ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

AMONG

HELIX HEARING INC.

AND

HELIX HEARING CARE OF AMERICA CORP.

AND

3371727 CANADA INC.

April 27, 2009

TABLE OF CONTENTS

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT made as of the 27 ^th day of April, 2009,

AMONG:

HELIX HEARING INC. , a corporation existing under the laws of Ontario, (hereinafter referred to as the “Purchaser” ),

OF THE FIRST PART,

- and -

HELIX HEARING CARE OF AMERICA CORP., a corporation existing under the laws of Canada, (hereinafter referred to as the “Vendor” ),

OF THE SECOND PART.

-and-

3371727 CANADA INC ., a corporation existing under the laws of Canada,(hereinafter referred to as “3371727” )

OF THE THIRD PART

WHEREAS the Vendor has carried on in the Province of Ontario the business of marketing, distribution and selling of hearing aids to product end-users (the “ Business ”);

AND WHEREAS the Purchaser is willing to purchase the Purchased Assets (as hereinafter defined), and the Vendor is willing to sell the Purchased Assets to the Purchaser, on the terms and conditions of this Agreement;

AND WHEREAS the Vendor is an indirect wholly-owned subsidiary of HearUSA, Inc., a Delaware corporation, (“HearUSA”) and 3371727 is a direct wholly-owned subsidiary of the Vendor; and

AND WHEREAS HearUSA has agreed to guarantee the obligations of the Vendor hereunder.

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants, agreements, representations, warranties and indemnities of the parties herein contained and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each party), the parties agree as follows:

ARTICLE 1 — INTERPRETATION

For the purposes of this Agreement, unless the context otherwise requires, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:

“3371727 Contract” means any Contract under which (a) 3371727 has or may acquire any rights or benefits, (b) 3371727 has or may become subject to any obligation or liability, or (c) 3371727 or any of the assets owned or used by 3371727 is or may become bound;

“Accounting Records” means all of the Vendor’s books of account (including the general ledger), records relating to Accounts Receivable, Inventory, Accounts Payable and Prepaid Expenses, accounting records and other financial data and information relating to the Business or the Purchased Assets, including Tax Returns;

“Accounts Receivable” means any and all accounts, accounts receivable, trade accounts, notes, notes receivable, book debts or other debts due or accruing to a Company in connection with the Business as reflected on the Closing Balance Sheet, including the benefit of any security thereon, and any claim, right or remedy relating thereto;

“Accounts Receivable Trust Account Agreement” means the accounts receivable trust account agreement to be entered into between the Vendor and the Purchaser, in the form attached hereto as Exhibit C;

“Accounts Receivable Trust Bank Account” means the bank concentration deposit account of the Vendor with the Royal Bank of Canada, Business Banking, Montreal Downtown, 1 Place Ville-Marie, M-1, Montreal, QC H3C 3B5, identified as account number 008861052109;

“Affiliate” has the meaning attributed to that term in the Canada Business Corporations Act , as amended from time to time;

“Applicable Law” means any law, statute, ordinance, regulation, rule, by-law, decree, writ or order, protocol, code, guideline, treaty, policy, notice, direction and judicial, arbitral, administrative, ministerial or departmental judgements, awards or requirements of any Authority having jurisdiction over the Vendor or over any part of the Business or the Purchased Assets and includes, without limitation, Environmental Laws;

“Assignment of Leases” means assignments of the Leases by the Vendor in favour of the Purchaser, and an “Assignment of Lease” means an assignment of any one of the Leases;

“Assumed Liabilities” means the liabilities and obligations of the Vendor assumed by the Purchaser pursuant to Section 3.3;

“Authority” means any governmental or regulatory authority, department, body or agency or any court, tribunal, bureau, commission, arbitrator or arbitration board or other similar body, whether federal, provincial, state, municipal or other geographic or political subdivision thereof;

“Books and Records” means all books, records, files and papers, manuals and data, sales and advertising materials, lists of present and former suppliers, price lists, sales records, personnel, employment and other records, customer data, documentary evidence of all licenses, orders and permits, and all other correspondence, data and information, financial or otherwise, in any format or media whatsoever, of the Vendor, including copies of all Accounting Records and books and records required by Applicable Law to be retained by the Vendor (the originals of which shall be retained by the Vendor), and all books and records of 3371727, but excluding Tax Returns of the Vendor and books and records relating to the Excluded Assets;

“Business” has the meaning set out in the Recitals of this Agreement;

“Business Day” means any day, other than a Saturday or a Sunday, on which chartered banks in Toronto, Ontario are open for business;

“Cash” means, as of the Effective Time, the amount of cash and bank deposits as reflected in a Company’s bank statements and certificates of deposit less escrowed amounts or other restricted cash balances and less the amounts of any unpaid checks, drafts and wire transfers issued on or prior to the date of determination, calculated in accordance with GAAP. For avoidance of doubt, Cash shall (i) be calculated net of issued but uncleared checks and drafts, (ii) include checks and drafts deposited for the account of the Company’s, and (iii) be calculated net of overdrawn accounts.

“Claim” has the meaning set out in Section 10.3;

“Closing” has the meaning set out in Section 9.1;

“Closing Date” means April 27, 2009 or such other date as the Vendor and the Purchaser may mutually determine;

“Closing Balance Sheet” means the unaudited consolidated balance sheet of the Companies as at the Effective Time, in respect of the Business and the Purchased Assets, but excluding the effect of any Excluded Assets and Excluded Liabilities, prepared pursuant to Section 3.6 on the same basis and applying the same accounting principles, policies and practices that were used in preparing the Existing Balance Sheets;

“ Companies ” means collectively the Vendor and 3371727, and “ Company ” means either one of them individually;

“Contract” means any agreement, indenture, contract, deed of trust, licence, option, right, promise, assurance, undertaking, whether written or oral, express or implied and whether or not legally binding, but excluding the Leases;

“Current Assets” means Accounts Receivable, Inventories, Cash and Prepaid Expenses;

“Direct Claim” has the meaning set out in Section 10.3;

“Effective Time” means 11:59 p.m. as of Saturday, April 25, 2009;

“Employee Plans” has the meaning set out in Section 4.23;

“Employees” has the meaning set out in Section 4.22(a);

“Employment Legislation” means, collectively, the Ontario Human Rights Code , the Occupational Health and Safety Act (Ontario), the Pay Equity Act (Ontario), the Employment Standards Act , 2000 (Ontario) or predecessor to that Act, the Pension Benefits Act (Ontario), the Workplace Safety and Insurance Act , 1997 (Ontario) or predecessor to that Act and the Employment Insurance Act (Canada), all as amended from time to time;

“Encumbrance” means any encumbrance, lien, charge, hypothec, privilege, pledge, mortgage, title retention agreement, security interest, reservation of title, easement, right of occupation, any matter capable of registration against title, or any written agreement to create any of the foregoing;

“Environmental Condition” means the presence of any Hazardous Substance on the Leased Property attributable to the Vendor;

“Environmental Laws” means any Applicable Law governing pollution or the protection of the environment in effect as of the Closing Date;

“Environmental Permits” means all licences, permits, approvals, consents, registrations, certificates, authorizations or other similar approvals issued or granted or required by an Authority pursuant to an Environmental Law;

“Equipment” has the meaning set out in Section 2.1(a);

“Escrow Agent” means The Bank of Nova Scotia Trust Company;

“Escrow Agreement” means the agreement to be entered into between the Vendor, the Purchaser, and the Escrow Agent, in the form attached hereto as Exhibit B;

“Escrow Amount” has the meaning set out in Section 3.2(b);

“Estoppel and Consent Certificate” means the form of Estoppel and Consent Certificate obtained by the Vendor from each landlord for each Leased Property substantially in the form annexed hereto as Exhibit E;

“ETA” means Part IX of the Excise Tax Act (Canada), as amended from time to time;

“Excluded Assets” has the meaning set out in Section 2.2;

“Excluded Liabilities” has the meaning set out in Section 3.4;

“Existing Balance Sheets” means the annual unaudited consolidated balance sheet of the Companies as at December 27, 2008, and the interim unaudited consolidated balance sheet of the Companies as at March 28, 2009, both such balance sheets attached hereto as Schedule 1.1(a);

“GST” means all goods and services taxes payable under the ETA;

“Hazardous Substance” means any substance or waste which is defined as hazardous, toxic, a pollutant or a contaminant under Environmental Law;

“ HearUSA IP ” means certain intellectual property and other assets of HearUSA set out in the HearUSA Licence;

“ HearUSA Licence ” means the licence agreement between HearUSA and the Vendor dated with effect on the day prior to the Closing Date in connection with the HearUSA IP, in the form attached hereto as Schedule 1.1(b);

“including” (and having correlative meaning “ include ” and “ includes ”) means including without limiting the generality of any description preceding such term;

“Indemnified Party” has the meaning set out in Section 10.3;

“Indemnifying Party” has the meaning set out in Section 10.3;

“Intellectual Property” means all rights in patents, patent applications, trade-marks, trade-mark applications, trade-names, business names, domain names, inventions, technical data, licensed and unlicensed know-how, copyright and industrial designs;

“Intellectual Property Assets” has the meaning set out in Section 2.1(j);

“Interim Occupancy Agreement” has the meaning set out in Section 7.10(e);

“Inventory” has the meaning set out in Section 2.1(l);

“ITA” means the Income Tax Act (Canada), as amended from time to time;

“knowledge of the Vendor” or similar expressions mean the actual knowledge of the individual or individuals among Stephen Hansbrough, Gino Chouinard, Frank Puñal, Denise Pottlitzer and Maggie Black, with responsibility for the relevant matter;

“Lease” means, collectively, all agreements to lease, offers to lease, lease, lease amendments, renewal agreements, subleases and other rights or licenses granted to the Vendor or its predecessors in title to possess or occupy the Leased Property or any part thereof as at the date hereof, in each case amended, renewed or otherwise varied, and all material correspondence or other agreements related thereto, and “Lease” shall mean any one of the Leases;

“Leased Properties” means all lands and premises leased by the Vendor pursuant to the Leases in connection with the operation of the Business, and “Leased Property” means any one of them;

“Losses” , in respect of any matter, means all claims, demands, losses, damages, liabilities, Taxes, deficiencies, costs and expenses (including, without limitation reasonable legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement) arising as a result of such matter, but excluding any indirect, special, punitive, exemplary or consequential losses or damages and losses of revenue or profit;

“Material Adverse Effect” means, when used in connection with the Business, any change, event, violation, inaccuracy, circumstance or event that is materially adverse to the business, assets, liabilities, financial condition, or results of operation of the Business, but in each case shall not include the effect of (i) changes in GAAP or official interpretations of the foregoing, (ii) changes in general economic, financial or market conditions affecting the Business, (iii) any seasonal effects on the Business, or (iv) changes arising from this Agreement or the transactions contemplated hereby or arising from any actions or omissions of the Purchaser or the Companies if consented to in writing by the Purchaser;

“Non-Assigned Lease” has the meaning set out in Section 7.10(b);

“Order” means any order, decree, instruction, direction, demand, proceeding or other mandatory communication issued by an Authority or any notification of any intention to issue or impose the same by an Authority where it could reasonably be concluded that the notification may be part of a process whereby a mandatory communication having the force of law will be issued;

“Permits” has the meaning set out in Section 2.1(i);

“Permitted Encumbrances” means:

“Person” means any individual, estate, trust, firm, partnership, joint venture, corporation, unlimited liability company, limited liability company, unincorporated association or organization, government or any agency or ministry of any government, and includes any successor to any of the foregoing;

“Prepaid Expenses” has the meaning set out in Section 2.1(m);

“Principal Sites” has the meaning set out in Section 7.10(a);

“Purchase Price” has the meaning set out in Section 3.1;

“Purchased Assets” has the meaning set out in Section 2.1;

“Purchased Shares” has the meaning set out in Section 2.1(r);

“Purchaser Employee Plans” has the meaning set out in Section 7.7(f);

“ Returns Reserve ” means the amount of $38,266.00, representing an agreed reserve for products returned by customers within 45 days of sale in accordance with the Vendor’s current return policy;

“Support Agreement” means the support agreement to be entered into between the Purchaser and the Vendor, in the form attached hereto as Exhibit D;

“Tax” or “Taxes” means any and all taxes, charges, fees, levies, imposts, and other assessments, including all income, sales, retail, use, goods and services, harmonized sales, value added, corporation, premium, environmental, stamp, business, social services, royalty, occupancy, property development, capital, capital gains, alternative, net worth, transfer, land transfer, profits, withholding, payroll, employer health, social security, excise, franchise, recapture, real property and personal property taxes, and any other taxes, customs duties, tariffs, fees, assessments, reassessments or similar charges in the nature of a tax, including provincial pension plan contributions, employment insurance contributions, health services fund contributions and workers’ compensation premiums, together with any instalments with respect thereto, and any interest, costs of any nature, surtaxes, fines, penalties, additions to tax or other additional amounts, imposed, levied, assessed, reassessed or collected by any governmental authority, including a Tax Authority;

“Tax Authority” means, with respect to any Tax, the Authority that imposes, assesses and reassesses such Tax and the Authority charged with the collection of such Tax;

“Tax Return” means any return, declaration, report, election, form, notice, filing, information return, or other document (whether in tangible, electronic or other form) relating to Taxes, including any amendment thereof and including any attachment or supplements thereto made, prepared, filed or required to be made, prepared or filed by Applicable Law in respect of Taxes;

“Time of Closing” means 10:00 a.m. (Toronto time) on the Closing Date, or such other time on the Closing Date as the Vendor and the Purchaser may mutually determine;

“Third Party Claim” has the meaning set out in Section 10.3;

“Transition Period” has the meaning set out in Section 7.7(f); and

“Vendor Contract” means any Contract under which: (a) Vendor has or may acquire any rights or benefits, (b) Vendor has or may become subject to any obligation or liability, or (c) Vendor or any of the Purchased Assets is or may become bound.

Unless otherwise indicated, all dollar amounts in this Agreement are expressed in Canadian funds.

The division of this Agreement into sections and the insertion of headings are for convenience of reference only and shall not affect the interpretation of this Agreement. Unless otherwise indicated, any reference in this Agreement to a Section or Schedule refers to the specified Section of or Schedule to this Agreement and any reference in this Agreement to a Section shall include a subsection of such Section, as applicable.

In this Agreement, words importing the singular number only shall include the plural and vice versa, words importing gender shall include all genders and words importing persons shall include individuals, corporations, partnerships, associations, trusts, unincorporated organizations, governmental bodies and other legal or business entities of any kind whatsoever.

Any reference in this Agreement to generally accepted accounting principles or GAAP refers to generally accepted accounting principles which have been established in the United States at the relevant time applied on a consistent basis.

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral. There are no conditions, covenants, agreements, representations, warranties or other provisions, express or implied, collateral, statutory or otherwise, relating to the subject matter hereof except as herein provided.

Time shall be of the essence in this Agreement.

This Agreement shall be construed, interpreted and enforced in accordance with, and the respective rights and obligations of the parties shall be governed by, the laws of the Province of Ontario and the federal laws of Canada applicable therein and, except as provided in this Agreement, each party irrevocably attorns to the exclusive jurisdiction of the courts of such province and all courts competent to hear appeals therefrom.

If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such determination shall not impair or affect the validity, legality or enforceability of the remaining provisions hereof, and each provision is hereby declared to be separate, severable and distinct.

This Agreement shall enure to the benefit of and shall be binding on and enforceable by the parties and, where the context so permits, their respective successors and permitted assigns. None of the parties may assign any of its rights or obligations hereunder without the prior written consent of the other parties.

No amendment or waiver of any provision of this Agreement shall be binding on any party unless consented to in writing by such party. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver constitute a continuing waiver unless otherwise provided.

The following Exhibits are attached to and form part of this Agreement.

The following Schedules are attached to and form part of this Agreement. The schedules to the extent reasonably practicable and applicable shall be organized by the Vendor for each individual location of the Leased Property.

ARTICLE 2- PURCHASE AND SALE OF PURCHASED ASSETS

Subject to and upon the terms and conditions contained in this Agreement, the Vendor shall sell, assign and transfer to the Purchaser and the Purchaser shall purchase from the Vendor, all right, title and interest of the Vendor to all of the Vendor’s property and assets used in connection with the Business (other than the Excluded Assets), including without limitation the property and assets described in clauses (a) through (r) below (collectively, the “ Purchased Assets ”), at the Closing Date, free and clear of all Encumbrances except Permitted Encumbrances, if any:

(collectively, the “ Intellectual Property Assets ”), including as set out in Schedule 2.1(k);

Notwithstanding anything in the foregoing Section 2.1, the Purchased Assets shall not include any of the following property and assets (collectively, the “ Excluded Assets ”) and the Purchaser shall in no way be construed to acquire any interest in any of the following:

If any of the Excluded Assets or any proceeds in respect thereof shall at any time come into the possession of or under the control of the Purchaser or any of its employees, officers or agents, such assets and/or proceeds, as applicable, shall be held by the Purchaser in trust for the benefit of the Vendor. Within ten (10) Business Days from the date on which the Purchaser or any of its employees, officers or agents, come into possession of or obtain control over any of such assets and/or proceeds, as applicable, the Purchaser shall by notice in writing delivered to the Vendor in accordance with the provisions hereof, so advise the Vendor. The Purchaser shall have a duty to forthwith account and deliver over to the Vendor any of such assets and/or proceeds, as applicable.

ARTICLE 3 — PURCHASE PRICE

3.1 Purchase Price

Subject as hereinafter provided, the purchase price (the “ Purchase Price ”) payable by the Purchaser to the Vendor for the Purchased Assets shall be $28,625,000.00.

At the Time of Closing, the Purchaser shall satisfy the amount set forth in Section 3.1 as follows:

Subject to the provisions of this Agreement, the Purchaser agrees to assume, pay, satisfy, discharge, perform and fulfill, from and after the Time of Closing, the following liabilities and obligations (the “ Assumed Liabilities ”) and no others:

The Purchaser shall not assume, pay, satisfy, discharge, perform or fulfil and the Vendor shall be solely responsible for all other liabilities and obligations of the Vendor whether related to the Business and the Purchased Assets or otherwise (the “ Excluded Liabilities ”). For greater certainty, the Vendor shall be responsible for all of its liabilities that are not Assumed Liabilities.

The Purchase Price shall be allocated among the Purchased Assets in the manner specified in Schedule 3.7. The Purchaser and the Vendor agree to be bound by such allocation and to report the purchase and sale of the Purchased Assets for all federal, provincial and local Tax purposes in a manner consistent with such allocation.

The Purchaser and the Vendor shall elect jointly under subsection 167(1) of the ETA, in the form prescribed for the purposes of that provision, in respect of the sale and transfer hereunder of the Purchased Assets, and the Purchaser shall file such election with the Canada Revenue Agency on or before the time specified in subsection 167(1.1) of the ETA for this purpose.

The Purchaser shall be liable for and shall pay all federal and provincial sales taxes (including any GST, retail sales taxes and land transfer taxes) and all other similar taxes, duties, fees or other like charges of any jurisdiction payable in connection with the purchase of the Purchased Assets. For greater certainty, the Vendor shall be responsible for all income taxes payable by the Vendor as a result of the transactions contemplated herein.

ARTICLE 4 — REPRESENTATIONS AND WARRANTIES
OF THE VENDOR

The Vendor represents and warrants, as of the date hereof, to the Purchaser with respect to the Vendor and 3371727 as follows, and the Vendor acknowledges that the Purchaser is relying on such representations and warranties in connection with its purchase of the Purchased Assets.

The minute books of the 3371727 contain true, correct and complete copies of its charter documents, and its by-laws. The minutes of meetings of its board of directors and every committee thereof and of its shareholders, including written resolutions of its directors and shareholders and the share certificate book, register of shareholders, register of transfers and register of directors and officers of the Corporation are complete and accurate in all material respects.