Document:

exv4w3

 

Exhibit 4.3

EXHIBIT B

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR UNDER ANY STATE SECURITIES LAWS, IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION FOR
NON-PUBLIC OFFERINGS. THIS SECURITY MAY NOT BE SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER
THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE ISSUER RECEIVES AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

Issuance Date: ____________, 2005

Warrant No.: _____________

HEARUSA, INC.

PURCHASE WARRANT

WARRANT (“WARRANT”) TO PURCHASE SHARES OF

COMMON STOCK, $0.10 PAR VALUE PER SHARE

     This
is to certify that, FOR VALUE RECEIVED, _______________________ (“Warrantholder”), is
entitled to purchase, subject to the provisions of this Warrant, from HearUSA, Inc., a corporation
organized under the laws of Delaware (“Company”), at any time and from time to time after the
issuance date hereof (“Exercise Date”) but not later than 5:00 P.M., Eastern time, on the fifth
(5th)
anniversary of such issuance date (“Expiration Date”),
_____________ shares (“Warrant
Shares”) of Common Stock, $0.10 par value (“Common Stock”), of the Company, at an exercise price
per share equal to $___________ (the exercise price in effect from time to time hereafter being herein
called the “Warrant Price”). The number of Warrant Shares purchasable upon exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein.

     This Warrant has been issued pursuant to the terms of the Purchase Agreement (“Purchase
Agreement”) dated on or about the date hereof between the Company and the Warrantholder.
Capitalized terms used herein and not defined shall have the meaning specified in the Purchase
Agreement.

     Section 1.      Registration. The Company shall maintain books for the transfer and
registration of the Warrant. Upon the initial issuance of the Warrant, the Company shall issue and
register the Warrant in the name of the Warrantholder.

     Section 2.      Transfers. As provided herein, this Warrant may be transferred only
pursuant to a registration statement filed under the Securities Act of 1933, as amended
(“Securities Act”) or an exemption from registration thereunder. Subject to such restrictions, the
Company shall transfer this Warrant from time to time, upon the books to be maintained by the
Company for that purpose, upon surrender hereof for transfer properly endorsed or accompanied by
appropriate instructions for transfer upon any such transfer, and a new Warrant shall be issued to
the transferee and the surrendered Warrant shall be canceled by the Company. References to
Warrantholder or holder shall include any such transferee.

 

 

     Section 3.      Exercise of Warrant.

     (a)      Subject to the provisions hereof, the Warrantholder may exercise this Warrant to purchase
up to 75% of the Warrant Shares, in whole or in part, at any time and from time to time on and
after the Exercise Date and before the Expiration Date upon surrender of the Warrant, together with
delivery of the duly executed Warrant exercise form attached hereto (the “Exercise Agreement”)
(which may be by fax), to the Company during normal business hours on any business day at the
Company’s principal executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), and upon payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company of the Warrant Price for the
Warrant Shares specified in the Exercise Agreement. The Warrant Shares so purchased shall be
deemed to be issued to the holder hereof or such holder’s designee, as the record owner of such
shares, as of the close of business on the date on which the completed Exercise Agreement shall
have been delivered to the Company (or such later date as may be specified in the Exercise
Agreement). Certificates for the Warrant Shares so purchased, representing the aggregate number of
shares specified in the Exercise Agreement, shall be delivered to the holder hereof within a
reasonable time, not exceeding five (5) business days, after this Warrant shall have been so
exercised. The certificates so delivered shall be in such denominations as may be requested by the
holder hereof and shall be registered in the name of such holder or such other name as shall be
designated by such holder. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the holder a new Warrant representing the number of shares with respect to
which this Warrant shall not then have been exercised. In lieu of delivering physical certificates
representing the shares of Common Stock issuable upon exercise of this Warrant, provided the
Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer (“FAST”) program, upon request of the Warrantholder, the Company shall use
commercially reasonable efforts to cause its transfer agent to electronically transmit such shares
issuable upon exercise to the Warrantholder (or its designee), by crediting the account of the
Warrantholder’s (or such designee’s) prime broker with DTC through its Deposit Withdrawal Agent
Commission system (provided that the same time periods herein as for stock certificates shall
apply).

     (b)      In the event the Note remains outstanding as of December 31, 2005, subject to the
provisions hereof, the Warrantholder may exercise this Warrant to purchase up to the remaining 25%
of the Warrant Shares, in whole or in part, at any time and from time to time on and after January
1, 2006 and before the Expiration Date upon compliance with the procedures set forth in
subparagraph (a) above. In the event the Note has been repaid as of December 31, 2005, this
Warrant shall represent the right to purchase only 75% of the Warrant Shares as described in
subparagraph (a) above.

     Section 4.      Compliance with the Securities Act of 1933. Neither this Warrant nor the
Common Stock issued upon exercise hereof nor any other security issued or issuable upon exercise of
this Warrant may be offered or sold except as provided in this Warrant and in conformity with the
Securities Act of 1933, as amended, and then only against receipt of an agreement of such person to
whom such offer of sale is made to comply with the provisions of this Section 4 with respect to any
resale or other disposition of such security. The Company may cause

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the legend set forth on the
first page of this Warrant to be set forth on each Warrant or similar legend on any security issued
or issuable upon exercise of this Warrant until the Warrant Shares have been registered for resale
under the Registration Rights Agreement or until Rule 144 is available, unless counsel for the
Company is of the opinion as to any such security that such legend is unnecessary.

     Section 5.      Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issuance or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder of this Warrant in respect of
which such shares are issued. The holder shall be responsible for income taxes due under federal
or state law, if any such tax is due.

     Section 6.      Mutilated or Missing Warrants. In case this Warrant shall be mutilated,
lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon
cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen
or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares,
but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or
destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable
indemnity or bond with respect thereto, if reasonably requested by the Company.

     Section 7.      Reservation of Common Stock. The Company hereby represents and warrants
that there have been reserved, and the Company shall at all applicable times keep reserved, out of
the authorized and unissued Common Stock, a number of shares sufficient to provide for the exercise
of the rights of purchase represented by the Warrant in full (without regard to any restrictions on
beneficial ownership contained herein), and the transfer agent for the Common Stock, including
every subsequent transfer agent for the Common Stock or other shares of the Company’s capital stock
issuable upon the exercise of any of the right of purchase aforesaid (“Transfer Agent”), shall be
irrevocably authorized and directed at all times to reserve such number of authorized and unissued
shares of Common Stock as shall be requisite for such purpose. The Company agrees that all Warrant
Shares issued upon exercise of the Warrant in accordance with its terms shall be, at the time of
delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid
and non-assessable shares of Common Stock of the Company. The Company will keep a conformed copy
of this Warrant on file with its Transfer Agent. The Company will supply from time to time the
Transfer Agent with duly executed stock certificates required to honor the outstanding Warrant.

     Section 8.      Warrant Price. The Warrant Price, subject to adjustment as provided in
Section 9, shall, if payment is made in cash or by certified check, be payable in lawful money of
the United States of America.

     Section 9.      Adjustment of Warrant Exercise Price and Number of Shares. If the Company
at any time after the date of issuance of this Warrant subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common
Stock into a greater number of shares, the Warrant Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of shares of Common Stock obtainable
upon exercise of this Warrant will be proportionately increased. If the Company at any time after

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the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the
Warrant Price in effect immediately prior to such combination will be proportionately increased and
the number of shares of Common Stock obtainable upon exercise of this Warrant will be
proportionately decreased. Any adjustment under this Section 9 shall become effective at the close
of business on the date the subdivision or combination becomes effective.

     Section 10.      Fractional Interest. The Company shall not be required to issue
fractions of Warrant Shares upon the exercise of the Warrant. If any fraction of a Warrant Share
would, except for the provisions of this Section, be issuable upon the exercise of the Warrant (or
specified portions thereof), the Company shall round such calculation to the nearest whole number
and disregard the fraction.

     Section 11.      Benefits. Nothing in this Warrant shall be construed to give any
person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable
right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive
benefit of the Company and the Warrantholder.

     Section 12.      Notices to Warrantholder. Upon the happening of any event requiring an
adjustment of the Warrant Price, the Company shall forthwith give written notice thereof to the
Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant
Price and the adjusted number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such calculation is based. In
the event of a dispute with respect to any such calculation, the certificate of the Company’s
independent certified public accountants shall be conclusive evidence of the correctness of any
computation made, absent manifest error. Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject adjustment. At the
Warrantholder’s request, the Company shall deliver to the Warrantholder as of a requested date a
notice specifying the Warrant Price and the number of Warrant Shares into which this Warrant is
exercisable as of such date.

     Section 13.      Identity of Transfer Agent. The Transfer Agent for the Common Stock is
American Stock Transfer and Trust Company. Forthwith upon the appointment of any subsequent
transfer agent for the Common Stock or other shares of the Company’s capital stock issuable upon
the exercise of the rights of purchase represented by the Warrant, the Company will fax to the
Warrantholder a statement setting forth the name and address of such transfer agent.

     Section 14.      Notices. Any notice pursuant hereto to be given or made by the
Warrantholder to or on the Company shall be sufficiently given or made if delivered personally or
by facsimile or if sent by an internationally recognized courier, addressed as follows:

HearUSA, Inc.

1250 Northpoint Parkway

West Palm Beach, FL 33407

Fax: 561/688-8893

Attention: CEO

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With a copy to:

Bryan Cave LLP

700 Thirteenth Street, N.W.

Washington, D.C. 20005-3960

Fax: (202) 508-6200

Attention: LaDawn Naegle, Esq.

or such other address as the Company may specify in writing by notice to the Warrantholder
complying as to delivery with the terms of this Section 14.

     Any notice pursuant hereto to be given or made by the Company to or on the Warrantholder shall
be sufficiently given or made if personally delivered or if sent by an internationally recognized
courier service by overnight or two-day service, to the address set forth on the books of the
Company or, as to each of the Company and the Warrantholder, at such other address as shall be
designated by such party by written notice to the other party complying as to delivery with the
terms of this Section 14.

     All such notices, requests, demands, directions and other communications shall, when sent by
courier, be effective two (2) days after delivery to such courier as provided and addressed as
aforesaid. All faxes shall be effective upon receipt.

     Section 15.      Registration Rights. The holder of this Warrant is entitled to the
benefit of certain registration rights in respect of the Warrant Shares as provided in the
Registration Rights Agreement.

     Section 16.      Successors. All the covenants and provisions hereof by or for the benefit
of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns
hereunder.

     Section 17.      Governing Law. This Warrant shall be deemed to be a contract made under
the laws of the State of New York, without giving effect to its conflict of law principles, and for
all purposes shall be construed in accordance with the laws of said State.

     Section 18.      9.9% Limitations. Notwithstanding anything to the contrary contained
herein, the number of shares of Common Stock that may be acquired by the holder upon exercise
pursuant to the terms hereof shall not exceed a number that, when added to the total number of
shares of Common Stock deemed beneficially owned by such holder at such time (other than by virtue
of the ownership of securities or rights to acquire securities (including the Warrant Shares) that
have limitations on the holder’s right to convert, exercise or purchase similar to the limitation
set forth herein), together with all shares of Common Stock deemed beneficially owned (other than
by virtue of the ownership of securities or rights to acquire securities that have limitations on
the right to convert, exercise or purchase similar to the limitation set forth herein) by the
Warrantholder’s “affiliates” at such time (as defined in Rule 144 of the Act) (“Aggregation
Parties”) that would be aggregated for purposes of determining whether a group under Section 13(d)
of the Securities Exchange Act of 1934, as amended, exists, would exceed 9.9% of the total issued
and outstanding shares of the Common Stock (the “Restricted Ownership Percentage”). Each holder
shall have the right (x) at any time and from time to time to reduce its Restricted Ownership

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Percentage immediately upon notice to the Company and (y) (subject to waiver) at any time and from
time to time, to increase its Restricted Ownership Percentage immediately in the event of the
announcement as pending or planned, of a Change in Control Transaction (as defined in the Note).

     Section 19.      Replacement Warrants. The Company agrees that within ten (10) business
days after any request from time to time of the Warrantholder, it shall deliver to such holder a
new Warrant in substitution of this Warrant which is identical in all respects except that the then
Warrant Price shall be appropriately specified in the Warrant, and the Warrant shall specify the
fixed number of Warrant Shares into which this Warrant is then exercisable. Such changes are
intended not as amendments to the Warrant but only as clarification of the foregoing numbers for
convenience purposes, and such changes shall not affect any provisions concerning adjustments to
the Warrant Price or number of Warrant Shares contained herein.

     Section 20.      Absolute Obligation to Issue Warrant Shares. The Company’s obligations to
issue and deliver Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the holder hereof to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any judgment against any
person or entity or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the holder hereof or any other Person
of any obligation to the Company or any violation or alleged violation of law by the holder or any
other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the holder hereof in connection with the issuance of Warrant Shares.
The Company will at no time close its shareholder books or records in any manner which interferes
with the timely exercise of this Warrant.

     Section 21.      Assignment, etc. The Warrantholder may assign or transfer this Warrant to
any transferee only with the prior written consent of the Company, which may not be unreasonably
withheld or delayed, provided that the Warrantholder may assign or transfer this Warrant to any of
such Warrantholder’s affiliates without the consent of the Company. The Warrantholder shall notify
the Company of any such assignment or transfer promptly. This Warrant shall be binding upon the
Company and its successors and shall inure to the benefit of the Warrantholder and its successors
and permitted assigns.

     Section 22.      Judicial Proceedings. Any legal action, suit or proceeding brought
against the Company with respect to this Warrant may be brought in any federal court of the
Southern District of New York or any state court located in New York County, State of New York, and
by execution and delivery of this Warrant, the Company hereby irrevocably and unconditionally
waives any claim (by way of motion, as a defense or otherwise) of improper venue, that it is not
subject personally to the jurisdiction of such court, that such courts are an inconvenient forum or
that this Warrant or the subject matter may not be enforced in or by such court. The Company
hereby irrevocably and unconditionally consents to the service of process of any of the
aforementioned courts in any such action, suit or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, at its address set forth or provided for in Section
14, such service to become effective 10 days after such mailing. Nothing herein contained shall be
deemed to affect the right of any party to serve process in any manner permitted by law or commence
legal proceedings or otherwise proceed against any other party in any other jurisdiction to enforce
judgments obtained in any action, suit or proceeding brought pursuant to this Section.

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The Company
irrevocably submits to the exclusive jurisdiction of the aforementioned courts in such action, suit
or proceeding.

 
 

[Balance of page intentionally blank; signature pages follow]

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     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the date
first written above.

	 	 	 	 	 
	 	HEARUSA, INC.

 	 
	 	By:  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Attest:

Sign:______________________________

Print Name:

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EXHIBIT B

HEARUSA, INC.

WARRANT EXERCISE FORM

HearUSA, Inc.

1250 Northpoint Parkway

West Palm Beach, FL 33407

Fax: _____________________

Attention: _______________

     This undersigned hereby irrevocably elects to exercise the right of purchase represented by
the within Warrant (“Warrant”) for, and to purchase
thereunder ____________________ shares of Common
Stock (“Warrant Shares”) provided for therein, and requests that certificates for the Warrant
Shares be issued as follows:

_________________________

Name

_________________________

Address

_________________________

_________________________

and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise
of the Warrant, that a new Warrant for the balance of the Warrant Shares.

     In lieu of delivering physical certificates representing the Warrant Shares purchasable upon
exercise of this Warrant, provided the Company’s transfer agent is participating in the Depository
Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the
Holder, the Company shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares issuable upon conversion or exercise to the undersigned, by crediting
the account of the undersigned’s prime broker with DTC through its Deposit Withdrawal Agent
Commission (“DWAC”) system.

	 	 	 	 	 
	 	 	 
	Dated: _________________ 	Signature: ______________________________ 	 
	 	______________________________________

Name (please print) 	 
	 	______________________________________

     Addressexv4w4

 

Exhibit 4.4

     NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES MAY BE EXCHANGED HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

2005 7% SUBORDINATED NOTE DUE ___________, 2008

OF

HEARUSA, INC.

 

			
	Note No.: ______________________
	 	Original Principal Amount: ______________________
	Issuance Date:
______________________, 2005	 	 

     This Note (“Note”) is one of a duly authorized issue of Notes of HEARUSA, INC., a
corporation duly organized and existing under the laws of the State of Delaware (the
“Company”), designated as the Company’s 2005 7%
Subordinated Notes Due _____________, 2008 (“Maturity
Date”) in an aggregate principal amount (when taken together with the original principal amounts of
all other Notes) of up to Five Million Five Hundred Thousand U.S. Dollars (U.S. $5,500,000) (the
“Notes”).

     For Value Received, the Company hereby promises to pay to the order of
___________________________________________ or its registered assigns or successors-in-interest
(“Holder”) the principal sum of ________________
Dollars (U.S. $_____________), together with all
accrued but unpaid interest thereon, if any, on the Maturity Date, to the extent such principal
amount and interest has not been repaid in accordance with the terms hereof. Interest on the
unpaid principal balance hereof shall accrue at the rate of 7% per annum from the date of original
issuance hereof (the “Issuance Date”) until the same becomes due and payable on the Maturity Date,
or such earlier date upon acceleration or by redemption or payment in accordance with the terms
hereof. Interest on this Note shall accrue daily commencing on the Issuance Date and shall be
computed on the basis of a 360-day year, 30-day months and actual days elapsed and shall be payable
in accordance with Section 1 hereof. Notwithstanding anything contained herein, this Note shall
bear interest on the due and unpaid Principal Amount from and after the occurrence and during the
continuance of an Event of Default pursuant to Section 4(a) at the rate (the “Default Rate”) equal
to the lower of fifteen percent (15%) per annum or the highest rate permitted by law. Unless
otherwise agreed or required by applicable law, payments will be applied first to any unpaid
collection costs, then to unpaid interest and fees and any remaining amount to principal.

     All payments of principal and interest on this Note shall be made in lawful money of the
United States of America by wire transfer of immediately available funds to such account as the
Holder may from time to time designate by written notice in accordance with the provisions of this

 

 

Note or by Company check. At any time, and from time to time, the Company may prepay, in whole or
in part, the original Principal Amount of this Note, without penalty, after providing written
notice of such prepayment. Whenever any amount expressed to be due by the terms of this Note is
due on any day which is not a Business Day (as defined below), the same shall instead be due on the
next succeeding day which is a Business Day.

     Capitalized terms used herein and not otherwise defined shall have the meanings set forth in
the Purchase Agreement dated on or about the Issuance Date pursuant to which the Notes were
originally issued (the “Purchase Agreement”). For purposes hereof the following terms shall have
the meanings ascribed to them below:

     “Bankruptcy Event” means any of the following events: (a) the Company commences a case or
other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any subsidiary thereof; (b) there is commenced against the Company any such case or
proceeding that is not dismissed within 60 days after commencement; (c) the Company is adjudicated
insolvent or bankrupt or any order of relief or other order approving any such case or proceeding
is entered; (d) the Company suffers any appointment of any custodian or the like for it or any
substantial part of its property that is not discharged or stayed within 60 days; (e) the Company
makes a general assignment for the benefit of creditors; (f) the Company fails to pay, or states
that it is unable to pay or is unable to pay, its debts generally as they become due; (g) the
Company calls a meeting of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or (h) the Company, by any act or failure to act, expressly indicates
its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other
action for the purpose of effecting any of the foregoing.

     “Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial
banks in the City of New York are authorized or required by law or executive order to remain
closed.

     “Change in Control Transaction” will be deemed to exist if (i) there occurs any consolidation,
merger or other business combination of the Company with or into any other corporation or other
entity or person (whether or not the Company is the surviving corporation), or any other corporate
reorganization or transaction or series of related transactions in which in any of such events the
voting stockholders of the Company prior to such event cease to own 50% or more of the voting
power, or corresponding voting equity interests, of the surviving corporation after such event
(including without limitation any “going private” transaction under Rule 13e-3 promulgated pursuant
to the Exchange Act or tender offer by the Company under Rule 13e-4 promulgated pursuant to the
Exchange Act for 20% or more of the Company’s Common Stock), (ii) any person (as defined in Section
13(d) of the Exchange Act), together with its affiliates and associates (as such terms are defined
in Rule 405 under the Act), beneficially owns or is deemed to beneficially own (as described in
Rule 13d-3 under the Exchange Act without regard to the 60-day exercise period) in excess of 50% of
the Company’s voting power, (iii) there is a replacement of more than one-half of the members of
the Company’s Board of Directors which is not approved by those individuals who are members of the
Company’s Board of Directors on the date thereof, (iv) in one or a series of related transactions,
there is a sale or transfer of all or substantially all of the assets of the Company, determined on
a consolidated basis, or (v) the Company enters into any agreement providing for an event set forth
in (i), (ii), (iii) or (iv) above.

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     “Common Stock” shall mean the Company’s Common Stock, par value $.10 per share.

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

     “Payment
Date” shall mean each __________, __________, __________
and __________ of each year, provided
that if any such day is not a Trading Day, then such Payment Date shall mean the next succeeding
day which is a Trading Day.

     “Principal Amount” shall refer to (i) the original principal amount of this Note, plus (ii)
any default payments owing under the Agreements but not previously paid or added to the Principal
Amount, less (iii) all amounts of principal previously repaid or exchanged.

     “Principal Market” shall mean the American Stock Exchange or such other principal market or
exchange on which the Common Stock is then listed for trading.

     “Trading Day” shall mean a day on which there is trading on the Principal Market.
The following terms and conditions shall apply to this Note:

     Section 1.      Payments of Principal and Interest.

          (a)      Interest Only Payments. On each Payment Date beginning on ___until the Maturity
Date, the Company shall pay to the Holder all interest accrued to date on the entire outstanding
Principal Amount of this Note (“Interest Amount”), less amounts prepaid pursuant to Section 1(b)
below in accordance with this Section 1.

          (b)      Interest Prepayment. On the Issuance Date, the Company shall prepay to the Holder all
interest that would have accrued on the entire Principal Amount of
this Note through __________, but
for the fact that it was prepaid pursuant hereto.

          (c)      Quarterly Payments. On each Payment Date beginning on __________, 2005, the Company shall
repay eight percent (8%) of the original Principal Amount (including accrued but unpaid interest to
that date), plus a premium equal to two percent (2%) of the Principal Amount being repaid.

          (d)      Acceleration. All outstanding Principal Amount of this Note, including any interest due
hereon, shall become due and payable immediately upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company.

          (e)      Certain Additional Payments by the Company. Any payment by the Company to the Holder
hereunder, whether for principal, interest or otherwise, shall not be subject to any deduction,
withholding or offset for any reason whatsoever except to the extent required by law, and the
Company represents that to its best knowledge no deduction, withholding or offset is so required
for any tax or any other reason.

          (f)      Cancellation. After all of the Principal Amount has been paid in full or exchanged into
equity securities pursuant to Section 4 hereof, this Note shall automatically be deemed cancelled,
and the Holder shall promptly surrender the Note to the Company.

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     Section 2.      Subordinated/Subsequent Debt. The Notes are and shall be subordinated to
the debt owed by the Company to Siemens Hearing Instruments, Inc. pursuant to the agreements in
effect on the Issuance Date, and shall be pari-passu with the Company’s 2003 Convertible
Subordinated Notes due November 30, 2008. So long as any Principal Amount is outstanding, the
Company and its subsidiaries shall not directly or indirectly, without the written approval of the
holders of at least 51% of the outstanding Principal Amount of all of the Notes then outstanding,
(a) redeem any shares of the Company’s capital stock (other than shares of the Company’s E Series
Convertible Preferred Stock), or (b) incur or permit to exist additional indebtedness which is
senior to the Notes (except for (i) indebtedness and liens to Siemens Hearing Instruments, Inc.
pursuant to the agreements currently in effect on the Issuance Date; (ii) in connection with the
acquisition by the Company, by whatever means, of any business, assets or technologies; (iii) to
any strategic investor, vendor, customer, lease or similar arrangement; or (iv) pursuant to any
unsecured commercial borrowing, lending or lease financing transaction).

     Section 3.      Redemption Right.

          (a)      Upon consummation of a Change in Control Transaction prior to the Maturity Date, the
Holder shall have the right thereafter to require the Company or its successor to redeem this Note,
in whole but not in part, at a redemption price equal to (i) if prior to or on the first
anniversary of the Issuance Date, 115% of the outstanding Principal Amount (plus all accrued and
unpaid interest, if any), (ii) if between the first and second anniversaries of the Issuance Date,
110% of the outstanding Principal Amount (plus all accrued and unpaid interest, if any); or (iii)
if after the second anniversary of the Issuance Date, 105% of the outstanding Principal Amount
(plus all accrued and unpaid interest, if any).

          (b)      In the event of the death of the Company’s Chairman, Paul A. Brown, M.D., the Holder shall
have the right to require the Company to redeem up to sixty percent (60%) of the original Principal
Amount of the Note (the “Redeemable Percentage”) at a redemption price equal to the pro rata
portion of the original Principal Amount. The Redeemable Percentage shall be subject to reduction
on a pro rata basis with the Redeemable Percentage of other outstanding Notes in the event proceeds
from the existing $3 million key man life insurance policy relating to the Company’s Chairman, Paul
A. Brown, M.D. are not sufficient to pay the redemption price for all the Notes as to which this
redemption right has been exercised.

          (c)      Upon the happening of an event that triggers a redemption right hereunder, the Holder
shall have five (5) days to exercise its redemption right by providing this Note and written notice
of election to the Company.

Section 4.      Exchange.

          (a)      Right to Exchange. Subject to the exclusions herein, at any time there is an
outstanding Principal Amount, if the Company closes a private placement of its equity securities at
a price equal to or greater than $3.00 per share of Common Stock (subject to adjustment for stock
splits, stock dividends and recapitalizations), then the Holder shall have the right to exchange
the outstanding Principal Amount of this Note (plus accrued but unpaid interest, if any), in whole
or in part, for the type of equity securities issued in such placement to the extent such issuance
to the Holder would comply with applicable securities laws and stock exchange regulations. The
number of securities received by the Holder shall be determined by the outstanding Principal Amount
being

4

 

exchanged (plus accrued but unpaid interest, if any). By way of illustration, the Holder may
exchange $1 million of outstanding Principal Amount (plus accrued but unpaid interest, if any) for
that number of securities that could be acquired for a purchase price of $1 million had the Holder
participated in the private placement.

          (b)      Exchange Notice. Upon the triggering of an exchange right hereunder, the Holder
shall have five (5) days to exercise its exchange right by providing this Note and written notice
of exchange to the Company.

          (c)      No Fractions. Upon an exchange hereunder, in lieu of issuing a stock certificate
representing a fraction of a share of Common Stock, the Company may (if otherwise permitted) make a
cash payment in respect of any final fraction of a share based in the closing price of a share of
Common Stock at such time.

          (d)      Charges, Taxes and Expenses. Issuance of certificates for securities upon the
exchange of this Note shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such certificate, all of which shall be paid
by the Company; provided, however, that the Company shall not be required to pay any tax which may
be payable in respect of any transfer of certificates to be issued in a name other than the name of
the Holder.

          (e)      Exchange Limitation. Notwithstanding anything to the contrary contained herein,
the number of shares of Common Stock that may be beneficially acquired by the Holder upon exchange
pursuant to the terms hereof shall not exceed a number that, when added to the total number of
shares of Common Stock deemed beneficially owned by such Holder (other than by virtue of the
ownership of securities or rights to acquire securities (including the Notes and Warrants) that
have limitations on the Holder’s right to exchange, exercise or purchase similar to the limitation
set forth herein), together with all shares of Common Stock deemed beneficially owned at such time
(other than by virtue of the ownership of securities or rights to acquire securities that have
limitations on the right to exchange, exercise or purchase similar to the limitation set forth
herein) by the holder’s “affiliates” at such time (as defined in Rule 144 of the Act) (“Aggregation
Parties”) that would be aggregated for purposes of determining whether a group under Section 13(d)
of the Securities Exchange Act of 1934 as amended, exists, would exceed 9.9% of the total issued
and outstanding shares of the Common Stock (the “Restricted Ownership Percentage”). Each holder
shall have the right (w) at any time and from time to time to reduce its Restricted Ownership
Percentage immediately upon notice to the Company and (x) (subject to waiver) at any time and from
time to time, to increase its Restricted Ownership Percentage immediately in the event of the
announcement as pending or planned, of a Change in Control Transaction.

Section 5.      Defaults and Remedies.

          (a)      Events of Default. An “Event of Default” is: (i) a default in payment of any
amount due hereunder which default continues for more than 5 business days after written notice
thereof has been received by the Company; (ii) failure by the Company for seven (7) days after
written notice has been received by the Company to remedy any material breach by the Company of its
covenants, representations or warranties in the Purchase Agreement, Registration Rights Agreement
or Warrants; (iii) if the Company is subject to any Bankruptcy Event; or (iv)

5

 

failure of the
Company to list any of its equity securities on the American Stock Exchange or Nasdaq Stock Market.

          (b)      Remedies. If an Event of Default occurs and is continuing with respect to any of
the Notes, the Holder may declare all of the then outstanding Principal Amount of this Note and all
other Notes held by the Holder, including any interest due thereon, to be due and payable
immediately. In the event of such acceleration, the amount due and owing to the Holder shall be
115% of the outstanding Principal Amount of the Notes held by the Holder (plus all accrued and
unpaid interest, if any). The Company shall pay interest on such amount in cash at the Default
Rate to the Holder if such amount is not paid within 7 days of Holder’s request. The remedies
under this Note shall be cumulative.

Section 6.      General.

          (a)      Payment of Expenses. The Company agrees to pay all reasonable charges and
expenses, including attorneys’ fees and expenses, which may be incurred by the Holder in
successfully enforcing this Note and/or collecting any amount due under this Note.

          (b)      Savings Clause. In case any provision of this Note is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such
provision shall be adjusted rather than voided, if possible, so that it is enforceable to the
maximum extent possible, and the validity and enforceability of the remaining provisions of this
Note will not in any way be affected or impaired thereby. In no event shall the amount of interest
paid hereunder exceed the maximum rate of interest on the unpaid principal balance hereof allowable
by applicable law. If any sum is collected in excess of the applicable maximum rate, the excess
collected shall be applied to reduce the principal debt. If the interest actually collected
hereunder is still in excess of the applicable maximum rate, the interest rate shall be reduced so
as not to exceed the maximum allowable under law.

          (c)      Amendment. Neither this Note nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the Company and the Holder.

          (d)      Assignment, Etc. The Holder may assign or transfer this Note to any transferee.
The Holder shall notify the Company of any such assignment or transfer promptly. This Note shall
be binding upon the Company and its successors and shall inure to the benefit of the Holder and its
successors and assigns.

          (e)      No Waiver. No failure on the part of the Holder to exercise, and no delay in
exercising any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise by the Holder of any right, remedy or power hereunder preclude any other
or future exercise of any other right, remedy or power. Each and every right, remedy or power
hereby granted to the Holder or allowed it by law or other agreement shall be cumulative and not
exclusive of any other, and may be exercised by the Holder from time to time.

          (f) Governing Law; Jurisdiction.

               (i)      Governing Law. THIS NOTE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK

6

 

WITHOUT REGARD TO ANY CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD
OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

               (ii)      NO JURY TRIAL. THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY WAIVES ANY AND ALL RIGHTS IT
MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH, THIS NOTE.

          (g)      Replacement Notes. This Note may be exchanged by Holder at any time and from time
to time for a Note or Notes with different denominations representing an equal aggregate
outstanding Principal Amount, as reasonably requested by Holder, upon surrendering the same. No
service charge will be made for such registration or exchange. In the event that Holder notifies
the Company that this Note has been lost, stolen or destroyed, a replacement Note identical in all
respects to the original Note (except for registration number and Principal Amount, if different
than that shown on the original Note), shall be issued to the Holder, provided that the Holder
executes and delivers to the Company an agreement reasonably satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection with the Note.

     IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on the day and in the
year first above written.

	 	 	 	 	 
	 	HEARUSA, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

     Attest:

Sign: ________________________________

Print Name:

7

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