Summary of HEARUSA INC - Yahoo! Finance

Entry into a Material Definitive Agreement, Material Modification to Rights of Securi

Item 1.01 Entry into a Material Definitive Agreement

Effective November 16, 2009, HearUSA Inc. (the "Company") amended and restated the Amended and Restated Rights Agreement, originally dated December 14, 1999 and amended and restated as of July 11, 2002 (the "Rights Agreement"). In connection therewith, the Company also appointed American Stock Transfer and Trust Company, LLC, the Company's transfer agent, as the new rights agent (the "Rights Agent"). On December 14, 1999, the Board of Directors of the Company initially adopted the Rights Agreement and declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of Common Stock, par value $0.10 per share, of the Company (the "Common Stock"). The dividend distribution was made on December 31, 1999 (the "Record Date") to the stockholders of record on that date. The description and terms of the Rights are set forth in the Rights Agreement. The Rights Agreement is intended to extend protections (with certain modifications) similar to those provided by the Company's previous Rights Agreement dated as of December 14, 1999 and amended and restated as of July 11, 2002.

Under the Rights Agreement, each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series H Junior Participating Preferred Stock, par value $1.00 per share (the "Preferred Stock") of the Company at a price of $10.00 per one one-hundredth of a share of Preferred Stock (the "Purchase Price"), subject to adjustment. Until the earlier to occur of (i) the close of business on the tenth business day following the date of public announcement or the date on which the Company first has notice or determines that a person or group of affiliated or associated persons (other than the Company, any subsidiary of the Company or any employee benefit plan of the Company) ("Acquiring Person") has acquired, or obtained the right to acquire, 15% or more of the outstanding shares of voting stock of the Company (the "Stock Acquisition Date") without the prior written consent of the Board of Directors or pursuant to a Permitted Offer (as defined below) or (ii) the close of business on the tenth business day (or such later date as may be determined by action of the Board of Directors but not later than the Stock Acquisition Date) following the commencement of a tender offer or exchange offer, other than pursuant to a Permitted Offer, by a person (other than the Company, any subsidiary of the Company or an employee benefit plan of the Company) which, upon consummation, would result in the beneficial ownership by such party of 15% or more of the Company's voting stock (the earlier of the dates in clause (i) or
(ii) above being called the "Distribution Date"), the Rights will be evidenced, with respect to any of the Common Stock certificates outstanding as of the Record Date, by such Common Stock certificates. As amended, the Rights Agreement defines "beneficial ownership" to include certain derivative instruments and similar interests a party may hold relating to the Company's securities.

As amended, the Rights Agreement provides that the Rights will not be triggered in the case of a "Permitted Offer". A Permitted Offer is a tender or exchange offer for all outstanding shares of Common Stock at a price and on terms that are determined by a majority of the Board of Directors (independent of the person or group making the offer) to be adequate from a financial perspective and in the best interests of the Company and its shareholders. This determination by the board must be made before the earlier of: (i) launch of the tender or exchange offer, (ii) the filing of any offer-related document with the Securities and Exchange Commission or (iii) before the person making the offer becomes an Acquiring Person.

The Rights Agreement provides that, until the Distribution Date, the Rights will be evidenced by Common Share certificates and will be transferred with and only with such Common Share certificates. With respect to Common Stock held in book-entry accounts, the Rights will be held in the accounts until the Distribution Date. Common Stock share certificates contain a notation incorporating the Rights Agreement by reference. A book-entry account for such Common Stock shall also be deemed to incorporate the Rights Agreement. The surrender for transfer of any certificate for Common Stock or book-entry accounts holding Common Stock outstanding will also constitute the transfer of the Rights associated with the Common Stock represented by the certificate or book-entry account.

The Rights are not exercisable until the Distribution Date. The Rights will expire, if not previously exercised, on November 16, 2019 (the "Final Expiration Date"), unless the Final Expiration Date is extended or unless the Rights are earlier redeemed or exchanged by the Company.

The Purchase Price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for or purchase Preferred Stock at a price, or securities convertible into Preferred Stock with a conversion price, . . .