(e) Compensatory Arrangements with Executives

Employment Agreements. On February 25, 2008, upon the recommendation of the Compensation Committee of the Board of Directors of HearUSA, Inc. (the “Company”), the Board approved new employment agreements with Stephen J. Hansbrough, chairman, president and chief executive officer, and Gino Chouinard, executive vice president and chief financial officer. The new agreements replace employment agreements entered into with the executives as of August 31, 2005. Under the 2005 agreements, Mr. Hansbrough’s contract term extended to 2010 and automatically renewed for successive five-year terms and Mr. Chouinard’s contract term extended to 2008 and automatically renewed for successive three-year terms.

Pursuant to the new agreements, each of the executives will be employed for a three-year term, renewable for successive one-year terms unless notice of non-renewal is given. The agreements provide for annual base compensation (for Mr. Hansbrough in the amount of $420,000 and for Mr. Chouinard in the amount of $310,000), participation in the Company’s current employee benefit plans and, at the discretion of the Board of Directors, in equity compensation plans and cash incentive plans. In the event Mr. Hansbrough is terminated without cause prior to the end of the term, or if the Company declines to renew the agreement at the end of the term, Mr. Hansbrough is entitled to severance of two times base salary plus cash bonus for the year, continuation of health and life insurance benefits for 24 months, acceleration by 12 months of unvested options and extension of post-termination option exercise periods of such vested options. In the event Mr. Chouinard is terminated without cause prior to the end of the term, or if the Company declines to renew the agreement at the end of the term, Mr. Chouinard is entitled to severance of 1.5 times base salary plus cash bonus for the year, continuation of health and life insurance benefits for 18 months, acceleration by 12 months of unvested options and extension of post-termination option exercise periods of such vested options.

In the event of a change in control (as defined in the agreements) and the termination of Mr. Hansbrough without cause or his resignation with good reason (as defined in the agreement), Mr. Hansbrough would be entitled to receive three times his base salary plus bonus for the year, continuation of health and life insurance benefits for a period of 36 months, acceleration of vesting of all unvested options and extension of the exercise period, and immediate vesting of all performance-based restricted stock or stock units grants. In the event of a change in control (as defined in the agreements) and the termination of Mr. Chouinard without cause or his resignation with good reason (as defined in the agreement), Mr. Chouinard would be entitled to receive two times his base salary plus bonus for the year, continuation of health and life insurance benefits for a period of 24 months, acceleration of vesting of all unvested options and extension of the exercise period, and immediate vesting of all performance-based restricted stock or stock units grants. The executives have each agreed, during the term of their employment and for a period of time following their termination, to specified non-compete provisions.

In connection with the entry into the new contracts and termination of the existing employment agreements, the Compensation Committee granted to Mr. Hansbrough 91,000 time-vesting restricted stock units and to Mr. Chouinard 45,500 time-vesting restricted stock units. The RSUs were granted pursuant to the Company’s stockholder-approved equity compensation plans and vest