Exhibit
10.3
SECOND AMENDMENT TO INVESTOR
RIGHTS AGREEMENT
This SECOND AMENDMENT TO INVESTOR
RIGHTS AGREEMENT (the “ Amendment ”) is entered
into as of December 23, 2008 (the “ Second Amendment
Effective Date ”), by and between HEARUSA, INC. ,
a Delaware corporation (“ Company ”), and
SIEMENS HEARING INSTRUMENTS, INC. , a Delaware corporation
(“ Investor ”).
Capitalized terms used herein
without definition shall have the meanings given to such terms in
the Investor Rights Agreement (as defined in the
Recitals).
RECITALS
A. The
Company and the Investor are parties to (a) the Investor Rights
Agreement dated as of December 30, 2006, as amended by that certain
Second Amendment to Credit Agreement and First Amendment to
Investor Rights Agreement and Supply Agreement dated as of
September 24, 2007 (the “2007 Amendments”) (as amended,
the “Investor Rights Agreement”) and (b) the Second
Amended and Restated Credit Agreement dated as of December 30,
2006, as amended by that certain First Amendment to Credit
Agreement dated as of June 27, 2007, the 2007 Amendments and the
Third Amendment to Credit Agreement of near or even date herewith
(as amended, the “Credit Agreement”).
B. Pursuant
to a Stock Purchase Agreement by and between the Company and the
Investor of near or even date herewith (the “Purchase
Agreement”), the Company and the Investor have agreed that
the Investor shall purchase, and the Company shall issue, 6,400,000
shares of the Company’s $0.10 par value common stock in
consideration of the cancellation of certain trade payables owed to
the Investor in a face amount equal to the purchase price for such
shares.
C. A
condition precedent to the Investor’s obligations under the
Purchase Agreement is the execution and delivery by the Company and
the Investor of this Amendment.
NOW, THEREFORE, in consideration of
the premises and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and the
Investor agree, as follows:
(a)
Section 1.1 of the Investor Rights Agreement is
amended by adding the following defined terms:
“Approved Stock Plan”
has the meaning specified in the Second Amended and Restated Credit
Agreement by and between the Company and the Investor dated as of
December 30, 2006, as subsequently amended.
“Second Amendment Effective
Date” means December 23, 2008.
(b) The
definition of “Shares” in Section 1.1 of
the Investor Rights Agreement is amended in its entirety to read as
follows:
“Shares” means 6,400,000 shares of
the Company’s Common Stock issued by the Company to the
Investor pursuant to the Stock Purchase Agreement by and between
the Company and the Investor dated as of December 23,
2008.
(c)
Section 2.2(a) of the Investor Rights Agreement is
amended in its entirety to read as follows:
(a) The
Company will, (i) within ninety (90) days following the Second
Amendment Effective Date, prepare and file with the Commission a
Registration Statement on Form S-3 or, if not available, Form S-1,
or any equivalent form for registration by issuers in accordance
with the Securities Act, to permit the resale from time to time of
the Registrable Securities under the Securities Act on a delayed or
continuous basis pursuant to Rule 415 (the “ Shelf
Registration Statement ”), (ii) use reasonable best
efforts to cause the Shelf Registration Statement to be declared
effective (the “ Registration Effective Date
”) as soon as reasonably practicable and in any event within
one hundred eighty (180) days after the Second Amendment Effective
Date, and (iii) use reasonable best efforts to cause the Shelf
Registration Statement to remain effective until the date on which
all of the Registrable Securities covered by the Shelf Registration
Statement have been sold to the public pursuant to such
registration statement in accordance with the intended methods of
distribution thereof. The plan of distribution contemplated by the
Shelf Registration Statement shall permit resales of Registrable
Securities in the manner or manners designated by the Investor,
including offers and sales through underwriters or agents, offers
and sales directly to investors, block trades and such other
methods of offer and sale as the Investor shall request. The
Company shall not permit any securities other than Registrable
Securities to be included in the Shelf Registration
Statement.
(d)
Section 3 of the Investor Rights Agreement is amended
by adding Section 3.2 in the form as
follows:
3.2
Observer Rights. As long as the Investor and any
“affiliate” of the Investor as such term is defined in
Rule 144 own not less than 10% of either the Outstanding Company
Common Stock or the Outstanding Company Voting Securities, the
Company shall invite a representative of Investor to attend all
meetings of its Board in a nonvoting observer capacity and shall
give such representative copies of all notices, minutes, consents,
and other materials that it provides to its directors, at the same
time and in the same manner as provided to such directors;
provided, however, the Company shall not be obligated to provide
material to the extent the Company reasonably determines in good
faith that (i) such materials pertain to the Investor or Siemens
Aktiengesellschaft, so as to create an actual or potential conflict
in interest, (ii) such materials constitute attorney-client
privileged documentation, (iii) such materials include
information
concerning pricing or terms offered by the
Investor’s competitors or similar competitively sensitive
information that would be inappropriate to disclose to the
Investor, or (iv) such materials pertain to extraordinary
transactions or other similar highly confidential information not
involving the ongoing business operations of the Company that would
be inappropriate to disclose to the Investor. The representative
will be the person designated by the Investor from time to time.
The Investor will (and will cause its representative acting as
observer to) keep confidential any confidential information
obtained from the Company through the representative acting as
observer pursuant to the terms of this Section 3.2, unless such
confidential information (a) is or becomes known to the public in
general (other than as a result of a breach of this Section 3.2 by
the Investor or its representative), (b) the Investor demonstrates
that such confidential information was known to the Investor when
disclosed, or (c) the Investor demonstrates that such confidential
information was disclosed to the Investor on an unsolicited basis
by a third party without a breach of any obligation of
confidentiality known to the Investor such third party may have to
the Company; provided, however, that the Investor and its
representative may disclose confidential information (i) to the
Investor’s Board of Directors and management and to managers
of the business units of Siemens Aktiengesellschaft which have
supervision of the Investor’s business, provided that the
Investor informs them that such information is confidential and
directs them to mainta
