosing represents to the total number of Landlord Consents required to bedelivered hereunder. Thereafter, upon Seller’s delivery to Buyer of additionalLandlord Consents, Buyer shall pay, within three (3) days of such
 

 
delivery to Seller, the pro rata portion of the Purchase Price based upon thepercentage that the number of Landlord Consents then delivered represents to thetotal number of Landlord Consents required to be delivered hereunder until suchtime as Seller delivers to Buyer all of such Landlord Consents. All payments toSeller hereunder shall be by wire transfer of immediately available funds.(iii) Notwithstanding anything contained in this Agreement to the contrary, thisAgreement shall not constitute an assignment or an attempted assignment of anycontract, lease, license, commitment, agreement or purchase or sale order or anyclaim or right or any benefit arising thereunder or resulting therefrom if suchassignment or attempted assignment thereof, without the consent from a thirdparty thereto, would constitute a material breach thereof or in any waymaterially adversely affect the rights of Buyer thereunder.(f) Confidentiality. Seller and Buyer acknowledge and agree that they shallcontinue to abide by and comply with terms of that certain confidentiality agreement, datedApril 12, 2005, which continues to be in full force and legal effect.(g) Access to Information. During the period prior to the Closing Date, Sellershall give to Buyer and its attorneys, accountants or other authorized representatives, fullaccess to all of the property, books, contracts, commitments and records of Seller’sBusiness at the Premises. By way of example, and not limitation, Seller shall have providedall Payer Agreements in effect on the Closing Date. Seller shall furnish to Buyer duringsuch period all such information concerning Seller and its Business at the Premises as Buyermay request.(h) Further Assurances. Each party shall, at the request and expense of therequesting party but without further consideration, do, execute, acknowledge, deliver andfile, or shall cause to be done, executed, acknowledged, delivered or filed, all suchfurther acts, deeds, transfers, conveyances, assignments or assurances as may be reasonablyrequested to consummate the transactions and otherwise fulfill Seller’s obligations ascontemplated by this Agreement.**13.** **Closing Date.** The consummation of the purchase and sale of the Assets contemplatedhereby (the “Closing”) shall, subject to the conditions hereof, occur on June 22, 2005, orsuch other date as Seller and Buyer shall agree (the “Closing Date”) by facsimile transmissionof the documents to be delivered pursuant to subsections (a) and (b) below. If the Closingshall occur, it shall be deemed to be effective as of 12:01 a.m., Central Time (the “EffectiveTime”) on the Closing Date. (a) Buyer’s Obligations. On the Closing Date, Buyer shall deliver the following toSeller: (i) Subject to the limitations in 12(e), the Purchase Price;  (ii) An Assignment and Assumption Agreement substantially in the formattached hereto as **Exhibit M**executed by Buyer; and  (iii) Such other documents as Seller may reasonably request. (b) Seller’s Obligations. On the Closing Date, Seller shall deliver the followingto Buyer: (i) An Assignment and Assumption Agreement substantially in the formattached hereto as **Exhibit M;**  (ii) A Bill of Sale substantially in the form attached hereto as**Exhibit N**executed by Seller transferring and assigning to Buyer all of thePersonal Property;  (iii) Physical possession of the Personal Property and CustomerRecords;  (iv) Updated lists of purchase orders; and  (v) Such other documents as Buyer may reasonably request.
 

 
**14.** **Seller’s Employees****.**Buyer currently expects to employ, at its option, certain ofthe employees of Seller. Seller shall take all action required by law or otherwise to causethe valid termination of employment at the Closing Date of all employees of the Business.Seller shall be solely responsible for any and all liability arising from any termination ofemployment of those employees. Nothing in this Agreement is intended to confer upon anyemployee of the Business any rights or remedies, including, without limitation, any rights ofemployment of any nature or kind whatsoever. **15.** **survival; indemnification; certain remedies** (a) The representations and warranties of Seller and Buyer contained in thisAgreement shall survive the Closing for the period of one year after the ClosingDate (the “Indemnification Deadline”); provided, however, that the representationsand warranties of Seller shall survive the Closing and continue in full force andeffect forever thereafter in the event of (a) any intentional or willful breaches ofthe representations or warranties set forth in Section 6, (b) any intentional orwillful failure to perform any covenant hereunder, (c) any Excluded Liabilities or(d) any other intentional fraud committed by Seller under this Agreement orotherwise. It being understood that in the event notice of any claim forindemnification under Section 15(b) or Section 15(d) hereof has been given (withinthe meaning of Section 15) prior to the Indemnification Deadline, therepresentations and warranties that are the subject of such indemnification claimshall survive with respect to such claim until such time as such claim is finallyresolved.  (b) Seller hereby agrees that from and after the Closing it shall indemnify,defend and hold harmless Buyer and its directors, officers, shareholders, agents,representatives and employees and their heirs, successors and permitted assigns,each in their capacity as such (the “Buyer Indemnified Parties” collectively withthe Seller Indemnified Parties, the “Indemnified Parties”) from, against and inrespect of any damages, losses, charges, liabilities, claims, demands, actions,suits, proceedings, payments, judgments, settlements, assessments, deficiencies,taxes, interest, penalties, and costs and expenses (including removal costs,remediation costs, closure costs, fines, penalties and expenses of investigation andongoing monitoring, reasonable attorneys’ fees, and reasonable out of pocketdisbursements) (collectively, “Losses”) imposed on, sustained, incurred or sufferedby, or asserted against, any of the Buyer Indemnified Parties, whether in respect ofthird party claims, claims between the parties hereto, or otherwise, directly orindirectly relating to, arising out of or resulting from, subject to Section 15(c),(i) any breach of any representation or warranty made by Seller contained in thisAgreement for the period such representation or warranty survives and (ii) anybreach of any covenant or agreement of Seller contained in this Agreement.  (c) Seller shall not be liable to the Buyer Indemnified Parties for anyLosses with respect to the matters contained in Section 15(b) unless the Lossestherefrom exceed an aggregate amount equal to $10,000. Once Losses exceed theaggregate amount of $10,000, Seller shall be liable to Buyer for all amountsincurred by such Losses. Seller’s liability for Buyer’s Losses relating tounintentional breaches of the representations and warranties set forth in Section 6will not exceed the aggregate amount of $1,100,000; provided, however, that thereshall be no limitation on Seller’s indemnification obligations hereunder withrespect to any Losses that Buyer suffers resulting from (a) any intentional orwillful breaches of the representations or warranties set forth in Section 6, (b)any intentional or willful failure to perform any covenant hereunder, (c) anyExcluded Liabilities or (d) any other intentional fraud committed by Seller underthis Agreement or otherwise.  (d) Buyer hereby agrees that from and after the Closing it shall indemnify,defend and hold harmless Seller and its directors, officers, shareholders, agents,representatives and employees and their heirs, successors and permitted assigns,each in their capacity as such (the “Seller Indemnified Parties”) from, against andin respect of any Losses imposed on, sustained, incurred or suffered by, or assertedagainst, any of the Seller Indemnified Parties, whether in respect of third party
 

 
  claims, claims between the parties hereto, or otherwise, directly or indirectlyrelating to, arising out of or resulting from (i) any breach of any representation orwarranty made by Buyer contained in this Agreement for the period such representationor warranty survives, (ii) any of the Assumed Liabilities, (iii) any breach of acovenant or agreement of Buyer contained in this Agreement, and (iv) Buyer’soperation or ownership of the Assets or the Business following the Closing. (e) Buyer shall not be liable to the Seller Indemnified Parties for anyLosses with respect to the matters contained in Section 15(d) unless the Lossestherefrom exceed an aggregate amount equal to $10,000. Once Losses exceed theaggregate amount of $10,000, Buyer shall be liable to Seller for all amountsincurred by such Losses. Buyer’s liability for Seller’s Losses relating tounintentional breaches of the representations and warranties set forth in Section 7will not exceed the aggregate amount of $1,100,000; provided, however, that thereshall be no limitation on Buyer’s indemnification obligations hereunder with respectto any Losses that Seller suffers resulting from (a) any intentional or willfulbreaches of the representations or warranties set forth in Section 7, (b) anyintentional or willful failure to perform any covenant hereunder, (c) any AssumedLiabilities or (d) any other intentional fraud committed by Seller under thisAgreement or otherwise. (f) In the event that any written claim or demand for which an indemnifyingparty (an “Indemnifying Party”) may have liability to any Indemnified Partyhereunder is asserted against or sought to be collected from any Indemnified Partyby a third party (a “Third Party Claim”), such Indemnified Party shall promptly, butin no event more than ten days following such Indemnified Party’s receipt of a ThirdParty Claim, notify the Indemnifying Party in writing of such Third Party Claim, theamount or the estimated amount of damages sought thereunder to the extent thenascertainable (which estimate shall not be conclusive of the final amount of suchThird Party Claim), any other remedy sought thereunder, any relevant timeconstraints relating thereto and, to the extent practicable, any other materialdetails pertaining thereto (a “Claim Notice”); provided, however, that the failuretimely to give a Claim Notice shall affect the rights of an Indemnified Partyhereunder only to the extent that such failure has a material prejudicial effect onthe defenses or other rights available to the Indemnifying Party with respect tosuch Third Party Claim. The Indemnifying Party shall have 30 days (or such lessernumber of days set forth in the Claim Notice as may be required by court proceedingin the event of a litigated matter) after receipt of the Claim Notice (the “NoticePeriod”) to notify the Indemnified Party that it desires to defend the IndemnifiedParty against such Third Party Claim. (g) In the event that the Indemnifying Party notifies the Indemnified Partywithin the Notice Period that it desires to defend the Indemnified Party against aThird Party Claim, the Indemnifying Party shall have the right to defend theIndemnified Party by appropriate proceedings and shall have the sole power to directand control such defense at its expense. Once the Indemnifying Party has dulyassumed the defense of a Third Party Claim, the Indemnified Party shall have theright, but not the obligation, to participate in any such defense and to employseparate counsel of its choosing. The Indemnified Party shall participate in anysuch defense at its expense unless (i) the Indemnifying Party and the IndemnifiedParty are both named parties to the proceedings and the Indemnified Party shall havereasonably concluded that representation of both parties by the same counsel wouldbe inappropriate due to actual or potential differing interests between them, or(ii) the Indemnified Party assumes the defense of a Third Party Claim after theIndemnifying Party has failed to diligently pursue a Third Party Claim it hasassumed, as provided in the first sentence of Section 15(h). The Indemnifying Partyshall not, without the prior written consent of the Indemnified Party, settle,compromise or offer to settle or compromise any Third Party Claim on a basis thatwould result in (i) the imposition of a consent order, injunction or decree thatwould restrict the future activity or conduct of the Indemnified Party or any of itsaffiliates, (ii) a finding or admission of a violation of law or violation of therights of any person by the Indemnified Party or any of its affiliates, (iii) afinding or admission that would have an adverse effect on other claims made orthreatened against the Indemnified Party or any of its affiliates, or
 

 
(iv) any monetary liability of the Indemnified Party that will not be promptly paidor reimbursed by the Indemnifying Party. (h) If the Indemnifying Party (i) elects not to defend the Indemnified Partyagainst a Third Party Claim, whether by not giving the Indemnified Party timelynotice of its desire to so defend or otherwise or (ii) after assuming the defense ofa Third Party Claim, fails to take reasonable steps necessary to defend diligentlysuch Third Party Claim within ten days after receiving written notice from theIndemnified Party to the effect that the Indemnifying Party has so failed, theIndemnified Party shall have the right but not the obligation to assume its owndefense; it being understood that the Indemnified Party’s right to indemnificationfor a Third Party Claim shall not be adversely affected by assuming the defense ofsuch Third Party Claim. The Indemnified Party shall not settle a Third Party Claimwithout the consent of the Indemnifying Party, which consent shall not beunreasonably withheld.  (i) Notwithstanding anything to the contrary contained in this Agreement, noPerson shall be liable under this Section 15 for any consequential, punitive,special, incidental or indirect damages, including lost profits, except to theextent awarded by a court of competent jurisdiction in connection with a Third PartyClaim.  (j) The rights and remedies of Seller and Buyer under this Section 15 areexclusive and in lieu of any and all other rights and remedies that Seller and Buyermay have under this Agreement or otherwise against each other with respect to thetransactions contemplated hereby for monetary relief with respect to (i) any breachof any representation or warranty or any failure to perform any covenant oragreement set forth in this Agreement, other than those which are intentional orwillful, and (ii) the Assumed Liabilities or the Excluded Liabilities, and Buyer andSeller each expressly waives any and all other rights or causes of action it or itsaffiliates may have against the other party or its affiliates now or in the futureunder any law with respect to the subject matter hereof.**16.** **Notices.** All notices required hereunder shall be in writing and shall bedelivered to the parties as follows:         To Seller: HearUSA, Inc.      1250 Northpoint Parkway      West Palm Beach, Florida 33407      Attn: Gino Chouinard      Facsimile: (561) 478-9603           With copy (which shall not constitute notice) to:           Bryan Cave LLP      700 13th Street N.W.      Washington, DC 20005      Attn: Phillip A. Quatrini, Esq.      Facsimile: (202) 508-6200           To Buyer: Sonus-USA, Inc.      5000 Cheshire Lane North      Plymouth, Minnesota, 55446      Attn: President      Facsimile: (763) 268-4280           With copy (which shall not constitute notice) to:
 

 
           Fredrikson & Byron P.A.      200 South Sixth Street, Suite 4000      Minneapolis, Minnesota 55402-1425      Attention: Ryan S. Johnson, Esq.      Facsimile: (612) 492-7077    Such addresses may be changed by written notice to the other party. Such notices shall beeffective upon receipt if delivered personally or by facsimile transmission, withconfirmation of transmission; three business days after mailing if delivered by registeredor certified mail; or one business day after mailing if delivered by overnight courierservice. **16.** **Agreement.**This Agreement contains the entire agreement of the parties concerningthe subject matter hereof, and supersedes all prior communications, understandings andagreements. No representations, promises or agreements, oral or otherwise, not containedherein shall be of any force or effect. **17.** **Governing Law; Remedies; Consent to Jurisdiction.** This Agreement shall begoverned by and construed under the laws of the State of Minnesota. Any controversy relatingto this Agreement or any modification or extension of it and any proceeding relating theretoshall be held in Minneapolis, Minnesota. The parties hereby submit to jurisdictionfor any enforcement of this Agreement in Minnesota. **18.** **Counterparts.**This Agreement may be executed in counterparts and bydifferent parties on different counterparts with the same effect as if the signatures theretowere on the same instrument. The delivery by a party of an executed facsimile of thisAgreement shall constitute effective and binding execution. **19.** **Assignment.**Neither this Agreement nor any of the rights, interests, or obligationshereunder shall be assigned by Seller (whether by operation of law or otherwise) without theprior written consent of the Buyer. Subject to the preceding sentence, this Agreement will bebinding upon, inure to the benefit of and be enforceable by the parties and their respectivesuccessors and permitted assigns, heirs, personal representatives and executors. **20.** **No Third Party Benefit.**Nothing in this Agreement, expressed or implied, isintended to confer on any person other than the parties to this Agreement or their respectivesuccessors or assigns, any rights, remedies, obligations or liabilities under or by reason ofthis Agreement.   IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year firstwritten above.       **Sonus-USA, Inc.**   **HearUSA, Inc.**         By: /s/ Scott Klein   By: /s/ Stephen J. Hansbrough            Its: Sr. Vice President      Its: President & CEO