Document:

exv10w4w2

 

Exhibit 10.4.2

SECOND AMENDMENT TO THE

MERISTAR HOSPITALITY CORPORATION

INCENTIVE PLAN

     Pursuant to the approval by the Board of Directors of MeriStar Hospitality
Corporation (the “Company”) and the Company’s shareholders at the Company’s
2002 Annual Meeting, the MeriStar Hospitality Corporation Incentive Plan (the
“Plan”) is amended, effective June 9, 2003, by deleting the language contained
in Section 7.1 in its entirety and by replacing such language with the
following text:

     Award. In accordance with the provisions of Article IV, the
Committee will designate each individual to whom a Stock Award is
to be made and will specify the number of shares of Common Stock
covered by such awards; provided, however, that no individual may
receive Stock Awards with respect to more than 250,000 shares of
Common Stock in any calendar year.

     IN WITNESS WHEREOF, MeriStar Hospitality Corporation has caused this
amendment to the Plan to be duly executed in its corporate name this 9th day of
June, 2003.

MERISTAR HOSPITALITY CORPORATION

 

/s/ Jerome J. Kraisinger

Jerome J. Kraisinger

Executive Vice President, General Counsel, and Secretaryexv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is effective as of May 12,
2003 (the “Effective Date”), by and between HearUSA, Inc., a Delaware
corporation (“HearUSA”), and Paul A. Brown, M.D. (“Executive”).

RECITALS

     1. HearUSA operates a network of hearing care centers which provide a full
range of audiological products and services for the hearing impaired (the
“Business”);

     2. Executive is recognized as having experience in the management and
operation of companies that are in the Business;

     3. HearUSA’s Board of Directors (the “Board”) has determined that it is in
the best interests of HearUSA’s and its stockholders to assure that HearUSA’s
will have the continued dedication of Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined in Section
4.7);

     4. The Board believes it is imperative (a) to diminish the inevitable and
significant distractions of Executive and dilution of the time of Executive, by
virtue of the personal uncertainties and risks created by a pending or
threatened Change in Control, (b) to encourage Executive’s full attention and
dedication to HearUSA currently and in the event of any threatened or pending
Change in Control and (c) to provide Executive with compensation arrangements
in the event of a Change in Control which provide Executive with financial
security, which are competitive with those of other companies, and which ensure
that Executive receives the compensation and benefits intended to be provided
to Executive by HearUSA through this Agreement and HearUSA’s various employee
benefit and compensation plans and arrangements without regard to any Excise
Tax (as defined in Section 4.11(a)); and

     5. To accomplish the objectives described in the two immediately preceding
recitals, the Board desires to cause HearUSA to enter into this Agreement as
set forth herein.

     NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged by the
parties, HearUSA and Executive agree as follows:

ARTICLE I

EMPLOYMENT, REPORTING AND DUTIES

     1.1 Employment. On the terms and subject to the conditions of this
Agreement, HearUSA hereby employs and engages the services of Executive to
serve as, and Executive agrees to serve as and perform the function of,
Chairman of the Board (the “Office”) of HearUSA for the Term (as defined in
Section 4.1) and for the compensation and benefits stated herein.

 

 

     1.2 Major Responsibilities; Authority. Executive shall have the
authorities, duties, responsibilities and status (including offices, titles and
reporting requirements) usually associated with the Office of companies having
operations and assets similar in nature and value to the operations and assets
of HearUSA and at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date, and such other duties as the
Board shall determine and Executive shall accept from time to time.

     1.3 Extent of Service. During the Term, and excluding any periods of
vacation and sick leave to which Executive is entitled, Executive agrees to
devote reasonable time and energies to the Business consistent with past
practice and shall not, during the Term, be engaged in any business activity
which would interfere or prevent Executive from carrying out his duties under
this Agreement; provided, however, that this Section 1.3 shall not be construed
as preventing Executive from investing his assets in such form or manner as
will not require services on the part of Executive in the operation of the
affairs of any company in which such investments are made.

     1.4 Location. Executive shall not be required to move from Executive’s
home in Palm Beach County, Florida in the performance of his duties,
responsibilities and obligations hereunder.

ARTICLE II

COMPENSATION AND RELATED ITEMS

     2.1 Compensation.

          (a) Base Salary. Until a Change in Control occurs, as compensation and in
consideration for the services to be rendered by Executive under this Agreement
and for the performance by Executive of the usual obligations of such
employment, HearUSA agrees to pay Executive, and Executive agrees to accept, a
base salary (the “Base Salary”) effective May 12, 2003 of at least $275,000 per
annum which shall be paid in accordance with HearUSA standard payroll practice.
Executive’s Base Salary shall be subject to review annually by the Board in
accordance with HearUSA’s review policies and practices for executives as in
effect at the time of any such review. If a Change in Control occurs,
Executive’s Base Salary for the next calendar year and each subsequent calendar
year during the Term must increase by at least 20% over his Base Salary during
the previous calendar year.

          (b) Bonus. At the end of each calendar year during the Term, the
Executive shall be eligible to receive an annual bonus (the “Annual Bonus”),
based upon a performance evaluation criteria which shall be consistent with the
criteria used by the Board for its current evaluation of Executive; provided
that, if, in any calendar year during the Term, HearUSA achieves the net income
target approved by the Board for such calendar year (the “Net Income Target”)
the Executive must receive an Annual Bonus equal to at least 50% of Executive’s
Base Salary for the previous calendar year. For the purposes of this
Agreement, net income must be determined in accordance with generally accepted
accounting principles, consistently applied.

          (c) Percentage of Net Income. If, in any calendar year during the Term,
HearUSA achieves the Net Income Target approved by the Board for such calendar
year, no more

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than 100 days after the end of such calendar year, HearUSA must pay to
Executive an amount equal to 1% of HearUSA’s net income for such calendar year.

          (d) Additional Compensation. In addition to the Base Salary provided for
in Section 2.1(a), Executive or Executive’s family, as the case may be, shall
be entitled to:

          (i) participate in, and shall receive all benefits under:

          (A) any and all welfare benefit and similar employee benefit
plans, programs, arrangements or policies that are generally made
available by HearUSA and its affiliates (as defined in Section
4.11(l)) now or at any time in the future to other key employees or
retired key employees, including any hospitalization, medical,
prescription, dental, disability, salary continuance, individual
life insurance, executive life insurance, group life insurance,
accidental death insurance and travel accident insurance plans,
programs, arrangements and policies; and

          (B) in addition to the incentive compensation provided for in
Section 2.1(b), Executive will be entitled to any and all incentive,
savings, retirement, profit sharing, pension, stock option,
restricted stock, employee stock ownership, supplemental executive
retirement and other employee benefit plans, programs, arrangements
and policies that are generally made available by HearUSA and its
affiliates now or at any time in the future to officers and other
key employees; additionally, pension benefits from HearUSA when
Executive is eligible for and elects retirement shall be calculated
so as to provide a benefit based on actual credited years and months
of service with HearUSA plus a benefit calculated equivalent to an
added ten years of credited service;

          (ii) annual vacations and sick leave in accordance with the vacation
and sick leave policies of HearUSA and its affiliates that are now or at
any time in the future in effect with respect to officers and other key
employees, during which time Executive’s compensation shall be paid in
full; and

          (iii) fringe benefits in accordance with the fringe benefit policies
of HearUSA and its affiliates that are now or at any time in the future in
effect with respect to officers and other key employees.

     2.2 Expenses. HearUSA agrees that, during the Term, Executive shall be
allowed reasonable and necessary business expenses in connection with the
performance of his duties hereunder within guidelines established by the Board
as in effect at any time with respect to key employees (“Business Expenses”),
including reasonable and necessary expenses for food, travel, lodging,
entertainment and other items in the promotion of the Business within such
guidelines. HearUSA shall promptly reimburse Executive for all Business
Expenses incurred by Executive upon Executive’s presentation to HearUSA of an
itemized account thereof, together with receipts, vouchers or other supporting
documentation. After termination or expiration of the Term, however such
termination or expiration may come about, Executive shall have ninety (90) days
after the date

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of such termination or expiration to submit Business Expenses incurred during
the Term to HearUSA for reimbursement.

ARTICLE III

EXCULPATION

     HearUSA agrees that Executive will not be liable for any losses, expenses,
costs or damages caused by or resulting from the recommendations, suggestions,
actions, errors, omissions or mistakes of Executive undertaken or proposed by
Executive if Executive acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of HearUSA. Executive’s
rights under this Article III shall not be deemed exclusive of, but shall be
cumulative with, any and all other rights (including rights of indemnification
and advancement of expenses) to which Executive may now or at any time in the
future be entitled under applicable law, HearUSA’s certificate of
incorporation, HearUSA’s bylaws, any agreement (including this Agreement), any
vote of stockholders, any resolution of directors, or otherwise. Nothing
contained in this Article III will prevent the termination of Executive’s
employment in accordance with the provisions of this Agreement.

ARTICLE IV

TERM AND TERMINATION

     4.1 Term. Subject to Section 4.2, the term of this Agreement shall be for
five (5) years commencing on the Effective Date (“Term”); provided, however,
that if a Change in Control occurs prior to the second anniversary of the
Effective Date, the Term shall be extended to end on the fifth anniversary of
such Change in Control.

     4.2 Termination of Term. Except as may otherwise be provided herein, the
Term shall terminate:

          (a) Thirty (30) days after written notice of termination is given by
either party to the other; or

          (b) On Executive’s death or, at HearUSA’s option, upon Executive’s
becoming Disabled (as defined in Section 4.9).

Any notice of termination given by HearUSA to Executive under Section 4.2(a)
above shall specify whether such termination is with or without Cause (as
defined in Section 4.4). Any notice of termination given by Executive to
HearUSA under Section 4.2(a) above shall specify whether such termination is
made with or without Good Reason (as defined in Section 4.5) or Good
Reason-Change in Control (as defined in Section 4.6).

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     4.3
Obligations of HEARx Upon Termination.

          (a) Cause; Without Good Reason; and Without Good Reason-Change in Control.
If HearUSA terminates the Term with Cause pursuant to Section 4.2(a), or if
Executive terminates the Term without Good Reason or without Good Reason-Change
in Control pursuant to Section 4.2(a), the Term shall terminate without further
obligations to Executive, other than those obligations owing or accrued to,
vested in, or earned by Executive through the date of termination, including:

          (i) Executive’s Base Salary in effect at the time of such termination
through the date of termination to the extent it remains unpaid; and

          (ii) all compensation previously deferred (together with any accrued
interest thereon) and not yet paid by HearUSA, and any accrued vacation
pay not yet paid by HearUSA; and

          (iii) all other amounts or benefits owing or accrued to, vested in or
earned by Executive through the date of termination under the then
existing or applicable plans, programs, arrangements and policies of
HearUSA and its affiliates, including any such plans, programs,
arrangements or policies described in Section 2.1(b).

The obligations owing or accrued to, vested in, or earned by Executive through
the date of termination, including such amounts and benefits specified in
clauses (i), (ii) and (iii) of this Section 4.3(a), are collectively referred
to as the “Accrued Obligations.” The aggregate amount of such obligations
owing or accrued to, vested in, or earned by Executive through the date of
termination, including the Accrued Obligations, shall be paid by HearUSA to
Executive in accordance with the plans, programs or agreements under which the
Accrued Obligations were earned.

          (b) Good Reason. If Executive terminates the Term with Good Reason
pursuant to Section 4.2(a):

          (1) HearUSA shall pay the aggregate of the following amounts to
Executive in one lump sum within thirty (30) days after the date of such
termination or in a manner and at such later time as specified by
Executive, provided that all such payments must be made no later than the
end of the Term as in effect immediately before the date of such
termination:

          (i) to the extent not theretofore paid, Executive’s Base Salary
in effect at the time of such termination (but prior to giving
effect to any reduction of Executive’s Base Salary which may have
precipitated such termination) for the duration of the Term as in
effect immediately before the date of such termination; and

          (ii) if more than three years of the Term have elapsed on the
date of such termination, an amount equal to one (1) times
Executive’s Base Salary in

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effect at the time of such termination (but prior to giving effect
to any reduction of Executive’s Base Salary which may have
precipitated such termination); and

          (iii) an amount equal to (A) one (1) times the average of all
bonus, profit sharing and other incentive payments made by HearUSA
to Executive in respect of the two (2) calendar years immediately
preceding such termination, and (B) the pro-rata share of
Executive’s target bonus, profit sharing and other incentive
payments for the calendar year in which such termination occurred
based upon the proportion that the number of days that have elapsed
in such calendar year up to and including the date of termination
bears to 365; and

          (iv) in the case of compensation previously deferred by
Executive, all amounts previously deferred (together with any
accrued interest thereon) and not yet paid by HearUSA, and any
accrued vacation pay not yet paid by HearUSA; and

          (v) all other amounts or benefits owing or accrued to, vested
in, or earned by Executive through the date of termination under the
then existing or applicable plans, programs, arrangements and
policies of HearUSA and its affiliates, including any such plans,
programs, arrangements or policies described in Section 2.1(b); and

          (vi) any and all other Accrued Obligations not otherwise
described in clauses (i), (ii), (iii) or (iv) of this Section
4.3(b)(1); and

               (2) Executive shall receive the following additional benefits:

          (i) for a 548-day period commencing on the date of termination
of the Term (the “Good Reason Benefits Period”), Executive shall
continue to be covered under each of the medical, dental, life
insurance, accident benefit and other welfare benefit (exclusive of
short- and long-term disability benefit) programs of HearUSA in
effect and applicable to Executive immediately prior to such
termination, and HearUSA shall pay the costs therefore except to the
extent that Executive already pays all or any portion thereof;
provided, however, that if Executive obtains any of the welfare
benefits provided for under this sentence from a new employer,
HearUSA’s obligation to provide such welfare benefits should be
secondary to that of such new employer. Executive’s coverage under
HearUSA’s medical and dental programs for the Good Reason Benefits
Period shall be included in the calculation of the “Period of
Coverage” to be provided to Executive pursuant to Section
4980B(f)(2)(B) of the Internal Revenue Code of 1986, as amended (the
“Code”), and Executive’s right to “Continuation Coverage” under
Section 4980B(f)(2) of the Code. The amount of the “Applicable
Premium” to be charged Executive under Section 4980B(f)(4) for
Continuation Coverage shall never be greater than the monthly amount
charged Executive for medical and dental coverage prior to the
termination of the Term; and

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          (ii) shall be fully vested in any and all options, restricted
stock, stock appreciation rights, cash equivalent stock appreciation
rights or any other similar rights based on the fair market value of
or otherwise relating to HearUSA’s common stock (collectively,
“Stock Incentive Rights”) which are outstanding immediately prior to
the termination of the Term, and Executive may exercise any such
vested Stock Incentive Rights during the two year period commencing
on the date of termination of the Term, notwithstanding any
provision otherwise in any plan or agreement awarding or granting
any Stock Incentive Right to Executive; and

          (iii) shall be fully vested in any and all benefits accrued
under any “employee pension benefit plan,” as defined in Section
3(2)(A) of the Employee Retirement Income Security Act of 1947, as
amended (“ERISA”), of HearUSA (“Retirement Plan”); and

          (iv) shall receive credit in the calculation of the accrued
benefit under HearUSA’s Pension Plan (“Pension Plan”) for (A) the
compensation to be paid to Executive pursuant to Section
4.3(b)(1)(ii) and (B) one (1) year of service in addition to the
service accrued by Executive through the date that the Term is
terminated. If the benefits set forth in this clause would cause
the Pension Plan to lose its qualification under Section 401(a) of
the Code, then the benefits accrued hereunder shall accrue to
Executive under HearUSA’s Supplemental Executive Retirement Plan
(“SERP”).

          (c) Without Cause Before a Change in Control. If HearUSA terminates the
Term without Cause before the occurrence of a Change in Control pursuant to
Section 4.2(a):

          (1) HearUSA shall pay the aggregate of the following amounts to
Executive in one lump sum within thirty (30) days after the date of such
termination or in a manner and at such later time as specified by
Executive, provided that all such payments must be made no later than the
end of the Term as in effect immediately before the date of such
termination:

          (i) to the extent not theretofore paid, Executive’s Base Salary
in effect at the time of such termination for the duration of the
Term as in effect immediately before the date of such termination;
and

          (ii) if more than three years of the Term have elapsed on the
date of such termination, an amount equal to one (1) times
Executive’s Base Salary in effect at the time of such termination;
and

          (iii) an amount equal to the sum of (A) one (1) times the
average of all bonus, profit sharing and other incentive payments
made by HearUSA to Executive in respect of the two calendar years
immediately preceding such termination, and (B) the pro-rata share
of Executive’s target bonus, profit sharing and other incentive
payments for the calendar year in which such termination occurred

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based upon the proportion that the number of days that have elapsed
in such calendar year up to and including the date of termination
bears to 365; and

          (iv) in the case of compensation previously deferred by
Executive, all amounts previously deferred (together with any
accrued interest thereon) and not yet paid by HearUSA, and any
accrued vacation pay not yet paid by HearUSA; and

          (v) all other amounts or benefits owing or accrued to, vested
in, or earned by Executive through the date of termination under the
then existing or applicable plans, programs, arrangements and
policies of HearUSA and its affiliates, including any such plans,
programs, arrangements or policies described in Section 2.1(b); and

          (vi) any and all other Accrued Obligations not otherwise
described in clauses (i), (ii), (iii) or (iv) of this Section
4.3(b)(1); and

               (2) Executive shall receive the following additional benefits:

          (i) for a 548-day period commencing on the date of termination
of the Term (the “Without Cause Benefits Period”), Executive shall
continue to be covered under each of the medical, dental, life
insurance, accident benefit and other welfare benefit (exclusive of
short- and long-term disability benefit) programs of HearUSA in
effect and applicable to Executive immediately prior to such
termination, and HearUSA shall pay the costs therefore except to the
extent that Executive already pays all or any portion thereof;
provided, however, that if Executive obtains any of the welfare
benefits provided for under this sentence from a new employer,
HearUSA’s obligation to provide such welfare benefits will thereupon
cease. Executive’s coverage under HearUSA’s medical and dental
programs for the Without Cause Benefits Period shall be included in
the calculation of the “Period of Coverage” to be provided to
Executive pursuant to Section 4980B(f)(2)(B) of the Code, and
Executive’s right to “Continuation Coverage” under Section
4980B(f)(2) of the Code. The amount of the “Applicable Premium” to
be charged Executive under Section 4980B(f)(4) for Continuation
Coverage shall never be greater than the monthly amount charged
Executive for medical and dental coverage prior to the termination
of the Term; and

          (ii) shall be fully vested in any and all Stock Incentive
Rights which are outstanding immediately prior to the termination of
the Term, and Executive may exercise any such vested Stock Incentive
Rights during the two year period commencing on the date of
termination of the Term, notwithstanding any provision otherwise in
any plan or agreement awarding or granting any Stock Incentive Right
to Executive; and

          (iii) shall be fully vested in any and all benefits accrued
under any Retirement Plan; and

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          (iv) shall receive credit in the calculation of the accrued
benefit under HearUSA’s Pension Plan for (A) the compensation to be
paid to Executive pursuant to Section 4.3(c)(1)(ii) and (B) one (1)
year of service in addition to the service accrued by Executive
through the date that the Term is terminated. If the benefits set
forth in this clause would cause the Pension Plan to lose its
qualification under Section 401(a) of the Code, then the benefits
accrued hereunder shall accrue to Executive under HearUSA’s SERP.

          (d) Good Reason-Change in Control; Without Cause On or After a Change in
Control. If Executive terminates the Term with Good Reason-Change in Control
pursuant to Section 4.2(a), or if HearUSA terminates the Term without Cause on
or after the occurrence of a Change in Control pursuant to Section 4.2(a):

          (1) HearUSA shall pay the aggregate of the following amounts to
Executive in one lump sum within thirty (30) days after the date of such
termination or in a manner and at such later time as specified by
Executive, provided that all such payments must be made no later than the
end of the Term as in effect immediately before the date of such
termination:

          (i) to the extent not theretofore paid, Executive’s Base Salary
in effect at the time of such termination (but prior to giving
effect to any reduction of Executive’s Base Salary which may have
precipitated such termination) for the duration of the Term as in
effect immediately before the date of such termination; and

          (ii) an amount equal to the sum of (A) the greater of (a)
Executive’s Base Salary times the number of years remaining in the
original five-year term of this Agreement or (b) three (3) times
Executive’s Base Salary in effect at the time of such termination
(but prior to giving effect to any reduction therein which may have
precipitated such termination), (B) three (3) times the average of
all bonus, profit sharing and other incentive payments made by
HearUSA to Executive in respect of the two (2) calendar years
immediately preceding such termination and (C) the pro-rata share of
Executive’s target bonus, profit sharing and other incentive
payments for the calendar year in which such termination occurred
based upon the proportion that the number of days that have elapsed
in such calendar year up to and including the date of termination
bears to 365; and

          (iii) in the case of compensation previously deferred by
Executive, all amounts previously deferred (together with any
accrued interest thereon) and not yet paid by HearUSA, and any
accrued vacation pay not yet paid by HearUSA; and

          (iv) all other amounts or benefits owing or accrued to, vested
in, or earned by Executive through the date of termination under the
then existing or applicable plans, programs, arrangements and
policies of HearUSA and its affiliates, including any such plans,
programs, arrangements or policies described in Section 2.1(b); and

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          (v) any and all other Accrued Obligations not otherwise
described in clauses (i), (ii), (iii) or (iv) of this Section
4.3(d)(1); and

          (2) Executive shall receive the following additional benefits:

          (i) for the three year period commencing on the date of
termination of the Term (the “Three Year Period”), Executive shall
continue to be covered under each of the medical, dental, life
insurance, accident benefit and other welfare benefit (exclusive of
short- and long-term disability benefit) programs of HearUSA in
effect and applicable to Executive immediately prior to the time of
such termination, and HearUSA shall pay the costs therefore except
to the extent that Executive already pays all or any portion
thereof; provided, however, that if Executive obtains any of the
welfare benefits provided for under this sentence from a new
employer, HearUSA’s obligation to provide such welfare benefits
shall be secondary to that of such new employer. Executive’s
coverage under HearUSA’s medical and dental programs for the Three
Year Period shall not be included in the calculation of the “Period
of Coverage” to be provided to Executive pursuant to Section
4980B(f)(2)(B) of the Code, and Executive’s right to “Continuation
Coverage” under Section 4980B(f)(2) of the Code for medical and
dental benefits under HearUSA’s medical and dental programs shall
commence on the first day following the end of the Three Year
Period. The amount of the “Applicable Premium” to be charged
Executive under Section 4980B(f)(4) for Continuation Coverage shall
never be greater than the monthly amount charged Executive for
medical and dental coverage during the Three Year Period; and

          (ii) shall be fully vested in any and all Stock Incentive
Rights which are outstanding immediately prior to the termination of
the Term, and Executive may exercise any such vested Stock Incentive
Rights during the Three Year Period, notwithstanding any provision
otherwise in any plan or agreement awarding or granting any Stock
Incentive Right to Executive; and

          (iii) shall be fully vested in any and all benefits accrued
under any Retirement Plan; and

          (iv) shall receive credit in the calculation of the accrued
benefit under the Pension Plan for (A) the compensation to be paid
to Executive pursuant to Section 4.3(d)(1)(ii) and (B) three (3)
years of service in addition to the service accrued by Executive
through the date that the Term is terminated. If the benefits set
forth in this clause would cause the Pension Plan to lose its
qualification under Section 401(a) of the Code, then the benefits
accrued hereunder shall accrue to Executive under the SERP, and if
the Executive is not a participant in the SERP, the actual lump sum
equivalent of the benefit described in this clause shall be paid in
accordance with Section 4.3(d)(1).

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          (e) Death. If Executive’s employment is terminated under Section 4.2(b)
by reason of Executive’s death, HearUSA shall pay to Executive’s legal
representatives the full amount of the obligations owing or accrued to, vested
in or earned by Executive through the date of Executive’s death, including the
Accrued Obligations in accordance with the plans, programs or agreements under
which the Accrued Obligations were earned. Notwithstanding the provisions of
any agreement pursuant to which Stock Incentive Rights were granted, any
granted but unvested Stock Incentive Rights will automatically vest on the date
of Executive’s death. Executive’s legal representative may exercise any Stock
Incentive Rights which vest pursuant to this Section 4.3(e) during a one year
period following Executive’s death. Anything in this Agreement to the contrary
notwithstanding, Executive’s family shall be entitled to receive benefits
provided by HearUSA and any of its affiliates to surviving families under the
then existing or applicable plans, programs or arrangements and policies of
HearUSA and its affiliates.

          (f) Disability. If Executive’s employment is terminated under Section
4.2(b) by reason of Executive’s becoming Disabled, HearUSA shall pay to
Executive or Executive’s legal representative the full amount of the
obligations owing or accrued to, vested in or earned by Executive through the
date of termination, including the Accrued Obligations in accordance with the
plans, programs or agreements under which the Accrued Obligations were earned.
Notwithstanding the provisions of any agreement pursuant to which Stock
Incentive Rights were granted, any granted but unvested Stock Incentive Rights
will automatically vest on the date of Executive’s death. Executive or
Executive’s legal representative may exercise any Stock Incentive Rights which
vest pursuant to this Section 4.3(f) during a one year period following
Executive’s death.

     4.4 Cause. As used in this Agreement, the term “Cause” means (a) willful
misconduct by Executive or gross neglect by Executive of his duties as an
employee, officer or director of HearUSA which continues for more than thirty
(30) days after Executive’s receipt of written notice from the Board to
Executive specifically identifying the willful misconduct or gross negligence
of Executive and directing Executive to discontinue the same, (b) the
commission by Executive of a crime constituting a felony or (c) the commission
by Executive of an act, other than an act taken in good faith within the course
and scope of Executive’s employment, which is directly detrimental to HearUSA
and exposes HearUSA to material liability.

     4.5 Good Reason. As used in this Agreement, the term “Good Reason” means
the breach of any material provision of this Agreement by HearUSA (including
any removal of Executive, without Cause, from the position of the Office during
the Term) which is not cured within thirty (30) days after written notice from
Executive to HearUSA specifically identifying such breach; provided, however,
that the term “Good Reason” shall not include any breach of any provision of
this Agreement that occurs after the occurrence of a Change in Control.

     4.6 Good Reason-Change in Control.

          (a) Except as provided in Section 4.6(b), as used in this Agreement, the
term “Good Reason-Change in Control” means after the occurrence of a Change in
Control, a determination by Executive that any one or more of the following
events has occurred:

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          (i) a material change in the nature of Executive’s Office, including
his authorities, duties, responsibilities or status (including offices,
titles or reporting requirements), from those in effect immediately prior
to the Change in Control; or

          (ii) the relocation of Executive’s place of employment to a location
in excess of fifty (50) miles from the place of Executive’s employment
immediately prior to the Change in Control, except for required travel on
HearUSA business to an extent substantially equivalent to Executive’s
business travel obligations immediately prior to the Change in Control; or

          (iii) any reduction by HearUSA of Executive’s Base Salary, or a
material reduction in his bonus, profit sharing or other incentive
benefits, from those in effect immediately prior to the Change in Control;
or

          (iv) the failure by HearUSA to increase Executive’s Base Salary in a
manner consistent (both as to frequency and percentage increase) with (A)
HearUSA’s practices in effect immediately prior to the Change in Control
with respect to similarly positioned employees or (B) HearUSA’s practices
implemented subsequent to the Change in Control with respect to similarly
positioned employees, whichever is more favorable to Executive; or

          (v) the failure of HearUSA to continue in effect Executive’s
participation in (A) HearUSA’s employee benefit plans, programs,
arrangements and policies, at a level substantially equivalent in value to
and on a basis consistent with the relative levels of participation of
other similarly positioned employees, as in effect immediately prior to
the Change in Control or (B) HearUSA’s employee benefit plans, programs,
arrangements and policies implemented subsequent to the Change in Control
with respect to similarly positioned employees, whichever is more
favorable to Executive; or

          (vi) the failure of HearUSA to obtain from a successor (including a
successor to a material portion of the business or assets of HearUSA) a
satisfactory assumption in writing of HearUSA’s obligations under this
Agreement; or

          (vii) the failure of HearUSA to continue to provide Executive with
office space, related facilities and support personnel (including
administrative and secretarial assistance) that are both commensurate with
the Office and Executive’s responsibilities to and position with HearUSA
immediately prior to the Change in Control and not materially dissimilar
to the office space, related facilities and support personnel provided to
other key executive officers of HearUSA; or

          (viii) HearUSA notifies Executive of HearUSA’s intention not to
observe or perform one or more of the obligations of HearUSA under this
Agreement; or

          (ix) HearUSA breaches any provision of this Agreement and such breach
is not cured within thirty (30) days after HearUSA’s receipt of notice
thereof from Executive.

12

 

          (b) If, after the occurrence of a Change in Control, Executive receives a
written description from HearUSA of the nature of Executive’s Office
thereafter, stating Executive’s authorities, duties, responsibilities, status,
salary, bonus and other employee benefits, or job location, and Executive
accepts such new authorities, duties, responsibilities, status, salary, bonus
and other employee benefits, or job location (“New Office”) with HearUSA
without determining that the New Office causes a Good Reason-Change in Control
as set forth in Section 4.6(a), then for the remaining Term the New Office
shall be the authorities, duties, responsibilities, status, salary, bonus and
other employee benefits, or job location to be used by Executive in determining
whether a Good Reason-Change in Control occurs thereafter pursuant to Section
4.6(a).

     4.7 Change in Control. As used herein, the term “Change in Control” shall
mean the occurrence with respect to HearUSA of any of the following events:

          (a) a report on Schedule 13D is filed with the Securities and Exchange
Commission (the “SEC”) pursuant to Section 13(d) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), disclosing that any person, entity or
group (within the meaning of Section 13(d) or 14(d) of the Exchange Act), other
than HearUSA (or one of its subsidiaries) or any employee benefit plan
sponsored by HearUSA (or one of its subsidiaries), is the beneficial owner (as
such term is defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of 30% or more of the outstanding common stock of
HearUSA or the combined voting power of the then outstanding securities of
HearUSA;

          (b) a report is filed by HearUSA disclosing a response to either Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Exchange Act, Item 1 of
Form 8-K promulgated under the Exchange Act, or any similar reporting
requirement hereafter promulgated by the SEC;

          (c) any person, entity or group (within the meaning of Section 13(d) or
Section 14(d) of the Exchange Act), other than HearUSA (or one of its
subsidiaries) or any employee benefit plan sponsored by HearUSA (or one of its
subsidiaries), shall purchase securities pursuant to a tender offer or exchange
offer to acquire any common stock of HearUSA (or securities convertible into
common stock) for cash, securities or any other consideration, provided that
after consummation of the offer, the person, entity or group in question is the
beneficial owner (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of 30% or more of the combined voting
power of the then outstanding securities of HearUSA (as determined under
paragraph (d) of Rule 13d-3 promulgated under the Exchange Act, in the case of
rights to acquire common stock);

          (d) the stockholders of HearUSA shall approve:

          (i) any merger, consolidation or reorganization of HearUSA:

          (A) in which HearUSA is not the continuing or surviving
corporation,

13

 

          (B) pursuant to which common stock of HearUSA would be
converted into cash, securities or other property,

          (C) with an entity which, prior to such merger, consolidation
or reorganization, owned 20% or more of the combined voting power of
the then outstanding securities of HearUSA, or

          (D) in which HearUSA will not survive as an independent,
publicly owned corporation;

          (ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all the
assets of HearUSA, or

          (iii) any liquidation or dissolution of HearUSA;

          (e) the stockholders of HearUSA shall approve a merger, consolidation,
reorganization, recapitalization, exchange offer, purchase of assets or other
transaction after the consummation of which any person, entity or group (within
the meaning of Section 13(d) or Section 14(d) of the Exchange Act) would own
beneficially in excess of 30% of the outstanding common stock of HearUSA or in
excess of 30% of the combined voting power of the then outstanding securities
of HearUSA;

          (f) HearUSA’s common stock is listed on none of the American Stock
Exchange, New York Stock Exchange and NASDAQ National Market System as a result
of a going-private transaction; or

          (g) during any period of two consecutive years, the individuals who at the
beginning of such period constituted the Board cease for any reason to
constitute a majority of the Board, unless the election or nomination for
election by HearUSA’s stockholders of each new director during any such
two-year period was approved by the vote of two-thirds of the directors then
still in office who were directors at the beginning of such two-year period.

     4.8 Disabled. As used herein, “Disabled” or “Disability” shall mean a
mental or physical impairment which, in the reasonable opinion of a qualified
doctor selected by HearUSA, renders Executive unable to perform with reasonable
diligence the ordinary functions and duties of Executive on a full-time basis
in accordance with the terms of this Agreement, which inability continues for a
period of not fewer than 180 consecutive days.

     4.9 Return of Materials; Confidential Information. In the event of any
termination of the Term, Executive shall promptly deliver to HearUSA all lists,
books, records, literature, products and any other materials owned or provided
by HearUSA in connection with Executive’s employment hereunder. Executive
shall not at any time during or after the Term hereof use for himself or
others, or divulge to others, any secret or confidential information, knowledge
or data of HearUSA obtained by Executive as a result of his employment unless
authorized by the Board.

14

 

     4.10 Certain Additional Payments by HearUSA.

          (a) Anything in this Agreement to the contrary notwithstanding, if it
shall be determined that any payment or distribution by HearUSA or any of its
affiliates to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (any such payments or distributions being individually referred to
herein as a “Payment,” and any two or more of such payments or distributions
being referred to herein as “Payments”), would be subject to the excise tax
imposed by Section 4999 of the Code (such excise tax, together with any
interest thereon, any penalties, additions to tax, or additional amounts with
respect to such excise tax, and any interest in respect of such penalties,
additions to tax or additional amounts, being collectively referred herein to
as the “Excise Tax”), then Executive shall be entitled to receive and HearUSA
shall make an additional payment or payments (individually referred to herein
as a “Gross-Up Payment,” and any two or more of such additional payments being
referred to herein as “Gross-Up Payments”) in an amount such that after payment
by Executive of all taxes (as defined in Section 4.10(k)) imposed upon the
Gross-Up Payment, Executive retains an amount of such Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.

          (b) Subject to the provisions of Section 4.10(c) through (i), any
determination (individually, a “Determination”) required to be made under this
Section 4.10(b), including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall initially be made, at HearUSA’s expense,
by nationally recognized tax counsel mutually acceptable to HearUSA and
Executive (“Tax Counsel”). Tax Counsel shall provide detailed supporting legal
authorities, calculations and documentation both to HearUSA and Executive
within 15 business days of the termination of Executive’s employment, if
applicable, or such other time or times as is reasonably requested by HearUSA
or Executive. If Tax Counsel makes the initial Determination that no Excise
Tax is payable by Executive with respect to a Payment or Payments, it shall
furnish Executive with an opinion reasonably acceptable to Executive that no
Excise Tax will be imposed with respect to any such Payment or Payments.
Executive shall have the right to dispute any Determination (a “Dispute”)
within 15 business days after delivery of Tax Counsel’s opinion with respect to
such Determination. The Gross-Up Payment, if any, as determined pursuant to
such Determination shall, at HearUSA’s expense, be paid by HearUSAto Executive
within five business days of Executive’s receipt of such Determination. The
existence of a Dispute shall not in any way affect Executive’s right to receive
the Gross-Up Payment in accordance with such Determination. If there is no
Dispute, such Determination shall be binding, final and conclusive upon HearUSA
and Executive, subject in all respects, however, to the provisions of Section
4.10(c) through (i) below. As a result of the uncertainty in the application
of Sections 4999 and 280G of the Code, it is possible that Gross-Up Payments
(or portions thereof) which will not have been made by HearUSA should have been
made (“Underpayments”), and if upon any reasonable written request from
Executive or HearUSA to Tax Counsel, or upon Tax Counsel’s own initiative, Tax
Counsel, at HearUSA’s expense, thereafter determines that Executive is required
to make a payment of any Excise Tax or any additional Excise Tax, as the case
may be, Tax Counsel shall, at HearUSA’s expense, determine the amount of the
Underpayment that has occurred, and any such Underpayment shall be promptly
paid by HearUSA to Executive.

          (c) HearUSA shall defend, hold harmless and indemnify Executive on a fully
grossed-up after tax basis from and against any and all claims, losses,
liabilities, obligations, damages, impositions, assessments, demands,
judgments, settlements, costs and expenses

15

 

(including reasonable attorneys’, accountants’, and experts’ fees and expenses)
with respect to any tax liability of Executive resulting from any Final
Determination (as defined in Section 4.10(j)) that any Payment is subject to
the Excise Tax.

          (d) If a party hereto receives any written or oral communication with
respect to any question, adjustment, assessment or pending or threatened audit,
examination, investigation or administrative, court or other proceeding which,
if pursued successfully, could result in or give rise to a claim by Executive
against HearUSA under this Section 4.10(d) (“Claim”), including a claim for
indemnification of Executive by HearUSA under Section 4.10(c), then such party
shall promptly notify the other party hereto in writing of such Claim (“Tax
Claim Notice”).

          (e) If a Claim is asserted against Executive (“Executive Claim”),
Executive shall take or cause to be taken such action in connection with
contesting such Executive Claim as HearUSA shall reasonably request in writing
from time to time, including the retention of counsel and experts as are
reasonably designated by HearUSA (it being understood and agreed by the parties
hereto that the terms of any such retention shall expressly provide that
HearUSA shall be solely responsible for the payment of any and all fees and
disbursements of such counsel and any experts) and the execution of powers of
attorney, provided that:

          (i) within 30 calendar days after HearUSA receives or delivers, as
the case may be, the Tax Claim Notice relating to such Executive Claim (or
such earlier date that any payment of the taxes claimed is due from
Executive, but in no event sooner than five calendar days after HearUSA
receives or delivers such Tax Claim Notice), HearUSA shall have notified
Executive in writing (“Election Notice”) that HearUSA does not dispute its
obligations (including its indemnity obligations) under this Agreement and
that HearUSA elects to contest, and to control the defense or prosecution
of, such Executive Claim at HearUSA’s sole risk and sole cost and expense;
and

          (ii) HearUSA’s shall have advanced to Executive on an interest-free
basis, the total amount of the tax claimed for Executive, at HearUSA’s
request, to pay or cause to be paid the tax claimed, file a claim for
refund of such tax and, subject to the provisions of the last sentence of
Section 4.10(g), sue for a refund of such tax if such claim for refund is
disallowed by the appropriate taxing authority (it being understood and
agreed by the parties hereto that HearUSA shall only be entitled to sue
for a refund and HearUSA shall not be entitled to initiate any proceeding
in, for example, United States Tax Court) and shall indemnify and hold
Executive harmless, on a fully grossed-up after tax basis, from any tax
imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and

          (iii) HearUSA shall reimburse Executive for any and all costs and
expenses resulting from any such request by HearUSA and shall indemnify
and hold Executive harmless, on fully grossed-up after-tax basis, from any
tax imposed as a result of such reimbursement.

          (f) Subject to the provisions of Section 4.10(e), HearUSA shall have the
right to defend or prosecute, at the sole cost, expense and risk of HearUSA,
such Executive Claim by all

16

 

appropriate proceedings, which proceedings shall be defended or prosecuted
diligently by HearUSA to a Final Determination; provided, however, that (i)
HearUSA shall not, without Executive’s prior written consent, enter into any
compromise or settlement of such Executive Claim that would adversely affect
Executive, (ii) any request from HearUSA to Executive regarding any extension
of the statute of limitations relating to assessment, payment or collection of
taxes for the taxable year of Executive with respect to which the contested
issues involved in, and amount of, the Executive Claim relate is limited solely
to such contested issues with respect to the Executive Claim and Executive
shall be entitled to settle or contest, in his sole and absolute discretion,
any other issue raised by the Internal Revenue Service or any other taxing
authority. So long as HearUSA is diligently defending or prosecuting such
Executive Claim, Executive shall provide or cause to be provided to HearUSA any
information reasonably requested by HearUSA that relates to such Executive
Claim, and shall otherwise cooperate with HearUSA and its representatives in
good faith to contest effectively such Executive Claim. HearUSA shall keep
Executive informed of all developments and events relating to any such
Executive Claim (including providing to Executive copies of all written
materials pertaining to any such Executive Claim), and Executive or his
authorized representatives shall be entitled, at Executive’s expense, to
participate in all conferences, meetings and proceedings relating to any such
Executive Claim.

          (g) If, after actual receipt by Executive of an amount of a tax claimed
(pursuant to an Executive Claim) that has been advanced by HearUSA pursuant to
Section 4.10(e)(ii), the extent of the liability of HearUSA hereunder with
respect to such tax claimed has been established by a Final Determination,
Executive shall promptly pay or cause to be paid to HearUSA any refund actually
received by, or actually credited to, Executive with respect to such tax
(together with any interest paid or credited thereon by the taxing authority
and any recovery of legal fees from such taxing authority related thereto),
except to the extent that any amounts are then due and payable buy HearUSA to
Executive, whether under the provisions of this Agreement or otherwise. If,
after the receipt by Executive of an amount advanced by HearUSA pursuant to
Section 4.10(e)(ii), a determination is made by the Internal Revenue Service or
other appropriate taxing authority that Executive shall not be entitled to any
refund with respect to such tax claimed and HearUSA does not notify Executive
in writing of its intent to contest such denial of refund prior to the
expiration of thirty days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of any Gross-Up Payments and
other payments required to be paid hereunder.

          (h) With respect to any Executive Claim, if HearUSA fails to deliver an
Election Notice to Executive within the period provided in Section 4.10(e)(i)
or, after delivery of such Election Notice, HearUSA fails to comply with the
provisions of Section 4.10(e)(ii) and (iii) and Section 4.10(f), then Executive
shall at any time thereafter have the right (but not the obligation), at his
election and in his sole and absolute discretion, to defend or prosecute, at
the sole cost, expense and risk of HearUSA, such Executive Claim. Executive
shall have full control of such defense or prosecution and such proceedings,
including any settlement or compromise thereof. If requested by Executive,
HearUSA shall cooperate, and shall cause its affiliates to cooperate, in good
faith with Executive and his authorized representatives in order to contest
effectively such Executive Claim. HearUSA may attend, but not participate in
or control, any defense, prosecution, settlement or compromise of any Executive
Claim controlled by Executive pursuant to this Section 4.10(h) and shall bear
its own costs and expenses with respect thereto. In the case of any Executive
Claim that

17

 

is defended or prosecuted by Executive, Executive shall, from time to time, be
entitled to current payment, on a fully grossed-up after tax basis, from
HearUSA with respect to costs and expenses incurred by Executive in connection
with such defense or prosecution.

          (i) In the case of any Executive Claim that is defended or prosecuted to a
Final Determination pursuant to the terms of this Section 4.10(i), HearUSA
shall pay, on a fully grossed-up after tax basis, to Executive in immediately
available funds the full amount of any taxes arising or resulting from or
incurred in connection with such Executive Claim that have not theretofore been
paid by HearUSA to Executive, together with the costs and expenses, on a fully
grossed-up after tax basis, incurred in connection therewith that have not
theretofore been paid by HearUSA to Executive, within ten calendar days after
such Final Determination. In the case of any Executive Claim not covered by
the preceding sentence, HearUSA shall pay, on a fully grossed-up after tax
basis, to Executive in immediately available funds the full amount of any taxes
arising or resulting from or incurred in connection with such Executive Claim
at least ten calendar days before the date payment of such taxes is due from
Executive, except where payment of such taxes is sooner required under the
provisions of this Section 4.10(i), in which case payment of such taxes (and
payment, on a fully grossed-up after tax basis, of any costs and expenses
required to be paid under this Section 4.10(i)) shall be made within the time
and in the manner otherwise provided in this Section 4.10(i).

          (j) For purposes of this Agreement, the term “Final Determination” shall
mean (A) a decision, judgment, decree or other order by a court or other
tribunal with appropriate jurisdiction, which has become final and
non-appealable; (B) a final and binding settlement or compromise with an
administrative agency with appropriate jurisdiction, including, but not limited
to, a closing agreement under Section 7121 of the Code; (C) any disallowance of
a claim for refund or credit with respect to an overpayment of tax unless a
suit is filed on a timely basis; or (D) any final disposition by reason of the
expiration of all applicable statutes of limitations.

          (k) For purposes of this Agreement, the terms “tax” and “taxes” mean any
and all taxes of any kind whatsoever (including any and all Excise Taxes,
income taxes, and employment taxes), together with any interest thereon, any
penalties, additions to tax or additional amounts with respect to such taxes
and any interest in respect of such penalties, additions to tax or additional
amounts.

          (l) For purposes of this Agreement, the terms “affiliate” and “affiliates”
mean, when used with respect to any entity, individual or other person, any
other entity, individual or other person which, directly or indirectly, through
one or more intermediaries controls, or is controlled by, or is under common
control with, such entity, individual or person. The term “control” and
deviations thereof when used in the immediately preceding sentence means the
ownership, directly or indirectly, of 50% of more of the voting securities of
an entity or other person or possessing the power to direct or cause the
direction of the management and policies of such entity or other person,
whether through the ownership of voting securities, by contract or otherwise.

     4.11 Legal Fees and Expenses. HearUSA shall defend, hold harmless and
indemnify Executive on a fully grossed-up after tax basis from and against any
and all costs and expenses

18

 

(including reasonable attorneys’, accountants’ and experts’ fees and expenses)
incurred by Executive acting reasonably from time to time as a result of any
contest (regardless of the outcome) by HearUSA or others contesting the
validity or enforcement of, or liability under, any term or provision of this
Agreement, plus in each case interest at the applicable federal rate provided
for in Section 7872(f)(2)(B) of the Code.

     4.12 Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive’s continuing or future participation in any benefit, bonus,
incentive or other plan, program, arrangement or policy provided by HearUSA or
any of its affiliates (including any plan, program, arrangement or policy
described in Section 2.1(e)) and for which Executive and/or Executive’s family
may qualify, nor shall anything herein limit or otherwise affect such rights as
Executive and/or Executive’s family may have under any other agreements with
HearUSA or any of its affiliates. Amounts which are vested benefits or which
Executive and/or Executive’s family is otherwise entitled to receive under any
plan, program, arrangement or policy described in Section 2.1(e)) at or
subsequent to the date of termination of the Term shall be payable in
accordance with such plan, program, arrangement or policy.

     4.13 Full Settlement. HearUSA’s obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which HearUSA may have against Executive or others. In
no event shall Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to Executive under any
of the provisions of this Agreement.

ARTICLE VI

GENERAL PROVISIONS

5.1 Arbitration of Disputes.

          (a) Scope of Agreement. HearUSA and Executive agree to take all
reasonable steps to resolve any employment-related legal and/or judicial
disputes between them quickly and fairly. Should such matters remain
unresolved, HearUSA and Executive agree that final and binding arbitration
shall be the exclusive remedy for any dispute between them relating to all
common law, statutory, legal or judicial claims, including any claims for
breach of contract and for violation of laws forbidding discrimination on the
basis of race, color, religion, gender, age, national origin, disability, or
any other legally protected status.

          (b) Procedure. Arbitration shall be before a single arbitrator in Miami,
Florida, unless the parties mutually agree to hold the arbitration in a
different location. The arbitration will be administered in accordance with
the employment dispute rules of the American Arbitration Association (AAA), and
its procedures then in effect. If the parties cannot agree on an arbitrator,
then the AAA rules will govern selection. HearUSA will pay the fees of the AAA
and the arbitrator. However, if Executive submits a matter to arbitration, he
shall be responsible for contributing to such fees an amount equivalent to the
amount required to file a complaint of the

19

 

same type in the state court, which is geographically closest to the site of
the arbitration if he does not prevail in the arbitration.

     The arbitrator’s award is to be in writing, with reasons given and
evidence cited for the award. The arbitrator shall have the discretion to
award fees (including administrative charges, costs and/or reasonable
attorney’s fees actually expended) to the prevailing party, in accordance with
controlling law. Any court of competent jurisdiction may enter judgment upon
the award, either by: (1) confirming the award, or (2) vacating, modifying or
correcting the award: (a) on any ground referred to in the U.S. Arbitration
Act, (b) where the findings of fact are not supported by substantial evidence,
or (c) where the conclusions of law are erroneous.

     5.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Delaware.

     5.3 Assignability. This Agreement is personal to Executive and without
the prior written consent of HearUSA shall not be assignable by Executive other
than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by Executive’s legal representatives
and heirs. This Agreement shall inure to the benefit of and be binding upon
HearUSA and its successors and assigns. HearUSA shall require any corporation,
entity, individual or other person who is the successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business and/or assets of HearUSA to expressly
assume and agree to perform, by a written agreement in form and substance
satisfactory to Executive, all of the obligations of HearUSA under this
Agreement. As used in this Agreement, the term “HearUSA” shall mean HearUSA as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, written agreement or otherwise.

     5.4 Withholding. HearUSA may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

     5.5 Entire Agreement; Amendment. This Agreement constitutes the entire
agreement and understanding between Executive and HearUSA and supersedes any
prior agreements or understandings, whether written or oral, with respect to
the subject matter hereof. Except as may be otherwise provided herein, this
Agreement may not be amended or modified, except by subsequent written
agreement executed by both parties hereto.

     5.6 Multiple Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all of which
together shall constitute one Agreement.

     5.7 Notices. Any notice provided for in this Agreement shall be deemed
delivered upon deposit in the United States mails, registered or certified
mail, addressed to the party to whom directed at the addresses set forth below
or at such other addresses as may be substituted therefore by notice given
hereunder. Notice given by any other means must be in writing and shall be
deemed delivered only upon actual receipt.

20

 

If to HearUSA:

1250 Northpoint Parkway

West Palm Beach, FL 33407

Attn: President

If to Executive:

223 Grand Pointe Drive — Ballen Isles

Palm Beach Gardens, FL 33418

Attn: Paul A. Brown, M.D.

     5.8 Waiver. The waiver of any breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any breach of the
same or by any other term or condition of this Agreement.

     5.9 Severability. In the event any provision of this Agreement is found
to be unenforceable or invalid, such provision shall be severable from this
Agreement and shall not affect the enforceability or validity of any other
provision of this Agreement.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.

	 	 	 	 	 
	 	 	HearUSA, Inc.
	 
	 	 	 	 
	

	 	By:	 	 /s/ Stephen J. Hansbrough
	

	 	 	 	
 
	

	 	Name:	 	 Stephen J. Hansbrough
	

	 	 	 	
 
	

	 	Title:	 	 Chief Executive Officer
	

	 	 	 	
 
	 	 	/s/ Paul A. Brown
	 	 	
 
	 	 	Paul A. Brown, M.D.

21

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