Document:

ex10-2

 

Exhibit 10.2

ESCROW AGREEMENT

     THIS ESCROW AGREEMENT (the “Agreement”) is made as of this 13th day of
December, 2001, by and among AMERICAN STOCK TRANSFER & TRUST COMPANY, a New
York corporation (the “Escrow Agent”), HEARx LTD., a Delaware corporation (the
“Company”), and ADVANTAGE FUND II LTD. (the “Investor”).

W I T N E S S E T H :

     WHEREAS, pursuant to the terms and conditions of the Exchange and
Redemption Agreement, dated as of December 4, 2001 the Company and the Investor
(the “Exchange Agreement”), the Company has issued 470,530 shares of its common
stock, $.10 par value per share (the “Common Stock”), to the Investor (such
shares together with 129,470 shares of Common Stock currently held by the
Investor are hereinafter referred to as the “Escrowed Shares”); and

     WHEREAS, the Company and the Investor desire that the Escrowed Shares be
held in escrow pending their sale or disposition by the Investor pursuant to
the terms and conditions of this Agreement; and

     WHEREAS, the Escrow Agent acts as the Company’s transfer agent for its
Common Stock and is willing to act as the escrow agent for the Escrowed Shares.

     NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which the parties acknowledge, the parties hereby agree as
follows:

     1.     Establishment of Escrow Account. Investor and the Company hereby
appoint Escrow Agent to serve as escrow agent hereunder. Escrow Agent hereby
accepts such appointment and, upon receipt of the Escrowed Shares, agrees to
hold, invest, disburse and release the Escrowed Shares in accordance with this
Escrow Agreement. Concurrently herewith, the Company and the Investor shall
deposit with the Escrow Agent the Escrowed Shares. The Company shall deliver
four of the certificates representing the Escrowed Shares in denominations of
100,000 shares of Common Stock and one certificate in the denomination of
70,530 shares of Common Stock, each such certificate shall be registered in the
name of the Investor (each such certificate, a “Certificate”), and the Investor
shall deposit with the Escrow Agent, by electronic delivery through DTC,
129,470 shares of Common Stock (the “DTC Shares.”)

     2.     Voting Rights. The Investor shall have the right to vote all Escrowed
Shares owned by it of record with respect to any matter to which the holders of
the Common Stock of the Company are entitled to vote.

 

 

     3.     Dividends and Distributions. In the case that during the term of this
Agreement a dividend or other distribution shall be made or issued upon or on
account of any of the Escrowed Shares any (i) cash dividends paid by the
Company; (ii) stock dividends in the form of additional shares of Common Stock
or other securities of the Company; or (iii) any other funds or any property
through a distribution by the Company to its stockholders or a capital
transaction affecting the Common Stock of the Company, such dividend or other
distribution shall be kept by the Escrow Agent as Escrowed Shares subject to
this Agreement, if in shares of Common Stock, and shall be delivered promptly
to the Investor, if in cash or other securities of the Company or other funds
or property.

     4.     Tax Treatment. The Company and the Investor agree that, for United
States Federal income tax purposes, the Investor will be treated as the sole
owners of the Escrowed Shares.

     5.     Disbursements From the Escrow Account.

            (a)  Except to the extent of one or more Investor Notices (as defined
below) or the removal or resignation of the Escrow Agent in accordance with
Section 7, the Escrowed Shares will be held by the Escrow Agent in accordance
with this Agreement at its place of business specified in Section 10.

            (b)  The Investor is entitled to deliver to the Escrow Agent one or more
written notices instructing the Escrow Agent to release Escrowed Shares in the
circumstances and with the results set forth in Sections 5(c), (d) and (e) of
this Agreement. In order to be effective under this Agreement, each such
notice (each, an “Investor Notice”) that directs the release of all or a
portion of the Escrowed Shares based upon the stock price of the Common Stock
must have attached or set forth thereon a listing of the stock price for the
Common Stock as reported by the Wall Street Journal (or another reporting
service mutually agreed to in writing by each of the Company and the Investor
for such purpose for the relevant period and provided to the Escrow Agent). In
addition, each Investor Notice shall specify (a) the number of shares
represented by a Certificate that will be delivered to it pursuant to such
Investor Notice or (b) that the DTC Shares will be delivered to it by
electronic delivery pursuant to the Investor Notice. The Investor will provide
a copy of each Investor Notice to the Company via facsimile concurrently with
such delivery to the Escrow Agent. Absent an error in calculation, the parties
understand and agree that the Escrow Agent is bound to act in accordance with
Investor Notices, without any investigation on the part of the Escrow Agent,
and no notice or instruction received from or on behalf of the Company shall
affect the Escrow Agent’s obligation to act in accordance with any Investor
Notice (absent an error in calculation) or to honor subsequent Investor
Notices. The Company agrees that it shall have no right to deliver any such
contradictory notices. The Escrow Agent shall deliver all Certificates and DTC
Shares hereunder as soon as practicable following the receipt of an Investor
Notice directing such release and shall immediately notify the Company of such
delivery.

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            (c)  If at any time and from time to time prior to January 1, 2004, the
Escrow Agent receives an Investor Notice stating that the closing price (the
“Closing Price”) of the
Common Stock as reported by the Wall Street Journal (or another reporting
service mutually agreed to in writing by each of the Company and the Investor
and provided to the Escrow Agent) for the five consecutive trading days
immediately preceding the date of such notice equals or exceeds $2.46 per share
(subject to equitable adjustment in the event of any stock split, stock
combination or similar event affecting the Common Stock), then the Escrow Agent
shall deliver to or as directed by the Investor one Certificate or the DTC
Shares, as specified in such Investor Notice. If the Escrow Agent shall have
previously delivered one or more Certificates or the DTC Shares to the Investor
under this Section, then it shall be a condition to the Escrow Agent’s
obligation to deliver a Certificate or DTC Shares, as the case may be, on
account of the Investor Notice then at issue that the Investor Notice at issue
contain a certification of the Investor that the Investor has sold or otherwise
disposed of the shares of Common Stock represented by prior delivered
Certificate(s) or DTC Shares in a manner permitted by the Exchange Agreement,
including any effective volume limitations therein on the Investor’s right to
resale any such shares, if any.

            (d)  The Escrow Agent agrees to issue Certificates free of restrictive
legends if so directed by the Company and the Escrow Agent receives an opinion
of counsel to the Company to that effect. The parties hereto acknowledge and
agree that the DTC Shares will be delivered at all times free of restrictive
legend.

            (e)  If the Escrow Agent holds less than 200,000 Escrowed Shares on or
following January 1, 2004, then the Investor may deliver to the Escrow Agent an
Investor Notice directing the delivery to or as directed by it of all then
remaining Escrowed Shares, following the delivery of which this Agreement shall
terminate. If on or following January 1, 2004 the Escrow Agent holds 200,000
or more Escrowed Shares and the Investor has sold or otherwise disposed of all
of the shares represented by any previously delivered Certificates or the DTC
Shares, then the Escrow Agent shall deliver to the Investor one additional
Certificate or the DTC Shares, as specified in the Investor Notice. If the
Investor shall subsequently deliver to the Escrow Agent an Investor Notice
stating that it has sold or otherwise disposed of the shares represented by any
additional Certificates or the DTC Shares previously delivered under this
Section and certifies that the volume limitations set forth in Section 5(c)
above have been met, then the Escrow Agent shall deliver to the Investor an
additional Certificate or the DTC Shares, as specified in such Investor Notice,
until such time as no further Escrowed Shares are held by the Escrow Agent.

     6.     Resignation and Removal of Escrow Agent. Escrow Agent may resign from
the performance of its duties hereunder at any time and for any reason by
giving not less than twenty (20) days’ prior written notice to the parties, or
may be removed, with or without cause, by the parties, acting jointly by
furnishing a written notice to Escrow Agent, at any time by the giving of ten
(10) days’ prior written notice to Escrow Agent. Such resignation of removal
shall take effect upon the appointment of a successor escrow agent as provided
below or as otherwise agreed by the Company, the Investor and Escrow Agent.
Upon any such notice of resignation or removal, the Company and the Investor
jointly shall appoint a successor Escrow Agent hereunder. The parties hereto
agree that the successor Escrow Agent may be Robinson Silverman Pearce Aronsohn
& Berman LLP (“Robinson Silverman”). Upon the acceptance in writing of any
appointment as Escrow Agent

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hereunder by a successor Escrow Agent, such
successor Escrow Agent
shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Escrow Agent, and the retiring
Escrow Agent shall be discharged from its duties and obligations under this
Escrow Agreement, but shall not be discharged from any liability for actions
taken as Escrow Agent hereunder prior to such succession. After any retiring
Escrow Agent’s resignation or removal, the provisions of this Escrow Agreement
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Escrow Agent under this Escrow Agreement. In the event that a
successor escrow agent is not so appointed, then Escrow Agent may relinquish
its custody of the Escrowed Shares by delivering the Escrowed Shares to
Robinson Silverman.

     7.     Liability of Escrow Agent.

            (a)  Escrow Agent shall have no liability or obligation with respect to the
Escrowed Shares except for Escrow Agent’s willful misconduct or gross
negligence. Escrow Agent’s sole responsibility shall be for the safekeeping,
investment, and disbursement of the Escrowed Shares in accordance with the
terms of this Escrow Agreement. Escrow Agent shall have no implied duties or
obligations and shall not be charged with knowledge or notice of any fact or
circumstance not specifically set forth herein. Escrow Agent may rely upon any
instrument, not only as to its due execution, validity and effectiveness, but
also as to the truth and accuracy of any information contained therein, which
Escrow Agent shall in good faith believe to be genuine, to have been signed or
presented by the person or parties purporting to sign the same and to conform
to the provisions of this Escrow Agreement. In no event shall Escrow Agent be
liable for incidental, indirect, special, consequential or punitive damages.
Escrow Agent shall not be obligated to take any legal action or commence any
proceeding in connection with the Escrowed Shares or this Escrow Agreement, or
to appear in, prosecute or defend any such legal action or proceeding. Escrow
Agent may consult legal counsel selected by it in the event of any dispute or
question as to the construction of any of the provisions of this Agreement or
of any other agreement or of its duties hereunder, and shall incur no liability
and shall be fully indemnified from any liability whatsoever in acting in
accordance with the opinion or instruction of such counsel. The Company shall
promptly pay, upon demand, the reasonable fees and expenses of any such
counsel.

            (b)  The Escrow Agent is authorized, in its sole discretion, to comply with
orders issued or process entered by any court with respect to the Escrowed
Shares, without determination by the Escrow Agent of such court’s jurisdiction
in the matter. If any portion of the Escrowed Shares is at any time attached,
garnished or levied upon under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or decree
shall be made or entered by any court affecting such property or any part of
such proceeds, then and in any such event, the Escrow Agent is authorized, in
its sole discretion, to rely upon and comply with any such order, writ,
judgment or decree which it is advised by legal counsel selected by it is
binding

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upon it without the need for appeal or other action; and if the Escrow
Agent complies with any such order, writ, judgment or decree, it shall not be
liable to any of the parties or to any other person or entity by reason of such
compliance even though such order, writ, judgment or decree may be subsequently
reversed, modified, annulled, set aside or vacated. Escrow Agent shall give
prompt written notice to the Company and the Investor of its compliance
with any such order, writ, judgment or decree.

     8.     Indemnification of Escrow Agent. From and at all times after the date
of this Escrow Agreement, the Company shall, to the fullest extent permitted by
law and to the extent provided herein, indemnify and hold harmless Escrow Agent
and each director, officer, employee, attorney, agent and affiliate of Escrow
Agent (collectively, the “Indemnified Parties”) against any and all actions,
claims (whether or not valid), losses, damages, liabilities, costs and expenses
of any kind or nature whatsoever (including without limitation reasonable
attorneys’ fees, costs and expenses) incurred by or asserted against any of the
Indemnified Parties from and after the date of this Agreement, whether direct,
indirect or consequential, as a result of or arising from or in any way
relating to any claim, demand, suit, action or proceeding (including any
inquiry or investigation) by any person (including, without limitation, the
Company or the Investor), whether threatened or initiated, asserting a claim
for any legal or equitable remedy against any person under any statute or
regulation (including, but not limited to, any federal or state securities
laws, or under any common law or equitable cause or otherwise), arising from or
in connection with the negotiation, preparation, execution, performance or
failure of performance of this Escrow Agreement or any transactions
contemplated herein, whether or not any such Indemnified Party is a party to
any such action, proceeding, suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Party shall have the
right to be indemnified hereunder for any liability finally determined by a
court of competent jurisdiction, subject to no further appeal, to have resulted
from the gross negligence or willful misconduct of such Indemnified Party.

     9.     Fees and Expenses of Escrow Agent. The Company shall compensate Escrow
Agent for its services hereunder in accordance with Exhibit A attached to this
Agreement and, in addition, shall reimburse Escrow Agent for all of its
reasonable and actual out-of-pocket expenses, including travel expenses,
telephone and facsimile transmission costs, postage (including express mail and
overnight delivery charges), copying charges and the like. All of the
compensation and reimbursement obligations set forth in this Section 9 shall be
payable by the Company upon demand by Escrow Agent. The obligations of the
Company under this Section 9 shall survive any termination of this Escrow
Agreement and the resignation or removal of Escrow Agent.

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     10.     Notices. All notices, instructions or correspondence required or
permitted to be given in connection with this Agreement shall be given by hand,
facsimile, overnight express service or certified mail, return receipt
requested, and shall be effective upon receipt, addressed to the parties as
follows:

	 
	If to the Company:
	 
	HEARx Ltd.
	1250 Northpoint Parkway
	West Palm Beach, FL 33407
	Facsimile No.: (501) 688-8883
	Attn:  Chairman
	 
	With copies to:
	 
	Bryan Cave LLP
	700 Thirteenth Street, N.W., Suite 700
	Washington, DC  20005-3960
	Facsimile No.: (202) 508-6200
	Attn: LaDawn Naegle, Esq
	 
	If to the Investor:
	 
	Genesee International Inc.
	10500 NE 8th Street
	Suite 1920
	Bellevue, WA 98004
	Facsimile: (425) 462-4645
	Attention: Howard Coleman
	 
	With copies to:
	 
	Robinson Silverman Pearce Aronsohn & Berman LLP
	1290 Avenue of the Americas
	New York, NY  10104
	Facsimile No.:  (212) 541-4630 and (212) 541-1432
	Attn:  Eric L. Cohen, Esq
	 
	If to Escrow Agent:
	 
	American Stock Transfer & Trust Company
	6201 15th Avenue - Third Floor
	Brooklyn, NY 11219
	Attention:    Mr. Herbert J. Lemmer
	Fax No.        (718) 331-1852

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     The parties may change the address to which notices shall be given by
giving notice to the other in the same manner as set forth above in this
Section 10.

     11.     Amendment or Waiver. This Escrow Agreement may be changed, waived,
discharged or terminated only by a writing signed by the Company, the Investor
and Escrow Agent. No delay or omission by any party in exercising any right
with respect to this Agreement shall operate as a waiver. A waiver on any one
occasion shall not be construed as a bar to, or waiver of, any right or remedy
on any future occasion.

     12.     Severability. To the extent any provision of this Escrow Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Escrow Agreement.

     13.     Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the internal laws (and not laws pertaining to
conflicts or choice of law) of the State of New York in all respects, including
all matters of validity, construction and performance of this Escrow Agreement.
All parties consent to the exercise of personal jurisdiction over them in New
York and agree that any lawsuit or arbitration arising out of or relating to
this Escrow Agreement shall be brought exclusively in a court of competent
subject matter jurisdiction located within the County of New York, State of New
York.

     14.     Entire Agreement. This Escrow Agreement constitutes the entire
agreement between the parties relating to the holding, investment, disbursement
and release of the Escrow Property and sets forth in their entirety the
obligations and duties of Escrow Agent with respect to the Escrowed Shares.

     15.     Binding Effect. All of the terms of this Escrow Agreement, as amended
from time to time, shall be binding upon, inure to the benefit of and be
enforceable by the respective heirs, successors and assigns of the Company, the
Investor and Escrow Agent.

     16.     Execution in Counterparts. This Escrow Agreement may be executed in
two or more counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same agreement or direction. Each counterpart may consist of a number of
copies hereof each signed by less than all, but together signed by all of the
parties hereto. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

     17.     Termination. Upon the first to occur of the disbursement or release
of all Escrowed Shares or the disbursement or release of all Escrowed Shares
pursuant to Section 7(b) of this Agreement, this Escrow Agreement shall
terminate and Escrow Agent shall have no further obligation or liability
whatsoever with respect to this Escrow Agreement or the Escrowed Shares.

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     18.     Construction. When used herein the masculine includes the feminine
and neuter and the singular includes the plural and vice versa.

     19.     Attorneys’ Fees. Should an action be instituted by any of the parties
to this Agreement in any court of law or equity pertaining to the enforcement
of any of the provisions of this Agreement, the prevailing party shall be
entitled to recover, in addition to any judgment or decree rendered in such
action, all court costs and reasonable attorneys’ fees and expenses.

     20.     No Party Deemed Drafter. The parties agree that no one party shall be
deemed to be the drafter of this Agreement and that in the event this Agreement
is ever construed by a court of law or equity, such court shall not construe
this Agreement or any provision of this Agreement against any party as the
drafter of the Agreement. The parties, and each of them, acknowledge that all
parties have contributed substantially and materially to the preparation of
this Agreement.

     21.     Equitable Relief. The parties agrees that any material breach or
attempted or threatened breach of this Agreement could result in irreparable
injury to the parties for which there would be no adequate remedy at law and
consents to injunctive relief without limiting the applicability of any other
remedies.

[Signature page follows.]

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     IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed under seal as of the date first above written.

	 
	HEARx LTD.
	 
	By:/s/ Paul A Brown

Name: Paul A. Brown, M.D.

Title: Chairman and Chief Executive Officer
	 
	ADVANTAGE FUND II LTD.
	 
	By:/s/ Donald R. Morken

Name:
	Title:
	 
	AMERICAN STOCK TRANSFER & TRUST COMPANY
	 
	By:/s/ H. J. Lemmer

      Herbert J. Lemmer, Vice President

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Exhibit A

Fee of the Escrow Agent

     The Company shall pay the Escrow Agent an annual fee of $2,500, with the
first fee payment to be made on the date of this Agreement and each subsequent
payment shall be made on the each anniversary of the date of this Agreement.

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Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

               This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered
into as of December 13, 2001, between HEARx Ltd., a Delaware corporation (the
“Company”) and Advantage Fund II Ltd. (the “Purchaser”).

               This Agreement is made pursuant to the Exchange and Redemption Agreement,
dated as of the date hereof between the Company and the Purchaser (the
“Exchange Agreement”).

               The Company and the Purchaser hereby agree as follows:

       1.     Definitions

               Capitalized terms used and not otherwise defined herein that are defined
in the Exchange Agreement shall have the meanings given such terms in the
Exchange Agreement. As used in this Agreement, the following terms shall have
the following meanings:

               “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, “control,” when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of “affiliated,” “controlling” and “controlled” have
meanings correlative to the foregoing.

               “Business Day” means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York or the State of Florida generally are authorized or required by law or
other government actions to close.

               “Closing Date” shall have the meaning set forth in the Exchange Agreement.

               “Commission” means the Securities and Exchange Commission.

               “Common Stock” means the Company’s common stock, $.10 par value per share,
or such securities into which such stock shall hereafter be reclassified.

               “Effectiveness Date” means the earlier to occur of (a) the 60th Business
Day following the date that the Commission declares effective the Form S-4
regarding the transaction with Helix Hearing Care of America Corp. and (b) the
180th day following the Closing Date.

               “Effectiveness Period” shall have the meaning set forth in Section 2(a).

               “Exchange Act” means the Securities Exchange Act of 1934, as amended.

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               “Filing Date” means the earlier to occur of (a) the 15th Business Day
following the date that the Commission declares effective the Form S-4
regarding the transaction with Helix Hearing Care of America Corp. and (b) 90th
day following the Closing Date.

               “Holder” or “Holders” means the holder or holders, as the case may be,
from time to time of Registrable Securities.

               “Indemnified Party” shall have the meaning set forth in Section 5(c).

               “Indemnifying Party” shall have the meaning set forth in Section 5(c).

               “Losses” shall have the meaning set forth in Section 5(a).

               “Person” means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.

               “Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

               “Prospectus” means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

               “Registrable Securities” means the Exchange Common Stock issued to the
Purchaser pursuant to the Exchange Agreement.

               “Registration Statement” means the registration statement contemplated by
Section 2(a), including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.

               “Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

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               “Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

               “Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

               “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

               “Special Counsel” means one special counsel to the Holders.

       2.     Shelf Registration.

               (a)      On or prior to the Filing Date, the Company shall prepare and file
with the Commission a Registration Statement covering the resale of all
Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except
if the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another
appropriate form in accordance herewith as the Holders may consent) and shall
contain (except if otherwise directed by the Holders) the “Plan of
Distribution” attached hereto as Annex A.

               (b)      The Company shall use its best efforts to cause the Registration
Statement required to be filed hereunder to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event prior to the Effectiveness Date, and shall use its best efforts to keep
such Registration Statement continuously effective under the Securities Act
until all Registrable Securities covered by the Registration Statement have
been sold or may be sold by the Holders thereof without volume restrictions
pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to
a written opinion letter to such effect, addressed and acceptable to the
Company’s transfer agent and the affected Holders (the “Effectiveness Period”),
provided, that the Company shall not be deemed to have used its best efforts to
keep the Registration Statement effective during the Effectiveness Period if it
voluntarily takes any action that would result in the Holders not being able to
sell the Registrable Securities covered by such Registration Statement during
the Effectiveness Period, unless such action is required under applicable law
or the Company has filed a post-effective amendment to the Registration
Statement and the Commission has not declared it effective.

               (c)      If (a) a Registration Statement is not filed on or prior to the Filing
Date (if the Company files such Registration Statement without affording the
Holder the opportunity to review and comment on the same as required by Section
3(a) hereof, the Company shall not be deemed to have satisfied this clause
(a)), or (b) the Registration Statement filed hereunder is not declared
effective by the Commission on or prior to the Effectiveness Date, or (c) after
a Registration Statement is filed with and declared effective by the
Commission, such Registration

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Statement ceases to be effective as to all Registrable Securities at any
time prior to the expiration of the Effectiveness Period without being
succeeded within twenty Trading Days by an amendment to such Registration
Statement or by a subsequent Registration Statement filed with and declared
effective by the Commission, or (d) the Common Stock shall be delisted or
suspended from trading on the American Stock Exchange (“AMEX”) or on either of
the New York Stock Exchange, NASDAQ National Market or Nasdaq SmallCap Market
(each, a “Subsequent Market”) for more than three Trading Days, or (e) an
amendment to a Registration Statement is not filed by the Company with the
Commission within ten Trading Days of the Commission’s notifying the Company
that such amendment is required in order for such Registration Statement to be
declared effective (any such failure or breach being referred to as an “Event,”
and the date on which such Event occurs, or the date on which the related
Trading Day period is exceeded, being referred to as “Event Date”), then, on
the Event Date and each monthly anniversary thereof until the applicable Event
is cured, the Company shall pay to the Purchaser $5,000, in cash, as liquidated
damages and not as a penalty; provided, however, that the Purchaser is then a
Holder of Registrable Securities hereunder. If the Company fails to pay any
liquidated damages pursuant to this Section in full within seven days after the
date payable, the Company will pay interest thereon at a rate of 18% per annum
(or such lesser maximum rate that is permitted to be paid by applicable law) to
the Purchaser, accruing daily from the date such liquidated damages are due
until such amounts, plus all such interest thereon, are paid in full.

       3.     Registration Procedures

               In connection with the Company’s registration obligations hereunder, the
Company shall:

               (a)      Not less than five Business Days prior to the filing of a Registration
Statement or any related Prospectus or any amendment or supplement thereto
(including any document that would be incorporated or deemed to be incorporated
therein by reference), the Company shall, (i) furnish to the Holders and their
Special Counsel copies of all such documents proposed to be filed, which
documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such Holders and their Special
Counsel, and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of respective counsel to such to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file a Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities covered thereby or their Special Counsel shall
reasonably object. Notwithstanding anything to the contrary contained herein,
the parties agree that if (1) the Holders or their Special Counsel shall fail
to provide comments to the Company or their counsel to a proposed Registration
Statement by the expiration of the fifth Business Day following the date on
which they received the same for review, or (2) the Holders or their Special
Counsel shall fail to provide comments to the Company or its counsel to a
proposed amendment or supplement to a Registration Statement hereunder by the
expiration of the second Business Day following the date on which they receive
the same for review, then a number of days equal to the number of

4

 

Business Days in excess of such periods shall be added to the definitions
of Filing Date and Effectiveness Date for purposes of Section 2(b) hereof.

               (b)      (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement continuously effective as to the Registrable Securities for the
Effectiveness Period; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; and (iii) respond as promptly as
reasonably possible, and in any event within ten Business Days, to any comments
received from the Commission with respect to the Registration Statement or any
amendment thereto and as promptly as reasonably possible provide the Holders
true and complete copies of all correspondence from and to the Commission
relating to such Registration Statement.

               (c)      Notify the Holders of Registrable Securities to be sold and their
Special Counsel as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than five Business Days prior to such filing) and (if requested
by any such Person) confirm such notice in writing no later than one Business
Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a “review”
of such Registration Statement and whenever the Commission comments in writing
on such Registration Statement (the Company shall provide true and complete
copies thereof and all written responses thereto to each of the Holders); and
(C) when the Registration Statement or any post-effective amendment has become
effective; (ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any Proceedings for that purpose;
(iv) if at any time any of the representations and warranties of the Company
contained in any Transaction Document ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and (vi) of the
occurrence of any event or passage of time that makes the financial statements
included in the Registration Statement ineligible for inclusion therein or any
statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration
Statement or the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

               (d)      Use its best efforts to avoid the issuance of, or, if issued, to
obtain the withdrawal of (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any

5

 

suspension of the qualification (or exemption from qualification) of any
of the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.

               (e)      Furnish to each Holder and their Special Counsel, without charge, at
least one conformed copy of the Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.

               (f)      Promptly deliver to each Holder and their Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form
of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

               (g)      Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Holders and their
Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Registration Statement; provided, that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.

               (h)      Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be delivered to
a transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by the Exchange Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any such Holders may reasonably request.

               (i)       Upon the occurrence of any event contemplated by Section 3(c)(vi), as
promptly as reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

6

 

               (j)      Comply with all applicable rules and regulations of the Commission.

       4.     Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing
fees (including, without limitation, fees and expenses (A) with respect to
filings required to be made with AMEX and any subsequent market on which the
Common Stock is then listed for trading, and (B) in compliance with state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as the Holders of a majority of Registrable Securities may
reasonably designate)), (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, (v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. Notwithstanding the foregoing,
brokerage fees and underwriting commissions incurred by the Holders in
disposing of their Registrable Securities under a Registration Statement shall
be borne by such Holders.

7

 

       5.     Indemnification

               (a)      Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
costs of preparation and attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in the Registration Statement,
any Prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any Prospectus or
form of prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading, except to the extent, but only to the
extent, that (1) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information
relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in the Registration Statement, such Prospectus or
such form of Prospectus or in any amendment or supplement thereto or (2) in the
case of an occurrence of an event of the type specified in Section
3(c)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(e). The Company shall notify the Holders promptly of
the institution, threat or assertion of any Proceeding of which the Company is
aware in connection with the transactions contemplated by this Agreement.

               (b)      Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review) arising solely out of or based solely upon any untrue
statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was

8

 

reviewed and expressly approved in writing by such Holder expressly for
use in the Registration Statement, such Prospectus or such form of Prospectus
or in any amendment or supplement thereto or (2) in the case of an occurrence
of an event of the type specified in Section 3(c)(ii)-(vi), the use by such
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 6(e). In
no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.

               (c)      Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment of
all fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have proximately and
materially adversely prejudiced the Indemnifying Party.

               An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

               All fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such

9

 

Proceeding in a manner not inconsistent with this Section) shall be paid
to the Indemnified Party, as incurred, within ten Business Days of written
notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).

               (d)      Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying Party or Indemnified Party, and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include,
subject to the limitations set forth in Section 5(c), any reasonable attorneys’
or other reasonable fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section was
available to such party in accordance with its terms.

               The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder
shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Holder from the sale of
the Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

               The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

10

 

       6.     Miscellaneous

               (a)      Remedies. In the event of a breach by the Company or by a Holder, of
any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted
by law and under this Agreement, including recovery of damages, will be
entitled to seek specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of
any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.

               (b)      No Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has entered, as of the date hereof, nor shall the Company or any
of its subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Except as and to the extent specified in Schedule 6(b)
hereto, neither the Company nor any of its subsidiaries has previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person.

               (c)      No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto) may
include securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders.

               (d)      Compliance. Each Holder covenants and agrees that it will comply with
the prospectus delivery requirements of the Securities Act as applicable to it
in connection with sales of Registrable Securities pursuant to the Registration
Statement.

               (e)      Discontinued Disposition. Each Holder agrees by its acquisition of
such Registrable Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Sections 3(c)(ii),
3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Securities under the Registration
Statement until such Holder’s receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Section 3(i),
or until it is advised in writing (the “Advice”) by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or
deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce the
provisions of this paragraph.

               (f)      Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in

11

 

writing and signed by the Company and the Holders of at least two-thirds
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the immediately preceding sentence.

               (g)      Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 8:00 p.m. (New York City
time) on a Business Day, against electronic confirmation of receipt (ii) the
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in the
Exchange Agreement later than 8:00 p.m. (New York City time) on any date and
earlier than 11:59 p.m. (New York City time) on such date, against electronic
confirmation of receipt (iii) the Business Day following the date of mailing,
if sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:

	 	 	 
	If to the Company:	 	
HEARx Ltd.
	 	 	
1250 Northpoint Parkway
	 	 	
West Palm Beach, FL 33407
	 	 	
Facsimile No.: (501) 688-8883
	 	 	
Attn: Chairman
	 
	With copies to:	 	
Bryan Cave LLP
	 	 	
700 Thirteenth Street, N.W.
	 	 	
Suite 700
	 	 	
Washington, D.C. 20005-3960
	 	 	
Facsimile No.: (202) 508-6200
	 	 	
Attn: LaDawn Naegle, Esq.
	 
	If to the Purchaser:	 	
c/o CITCO
	 	 	
Kaya Flamboyan 9
	 	 	
Curacao, Netherlands Antilles
	 	 	
Facsimile: 011-599-9732-2008
	 	 	
Attention: W.R. Weber
	 
	With copies to:	 	
Genesee International Inc.
	 	 	
10500 NE 8th Street
	 	 	
Suite 1920
	 	 	
Bellevue, WA 98004

12

 

	 	 	 
	 	 	
Facsimile: (425) 462-4645
	 	 	
Attention: Howard Coleman
	 
	 	 	
Robinson Silverman Pearce Aronsohn & Berman LLP
	 	 	
1290 Avenue of the Americas
	 	 	
New York, NY 10104
	 	 	
Facsimile No.: (212) 541-4630 and (212) 541-1432
	 	 	
Attn: Eric L. Cohen, Esq.

          If to any other Person who is then the registered Holder:

	 	 	 
		 	
To the address of such Holder as it appears in
the stock transfer books of the Company

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

               (h)      Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign its
rights or obligations hereunder without the prior written consent of each
Holder. Each Holder may assign their respective rights hereunder in the manner
and to the Persons as permitted under the Exchange Agreement.

               (i)       Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.

               (j)       Governing Law. The corporate laws of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof.

               (k)      Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.

               (l)       Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use their reasonable efforts to find and employ an alternative means to

13

 

achieve the same or substantially the same result as that contemplated by
such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.

               (m)      Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

               (n)      Shares Held by the Company and its Affiliates. Whenever the consent
or approval of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the Company or its
Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

               (o)      Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and neither Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser
pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not
be necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES TO FOLLOW]

14

 

               IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.

	 	 	 
	
HEARx LTD.
	 
	By:	 	
/s/ Paul A. Brown, M.D.
	 	 	

	 	 	
Paul A. Brown, M.D.
	 	 	
Chairman and Chief Executive Officer
	 
	
ADVANTAGE FUND II LTD.
	 
	By:	 	
Genesee International Inc.
as General Manager
	 
	 	 	
/s/Donald R. Morken
	 	 	

	 	 	
Donald R. Morken
	 	 	
President

 

Annex A

Plan of Distribution

            The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:

	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	 
	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
	 
	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	 
	•	 	an exchange distribution in accordance with the rules of the applicable exchange;
	 
	•	 	privately negotiated transactions;
	 
	•	 	broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per
share;
	 
	•	 	a combination of any such methods of sale; and
	 
	•	 	any other method permitted pursuant to applicable law.

            The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

            The Selling Stockholders may pledge their shares to their brokers under
the margin provisions of customer agreements. If a Selling Stockholder
defaults on a margin loan, the broker may, from time to time, offer and sell
the pledged shares.

            Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The Selling Stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.

 

            The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such event,
any commissions received by such persons and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.

            The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders and the Selling Stockholders have agreed to indemnify the Company
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00032-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00032-of-00352.parquet"}]]