**Exhibit 10.4****EMPLOYMENT AGREEMENT**          THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 31st day of August,2005, by and between HearUSA, Inc., a Delaware corporation (the “Company”), and Kenneth Schofield(“Employee”).**Background**:     (a) Employee has been serving as the Chief Operating Officer of the Company in a managerialcapacity prior to the date hereof.     (b) The Company wishes for the Employee to continue as an employee of the Company on the termsprovided herein.     (c) The Employee wishes to continue as an employee of the Company and is willing to renderservices to the Company on the terms and conditions hereinafter set forth;**Agreement**     In consideration of the mutual promises hereinafter set forth, it is hereby agreed asfollows:     1. Employment. Employee shall continue to be employed by the Company, with suchcontinued employment to be under the terms and conditions set forth herein, and Employee herebyaccepts such continued employment upon the terms and conditions set forth herein.     2. Term of Employment. The term of this Agreement shall commence on the date firstset forth above and shall end on the third anniversary of such date (the “Initial EmploymentPeriod”), and shall continue in effect for successive periods of three years thereafter unlesseither the Company or Employee gives written notice of non-renewal prior to the end of the thencurrent term of this Agreement, or unless sooner terminated as provided in Section 6 or Section 7hereof. For clarity, either Employee or the Company may terminate the Term of Employment,including during the Initial Employment Period, by providing written notice at any time and for anyreason, with no liability to the other party other than pursuant to Section 6 or Section 7 hereof.The Initial Employment Period and any renewal terms of this Agreement are referred to herein as the“Term of Employment.”     3. Location of Employment. Employee will continue to be located at the Company’scorporate offices in West Palm, Florida.
 

 
     4. Duties.          (a) Employee shall serve in a full-time capacity with the title of Chief Operating Officer,reporting to the Chief Executive Officer of the Company, and the Employee shall have theauthority, duties, responsibilities and status (including office, title and reportingrequirement) associated with the office of Chief Operating Officer (including those contemplated bythe Company’s bylaws).          (b) Employee shall be authorized by the Chief Executive Officer to employ reasonablediscretion in performing Employee’s responsibilities.          (c) Employee shall have such further duties and responsibilities, not inconsistent with suchposition, as shall be assigned to the Employee by the Chief Executive Officer or the Board ofDirectors of the Company.          (d) Employee shall devote his full business time and attention and such skill, energy and bestefforts as may be necessary for the faithful performance of duties assigned to Employee.     5. Compensation.          (a) During the Term of Employment, the Company shall pay Employee, as compensation for hisservices during the Employment Period, a base salary (the “Base Salary”) at a rate of Two HundredTen Thousand Dollars ($210,000.00) per year, such Base Salary to be payable in accordance with theCompany’s usual payment practices and to be subject to adjustment from time to time as may beagreed between the Employee and the Company. Employee shall be entitled to participate in theCompany’s current employee benefit plans, and will in the future be entitled to participate in anynew employee benefit plans that are put in place for the Company executive officers, provided thatany such plans shall be subject to the approval of the Board of Directors. Additionally, Employeeshall be entitled to such prerogatives of office as are the Company’s current practice, subject tothe right of the Company to revise such practices.          (b) The Employee will be eligible to participate in the Company’s stock plan and bonus plan,subject to the discretion of the Board of Directors of the Company.          (c) All compensation shall be subject to customary withholding taxes and other employmenttaxes as required with respect thereto.     6. Termination of Employment by the Company. This Agreement and Employee’s employmentmay be terminated by the Company as follows:          (a) At the election of the Company, upon thirty days’ prior written notice to Employee in theevent Employee becomes disabled and such disability continues for a period exceeding three (3)consecutive months. In the event of a disagreement concerning the existence of any suchdisability, the matter shall be resolved by a disinterested licensed physician chosen by theCompany.          (b) At the election of the Company, for “Cause” immediately upon notice by the Company to theEmployee. “Cause” shall mean:
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            (i) willful or prolonged absence from work by the Employee (other than by reason ofdisability) or failure, neglect or refusal by the Employee to perform his duties andresponsibilities hereunder;            (ii) material breach by the Employee of any of the covenants contained in this Agreement;            (iii) the Employee’s commission of fraud or dishonesty against the Company, itssubsidiaries, parent, affiliates or their respective officers, directors, stockholders oremployees; conduct intended to injure or having the effect of injuring the reputation, businessor business relationships of the Company, its subsidiaries, parent or affiliates or theirrespective officers, directors or employees;            (iv) upon a charge by a governmental entity against the Employee of any crime involvingmoral turpitude or which could reflect unfavorably upon the Company or upon the filing of anycivil action involving the Employee and a charge of embezzlement, theft, fraud or other similaract; or            (v) failure or refusal of Executive to materially comply with the policies, standards andregulations of the Company as from time to time may be made known to Executive.          (c) At the election of the Company, at any time, without Cause immediately upon notice by theCompany to Employee.          (d) Upon termination of this Agreement by the Company, all rights and obligations of theparties hereunder shall cease, except: (i) if this Agreement is terminated without Cause by theCompany prior to the end of the Term of this Agreement; or (ii) if the Company gives written noticeof non-renewal of this Agreement pursuant to Section 2 above; or (iii) if there is a Change inControl of the Company (as defined below) and this Agreement is terminated without Cause by theCompany, then (x) Employee shall receive a lump sum equal to his Base Salary times two plus anybonus or other long term incentive compensation to which the Employee would have been entitledabsent the termination, (y) Employee’s health and life insurance benefits shall continue for aperiod of 24 months after such termination, and (z) all of Employee’s unvested options shallimmediately vest and may be exercised by Employee for such post-termination period as is prescribedby such option agreements and related stock plan(s). Termination of employment pursuant to thisSection 6 or otherwise shall not terminate or otherwise affect the rights and obligations of theparties pursuant to Sections 9 through 12 and Section 15 hereof.          (e) Nothing contained herein will be construed to prevent Employee from seeking or obtainingother employment in the event the employment of Employee is terminated by the Company withoutCause.
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     7. Termination of Employment by Employee. Employee may terminate his employment withthe Company at any time and for any reason, such termination to be effective immediately uponnotice by Employee to the Company. Upon such termination by Employee, all rights andobligations of the parties hereunder shall cease, except: if Employee terminates hisemployment under this Agreement for Good Reason (as defined below) within one year of a Change inControl (as defined below), (i) Employee shall receive a lump sum equal to his Base Salary timestwo plus any bonus or other long term incentive compensation to which the Employee would have beenentitled absent the termination, (ii) Employee’s health and life insurance benefits shall continuefor a period of 24 months after such termination, and (iii) all of Employee’s unvested optionsshall immediately vest and may be exercised by Employee for such post-termination period as isprescribed by such option agreements and related stock plan(s). Termination of employmentpursuant to this Section 7 or otherwise shall not terminate or otherwise affect the rights andobligations of the parties pursuant to Sections 9 through 12 and Section 15 hereof.     8. Change in Control. For the purposes of this Agreement,          (a) “Change in Control” shall mean the effective date of any of the following eventsoccurring during the term of Employee’s employment: (a) consummation of any consolidation, merger,statutory share exchange or other business combination as a result of which persons who werestockholders of the Company immediately prior to the effective date thereof beneficially own lessthan 50% of the combined voting power in the election of directors of the surviving or resultingentity following the effective date; (b) individuals who, as of the date hereof, constitute theBoard of Directors of the Company cease for any reason to constitute at least a majority of theBoard of Directors of the Company, provided that any person who is elected as a director subsequentto the date hereof by a vote of, or upon the recommendation of, at least a majority of thedirectors comprising the current Board (other than an individual whose initial assumption of officeis in connection with an actual or threatened election contest relating to the election of thedirectors of the Company) shall be considered a member of the current Board for these purposes; (c)consummation of any sale, lease, exchange or other transfer (in one transaction or a series ofrelated transactions) of all or substantially all of the assets of the Company; (d) shareholderapproval of any plan or proposal for the liquidation or dissolution of the Company; or (e)acquisition of beneficial ownership by any “person” or “group” (as such term is used Sections 13(d)and 14(d)(2) of the Exchange Act) of securities representing twenty percent (20%) or more of thecombined voting power in the election of the Company’s directors, provided such acquisition has notbeen approved by at least a majority of the members of the Board of Directors in office immediatelyprior to the acquisition.          (b) “Good Reason” shall mean, without Employee’s consent, (1) the scope of Employee’sresponsibilities and/or discretion is/are materially diminished; or (2) the Company requiresEmployee to relocate to a location greater than 100 miles from the Company’s current corporateheadquarters in West Palm Beach, Florida; or (3) Employee’s Base Salary is reduced by an amountgreater than twenty-five percent (25%) and such reduction is not pursuant to a Company-wideemployee salary reduction plan or program.     9. Third-Party Confidentiality. Employee acknowledges that the Company has disclosedthat the Company is now, and may be in the future, subject to duties to third parties to maintaininformation in confidence and secrecy. By executing this Agreement, Employee consents to be boundby any such duty owed by the Company to any third party.
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     10. Confidentiality; Return of Property.          (a) Employee acknowledges that Employee’s work for the Company is expected to bring him intoclose contact with various confidential business data of the Company, its contracting parties,affiliates and customers not readily available to the public. Accordingly, Employee:            (i) covenants and agrees that (A) during the Term of Employment, except pursuant toappropriate safeguards on confidentiality and only in connection with the business of theCompany and (B) after the Term of Employment, on any basis for any reason, Employee shall notuse or disclose to anyone except authorized personnel of the Company or the Company’s Affiliates(as defined below), whether or not for his benefit or otherwise, any confidential matters(collectively, “Confidential Matters”) concerning the Company or its suppliers, consultants,agents, other contracting parties or customers, whether such customers are deemed former,current or potential customers (collectively, the “Clients”), including without limitation allconfidential technical information of the Company, secrets, trade secrets, proprietary software,copyrights, Client lists, lists of employees, confidential evaluations, mailing lists, detailsof consultant contracts, pricing policies, sales data and reports, margins, operational methodsand processes, plans, financial information and other confidential business affairs, learned byEmployee concerning the Company, its Clients or a third party, including without limitation anysubsidiaries, partners, affiliates, shareholders, employees, lenders, suppliers, consultants,agents or joint venture partners of the Company (collectively, “Affiliates”); and            (ii) covenants and agrees that (A) all confidential memoranda, notes, lists (including,without limitation, mailing and Client lists), records and other confidential documents, whetherin written, electronic or other form (and all copies thereof) made or compiled by Employee ormade available to him concerning the Company, its Clients and any Affiliates are the soleproperty of the Company, and (B) if such documents are in the possession or control of theEmployee, the Employee shall deliver them, without retaining any copies thereof, to the Companypromptly at the time of the Employee’s termination of employment or at any other time uponrequest by the Company.          (b) Section 10 shall not apply to any information that: (i) is publicly available or becomespublicly available through no act or fault of Employee; (ii) is made known to Employee by a thirdparty who did not obtain it directly or indirectly from the Company; (iii) is independentlydeveloped by Employee without use of the Company’s information as evidenced by credible writtenrecords of Employee; or (iv) is information required to be disclosed by operation of law,governmental regulation or court order provided that, if Employee determines that such disclosuremight be required, Employee will promptly notify the Company and provide the Company, to the extentpracticable, an opportunity to seek a protective order or other appropriate remedy to prevent suchdisclosure.          (c) Upon the termination of the Employee’s employment hereunder for any reason, the Employeeshall promptly return to the Company any property owned by the Company orfurnished to the Employee by the Company for use in connection with Employee’s serviceshereunder.
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     11. Noncompetition/Conflicts of Interest.          (a) The Employee covenants and agrees that the Employee shall not, directly or indirectly, asa principal, employee, partner, consultant, agent or otherwise, compete or assist in a CompetitiveActivity anywhere in the United States during the Term of Employment and for a period of one yearafter the termination of this Agreement (except termination without Cause by the Company or at theend of a term hereof) (the “Restricted Period”) without the express prior written consent of theCompany; provided, however, that the running of the Restricted Period shall betolled during any period of time in which Employee violates the provisions of this Section.“Competitive Activity” means the promotion, marketing or sale of hearing care products andservices.          (b) During the Restricted Period, Employee shall not, directly or indirectly, alone or inconcert with others, solicit or encourage any employee of the Company, or an employee of any personor entity with which the Company has an agreement through which the Company and the person orentity are to act in concert with respect to the business of the Company, to leave their respectiveemployment or hire any employee of the Company.     12. Acknowledgment Regarding Restrictions. Employee recognizes and agrees that therestraints contained in Section 11 are reasonable in view of the Company’s legitimate interests inprotecting its business. Employee further acknowledges that the limitations contained in Section11 are reasonable as to the duration in time, as to geographic scope and as to the nature of theactivities restricted. However, in the event an appropriate court determines that the provisionsof Section 11 are excessively broad as to duration, geographic scope, prohibited activities orotherwise, the parties agree that Section 11 may be reduced or curtailed to the extent necessary torender it enforceable.     13. Vacation and Holidays. The Employee shall be entitled to vacation allowance andholidays in accordance with the policies of the Company as in effect from time to time for itsemployees.     14. Non-Waiver of Rights. The Company’s failure to enforce at any time any of theprovisions of this Agreement or to require at any time performance by the Employee of any of theprovisions hereof shall in no way be construed to be a waiver of such provisions or to affecteither the validity of this Agreement, or any part of it, or the right of the Company thereafter toenforce each and every provision in accordance with the terms of this Agreement.     15. The Company’s Right to Injunctive Relief. In the event of a breach or threatenedbreach of any of Employee’s duties and obligations under the terms and provisions of Section 10 orSection 11, Employee agrees that the Company shall be entitled to a temporary restraining order anda preliminary and permanent injunction to prevent such breach or threatened breach because the harmwhich might result to the Company’s business as a result of any noncompliance by Employee with anyof the provisions of Section 10 or Section 11 may be irreparable. Employee acknowledges that theCompany’s entitlement to injunctive relief shall be in addition to the Company’s entitlement todamages.
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     16. Assignments. This Agreement shall be freely assignable by the Company and shallinure to the benefit of, and be binding upon, the Company, its successors and assigns and/or anyother corporate entity which shall succeed to the business being operated by the Company, but,being a contract for personal services, neither this Agreement nor any rights hereunder areassignable by the Employee.     17. Governing Law. This Agreement shall be interpreted in accordance with andgoverned by the laws of the State of Delaware without regard to its conflict of law rules.     18. Amendments. No modification, amendment or waiver of any of the provisions of thisAgreement shall be effective unless in writing and signed by the parties hereto.     19. Notices. Any notices to be given by either party hereunder shall be in writingand shall be deemed to have been duly given if delivered or mailed, certified or registered mail,postage prepaid, as follows: to the Company at 1250 Northpoint Parkway, West Palm Beach, Florida33407, Attention: Chief Executive Officer; and to Employee at the address set forth beside his namebelow; or to such other address as may have been furnished to the other party in writing.     20. Entire Agreement. This Agreement is the entire agreement between the parties andsupersedes any previous oral or written agreement or understanding between the Company and theEmployee with respect to the subject matter hereof. There are no representations, warranties,promises or undertakings between the parties relating to the subject matter of this Agreement otherthan those set forth herein.     21. Severability. If any provision of this Agreement shall be determined to beillegal or unenforceable, the remaining provisions of this Agreement shall remain in full force andeffect, and this Agreement shall be construed as if the illegal or unenforceable provision were nota part hereof, so long as the remaining provisions of this Agreement shall be sufficient to carryout the overall intent of the parties as expressed herein.     22. Counterparts. This Agreement may be executed in two or more counterparts, each ofwhich shall be deemed an original, but all of which together shall constitute one and the sameinstrument.     23. Headings. The headings in this Agreement are for reference purposes only andshall not in any way affect the meaning or interpretation of this Employment agreement.          IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date firstabove written.      HearUSA, Inc.