EXHIBIT 4.7
The Tail Wind Fund, Ltd.
404 East Bay Street
P.O. Box SS 5539, Nassau, Bahamas
Fax: 242 393 9021 - attn N Rolle
Cc: 011 44 207 468 7657 - attn D Crook
October 25, 2001
Fonar Corporation
110 Marcus Drive
Melville, New York 11747
Attn: Raymond Damadian, M.D., President
Re: 4% Convertible Debenture Due June 30, 2002 of Fonar Corporation (the
"Company") issued on May 24, 2001 to The Tail Wind Fund, Ltd. ("Tail
Wind") in the aggregate original principal amount of $4,500,000 (the
"Debenture"); capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Debenture.
Dear Mr. Damadian:
As you are aware, the Company's second Repayment Date of a Monthly Amount under
the Debenture was originally due on Monday, October 1, 2001, but such Repayment
Date was extended until Monday, October 15, 2001 pursuant to the terms of that
certain waiver and modification letter dated October 3, 2001. Such second
Monthly Amount due has not yet been received by Tail Wind, and you have
requested that we permit the second Repayment Date to be further extended until
Monday, November 5, 2001 and that we also extend the third Repayment Date under
the Debenture until Monday, November 5, 2001. We are willing to permit such
extensions on the following terms:
1. Each of the Monthly Amounts under the Debenture originally due on
October 1, 2001 and November 1, 2001, respectively, shall be paid in
accordance with the terms of the Debenture on Monday, November 5, 2001
(which shall constitute a Repayment Date thereunder), provided that if
the Company elects or is required to pay either or both of such
Monthly Amounts on such Repayment Date in shares of Common Stock as
permitted by and in accordance with the terms of the Debenture, then
(a) the number of shares to be issued in payment of such Monthly
Amount shall be determined by dividing such Monthly Amount by the
average of the two (2) lowest closing bid prices of the Common Stock
on the Principal Market during the calendar month of October 2001 (as
appropriately and equitably adjusted for stock splits, stock
dividends, distributions and similar events) less $0.25, and (b) the
Company shall cause its transfer agent to electronically transmit such
shares by crediting the account of Tail Wind's prime broker with DTC
through its Deposit Withdrawal Agent Commission system on such
Repayment Date or to issue an unlegended stock certificate which must
be received by Tail Wind on such Repayment Date. If the Company elects
or is required to pay either or both of such Monthly Amounts on such
Repayment Date in cash, then such cash shall be received by wire
transfer to the account of Tail Wind on or prior to such Repayment
Date.
2. Upon any acceleration of the Debenture pursuant to the terms thereof,
such Monthly Amounts shall automatically become immediately due and
payable.
3. Any liquidated damages would be payable in cash immediately, provided
that no Default Interest or damages shall accrue on such Monthly
Amount provided payment is made on November 5, 2001 as provided herein
(but regular interest shall accrue).
Please be advised that, except for the foregoing waiver and modification, this
letter shall not in any way waive or prejudice any of the rights of Tail Wind or
obligations of the Company under the Debenture or other Agreements, or under any
law, in equity or otherwise, and such waiver and modification shall not
constitute a waiver or modification of any other provision of the Debenture or
other Agreements nor a waiver or modification of any subsequent default or
breach of any obligation of the Company or of any subsequent right of Tail Wind
(including without limitation the payment of all future and prior Monthly
Amounts on the applicable Repayment Dates in accordance with the Debenture, as
modified by the prior waiver between the parties). The foregoing waiver and
modification shall supercede the waiver and modification between the parties
dated October 3, 2001. For clarification purposes, Tail Wind shall be under no
obligation to, and the Company acknowledges that Tail Wind does not intend to,
grant any further waivers of any of the Company's obligations under the
Debenture.
If the foregoing waiver and modification is acceptable to the Company, please
agree to such waiver and modification by executing a copy of this letter below
and delivering it to Tail Wind at the above address with a copy to Peter Weisman
at facsimile number (212) 986-8866. This letter shall not become effective
unless and until it is duly executed and delivered by the Company, at which time
it shall become binding and enforceable against both the Company and Tail Wind.
This letter shall remain revocable by Tail Wind until it is so executed and
delivered by the Company.
Very truly yours,
THE TAIL WIND FUND, LTD.
By: /s/Ngaire Rolle
Ngaire Rolle
AGREED AND ACCEPTED:
FONAR CORPORATION
By: /s/ Raymond Damadian
Raymond Damadian, M.D., President