EXHIBIT 5
AGREEMENT AND PLAN OF MERGER
By and Among
FONAR CORPORATION,
FONAR, LLC,
and
FONAR ACQUISITION SUB, INC.
Dated as of December 23, 2025
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this “Agreement”),
is entered into as of December 23, 2025, by and among FONAR Corporation, a Delaware corporation (the “Company”), FONAR,
LLC, a Delaware limited liability company (“Parent”), and FONAR Acquisition Sub, Inc., a Delaware corporation and a
wholly owned Subsidiary of Parent (“Merger Sub”). Capitalized terms used herein (including in the immediately preceding
sentence) and not otherwise defined herein shall have the meanings set forth in Section 8.01 hereof.
RECITALS
WHEREAS, the parties intend that Merger Sub be merged with and into
the Company, with the Company surviving such merger on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, in the Merger, upon the terms and subject to the conditions
of this Agreement, each share of (a) common stock, par value $0.0001 per share, of the Company (the “Company Common Stock”),
(b) Class B common stock, par value $0.0001 per share, of the Company (the “Company Class B Common Stock”), (c) Class
C common stock, par value $0.0001 per share, of the Company (the “Company Class C Common Stock”) and (d) Class A non-voting
preferred stock, par value $0.0001 per share, of the Company (the “Company Class A Preferred Stock”), will be converted
into the right to receive the Merger Consideration except as otherwise provided in this Agreement;
WHEREAS, the Board of Directors of the Company (the “Company
Board”), following the unanimous recommendation of a special committee of the Company Board consisting solely of disinterested
directors of the Company (the “Special Committee”), has unanimously: (a) determined that it is fair to, and in the
best interests of, the Company and the Company’s stockholders, and declared it advisable to enter into this Agreement with Parent
and Merger Sub; (b) approved the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated
hereby, including the Merger; and (c) resolved, subject to the terms and conditions set forth in this Agreement, to recommend adoption
of this Agreement by the stockholders of the Company; in each case, in accordance with the Delaware General Corporation Law (the “DGCL”),
and specifically, Section 144 (c) thereof as a “going private” transaction;
WHEREAS, the manager of Parent and board of directors of Merger
Sub have each unanimously: (a) determined that it is in the best interests of Parent or Merger Sub, as applicable, and their respective
members and stockholders, and declared it advisable, to enter into this Agreement; and (b) approved the execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated hereby, including the Merger; in each case, in accordance with
the DGCL; and
WHEREAS, the parties desire to make certain representations, warranties,
covenants, and agreements in connection with the Merger and the other transactions contemplated by this Agreement and also to prescribe
certain terms and conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and of the representations,
warranties, covenants, and agreements contained in this Agreement, the parties, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
Section 1.01 The Merger. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, at the Effective Time: (a) Merger Sub will merge with and into the Company
(the “Merger”); (b) the separate corporate existence of Merger Sub will cease; and (c) the Company will continue the
Company’s corporate existence under the DGCL as the surviving corporation in the Merger and a wholly owned Subsidiary of Parent
(sometimes referred to herein as the “Surviving Corporation”).
Section 1.02 Closing. Upon the terms and subject to the conditions
set forth herein, the closing of the Merger (the “Closing”) will take place at 10:00 a.m., New York, New York time,
as soon as practicable (and, in any event, within three Business Days) after the satisfaction or, to the extent permitted hereunder, waiver
of the last to be satisfied or waived of the conditions to the Merger set forth in Article VI (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted hereunder, waiver of all such conditions),
unless this Agreement has been terminated pursuant to its terms or unless another time or date is agreed to in writing by the parties
hereto. The Closing shall take place at the offices of Moritt Hock & Hamroff LLP, 400 Garden City Plaza, Garden City, New York 11530,
or remotely by exchange of documents and signatures (or their electronic counterparts), unless another place is agreed to in writing by
the parties hereto. The actual date of the Closing is hereinafter referred to as the “Closing Date.”
Section 1.03 Effective Time. Subject to the provisions of this
Agreement, at the Closing, the Company, Parent, and Merger Sub will cause a certificate of merger (the “Certificate of Merger”)
to be executed, acknowledged, and filed with the Secretary of State of the State of Delaware in accordance with the relevant provisions
of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger will become effective at such time as the
Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or at such later date or time as may be
agreed by the Company and Parent in writing and specified in the Certificate of Merger in accordance with the DGCL (the effective time
of the Merger being hereinafter referred to as the “Effective Time”).
Section 1.04 Effects of the Merger. The Merger shall have the
effects set forth in this Agreement and in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and
subject thereto, from and after the Effective Time, all property, rights, privileges, immunities, powers, franchises, licenses, and authority
of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, and duties
of each of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions, and duties of the Surviving Corporation.
Section 1.05 Certificate of Incorporation; By-Laws. At the Effective
Time: (a) the certificate of incorporation of the Surviving Corporation shall be amended and restated so as to read in its entirety as
set forth in Exhibit A, and, as so amended and restated, shall be the certificate of incorporation of the Surviving Corporation until,
subject to Section 5.07(a), thereafter amended in accordance with the terms thereof and applicable Law; and (b) the by-laws of Merger
Sub as in effect immediately prior to the Effective Time shall be the by-laws of the Surviving Corporation, except that references to
Merger Sub’s name shall be replaced with references to the Surviving Corporation’s name, until, subject to Section 5.07(a),
thereafter amended in accordance with the terms thereof, the certificate of incorporation of the Surviving Corporation, and applicable
Law.
Section 1.06 Directors and Officers. The directors and officers
of Merger Sub, in each case, immediately prior to the Effective Time shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier
death, resignation, or removal in accordance with the certificate of incorporation and by-laws of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK; PAYMENT FOR
SHARES
Section 2.01 Effect of the Merger on Capital Stock. At the Effective
Time, as a result of the Merger and without any action on the part of Parent, Merger Sub, the Company, or the holder of any capital stock
of Parent, Merger Sub, or the Company:
(a) Cancellation
of Certain of the Company’s Securities. Each share of Company Common Stock, Company Class B Common Stock, Company Class C Common
Stock, or Company Class A Preferred Stock that is owned by Parent or the Company (as treasury stock or otherwise) or any of their respective
direct or indirect wholly owned Subsidiaries as of immediately prior to the Effective Time (collectively, “Parent Cancelled Shares”)
will automatically be cancelled and retired and will cease to exist, and no consideration will be delivered in exchange therefor.
(b) Conversion
of the Company’s Securities Other Than Parent Cancelled Shares. Each share of Company Common Stock, Company Class B Common Stock,
Company Class C Common Stock, or Company Class A Preferred Stock issued and outstanding immediately prior to the Effective Time, other
than Parent Cancelled Shares and Dissenting Shares (which shall be treated in accordance with Section 2.03), will be converted into the
right to receive the following amounts, in cash, without interest (collectively, the “Merger Consideration”):
(i) With
respect to each share of Company Common Stock, $19.00 (the “Company Common Stock Merger Consideration”);
(ii) With
respect to each share of Company Class B Common Stock, $19.00 (the “Company Class B Stock Merger Consideration”);
(iii) With
respect to each share of Company Class C Common Stock, $6.34 (the “Company Class C Stock Merger Consideration”); and
(iv) With
respect to each share of Company Class A Non-voting Preferred Stock, $10.50 (the “Company Class A Preferred Stock Merger Consideration”).
(c) Cancellation
of Shares. At the Effective Time, all shares of Company Common Stock, Company Class B Common Stock, Company Class C Common Stock,
or Company Class A Preferred Stock will no longer be outstanding and all shares of Company Common Stock, Company Class B Common Stock,
Company Class C Common Stock, or Company Class A Preferred Stock will be cancelled and retired and will cease to exist, and, subject to
Section 2.01(a) and Section 2.03, each holder of: (i) a certificate formerly representing any shares of Company Common Stock, Company
Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred Stock (each, a “Certificate”); or
(ii) any book-entry shares which immediately prior to the Effective Time represented shares of Company Common Stock, Company Class B Common
Stock, Company Class C Common Stock, or Company Class A Preferred Stock (each, a “Book-Entry Share”) will, subject
to applicable Law in the case of Dissenting Shares, cease to have any rights with respect thereto, except the right to receive the Merger
Consideration in accordance with Section 2.02.
(d) Conversion
of Merger Sub Capital Stock. Each share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and become one newly issued, fully paid, and non-assessable share of common stock,
par value $0.0001 per share, of the Surviving Corporation with the same rights, powers, and privileges as the shares so converted and
shall constitute the only outstanding shares of capital stock of the Surviving Corporation. From and after the Effective Time, all certificates
representing shares of Merger Sub common stock shall be deemed for all purposes to represent the number of shares of common stock of the
Surviving Corporation into which they were converted in accordance with the immediately preceding sentence.
Section 2.02 Surrender and Payment.
(a) Paying
Agent; Payment Fund. Prior to the Effective Time, Parent shall appoint Computershare (or an affiliate thereof) as paying agent (the
“Paying Agent”) to act as the agent for the purpose of paying the Merger Consideration for: (i) the Certificates; and
(ii) the Book-Entry Shares. At or promptly following the Effective Time, Parent shall deposit, or cause the Surviving Corporation to deposit,
with the Paying Agent, funds that, , shall be sufficient to pay the aggregate Merger Consideration that is payable in respect of all of
the shares of Company Common Stock, Company Class B Common Stock, Company Class C Common Stock, and Company Class A Preferred Stock represented
by the Certificates and the Book-Entry Shares, other than (x) Parent Cancelled Shares and (y) Dissenting Shares,
in amounts and at the
times necessary for such payments (the “Payment Fund”). If for any reason (including losses) the Payment Fund is inadequate
to pay the amounts to which holders of shares shall be entitled under Section 2.01(b), Parent shall take all steps necessary to deposit
and/or enable or cause the Surviving Corporation promptly to deposit in trust additional cash with the Paying Agent sufficient to make
all payments required under this Agreement. The Payment Fund shall not be used for any other purpose. The Surviving Corporation shall
pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of shares of Company Common Stock,
Company Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred Stock for the Merger Consideration. Promptly
after the Effective Time, Parent shall send, or shall cause the Paying Agent to send, to each record holder of a Certificate representing
shares of Company Common Stock, Company Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred Stock as applicable,
at the Effective Time, whose Company Common Stock, Company Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred
Stock was converted pursuant to Section 2.01(b) into the right to receive the Merger Consideration, a letter of transmittal and instructions
(which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificates
and the transfer of any the Book-Entry Shares to the Paying Agent, and which letter of transmittal will be in customary form and have
such other provisions as Parent and the Surviving Corporation may reasonably specify) for use in such exchange.
(b) Procedures
for Surrender; No Interest. Each holder of shares of Company Common Stock, Company Class B Common Stock, Company Class C Common Stock,
or Company Class A Preferred Stock that have been converted into the right to receive the Merger Consideration shall be entitled to receive
the Merger Consideration in respect of the Company Common Stock, Company Class B Common Stock, Company Class C Common Stock, or Company
Class A Preferred Stock represented by a Certificate or Book-Entry Share upon: (i) surrender to the Paying Agent of a Certificate, together
with a duly completed and validly executed letter of transmittal and such other documents as may reasonably be requested by the Paying
Agent; or (ii) receipt of an “agent’s message” by the Paying Agent (or such other evidence, if any, of transfer as the
Paying Agent may reasonably request) in the case of Book-Entry Shares. Until so surrendered or transferred, as the case may be, and subject
to the terms set forth in Section 2.03, each such Certificate or Book-Entry Share, as applicable, shall represent after the Effective
Time for all purposes only the right to receive the Merger Consideration payable in respect thereof. No interest shall be paid or accrued
on the cash payable upon the surrender or transfer of any Certificate or Book-Entry Share. Upon payment of the Merger Consideration pursuant
to the provisions of this Article II, each Certificate or Certificates or Book-Entry Share or Book-Entry Shares so surrendered or transferred,
as the case may be, shall immediately be cancelled.
(c) Investment
of Payment Fund. Until disbursed in accordance with the terms and conditions of this Agreement, the cash in the Payment Fund will
be invested by the Paying Agent, as directed by Parent or the Surviving Corporation. No gains or losses with respect to any investments
of the Payment Fund will affect the amounts payable to the holders of Certificates or Book-Entry Shares. Any income from investment of
the Payment Fund will be payable to either Parent or Surviving Corporation depending on which Person has the continued obligation of paying
Merger Consideration after the Payment Fund is terminated.
(d) Payments
to Non-Registered Holders. If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name
the surrendered Certificate or the transferred Book-Entry Share, as applicable, is registered, it shall be a condition to such payment
that: (i) such Certificate shall be properly endorsed or shall otherwise be in proper form for transfer or such Book-Entry Share shall
be properly transferred; and (ii) the Person requesting such payment shall pay to the Paying Agent any transfer or other Tax required
as a result of such payment to a Person other than the registered holder of such Certificate or Book-Entry Share, as applicable, or establish
to the reasonable satisfaction of the Paying Agent that such Tax has been paid or is not payable.
(e) Full
Satisfaction. All Merger Consideration paid upon the surrender of Certificates or transfer of Book-Entry Shares in accordance with
the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock,
Company Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred Stock formerly represented by such Certificate
or Book-Entry Shares, and from and after the Effective Time, there shall be no further registration of transfers of shares of Company
Common Stock, Company Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred Stock on the stock transfer books
of the Surviving Corporation. If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation,
they shall be cancelled and exchanged for the Merger Consideration provided for, and in accordance with the procedures set forth, in this
Article II.
(f) Termination
of Payment Fund. Any portion of the Payment Fund that remains unclaimed by the holders of shares of Company Common Stock, Company
Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred Stock as of the one year anniversary of the Effective
Time shall be returned to the Surviving Corporation (or, at the option of Parent, Parent to the extent that Parent undertakes the payment
obligation in respect of the Merger Consideration after the Payment Fund is terminated), upon demand, and any such holder who has not
exchanged shares of Company Common Stock, Company Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred Stock
for the Merger Consideration in accordance with this Section 2.02 prior to that time shall thereafter look only to the Surviving Corporation
or Parent, as applicable (subject to abandoned property, escheat, or other similar Laws), as general creditors thereof with respect to
the payment of the Merger Consideration, for payment of the Merger Consideration without any interest. Notwithstanding the foregoing,
neither the Surviving Corporation nor Parent shall be liable to any holder of shares of Company Common Stock, Company Class B Common Stock,
Company Class C Common Stock, or Company Class A Preferred Stock for any amounts paid to a public official pursuant to applicable abandoned
property, escheat, or similar Laws. Any amounts remaining unclaimed by holders of shares of Company Common Stock, Company Class B Common
Stock, Company Class C Common Stock, or Company Class A Preferred Stock at such time when the amounts would otherwise escheat to or become
property of any Governmental Entity shall become, to the extent permitted by applicable Law, the property of the Surviving Corporation
(or, at the option of Parent, Parent) free and clear of any claims or interest of any Person previously entitled thereto.
(g) Dissenting
Shares Merger Consideration. Any portion of the Merger Consideration made available to the Paying Agent in respect of any Dissenting
Shares shall be returned to Parent, upon demand.
(h) No Liability.
None of the Company, the Surviving Corporation, Parent, or the Paying Agent shall be liable to any Person for any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or similar Law.
Section 2.03 Dissenting Shares. Notwithstanding any provision
of this Agreement to the contrary, including Section 2.01, shares of Company Common Stock, Company Class B Common Stock, Company Class
C Common Stock, or Company Class A Preferred Stock issued and outstanding immediately prior to the Effective Time, other than Parent Cancelled
Shares, and held by a holder (i) who has not voted in favor of adoption of this Agreement or consented thereto in writing and (ii) who
is entitled to demand and shall have properly exercised appraisal rights for such shares in accordance with Section 262 of the DGCL (such
shares of Company Common Stock, Company Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred Stock, as applicable,
being referred to collectively as the “Dissenting Shares”) until such time as such holder fails to perfect or otherwise
waives, withdraws, or loses such holder’s appraisal rights under the DGCL with respect to such shares) shall not be converted into
a right to receive the Merger Consideration, but instead shall be entitled to only such rights as are granted by Section 262 of the DGCL;
provided, however, that if, after the Effective Time, such holder fails to perfect, waives, withdraws, or loses such holder’s
right to appraisal pursuant to Section 262 of the DGCL or if a court of competent jurisdiction shall determine that such holder is not
entitled to the relief provided by Section 262 of the DGCL, such shares of Company Common Stock, Company Class B Common Stock, Company
Class C Common Stock, or Company Class A Preferred Stock shall be treated as if they had been converted as of the Effective Time into
the right to receive the Merger Consideration in accordance with Section 2.01(b), without interest thereon, upon surrender of such Certificate
formerly representing such share or transfer of such Book-Entry Share, as the case may be. The Company shall provide Parent prompt written
notice of any demands received by the Company for appraisal of shares of Company Common Stock, Company Class B Common Stock, Company Class
C Common Stock, or Company Class A Preferred Stock, any waiver or withdrawal of any such demand, and any other demand, notice, or instrument
delivered to the Company prior to the Effective Time that relates to such demand, and Parent shall have the opportunity and right to direct
all negotiations and proceedings with respect to such demands. Except with the prior written consent of Parent, the Company shall not
make any payment with respect to, or settle, or offer to settle, any such demands.
Section 2.04 Adjustments. Without limiting the other provisions
of this Agreement, if at any time during the period between the date of this Agreement and the Effective Time, any change in the outstanding
shares of capital stock of the Company shall occur (other than the issuance of additional shares of capital stock of the Company as permitted
by this Agreement), including by reason of any reclassification, recapitalization, stock split (including a reverse stock split), or combination,
exchange, readjustment of shares, or similar transaction, or any stock dividend or distribution paid in stock, the Merger Consideration
and any other amounts payable pursuant to this Agreement shall be appropriately adjusted to reflect such change; provided, however,
that this sentence shall not be construed to permit the Company to take any action with respect to the Company’s securities that
is prohibited by the terms of this Agreement.
Section 2.05 Withholding Rights. Each of the Paying Agent, Parent,
and the Surviving Corporation shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant
to this Article II such amounts as may be required to be deducted and withheld with respect to the making of such payment under any Tax
Laws. To the extent that amounts are so deducted and withheld by the Paying Agent, Parent, or the Surviving Corporation, as the case may
be, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which the Paying
Agent, Parent, or the Surviving Corporation, as the case may be, made such deduction and withholding.
Section 2.06 Lost, Stolen, or Destroyed Certificates. In the
event any Certificate shall have been lost, stolen, or destroyed, the holder of such lost, stolen, or destroyed Certificate shall execute
an affidavit of that fact upon request. The holder of any such lost, stolen, or destroyed Certificate shall also deliver a reasonable
indemnity (including the posting of a bond in such reasonable amount as the Surviving Company may direct) against any claim that may be
made against Parent, the Surviving Corporation or the Paying Agent with respect to such Certificate alleged to have been lost, stolen,
or destroyed. The affidavit and any indemnity which may be required hereunder shall be delivered to the Paying Agent (or, after the first
anniversary of the Effective Time, the Surviving Corporation), which shall be responsible for making payment for such lost, stolen, or
destroyed Certificates pursuant to the terms hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company’s SEC Documents (as defined in
Section 3.04) or the correspondingly numbered Section of the disclosure letter, dated as of the date of this Agreement and delivered by
the Company to Parent concurrently with the execution of this Agreement (the “Company Disclosure Letter”), the Company
hereby represents and warrants to Parent and Merger Sub as follows:
Section 3.01 Organization; Standing and Power; Charter Documents;
Subsidiaries.
(a) Organization;
Standing and Power. The Company and each of the Company’s Subsidiaries is a corporation, limited liability company, or other
legal entity duly organized, validly existing, and in good standing (to the extent that the concept of “good standing” is
applicable in the case of any jurisdiction outside the United States) under the Laws of its jurisdiction of organization (except where
the failure to be in good standing, would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect), and has the requisite corporate, limited liability company, or other organizational, as applicable, power and authority to own,
lease, and operate its assets and to carry on its business as now conducted. Each of the Company and the Company’s Subsidiaries
is duly qualified or licensed to do business as a foreign corporation, limited liability company, or other legal entity and is in good
standing (to the extent that the concept of “good standing” is applicable in the case of any jurisdiction outside the United
States) in each jurisdiction where the character of the assets and properties owned, leased, or operated by it or the nature of its business
makes such qualification or license necessary, except where the failure to be so qualified or licensed or to be in good standing, would
not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) Charter
Documents. The Company has delivered or made available to Parent a true and correct copy of the Certificate of Incorporation (including
any certificate of designations), by-laws, or like organizational documents, each as amended to date (collectively, the “Charter
Documents”), of the Company and each of the Company’s Subsidiaries. Neither the Company nor any of the Company’s
Subsidiaries is in violation, in any material respect, of any of the provisions of its Charter Documents.
(c) Subsidiaries.
Section 3.01(c)(i) of the Company Disclosure Letter lists each of the Subsidiaries of the Company as of the date hereof and its place
of organization. Section 3.01(c)(ii) of the Company Disclosure Letter sets forth, for each Subsidiary that is not, directly or indirectly,
wholly owned by the Company: (i) the number and type of any capital stock of, or other equity or voting interests in, such Subsidiary
that is outstanding as of the date hereof; and (ii) the number and type of shares of capital stock of, or other equity or voting interests
in, such Subsidiary that, as of the date hereof, are owned, directly or indirectly, by the Company. All of the outstanding shares of capital
stock of,
or other equity or voting interests in, each Subsidiary of the Company that is owned directly or indirectly by the Company have
been validly issued, were issued free of pre-emptive rights, are fully paid and non-assessable, and are free and clear of all Liens, including
any restriction on the right to vote, sell, or otherwise dispose of such capital stock or other equity or voting interests, except for
any Liens: (A) imposed by applicable securities Laws; or (B) arising pursuant to the Charter Documents of any non-wholly owned Subsidiary
of the Company. Except for the capital stock of, or other equity or voting interests in, its Subsidiaries, the Company does not own, directly
or indirectly, any capital stock of, or other equity or voting interests in, any Person.
Section 3.02 Capital Structure.
(a) Capital
Stock. The authorized capital stock of the Company consists of: (i) 8,500,000 shares of Company Common Stock; (ii) 227,000 shares
of Company Class B Common Stock; (iii) 567,000 shares of Company Class C Common Stock; and (iv) 453,000 shares of Company Class A Preferred
Stock. As of the date of this Agreement: (A) 6,203,465 shares of Company Common Stock were issued and outstanding (not including shares
held in treasury); (B) 34,840 shares of Company Common Stock were issued and held by the Company in its treasury; (C) 146 shares of Company
Class B Common Stock (convertible under the terms of the Certificate of Incorporation into 146 shares of Company Common Stock) were issued
and outstanding; (D) zero shares of Company Class B Common Stock were held by the Company in its treasury; (E) 382,513 shares of Company
Class C Common Stock (convertible under the terms of the Certificate of Incorporation into 127,504 shares of Company Common Stock) were
issued and outstanding; (F) zero shares of Company Class C Common Stock were held by the Company in its treasury; (G) 313,438 shares of
Company Class A Preferred Stock were issued and outstanding; and (H) ) 1,600 shares of Company Class A Preferred Stock were held by the
Company in its treasury. All of the outstanding shares of capital stock of the Company are, and all shares of capital stock of the Company
which may be issued as contemplated or permitted by this Agreement will be, when issued, duly authorized, validly issued, fully paid,
and non-assessable, and not subject to any pre-emptive rights. No Subsidiary of the Company owns any shares of Company Common Stock, Company
Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred Stock.
(b) Stock
Awards.
(i) As
of the date of this Agreement, there are an aggregate of 450,177 shares of Company Common Stock reserved for issuance pursuant to Company
Equity Awards not yet granted under the Company Benefit Plans. As of the date of this Agreement, there are no shares of Company Common
Stock reserved for issuance pursuant to outstanding options. As of the date of this Agreement, there are no Company Equity Award issued
or outstanding under the Company Benefit Plans.
(ii) Except
for the Company Benefit Plans and as set forth in Section 3.02(b)(ii) of the Company Disclosure Letter, there are no Contracts to which
the Company is a party obligating the Company to accelerate the vesting of any Company Equity Award as a result of the transactions contemplated
by this Agreement (whether alone or upon the occurrence of any additional or subsequent events). As of the date of this Agreement, there
are no outstanding: (A) options, warrants, or other agreements or commitments to acquire from the Company or any of its Subsidiaries,
or obligations of the Company or any of its Subsidiaries to issue, any Voting Debt or shares of capital stock of (or securities convertible
into or exchangeable for shares of capital stock of) the Company; or (B) restricted shares, restricted stock units, stock appreciation
rights, performance shares, profit participation rights, contingent value rights, “phantom” stock, or similar securities or
rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any shares of capital
stock of the Company, in each case that have been issued by the Company or its Subsidiaries (the items in clauses (A) and (B), together
with the capital stock of the Company, being referred to collectively as “Company Securities”). All outstanding shares
of Company Common Stock, Company Class B Common Stock, Company Class C Common Stock, and Class A Preferred Stock and all outstanding shares
of capital stock, voting securities, or other ownership interests in any Subsidiary of the Company, have been issued in compliance in
all material respects with all applicable securities Laws.
(iii) As
of the date of his Agreement, there are no outstanding Contracts requiring the Company or any of its Subsidiaries to repurchase, redeem,
or otherwise acquire any Company Securities or Company Subsidiary Securities. Neither the Company nor any of the Company’s Subsidiaries
is a party to any voting agreement with respect to any Company Securities or Company Subsidiary Securities.
(c) Company
Subsidiary Securities. As of the date of this Agreement, there are no outstanding: (i) securities of the Company or any of the Company’s
Subsidiaries convertible into or exchangeable for capital stock, voting securities, or other ownership interests in any Subsidiary of
the Company; (ii) options, warrants, or other agreements or commitments to acquire from the Company or any of the Company’s Subsidiaries,
or obligations of the Company or any of the Company’s Subsidiaries to issue, any capital stock, voting securities, or other ownership
interests in (or securities convertible into or exchangeable for capital stock, voting securities, or other ownership interests in) any
Subsidiary of the Company; or (iii) restricted shares, restricted stock units, stock appreciation rights, performance shares, profit participation
rights, contingent value rights, “phantom” stock, or similar securities or rights that are derivative of, or provide economic
benefits based, directly or indirectly, on the value or price of, any capital stock or voting securities of, or other ownership interests
in, any Subsidiary of the Company, in each case that have been issued by a Subsidiary of the Company (the items in clauses (i), (ii),
and (iii), together with the capital stock, voting securities, or other ownership interests of such Subsidiaries, being referred to collectively
as “Company Subsidiary Securities”).
Section 3.03 Authority; Non-Contravention; Governmental Consents;
Board Approval; Anti-Takeover Statutes.
(a) Authority.
The Company has all requisite corporate power and authority to enter into and to perform the Company’s obligations under this Agreement
and, subject to, in the case of the consummation of the Merger, adoption of this Agreement by the Requisite Company Vote (as defined in
Section 3.22(a)), to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize the execution and
delivery of this Agreement or to consummate the Merger and the other transactions contemplated hereby, subject only, in the case of consummation
of the Merger, to the receipt of the Requisite Company Vote and Disinterested Stockholder Approval. The Requisite Company Vote and Disinterested
Stockholder Approval are the only votes or consents of the holders of any class or series of the Company’s capital stock necessary
to approve and adopt this Agreement, approve the Merger, and consummate the Merger and the other transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company and, assuming due execution and delivery by Parent and Merger Sub, constitutes
the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium, and other similar Laws affecting creditors’ rights generally
and by general principles of equity.
(b) Non-Contravention.
The execution, delivery, and performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated
by this Agreement, including the Merger, do not and will not: (i) subject to obtaining the Requisite Company Vote, contravene or conflict
with, or result in any violation or breach of, the Charter Documents of the Company or any of its Subsidiaries; (ii) assuming that all
Consents contemplated by clauses (i) through (v) of Section 3.03(c) have been obtained or made and, in the case of the consummation of
the Merger, subject to obtaining the Requisite Company Vote, conflict with or violate any Law applicable to the Company, any of its Subsidiaries,
or any of their respective properties or assets; (iii) result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the Company’s or any of its Subsidiaries’ loss of any benefit
or the imposition of any additional payment or other liability under, or alter the rights or obligations of any third party under, or
give to any third party any rights of termination, amendment, acceleration, or cancellation, or require any Consent under, any Contract
to which the Company or any of its Subsidiaries is a party or otherwise bound as of the date hereof; or (iv) result in the creation of
a Lien (other than Permitted Liens) on any of the properties or assets of the Company or any of its Subsidiaries, except, in the case
of each of clauses (ii), (iii), and (iv) of this Section 3.03(b), for any conflicts, violations, breaches, defaults, loss of benefits,
additional payments or other liabilities, alterations, terminations, amendments, accelerations, cancellations, or Liens that, or where
the failure to obtain any Consents, in each case, would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(c) Governmental
Consents. No consent, approval, license, permission, order, or authorization of, or registration, declaration, or filing with, or
notice to (any of the foregoing being a “Consent”), any supranational, national, state, municipal, local, or foreign
government, any instrumentality, subdivision, court, administrative agency or commission, or other governmental authority, or any quasi-governmental
or private body exercising any regulatory or other governmental or quasi-governmental authority (a “Governmental Entity”)
is required to be obtained or made by the Company in connection with the execution, delivery, and performance by the Company of this Agreement
or the consummation by the Company of the Merger and other transactions contemplated hereby, except for: (i) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware; (ii) the filing of the Company Proxy Statement in definitive form with
the Securities and Exchange Commission (“SEC”) in accordance with the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and such reports under the Exchange Act as may be required in connection with this Agreement, the
Merger, and the other transactions contemplated by this Agreement; (iii) such Consents as may be required under any Antitrust Laws that
are applicable to the transactions contemplated by this Agreement; (iv) such Consents as may be required under applicable state securities
or “blue sky” Laws and the securities Laws of any foreign country or the rules and regulations of the Nasdaq National Market
(“Nasdaq”); (v) the other Consents of Governmental Entities listed in Section 3.03(c) of the Company Disclosure Letter
(the “Other Governmental Approvals”); and (vi) such other Consents which if not obtained or made would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Board
Approval. The Company Board, following the recommendation of the Special Committee and after commercially reasonable, full disclosure
of the interests in the Merger and other transactions contemplated by this Agreement by the interested directors, by resolutions duly
adopted by a unanimous vote at a meeting of all disinterested directors of the Company duly called and held and, not subsequently rescinded
or modified in any way, has: (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, upon the
terms and subject to the conditions set forth herein, are fair to, and in the best interests of, the Company and the Company’s stockholders;
(ii) approved and declared advisable this Agreement, including the execution, delivery, and performance thereof, and the consummation
of the transactions contemplated by this Agreement, including the Merger, upon the terms and subject to the conditions set forth herein;
(iii) directed that this Agreement be submitted to a vote of the Company’s stockholders for adoption at the Company Stockholders
Meeting in accordance with Sections 144(c) and 251 of the DGCL; and (iv) resolved to recommend that Company stockholders vote in favor
of adoption of this Agreement in accordance with the DGCL (collectively, the “Company Board Recommendation”).
(e) Anti-Takeover
Statutes. Except for Section 203 of the DGCL, no “fair price,” “moratorium,” “control share acquisition,”
“supermajority,” “affiliate transactions,” “business combination,” or other similar anti-takeover
statute or regulation enacted under any federal, state, local, or foreign laws applicable to the Company is applicable to this Agreement,
the Merger, or any of the other transactions contemplated by this Agreement. The Company Board has taken all actions so that the restrictions
contained in Section 203 of the DGCL applicable to a “business combination” (as defined in such Section 203) will not apply
to the execution, delivery, or performance of this Agreement and the consummation of the Merger and the other transactions contemplated
by this Agreement.
Section 3.04 SEC Filings; Financial Statements; Sarbanes-Oxley Act
Compliance; Undisclosed Liabilities; Off-Balance Sheet Arrangements.
(a) SEC
Filings. The Company has timely filed with or furnished to, as applicable, the SEC all registration statements, prospectuses, reports,
schedules, forms, statements, and other documents (including exhibits and schedules thereto and all other information incorporated by
reference) required to be filed or furnished by it with the SEC since July 1, 2022 (the “Company SEC Documents”). True,
correct, and complete copies of all Company SEC Documents are publicly available in the Electronic Data Gathering, Analysis, and Retrieval
database of the SEC (“EDGAR”). To the extent that any Company SEC Document available on EDGAR contains redactions pursuant
to a request for confidential treatment or otherwise, the Company has made available to Parent the full text of all such Company SEC Documents
that it has so filed or furnished with the SEC. As of their respective filing dates or, if amended or superseded by a subsequent filing
prior to the date hereof, as of the date of the last such amendment or superseding filing (and, in the case of registration statements
and proxy statements, on the dates of effectiveness and the dates of the relevant meetings,
respectively), each of the Company SEC Documents
complied as to form in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the “Securities
Act”), the Exchange Act, and the Sarbanes-Oxley Act of 2002 (including the rules and regulations promulgated thereunder, the
“Sarbanes-Oxley Act”), and the rules and regulations of the SEC thereunder applicable to such Company SEC Documents.
None of the Company SEC Documents, including any financial statements, schedules, or exhibits included or incorporated by reference therein
at the time they were filed (or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of the last
such amendment or superseding filing), contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not
misleading. To the Knowledge of the Company, none of the Company SEC Documents is the subject of ongoing SEC review or outstanding SEC
investigation and there are no outstanding or unresolved comments received from the SEC with respect to any of the Company SEC Documents.
None of the Company’s Subsidiaries is required to file or furnish any forms, reports, or other documents with the SEC and neither
the Company nor any of its Subsidiaries is required to file or furnish any forms, reports, or other documents with any securities regulation
(or similar) regime of a non-United States Governmental Entity.
(b) Financial
Statements. Each of the consolidated financial statements (including, in each case, any notes and schedules thereto) contained in
or incorporated by reference into the Company SEC Documents: (i) complied as to form in all material respects with the published rules
and regulations of the SEC with respect thereto as of their respective dates; (ii) was prepared in accordance with United States generally
accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved (except as may
be indicated in the notes thereto and, in the case of unaudited interim financial statements, as may be permitted by the SEC for Quarterly
Reports on Form 10-Q or other rules and regulations of the SEC); and (iii) fairly presented in all material respects the consolidated
financial position and the results of operations and cash flows of the Company and its consolidated Subsidiaries as of the respective
dates of and for the periods referred to in such financial statements, subject, in the case of unaudited interim financial statements,
to normal and year-end audit adjustments as permitted by the applicable rules and regulations of the SEC (but only if the effect of such
adjustments would not, individually or in the aggregate, be material).
(c) Internal
Controls. Except as set forth in the Company’s SEC Documents, the Company and each of the Company’s Subsidiaries has established
and maintains a system of “internal controls over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act) that is sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP including policies and procedures that: (i) require the maintenance
of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and
the Company’s Subsidiaries ; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with GAAP and that receipts and expenditures of the Company and the Company’s Subsidiaries
are being made only in accordance with appropriate authorizations of the Company’s management and the Company Board; and (iii) provide
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the assets of the Company and the
Company’s Subsidiaries.
(d) Disclosure
Controls and Procedures. The Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e)
of the Exchange Act) are designed to reasonably ensure that all information (both financial and non-financial) required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in the rules and forms of the SEC, and that all such information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the chief executive
officer and chief financial officer of the Company required under the Exchange Act with respect to such reports. Except as set forth in
the Company’s SEC Documents, neither the Company nor, to the Knowledge of the Company, the Company’s independent registered
public accounting firm has identified or been made aware of: (i) any significant deficiency or material weakness in the system of internal
control over financial reporting utilized by the Company and the Company’s Subsidiaries that has not been subsequently remediated;
or (ii) any fraud that involves the Company’s management or other employees who have a role in the preparation of financial statements
or the internal control over financial reporting utilized by the Company and the Company’s Subsidiaries.
(e) Undisclosed
Liabilities. The audited balance sheet of the Company dated as of June 30, 2025 contained in the Company SEC Documents filed prior
to the date of this Agreement is hereinafter referred to as the “Company Balance Sheet.” Neither the Company nor any
of the Company’s Subsidiaries has any Liabilities other than Liabilities that: (i) are reflected or reserved against in the Company
Balance Sheet (including in the notes thereto); (ii) were incurred since the date of the Company Balance Sheet in the ordinary course
of business consistent with past practice; (iii) are incurred in connection with the transactions contemplated by this Agreement; or (iv)
would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(f) Off-Balance
Sheet Arrangements. Except as described in the Company SEC Documents filed as of the date of this Agreement, neither the Company nor
any of the Company’s Subsidiaries is a party to, or has any commitment to become a party to: (i) any joint venture, off-balance
sheet partnership, or any similar Contract or arrangement (including any Contract or arrangement relating to any transaction or relationship
between or among the Company or any of its Subsidiaries, on the one hand, and any other Person, including any structured finance, special
purpose, or limited purpose Person, on the other hand); or (ii) any “off-balance sheet arrangements” (as defined in Item 2.03(d)
of the SEC’s Current Report on Form 8-K or as described in Instruction 8 to Item 303(b) of Regulation S-K promulgated by the SEC).
Section 3.05 Absence of Certain Changes or Events. Since the
date of the Company Balance Sheet, except in connection with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, the business of the Company and each of the Company’s Subsidiaries has been conducted in the ordinary
course of business in all material respects consistent with past practice in all material respects and there has not been or occurred:
(a) any Company
Material Adverse Effect or any event, condition, change, or effect that could reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect; or
(b) any event,
condition, action, or effect that, if taken during the period from the date of this Agreement through the Effective Time, would require
the consent of Parent pursuant to Section 5.01.
Section 3.06 Taxes.
(a) Tax
Returns and Payment of Taxes. The Company and each of the Company’s Subsidiaries have duly and timely filed or caused to be
filed (taking into account any valid extensions) all material Tax Returns required to be filed by them. Such Tax Returns are true, complete,
and correct in all material respects. Neither Company nor any of the Company’s Subsidiaries is currently the beneficiary of any
extension of time within which to file any Tax Return other than extensions of time to file Tax Returns obtained in the ordinary course
of business consistent with past practice. All material Taxes due and owing by the Company or any of the Company’s Subsidiaries
(whether or not shown on any Tax Return) have been timely paid or, where payment is not yet due, the Company has made an adequate provision
for such Taxes in the Company’s financial statements included in the Company SEC Documents (in accordance with GAAP). The Company’s
most recent financial statements included in the Company SEC Documents reflect an adequate reserve (in accordance with GAAP) for all material
Taxes payable by the Company and the Company’s Subsidiaries through the date of such financial statements. Neither the Company nor
any of the Company’s Subsidiaries has incurred any material Liability for Taxes since the date of the Company’s most recent
financial statements included in the Company SEC Documents outside of the ordinary course of business or otherwise inconsistent with past
practice.
(b) Availability
of Tax Returns. The Company has made available to Parent complete and accurate copies of all federal, state, local, and foreign income,
franchise, and other material Tax Returns filed by or on behalf of the Company or its Subsidiaries for any Tax period ending after June
30, 2020.
(c) Withholding.
The Company and each of the Company’s Subsidiaries have withheld and timely paid each material Tax required to have been withheld
and paid in connection with amounts paid or owing to any Company Employee, creditor, customer, stockholder, or other party (including,
without limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions under any state, local,
and foreign Laws), and materially complied with all information reporting and backup withholding provisions of applicable Law.
(d) Liens.
There are no Liens for material Taxes upon the assets of the Company or any of its Subsidiaries other than for current Taxes not yet due
and payable or for Taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP has been made in the Company’s most recent financial statements included in the Company SEC Documents.
(e) Tax
Deficiencies and Audits. No deficiency for any material amount of Taxes which has been proposed, asserted, or assessed in writing
by any taxing authority against the Company or any of its Subsidiaries. There are no waivers or extensions of any statute of limitations
currently in effect with respect to Taxes of the Company or any of its Subsidiaries. There are no audits, suits, proceedings, investigations,
claims, examinations, or other administrative or judicial proceedings ongoing or pending with respect to any material Taxes of the Company
or any of its Subsidiaries.
(f) Tax
Jurisdictions. There are no pending claims by any taxing authority in a jurisdiction where the Company and its Subsidiaries do not
file Tax Returns that the Company or any of the Company’s Subsidiaries is or may be subject to Tax in that jurisdiction.
(g) Tax
Rulings. Neither the Company nor any of the Company’s Subsidiaries has requested or is the subject of or bound by any private
letter ruling, technical advice memorandum, or similar ruling or memorandum with any taxing authority with respect to any material Taxes,
nor is any such request outstanding.
(h) Consolidated
Groups, Transferee Liability, and Tax Agreements. Neither Company nor any of the Company’s Subsidiaries: (i) has been a member
of a group filing Tax Returns on a consolidated, combined, unitary, or similar basis; (ii) has any material liability for Taxes of any
Person (other than the Company or any of the Company’s Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any comparable
provision of local, state, or foreign Law), as a transferee or successor, by Contract, or otherwise; or (iii) is a party to, bound by,
or has any material liability under any Tax sharing, allocation, or indemnification agreement or arrangement.
(i) Change
in Accounting Method. Neither Company nor any of the Company’s Subsidiaries has agreed to make, nor is it required to make,
any material adjustment under Section 481(a) of the Code or any comparable provision of state, local, or foreign Tax Laws by reason of
a change in accounting method or otherwise.
(j) Post-Closing
Tax Items. The Company and the Company’s Subsidiaries will not be required to include any material item of income in, or exclude
any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result
of any: (i) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state,
local or foreign income Tax Law) executed on or prior to the Closing Date; (ii) installment sale or open transaction disposition made
on or prior to the Closing Date; (iii) prepaid amount received on or prior to the Closing Date; or (iv) any income under Section 965(a)
of the Code, including as a result of any election under Section 965(h) of the Code with respect thereto.
(k) Ownership
Changes. Without regard to the Merger or the transactions contemplated by this Agreement, neither the Company nor any of its Subsidiaries
has undergone an “ownership change” within the meaning of Section 382 of the Code.
(l) Section
355. Neither Company nor any of its Subsidiaries has been a “distributing corporation” or a “controlled corporation”
in connection with a distribution described in Section 355 of the Code.
(m) Reportable
Transactions. Neither Company nor any of its Subsidiaries has been a party to, or a material advisor with respect to, a “reportable
transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b).
Section 3.07 Intellectual Property.
(a) Scheduled
Company-Owned IP. Section 3.07(a) of the Company Disclosure Letter contains a true and complete list, specifying as to each as applicable,
the name of the current owners, jurisdictions, and application or registration numbers, as of the date hereof, of all: (i) Company-Owned
IP that is the subject of any issuance, registration, certificate, application, or other filing by, to or with any Governmental Entity
or authorized private registrar, including patents, patent applications, trademark registrations and pending applications for registration,
copyright registrations and pending applications for registration, and internet domain name registrations; and (ii) material unregistered
Company-Owned IP.
(b) Right
to Use; Title. Except as set forth on Section 3.07 (b) of the Company Disclosure Letter, the Company or one of the Company’s
Subsidiaries is the sole and exclusive legal and beneficial owner, or has, pursuant to a valid existing license agreement with the Estate
of Raymond Damadian, of all right, title, and interest in and to the Company-Owned IP, and has the valid and enforceable right to use
all other Intellectual Property used in or necessary for the conduct of the business of the Company and the Company’s Subsidiaries
as currently conducted and as proposed to be conducted (“Company IP”), in each case, free and clear of all Liens other
than Permitted Liens, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(c) Validity
and Enforceability. The Company and the Company’s Subsidiaries’ rights in the Company-Owned IP are valid, subsisting,
and enforceable, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
The Company and each of the Company’s Subsidiaries have taken reasonable steps to maintain the Company IP and to protect and preserve
the confidentiality of all trade secrets included in the Company IP, except where the failure to take such actions would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Non-Infringement.
Except as would not be reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the conduct
of the businesses of the Company and any of its Subsidiaries has not infringed, misappropriated, or otherwise violated, and is not infringing,
misappropriating, or otherwise violating, any Intellectual Property of any other Person; and (ii) to the Knowledge of the Company, no
third party is infringing upon, violating or misappropriating any Company IP.
(e) IP Legal
Actions and Orders. There are no Legal Actions pending or, to the Knowledge of the Company, threatened: (i) alleging any infringement,
misappropriation, or violation by the Company or any of its Subsidiaries of the Intellectual Property of any Person; or (ii) challenging
the validity, enforceability, or ownership of any Company-Owned IP or the Company or any of the Company’s Subsidiaries’ rights
with respect to any Company IP, in each case except for such Legal Actions that would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect. The Company and the Company’s Subsidiaries are not subject to any outstanding
Order that restricts or impairs the use of any Company-Owned IP, except where compliance with such Order would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
(f) Company
IT Systems. The Company and its Subsidiaries have taken commercially reasonable efforts to safeguard the confidentiality, availability,
security, and integrity of the Company IT Systems, including implementing and maintaining appropriate backup, disaster recovery, and software
and hardware support arrangements, in each case except as would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
(g) Privacy
and Data Security. The Company and each of the Company’s Subsidiaries have complied with all applicable Laws and all internal
or publicly posted policies, notices, and statements concerning the collection, use, processing, storage, transfer, and security of personal
information in the conduct of the Company’s and the Company’s Subsidiaries’ businesses, in each case except as would
not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.08 Compliance; Permits.
(a) Compliance.
The Company and each of the Company’s Subsidiaries are and, since July 1, 2022, have been in material compliance with, all Laws
or Orders applicable to the Company or any of the Company’s Subsidiaries or by which the Company or any of the Company’s Subsidiaries
or any of their respective businesses or properties is bound.
(b) Permits.
The Company and the Company’s Subsidiaries hold, to the extent necessary to operate their respective businesses as such businesses
are being operated as of the date hereof, all permits, licenses, registrations, variances, clearances, Consents, commissions, franchises,
exemptions, Orders, authorizations, and approvals from Governmental Entities (collectively, “Permits”), except for
any Permits for which the failure to obtain or hold would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. No suspension, cancellation, non-renewal, or adverse modifications of any Permits of the Company or any of the
Company’s Subsidiaries is pending or, to the Knowledge of the Company, threatened, except for any such suspension or cancellation
which would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company and each
of the Company’s Subsidiaries is and, since July 1, 2022, has been in compliance with the terms of all Permits, except where the
failure to be in such compliance would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 3.09 Litigation. Except as set forth on Section 3.09
of the Company Disclosure Letter, there is, and since July 1, 2022 there has been, no Legal Action pending, or to the Knowledge of the
Company, threatened against the Company or any of the Company’s Subsidiaries or any of their respective properties or assets or,
to the Knowledge of the Company, any officer or director of the Company or any of its Subsidiaries in their capacities as such other than
any such Legal Action that: (a) does not involve an amount in controversy in excess of $500,000; and (b) does not seek material injunctive
or other material non-monetary relief. None of the Company or any of the Company’s Subsidiaries or any of their respective properties
or assets is subject to any order, writ, assessment, decision, injunction, decree, ruling, or judgment of a Governmental Entity, arbitrator,
or other tribunal, whether temporary, preliminary, or permanent (“Order”), which would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. To the Knowledge of the Company, there are, and since July 1, 2022
there have been, no SEC inquiries or investigations, other governmental inquiries or investigations, or internal investigations pending
or, to the Knowledge of the Company, threatened, in each case regarding any accounting practices of the Company or any of its Subsidiaries
or any malfeasance by any officer or director of the Company.
Section 3.10 Brokers’ and Finders’ Fees. Except for
fees payable to Marshall & Stevens Transaction Advisory Services LLC (the “Special Committee Independent Valuation Consultant”)
pursuant to an engagement letter listed in Section 3.10 of the Company Disclosure Letter, a correct and complete copy of which has been
provided to Parent, neither the Company nor any of the Company’s Subsidiaries has incurred, nor will it incur, directly or indirectly,
any liability for investment banker, brokerage, or finders’ fees or agents’ commissions, or any similar charges in connection
with this Agreement or any transaction contemplated by this Agreement.
Section 3.11 Related Person Transactions. Since July 1, 2022,
there have been no transactions, or series of related transactions, agreements, arrangements, or understandings in effect, nor are there
any currently proposed transactions, or series of related transactions, agreements, arrangements, or understandings, that would be required
to be disclosed under Item 404(a) of Regulation S-K that have not been otherwise disclosed in the Company SEC Documents filed prior to
the date of this Agreement.
Section 3.12 Employee Benefit Issues.
(a) No Company
Benefit Plan is, and neither the Company nor any of its ERISA Affiliates sponsors, maintains or contributes (or is required to contribute)
to, or has in the past six (6) years sponsored, maintained or contributed (or been required to contribute) to, or otherwise has ever
had any current or contingent liability or obligation in respect of (i) a “defined benefit plan” as defined in Section 3(35)
of ERISA or any benefit plan that is or was, any employee benefit plan subject to Title IV of ERISA, Sections 412 or 430 of the Code,
or Section 302 of ERISA, (ii) a multiemployer plan, as defined in Section 3(37) of ERISA, (iii) a “multiple
employer plan” as described in Section 413(c) of the Code or Section 210 of ERISA, or (iv) a “multiple employer
welfare arrangement” as defined in Section 3(40) of ERISA.
(b) Each Company
Benefit Plan intended to be qualified under Section 401(a) of the Code has received or is permitted to rely upon a favorable determination
or opinion letter, or has a pending or has time remaining in which to file an application for such determination from the Internal Revenue
Service, and nothing has occurred that would reasonably be expected to adversely affect the qualification of such Company Benefit Plan.
Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect: (i) each
Company Benefit Plan has been established, maintained, funded and administered in compliance with its terms and with applicable Laws,
including ERISA and the Code; (ii) no Legal Action, claim or litigation is pending with respect to any Company Benefit Plan (other
than routine claims for benefits) and, to the Knowledge of the Company, no such Legal Action, claim or litigation is threatened; (iii) there
are no governmental audits or investigations pending or, to the Knowledge of the Company, threatened in connection with any Company Benefit
Plan; (iv) there has been no “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406
of ERISA or breach of fiduciary duty (as determined under ERISA) with respect to any Company Benefit Plan; (v) all contributions,
reimbursements, premiums and benefit payments that have become due with respect to each Company Benefit Plan have been timely made or
paid and all such amounts for any period ending on or before the Closing Date that are not yet due have been made, paid or properly accrued;
and (vi) neither the Company nor any Subsidiary of the Company has incurred any Tax or other penalty (whether or not assessed) pursuant
to Sections 4980B, 4980D, 4980H, 6721 or 6722 of the Code nor do any facts or circumstances exist that would reasonably be expected to
result in any such Tax or penalty.
(c) Except
as provided in this Agreement, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated
by this Agreement could (either alone or together with any other event): (i) result in, or cause the accelerated vesting, funding, timing
or delivery of, or increase the amount or value of, any payment, compensation or benefit to any current or former employee, officer, director,
consultant or other individual service provider of the Company or any Subsidiary of the Company, (ii) require a contribution by the
Company or any Subsidiary of the Company to any Company Benefit Plan; (iii) restrict the ability of the Company or any Subsidiary
of the Company to merge, amend or terminate any Company Benefit Plan; (iv) result in the forgiveness of any employee or service provider
loan; (v) result in any “parachute payment” (as defined in Section 280G(b)(2) of the Code), or (vi) result
in a requirement to pay any tax ”gross-up” or similar “make-whole” payments to any current or former
employee, officer, director, consultant or other individual service provider of the Company or any Subsidiary of the Company.
(d) No Company
Benefit Plan provides for, and neither the Company nor any Subsidiary of the Company has any current or contingent obligation to provide,
post-retirement or post-termination health, life insurance or other welfare benefits except as required under Part 6 of Subtitle B of
Title I of ERISA or Section 4980B of the Code or similar state applicable Law.
(e) Each Company
Benefit Plan that is a ”non-qualified deferred compensation plan” (as such term is defined in Section 409A(d)(1)
of the Code) subject to Section 409A of the Code has been maintained in documentary and operational compliance with the requirements
of Section 409A of the Code and applicable guidance issued thereunder, and no amount under any such plan, agreement or arrangement
is, has been or could reasonably be expected to be subject to any additional Tax, interest or penalties under Section 409A of the
Code.
(f) Neither
the Company nor any Subsidiary of the Company has any current or contingent obligation to indemnify, ”gross-up,” reimburse
or otherwise make whole any Person for any Taxes, including those imposed under Section 4999 or Section 409A of the Code.
Section 3.13 Employees, Labor Matters. Neither the Company nor
any Subsidiary of the Company is a party to, bound by, any Labor Agreement other than in the ordinary course of business and no such Labor
Agreements are being negotiated; and no labor union currently represents, or has requested or, to the Knowledge of the Company, has sought
to represent any of the employees of the Company or any Subsidiary. In the past three years, (i) neither the Company nor any Subsidiary
of the Company has been subject to any charge, demand, petition or representation Legal Action seeking to compel, require or demand it
to bargain with any labor union (ii) nor has there been any pending or threatened unfair labor practice charge, material labor grievance,
material labor arbitration, labor strike or lockout, work stoppage, slowdown, picketing, hand billing, or other material labor dispute
against or involving the Company or any Subsidiary of the Company, and no such matters are currently pending or, to the Knowledge of the
Company, threatened.
Section 3.14 Rights Agreement; Anti-Takeover Provisions.
(a) The Company
is not party to a rights agreement, “poison pill” or similar agreement or plan that would have the effect of preventing the
Merger and the other transactions contemplated by this Agreement and the Ancillary Agreements.
(b) Assuming
the satisfaction of the conditions set forth in Section 6.01, no “fair price,” “moratorium,” “control share
acquisition” or other similar anti-takeover statute or regulation or any anti-takeover provision in the Company’s Constituent
Documents is, or at the Effective Time will be, applicable to the Company or the transactions contemplated by this Agreement and the Ancillary
Agreements, including the Merger.
Section 3.15 Real Property and Personal Property Matters.
(a) Section 3.15(a) of
the Company Disclosure Letter sets forth a true and complete list of all real property owned in fee by the Company or any of its Subsidiaries.
(b) Section 3.15(b) of
the Company Disclosure Letter sets forth a true and complete list of all real property leased, subleased or otherwise occupied by the
Company or any of its Subsidiaries (collectively, the “Company Leased Real Property”) and the address for each Company
Leased Real Property.
(c) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its
Subsidiaries have a valid leasehold interest in the Company Leased Real Property as necessary to permit the Company and its Subsidiaries
to conduct their business in the ordinary course as currently conducted. Neither the Company or any of its Subsidiaries nor any other
party to the Real Property Leases is in breach or default in any material respect under any Real Property Lease.
(d) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its
Subsidiaries have title to, or a valid leasehold interest in, all material tangible personal property as necessary to permit the Company
and its Subsidiaries to conduct their business in the ordinary course as currently conducted.
Section 3.16 Environmental Matters. Except
as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect:
(a) The
Company and its Subsidiaries are, and for the past three years have been, in compliance with all Environmental Laws;
(b) The
Company and its Subsidiaries hold, and have for the past three years held, all Environmental Permits required for the operation of the
business of the Company and its Subsidiaries and are, and for the past three years have been, in compliance with the terms and conditions
of such Environmental Permits;
(c) No
claim or Legal Action is pending, or to the Knowledge of the Company, threatened in writing against the Company and its Subsidiaries alleging,
and none of Company and its Subsidiaries have received any unresolved written notice or Order relating to, a violation of, or liability
under, any Environmental Law;
(d) To
the Knowledge of the Company, no Hazardous Substance has been released, treated, stored, disposed of, arranged for disposal, transported,
handled or exposed to any Person in a manner or amount that has resulted or would reasonably be expected to result in liability to the
Company and its Subsidiaries under Environmental Laws; and
(e) The
Company and its Subsidiaries have not assumed by contract or provided an indemnity with respect to any liability of any other Person arising
under Environmental Laws or relating to Hazardous Substances
Section 3.17 Material Contracts.
(a) As
of the date hereof, except (x) as filed as exhibits to the Company SEC Documents, and (y) for this Agreement and the other agreements
entered into in connection with the transactions contemplated hereby, Section 3.17 of the Company Disclosure Letter sets
forth a list of agreements that the Company or its Subsidiaries are party to or are bound by:
(i) that
is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Exchange Act);
(ii) (A)
containing a covenant limiting in any material respect the ability of the Company or any Subsidiary of the Company to compete or engage
in any line of business or to compete with any Person in any geographic area, or (B) containing any “most favored nation”
or “exclusivity” provisions that is material to the Company and its Subsidiaries taken as a whole;
(iii) relating
to or evidencing indebtedness of the Company or any Subsidiary of the Company in excess of $1,000,000 (excluding, for the avoidance of
doubt, intercompany loans solely between the Company and any of its wholly-owned Subsidiaries or solely between or among any wholly-owned
Subsidiaries of the Company);
(iv) that
is a material license granted by the Company or any Subsidiary of the Company to Company Intellectual Property, other than (A) non-exclusive licenses
granted to customers in the ordinary course of business, (B) employee, contractors, and consulting agreements entered into in the
ordinary course of business, and (C) material contracts set forth in Section 3.17(a)(i) of the Company Disclosure Schedule;
(v) that
is a material license of the rights of any third party granted to the Company or any Subsidiary of the Company, including that arises
out of any material Intellectual Property-related dispute (including any co-existence agreement), other than (A) Contracts
for commercially available software involving payments of less than $1,000,000 annually, (B) employee, contractor, and consulting
agreements entered into in the ordinary course of business, and (C) material contracts set forth in Section 3.17(a)(i);
(vi) primarily
relating to the acquisition, ownership, or development of any material Company Intellectual Property, other than Contracts with shareholders,
directors, officers, employees, contractors and other representatives of the Company that assign rights in Intellectual Property from
such individuals to one of the Company and its Subsidiaries;
(vii) that
is a collective bargaining agreement, works council agreement, labor agreement, or other Contract with a labor union (each, a “Labor
Agreement”);
(viii) that
is a settlement, conciliation or similar Contract (A) with any Governmental Entity, (B) pursuant to which the Company or any
Company Subsidiary will have any material outstanding obligation or restriction after the date of this Agreement, or (C) that contains
payment obligations of the Company or any of its Subsidiaries in excess of $500,000;
(ix) relating
to the disposition or acquisition of assets by the Company or any Subsidiary (A) in the past three years, with a value or purchase
price greater than $1,000,000 or (B) pursuant to which any potential earn-out, deferred or contingent payment obligations
remain outstanding (excluding indemnification obligations in respect of representations and warranties) or otherwise survive as of the
date hereof that would reasonably expected to result in the receipt or making by the Company or any of its Subsidiaries of future payments
in excess of $500,000;
(x) that
is a joint venture entity, a legal partnership or similar arrangement (excluding commercial agreements that do not involve the formation
of an entity with any third Person);
(xi) that
provides for indemnification of any officer, director or employee by the Company or any of its Subsidiaries, other than Contracts entered
into on substantially the same form as the Company’s standard forms previously made available to Parent;
(xii) that
provides for accelerated vesting in connection with a change of control or otherwise in connection with the Merger or the transactions
contemplated hereby (including as a result of any termination of employment following a change of control or the Merger); and
(xiii) that
obligates the Company or any Subsidiary to make any future capital investment or capital expenditure outside the ordinary course of business
and in excess of $500,000.
(b) Each
Contract of the type described in Section 3.17(a), whether or not set forth in Section 3.17(a) of the Company Disclosure
Schedule, is referred to herein as a “Material Contract”. Except for Material Contracts that have expired or terminated
by their terms, as of the date hereof, all of the Material Contracts are (i) valid and binding on the Company or the applicable Subsidiary
of the Company, as the case may be, and, to the Knowledge of the Company, each other party thereto, and (ii) in full force and effect,
except (A) as may be limited by bankruptcy, insolvency, moratorium and other similar applicable Law affecting creditors’ rights
generally and by general principles of equity and (B) as would not, individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect. As of the date hereof, neither the Company nor any Subsidiary of the Company has, and, to the Knowledge
of the Company, none of the other parties thereto have, breached, violated any provision of, or committed or failed to perform any act
under, and no event or condition exists, which (with or without notice, lapse of time or both) would constitute a default under, the provisions
of any Material Contract, except in each case for those violations, acts (or failures to act) and defaults which, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse Effect and, as of the date hereof, to the Knowledge of
the Company, neither the Company nor any Subsidiary of the Company has received written notice of any of the foregoing. No event has occurred
or circumstances exist that (with or without notice, lapse of time or both) would constitute such a breach or default pursuant to any
Material Contract or permit the termination or modification thereof or permit the acceleration or maturity of performance thereof, by
the Company or any of its Subsidiaries, or to the Knowledge of the Company, any other party thereto, except for immaterial breaches and
defaults. Since June 30, 2025, the Company has not received written notice from any Person that such Person intends to modify in any material
respect, terminate, or not renew, any Material Contract.
Section 3.18 Insurance. Except
as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect: (a) all insurance
policies maintained by the Company and its Subsidiaries are in full force and effect and all premiums due and payable thereon have been
paid; and (b) neither the Company nor any of its Subsidiaries is in breach of or default under any of such insurance policies;
Section 3.19 Proxy Statement and Schedule 13E-3. None of the
information included or incorporated by reference in the letter to the stockholders, notice of meeting, proxy statement, and forms of
proxy (collectively, the “Company Proxy Statement”), to be filed with the SEC in connection with the Merger, at the
time it is filed with the SEC in definitive form, at the time it (or any amendment or supplement thereto) is first disseminated to the
Company’s stockholders, or at the time of the Company Stockholders Meeting, and none of the information supplied or to be supplied
by the Company for inclusion or incorporation by reference in the Schedule 13E-3 to be filed with the SEC concurrently with each filing
of the Proxy Statement, will contain any untrue statement of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing,
no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information
supplied by Parent or Merger Sub expressly for inclusion or incorporation by reference in the Company Proxy Statement. The Company Proxy
Statement will comply as to form in all material respects with the requirements of the Exchange Act.
Section 3.20 Fairness Opinion. The Company has received the opinion
of the Special Committee Independent Valuation Consultant dated December 23, 2025 (the “Fairness Opinion”) (and has provided
a copy of such opinion to Parent). The Fairness Opinion states that, as of the date of the Fairness Opinion and based upon and subject
to the qualifications and assumptions set forth therein, the Merger Consideration is fair, from a financial point of view, to the holders
of shares of Company Common Stock, Company Class B Common Stock, Company Class C Common Stock, and Class A Preferred Stock and, as of
the date of this Agreement, such opinion has not been withdrawn, revoked, or modified.
Section 3.21 Absence of Undisclosed Liabilities. The Company
and the Company’s Subsidiaries do not have any liabilities or obligations, known or unknown, contingent or otherwise, required to
be reflected on or reserved against in a balance sheet in accordance with GAAP except (a) liabilities and obligations in the respective
amounts reflected on or reserved against in the consolidated balance sheet of the Company and its Subsidiaries included in the Company’s
financial statements forming a part of the Company’s SEC Documents, as filed with the SEC, (b) liabilities and obligations incurred
in the ordinary course of business, consistent with past practice, since June 30, 2025, (iii) liabilities and obligations incurred pursuant
to the performance of Company Contracts, and (iv) liabilities and obligations that would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
Section 3.22 Stockholder Approval; Voting Agreements.
(a) DGCL Stockholder Voting Authorization and Disinterested
Stockholder Approval. This Agreement requires, as a condition to the Closing, (i) the affirmative vote, at the Company Stockholders
Meeting, of shares representing a majority of the Company’s Capital Stock outstanding and entitled to vote, voting together as a
single class, after giving effect to the respective voting powers of each class of Company Capital Stock (the “Company Stockholder
Approval”), and (ii) the affirmative vote, at the Company Stockholders Meeting, of a majority of the votes cast by disinterested
stockholders of their shares of Company Capital Stock, voting together as a single class after giving effect to the respective voting
powers of each class of Company Capital Stock (the “Disinterested Stockholder Approval” and together with the Company
Stockholder Approval, the “Requisite Company Vote”), in each instance, in favor of the approval and adoption of this
Agreement and the consummation of the Merger and the other transactions contemplated hereby.
For purposes of evaluating whether the Disinterested Stockholder Approval
has been obtained, the Company shall exclude any votes cast at the Company Stockholders Meeting by Parent, other members of Acquisition
Group and any other stockholder that does not qualify as a “disinterested stockholder” for purposes of Section 144(c) of the
DGCL.
(b) Voting Agreements by Parent Members. The
Company has entered into, and delivered to Parent, copies of duly executed voting agreements (“Voting Agreements”),
in form and substance satisfactory to the Company and Parent, whereby the persons executing such Voting Agreements have agreed to vote
the shares of Company Common Stock, Company Class B Common Stock, and Company Class C Common Stock, constituting an aggregate of 6,622,872
voting securities held by them, in favor of the Merger at the Company Stockholder Meeting.
Section 3.23 Investment Company. None of the Company or any Subsidiary
is, or at the Effective Time will be, required to be registered as an investment company under the Investment Company Act of 1940, as
amended.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB
Parent and Merger Sub hereby jointly and severally represent and warrant
to the Company as follows:
Section 4.01 Organization. Each of Parent and Merger Sub is a
limited liability company or corporation duly formed or organized, validly existing, and in good standing under the Laws of the jurisdiction
of its incorporation.
Section 4.02 Authority; Non-Contravention; Governmental Consents;
Board Approval.
(a) Authority.
Each of Parent and Merger Sub has all requisite corporate power and authority to enter into and to perform its obligations under this
Agreement and to consummate the transactions contemplated by this Agreement, subject to, in the case of the consummation of the Merger,
the adoption of this Agreement by Parent as the sole stockholder of Merger Sub. The execution and delivery of this Agreement by Parent
and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of Parent and Merger Sub and no other corporate proceedings on the part of Parent or Merger
Sub are necessary to authorize the execution and delivery of this Agreement or to consummate the Merger and the other transactions contemplated
hereby, subject only, in the case of the consummation of the Merger, the adoption of this Agreement by Parent as the sole stockholder
of Merger Sub. This Agreement has been duly executed and delivered by Parent and Merger Sub and, assuming due execution and delivery by
the Company, constitutes the legal, valid, and binding obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, and other similar Laws
affecting creditors’ rights generally and by general principles of equity.
(b) Non-Contravention.
The execution, delivery, and performance of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated by this Agreement, do not and will not: (i) contravene or conflict with, or result in any violation or breach
of, the certificate of incorporation or by-laws of Parent or Merger Sub; (ii) assuming that all of the Consents contemplated by clauses
(i) through (v) of Section 4.02(c) have been obtained or made, conflict with or violate any Law applicable to Parent or Merger Sub or
any of their respective properties or assets; (iii) result in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, result in Parent’s or any of its Subsidiaries’ loss of any benefit or the imposition
of any additional payment or other liability under, or alter the rights or obligations of any third party under, or give to any third
party any rights of termination, amendment, acceleration, or cancellation, or require any Consent under, any Contract to which Parent
or any of its Subsidiaries is a party or otherwise bound as of the date hereof; or (iv) result in the creation of a Lien (other than Permitted
Liens) on any of the properties or assets of Parent or any of its Subsidiaries, except, in the case of each of clauses (ii), (iii), and
(iv), for any conflicts, violations, breaches, defaults, loss of benefits, additional payments or other liabilities, alterations, terminations,
amendments, accelerations, cancellations, or Liens that, or where the failure to obtain any Consents, in each case, would not reasonably
be expected to have, individually or in the aggregate, a material adverse effect on Parent’s and Merger Sub’s ability to consummate
the transactions contemplated by this Agreement.
(c) Governmental
Consents. No Consent of any Governmental Entity is required to be obtained or made by Parent or Merger Sub in connection with the
execution, delivery, and performance by Parent and Merger Sub of this Agreement or the consummation by Parent and Merger Sub of the Merger
and other transactions contemplated hereby, except for: (i) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware; (ii) the filing with the SEC of (A) the Company Proxy Statement in definitive form in accordance with the Exchange
Act, and (B) such reports under the Exchange Act as may be required in connection with this Agreement, the Merger, and the other transactions
contemplated by this Agreement; (iii) such Consents as may be required under the HSR Act or other Antitrust Laws that are applicable to
the transactions contemplated by this Agreement; (iv) such Consents as may be required under applicable state securities or “blue
sky” Laws and the securities Laws of any foreign country or the rules and regulations of Nasdaq; (v) the Other Governmental Approvals;
and (vi) such other Consents which if not obtained or made would not reasonably be expected to have, individually or in the aggregate,
a material adverse effect on Parent’s and Merger Sub’s ability to consummate the transactions contemplated by this Agreement.
(d) Approval.
(i) The
Manager of Parent by resolutions duly adopted, and not subsequently rescinded or modified in any way, has (A) determined that this Agreement
and the transactions contemplated hereby, including the Merger, upon the terms and subject to the conditions set forth herein, are fair
to, and in the best interests of, Parent and Parent’s members, and (B) approved and declared advisable this Agreement, including
the execution, delivery, and performance thereof, and the consummation of the transactions contemplated by this Agreement, including the
Merger, upon the terms and subject to the conditions set forth herein.
(ii) The
board of directors of Merger Sub, by resolutions duly adopted, and not subsequently rescinded or modified in any way, has (A) determined
that this Agreement and the transactions contemplated hereby, including the Merger, upon the terms and subject to the conditions set forth
herein, are fair to, and in the best interests of, Merger Sub and Parent, as the sole stockholder of Merger Sub, (B) approved and declared
advisable this Agreement, including the execution, delivery, and performance thereof, and the consummation of the transactions contemplated
by this Agreement, including the Merger, upon the terms and subject to the conditions set forth herein, and (C) resolved to recommend
that Parent, as the sole stockholder of Merger Sub, approve the adoption of this Agreement in accordance with the DGCL.
Section 4.03 Company Proxy Statement and Schedule
13E-3. None of the information supplied or to be supplied in writing by Parent or Merger Sub or any of Parent’s Representatives
for inclusion in the Company Proxy Statement will at the time of the mailing of the Company Proxy Statement to the stockholders of the
Company, at the time of the Company Stockholders Meeting, and at the time of any amendments thereof or supplements thereto, and none of
the information supplied or to be supplied in writing by Parent or Merger Sub or any of Parent’s Representatives for inclusion in
the Schedule 13E-3 filed with the SEC concurrently with the filing of the Company Proxy Statement, will at the time of such filing with
the SEC, and at the time of any amendments thereof or supplements thereto, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Schedule 13E-3 will comply as to form in all material respects with all applicable Laws.
No Person other than those disclosed in the Schedule 13E-3 is required to file the Schedule 13E-3, and no disclosure regarding any other
Person is required to be included in the Schedule 13E-3.
Section 4.04 Financial Capability.
(a) Debt
and Equity Commitments. Parent has delivered to the Company true, correct, and complete copies of (i) executed debt commitment letters
or subscription agreements (together with all exhibits, schedules, annexes, term sheets, and related fee letters (excluding any fee amounts
or economic terms that do not adversely affect the conditionality of the commitments), collectively, the “Debt Commitment Letters”)
from one or more financing sources in an amount of not less than $45,000,000 (each, individually, a “Debt Financing Source”
and collectively the “Debt Financing Sources”), pursuant to which, and subject to the terms and conditions set forth
therein, the Debt Financing Sources have committed to provide the debt financing described therein (the “Debt Financing”),
and (ii) executed equity commitment letters or subscription agreements (the “Equity Commitment Letters” and, together
with the Debt Commitment Letters, the “Financing Commitments”), from one or more equity investors, pursuant to which
the equity investors thereto have committed, subject to the terms and conditions set forth therein, to provide equity financing (comprised
of cash and rollover securities) in an amount of not less than $45,000,000 (the “Equity Financing” and, together with
the Debt Financing, the “Financing”).
(b) Sufficient
Funding. The Financing Commitments, together with cash on hand of Parent, is sufficient in the aggregate to (i) fund the payment of
the aggregate Merger Consideration, (ii) pay all fees, costs, and expenses required to be paid by Parent pursuant to this Agreement in
connection with the Merger and other transaction contemplated by this Agreement, and (iii) satisfy all other payment obligations of Parent,
Merger Sub and Surviving Corporation under this Agreement, in each case assuming satisfaction or waiver of the conditions set forth in
Article VI of this Agreement. Parent does not have any reason to believe that it will be unable to obtain the Financing on the terms and
conditions described in the Financing Commitments.
(c) No Amendments
or Modifications to Financing Commitments. As of the date of this Agreement, the Financing Commitments have not been amended or modified
in any manner, and no such amendment or modification is contemplated by Parent. None of the Financing Commitments has been withdrawn or
terminated. The Financing Commitments are in full force and effect and constitute legal, valid, and binding obligations of Parent and
Merger Sub and, to the Knowledge of Parent, the other parties thereto, enforceable in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and
subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
(d) No Side
Letters. There are no side letters or other contracts, agreements, arrangements, or understandings (whether written or oral) related
to the Financing to which Parent or Merger Sub or any of its Affiliates is a party that would reasonably be expected to adversely affect
the availability of the Financing or the enforceability of the Financing Commitments.
(e) Solvency.
Assuming the accuracy of the representations and warranties of the Company set forth in this Agreement, immediately after giving effect
to the consummation of the Merger and the other transactions contemplated by this Agreement, including the Financing, any alternative
financing, and the payment of all related fees and expenses, Parent and the Surviving Corporation will be solvent.
(f) No Financing
Contingency. Each of Parent and Merger Sub acknowledges and agrees that its obligation to consummate the Merger is not contingent
on the Company’s ability to obtain the Financing or any alternative financing.
Section 4.05 Legal Proceedings. As of the date hereof, there
is no pending or, to the Knowledge of Parent, threatened, Legal Action against Parent or any of its Subsidiaries, including Merger Sub,
nor is there any injunction, Order, judgment, ruling, or decree imposed upon Parent or any of its Subsidiaries, including Merger Sub,
in each case, by or before any Governmental Entity, that would, individually or in the aggregate, reasonably be expected to have a material
adverse effect on Parent’s and Merger Sub’s ability to consummate the transactions contemplated by this Agreement.
Section 4.06 Ownership of Company Common Stock. Neither Parent
nor any of Parent’s Affiliates or associates “owns” (as defined in Section 203(c)(9) of the DGCL) any shares of Company
Common Stock, Company Class B Common Stock, Company Class C Common Stock, or Company Class A Preferred Stock, other than: (a) 248,772
shares of Company Common Stock, (b) no shares of Company Class B Common Stock, (c) 254,964 shares of Company Class C Common Stock, and
(d) 12,927 shares of Company Class A Non-voting Preferred Stock to be owned by Parent immediately preceding the consummation of the Merger,
which shares are to be acquired from members of Parent (each of such members having acquired the shares more than three (3) years prior
to the date of this Agreement) as contributions made in exchange for the members acquiring their respective membership interests in Parent.
Section 4.07 Brokers. Other than CBIZ Forensic Consulting Group,
LLC neither Parent, Merger Sub, nor any of their respective Affiliates has incurred, nor will it incur, directly or indirectly, any liability
for investment banker, brokerage, or finders’ fees or agents’ commissions, or any similar charges in connection with this
Agreement or any transaction contemplated by this Agreement for which the Company would be liable in connection the Merger.
Section 4.08 Ownership and Operations of Merger
Sub and Parent; Affiliates. Parent owns all of the outstanding capital stock of Merger Sub. Parent and Merger Sub were each formed
solely for the purpose of engaging in the Merger and the transactions contemplated hereby and have each engaged in no other business activities
other than those relating to the Merger and the transactions contemplated hereby.
Section 4.09 Certain Arrangements. As of
the date of this Agreement, there are no contracts or other agreements, arrangements or understandings (whether oral or written) or commitments
to enter into agreements, arrangements or understandings (whether oral or written) (i) between Parent, Merger Sub, or any of their respective
Affiliates, on the one hand, and any member of the Company’s management or directors, on the other hand, as of the date hereof that
relate in any way to the Company or the Merger, or (ii) between Parent, Merger Sub, or any of their respective Affiliates, on the one
hand, and any other Person, on the other hand, pursuant to which any stockholder of the Company would be entitled to receive consideration
of a different amount or nature than the Merger Consideration or pursuant to which any stockholder of the Company agrees to vote to adopt
this Agreement or the Merger (other than the Voting Agreements) or agrees to vote in favor of any Superior Proposal.
Section 4.10 No Other Company Representations
or Warranties. Except for the representations and warranties set forth in Article III, Parent and Merger Sub hereby acknowledge that
neither the Company, nor any of its stockholders, directors, officers, employees, advisors, agents or representatives, nor any other Person,
has made or is making any other express or implied representation or warranty with respect to the Company or its business or operations,
including with respect to any information provided or made available to Parent or Merger Sub. Neither the Company, nor any of its stockholders,
directors, officers, employees, advisors, agents or representatives, will have or be subject to any liability or other obligation to Parent
or Merger Sub resulting from the delivery, dissemination, or any other distribution to Parent, Merger Sub, or their respective stockholders,
directors, officers, employees, Affiliates or Representatives, or the use by Parent, Merger Sub or their respective stockholders, directors,
officers, employees, Affiliates, or representatives of any information, documents, estimates, projections, forecasts, or other forward-looking
information, business plans, or other material provided or made available to Parent, Merger Sub, or their respective stockholders, directors,
officers, employees, Affiliates or Representatives in anticipation or contemplation of the Merger.
Section 4.11 Non-Reliance on Company Estimates,
Projections, Forecasts, Forward-Looking Statements and Business Plans. In connection with the due diligence investigation of the Company
by Parent and Merger Sub, Parent and Merger Sub and their Representatives may have received and may continue to receive from the Company
certain estimates, projections, forecasts, and other forward-looking information, as well as certain business plan information, regarding
the Company and its business and operations. Parent and Merger Sub hereby acknowledge that there are uncertainties inherent in attempting
to make such estimates, projections, forecasts, and other forward-looking statements, as well as in such business plans, with which Parent
and Merger Sub are familiar, that Parent and Merger Sub are taking full responsibility for making their own evaluation of the adequacy
and accuracy of all estimates, projections, forecasts, and other forward-looking information, as well as such business plans, so furnished
to them (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, forward-looking information
or business plans), and that Parent and Merger Sub will have no claim against the Company, or any of its stockholders, directors, officers,
employees, advisors, agents or Representatives, with respect thereto.
Section 4.12 No Third Party Transaction.
Neither Parent nor any of its Affiliates has entered into any agreement, arrangement or understanding with any Third Party concerning
the possible sale of the Surviving Corporation or all or substantially all the assets of the Surviving Corporation to a Third Party after
the Merger has been consummated.
ARTICLE V
COVENANTS
Section 5.01 Conduct of Business of the Company. During the period
from the date of this Agreement until the earlier of the termination of this Agreement (in accordance with its terms) or the Effective
Time, the Company shall, and shall cause each of the Company’s Subsidiaries to, except as expressly permitted or contemplated by
this Agreement, as required by applicable Law, or with the prior written consent of Parent (which consent shall not be unreasonably withheld,
conditioned, or delayed), to use the Company’s commercially reasonable efforts to conduct the Company’s business only in the
ordinary course of business consistent with past practice in all material respects, and, to the extent consistent therewith, the Company
shall, and shall cause each of the Company’s Subsidiaries to, use the Company’s commercially reasonable efforts to preserve
substantially intact its and its Subsidiaries’ business organization, to keep available the services of its and its Subsidiaries’
current officers and key employees on terms and conditions substantially comparable to those currently in effect and maintain its current
rights and franchises, in each case, consistent with past practice, to preserve its and its Subsidiaries’ present relationships
with customers, suppliers, distributors, licensors, licensees, and other Persons having business relationships with it. Without limiting
the generality of the foregoing, between the date of this Agreement and the Effective Time, except as otherwise expressly permitted or
contemplated by this Agreement, or as required by applicable Law, the Company shall not, nor shall the Company permit any of the Company’s
Subsidiaries to, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed):
(a) amend or
propose to amend its Charter Documents;
(b) (i) split,
combine, or reclassify any Company Securities or Company Subsidiary Securities, (ii) repurchase, redeem, or otherwise acquire, or offer
to repurchase, redeem, or otherwise acquire, any Company Securities or Company Subsidiary Securities, or (iii) declare, set aside, or
pay any dividend or distribution (whether in cash, stock, property, or otherwise) in respect of, or enter into any Contract with respect
to the voting of, any shares of the Company’s or Company Subsidiaries’ capital stock or other equity interests (other than
dividends from the Company’s direct or indirect owned Subsidiaries);
(c) issue,
sell, pledge, dispose of, or encumber any Company Securities or Company Subsidiary Securities, other than (i) the issuance of shares of
Company Common Stock upon the exercise of any Company Equity Award outstanding as of the date of this Agreement in accordance with its
terms, if any, (ii) the issuance of shares of Company Common Stock upon exercise of any Warrant that is outstanding as of the date of
this Agreement, if any, or (iii) the issuance of shares of Company Common Stock upon the conversion of Convertible Notes, if any;
(d) except
as required by any Company Benefit Plan or Contract in effect as of the date of this Agreement (i) increase the compensation payable or
that could become payable by the Company or any of the Company’s Subsidiaries to directors, officers, or employees, other than increases
in compensation made to non-officer employees in the ordinary course of business consistent with past practice, (ii) promote any officers
or employees, except in connection with the Company’s annual or quarterly compensation review cycle or as the result of the termination
or resignation of any officer or employee, or (iii) establish, adopt, enter into, amend, terminate, exercise any discretion under, or
take any action to accelerate rights under any Company Benefit Plans or any plan, agreement, program, policy, trust, fund, or other arrangement
that would be a Company Benefit Plan if it were in existence as of the date of this Agreement, or make any contribution to any Company
Benefit Plan, other than contributions required by Law, the terms of such Company Benefit Plans as in effect on the date hereof, or that
are made in the ordinary course of business consistent with past practice;
(e) acquire,
by merger, consolidation, acquisition of stock or assets, or otherwise, any business or Person or division thereof or make any loans,
advances, or capital contributions to or investments in any Person;
(f) (i) transfer,
license, sell, lease, or otherwise dispose of (whether by way of merger, consolidation, sale of stock or assets, or otherwise) or pledge,
encumber, mortgage, or otherwise subject to any Lien (other than a Permitted Lien), any assets, including the capital stock or other equity
interests in any Subsidiary of the Company; provided that the foregoing shall not prohibit the Company and the Company’s
Subsidiaries from transferring, selling, leasing, or disposing of obsolete equipment or assets being replaced, or granting non-exclusive
licenses under the Company IP, in each case in the ordinary course of business consistent with past practice, or (ii) adopt or effect
a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, or other reorganization;
(g) repurchase,
prepay, or incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person, issue or sell any debt securities
or options, warrants, calls, or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt
securities of another Person, enter into any “keep well” or other Contract to maintain any financial statement condition of
any other Person (other than any owned Subsidiary of it) or enter into any arrangement having the economic effect of any of the foregoing,
other than in connection with the financing of ordinary course trade payables consistent with past practice;
(h) except
as set forth in Section 5.01(h) of the Company Disclosure Letter, enter into or amend or modify in any material respect, or consent to
the termination of (other than at its stated expiry date), any Company Material Contract or any Lease with respect to material Real Estate
or any other Contract or Lease that, if in effect as of the date hereof would constitute a Company Material Contract or Lease with respect
to material Real Estate hereunder;
(i) except
as set forth in Section 5.01(i) of the Company Disclosure Letter, institute, settle, or compromise any Legal Action involving the payment
of monetary damages by the Company or any of its Subsidiaries of any amount exceeding $50,000 in the aggregate, other than (i) any Legal
Action brought against Parent or Merger Sub arising out of a breach or alleged breach of this Agreement by Parent or Merger Sub, and (ii)
the settlement of claims, liabilities, or obligations reserved against on the Company Balance Sheet; provided that neither the
Company nor any of the Company’s Subsidiaries shall settle or agree to settle any Legal Action which settlement involves a conduct
remedy or injunctive or similar relief or has a restrictive impact on the Company’s business;
(j) make any
material change in any method of financial accounting principles or practices, in each case except for any such change required by a change
in GAAP or applicable Law;
(k) (i) settle
or compromise any material Tax claim, audit, or assessment for an amount materially in excess of the amount reserved or accrued on the
Company Balance Sheet (or most recent consolidated balance sheet included in the Company SEC Documents), (ii) make or change any material
Tax election, change any annual Tax accounting period, or adopt or change any method of Tax accounting, (iii) amend any material Tax Returns
or file claims for material Tax refunds, or (iv) enter into any material closing agreement, surrender in writing any right to claim a
material Tax refund, offset or other reduction in Tax liability or consent to any extension or waiver of the limitation period applicable
to any material Tax claim or assessment relating to the Company or the Company’s Subsidiaries;
(l) enter into
any material agreement, agreement in principle, letter of intent, memorandum of understanding, or similar Contract with respect to any
joint venture, strategic partnership, or alliance;
(m) except
in connection with actions permitted by Section 5.04, take any action to exempt any Person from, or make any acquisition of securities
of the Company by any Person not subject to, any state takeover statute or similar statute or regulation that applies to Company with
respect to a Takeover Proposal or otherwise, including the restrictions on “business combinations” set forth in Section 203
of the DGCL, except for Parent, Merger Sub, or any of their respective Subsidiaries or Affiliates, or the transactions contemplated by
this Agreement;
(n) abandon,
allow to lapse, sell, assign, transfer, grant any security interest in otherwise encumber or dispose of any material Company IP, or grant
any right or license to any material Company IP other than pursuant to non-exclusive licenses entered into in the ordinary course of business
consistent with past practice;
(o) modify
any privacy policies of the Company or any of the Company’s Subsidiaries or the integrity, security, or operation of the Company
IT Systems in any adverse manner that would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole;
(p) terminate
or modify in any material respect, or fail to exercise renewal rights with respect to, any material insurance policy;
(q) engage
in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person
covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404 of Regulation
S-K promulgated by the SEC;
(r) adopt or
implement any stockholder rights plan or similar arrangement; or
(s) agree or
commit to do any of the foregoing.
Section 5.02 Conduct of Parent. From the date of this Agreement
until the earlier to occur of the Effective Time or the termination of this Agreement in accordance with the terms set forth in Article
VII, except as expressly permitted or contemplated by this Agreement, as required by applicable Law, or with the prior written consent
of the Company (which consent shall not be unreasonably withheld, conditioned, or delayed), Parent shall not, and shall not permit any
of Parent’s Subsidiaries to, take, or agree or commit to take, any action that would reasonably be expected to, individually or
in the aggregate, prevent, materially delay, or intentionally impede the consummation of the Merger or the other transactions contemplated
by this Agreement; provided that this Section 5.02 shall not govern obligations governed by Section 5.09, which shall be solely
governed by Section 5.09.
Section 5.03 Access to Information; Confidentiality.
(a) Access
to Information. From the date of this Agreement until the earlier to occur of the Effective Time or the termination of this Agreement
in accordance with the terms set forth in Article VII, the Company shall, and shall cause the Company’s Subsidiaries to, afford
to Parent and Parent’s Representatives reasonable access, at reasonable times, during normal business hours and on reasonable prior
notice and in a manner as shall not unreasonably interfere with the business or operations of the Company or any Subsidiary thereof, to
the properties, offices, and other facilities and to all books, records, contracts, and such other assets and information of the Company
and the Company’s Subsidiaries as Parent may reasonably request from time to time. Neither the Company nor any of the Company’s
Subsidiaries shall be required to provide access to or disclose information where such access or disclosure would jeopardize the protection
of attorney-client privilege or contravene any Law (it being agreed that the parties shall use their reasonable best efforts to cause
such information to be provided in a manner that would not result in such jeopardy or contravention). No investigation shall affect the
Company’s representations, warranties, covenants, or agreements contained herein, or limit or otherwise affect the remedies available
to Parent or Merger Sub pursuant to this Agreement.
(b) Confidentiality.
The parties hereby agree that all information provided to the other party or the other parties’ Representatives in connection with
this Agreement and the consummation of the transactions contemplated hereby, including any information obtained pursuant to Section 5.03(a),
shall be treated in accordance with the Confidentiality Agreement, dated July 1, 2022, between Parent and the Company (the “Confidentiality
Agreement”). Parent and the Company shall comply with, and shall cause their respective Representatives to comply with, all
of their respective obligations under the Confidentiality Agreement, which shall survive the termination of this Agreement in accordance
with the terms set forth therein.
Section 5.04 No Solicitation.
(a) Takeover
Proposal. Except as permitted by this Section 5.04, during the period from the date of this Agreement until the earlier of the Effective
Time or the valid termination of this Agreement in accordance with its terms, the Company shall not, and shall direct and cause the Company’s
Subsidiaries and the Company’s and the Company’s Subsidiaries’ respective Representatives not to: (i) directly or indirectly,
solicit, initiate, or knowingly facilitate or encourage the submission of any Takeover Proposal or the making of any proposal that could
reasonably be expected to lead to any Takeover Proposal; (ii) continue, conduct, or engage in any discussions or negotiations with, disclose
any non-public information relating to the Company or any of the Company’s Subsidiaries to, afford access to the business, properties,
assets, books, or records of the Company or any of the Company’s Subsidiaries to any third party (or its potential sources of financing)
that is seeking to make, or has made, any Takeover Proposal; (iii) except where the Special Committee makes a good faith determination,
after consultation with its financial advisors and outside legal counsel, that the failure to do so would cause the Company Board to be
in breach of/be inconsistent with the Company’s Board’s fiduciary duties, amend or grant any waiver or release under any standstill
or similar agreement with respect to any class of equity securities of the Company or any of its Subsidiaries; (iv) approve any transaction
under, or any third party becoming an “interested stockholder” under, Section 203 of the DGCL; (v) enter into any agreement
in principle, letter of intent, term sheet, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership
agreement, or other Contract relating to any Takeover Proposal (each, a “Company Acquisition Agreement”); or (vi) approve,
authorize, agree, or publicly announce any intention to do any of the foregoing. The Company shall, and shall cause the Company’s
Subsidiaries and the Company’s and the Company’s Subsidiaries’ Representatives to cease immediately and cause to be
terminated any and all existing activities, discussions, or negotiations, if any, with any third party conducted prior to the date hereof
with respect to any Takeover Proposal and shall use the Company’s reasonable best efforts to cause any such third party (or its
agents or advisors) in possession of non-public information in respect of the Company or any of its Subsidiaries that was furnished by
or on behalf of the Company and its Subsidiaries to return or destroy (and confirm destruction of) all such information. Without limiting
the foregoing, it is understood that any violation of or the taking of actions inconsistent with the restrictions set forth in this Section
5.04 by any Representative of the Company or the Company’s Subsidiaries, whether or not such Representative is purporting to act
on behalf of the Company or any of the Company’s Subsidiaries, shall be deemed to be a breach of this Section 5.04 by the Company.
(b) Permitted
Conduct Related to Certain Takeover Proposals. Notwithstanding Section 5.04(a), prior to the receipt of the Disinterested Stockholder
Approval, the Special Committee, directly or indirectly through any Representative, may, subject to Section 5.04(c): (i) participate in
negotiations or discussions with any third party that has made (and not withdrawn) a bona fide, unsolicited, written Takeover Proposal
that the Special Committee believes in good faith, after consultation with the Special Committee’s financial advisors and outside
legal counsel, constitutes a Superior Proposal; and (ii) thereafter furnish to such third party non-public information relating to the
Company or any of the Company’s Subsidiaries pursuant to an executed confidentiality agreement (a copy of which confidentiality
agreement shall be provided promptly to Parent for informational purposes (and in all events within 24 hours)); provided, in each
such case, that: (A) none of the Company or the Company’s Subsidiaries or any of their respective Representatives shall have violated
any of the provisions of this Section 5.04, and (B) the Company Board first shall have determined in good faith, after consultation with
its financial advisors and outside legal counsel, that the failure to take such action would cause the Company Board to be in breach of
its fiduciary duties under applicable Law.
(c) Notification
to Parent. The Special Committee shall not take any of the actions referred to in clauses (i) or (ii) of Section 5.04(b) unless the
Company shall have delivered to Parent a prior written notice advising Parent that the Company intends to take such action. The Company
shall notify Parent promptly (but in no event later than two Business Days) after the Company obtains Knowledge of the receipt by the
Company (or any of the Company’s Representatives) of any Takeover Proposal, any inquiry that could reasonably be expected to lead
to a Takeover Proposal, any request for non-public information relating to the Company or any of the Company’s Subsidiaries or for
access to the business, properties, assets, books, or records of the Company or any of its Subsidiaries by any third party. In such notice,
the Company shall identify the third party making, and details of the material terms and conditions of, any such Takeover Proposal, indication
or request, including any proposed financing. The Company shall keep Parent fully informed, on a current basis, of the status and material
terms of any such Takeover Proposal, indication or request, including any material amendments or proposed amendments as to price, proposed
financing, and other material terms thereof. The Company shall provide Parent with at least 48 hours prior notice of any meeting of the
Company Board (or such lesser notice as is provided to the members of the Company Board) at which the Company Board is reasonably expected
to consider any Takeover Proposal. The Company shall promptly provide Parent with a list of any non-public information concerning the
Company’s and any of the Company’s Subsidiary’s business, present or future performance, financial condition, or results
of operations, provided to any third party, and, to the extent such information has not been previously provided to Parent, copies of
such information.
(d) Permitted
Conduct Related to a Superior Proposal. Except as expressly permitted by this Section 5.04(d) or Section 5.04(e), neither the Company
Board nor any committee thereof shall effect a Company Adverse Recommendation Change or enter into (or permit any Subsidiary to enter
into) a Company Acquisition Agreement. Notwithstanding the foregoing, at any time prior to the receipt of the Requisite Company Vote and
Disinterested Stockholder Approval, the Company Board, upon the recommendation of the Special Committee, may: (i) effect a Company Adverse
Recommendation Change with respect to a Superior Proposal or (ii) terminate this agreement pursuant to Section 7.04(a) in order to enter
into a Company Acquisition Agreement with respect to such Superior Proposal; in each case, that did not result from a breach of this Section
5.04, if: (A) the Company promptly notifies Parent, in writing, at least five Business Days (the “Superior Proposal Notice Period”)
before taking the action described in clause (i) or (ii) of this Section 5.04(d), of the Company’s intention to take such action
with respect to such Superior Proposal, which notice shall state expressly that the Company has received a Takeover Proposal that the
Company Board intends to declare is a Superior Proposal, and that the Company Board intends to take the action described in clause (i)
or (ii) of this Section 5.04(d); (B) the Company specifies the identity of the party making the Superior Proposal and the material terms
and conditions thereof in such notice and includes an unredacted copy of the Takeover Proposal and attaches to such notice the most current
version of any proposed agreement (which version shall be updated on a prompt basis) for such Superior Proposal and any related documents,
including financing documents, to the extent provided by the relevant party in connection with the Superior Proposal; (C) the Company
and the Company’s Representatives during the Superior Proposal Notice Period, negotiate with Parent in good faith to make such adjustments
in the terms and conditions of this Agreement so that such Takeover Proposal ceases to constitute a Superior Proposal, if Parent, in Parent’s
discretion, proposes to make such adjustments (it being agreed that in the event that, after commencement of the Superior Proposal Notice
Period, there is any material revision to the terms of a Superior Proposal, including, any revision in price or financing, the Superior
Proposal Notice Period shall be extended, if applicable, to ensure that at least three Business Days remains in the Superior Proposal
Notice Period subsequent to the time the Company notifies Parent of any such material revision (it being understood that there may be
multiple extensions)); and (D) the Company Board determines in good faith, after consulting with the Company Board’s financial advisors
and outside legal counsel, that such Takeover Proposal continues to constitute a Superior Proposal (after taking into account any adjustments
made by Parent during the Superior Proposal Notice Period in the terms and conditions of this Agreement) and that the failure to take
such action would cause the Company Board to be in breach of the Company Board’s fiduciary duties under applicable Law.
(e) Permitted
Conduct Related to Intervening Events. Notwithstanding anything to the contrary in the foregoing, in response to an Intervening Event
that has occurred after the date of this Agreement but prior to the receipt of the Requisite Company Vote and Disinterested Stockholder
Approval, the Company Board may effect a Company Adverse Recommendation Change if: (i) prior to effecting the Company Adverse Recommendation
Change, the Company promptly notifies Parent, in writing, at least five Business Days (the “Intervening Event Notice Period”)
before taking such action of the Company Board’s intent to consider such action (which notice shall not, by itself, constitute a
Company Adverse Recommendation Change), and which notice shall include a reasonably detailed description of the underlying facts giving
rise to, and the reasons for taking, such action; (ii) the Company shall, and shall cause the Company’s Representatives to, during
the Intervening Event Notice Period, negotiate with Parent in good faith to make such adjustments in the terms and conditions of this
Agreement so that the underlying facts giving rise to, and the reasons for taking such action, cease to constitute an Intervening Event,
if Parent, in Parent’s discretion, proposes to make such adjustments (it being agreed that in the event that, after commencement
of the Intervening Event Notice Period, there is any material development in an Intervening Event, the Intervening Event Notice Period
shall be extended, if applicable, to ensure that at least three Business Days remains in the Intervening Event Notice Period subsequent
to the time the Company notifies Parent of any such material development (it being understood that there may be multiple extensions));
and (iii) the Company Board determines in good faith, after consulting with the Company Board’s financial advisors and outside legal
counsel, that the failure to effect such Company Adverse Recommendation Change, after taking into account any adjustments made by Parent
during the Intervening Event Notice Period, would cause the Company Board to be in breach of the Company Board’s fiduciary duties
under applicable Law. The Company acknowledges and agrees that any Company Adverse Recommendation Change effected (or proposed to be effected)
in response to or in connection with any Takeover Proposal may be made solely and exclusively pursuant to Section 5.04(d) only, and may
not be made pursuant to this Section 5.04(e), and any Company Adverse Recommendation Change may only be made pursuant to this Section
5.04 and no other provisions of this Agreement.
(f) Compliance
with Tender Offer Rules. Nothing contained herein shall prevent the Company Board or any committee thereof from disclosing to the
Company’s stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act with regard to
a Takeover Proposal, if the Company determines, after consultation with the Company’s financial advisors and outside legal counsel,
that failure to disclose such position would cause the Company Board to be in breach of the Company Board’s fiduciary duties under
applicable Law; provided, however, that any public disclosure (other than any “stop, look and listen” statement
made under Rule 14d-9(f) under the Exchange Act) by the Company or the Company Board (or any committee thereof) relating to any determination,
position or other action by the Company, the Company Board or any committee thereof with respect to any Takeover Proposal shall be deemed
to be a Company Adverse Recommendation Change unless the Company Board expressly and publicly reaffirms the Company Board Recommendation
in such disclosure.
(g) Parent’s
and Parent’s Members’ Actions with Respect to a Takeover Proposal. For clarity purposes, nothing contained in this Section
5.04 shall be deemed to limit or restrict the right of Parent and any or all of the members of Parent to vote their respective voting
Company Securities against a Takeover Proposal or against the approval of a Company Acquisition Agreement.
Section 5.05 Stockholders Meeting; Preparation of Proxy Materials;
Approval by Sole Stockholder of Merger Sub.
(a) Company
Stockholders Meeting. The Company shall take all action necessary to duly call, give notice of, convene, and hold the Company Stockholders
Meeting as soon as reasonably practicable after the date of this Agreement and in no event later than 90 days following the date on which
the definitive version of the Company Proxy Statement is first mailed to holders of the Company Common Stock. Except to the extent that
the Company Board shall have effected a Company Adverse Recommendation Change as permitted by Section 5.04 hereof, the Company Proxy Statement
shall include the Company Board Recommendation. Subject to Section 5.04 hereof, the Company shall use reasonable best efforts to: (i)
solicit from the holders of Company Common Stock proxies in favor of the adoption of this Agreement and approval of the Merger; and (ii)
take all other actions necessary or advisable to secure the vote or consent of the holders of Company Securities required by the Certificate
of Incorporation and applicable Law to obtain such approval. The Company shall not submit any other proposals for approval at the Company
Stockholders Meeting without the prior written consent of Parent. The Company shall keep Parent and Merger Sub updated with respect to
proxy solicitation results as requested Parent or Merger Sub. The Company shall have the right,
after good faith consultation with Parent,
to, and shall at the request of Parent, postpone or adjourn the Company Stockholders Meeting for no longer than twenty Business Days in
the aggregate: (A) for the absence of a quorum, or (B) to allow reasonable additional time to solicit additional proxies to the extent
that at such time, taking into account the amount of time until the Company Stockholder Meeting, the Company has not received a number
of proxies that would reasonably be believed to be sufficient to obtain the Requisite Company Vote and Disinterested Stockholder Approval
at the Company Stockholder Meeting. If the Company Board makes a Company Adverse Recommendation Change, such will not alter the obligation
of the Company to submit the adoption of this Agreement and the approval of the Merger to the holders of Company Common Stock at the Company
Stockholders Meeting to consider and vote upon, unless this Agreement shall have been terminated in accordance with its terms prior to
the Company Stockholders Meeting.
(b) Preparation
of Company Proxy Statement. In connection with the Company Stockholders Meeting, as soon as reasonably practicable following the date
of this Agreement (and no later than 30 days after the date of this Agreement), the Company shall prepare and file the Company Proxy Statement
with the SEC. Parent, Merger Sub, and the Company will cooperate and consult with each other in the preparation of the Company Proxy Statement.
Without limiting the generality of the foregoing, each of Parent and Merger Sub will furnish the Company the information relating to it
required by the Exchange Act and the rules and regulations promulgated thereunder to be set forth in the Company Proxy Statement. The
Company shall not file the Company Proxy Statement, or any amendment or supplement thereto, without providing Parent a reasonable opportunity
to review and comment thereon (which comments shall be reasonably considered by the Company). The Company shall use its reasonable best
efforts to cause the Company Proxy Statement to comply as to form in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder. The Company shall use its reasonable best efforts to resolve, and each party agrees
to consult and cooperate with the other party in resolving, all SEC comments with respect to the Company Proxy Statement as promptly as
practicable after receipt thereof and to cause the Company Proxy Statement in definitive form to be cleared by the SEC and mailed to the
Company’s stockholders as promptly as reasonably practicable following filing with the SEC. The Company agrees to consult with Parent
prior to responding to SEC comments with respect to the preliminary Company Proxy Statement. Each of Parent, Merger Sub, and the Company
agree to correct any information provided by it for use in the Company Proxy Statement which shall have become false or misleading and
the Company shall promptly prepare and mail to the Company’s stockholders an amendment or supplement setting forth such correction.
The Company shall as soon as reasonably practicable: (i) notify Parent of the receipt of any comments from the SEC with respect to the
Company Proxy Statement and any request by the SEC for any amendment to the Company Proxy Statement or for additional information; and
(ii) provide Parent with copies of all written correspondence between the Company and the Company’s Representatives, on the one
hand, and the SEC, on the other hand, with respect to the Company Proxy Statement.
(c) Approval
by Sole Stockholder of Merger Sub. Immediately following the execution and delivery of this Agreement, Parent, as sole stockholder
of Merger Sub, shall adopt this Agreement and approve the Merger, in accordance with the DGCL.
Section 5.06 Notices of Certain Events. Subject to applicable
Law, the Company shall notify Parent and Merger Sub, and Parent and Merger Sub shall notify the Company, promptly of: (a) any notice or
other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement; (b) any notice or other communication from any Governmental Entity in connection with the transactions
contemplated by this Agreement; (c) any Legal Action commenced, or to such party’s Knowledge, threatened against, relating to, or
involving or otherwise affecting such party or any of its Subsidiaries or Affiliates, which relate to the transactions contemplated by
this Agreement; and (d) any event, change, or effect between the date of this Agreement and the Effective Time which individually or in
the aggregate causes or is reasonably likely to cause or constitute: (i) a material breach of any of its representations, warranties,
or covenants contained herein, or (ii) the failure of any of the conditions set forth in Article VI of this Agreement to be satisfied;
provided that any failure to give notice in accordance with the foregoing with respect to any breach shall not be deemed to constitute
a violation of this Section 5.06 or the failure of any condition set forth in Article VI to be satisfied, or otherwise constitute a breach
of this Agreement by the party failing to give such notice, in each case unless the underlying breach would independently result in a
failure of the conditions set forth in Article VI to be satisfied; and provided, further, that the delivery of any notice
pursuant to this Section 5.06 shall not cure any breach of, or noncompliance with, any other provision of this Agreement or limit the
remedies available to the party receiving such notice.
Section 5.07 Directors’ and Officers’ Indemnification and
Insurance.
(a) Indemnification.
Parent and Merger Sub agree that all rights to indemnification, advancement of expenses, and exculpation by the Company now existing in
favor of each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Effective Time an officer
or director of the Company or any of the Company’s Subsidiaries (each an “Indemnified Party”) as provided in
the Charter Documents of the Company, in each case as in effect on the date of this Agreement, or pursuant to any other Contracts in effect
on the date hereof and disclosed in Section 5.08 of the Company Disclosure Letter, shall be assumed by the Surviving Corporation in the
Merger, without further action, at the Effective Time and shall survive the Merger and shall remain in full force and effect in accordance
with their terms. For a period of six years from the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving
Corporation to, cause the Charter Documents of the Surviving Corporation to contain provisions with respect to indemnification, advancement
of expenses, and exculpation that are at least as favorable to the Indemnified Parties as the indemnification, advancement of expenses,
and exculpation provisions set forth in the Charter Documents of the Company as of the date of this Agreement. During such six-year period,
such provisions may not be repealed, amended or otherwise modified in any manner except as required by applicable Law.
(b) Insurance.
The Surviving Corporation shall, and Parent shall cause the Surviving Corporation to: (i) obtain as of the Effective Time “tail”
insurance policies with a claims period of six years from the Effective Time with at least the same coverage and amounts and containing
terms and conditions that are not less advantageous to the Indemnified Parties, in each case with respect to claims arising out of or
relating to events which occurred before or at the Effective Time (including in connection with the transactions contemplated by this
Agreement); provided, however, that in no event will the Surviving Corporation be required to expend an annual premium for
such coverage in excess of 100% of the last annual premium paid by the Company or any of the Company’s Subsidiaries for such insurance
prior to the date of this Agreement, which amount is set forth in Section 5.07(b) of the Company Disclosure Letter (the “Maximum
Premium”). If such insurance coverage cannot be obtained at an annual premium equal to or less than the Maximum Premium, the
Surviving Corporation will obtain, and Parent will cause the Surviving Corporation to obtain, the greatest coverage available for a cost
not exceeding an annual premium equal to the Maximum Premium.
(c) Survival.
The obligations of Parent, Merger Sub, and the Surviving Corporation under this Section 5.07 shall survive the consummation of the Merger
and shall not be terminated or modified in such a manner as to adversely affect any Indemnified Party to whom this Section 5.08 applies
without the consent of such affected Indemnified Party (it being expressly agreed that the Indemnified Parties to whom this Section 5.08
applies shall be third party beneficiaries of this Section 5.08, each of whom may enforce the provisions of this Section 5.07).
(d) Assumption
by Successors and Assigns; No Release or Waiver. In the event Parent, the Surviving Corporation or any of their respective successors
or assigns: (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger; or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in either
such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be,
shall assume all of the obligations set forth in this Section 5.08. The agreements and covenants contained herein shall not be deemed
to be exclusive of any other rights to which any Indemnified Party is entitled, whether pursuant to Law, Contract, or otherwise. Nothing
in this Agreement is intended to, shall be construed to, or shall release, waive, or impair any rights to directors’ and officers’
insurance claims under any policy that is or has been in existence with respect to the Company or its officers, directors, and employees,
it being understood and agreed that the indemnification provided for in this Section 5.07 is not prior to, or in substitution for, any
such claims under any such policies.
Section 5.08 Commercially Reasonable Efforts.
(a) Governmental
and Other Third-Party Approvals; Cooperation and Notification. Upon the terms and subject to the conditions set forth in this Agreement
(including those contained in this Section 5.08), each of the parties hereto shall, and shall cause its Subsidiaries to, use its commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper, or advisable to consummate and make effective, and to satisfy all conditions to, the Merger
and the other transactions contemplated by this Agreement, including: (i) the obtaining of all necessary Permits, waivers, and actions
or nonactions from Governmental Entities and the making of all necessary registrations, filings, and notifications (including filings
with Governmental Entities) and the taking of all steps as are necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entities; (ii) the obtaining of all required consents or waivers from third parties; and (iii) the execution
and delivery of any additional instruments necessary to consummate the Merger and to fully carry out the purposes of this Agreement. The
Company and Parent shall, subject to applicable Law, promptly: (A) cooperate and coordinate with the other in the taking of the actions
contemplated by clauses (i), (ii), and (iii) immediately above; and (B) supply the other with any information that may be reasonably required
in order to effectuate the taking of such actions. Each party hereto shall promptly inform the other party or parties hereto, as the case
may be, of any communication from any Governmental Entity regarding any of the transactions contemplated by this Agreement. If the Company,
on the one hand, or Parent or Merger Sub, on the other hand, receives a request for additional information or documentary material from
any Governmental Entity with respect to the transactions contemplated by this Agreement, then it shall use commercially reasonable efforts
to make, or cause to be made, as soon as reasonably practicable and after consultation with such party’s Representatives and the
other party, an appropriate response in compliance with such request, and, if permitted by applicable Law and by any applicable Governmental
Entity, provide the other party’s counsel with advance notice and the opportunity to attend and participate in any meeting with
any Governmental Entity in respect of any filing made thereto in connection with the transactions contemplated by this Agreement. Neither
Parent nor the Company shall commit to or agree (or permit any of their respective Subsidiaries to commit to or agree) with any Governmental
Entity to stay, toll, or extend any applicable waiting period under applicable Antitrust Laws, without the prior written consent of the
other (such consent not to be unreasonably withheld, conditioned, or delayed).
(b) Governmental
Antitrust Authorities. Without limiting the generality of the undertakings pursuant to Section 5.08(a) hereof, the parties hereto
shall: (i) provide or cause to be provided as promptly as reasonably practicable to Governmental Entities with jurisdiction over the Antitrust
Laws (each such Governmental Entity, a “Governmental Antitrust Authority”) information and documents requested by any
Governmental Antitrust Authority as necessary, proper, or advisable to permit consummation of the transactions contemplated by this Agreement,
including preparing and filing any notification, consents, and filings under applicable Antitrust Laws as promptly as practicable following
the date of this Agreement and thereafter to respond as promptly as practicable to any request for additional information or documentary
material that may be made under applicable Antitrust Laws; and (ii) subject to the terms set forth in Section 5.09(c) hereof, use their
reasonable best efforts to take such actions as are necessary or advisable to obtain prompt approval of the consummation of the transactions
contemplated by this Agreement by any Governmental Entity or expiration of applicable waiting periods.
(c) Actions
or Proceedings. In the event that any administrative or judicial action or proceeding is instituted (or threatened to be instituted)
by a Governmental Entity or private party challenging the Merger or any other transaction contemplated by this Agreement, or any other
agreement contemplated hereby, the Company shall cooperate in all respects with Parent and Merger Sub and shall use its reasonable best
efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed, or overturned any Order, whether temporary,
preliminary, or permanent, that is in effect and that prohibits, prevents, or restricts consummation of the transactions contemplated
by this Agreement. Notwithstanding anything in this Agreement to the contrary, none of Parent, Merger Sub, or any of their respective
Affiliates shall be required to defend, contest, or resist any action or proceeding, whether judicial or administrative, or to take any
action to have vacated, lifted, reversed, or overturned any Order, in connection with the transactions contemplated by this Agreement.
(d) No Divestitures;
Other Limitations. Notwithstanding anything to the contrary set forth in this Agreement, none of Parent, Merger Sub, or any of their
respective Subsidiaries shall be required to, and the Company may not, without the prior written consent of Parent, become subject to,
consent to, or offer or agree to, or otherwise take any action with respect to, any requirement, condition, limitation, understanding,
agreement, or Order to: (i) sell, license, assign, transfer, divest, hold separate, or otherwise dispose of any assets, business, or portion
of business of the Company, the Surviving Corporation, Parent, Merger Sub, or any of their respective Subsidiaries; (ii) conduct, restrict,
operate, invest, or otherwise change the assets, business, or portion of business of the Company, the Surviving Corporation, Parent, Merger
Sub, or any of their respective Subsidiaries in any manner; or (iii) impose any restriction, requirement, or limitation on the operation
of the business or portion of the business of the Company, the Surviving Corporation, Parent, Merger Sub, or any of their respective Subsidiaries;
provided that, if requested in writing by Parent, the Company will become subject to, consent to, or offer or agree to, or otherwise
take any action with respect to, any such requirement, condition, limitation, understanding, agreement, or Order so long as such requirement,
condition, limitation, understanding, agreement, or Order is only binding on the Company in the event the Closing occurs.
Section 5.09 Public Announcements. The initial press release
with respect to this Agreement and the transactions contemplated hereby shall be a release mutually agreed to by the Company and Parent.
Thereafter, each of the Company and Parent agrees that no public release, statement, announcement, or other disclosure concerning the
Merger and the other transactions contemplated hereby shall be issued by any party without the prior written consent of the other party
(which consent shall not be unreasonably withheld, conditioned, or delayed), except as may be required by: (a) applicable Law, (b) court
process, (c) the rules or regulations of any applicable United States securities exchange, or (d) any Governmental Entity to which the
relevant party is subject or submits; provided, in each such case, the party making the release, statement, announcement, or other
disclosure shall use such party’s reasonable best efforts to allow the other party reasonable time to comment on such release or
announcement in advance of such issuance. Notwithstanding the foregoing, the restrictions set forth in this Section 5.09 shall not apply
to any release, statement, announcement or other disclosure made with respect to: (i) a Company Adverse Recommendation Change issued or
made in compliance with Section 5.04; (ii) any other disclosure issued or made in compliance with Section 5.04; or (iii) the Merger and
the other transactions contemplated hereby that is substantially similar (and identical in any material respect) to those in a previous
release, statement, announcement, or other disclosure made by the Company or Parent in accordance with this Section 5.09.
Section 5.10 Anti-Takeover Statutes. If any “control share
acquisition,” “fair price,” “moratorium,” or other anti-takeover Law becomes or is deemed to be applicable
to Parent, the Merger Sub, the Company, the Merger, or any other transaction contemplated by this Agreement, then each of the Company
and the Company Board shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby may
be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to render such anti-takeover Law inapplicable
to the foregoing.
Section 5.11 Section 16 Matters. Prior to the Effective Time,
the Company shall take all such steps as may be required to cause to be exempt under Rule 16b-3 promulgated under the Exchange Act any
dispositions of shares of Company Common Stock (including derivative securities with respect to such shares) that are treated as dispositions
under such rule and result from the transactions contemplated by this Agreement by each director or officer of the Company who is subject
to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company immediately prior to the Effective Time.
Section 5.12 Stock Exchange Delisting; Deregistration. The Company
shall cooperate with Parent and use the Company’s reasonable best efforts to take, or cause to be taken, all actions, and do or
cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Laws and the rules and policies of
Nasdaq to enable the delisting by the Surviving Corporation of the shares of Company Common Stock from Nasdaq and the deregistration of
the shares of Company Common Stock under the Exchange Act as promptly as practicable after the Effective Time, and in any event no more
than ten days after the Effective Time.
Section 5.13 Stockholder Litigation. The Company shall promptly
advise Parent in writing after becoming aware of any Legal Action commenced, or to the Company’s Knowledge threatened in writing,
against the Company or any of the Company’s directors by any stockholder of the Company (on their own behalf or on behalf of the
Company) relating to this Agreement or the transactions contemplated hereby (including the Merger and the other transactions contemplated
hereby) and shall keep Parent reasonably informed regarding any such Legal Action. The Company shall: (a) give Parent the opportunity
to participate in the defense and settlement of any such stockholder litigation, (b) keep Parent reasonably apprised on a prompt basis
of proposed strategy and other significant decisions with respect to any such stockholder litigation, and provide Parent with the opportunity
to consult with the Company regarding the defense of any such litigation, which advice the Company shall consider in good faith, and (c)
not settle any such stockholder litigation without the prior written consent of Parent (which consent shall not be unreasonably withheld,
delayed, or conditioned). Notwithstanding anything to the contrary in this Section 5.13, any matters relating to Dissenting Shares shall
be governed by Section 2.03.
Section 5.14 Obligations of Merger Sub. Parent will take all
action necessary to cause Merger Sub to perform Merger Sub’s obligations under this Agreement and to consummate the Merger on the
terms and conditions set forth in this Agreement.
Section 5.15 Resignations. At the written request of Parent, the
Company shall cause each director of the Company or any director of any of the Company’s Subsidiaries to resign in such capacity,
with such resignations to be effective as of the Effective Time.
Section 5.16 Further Assurances. At and after the Effective Time,
the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of the Company
or Merger Sub, any deeds, bills of sale, assignments, or assurances and to take and do, in the name and on behalf of the Company or Merger
Sub, any other actions and things to vest, perfect, or confirm of record or otherwise in the Surviving Corporation any and all right,
title, and interest in, to and under any of the rights, properties, or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
Section 5.17 Financing Cooperation.
(a) Prior
to the Closing Date, the Company shall, and shall cause its Subsidiaries and their respective Representatives to, use its commercially
reasonable efforts to provide, in each case, all cooperation as is necessary and customary or as may be required under the terms of any
Debt Financing, to assist Parent and Merger Sub in connection with the Debt Financing, including:
| (i) | if required under the terms of any Debt Commitment Letter or definitive documents related thereto, furnishing Parent and Merger Sub,
as promptly as reasonably practicable, with (I) the financial statements required by the Debt Commitment Letter and (II) other financial
and other data regarding the Company and its Subsidiaries to the extent available to the Company; |
| (ii) | providing reasonably promptly to Parent and Merger Sub such other information regarding the Company and its Subsidiaries that is readily
available or within the Company’s or such Subsidiary’s possession, in each case, as is reasonably requested in connection
with the Debt Financing; |
| (iii) | if required under the terms of any Debt Commitment Letter or definitive documents related thereto, executing and delivering reasonable
and customary officers’ certificates, secretary certificates, perfection certificates, and other documentation required by the Debt
Financing Sources and the definitive documentation related to the Debt Financing, and reasonably facilitating the making of guarantees
and granting of security interests (and perfection thereof) in collateral, in each case contingent upon, or the effectiveness thereof
to be subject to, the occurrence of the Closing; |
| (iv) | delivering possessory collateral (such as certificated equity and promissory notes) within its possession or control to the Debt Financing
Sources, subject to the occurrence of the Closing; |
| (v) | using commercially reasonable efforts to cooperate in satisfying the conditions precedent set forth in the Debt Commitment Letter
or any definitive documentation relating to the Debt Financing that are within its control; |
| (vi) | taking all reasonably requested formal corporate or similar actions in connection with the Debt Financing and execute the definitive
documentation for the Debt Financing, in each case, subject to the occurrence of the Closing; and |
| (vii) | using commercially reasonable efforts to deliver applicable supporting information and documentation and assisting with, and providing
reasonable cooperation with respect to, customary appraisals and field exams. |
ARTICLE VI
CONDITIONS
Section 6.01 Conditions to Each Party’s Obligation to Effect
the Merger. The respective obligations of each party to this Agreement to effect the Merger is subject to the satisfaction or waiver
(where permissible pursuant to applicable Law) on or prior to the Closing of each of the following conditions:
(a) Company
Stockholder Approval. This Agreement will have been duly adopted by the vote of disinterested stockholders in accordance with Section
144(c) of the DGCL.
(b) Regulatory
Approvals. The waiting period applicable to the consummation of the Merger, if any, shall have expired or been terminated and all
required filings have been made and all required approvals obtained (or waiting periods expired or terminated) under applicable Antitrust
Laws.
(c) No Injunctions,
Restraints, or Illegality. No Governmental Entity having jurisdiction over any party hereto shall have enacted, issued, promulgated,
enforced, or entered any Laws or Orders, whether temporary, preliminary, or permanent, that make illegal, enjoin, or otherwise prohibit
consummation of the Merger or the other transactions contemplated by this Agreement.
(d) Governmental
Consents. All consents, approvals and other authorizations of any Governmental Entity set forth in Section 6.01 of the Company Disclosure
Letter and required to consummate the Merger and the other transactions contemplated by this Agreement (other than the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware) shall have been obtained, free of any condition that would reasonably
be expected to have a Company Material Adverse Effect or a material adverse effect on Parent’s and Merger Sub’s ability to
consummate the transactions contemplated by this Agreement.
Section 6.02 Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are also subject to the satisfaction or waiver (where permissible pursuant
to applicable Law) by Parent and Merger Sub on or prior to the Closing of the following conditions:
(a) Representations
and Warranties.
(i) The
representations and warranties of the Company (other than in Section 3.01(a), Section 3.02, Section 3.03(a), Section 3.03(b)(i), Section
3.03(d), Section 3.03(e), Section 3.05(a), Section 3.10, and Section 3.19) set forth in Article III of this Agreement shall be true and
correct in all respects (without giving effect to any limitation indicated by the words “Company Material Adverse Effect,”
“in all material respects,” “in any material respect,” “material,” or “materially”) as
of the date of this Agreement and as of the Closing Date, as if made at and as of such date (except those representations and warranties
that address matters only as of a particular date, which shall be true and correct in all respects as of that date), except where the
failure of such representations and warranties to be so true and correct would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect;
(ii) the
representations and warranties of the Company contained in Section 3.02 shall be true and correct (other than de minimis inaccuracies)
as of the date of this Agreement and as of the Closing Date, as if made at and as of such date (except those representations and warranties
that address matters only as of a particular date, which shall be true and correct in all material respects as of that date); and
(iii) the
representations and warranties contained in Section 3.01(a), Section 3.03(a), Section 3.03(b)(i), Section 3.03(d), Section 3.03(e), Section
3.05(a), Section 3.10, and Section 3.19 shall be true and correct in all respects as of the date of this Agreement and as of the Closing
Date, as if made at and as of such date (except those representations and warranties that address matters only as of a particular date,
which shall be true and correct in all respects as of that date).
(b) Performance
of Covenants. The Company shall have performed in all material respects all obligations, and complied in all material respects with
the agreements and covenants, in this Agreement required to be performed by or complied with by it at or prior to the Closing.
(c) Company
Material Adverse Effect. Since the date of this Agreement, there shall not have been any Company Material Adverse Effect or any event,
change, or effect that would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(d) Officers
Certificate. Parent will have received a certificate, signed by the chief executive officer or chief financial officer of the Company,
certifying as to the matters set forth in Section 6.02(a), Section 6.02(b), and Section 6.02(c).
Section 6.03 Conditions to Obligation of the Company. The obligation
of the Company to effect the Merger is also subject to the satisfaction or waiver by the Company on or prior to the Closing of the following
conditions:
(a) Representations
and Warranties. The representations and warranties of Parent and Merger Sub set forth in Article IV of this Agreement shall be true
and correct in all respects (without giving effect to any limitation indicated by the words “material adverse effect,” “in
all material respects,” “in any material respect,” “material,” or “materially”) as of the date
of this Agreement and as of the Closing Date, as if made at and as of such date (except those representations and warranties that address
matters only as of a particular date, which shall be true and correct in all respects as of that date), except where the failure of such
representations and warranties to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on Parent’s and Merger Sub’s ability to consummate the transactions contemplated by this Agreement.
(b) Performance
of Covenants. Parent and Merger Sub shall have performed in all material respects all obligations, and complied in all material respects
with the agreements and covenants, of this Agreement required to be performed by or complied with by them at or prior to the Closing.
(c) Officers
Certificate. The Company will have received a certificate, signed by an officer of Parent, certifying as to the matters set forth
in Section 6.03(a) and Section 6.03(b).
Section 6.04 Frustration of Closing Conditions. Neither the Company,
Parent, or Merger Sub may rely, as a basis for not consummating the Merger or the other transactions contemplated by this Agreement, on
the failure of any condition set forth in Section 6.01, Section 6.02, or Section 6.03, as the case may be, to be satisfied if such failure
was caused by such party’s breach in any material respect of any provision of this Agreement.
ARTICLE VII
TERMINATION, AMENDMENT, AND WAIVER
Section 7.01 Termination by Mutual Consent. This Agreement may
be terminated at any time prior to the Closing (whether before or after the receipt of the Requisite Company Vote and Disinterested Stockholder
Approval) by the mutual written consent of Parent, Merger Sub, and the Company.
Section 7.02 Termination by Either Parent or the Company. This
Agreement may be terminated by either Parent or the Company at any time prior to the Closing (whether before or after the receipt of the
Requisite Company Vote and Disinterested Stockholder Approval):
(a) if the
Merger has not been consummated on or before March 12, 2026 (the “End Date”); provided that the End Date shall
be automatically extended to the later of 90 days following (i) the date the Definitive Proxy Statement is filed and (ii) the date, if
applicable, upon which any review or investigation by a Governmental Entity, including, without limitation, the SEC, is completed; provided
further, that the right to terminate this Agreement pursuant to this Section 7.02(a) shall not be available to any party whose breach
of any representation, warranty, covenant, or agreement set forth in this Agreement has been the principal cause of the failure of the
Merger to be consummated on or before the End Date;
(b) if any
Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced, or entered any Law or Order making illegal,
permanently enjoining, or otherwise permanently prohibiting the consummation of the Merger or the other transactions contemplated by this
Agreement, and such Law or Order shall have become final and nonappealable; provided, however, that the right to terminate
this Agreement pursuant to this Section 7.02(b) shall not be available to any party whose breach of any representation, warranty, covenant,
or agreement set forth in this Agreement has been the principal cause of the issuance, promulgation, enforcement, or entry of any such
Law or Order; or
(c) if this
Agreement has been submitted to the stockholders of the Company for adoption at a duly convened Company Stockholders Meeting and the Requisite
Company Vote and Disinterested Stockholder Approval shall not have been obtained at such meeting (unless such Company Stockholders Meeting
has been adjourned or postponed, in which case at the final adjournment or postponement thereof).
Section 7.03 Termination By Parent. This Agreement may be terminated
by Parent at any time prior to the Closing:
(a) If: (i)
a Company Adverse Recommendation Change shall have occurred or the Company shall have approved or adopted, or recommended the approval
or adoption of, any Company Acquisition Agreement; or (ii) the Company shall have breached or failed to perform in any material respect
any of its covenants and agreements set forth in Section 5.04 or Section 5.05(a) or
(b) if there
shall have been a breach of any representation, warranty, covenant, or agreement on the part of the Company set forth in this Agreement
such that the conditions to the Closing of the Merger set forth in Section 6.02(a) or Section 6.02(b), as applicable, would not be satisfied
and, such breach is incapable of being cured by the End Date; or, if capable of being cured by the End Date, shall not have been cured
prior to the earlier of (i) 30 days after written notice thereof is given by Parent to the Company or (ii) the End Date; provided,
further, that Parent shall not have the right to terminate this Agreement pursuant to this Section 7.03(b) if Parent or Merger
Sub is then in material breach of any representation, warranty, covenant, or obligation hereunder that would cause any condition set forth
in Section 6.03(a) or Section 6.03(b) not to be satisfied.
Section 7.04 Termination By the Company. This Agreement may be
terminated by the Company at any time prior to the Closing:
(a) if, prior
to the receipt of the Requisite Company Vote and Disinterested Stockholder Approval at the Company Stockholders Meeting, the Company Board
authorizes the Company, to the extent permitted by and subject to full compliance with the applicable terms and conditions of this Agreement,
including Section 5.04, to enter into a Company Acquisition Agreement (other than a confidentiality agreement) in respect of a Superior
Proposal; provided, that the Company shall have paid any amounts due pursuant to Section 7.06(b) hereof in accordance with the
terms, and at the times, specified therein; and provided, further, that in the event of such termination, the Company substantially
concurrently enters into such Company Acquisition Agreement; or
(b) if there
shall have been a material breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub set forth
in this Agreement such that the conditions to the Closing of the Merger set forth in Section 6.03(a) or Section 6.03(b), as applicable,
would not be satisfied and, in either such case, such breach is incapable of being cured by the End Date; or, if capable of being cured
by the End Date, shall not have been cured prior to the earlier of (i) 30 days after written notice thereof is given by the Company to
Parent or (ii) the End Date; provided, further, that the Company shall not have the right to terminate this Agreement pursuant
to this Section 7.04(b) if the Company is then in breach of any representation, warranty, covenant, or obligation hereunder that would
cause any condition set forth in Section 6.02(a) or Section 6.02(b) not to be satisfied.
Section 7.05 Notice of Termination; Effect of Termination. The
party desiring to terminate this Agreement pursuant to this Article VII (other than pursuant to Section 7.01) shall deliver written notice
of such termination to the other party or parties hereto specifying with particularity the reason for such termination, and any such termination
in accordance with this Section 7.05 shall be effective immediately upon delivery of such written notice. If this Agreement is properly
and validly terminated pursuant to this Article VII, it will become void and of no further force and effect, with no liability or obligation
on the part of any party to this Agreement (or any stockholder, director, officer, employee, agent, or Representative of such party) to
any other party or parties hereto, except: (a) with respect to Section 5.03(b), this Section 7.05, Section 7.06, and Article VIII (and
any related definitions contained in any such Sections or Article), which shall remain in full force and effect; and (b) with respect
to any liabilities or damages incurred or suffered by a party or parties hereto, to the extent such liabilities or damages were the result
of fraud or the breach by another party of any of such other party’s representations, warranties, covenants, or other agreements
set forth in this Agreement.
Section 7.06 Fees and Expenses Following Termination.
(a) If this
Agreement is terminated by Parent pursuant to Section 7.03(a), then the Company shall pay to Parent (by wire transfer of immediately available
funds), within two Business Days after such termination, the Termination Fee, plus Parent’s Expenses actually incurred by
Parent on or prior to the termination of this Agreement.
(b) If this
Agreement is terminated by the Company pursuant to Section 7.04(a), then the Company shall pay to Parent (by wire transfer of immediately
available funds), at or prior to such termination, the Termination Fee, plus Parent’s Expenses actually incurred by Parent
on or prior to the termination of this Agreement.
(c) If this
Agreement is terminated (i) by Parent pursuant to Section 7.03(b), or (ii) by the Company or Parent pursuant to (A) Section 7.02(a), provided
that, at the time of termination, the Disinterested Stockholder Approval has not been obtained and, in the case of a termination by the
Company, only if at such time Parent would not be prohibited from terminating this Agreement pursuant to Section 7.02(a), or (B) Section
7.02(c); and, in each case: (1) prior to such termination, a Takeover Proposal shall have been publicly disclosed or otherwise made or
communicated to the Company or the Company Board, and (2) within twelve months following the date of such termination of this Agreement
the Company shall have entered into a definitive agreement with respect to any Takeover Proposal, or consummated any Takeover Proposal
(in each case, whether or not such Takeover Proposal is the same as the original Takeover Proposal made, communicated, or publicly disclosed),
then in any such event the Company shall pay to Parent (by wire transfer of immediately available funds), immediately prior to and as
a condition to consummating such transaction,
the Termination Fee, plus Parent’s Expenses actually incurred by Parent on
or prior to the termination of this Agreement (it being understood for all purposes of this Section 7.06(c), all references in the definition
of Takeover Proposal to “15%” shall be deemed to be references to “35%” instead). If a Person (other than Parent)
makes a Takeover Proposal that has been publicly disclosed and subsequently withdrawn prior to such termination or the Company Stockholder
Meeting, as applicable, and, within twelve months following the date of the termination of this Agreement, such Person or any of the Person’s
Affiliates makes a Takeover Proposal that is publicly disclosed, such initial Takeover Proposal shall be deemed to have been “not
withdrawn” for purposes of this Section 7.06(c).
(d) The Company
acknowledges and hereby agrees that the provisions of this Section 7.06 are an integral part of the transactions contemplated by this
Agreement (including the Merger), and that, without such provisions, Parent and Merger Sub would not have entered into this Agreement.
If the Company shall fail to pay in a timely manner the amounts due pursuant to this Section 7.06, and, in order to obtain such payment,
Parent makes a claim against the Company that results in a judgment against the Company, the Company shall pay to Parent the reasonable
costs and expenses of Parent (including its reasonable attorneys’ fees and expenses) incurred or accrued in connection with such
suit, together with interest on the amounts set forth in this Section 7.06 at the prime rate as published in The Wall Street Journal in
effect on the date such payment was required to be made through the date such payment was actually received, or a lesser rate that is
the maximum permitted by applicable Law. The parties acknowledge and agree that: (i) the right to receive the Termination Fee and/or any
Expense reimbursement under this Agreement shall not limit or otherwise affect Parent’s or Merger Sub’s right to specific
performance as provided in Section 8.13; and (ii) in no event shall the Company be obligated to pay the Termination Fee on more than one
occasion.
(e) Except
as expressly set forth in this Section 7.06, all Expenses incurred in connection with this Agreement and the transactions contemplated
hereby will be paid by the party incurring such Expenses; provided, however, that Parent and the Company shall be equally
responsible for all filing fees incurred in connection with any Antitrust Law in connection with the consummation of the transactions
contemplated by this Agreement.
(f) Notwithstanding anything herein to the contrary,
the Company and its Representatives agree that (i) no Debt Financing Source shall have any liability hereunder (whether in contract or
in tort, in law or in equity, or granted by statute) for any claims, causes of action, obligations, or losses arising under, out of, in
connection with, or related in any manner to this Agreement or based on, in respect of or by reason of this Agreement or its negotiation,
execution, performance, or breach (provided that nothing in this Section 7.06(f) shall limit the liability or obligations of the Debt
Financing Parties under the Debt Commitment Letter or any definitive agreements with respect to the Debt Financing); and (ii) only the
Parent or its Representatives shall be permitted to bring any claim against a Debt Financing Source for failing to satisfy any obligation
to fund the Debt Financing pursuant to the terms of the Debt Commitment Letter.
Section 7.07 Amendment. At any time prior to the Effective Time,
this Agreement may be amended or supplemented in any and all respects, whether before or after receipt of the Disinterested Stockholder
Approval, by written agreement signed by each of the parties; provided, however, that (a) following the receipt of the Requisite
Company Vote and Disinterested Stockholder Approval, there shall be no amendment or supplement to the provisions of this Agreement which
by Law would require further approval by the holders of Company Common Stock without such approval and (b) none of the Debt Financing
Source Protective Provisions may be amended or modified in any manner that is adverse to any Debt Financing Source without the consent
of such Debt Financing Source. This Agreement may not be modified or amended except as provided in the immediately preceding sentence
and any purported amendment by any Party or Parties effected in a manner which does not comply with this Section 7.07 shall be void, ab
initio.
Section 7.08 Extension; Waiver. At any time prior to the Effective
Time, Parent or Merger Sub, on the one hand, or the Company, on the other hand, may: (a) jointly agree extend the time for the performance
of any of the obligations of the other party(ies); (b) individually waive any inaccuracies in the representations and warranties of the
other party(ies) contained in this Agreement or in any document delivered under this Agreement; or (c) unless prohibited by applicable
Law, individually waive compliance with any of the covenants, agreements, or conditions contained in this Agreement. Any agreement on
the part of a party to any extension or waiver will be valid only if set forth in an instrument in writing signed by such party. The failure
of any party to assert any of such party’s rights under this Agreement or otherwise will not constitute a waiver of such rights.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Definitions. For purposes of this Agreement, the
following terms will have the following meanings when used herein with initial capital letters:
“Acquisition Group” means Parent, Merger Sub and the
members of Parent holding equity interests of Parent.
“Affiliate” means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by, or is under common control with, such first Person. For the purposes of
this definition, “control” (including, the terms “controlling,” “controlled by,”
and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by
Contract, or otherwise.
“Agreement” has the meaning set forth in the Preamble.
“Antitrust Laws” means the Sherman Act of 1890, as amended,
the Clayton Act of 1914, as amended, the Federal Trade Commission Act of 1914, as amended, the HSR Act, and all other federal, state,
foreign or supranational Laws or Orders in effect from time to time that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.
“Book-Entry Share” has the meaning set forth in Section
2.01(c).
“Business Day” means any day, other than Saturday, Sunday,
or any day on which the SEC or banking institutions located in New York, New York are authorized or required by Law or other governmental
action to close.
“Certificate” has the meaning set forth in Section 2.01(c).
“Certificate of Incorporation” means the Certificate
of Incorporation of the Company, as amended through the date of this Agreement.
“Certificate of Merger” has the meaning set forth in
Section 1.03.
“Charter Documents” has the meaning set forth in Section
3.01(b).
“Closing” has the meaning set forth in Section 1.02.
“Closing Date” has the meaning set forth in Section
1.02.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the Preamble.
“Company Acquisition Agreement” has the meaning set
forth in Section 5.04(a).
“Company Adverse Recommendation Change” means the Company
Board: (a) withholding, withdrawing, amending, modifying, or materially qualifying, or publicly proposing to withhold, withdraw, amend,
modify, or materially qualify, or fail to make, in each case, in a manner adverse to Parent, the Company Board Recommendation; (b) failing
to include the Company Board Recommendation in the Company Proxy Statement that is disseminated to the Company’s stockholders; (c)
adopting, approving, endorsing, declaring advisable, or recommending, or publicly proposing to adopt, approve, endorse, declare advisable,
or recommend, a Takeover Proposal; (d) failing to recommend against acceptance of any tender offer or exchange offer for the shares of
Company Common Stock within ten Business Days after the commencement of such offer; or (e) failing to reaffirm (publicly, if so requested
by Parent) the Company Board Recommendation within ten Business Days after the date any Takeover Proposal (or material modification thereto)
is first publicly disclosed by the Company or the Person making such Takeover Proposal.
“Company Balance Sheet” has the meaning set forth in
Section 3.04(e).
“Company Benefit Plan” means any plan or similar program
of the Company that provides health, medical, insurance, compensation bonus, retirement, equity or equity equivalent or other benefits
to one or more officers, directors, employees, or service providers of or to the Company or any of the Company’s Subsidiaries.
“Company Board” has the meaning set forth in the Recitals.
“Company Board Recommendation” has the meaning set forth
in Section 3.03(d).
“Company Capital Stock” means the Company Class B Common
Stock, Company Class C Common Stock and Company Common Stock.
“Company Class A Preferred Stock” has the meaning set
forth in the Recitals.
“Company Class A Preferred Stock Merger Consideration”
has the meaning set forth in Section 2.01(b)(iv).
“Company Class B Common Stock” has the meaning set forth
in Recitals.
“Company Class B Stock Merger Consideration” has the
meaning set forth in Section 2.01(b)(ii).
“Company Class C Common Stock” has the meaning set forth
in Recitals.
“Company Class C Stock Merger Consideration” has the
meaning set forth in Section 2.01(b)(iii).
“Company Common Stock” has the meaning set forth in
the Recitals.
“Company Common Stock Merger Consideration” has the
meaning set forth in Section 2.01(b)(i).
“Company Disclosure Letter” has the meaning set forth
in the introductory language in Article III.
“Company Employee” means any current or former employee,
officer, or director of the Company or any of its Subsidiaries who is or was, as of the relevant time, employed by the Company or any
of its Subsidiaries, whether on a full-time, part-time, seasonal, or temporary basis, including those employees who are on leave of absence
(including medical leave, military leave, or other approved leave of absence) or who have a right to be reinstated under applicable Law
or Company policy.
“Company Equity Award” means a stock option, restricted
stock, or other award granted under one of the Company Benefit Plans, as the case may be.
“Company ERISA Affiliate” means all employers, trades,
or businesses (whether or not incorporated) that would be treated together with the Company or any of its Affiliates as a “single
employer” within the meaning of Section 414 of the Code.
“Company IP” has the meaning set forth in Section 3.07(b).
“Company IP Agreements” means all licenses, sublicenses,
consent to use agreements, settlements, coexistence agreements, covenants not to sue, waivers, releases, permissions, and other Contracts,
whether written or oral, relating to Intellectual Property and to which the Company or any of its Subsidiaries is a party, beneficiary,
or otherwise bound.
“Company IT Systems” means all software, computer hardware,
servers, networks, platforms, peripherals, and similar or related items of automated, computerized, or other information technology networks
and systems (including telecommunications networks and systems for voice, data, and video) owned, leased, licensed, or used (including
through cloud-based or other third-party service providers) by the Company or any of its Subsidiaries.
“Company Material Adverse Effect” means any event, circumstance,
development, occurrence, fact, condition, effect, or change (each, an “Effect”) that is, or would reasonably be expected
to become, individually or in the aggregate, materially adverse to: (a) the business, results of operations, condition (financial or otherwise),
or assets of the Company and the Company’s Subsidiaries, taken as a whole; or (b) the ability of the Company to timely perform its
obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis; provided, however,
that, for the purposes of clause (a), a Company Material Adverse Effect shall not be deemed to include any Effect (alone or in combination)
arising out of, relating to, or resulting from: (i) changes generally affecting the economy, financial or securities markets, or political
conditions, including any tariffs or trade wars; (ii) the execution and delivery, announcement, or pendency or consummation of the transactions
contemplated by this Agreement, including the impact thereof on relationships, contractual or otherwise, of the Company and its Subsidiaries
with employees, suppliers, customers, Governmental Entities, or other third Persons (it being understood and agreed that this clause shall
not apply with respect to any representation or warranty that is intended to address the consequences of the execution and delivery, announcement,
or pendency or consummation of this Agreement); (iii) any changes in applicable Law or GAAP or other applicable accounting standards,
including interpretations thereof, (iv) acts of war, sabotage, terrorism, or military actions, or the escalation thereof; (v) natural
disasters, weather conditions, epidemics, pandemics, or disease outbreaks (including public health emergencies (as declared by the World
Health Organization or the Health and Human Services Secretary of the United States), or other force majeure events; (vi) general
conditions in the industry in which the Company and its Subsidiaries operate; (vii) any failure, in and of itself, by the Company to meet
any internal or published projections, forecasts, estimates, or predictions in respect of revenues, earnings, or other financial or operating
metrics for any period (it being understood that any Effect underlying such failure may be deemed to constitute, or be taken into account
in determining whether there has been or would reasonably be expected to become, a Company Material Adverse Effect, to the extent permitted
by this definition and not otherwise excepted by another clause of this proviso); (viii) any change, in and of itself, in the market price
or trading volume of the Company’s securities or in the Company’s credit ratings (it being understood that any Effect underlying
such change may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected
to become, a Company Material Adverse Effect, to the extent permitted by this definition and not otherwise excepted by another clause
of this proviso); or (ix) actions taken as required or specifically permitted by the Agreement or actions or omissions taken with Parent’s
consent; provided further, however, that any Effect referred to in clauses (i), (iii), (iv), (v), or (vi) immediately above
shall be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur
if it has a disproportionate effect on the Company and its Subsidiaries, taken as a whole, compared to other participants in the industries
in which the Company and its Subsidiaries conduct their businesses (in which case, only the incremental disproportionate adverse effect
may be taken into account in determining whether a Company Material Adverse Effect has occurred).
“Company Material Contract” has the meaning set forth
in Section 3.17(b).
“Company-Owned IP” means all Intellectual Property owned
by the Company or any of its Subsidiaries.
“Company Proxy Statement” has the meaning set forth
in Section 3.19.
“Company SEC Documents” has the meaning set forth in
Section 3.04(a).
“Company Securities” has the meaning set forth in Section
3.02(b)(ii).
“Company Stockholder Approval” has the meaning set forth
in Section 3.22(a).
“Company Stockholders Meeting” means the special meeting
of the stockholders of the Company to be held to consider the adoption of this Agreement.
“Company Subsidiary Securities” has the meaning set
forth in Section 3.02(c).
“Confidentiality Agreement” has the meaning set forth
in Section 5.03(b).
“Consent” has the meaning set forth in Section 3.03(c).
“Constituent Documents” means the Company’s or
any Subsidiary’s, as the context may requires, certificate or articles of incorporation, certificate or articles of formation, bylaws,
or operating agreement, as the case may be.
“Contracts” means any contracts, agreements, licenses,
notes, bonds, mortgages, indentures, leases, or other binding instruments or binding commitments, whether written or oral.
“Debt Financing” has the meaning set forth in Section
4.04.
“Debt Financing Parties” means (a) the Debt Financing
Sources and each other Person that commits to provide or arrange or otherwise enters into agreements in connection with the Debt Financing,
the Debt Commitment Letter or other debt financings in connection with the transactions contemplated by this Agreement and the parties
to any joinder agreements or any definitive documentation entered pursuant thereto or relating thereto, and their respective successors
and assigns; (b) the respective current and future limited partners, shareholders, managers, members, controlling persons and Affiliates
of the Persons specified in clause (a), and their respective successors and assigns; and (c) the current and future limited partners,
shareholders, managers, members, controlling persons, Affiliates, officers, directors, employees and representatives of the Persons specified
in clauses (a) and (b) and their respective successors and assigns.
“Debt Financing Sources” has the meaning set forth in
Section 4.04(a).
“Debt Financing Sources Protective Provisions” means
the provisions set forth in Section 7.06, Section 7.07, Section 8.04, Section 8.09, and Section 8.11.
“DGCL” has the meaning set forth in the Recitals.
“Dissenting Shares” has the meaning set forth in Section
2.03.
“Disinterested Stockholder Approval” has the meaning
set forth in Section 3.22(a).
“EDGAR” has the meaning set forth in Section 3.04(a).
“Effect” has the meaning set forth in the definition
of “Company Material Adverse Effect.”
“Effective Time” has the meaning set forth in Section
1.03.
“End Date” has the meaning set forth in Section 7.02(a).
“Environmental Laws” means any applicable Law, and any
Order or binding agreement with any Governmental Entity: (a) relating to pollution (or the cleanup thereof) or the protection of natural
resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or
groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment,
storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation
of any Hazardous Substance. The term “Environmental Law” includes the following (including their implementing regulations
and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et. seq.; the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et.
seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et. seq.;
the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. §§ 11001 et. seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42
U.S.C. §§ 7401 et. seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et. seq.
“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended.
“Exchange Act” has the meaning set forth in Section
3.03(c).
“Expenses” means, with respect to any Person, all reasonable
and documented out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants, financial advisors, and investment
bankers of such Person and the Person’s Affiliates), incurred by such Person or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution, and performance of this Agreement and any transactions related thereto, any litigation
with respect thereto, the preparation, printing, filing, and mailing of the Company Proxy Statement, the filing of any required notices
under the any Antitrust Law, or in connection with other regulatory approvals, and all other matters related to the Merger and the other
transactions contemplated by this Agreement.
“GAAP” has the meaning set forth in Section 3.04(b).
“Governmental Antitrust Authority” has the meaning set
forth in Section 5.08(b).
“Governmental Entity” has the meaning set forth in Section
3.03(c).
“Hazardous Substance” means: (a) any material, substance,
chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral, or gas, in each case, whether naturally occurring or
man-made, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b)
any petroleum or petroleum-derived products, radon, mold, radioactive materials or wastes, asbestos in any form, lead or lead-containing
materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.
“HIPAA” means the Health Insurance Portability and Accountability
Act of 1996, as amended.
“Indemnified Party” has the meaning set forth in Section
5.07(a).
“Intellectual Property” means any and all of the following
arising pursuant to the Laws of any jurisdiction throughout the world: (a) trademarks, service marks, trade names, and similar indicia
of source or origin, all registrations and applications for registration thereof, and the goodwill connected with the use of and symbolized
by the foregoing; (b) copyrights and all registrations and applications for registration thereof; (c) trade secrets and know-how; (d)
patents and patent applications; (e) internet domain name registrations; and (f) other intellectual property and related proprietary rights.
“Intervening Event” means, with respect to the Company
any material event, circumstance, change, effect, development, or condition occurring or arising after the date hereof that was not known
to, nor reasonably foreseeable by, any member of the Company Board, as of or prior to the date hereof and did not result from or arise
out of the announcement or pendency of, or any actions required to be taken by the Company (or to be refrained from being taken by the
Company) pursuant to, this Agreement; provided, however, that in no event shall the following events, circumstances, or changes in circumstances
constitute an Intervening Event: (a) the receipt, existence, or terms of a Takeover Proposal or any matter relating thereto or consequence
thereof or any inquiry, proposal, offer, or transaction from any third party relating to or in connection with a transaction of the nature
described in the definition of “Takeover Proposal” (which, for the purposes of the Intervening Event definition, shall be
read without reference to the percentage thresholds set forth in the definition thereof); (b) any change in the price, or change in trading
volume, of the Company Common Stock, in and of itself; (c) the mere fact, in and of itself, that the Company meets or exceeds any internal
or published financial projections or forecasts for any period ending on or after the date hereof; or (d) changes in general economic
or geopolitical conditions, or changes in conditions in the global, international or U.S. economy generally; provided, however,
that the exceptions to this clause contained in (b) and (c) shall not apply to the underlying causes giving rise to or contributing to
such change or prevent any of such underlying causes from being taken into account in determining whether an Intervening Event has occurred.
“Intervening Event Notice Period” has the meaning set
forth in Section 5.04(e).
“IRS” means the United States Internal Revenue Service.
“Knowledge” means: (a) with respect to the Company and
its Subsidiaries, the actual knowledge of each of the individuals listed in Section 8.01 of the Company Disclosure Letter; and (b) with
respect to Parent and its Subsidiaries, the actual knowledge of each of the individuals listed in Section 8.01 of the Parent Disclosure
Letter; in each case, after due inquiry.
“Labor Agreement” has the meaning set forth in Section
3.17(a)(vii).
“Laws” means any federal, state, local, municipal, foreign,
multi-national or other laws, common law, statutes, constitutions, ordinances, rules, regulations, codes, Orders, or legally enforceable
requirements enacted, issued, adopted, promulgated, enforced, ordered, or applied by any Governmental Entity.
“Lease” means all leases, subleases, licenses, concessions,
and other agreements (written or oral) under which the Company or any of its Subsidiaries holds any Leased Real Estate, including the
right to all security deposits and other amounts and instruments deposited by or on behalf of the Company or any of its Subsidiaries thereunder.
“Leased Real Estate” means all leasehold or subleasehold
estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures, or other interest in real property
held by the Company or any of its Subsidiaries.
“Legal Action” means any legal, administrative, arbitral,
or other proceedings, suits, actions, investigations, examinations, claims, audits, hearings, charges, complaints, indictments, litigations,
examinations, or other similar legal proceedings by or pending before any Governmental Entity, arbitrator, mediator, or other tribunal.
“Liability” means any liability, indebtedness, or obligation
of any kind (whether accrued, absolute, contingent, matured, unmatured, determined, determinable, or otherwise, and whether or not required
to be recorded or reflected on a balance sheet under GAAP).
“Liens” means, with respect to any property or asset,
all pledges, liens, mortgages, charges, encumbrances, hypothecations, options, rights of first refusal, rights of first offer, and security
interests of any kind or nature whatsoever.
“Material Contracts” has the meaning set forth in Section
3.17(b).
“Maximum Premium” has the meaning set forth in Section
5.08(b).
“Merger” has the meaning set forth in Section 1.01.
“Merger Consideration” has the meaning set forth in
Section 2.01(b).
“Merger Sub” has the meaning set forth in the Preamble.
“Nasdaq” has the meaning set forth in Section 3.03(c).
“Order” has the meaning set forth in Section 3.09.
“Other Governmental Approvals” has the meaning set forth
in Section 3.03(c).
“Owned Real Estate” means all land, together with all
buildings, structures, fixtures, and improvements located thereon and all easements, rights of way, and appurtenances relating thereto,
owned by the Company or any of its Subsidiaries.
“Parent” has the meaning set forth in the Preamble.
“Paying Agent” has the meaning set forth in Section
2.02(a).
“Parent Cancelled Shares” has the meaning set forth
in Section 2.01(a).
“Parent Disclosure Letter” means the disclosure letter,
dated as of the date of this Agreement and delivered by Parent and Merger Sub to the Company concurrently with the execution of this Agreement.
“Payment Fund” has the meaning set forth in Section
2.02(a).
“Permits” has the meaning set forth in Section 3.08(b).
“Permitted Liens” means: (a) statutory Liens for current
Taxes or other governmental charges not yet due and payable or the amount or validity of which is being contested in good faith (provided
appropriate reserves required pursuant to GAAP have been made in respect thereof); (b) mechanics’, carriers’, workers’,
repairers’, and similar statutory Liens arising or incurred in the ordinary course of business for amounts which are not delinquent
or which are being contested by appropriate proceedings (provided appropriate reserves required pursuant to GAAP have been made in respect
thereof); (c) zoning, entitlement, building, and other land use regulations imposed by Governmental Entities having jurisdiction over
such Person’s owned or leased real property, which are not violated by the current use and operation of such real property; (d)
covenants, conditions, restrictions, easements, and other similar non-monetary matters of record affecting title to such Person’s
owned or leased real property, which do not materially impair the occupancy or use of such real property for the purposes for which it
is currently used in connection with such Person’s businesses; (e) any right of way or easement related to public roads and highways,
which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection
with such Person’s businesses; (f) any non-exclusive license to any Intellectual Property entered into in the ordinary course; and
(g) Liens arising under workers’ compensation, unemployment insurance, social security, retirement, and similar legislation.
“Person” means any individual, corporation, limited
or general partnership, limited liability company, limited liability partnership, trust, association, joint venture, Governmental Entity,
or other entity or group (which term will include a “group” as such term is defined in Section 13(d)(3) of the Exchange Act).
“Real Estate” means the Owned Real Estate and the Leased
Real Estate.
“Representatives” means collectively, with respect to
any Person, such Person’s directors, officers, Affiliates, employees, investment bankers, attorneys, accountants, consultants, brokers,
or other agents, advisors, or authorized representative of such Person.
“Requisite Company Vote” has the meaning set forth in
Section 3.03(a).
“Sarbanes-Oxley Act” has the meaning set forth in Section
3.04(a).
“SEC” has the meaning set forth in Section 3.03(c).
“Securities Act” has the meaning set forth in Section
3.04(a).
“Special Committee” means the special committee of the
Board of the Directors of the Company formed by the Board of Directors of the Company, to review the terms of the Merger and comprised
of Richard E. Turk and Robert M. Carrino.
“Special Committee Financial Advisor” has the meaning
set forth in Section 3.10.
“Subsidiary” of a Person means any other Person of which
at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board
of directors or other persons performing similar functions is directly or indirectly owned or controlled by such Person and/or by one
or more of its Subsidiaries.
“Superior Proposal” means a bona fide written
Takeover Proposal that did not result from a breach of Section 5.04 (except that, for purposes of this definition, each reference in the
definition of “Takeover Proposal” to “15% or more” shall be “more than 50%”) that the Special Committee
determines in good faith (after consultation with its financial advisor and outside legal counsel) is (a) notwithstanding any required
stockholder approval, reasonably likely to be consummated in accordance with its terms, and (b) if consummated, more favorable from a
financial point of view to the holders of Company Common Stock, Company Class B Common Stock, Company Class C Common Stock, and Company
Class A Preferred Stock than the transactions contemplated by this Agreement; in each case, after taking into account: (i) all financial
considerations; (ii) the identity of the third party making such Takeover Proposal; (iii) the anticipated timing, conditions (including
any financing condition or the reliability of any debt or equity funding commitments) and prospects for completion of such Takeover Proposal;
(iv) the other terms and conditions of such Takeover Proposal and the implications thereof on the Company, including relevant legal, regulatory,
and other aspects of such Takeover Proposal deemed relevant by the Company Board (including any conditions relating to financing, stockholder
approval, regulatory approvals, or other events or circumstances beyond the control of the party invoking the condition); and (v) any
revisions to the terms of this Agreement and the Merger proposed by Parent during the Superior Proposal Notice Period set forth in Section
5.04(d).
“Superior Proposal Notice Period” has the meaning set
forth in Section 5.04(d).
“Surviving Corporation” has the meaning set forth in
Section 1.01.
“Takeover Proposal” means an inquiry, proposal, or offer
from, or indication of interest in making a proposal or offer by, any Person or group (other than Parent and its Subsidiaries, including
Merger Sub), relating to any transaction or series of related transactions (other than the transactions contemplated by this Agreement),
involving any: (a) direct or indirect acquisition of assets of the Company or its Subsidiaries (including any voting equity interests
of Subsidiaries, but excluding sales of assets in the ordinary course of business) equal to 15% or more of the fair market value of the
Company’s and the Company’s Subsidiaries’ consolidated assets or to which 15% or more of the Company’s and the
Company’s Subsidiaries’ net revenues or net income on a consolidated basis are attributable; (b) direct or indirect acquisition
of 15% or more of the voting equity interests of the Company or any of its Subsidiaries whose business constitutes 15% or more of the
consolidated net revenues, net income, or assets of the Company and its Subsidiaries, taken as a whole; (c) tender offer or exchange offer
that if consummated would result in any Person or group (as defined in Section 13(d) of the Exchange Act) beneficially owning (within
the meaning of Section 13(d) of the Exchange Act) 15% or more of the voting power of the Company; (d) merger, consolidation, other business
combination, or similar transaction involving the Company or any of its Subsidiaries, pursuant to which such Person or group (as defined
in Section 13(d) of the Exchange Act) would own 15% or more of the consolidated net revenues, net income, or assets of the Company, and
its Subsidiaries, taken as a whole; (e) liquidation, dissolution (or the adoption of a plan of liquidation or dissolution), or recapitalization
or other significant corporate reorganization of the Company or one or more of its Subsidiaries which, individually or in the aggregate,
generate or constitute 15% or more of the consolidated net revenues, net income, or assets of the Company and its Subsidiaries, taken
as a whole; or (f) any combination of the foregoing.
“Taxes” means all federal, state, local, foreign, and
other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service,
service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium,
property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments, or charges of any
kind whatsoever, together with any interest, additions, or penalties with respect thereto and any interest in respect of such additions
or penalties.
“Tax Returns” means any return, declaration, report,
claim for refund, information return or statement, or other document relating to Taxes, including any schedule or attachment thereto,
and including any amendment thereof.
“Termination Fee” means $450,000.00 less the aggregate
dollar amount of Parent’s Expenses.
“Treasury Regulations” means the Treasury regulations
promulgated under the Code.
“Voting Agreements” has the meaning set forth in Section
3.22(b).
Section 8.02 Interpretation; Construction.
(a) The headings
herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect
any of the provisions hereof. Where a reference in this Agreement is made to a Section, Exhibit, Article, or Schedule, such reference
shall be to a Section of, Exhibit to, Article of, or Schedule of this Agreement unless otherwise indicated. Unless the context otherwise
requires, references herein: (i) to an agreement, instrument, or other document means such agreement, instrument, or other document as
amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof; and (ii) to a statute means such
statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. Whenever
the words “include,” “includes,” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation,” and the word “or” is not exclusive. The
word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends,
and does not simply mean “if.” Any reference in this Agreement to $, cash, or dollars is to U.S. dollars. The definitions
of terms herein shall apply equally to the singular and plural forms of the terms defined. The words “hereof,” “herein,”
“hereby,” “hereto,” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to “made
available” or “provided to” (or words of similar import) when referring to any document or information being
made available by the Company to Parent or Merger Sub shall mean posted to the electronic data room established in respect to the Merger
at least two (2) Business Days prior to the date of this Agreement.
(b) The parties
have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provision of this Agreement.
Section 8.03 Survival. None of the representations and warranties
contained in this Agreement or in any instrument delivered under this Agreement will survive the Effective Time. This Section 8.03 does
not limit any covenant or agreement of the parties contained in this Agreement which, by its terms, contemplates performance after the
Effective Time. The Confidentiality Agreement will survive termination of this Agreement in accordance with its terms.
Section 8.04 Governing Law.
(a) This Agreement, and all Legal Actions (whether based on contract, tort,
or statute) arising out of, relating to, or in connection with this Agreement or the actions of any of the parties hereto in the negotiation,
administration, performance, or enforcement hereof, shall be governed by and construed in accordance with the internal laws of the State
of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of Laws of any jurisdiction other than those of the State of Delaware.
(b) Notwithstanding anything to the contrary contained in this Agreement,
each of the Parties: (i) agrees that it will not bring or support any Person in any Legal Action of any kind or description, whether in
Law or in equity, whether in contract or in tort or otherwise, against any of the Debt Financing Parties in any way relating to this Agreement
or any of the transactions contemplated by this Agreement, including but not limited to any dispute arising out of or relating in any
way to the Debt Commitment Letter or the performance thereof or the financings contemplated thereby, in any forum other than the federal
and New York state courts located in the Borough of Manhattan within the City of New York, (ii) agrees that, except as specifically set
forth in the Debt Commitment Letter, all claims or causes of action (whether at Law, in equity, in contract, in tort or otherwise) against
any of the Debt Financing Parties in any way relating to this Agreement, the Debt Financing or the performance thereof or the financings
contemplated thereby, shall be exclusively governed by, and construed in accordance with, the internal laws of the State of New York,
without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application
of Laws of another jurisdiction and (iii) hereby irrevocably and unconditionally waives any right such Party may have to a trial by jury
in respect of any Legal Action (whether in Law or in equity, whether in contract or in tort or otherwise) to the same extent such rights
are waived pursuant to Section 8.06.
Section 8.05 Submission to Jurisdiction. Each of the parties
hereto irrevocably agrees that any Legal Action with respect to this Agreement and the rights and obligations arising hereunder, or for
recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by any
other party hereto or its successors or assigns shall be brought and determined exclusively in the Supreme Court of State of New York,
Suffolk County, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such Legal Action,
in any state or federal court within the State of New York. Each of the parties hereto agrees that mailing of process or other papers
in connection with any such Legal Action in the manner provided in Section 8.07 or in such other manner as may be permitted by applicable
Laws, will be valid and sufficient service thereof. Each of the parties hereto hereby irrevocably submits with regard to any such Legal
Action for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts
and agrees that it will not bring any Legal Action relating to this Agreement or any of the transactions contemplated by this Agreement
in any court or tribunal other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim, or otherwise, in any Legal Action with respect to this Agreement and the rights and obligations
arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising
hereunder: (a) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the
failure to serve process in accordance with this Section 8.05; (b) any claim that it or its property is exempt or immune from jurisdiction
of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise); and (c) to the fullest extent permitted by the applicable
Law, any claim that (i) the suit, action, or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit,
action, or proceeding is improper, or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 8.06 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES
THAT: (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE
THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION; (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY; AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.06.
Section 8.07 Notices. All notices, requests, consents, claims,
demands, waivers, and other communications hereunder shall be in writing and shall be deemed to have been given upon the earlier of actual
receipt or (a) when delivered by hand (providing proof of delivery); (b) when received by the addressee if sent by a nationally recognized
overnight courier (receipt requested); or (c) on the date sent by email if sent during normal business hours of the recipient, and on
the next Business Day if sent after normal business hours of the recipient. Such communications must be sent to the respective parties
at the following addresses (or to such other Persons or at such other address for a party as shall be specified in a written notice given
in accordance with this Section 8.07):
| If to Parent or Merger Sub, to: |
FONAR, LLC |
| |
265 Spagnoli Road |
| |
Melville, New York 11747 |
| |
Attention: Timothy R. Damadian |
| |
Email: tdamadian@gmail.com |
| |
|
| with a copy (which will not constitute |
|
| notice to Parent or Merger Sub) to: |
Moritt Hock & Hamroff LLP |
| |
400 Garden City Plaza |
| |
Garden City, New York 11530 |
| |
Attention: Dennis C. O’Rourke, Esq. |
| |
Email: dorourke@moritthock.com |
| |
bdaughney@moritthock.com |
| If to the Company, to: |
FONAR Corporation |
| |
110 Marcus Avenue |
| |
Melville, New York 11747 |
| |
Attention: John P. Collins, Esq. |
| |
Email: JCollins@fonar.com |
| |
|
| with a copy (which will not constitute |
|
| notice to the Company) to: |
Meister Seelig & Fein PLLC |
| |
125 Park Avenue - 7th Floor |
| |
New York, New York 10017 |
| |
Attention: Denis Dufresne, Esq. |
| |
Louis Lombardo, Esq. |
| |
Email: dad@msf-law.com |
| |
ll@msf-law.com |
| |
|
| |
DLA Piper LLP (US) |
| |
1251 Avenue of the Americas |
| |
New York, New York 10020 |
| |
Attention: |
Joshua Kaye, Esq. |
| |
|
Jon Venick, Esq. |
| |
Email: |
Joshua.Kaye@us.dlapiper.com |
| |
|
Jon.Venick@us.dlapiper.com |
Section 8.08 Entire Agreement. This Agreement (including all
exhibits, annexes, and schedules referred to herein), the Company Disclosure Letter, the Parent Disclosure Letter, and the Confidentiality
Agreement constitute the entire agreement among the parties with respect to the subject matter of this Agreement and supersede all other
prior agreements and understandings, both written and oral, among the parties to this Agreement with respect to the subject matter of
this Agreement. In the event of any inconsistency between the statements in the body of this Agreement, the Confidentiality Agreement,
the Parent Disclosure Letter, and the Company Disclosure Letter (other than an exception expressly set forth as such in the Parent Disclosure
Letter or the Company Disclosure Letter), the statements in the body of this Agreement will control. Notwithstanding the foregoing or
any other provisions of this Agreement to the contrary, the Company Disclosure Letter and the Parent Disclosure Letter contain “facts
ascertainable” as that term is used in Section 251(b) of the DGCL, and therefore do not form a part of this Agreement but instead
operate upon the terms of this Agreement as provided herein.
Section 8.09 No Third-Party Beneficiaries. This Agreement is
for the sole benefit of the parties hereto and their permitted assigns and respective successors and nothing herein, express or implied,
is intended to or shall confer upon any other Person any legal or equitable right, benefit, or remedy of any nature whatsoever under or
by reason of this Agreement, except if the Effective Time occurs: (a) the rights of holders of Company Common Stock to receive the Merger
Consideration, (b) the rights of holders of Company Equity Awards to receive the consideration set forth in Section 2.07, (c) the rights
of the Indemnified Parties as set forth in Section 5.08 and (d) the Debt Financing Sources shall be third-party beneficiaries of, and
shall be entitled to rely on, the Debt Financing Sources Protective Provisions.
Section 8.10 Severability. In the event that any provision of
this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable,
or incapable of being enforced under any applicable Law, the remainder of this Agreement shall continue in full force and effect and the
application of such provision to other Persons or circumstances shall be interpreted so as reasonably to effect the intent of the Parties.
The Parties further agree to negotiate in good faith to replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that shall achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable
provision.
Section 8.11 Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither Parent or Merger Sub,
on the one hand, nor the Company on the other hand, may assign its rights or obligations hereunder without the prior written consent of
the other party (Parent in the case of Parent and Merger Sub), which consent shall not be unreasonably withheld, conditioned, or delayed;
provided, however, that (a) prior to the Effective Time, Merger Sub may, without the prior written consent of the Company, assign
all or any portion of its rights under this Agreement to Parent or to one or more of Parent’s direct or indirect wholly owned subsidiaries
and (b) Parent and Merger Sub may pledge or assign any or all of its rights hereunder to the Debt Financing Sources as collateral security
for their obligations in connection with the Debt Financing, in each case, without the consent of any other Party. No assignment shall
relieve the assigning party of any of its obligations hereunder.
Section 8.12 Remedies Cumulative. Except as otherwise provided
in this Agreement, any and all remedies expressly conferred upon a party to this Agreement will be cumulative with, and not exclusive
of, any other remedy contained in this Agreement, at Law, or in equity. The exercise by a party to this Agreement of any one remedy will
not preclude the exercise by it of any other remedy.
Section 8.13 Specific Performance.
(a) The parties
hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof
and that the parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement or
to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled
at Law or in equity. For the avoidance of doubt, notwithstanding anything else in this Agreement, in no event shall specific performance
of Parent’s or Merger Sub’s obligation to consummate the Merger survive any termination of this Agreement.
(b) Each party
further agrees that: (i) no such party will oppose the granting of an injunction or specific performance as provided herein on the basis
that the other party has an adequate remedy at law or that an award of specific performance is not an appropriate remedy for any reason
at law or equity; (ii) no such party will oppose the specific performance of the terms and provisions of this Agreement; and (iii) no
other party or any other Person shall be required to obtain, furnish, or post any bond or similar instrument in connection with or as
a condition to obtaining any remedy referred to in this Section 8.13, and each party irrevocably waives any right it may have to require
the obtaining, furnishing, or posting of any such bond or similar instrument.
Section 8.14 Counterparts; Effectiveness. This Agreement may
be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one
or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need
not sign the same counterpart. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic
transmission, including by e-mail attachment, shall be effective as delivery of a manually executed counterpart of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers thereunto duly authorized.
| |
THE COMPANY: |
| |
|
|
| |
FONAR Corporation |
| |
|
|
| |
By: |
/s/ John P. Collins |
| |
|
Name: John P. Collins |
| |
|
Title: General Counsel |
| |
|
|
| |
PARENT: |
| |
|
|
| |
FONAR, LLC |
| |
|
|
| |
By: |
/s/ Timothy R. Damadian |
| |
|
Name: Timothy R. Damadian |
| |
|
Title: Manager |
| |
|
|
| |
MERGER SUB: |
| |
|
|
| |
FONAR Acquisition Sub, Inc. |
| |
|
|
| |
By: |
/s/ Timothy R. Damadian |
| |
|
Name: Timothy R. Damadian |
| |
|
Title: President |
EXHIBIT A
Certificate of Incorporation of Surviving Corporation
FORM OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FONAR CORPORATION
The
undersigned, in order to form a corporation pursuant to Section 102 of the Delaware General Corporation Law (the “DGCL”),
does hereby certify:
FIRST: The name of the Corporation
is: FONAR CORPORATION (the “Corporation”).
SECOND: The address of the Corporation’s
registered office in the State of Delaware is: 800 North State Street, Suite 304, Dover, Delaware 19901. The name of the registered agent
at such address for service of process is the United Corporate Services, Inc.
THIRD: The purposes for which
the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the DGCL.
FOURTH: The total number of
shares of stock which the Corporation is authorized to issue is 10,000. All shares shall be common stock, with a par value $0.00001 per
share and are to be of one class.
FIFTH: No director of the Corporation
shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability
(a) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL, or (d) for any transaction
from which the director derived an improper personal benefit. If the DGCL is amended after the date hereof to authorize corporate action
further eliminating or limiting the personal liability of directors, the liability of a director of the Corporation shall be eliminated
or limited to the fullest extent permitted by the DGCL.
SIXTH: The Corporation shall
indemnify any person who was or is made a party or is threatened to be made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or
officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or proceeding, in accordance with the laws of the State of
Delaware, and to the full extent permitted by said laws. Such indemnification shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under any Bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, including insurance purchased and maintained by the Corporation, both as to action in his official capacity and
as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
SEVENTH: Unless the Corporation
consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery
does not have subject matter jurisdiction, the federal district court for the State of Delaware) shall, to the fullest extent permitted
by law, be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action
asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, or stockholder of the Corporation to the Corporation
or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Certificate
of Incorporation, or the By-Laws (as either may be amended or restated) or as to which the DGCL confers jurisdiction on the Court of Chancery
of the State of Delaware, (iv) any action asserting a claim governed by the internal affairs doctrine; or (v) any action asserting a claim
relating to the business of the corporation, the conduct of its affairs, or the rights or powers of the Corporation or its stockholders,
directors, or officers. To the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring or holding any
interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this ARTICLE
SEVENTH.
EIGHTH: The Corporation reserves
the right to amend this Certificate of Incorporation in any manner permitted by the DGCL and, with the sole exception of those rights
and powers conferred under the above ARTICLES FIFTH AND SIXTH, all rights and powers conferred herein on stockholders, directors and officers,
if any, are subject to this reserved power.
IN WITNESS WHEREOF, the undersigned
executes, signs and acknowledges this Certificate of Incorporation, this ____ day of _______________, 202_, and affirms the statements
contained herein as true under penalty of perjury.
EXHIBIT 7
FONAR, LLC
SUBORDINATED SECURED 7% PROMISSORY NOTE SUBSCRIPTION
AGREEMENT
THE SUBORDINATED SECURED 7% PROMISSORY NOTES OF
FONAR, LLC (THE “SUBORDINATED NOTES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE OR ANY OTHER JURISDICTION. THERE ARE FURTHER RESTRICTIONS ON THE TRANSFERABILITY OF THE SUBORDINATED NOTES DESCRIBED HEREIN.
THE PURCHASE OF SUBORDINATED NOTES INVOLVES A HIGH
DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE INVESTMENT.
FONAR, LLC
265 Spagnoli Road
Melville, New York 11747
Ladies and Gentlemen:
The undersigned has been advised that FONAR, LLC, a limited liability company
organized under the laws of Delaware (the “Company”), is offering Subordinated Secured 7% Promissory Notes in an aggregate
principal amount of up to $10 million (the “Subordinated Notes”) in a private placement offering (the “Offering”)
intended to comply with Rule 506(b) of Regulation D (“Reg. D”) promulgated by the United States Securities and Exchange
Commission (the “SEC”) and exemptions from registration under various state “blue sky” securities laws.
The Company has further advised the undersigned that the Offering is being
made without registration of the Subordinated Notes under the Securities Act of 1933, as amended (the “Securities Act”),
or any securities law of any state of the United States or of any other jurisdiction.
It is understood that the Subordinated Notes are to be issued and sold
in connection with the Company’s proposed acquisition (indirectly through its wholly-owned subsidiary FONAR Acquisition Sub, Inc.),
a Delaware corporation (the “Merger Sub”)) of FONAR Corporation, a Delaware corporation (“Pubco”),
pursuant to the terms and conditions of that certain Agreement and Plan of Merger (the “Merger Agreement”), to be entered
into by and among Pubco, the Company, and Merger Sub (such acquisition and the merger referred to in the Merger Agreement, the “Merger
Transaction”). Upon completion of the Merger Transaction, (a) Pubco will be a wholly-owned subsidiary of the Company, (b) the
business of the Company shall be that of owning and managing Pubco, (c) Pubco will cease to be an SEC-reporting company with publicly
traded securities, and (d) the net income generated from the operations of Pubco will be up-streamed to the Company and the Company will
utilize any such up-streamed funds to meet its debt obligations, including the Company’s obligations to the holders of the Subordinated
Notes. The rights of the holders of the Subordinated Notes, including the right to receive interest payments and rights upon default,
will be subject to the superior and prior rights of the Company’s bank credit facility obligations to OceanFirst Bank, N.A. A copy
of the form of the proposed Merger Agreement is attached as Attachment A to this Class B Membership Interest Subscription Agreement
(this “Subscription Agreement”).
Capitalized terms used but not otherwise defined in this Subscription Agreement
shall have the meanings as set forth in the Subordinated Notes, the form of which is attached as Attachment B to this Agreement.
Payment of principal and interest on the Subordinated Note is secured by
a lien and security interest as evidenced by a Security Agreement to be executed by the Company and the holders of the Subordinated Notes.
A copy of the form of proposed Security Agreement is attached as Attachment C to this Agreement.
Accordingly, the undersigned agrees as follows:
1. Subscription.
Subject to the terms and conditions of this Subscription Agreement, including Section 2 which grants the Company to accept the subscription
of the undersigned made pursuant to this Subscription Agreement in whole or part and sell and issue to the undersigned only the Subject
Note (as defined in Section 2), the undersigned hereby subscribes to purchase (the “Subscription”) and, on the date
of the Closing referred to in Section 3 hereof, the undersigned shall purchase, from the Company, and the Company shall sell and issue
to the undersigned, a Subordinated Note in the principal amount as set forth on the Signature Page to this Agreement to the extent accepted
by the Company, as set forth on the Acceptance Page to this Agreement. In the Offering, the Subordinated Notes are being sold “at
par.” Accordingly, the purchase price for a Subordinated Note shall be equal in amount to the principal amount of the Subordinated
Note being purchased.
2. Acceptance
of Subscription and Issuance of Subordinated Notes. It is understood and agreed that the Company shall have the sole right,
in its complete discretion, to accept or reject the Subscription, in whole or in part, for any reason and that the Subscription shall
be deemed to be accepted by the Company only when this Agreement is signed by a duly authorized officer of the Company and delivered to
the undersigned in connection with the Closing referred to in Section 3 hereof. In the Offering, subscriptions, including the undersigned’s
Subscription, need not be accepted in the order received by the Company, and the Subordinated Notes subject to the Offering may be allocated
among the subscribers, including the undesigned, in such prorations as the Company may determine and the Company may choose to only issue
a Subordinated Note to the undersigned in a lesser principal amount than the undersigned desires to purchase as set forth in Section 1
above. Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to issue any of the Subordinated
Notes to any person who is a resident of a jurisdiction in which the issuance of Subordinated Notes to such person would constitute a
violation of the securities, “blue sky,” or other similar laws of such jurisdiction (collectively, the “State Securities
Laws”). The Subordinated Note subject to the Subscription, in the principal amount as accepted by the Company, is referred to
in this Subscription Agreement as the “Subject Note” and the aggregate purchase price for the Subject Note is referred
to in this Agreement as the “Aggregate Purchase Price.”
The undersigned’s Subscription is irrevocable by
the undersigned and may not be rescinded by the undersigned. The only conditions to Closing are set forth in Section 7 below.
3. The
Closing. At least five Business Days before the anticipated Closing Date, the Company shall deliver written notice
to the undersigned (the “Closing Notice”) specifying (a) the principal amount of the Subject Note, (b) the Aggregate
Purchase Price, (c) the anticipated Closing Date, and (d) the wire instructions for delivery of the Aggregate Purchase Price. No later
than two Business Days after the giving of the Closing Notice, the undersigned shall deliver to the Company such information as is reasonably
requested in the Closing Notice in order for the Company to issue the Subject Note to the undersigned. The undersigned shall deliver
to the escrow agent for the Offering, Computershare Limited (the “Escrow Agent”), not later than 5:00 p.m. (Eastern
Time) on the date that is two Business Days immediately preceding the anticipated Closing Date set forth in the Closing Notice, the Aggregate
Purchase Price payable to the Company in immediately available funds via wire transfer to the account specified in the Closing Notice.
Within five calendar days of the Closing, the Company will issue the Subject Note to the undersigned and revise its books and records
to reflect the issuance of the Subject Note to the undersigned, free and clear of any liens or other restrictions (other than those arising
under this Subscription Agreement, state or federal securities laws, and any Senior Bank Documents (as defined below)), in the name of
the undersigned.
4. Payment
for Subordinated Notes.
(a) Payment
of the Aggregate Purchase Price must be received by the Escrow Agent from the undersigned at or prior to the Closing.
(b) In the
event that the Closing is consummated but the Merger is not consummated under and pursuant to the Merger Agreement or otherwise, then
the payment of any Aggregate Purchase Price will be deemed void ab initio and not to have occurred and the Escrow Agent shall return
such paid Aggregate Purchase Price to the undersigned; provided, however, the Escrow Agent shall, upon written request of
the Company, retain and tender to the Company 1% of such paid Aggregate Purchase Price, to pay any and all costs and fees paid by the
Company or Merger Sub in connection with the formation of the Company or related to the entry into and the Company’s obligations
under the Merger Agreement.
5. Representations
and Warranties of the Company. As of the Closing, the Company shall be deemed to have represented and warranted to the undersigned
that:
(a) The Company
is duly formed and validly existing under the laws of Delaware, with full power and authority to conduct its intended business (i.e.,
to own, operate, and management Pubco) and to own its assets; and has the limited liability company power and authority to operate its
intended business and to own, lease, and operate its existing and intended properties, and is duly qualified and is in good standing as
a foreign limited liability company authorized to do business in each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where the failure to be so qualified would not have a material adverse effect
on the Company.
(b) The Subordinated
Notes, including the Subject Note, have been duly authorized, and, when issued and paid for, will constitute the legal, valid, and binding
obligations of the Company. The Subordinated Notes, including the Subject Note, have the rights and privileges set forth in the Subordinated
Notes and be subject to the Senior Bank Documents.
(c) The Merger
Agreement has been duly authorized by the Manager of the Company. Each of the Company and Merger Sub has all requisite corporate power
and authority to enter into and to perform its obligations under the Merger Agreement and to consummate the transactions contemplated
by the Merger Agreement, subject to, in the case of the consummation of the Merger, the adoption of the Merger Agreement by the Company
as the sole stockholder of Merger Sub. The Merger Agreement has been duly executed and delivered by the Company and Merger Sub and, assuming
due execution and delivery by Pubco, constitutes the legal, valid, and binding obligation of the Company and Merger Sub, enforceable against
the Company and Merger Sub in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium,
and other similar laws affecting creditors’ rights generally and by general principles of equity.
(d) No consent
of any governmental entity is required to be obtained or made by the Company or Merger Sub in connection with the execution, delivery,
and performance by the Company and Merger Sub of this Agreement or the consummation by the Company and Merger Sub of the Merger Transaction
contemplated by the Merger Agreement, except for: (i) the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware; (ii) the filing with the SEC of (A) Pubco’s Proxy Statement in definitive form in accordance with the Exchange Act,
and (B) such reports under the Securities and Exchange Act of 1934, as amended, as may be required in connection with this Agreement,
the Merger Transaction, and the other transactions contemplated by the Merger Agreement; (iii) such consents as may be required under
applicable state securities or “blue sky” laws and the securities laws of any foreign country; (v) the other governmental
approvals, if any; and (vi) such other consents which if not obtained or made would not reasonably be expected to have, individually or
in the aggregate, a material adverse effect on the Company’s and Merger Sub’s ability to consummate the transactions contemplated
by this Agreement or the Merger Agreement.
6. Representations,
Warranties, and Covenants of the Undersigned. The undersigned hereby represents and warrants to and covenants with
the Company that:
(a) General.
(i) The
undersigned has all requisite authority (and in the case of an individual, the capacity) to purchase the Subject Note, enter into this
Agreement, and to perform all the obligations required to be performed by the undersigned hereunder or under the LLC Agreement, and such
purchase will not contravene any law, rule or regulation binding on the undersigned or any investment guideline or restriction applicable
to the undersigned.
(ii) The
undersigned is a resident of the state set forth on the signature page hereto and is not acquiring the Subject Note as a nominee or agent
or otherwise for any other person.
(iii) The
undersigned will comply with all applicable laws and regulations in effect in any jurisdiction in which the undersigned purchases or sells
the Subject Note and obtain any consent, approval, or permission required for such purchases or sales under the laws and regulations of
any jurisdiction to which the undersigned is subject or in which the undersigned makes such purchases or sales, and the Company shall
have no responsibility therefor.
(b) Information
Concerning the Company.
(i) The
undersigned has not been furnished any offering materials other than the documents annexed to this Agreement and has relied only on the
information contained herein and therein. Further, the undersigned has reviewed the public filings of Pubco, including without limitation
Pubco’s Form 10-K for the fiscal year ended June 30, 2025 (“Form 10-K”) as filed with the SEC on September 22,
2025 and available, with all other public filings of Pubco, via the SEC’s EDGAR system accessible on the SEC’s sec.gov website.
In addition, the undersigned has reviewed copies of (A) a draft Preliminary Proxy Statement of Pubco with respect to the Merger Transaction,
a copy of which has been attached as Attachment D to this Subscription Agreement, (B) the Company’s unaudited balance sheet
at August 31, 2025 and statement of operations for the period from inception through August 31, 2025, copies of which have been attached
as Attachment E to this Subscription Agreement, and (C) pro forma financial information of the Company giving effect to
the consummation of the Merger Transaction, a copy of which has been attached as Attachment F to this Subscription Agreement. The
undersigned has also reviewed the Risk Factors contained in Attachment G to this Subscription Agreement (as well as the Risk Factors
contained in Item 1A of the Form 10-K). In addition, the undersigned has reviewed all amendments to the Form 10-K, as well as amendments
to all other public filings of Pubco (in each case, if any) made available via the EDGAR system prior to the execution and delivery of
this Subscription Agreement.
(ii) The
undersigned understands that no public market now exists for the Subordinated Notes, including the Subject Note, and that the Company
has made no promises or assurances that a public market will ever exist for the Subordinated Notes.
(iii) The
undersigned understands and accepts that the purchase of the Subject Note involves various risks, including the risks related to the business
of Pubco as set forth in the Form 10-K. The undersigned represents that it is able to bear any loss associated with an investment in the
Subject Note.
(iv) The
undersigned confirms that it is not relying on any communication (written or oral) of the Company or any of its affiliates as investment
or tax advice or as a recommendation to purchase any of the Subordinated Notes. It is understood that information and explanations related
to the terms and conditions of the Subordinated Notes provided in the Attachments to this Agreement, or otherwise by the Company, any
of the Company’s affiliates, or Pubco shall not be considered investment or tax advice or a recommendation to purchase, any of the
Subordinated Notes, including the Subject Note, and that neither the Company nor any of its affiliates is acting or has acted as an advisor
to the undersigned in deciding to invest in the Subordinated Notes. The undersigned acknowledges that neither the Company nor any of its
affiliates has made any representation regarding the proper characterization of the Subordinated Notes for purposes of determining the
undersigned’s authority to invest in the Subordinated Notes.
(v) The
undersigned is familiar with the business and financial condition and operations of the Company and Pubco. The undersigned has had access
to such information concerning the Company, the Subordinated Notes, and Pubco as it deems necessary to enable it to make an informed investment
decision concerning the purchase of the Subordinated Notes.
(vi) The
undersigned understands that, unless the undersigned notifies the Company in writing to the contrary at or before the Closing, each of
the undersigned’s representations and warranties contained in this Agreement will be deemed to have been reaffirmed and confirmed
as of the Closing.
(vii) The
undersigned acknowledges that the Company has the right in its sole and absolute discretion to abandon the Offering at any time prior
to the completion of the Offering. This Agreement shall thereafter have no force or effect and the Company shall return any previously
paid subscription price, including all or any portion of the Aggregate Purchase Price, without interest thereon, to the undersigned. In
addition, the Company has the right to reject all or any portion of the Subscription and, if any previously paid subscription price has
been tendered to the Escrow Agent, the Company shall cause any applicable previously paid subscription price to be returned to the undersigned
to the extent the Subscription is rejected in whole or part.
(viii) The
undersigned understands that no federal or state agency has passed upon the merits or risks of an investment in the Subordinated Notes
or made any finding or determination concerning the fairness or advisability of this investment.
(c) Non-Reliance.
(i) The
undersigned represents that it is not relying on (and will not at any time rely on) any communication (written or oral) of the Company
as investment advice or as a recommendation to purchase the Subordinated Notes, it being understood that information and explanations
related to the terms and conditions of the Subordinated Notes and the Merger Transaction shall not be considered investment advice or
a recommendation to purchase the Subordinated Notes.
(ii) The
undersigned confirms that neither the Company nor its affiliates have (i) given any guarantee or representation as to the potential success,
return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Subordinated Notes
or (ii) made any representation to the undersigned regarding the legality of an investment in the Subordinated Notes under applicable
legal investment or similar laws or regulations. In deciding to purchase any of the Subordinated Notes, the undersigned is not relying
on the advice or recommendations of the Company, nor its affiliates, and the undersigned has made its own independent decision that the
investment in the Subordinated Notes is suitable and appropriate for the undersigned.
(d) Status
of Undersigned.
(i) The
undersigned has such knowledge, skill, and experience in business, financial, and investment matters that the undersigned is capable of
evaluating the merits and risks of an investment in the Subordinated Notes. With the assistance of the undersigned’s own professional
advisors, to the extent that the undersigned has deemed appropriate, the undersigned has made its own legal, tax, accounting and financial
evaluation of the merits and risks of an investment in the Subordinated Notes and the consequences of this Subscription Agreement. The
undersigned has considered the suitability of the Subordinated Notes as an investment in light of the undersigned’s own circumstances
and financial condition and the undersigned is able to bear the risks associated with an investment in the Subordinated Notes and the
undersigned’s authority to invest in the Subordinated Notes.
(ii) The
undersigned agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable
U.S. federal and state securities laws in connection with the purchase and sale of the Subject Note. The undersigned has completed the
Confidential Purchaser Questionnaire contained in Attachment H to this Subscription Agreement and the information contained therein
is complete and accurate as of the date thereof and is hereby affirmed as of the date hereof. Any information that has been furnished
or that will be furnished by the undersigned to the Company is accurate and complete, and does not contain any misrepresentation or material
omission.
(e) Restrictions
on Transfer or Sale of Subordinated Notes.
(i) The
undersigned is acquiring the Subject Note solely for the undersigned’s own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution of the Subject Note. The undersigned understands that the Subordinated
Notes, including the Subject Note, have not been registered under the Securities Act or any State Securities Laws by reason of specific
exemptions under the provisions thereof which depend in part upon the investment intent of the undersigned and of the other representations
made by the undersigned in this Agreement. The undersigned understands that the Company is relying upon the representations and agreements
contained in this Agreement (and any supplemental information) for the purpose of determining whether this transaction meets the requirements
for such exemptions.
(ii) The
undersigned understands that the Subordinated Notes, including the Subject Note, are “restricted securities” under applicable
federal securities laws and that the Securities Act and the rules of the SEC provide in substance that the undersigned may dispose of
the Subject Note only pursuant to an effective registration statement under the Securities Act or an exemption therefrom; and the undersigned
understands that the Company has no obligation or intention to register any of the Subordinated Notes, including the Subject Note, or
to take action so as to permit sales pursuant to the Securities Act and the rules and regulations promulgated thereunder (including SEC
Rule 144). Accordingly, the undersigned understands that, under SEC rules, the undersigned may dispose of the Subordinated Notes principally
only in the transaction that are exempt from registration under the Securities Act. Consequently, the undersigned acknowledges that the
undersigned must bear the economic risks of the investment in the Subordinated Notes for an indefinite period of time.
(iii) The
undersigned agrees: (A) that the undersigned will not sell, assign, pledge, give, transfer or otherwise dispose of the Subject Note or
any interest therein, or make any offer or attempt to do any of the foregoing, except pursuant to a registration of the Subject Note under
the Securities Act and all applicable State Securities Laws, or in a transaction that is exempt from the registration provisions of the
Securities Act and all applicable State Securities Laws; (B) that any certificate evidencing any of the Subordinated Notes, including
the Subject Note, if any certificates are issued, will bear a legend making reference to the foregoing restrictions; and (C) that the
Company and its affiliates shall not be required to give effect to any purported transfer of such Subordinated Notes, including the Subject
Note, except upon compliance with the foregoing restrictions.
(iv) The
undersigned acknowledges that neither the Company nor any other person offered to sell the Subordinated Notes to the undersigned by means
of any form of general solicitation or advertising, including but not limited to: (A) any advertisement, article, notice or other communication
published in any newspaper, magazine, or similar media or broadcast over television or radio, or (B) any seminar or meeting whose attendees
were invited by any general solicitation or general advertising.
(v) The
undersigned is not and for so long as the undersigned holds any Subordinated Notes (I) will not be (A) an employee benefit plan or other
plan subject to Section 406 of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or Section
4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or any entity or other person whose assets constitute
(or are deemed for purposes of ERISA or the Code to constitute) the assets of any such plan or (B) another employee benefit plan subject
to U.S. federal, state or local laws, or non U.S. laws, which are substantially similar to Section 406 of ERISA or Section 4975 of the
Code unless the undersigned purchase and holding of the Subordinated Notes would not violate such substantially similar laws, or (II)
is not subject to ERISA and, with respect to the undersigned’s purchase and holding of the Subordinated Notes, is eligible for coverage
under one or more statutory or administrative exemptions from the prohibited transaction rules of ERISA and the Internal Revenue Code.
(vi) Either
(I) the undersigned is not and, for so long as the undersigned holds any Subordinated Notes, will not be, an employee benefit plan or
other plan subject to Section 406 of ERISA or Section 4975 of the Code, another employee benefit plan subject to U.S. federal, state or
local laws, or non-U.S. laws, which are substantially similar to Section 406 of ERISA or Section 4975 of the Code, or any entity or other
person whose assets constitute (or are deemed for purposes of ERISA or the Code to constitute) the assets of any such plan or (II) the
undersigned’s purchase and holding of the Subordinated Notes will not constitute or result in a non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code, or a non-exempt violation of any such substantially similar laws.
7. Conditions
to Obligations of the Undersigned and the Company. The obligations of the undersigned to purchase the Subject Note and pay
the Aggregate Purchase Price and of the Company to sell and issue the Subject Note are subject to the satisfaction at or prior to the
Closing of the following conditions precedent:
(a) the representations
and warranties of the Company contained in Section 5 hereof and of the undersigned contained in Section 6 hereof shall be true and correct
as of the Closing in all respects with the same effect as though such representations and warranties had been made as of the Closing;
(b) no suspension
of the qualification of the Subordinated Notes for offering or sale in any jurisdiction, or initiation or threatening of any proceedings
for any of such purposes, shall have occurred;
(c) all conditions
precedent to the closing of the Merger Transaction set forth in the Merger Agreement, including all necessary approval of Pubco’s
stockholders and regulatory approvals, if any, shall have been satisfied or waived by the appropriate party thereto, and the closing of
the Merger Transaction shall be scheduled to occur concurrently with or immediately following the Closing;
(d) no governmental
authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal
or otherwise restraining or prohibiting consummation of the Merger Transaction or the transaction contemplated by this Agreement; and
no such governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition;
and
(e) Prior to
or at the Closing, the undersigned shall deliver to the Company a duly completed and executed Internal Revenue Service Form W-9 or appropriate
Form W-8.
8. Obligations
Irrevocable. The obligations of the undersigned hereunder shall be irrevocable.
9. Waiver,
Amendment. Neither this Agreement nor any provisions hereof shall be modified, changed, discharged, or terminated except
by an instrument in writing, signed by the party against whom any waiver, change, discharge, or termination is sought.
10. Assignability.
Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either
the Company or the undersigned without the prior written consent of the other party.
11. Waiver
of Jury Trial. THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING
ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE
EVENT OF A LEGAL ACTION; (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY;
AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
12. Submission
to Jurisdiction. With respect to any suit, action or proceeding relating to any offers, purchases, or sales of the
Subject Note by the undersigned (“Proceedings”), the undersigned irrevocably submits to the jurisdiction of the federal
or state courts located in Suffolk County of New York, which submission shall be exclusive unless none of such courts has lawful jurisdiction
over such Proceedings.
13. Applicable
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
14. Section
and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
15. Notices.
All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered
personally, against written receipt therefor, or sent by registered or certified mail, return receipt requested, postage prepaid:
| If to the Company, to: |
Timothy R. Damadian, Manager |
| |
FONAR, LLC |
| |
265 Spagnoli Road |
| |
Melville, New York 11747 |
| |
|
| With a copy (which shall not |
|
| constitute notice) to: |
Dennis C. O’Rourke, Esq. |
| |
Moritt Hock & Hamroff LLP |
| |
400 Garden City Plaza |
| |
Garden City, New York 11530 |
| |
|
| If to the undersigned, to: |
At the address of the undersigned set forth in the |
| |
Signature Page to this Agreement |
In either case, to such other address as a party shall
have specified by notice to the other party given in accordance with this Section 15.
All notices shall be deemed given on the day of delivery,
if personally delivered, or three Business Days after deposit with the U.S. Postal Service, if sent via registered or certified mail.
16. Binding
Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and
their respective heirs, legal representatives, successors and assigns.
17. Survival.
All representations, warranties and covenants contained in this Agreement shall survive (a) the acceptance (in whole or part) of the
Subscription by the Company, (b) the Closing, (c) changes in the transactions, documents, and instruments relating to the Merger Transaction
that are not material or that are to the benefit of the undersigned, and (d) the death or disability of the undersigned, if a natural
person.
18. Notification
of Changes. The undersigned shall notify the Company upon the occurrence of any event prior to the closing of the purchase
of the Subject Note pursuant to this Agreement which would cause any representation, warranty, or covenant of the undersigned contained
in this Agreement to be false or incorrect.
19. Severability.
If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision
in any other jurisdiction.
20. Counterparts.
This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood
that all parties need not sign the same counterpart. Delivery of an executed counterpart of a signature page to this Agreement by facsimile
or other electronic transmission, including by e-mail attachment, shall be effective as delivery of a manually executed counterpart of
this Agreement.
21. Parties
in Interest; Third Party Beneficiaries. Notwithstanding anything to the contrary in this Subscription Agreement (or any of the Exhibits
hereto) or the Merger Agreement, each of the undersigned and the Company acknowledges and agrees that each of the Merger Sub and Pubco
are hereby made a third party beneficiary of this Subscription Agreement solely for the purposes of enforcing the Company’s specific
performance rights hereunder to enforce the undersigned’s compliance with its obligations under this Subscription Agreement, including
the undersigned’s obligation to fund its Subscription. Except as set forth in the immediately preceding sentence, this Subscription
Agreement shall inure to the benefit of and be binding solely upon the Company and the undersigned and nothing in this Subscription Agreement,
express or implied, is intended to confer upon any Person, other than the Company, Merger Sub, Pubco, and the undersigned, any rights
or remedies under, or by reason of, this Subscription Letter to confer upon any Person any rights or remedies against any Person other
than the undersigned under or by reason of this Subscription Agreement.
22. Subordination
to Senior Debt; Power of Attorney Grant.
(a) The
undersigned acknowledges and agrees that (a) in connection with the consummation of the Merger Transaction, (i) the Company shall become
either a borrower or a guarantor under the loan facilities (as amended, restated, amended and restated, refinanced, supplemented or otherwise
modified from time to time, the “Senior Loan Facilities”)
with OceanFirst Bank, N.A. or another lender (in either case, together with their successors and assigns, the “Senior
Lender”), (ii) the assets of the Company, Merger Sub and Pubco will be pledged as security
for the obligations due under the Senior Loan Facilities, and (iii) the Subordinated Notes, including the Subject Note, and the indebtedness,
rights and obligations evidenced hereby or granted hereunder, including the security interests granted to the holders of the Subordinated
Notes pursuant to the Security Agreement, are subordinate and junior in right of payment and in lien priority to the indebtedness and
other obligations under the Senior Loan Facilities (the “Senior Indebtedness”);
and (b) in connection with the entering into of the Senior Loan Facilities, the Senior Lender shall require that the undersigned, as
the subscriber to purchase the Subject Note or as the holder of the Subject Note (or Agent (as defined below) as attorney-in-fact and
agent for the undersigned), enter into certain agreements, including a subordination agreement, intercreditor agreement, and/or other
agreements typically utilized by the Senior Lender for similar transactions involving credit facilities similar in nature to the Senior
Loan Facilities (or other lenders providing credit facilities similar to the Senior Loan Facilities (the “Subordination
Documents”), in the manner and to the extent required by the Senior Lender.
(b) Notwithstanding
anything to the contrary in this Subscription Agreement, the undesigned irrevocably agrees to execute and be bound by the provisions
of the Subordination Documents. In respect of, and to facilitate, the foregoing, to the extent that Subordinated Creditor fails or refuses
to execute any of the Subordination Documents within five Business Days after being requested in writing from the Company or the Senior
Lender to do so, each of Timothy R. Damadian or Lucianno B. Bonanni shall be empowered (which power is coupled with an interest and is
irrevocable for the terms of this Agreement), as the undersigned’s attorney-in-fact and agent (in such capacity, the “Agent”),
to negotiate, execute and deliver such Subordination Document(s) for and on behalf of the undersigned in the undersigned’s name
and as authorized agent of the undersigned, and to bind the undersigned accordingly thereby. Further, the authority of the attorney-in
fact granted hereunder shall also authorize each of Timothy R. Damadian or Lucianno B. Bonanni, as the undersigned’s attorney-in-fact
and agent, to execute and deliver the Security Agreement for and on behalf of the undersigned in the undersigned’s name, and to
bind the undersigned accordingly thereby.
(c) The
terms of this Subscription Agreement shall be subject to terms and conditions of the Subordination Documents and in the event of any
conflict between the provisions set forth in this Subscription Agreement and those set forth in the Subordination Documents, the provisions
of the Subordination Documents shall supersede and control the terms and provisions of this Subscription Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned hereby subscribes to purchase, at par,
a Subordinated Secured 7% Promissory Note of FONAR, LLC in the principal amount set forth below and has duly executed this Subscription
Agreement as of the date set forth below the undersigned’s signature.
| Name of Subscriber: |
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| |
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| If Subscriber is Other than a Natural Person, |
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| the Name and Title of the Natural Person |
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| Executing this Subscription on Behalf of |
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| the Subscriber are as follows - |
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| |
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| Name: |
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| Title: |
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| Principal Amount of (and Purchase Price |
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| for) Subordinated Note Subscribed For: |
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| |
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| Subscriber’s Postal Address: |
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| Subscriber’s Email Address: |
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| Signature: |
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| Date: |
|
ACCEPTANCE PAGE
(To be completed by the Company)
SUBSCRIPTION AND SUBSCRIPTION AGREEMENT ACCEPTED AND
AGREED TO:
| Principal
Amount of Subordinated Secured 7% Promissory Note for
which the Subscription is accepted: |
|
$ |
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|
| |
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| Aggregate Purchase Price for which the Subscription is accepted: |
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$ |
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| FONAR, LLC |
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| By: |
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Name: |
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Title: |
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Dated: |
|
, 2025 |
ATTACHMENT A
Form of Merger Agreement
ATTACHMENT B
Form of Subordinated Secured 7% Promissory Note
ATTACHMENT C
Form of Security Agreement
ATTACHMENT D
Draft Preliminary Proxy Statement
ATTACHMENT E
Company’s Balance Sheet and Statement of Operations
ATTACHMENT F
Pro Forma Financial Information
ATTACHMENT G
Risk Factors
The Company is newly formed, has no operations and will be dependent
upon the operations of Pubco. The Company was only recently formed to serve as a vehicle to acquire the outstanding securities of
Pubco. The Company does not intend to have any operations or generate any revenue from any sources other than the operations of Pubco.
Therefore, investors in the Subordinated Notes will be completely dependent upon the operations and financial performance of Pubco in
order for the Company to make payment on its obligations, including the monthly payments of interest and principal payments when due.
The Subordinated Notes are to be subordinated to secured debt to be
incurred in connection with bank debt created in connection with the Merger Transaction and future senior debt and secured debt. It
is anticipated that, in connection with the consummation of the Merger Transaction, the Company will receive loans and extensions of credit
from OceanFirst Bank, N.A. (“OFB”) in the aggregate principal amount of approximately $35 million, which debt is to
be secured and guaranteed by Pubco and certain subsidiaries of Pubco (the “OFB Debt”). The Company’s obligations
to make payments on the Subordinated Notes are subordinate to the Company’s payment obligations under the OFB Debt and the security
interests in favor of OFB. In addition, the Subordinated Notes do not prohibit the Company from effectively being subordinated to any
new debt the Company may incur while the Subordinated Notes are outstanding. The terms of the OFB Debt will allow the Company to make
regularly scheduled monthly payments of non-default interest on the Subordinated Notes so long as the Company is in full compliance with
the covenants and agreements contained in the OFB Debt documents, including equity-to-debt, reserves, income, and other ratios and requirements.
Further, in the event that the Company is declared bankrupt, become insolvent or are liquidated or reorganized, any debt that ranks ahead
of the Subordinated Notes will be entitled to be paid in full from our assets before any payment may be made with respect to the Subordinated
Notes. In such an event, the holders of the Subordinated Notes will participate in the Company’s remaining assets ratably with all
holders of indebtedness that is deemed to be of the same ranking as the Subordinated Notes based upon the respective amounts owed to each
holder or creditor. In any of the foregoing events, the Company may not have sufficient assets to pay amounts due on the Subordinated
Notes. As a result, if holders of the Subordinated Notes receive any payments, they may receive less, ratably, than holders of senior
indebtedness.
The subordinated notes do not restrict the Company’s ability to
incur additional debt, to repurchase the Company’s securities or to take other actions that could negatively impact holders of the
Subordinated Notes. The Company is not restricted by the terms of the Subordinated Notes from incurring additional debt, including
additional senior debt, secured debt, or debt ranking on a parity with the Subordinated Notes, in the future, or from repurchasing the
Company’s equity securities. The Company’s ability to recapitalize, incur additional debt, and take a number of other actions
that are not limited by the terms of the Subordinated Notes could have the effect of diminishing our ability to make payments on the Subordinated
Notes when due.
Statutory, contractual, regulatory, or other restrictions also limit
the ability of the Company’s subsidiaries, including Pubco to pay dividends or make distributions, payments, loans, or advances
to the Company. Dividends, distributions, loans, and advances would be the sole source of funds the Company has in order to make payments
due under the Subordinated Notes. Accordingly, for these reasons, the Company may not have access to any assets or cash flows of the Company’s
subsidiaries to make payments on the Subordinated Notes.
The Company has made only limited covenants in the Subordinated Notes
and the subscription agreement for the Subordinated Notes, and these limited covenants may not protect an investment in the Notes. The
Subordinated Notes do not:
| ● | require the Company to maintain any financial ratios or specific levels of net worth, revenues, income, cash flows, or liquidity and,
accordingly, does not protect holders of the Subordinated Notes in the event that the Company experiences significant adverse changes
in its financial condition or results of operations; |
| ● | limit the Company incurring of indebtedness that would effectively rank senior to, or on a parity with, the Subordinated Notes; |
| ● | restrict the Company’s subsidiaries’ ability to issue securities or incur indebtedness or obligations that would be senior
to the Company’s equity in such subsidiaries; |
| ● | restrict the Company’s ability to pay dividends or other distributions and payments on the Company’s equity securities,
or to redeem or repurchase the Company’s equity our securities; |
| ● | restrict the Company or its subsidiaries from pledging their respective assets; or |
| ● | restrict our ability to make investments. |
Furthermore, the Subordinated Notes do not contain protections in the event
of a change in control and similar transactions involving the Company. The Company could engage in many types of transactions, such as
acquisitions, refinancings, or recapitalizations that could substantially affect the Company’s capital structure and the value of
the Subordinated Notes.
For these reasons, a potential investor in the Subordinated Notes should
consider the covenants and limitation or lack thereof in the Subordinated Notes as a significant factor in evaluating whether to invest
in the Subordinated Notes.
The subordinated notes will not be insured by the FDIC. The subordinated
notes will not be deposits and will not be insured by the FDIC or any other governmental agency.
The price at which a holder of a Subordinated Note will be able to sell
such Subordinated Note prior to maturity will depend on a number of factors and may be substantially less than the amount originally paid
for the Subordinated Note. The Company believes that the value of the Subordinated Notes in any secondary market, if any is created,
will be affected by the supply and demand of the Subordinated Notes, their interest rate, ranking, and a number of other factors. Some
of these factors are interrelated in complex ways. As a result, the effect of any one factor may be offset or magnified by the effect
of another factor.
Investors in the Subordinated Notes will have no control over the operations
of the Company. The holders of the Subordinated Notes are not entitled to take part in the management or control of the Company’s
business or the business of Pubco, including the operations of Pubco following consummation of the Merger Transaction, which will be the
sole responsibility of the Manager. The Manager of the Company, Timothy Damadian, will have virtually unlimited latitude in making decisions
for the Company and Pubco. Holders of the Subordinated Notes will not participate in the appointment of the Manager, any replacement of
a Manager, nor the election of any succeeding Manager.
There are conflicts of interest as a result of Timothy Damadian being
Manager of the Company, an executive officer of Pubco, and the agent on behalf of the holders of the Subordinated Notes. Pursuant
to the terms of the agreements related to the Subordinated Notes, the holders of the Subordinated Notes are appointing Timothy Damadian
as their agent with respect to enforcement and other rights under the Subordinated Notes. Following the consummation of the Offering and
Merger Transaction, Mr. Damadian, it is currently anticipated, would own approximately [PERCENT]%
of the total Class B Units of the Company and affiliates of Mr. Damadian will own all of the Class A Units and, as such, will hold at
least 62% of the voting power of all of the members of the Company. The Company is dependent upon Pubco to make dividends Pubco to the
Company in order for the Company to have funds available to pay interest and principal on the OFB Debt and Subordinated Notes. In the
event that a default exists under the Subordinated Notes, it would be in the control of Mr. Damadian to declare a default on behalf of
the holders of the Subordinated Notes. Mr. Damadian is also the President of Pubco and will retain such positions following the Merger.
Pubco may choose not to distribute (dividend out) all of its profits from operations to the Company in order to retain funds for business
purposes, including the establishment of reserves at levels higher than previously anticipated. The determination to declare or withhold
dividends would be made by Mr. Damadian in his capacity as President of Pubco and Pubco’s then board of directors. In his capacity
as Manager, Mr. Damadian has the power to elect Pubco’s entire board of directors. The retention of funds at Pubco, while benefitting
the long-term future of Pubco and the equity owners of the Company, could cause the Company to not have the funds necessary to fulfill
the Company’s debt obligations to the holders of the Secured Debt and the only person who could declare a default due to such failure
to pay all of such debt obligations, or enforce any rights of the holders of the Subordinated Notes under the security Agreement, is Mr.
Damadian. Therefore, there are conflicts of interests in the various positions to be held by Mr. Damadian which may adversely affect the
Subordinated Notes and enforcement of rights of the holders of the Subordinated Notes as compared to his role as Manager of the Company,
which is the obligor under the Subordinated Notes, and his role as agent for the holders.
The ability of the Company to make interest and principal payments to
the holders of the Subordinated Notes could vary and would depend upon the results of operations of Pubco. The Company will assume
substantial debt in connection with the consummation of the Merger Transaction, including debt to OceanFirst Bank, N.A. (“OFB”)
totaling approximately $35 million and private debt to individual holders of Subordinated Secured 7% Promissory Notes in the aggregate
principal amount of approximately $10 million (collectively with any additional debt or substitutions and refinancings, the “Merger
Debt”). The Company’s obligations under the Merger Debt gives priority in payment to the Merger Debt over the holders
of the Subordinated Notes. Further, unless the Company establishes and maintains required reserves, and is otherwise in compliance with
the debt service requirements and other covenants under the terms of the loan agreements with OFB, the Company will not be able to make
any payments on the Subordinated Notes. Given the fact that the Company’s sole source of income shall be from Pubco, the ability
of the Company to make payments to the Holders of the Subordinated Notes depends on Pubco’s positive cash flow from operations sufficient
to, first, make timely payment of all of the Company’s obligations required by the terms of the Merger Debt, and, second, establish
appropriate reserves, and, thereafter, make such distributions. The Company cannot assure investors that it would have adequate cash flow
from Pubco’s operations to cover expenses, including obligations under the Merger Debt, and also be in a position to make interest
and/or principal payment to the holders of the Subordinated Notes.
Following the consummation of the Merger Transaction, the Company sole
business shall be that of owning and managing Pubco and the lack of diversification makes the Company totally dependent on a single investment.
The Company’s business plan is to manage and grow the business of Pubco following the consummation of the Merger Transaction, and
has no plans to diversify into other businesses. The lack of diversity increases the risks to the Company relating to any downturn in
Pubco’s business or the industries in which Pubco operates. The failure of Pubco to generate sufficient profits will likely have
an adverse effect on the Company.
The Company’s debt level may have a negative impact on its ability
to make distributions to Investors and to adequately implement a growth strategy. The Company will incur indebtedness, including the
Merger Debt, in connection with the consummation of the Merger Transaction. In addition, subject to the terms of the Merger Debt, especially
the bank loan being made by OFB, Pubco may incur indebtedness in the future in connection with future acquisitions, development, and operating
activities. The Company’s and Pubco’s use of debt financing create risks, including but not limited to:
| ● | that Pubco’s cash flow would be insufficient to make required payments of principal and interest on the Merger Debt, or other
debt of the Company or Pubco; |
| ● | that the Company would be unable to refinance some, or all, of its indebtedness, including the Merger Debt, or that any refinancing
would not be on terms that are favorable to the Company; |
| ● | that required debt payments are not reduced if the economic performance of any property declines; and |
| ● | that any default of the Company’s indebtedness could result in acceleration of those obligations and possible loss of the Company’s
ownership of Pubco. |
Economic and regulatory changes that impact the industries in which
Pubco operates may cause the Company’s operating results to suffer. The Company’s operating results would be subject to
risks generally incident to the businesses operating in the medical imaging manufacture, support, and office management fields, including
but not limited to:
| ● | Changes in general or local economic conditions where Pubco operates; |
| ● | Changes in the supply of, or the demand for, similar or competing machines and medical office support businesses; |
| ● | Changes in applicable interest rates; |
| ● | Changes in tax, real estate, environmental, and/or zoning laws; |
| ● | Changes in laws and regulations involving the manufacture of medical imaging devices and/or administration and support of medical
offices; and |
| ● | Periods of high interest rates and limited supply of capital. |
These and other reasons may prevent the Company from being profitable or
from realizing growth, factors that could adversely affect the Company’s ability to satisfy its obligations and thereafter make
distributions to the Class B Unitholders.
The terms of the Subordinated Notes, and terms of the Offering, were
arbitrarily determined and may not reflect the actual value of the Subordinated Notes. The terms of the Subordinated Notes and the
Offering were determined by the Manager, in the Manager’s sole discretion. In determining the terms of the Subordinated Notes, the
Manager considered such matters as the Manager deemed appropriate, including estimates of the Company’s business potential, the
development of Pubco’s business, and the general condition of the industries in which Pubco operates. The terms of the Offering,
along with the Subordinated Notes, do not necessarily bear any relationship to the objective criteria of value applicable to the Subordinated
Notes or the Company. Accordingly, the terms of the Subordinated Notes and Offering, should not be viewed as an indication of the future
value of the Company, nor the Subordinated Notes or any other securities of the Company.
Investors will have limited ability, if any, to transfer the Subordinated
Notes. The Offering of the Subordinate Notes is being made pursuant to Section 4(2) of the Securities Act and Regulation D promulgated
under the Securities Act. The Subordinated Notes have not been registered under the Securities Act or the securities laws of the various
states. Accordingly, under applicable federal law, the Subordinated Notes may not be resold unless the sale is made under an effective
registration statement under the Securities Act and such state laws or exemptions from such registration requirements as are available.
The Company has no plans to become a public reporting company or to establish a trading market for its securities, including the Subordinated
Notes. As a result, each investor in the Subordinated Notes must bear the economic risk of an investment in the Company for an indefinite
period of time.
The Company is dependent upon the Manager for his services and any interruption
in his ability to provide his services could cause an adverse effect upon the Company us to cease operations; the Company is also dependent
on others. The loss of the services of the Manager, Timothy R. Damadian, who also serves as President and Chief Executive Officer
of Pubco, could have a material adverse effect on us. Neither the Company nor Pubco currently maintains any key man life insurance on
Mr. Damadian. The loss of Mr. Damadian’s services could adversely affect the Company’s results of operations as he is a key
member of Pubco’s management. The Company’s future success will also depend on Pubco’s ability to attract, retain, and
motivate other highly skilled employees. Competition for personnel in the industries in which Pubco operates is intense. The Company may
not be able to retain key employees or attract, assimilate, or retain other highly qualified employees in the future. If Pubco does not
succeed in attracting new personnel or retaining and motivating current personnel, the Company’s business will be adversely affected.
The U.S. Securities and Exchange Commission does not pass upon the merits
of any securities offered or the terms of the Offering, nor does the SEC pass upon the accuracy or completeness of any offering document
or literature. Neither the Offering nor the Subordinated Notes have been registered under federal or state securities laws, leading
to an absence of certain regulation applicable to the Company. No governmental agency has reviewed or passed upon the Offering, the Company,
or any securities of the Company, including the Subordinated Notes. The Company also has relied on exemptions from securities registration
requirements under applicable state securities laws. Investors in the Subordinated Notes, therefore, will not receive any of the benefits
that such registration would otherwise provide. Prospective investors must therefore assess the adequacy of disclosure and the fairness
of the terms of the Offering on their own or in conjunction with their personal advisors.
FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH IN THIS MEMORANDUM,
THE PURCHASE OF THE SUBORDINATED NOTES BEING OFFERED PURSUANT TO THE OFFERING INVOLVES A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING AN
INVESTMENT IN THE SUBORDINATED NOTES SHOULD BE AWARE OF THESE FACTORS. THE SUBORDINARY NOTES SHOULD BE PURCHASED ONLY BY THOSE PERSONS
AND ENTITIES WHO CAN AFFORD TO ABSORB A TOTAL LOSS OF THEIR INVESTMENT IN THE SUBORDINATED NOTES AND HAVE NO NEED FOR A RETURN ON THEIR
INVESTMENT.
ATTACHMENT H
FONAR, LLC
A Delaware limited liability company
Private Placement of Subordinated Secured 7% Promissory
Notes
Confidential Purchaser Questionnaire
FONAR, LLC
265 Spagnoli Road
Melville, New York
11747
Ladies and Gentlemen:
The information contained herein is furnished to FONAR, LLC, a Delaware
limited liability company (the “Company”), in order to assist the Company in determining whether the undersigned’s
Subscription to purchase a Subordinated Secured 7% Promissory Note (the “Subordinated Note”) of the Company can be
accepted by the Company in light of the requirements of Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 of Regulation D under the Securities Act (“Reg. D”), and an exemption contained in the
securities laws of certain states. The undersigned prospective subscriber (“Subscriber”) understands that the information
is needed in order for the Company to evaluate the satisfaction of various suitability requirements, including the requirement that the
Company must have reasonable grounds to believe that Subscriber is an “Accredited Investor,” as defined in Rule 501 of Reg.
D. (which in the case of a partnership Subscriber formed for the purpose of investing in the Subordinated Notes requires each partner
to be an Accredited Subscriber), and that Subscriber has knowledge and experience in financial and business affairs such that Subscriber
is capable of evaluating the merits and risks of the proposed investment. Subscriber understands that (a) the Company will rely on the
information contained herein for purposes of such determination, (b) the Subordinated Note distributed in connection therewith will not
be registered under the Securities Act in reliance upon the exemption from registration afforded by Section 4(a)(2) of the Securities
Act and Rule 506 of Regulation D promulgated thereunder, (c) the Subordinated Note will not be registered under the securities laws of
any state in reliance upon a similar exemption, and (d) this Questionnaire is not an offer of Subordinated Notes or any other securities.
Subscriber understands that, although this Questionnaire and the responses
provided herein will be kept confidential, the Company may need to present it to such parties as the Company deems advisable or required
in order to establish the applicability under any federal or state securities laws of an exemption from registration.
In accordance with the foregoing, the following representations and information
are hereby made and furnished:
(Please answer all questions. If the answer to any question is “None”
or “Not Applicable,” please so state. Each partner of an investing partnership formed for the purpose of investing in a Subordinated
Note must submit a completed Questionnaire.)
1. General Information.
Name of Prospective Subscriber: _________________________________
State of Domicile: __________________________________
Maximum Amount of Potential Investment: $ ___________________________
Type of Prospective Subscriber. Subscriber is:
☐ An individual
☐ A corporation
☐ A partnership or limited liability company
☐ A trust
☐ Other
Address. The address of Subscriber is: ___________________________
_____________________________________________
_______________________________________________
Contact Information. The contact information of Subscriber is:
Address:________________________________________
_______________________________________________
_______________________________________________
Telephone:___________________________________
Email:______________________________________
Facsimile:___________________________________
Contact Person (if Subscriber is an entity):________________
Tax I.D. Number. The social security number or federal tax identification
number (Employer Identification Number) of Subscriber is:____________________________
Individuals. If Subscriber is an individual:
Name of Employer: ____________________________________
Position: ___________________________________________
Entities. If Subscriber is an entity:
Nature of business: _________________________________
Date of inception of business: _________________________
Was Subscriber formed for the specific purpose of acquiring the Subordinated
Note?
☐ Yes ☐ No
2. Representations as to Accredited Subscriber Status. Subscriber
has read the definition of “Accredited Investor” from Rule 501 of Regulation D as set forth in Exhibit A, and certifies that
either (check one):
A. ☐ Subscriber is an “Accredited Subscriber” for one
or more of the following reasons:
☐ (a) Subscriber is an individual (not a partnership, corporation,
etc.) whose individual net worth (excess of total assets at fair market value, including homes (but excluding the value of the primary
residence of such individual), automobiles and personal property, over total liabilities (but excluding the amount of indebtedness secured
by the individual’s primary residence up to its fair market value, and including the amount of any such indebtedness in excess of
such fair market value)), or joint net worth with his or her spouse, presently exceeds $1,000,000;
☐ (b) Subscriber is an individual (not a partnership, corporation,
etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of
$300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses
but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching
the same income level in the current year;
☐ (c) Subscriber is a director or executive officer (e.g.,
President or any vice president in charge of a principal business unit, division or function such as sales, administration or finance)
of the Company;
☐ (d) Subscriber is a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the
specific purpose of acquiring the Subordinated Notes and with total assets in excess of $5,000,000;
______________________________________________
______________________________________________
(describe entity)
☐ (e) Subscriber is a trust with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Subordinated Notes, whose purchase would be directed by a “sophisticated person”
as described in Rule 506(b)(2)(ii);
☐ (f) Subscriber is a revocable trust which may be amended or revoked
by the grantors, and all of the grantors satisfy the conditions of clauses (a), (b) or (c) above and have completed copies of this Questionnaire,
which copies are delivered to the Company herewith;
☐ (g) Subscriber is an entity all the equity owners of which are
“Accredited Investors” within one or more of the above categories. If relying upon this category alone, each equity owner
must complete a separate copy of this Questionnaire;
______________________________________________
______________________________________________
(describe
entity)
☐ (h) A “family office,” as defined in rule 202(a)(11)(G)-1
under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1):
(i) With
assets under management in excess of $5,000,000,
(ii) That
is not formed for the specific purpose of acquiring the securities offered, and
(iii) Whose
prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family
office is capable of evaluating the merits and risks of the prospective investment.
☐ (i) A “family client,” as defined in rule 202(a)(11)(G)-1
under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), of a family office meeting the requirements in paragraph (a)(12)
of the definition of “accredited investor” set forth in Rule 501(a) promulgated under the Securities Act of 1933, as amended,
and whose prospective investment in the Company is directed by such family office pursuant to paragraph (a)(12)(iii) of said definition.
B. ☐ Subscriber is not an “Accredited Subscriber.”
3. Individual Representations as to Sophistication. The information
requested in this Section 3 must be provided by each prospective subscriber that is an individual, each individual shareholder of a prospective
Subscriber that is a corporation, each individual partner or member of a prospective subscriber that is a partnership or limited liability
company, each individual grantor of a prospective Subscriber that is a revocable trust and each sophisticated person as described in Rule
506(b)(2)(ii) under the Securities Act that will direct the investment by a prospective subscriber that is an irrevocable trust (attach
additional sheets if necessary):
A. General Information.
State where registered to vote: __________________________
Date of Birth: ________________________________________
Country of citizenship, if
other than the United States: ____________________________
B. Business Experience.
Current occupation (if retired, please described your last occupation):
Employer: ___________________________________________
Nature of Business: ____________________________________
Position and/or duties: __________________________________
Length of Employment: _________________________________
If current employment is less than five years, please complete the following
chart on Subscriber’s employment history for the past five years:
| Employer and Title |
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Primary Duties |
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Please list all professional qualifications that Subscriber has held or
currently hold, including bar admissions, accounting certificates, brokerage licenses and other professional licenses or certificates:
| Professional Qualifications |
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Year Received |
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Still Effective |
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Yes ☐ |
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No ☐ |
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Yes ☐ |
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No ☐ |
C. Education.
Please state Subscriber’s education and degrees earned:
D. Financial Advisors.
Please provide the name of your financial advisor(s), if any, who assists
Subscriber with Subscriber’s investment decisions (e.g., accountant, investment advisor, etc.) and the period of time for which
you have used the advisor(s):
| Name and Title |
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Company or Firm Name |
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From |
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To |
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E. Affiliation.
If Subscriber has any pre-existing personal or business relationship with
the Company or any of its officers or directors or any other prospective investor, please identify and describe the nature and duration
of such relationship:
______________________________________________________________
______________________________________________________________
______________________________________________________________
F. Net Worth and Income.
Please indicate Subscriber’s net worth (excess of total assets at
fair market value, including homes (but excluding the value of Subscriber’s primary residence), automobiles and personal property,
over total liabilities (but excluding the amount of indebtedness secured by Subscriber’s primary residence up to its fair market
value, and including the amount of any such indebtedness in excess of such fair market value)), together with Subscriber’s spouse,
if applicable:
$________________________
Please indicate Subscriber’s income (including foreign income, tax
exempt income and full amount of capital gains and losses but excluding any income of your spouse and any unrealized capital appreciation)
or reasonably expected income for the years ended or ending December 31:
2023: $________ 2024: $________ 2025: $________
Please indicate Subscriber’s income together with Subscriber’s
spouse (including foreign income, tax exempt income and full amount of capital gains and losses but excluding any unrealized capital appreciation)
or reasonably expected income for the years ended or ending December 31:
2023: $________ 2024: $________ 2025: $________
G. Investment Experience.
Indicate how often Subscriber invests in :
Restricted Securities (securities for which no market exists)
Often ☐ Occasionally ☐ Seldom ☐ Never ☐
Marketable Securities
Often ☐ Occasionally ☐ Seldom ☐ Never ☐
Government Securities
Often ☐ Occasionally ☐ Seldom ☐ Never ☐
Commodities
Often ☐ Occasionally ☐ Seldom ☐ Never ☐
Venture Capital Funds (limited partnerships or limited liability companies)
Often ☐ Occasionally ☐ Seldom ☐ Never ☐
Please list Subscriber’s most recent investments in restricted securities
(securities for which no market exists):
| Type
of Investment |
|
When
Purchased |
|
Amount
of Investment |
| |
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$ |
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Does Subscriber have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an investment in the Subordinated Note?
☐ Yes ☐ No
Does Subscriber, either alone by reason of Subscriber’s business
or financial experience or together with Subscriber’s professional advisor(s), have the capacity to protect Subscriber’s own
interests in connection with a purchase of the Subordinated Note?
☐ Yes ☐ No
Is Subscriber (or the beneficiary of the trust for which you are the fiduciary)
able to bear the economic risk of the investment, including a complete loss of the investment?
☐ Yes ☐ No
Would Subscriber’s purchase of the Subordinated Note be for investment?
☐ Yes ☐ No
If not, please state the reason for which Subscriber would purchase Subordinated
Note:
______________________________________________________________
______________________________________________________________
______________________________________________________________
4. Entity Representations as to Sophistication. The information
requested in this Section 4 must be provided by each prospective Subscriber that is a corporation, partnership, limited liability company
or trust (attach additional sheets if necessary):
A. Total Assets.
Please indicate the current value of the total assets of the entity:
$____________________________
B. Business.
Please describe the nature of the business conducted by the entity:
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
Please indicate the date that such business was commenced:
____________________________
C. Investment Experience.
Please provide information detailing the business, financial and investment
experience of the entity and the investment managers (persons who make investment decisions) of such entity:
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
By signing below, Subscriber hereby acknowledges that the answers, representations,
and information, set forth in this Questionnaire are accurate and complete in all respects, and undertakes to immediately notify the Company
in writing regarding any material change in the information set forth herein prior to the date and time that Subscriber purchases a Subordinated
Note. Subscriber understands that the Company and its legal counsel will rely on the accuracy and completeness of these representations
for the purpose of determining Subscriber’s suitability as an investor under applicable securities laws, and that a false representation
may constitute a violation of law and that any person who suffers damage as a result of a false representation may have a claim against
me for damages.
| Dated: |
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Authorized Signature |
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Print Name |
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Print Title (if applicable) |
Exhibit A
Rule
501 Definition Of Accredited Investor
Accredited investor. Accredited investor shall mean any person who
comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the
time of the sale of the securities to that person:
(1) Any bank
as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities
Exchange Act of 1934; any investment adviser registered pursuant to section 203 of the Investment Advisers Act of 1940 or registered pursuant
to the laws of a state; any investment adviser relying on the exemption from registering with the Commission under section 203(l) or (m)
of the Investment Advisers Act of 1940; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered
under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that act; any Small Business
Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act
of 1958; any Rural Business Investment Company as defined in section 384A of the Consolidated Farm and Rural Development Act; any plan
established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions,
for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning
of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21)
of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that
are accredited investors;
(2) Any private
business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization
described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, partnership, or limited
liability company, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
(4) Any director,
executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general
partner of a general partner of that issuer;
(5) Any natural
person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds $1,000,000;
(i) Except
as provided in paragraph (a)(5)(ii) of this section, for purposes of calculating net worth under this paragraph (a)(5):
(A) The
person’s primary residence shall not be included as an asset;
(B) Indebtedness
that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of
the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of
sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence,
the amount of such excess shall be included as a liability); and
(C) Indebtedness
that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time
of the sale of securities shall be included as a liability;
(ii) Paragraph
(a)(5)(i) of this section will not apply to any calculation of a person’s net worth made in connection with a purchase of securities
in accordance with a right to purchase such securities, provided that:
(A) Such
right was held by the person on July 20, 2010;
(B) The
person qualified as an accredited investor on the basis of net worth at the time the person acquired such right; and
(C) The
person held securities of the same issuer, other than such right, on July 20, 2010.
Note 1 to paragraph (a)(5): For the purposes of calculating joint net worth
in this paragraph (a)(5): Joint net worth can be the aggregate net worth of the investor and spouse or spousal equivalent; assets need
not be held jointly to be included in the calculation. Reliance on the joint net worth standard of this paragraph (a)(5) does not require
that the securities be purchased jointly.
(6) Any natural
person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s
spouse or spousal equivalent in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income
level in the current year;
(7) Any trust,
with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in §230.506(b)(2)(ii);
(8) Any entity
in which all of the equity owners are accredited investors;
Note 1 to paragraph (a)(8): It is permissible to look through various forms
of equity ownership to natural persons in determining the accredited investor status of entities under this paragraph (a)(8). If those
natural persons are themselves accredited investors, and if all other equity owners of the entity seeking accredited investor status are
accredited investors, then this paragraph (a)(8) may be available.
(9) Any entity,
of a type not listed in paragraph (a)(1), (2), (3), (7), or (8), not formed for the specific purpose of acquiring the securities offered,
owning investments in excess of $5,000,000;
Note 1 to paragraph (a)(9): For the purposes this paragraph (a)(9), “investments”
is defined in rule 2a51-1(b) under the Investment Company Act of 1940 (17 CFR 270.2a51-1(b)).
(10) Any natural
person holding in good standing one or more professional certifications or designations or credentials from an accredited educational
institution that the Commission has designated as qualifying an individual for accredited investor status. In determining whether to designate
a professional certification or designation or credential from an accredited educational institution for purposes of this paragraph (a)(10),
the Commission will consider, among others, the following attributes:
(i) The
certification, designation, or credential arises out of an examination or series of examinations administered by a self-regulatory organization
or other industry body or is issued by an accredited educational institution;
(ii) The
examination or series of examinations is designed to reliably and validly demonstrate an individual’s comprehension and sophistication
in the areas of securities and investing;
(iii) Persons
obtaining such certification, designation, or credential can reasonably be expected to have sufficient knowledge and experience in financial
and business matters to evaluate the merits and risks of a prospective investment; and
(iv) An
indication that an individual holds the certification or designation is either made publicly available by the relevant self-regulatory
organization or other industry body or is otherwise independently verifiable;
Note 1 to paragraph (a)(10): The Commission will designate professional
certifications or designations or credentials for purposes of this paragraph (a)(10), by order, after notice and an opportunity for public
comment. The professional certifications or designations or credentials currently recognized by the Commission as satisfying the above
criteria will be posted on the Commission’s website.
(11) Any natural
person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)),
of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of such
act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act;
(12) Any “family
office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1):
(i) With
assets under management in excess of $5,000,000,
(ii) That
is not formed for the specific purpose of acquiring the securities offered, and
(iii) Whose
prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family
office is capable of evaluating the merits and risks of the prospective investment; and
(13) Any “family
client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), of a family
office meeting the requirements in paragraph (a)(12) of this section and whose prospective investment in the issuer is directed by such
family office pursuant to paragraph (a)(12)(iii).
COVER SHEET WITH SUBSCRIPTION
INSTRUCTIONS
Enclosed herewith are the documents necessary to subscribe for any Subordinated
Secured 7% Promissory Note (each, a “Subordinated Note”) of FONAR LLC, a limited liability company organized under
the laws of Delaware (the “Company”). Set forth herein are instructions for the execution of the enclosed documents.
Instructions:
Each person considering subscribing for a Subordinated Note should review
the following instructions:
| ● | Agreement: One copy of the Subordinated Note Subscription Agreement, (the “Subscription Agreement”), Security
Agreement (Attachment C), and Purchaser Questionnaire (Attachment H) must be completed, executed, and delivered to the Company at the
address set forth below. |
| ● | Payment: Payment of the Aggregate Purchase Price for the Subordinated Note being subscribed for must be made by delivery at
or prior to the Closing (as defined in Section 3 of the Agreement) of immediately available funds to the bank account of Escrow Agent
in accordance with the Wire Instructions to be provided in the Closing Note given under Section 3 of the Subscription Agreement. |
| ● | Acceptance or Rejection of Subscription: The Company shall have the right to accept or reject a Subscription, in whole or in
part. If the Subscriber’s subscription is accepted, in whole or in part, the Company will complete and execute the Acceptance Page
to both copies of the Subscription Agreement and return one copy to Subscriber for Subscriber’s records. |
Company Address:
265 Spagnoli Road
Melville, New York 11747
EXHIBIT 8
FONAR, LLC
CLASS B MEMBERSHIP INTEREST UNITS
SUBSCRIPTION AGREEMENT
THE CLASS B MEMBERSHIP INTEREST UNITS OF FONAR,
LLC (THE “CLASS B UNITS”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE OR
ANY OTHER JURISDICTION. THERE ARE FURTHER RESTRICTIONS ON THE TRANSFERABILITY OF THE CLASS B UNITS DESCRIBED HEREIN.
THE PURCHASE OF THE CLASS B UNITS INVOLVES A HIGH
DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE INVESTMENT.
FONAR, LLC
265 Spagnoli Road
Melville, New York 11747
Ladies and Gentlemen:
The undersigned has been advised that FONAR, LLC, a limited liability company
organized under the laws of Delaware (the “Company”), is offering an aggregate of 2,268,422 Class B Membership Interest
Units of the Company (each, a “Class B Unit”) in a private placement offering (the “Offering”) intended
to comply with Rule 506(b) of Regulation D (“Reg. D”) promulgated by the United States Securities and Exchange Commission
(the “SEC”) and exemptions from registration under various state “blue sky” securities laws.
The Company has further advised the undersigned that the Offering is being
made without registration of the Class B Units under the Securities Act of 1933, as amended (the “Securities Act”),
or any securities law of any state of the United States or of any other jurisdiction.
It is understood that Class B Units are to be issued and sold in connection
with the Company’s proposed acquisition (indirectly through its wholly-owned subsidiary FONAR Acquisition Sub, Inc.), a Delaware
corporation (the “Merger Sub”)) of FONAR Corporation, a Delaware corporation (“Pubco”), pursuant
to the terms and conditions of that certain Agreement and Plan of Merger (the “Merger Agreement”), to be entered into
by and among Pubco, the Company, and Merger Sub (such acquisition and the merger referred to in the Merger Agreement, the “Merger
Transaction”). Upon completion of the Merger Transaction, (a) Pubco will be a wholly-owned subsidiary of the Company, (b) the
business of the Company shall be that of owning and managing Pubco, (c) Pubco will cease to be an SEC-reporting company with publicly
traded securities, and (d) the net income generated from the operations of Pubco will be up-streamed to the Company and the Company will
utilize any such up-streamed funds to meet its debt obligations, with any remaining funds (after the establishment of appropriate reserves
determined by, and in the sole discretion, of the manager of the Company) becoming available for distribution to the holders of the Class
B Units, including the Subject Units acquired by the undersigned pursuant to this Subscription Agreement. A copy of the form of the proposed
Merger Agreement is attached as Attachment A to this Class B Membership Interest Subscription Agreement (this “Subscription
Agreement”).
The Class B Units grant their holders specified rights to voting, the allocation
of profits and losses, and receipt of distributions, along with other rights and obligations as set forth in the Limited Liability Company
Agreement of the Company (the “LLC Agreement”), the form of which is attached as Attachment B to this Subscription
Agreement and to which the undersigned shall become a party in connection with the sale and issuance of Class B Units to the undersigned.
Capitalized terms used but not otherwise defined in this Subscription Agreement shall have the meanings as set forth in the LLC Agreement.
Accordingly, the undersigned hereby agrees as follows:
1. Subscription.
Subject to the terms and conditions of this Subscription Agreement, including Section 2 which grants the Company to accept the Subscription
in whole or part and sell and issue to the undersigned only the Subject Units (as defined in Section 2), the undersigned hereby subscribes
to purchase (the “Subscription”) and, on the date of the Closing referred to in Section 3 hereof, the undersigned shall
purchase, from the Company, and the Company shall sell and issue to the undersigned, that the number of Class B Units set forth on the
Signature Page to this Agreement, at a purchase price of $19.00 per Class B Unit (the “Per Unit Purchase Price”). The
Per Unit Purchase Price is intended to match the merger consideration to be paid on each share of Common Stock of Pubco in the Merger
Transaction.
2. Acceptance
of Subscription and Issuance of Class B Units. It is understood and agreed that the Company shall have the sole right, in its
complete discretion, to accept or reject the Subscription, in whole or in part, for any reason and that the Subscription shall be deemed
to be accepted by the Company only when this Agreement is signed by a duly authorized officer of the Company and delivered to the undersigned
in connection with the Closing referred to in Section 3 hereof. In the Offering, subscriptions, including the undersigned’s Subscription,
need not be accepted in the order received by the Company, and the Class B Units subject to the Offering may be allocated among the subscribers,
including the undesigned, in such prorations as the Company may determine. Notwithstanding anything in this Agreement to the contrary,
the Company shall have no obligation to issue any of the Class B Units to any person who is a resident of a jurisdiction in which the
issuance of Class B Units to such person would constitute a violation of the securities, “blue sky,” or other similar laws
of such jurisdiction (collectively, the “State Securities Laws”). The number of Class B Units subject to the Subscription
as accepted by the Company is referred to in this Subscription Agreement as the “Subject Units” and the aggregate purchase
price for such Subject Units is referred to in this Agreement as the “Aggregate Purchase Price.”
The undersigned’s Subscription is irrevocable by
the undersigned and may not be rescinded by the undersigned. The only conditions to Closing are set forth in Section 7 below.
3. The
Closing. At least five Business Days before the anticipated Closing Date, the Company shall deliver written notice to the undersigned
(the “Closing Notice”) specifying (a) the number of Subject Units, (b) the Aggregate Purchase Price, (c) the anticipated
Closing Date, and (d) the wire instructions for delivery of the Aggregate Purchase Price. No later than two Business Days after the giving
of the Closing Notice, the undersigned shall deliver to the Company such information as is reasonably requested in the Closing Notice
in order for the Company to issue the Subject Units to the undersigned. The undersigned shall deliver to the escrow agent for the Offering,
Computershare Limited (the “Escrow Agent”), not later than 5:00 p.m. (Eastern Time) on the date that is two Business
Days immediately preceding the anticipated Closing Date set forth in the Closing Notice, the Aggregate Purchase Price payable to the Company
either (a) in immediately available funds via wire transfer to the account specified in the Closing Notice, or (b) by tender of shares
of the Common Stock (or Class B Common Stock or Class C Common Stock) of Pubco owned of record by the undersigned having a value equal
to the Aggerate Purchase Price by means of delivery of stock certificates evidencing such Pubco shares, if the shares are evidenced by
one or more stock certificates, and a completed and executed stock power with respect to such Pubco shares, each, to be held in escrow
by the Escrow Agent until the Closing. Within five calendar days of the Closing, the Company will issue the Subject Units to the undersigned,
deliver a Class B Membership Interest Unit Certificate evidencing the undersigned’s ownership of the Subject Units, and revise its
books and records to reflect the issuance of the Subject Units to the undersigned, free and clear of any liens or other restrictions (other
than those arising under this Subscription Agreement, state or federal securities laws, and the LLC Agreement), in the name of the undersigned.
Any certificate evidencing the undersigned’s ownership of any of the Subject Units shall bear the legends as set forth in the LLC
Agreement.
At
or prior to the Closing, the undersigned shall deliver to the Company a duly completed and executed Signature Page to the LLC Agreement.
When
delivering this Subscription Agreement duly completed, dated, and executed by the undersigned to the Company, the undersigned shall also
deliver to the Company, a duly completed, dated, and executed Voting Agreement, the form of which is attached as Attachment
C to this Subscription Agreement.
4. Payment
for Class B Units.
(a) Payment
of the Aggregate Purchase Price must be received by the Escrow Agent from the undersigned at or prior to the Closing. As set forth in
Section 3 above, the Aggregate Purchase Price may be paid by delivery to the Escrow Agent of either (i) immediately available funds, via
wire transfer to the account specified in the Closing Notice, or (ii) by tender of shares of the Common Stock (or Class B Common Stock
or Class C Common Stock) of Pubco. In the event that the undersigned is tendering shares of either Class B Common Stock or Class C Common
Stock of Pubco, such shares shall be deemed to represent the underlying shares of Common Stock at the applicable conversion ratio. Each
share of Class B Common Stock represents the right to receive one share of Common Stock and each three shares of Class C Common Stock
represents the right to receive one share of Common Stock.
(b) In the
event that the Closing is consummated but the Merger is not consummated under and pursuant to the Merger Agreement or otherwise, then
the payment of any Aggregate Purchase Price will be deemed void ab initio and not to have occurred and the Escrow Agent shall return
such paid Aggregate Purchase Price to the undersigned in the same form as delivered to the Escrow Agent (i.e., immediately available funds,
if tendered in such form, or Pubco shares, if tendered in such form); provided, however, the Escrow Agent shall, upon written
request of the Company, retain and tender to the Company 1% of such paid Aggregate Purchase Price, to pay any and all costs and fees paid
by the Company or Merger Sub in connection with the formation of the Company or related to the entry into and the Company’s obligations
under the Merger Agreement.
5. Representations
and Warranties of the Company. As of the Closing, the Company shall be deemed to have represented and warranted to the undersigned
that:
(a) The Company
is duly formed and validly existing under the laws of Delaware, with full power and authority to conduct its intended business (i.e.,
to own, operate, and management Pubco) and to own its assets; and has the limited liability company power and authority to operate its
intended business and to own, lease, and operate its existing and intended properties, and is duly qualified and is in good standing as
a foreign limited liability company authorized to do business in each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where the failure to be so qualified would not have a material adverse effect
on the Company.
(b) The Class
B Units, including the Subject Units, have been duly authorized, and, when issued and paid for, will constitute the legal, valid, and
binding obligations of the Company. The Class B Units, including the Subject Units, have the rights and privileges set forth in the LLC
Agreement.
(c) The Merger
Agreement has been duly authorized by the Manager of the Company. Each of the Company and Merger Sub has all requisite corporate power
and authority to enter into and to perform its obligations under the Merger Agreement and to consummate the transactions contemplated
by the Merger Agreement, subject to, in the case of the consummation of the Merger, the adoption of the Merger Agreement by the Company
as the sole stockholder of Merger Sub. The Merger Agreement has been duly executed and delivered by the Company and Merger Sub and, assuming
due execution and delivery by Pubco, constitutes the legal, valid, and binding obligation of the Company and Merger Sub, enforceable against
the Company and Merger Sub in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium,
and other similar laws affecting creditors’ rights generally and by general principles of equity.
(d) No consent
of any governmental entity is required to be obtained or made by the Company or Merger Sub in connection with the execution, delivery,
and performance by the Company and Merger Sub of this Agreement or the consummation by the Company and Merger Sub of the Merger Transaction
contemplated by the Merger Agreement, except for: (i) the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware; (ii) the filing with the SEC of (A) Pubco’s Proxy Statement in definitive form in accordance with the Exchange Act,
and (B) such reports under the Securities and Exchange Act of 1934, as amended, as may be required in connection with this Agreement,
the Merger Transaction, and the other transactions contemplated by the Merger Agreement; (iii) such consents as may be required under
applicable state securities or “blue sky” laws and the securities laws of any foreign country; (v) the other governmental
approvals, if any; and (vi) such other consents which if not obtained or made would not reasonably be expected to have, individually or
in the aggregate, a material adverse effect on the Company’s and Merger Sub’s ability to consummate the transactions contemplated
by this Agreement or the Merger Agreement.
6. Representations,
Warranties, and Covenants of the Undersigned. The undersigned hereby represents and warrants to and covenants with
the Company that:
(a) General.
(i) The
undersigned has all requisite authority (and in the case of an individual, the capacity) to purchase the Subject Units, enter into this
Agreement, and to perform all the obligations required to be performed by the undersigned hereunder or under the LLC Agreement, and such
purchase will not contravene any law, rule or regulation binding on the undersigned or any investment guideline or restriction applicable
to the undersigned.
(ii) The
undersigned is a resident of the state set forth on the signature page hereto and is not acquiring the Subject Units as a nominee or agent
or otherwise for any other person.
(iii) The
undersigned will comply with all applicable laws and regulations in effect in any jurisdiction in which the undersigned purchases or sells
the Subject Units and obtain any consent, approval, or permission required for such purchases or sales under the laws and regulations
of any jurisdiction to which the undersigned is subject or in which the undersigned makes such purchases or sales, and the Company shall
have no responsibility therefor.
(b) Information
Concerning the Company.
(i) The
undersigned has not been furnished any offering materials other than the documents annexed to this Agreement and has relied only on the
information contained herein and therein. Further, the undersigned has reviewed the public filings of Pubco, including without limitation
Pubco’s Form 10-K for the fiscal year ended June 30, 2025 (“Form 10-K”) as filed with the SEC on September 22,
2025 and available, with all other public filings of Pubco, via the SEC’s EDGAR system accessible on the SEC’s sec.gov website.
In addition, the undersigned has reviewed copies of (A) a draft Preliminary Proxy Statement of Pubco with respect to the Merger Transaction,
a copy of which has been attached as Attachment D to this Subscription Agreement, (B) the Company’s unaudited balance sheet
at August 31, 2025 and statement of operations for the period from inception (June 26, 2025) through August 31, 2025, copies of which
have been attached as Attachment E to this Subscription Agreement, and (C) pro forma financial information of the Company
giving effect to the consummation of the Merger Transaction, a copy of which has been attached as Attachment F to this Subscription
Agreement. The undersigned has also reviewed the Risk Factors contained in Attachment G to this Subscription Agreement (as well
as the Risk Factors contained in Item 1A of the Form 10-K). In addition, the undersigned has reviewed all amendments to the Form 10-K,
as well as amendments to all other public filings of Pubco (in each case, if any) made available via the EDGAR system prior to the execution
and delivery of this Subscription Agreement.
(ii) The
undersigned understands that no public market now exists for the Class B Units, including the Subject Units, and that the Company has
made no promises or assurances that a public market will ever exist for the Class B Units.
(iii) The
undersigned understands and accepts that the purchase of the Subject Units involves various risks, including the risks related to the
business of Pubco as set forth in the Form 10-K. The undersigned represents that it is able to bear any loss associated with an investment
in the Subject Units.
(iv) The
undersigned confirms that it is not relying on any communication (written or oral) of the Company or any of its affiliates as investment
or tax advice or as a recommendation to purchase any of the Class B Units. It is understood that information and explanations related
to the terms and conditions of the Class B Units provided in the Attachments to this Agreement, or otherwise by the Company, any of the
Company’s affiliates, or Pubco shall not be considered investment or tax advice or a recommendation to purchase, any of the Class
B Units, including the Subject Units, and that neither the Company nor any of its affiliates is acting or has acted as an advisor to the
undersigned in deciding to invest in the Class B Units. The undersigned acknowledges that neither the Company nor any of its affiliates
has made any representation regarding the proper characterization of the Class B Units for purposes of determining the undersigned’s
authority to invest in the Class B Units.
(v) The
undersigned is familiar with the business and financial condition and operations of the Company and Pubco. The undersigned has had access
to such information concerning the Company, the Class B Units, and Pubco as it deems necessary to enable it to make an informed investment
decision concerning the purchase of the Class B Units.
(vi) The
undersigned understands that, unless the undersigned notifies the Company in writing to the contrary at or before the Closing, each of
the undersigned’s representations and warranties contained in this Agreement will be deemed to have been reaffirmed and confirmed
as of the Closing.
(vii) The
undersigned acknowledges that the Company has the right in its sole and absolute discretion to abandon the Offering at any time prior
to the completion of the Offering. This Agreement shall thereafter have no force or effect and the Company shall return any previously
paid subscription price, including all or any portion of the Aggregate Purchase Price, without interest thereon, to the undersigned. In
addition, the Company has the right to reject all or any portion of the Subscription and, if any previously paid subscription price has
been tendered to the Escrow Agent, the Company shall cause any applicable previously paid subscription price to be returned to the undersigned
to the extent the Subscription is rejected in whole or part.
(viii) The
undersigned understands that no federal or state agency has passed upon the merits or risks of an investment in the Class B Units or made
any finding or determination concerning the fairness or advisability of this investment.
(c) Non-Reliance.
(i) The
undersigned represents that it is not relying on (and will not at any time rely on) any communication (written or oral) of the Company
as investment advice or as a recommendation to purchase the Class B Units, it being understood that information and explanations related
to the terms and conditions of the Class B Units and the Merger Transaction shall not be considered investment advice or a recommendation
to purchase the Class B Units.
(ii) The
undersigned confirms that neither the Company nor its affiliates have (i) given any guarantee or representation as to the potential success,
return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Class B Units or
(ii) made any representation to the undersigned regarding the legality of an investment in the Class B Units under applicable legal investment
or similar laws or regulations. In deciding to purchase any of the Class B Units, the undersigned is not relying on the advice or recommendations
of the Company, nor its affiliates, and the undersigned has made its own independent decision that the investment in the Class B Units
is suitable and appropriate for the undersigned.
(d) Status
of Undersigned.
(i) The
undersigned has such knowledge, skill, and experience in business, financial, and investment matters that the undersigned is capable of
evaluating the merits and risks of an investment in the Class B Units. With the assistance of the undersigned’s own professional
advisors, to the extent that the undersigned has deemed appropriate, the undersigned has made its own legal, tax, accounting and financial
evaluation of the merits and risks of an investment in the Class B Units and the consequences of this Subscription Agreement. The undersigned
has considered the suitability of the Class B Units as an investment in light of the undersigned’s own circumstances and financial
condition and the undersigned is able to bear the risks associated with an investment in the Class B Units and the undersigned’s
authority to invest in the Class B Units.
(ii) The
undersigned agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable
U.S. federal and state securities laws in connection with the purchase and sale of the Subject Units. The undersigned has completed the
Confidential Purchaser Questionnaire contained in Attachment G to this Agreement and the information contained therein is complete
and accurate as of the date thereof and is hereby affirmed as of the date hereof. Any information that has been furnished or that will
be furnished by the undersigned to the Company is accurate and complete, and does not contain any misrepresentation or material omission.
(e) Restrictions
on Transfer or Sale of Class B Units.
(i) The
undersigned is acquiring the Subject Units solely for the undersigned’s own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution of the Subject Units. The undersigned understands that the Class B
Units, including the Subject Units, have not been registered under the Securities Act or any State Securities Laws by reason of specific
exemptions under the provisions thereof which depend in part upon the investment intent of the undersigned and of the other representations
made by the undersigned in this Agreement. The undersigned understands that the Company is relying upon the representations and agreements
contained in this Agreement (and any supplemental information) for the purpose of determining whether this transaction meets the requirements
for such exemptions.
(ii) The
undersigned understands that the Class B Units, including the Subject Units, are “restricted securities” under applicable
federal securities laws and that the Securities Act and the rules of the SEC provide in substance that the undersigned may dispose of
the Subject Units only pursuant to an effective registration statement under the Securities Act or an exemption therefrom; and the undersigned
understands that the Company has no obligation or intention to register any of the Class B Units, including the Subject Units, or to take
action so as to permit sales pursuant to the Securities Act and the rules and regulations promulgated thereunder (including SEC Rule 144).
Accordingly, the undersigned understands that, under SEC rules, the undersigned may dispose of the Class B Units principally only in the
transaction that are exempt from registration under the Securities Act. Consequently, the undersigned acknowledges that the undersigned
must bear the economic risks of the investment in the Class B Units for an indefinite period of time.
(iii) The
undersigned agrees: (A) that the undersigned will not sell, assign, pledge, give, transfer or otherwise dispose of the Subject Units or
any interest therein, or make any offer or attempt to do any of the foregoing, except pursuant to a registration of the Subject Units
under the Securities Act and all applicable State Securities Laws, or in a transaction that is exempt from the registration provisions
of the Securities Act and all applicable State Securities Laws; (B) that any certificate evidencing any of the Class B Units, including
the Subject Units, if any certificates are issued, will bear a legend making reference to the foregoing restrictions; and (C) that the
Company and its affiliates shall not be required to give effect to any purported transfer of such Class B Units, including the Subject
Units, except upon compliance with the foregoing restrictions.
(iv) The
undersigned acknowledges that neither the Company nor any other person offered to sell the Class B Units to the undersigned by means of
any form of general solicitation or advertising, including but not limited to: (A) any advertisement, article, notice or other communication
published in any newspaper, magazine, or similar media or broadcast over television or radio, or (B) any seminar or meeting whose attendees
were invited by any general solicitation or general advertising.
(v) The
undersigned is not and for so long as the undersigned holds any Class B Units (I) will not be (A) an employee benefit plan or other plan
subject to Section 406 of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or Section
4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or any entity or other person whose assets constitute
(or are deemed for purposes of ERISA or the Code to constitute) the assets of any such plan or (B) another employee benefit plan subject
to U.S. federal, state or local laws, or non U.S. laws, which are substantially similar to Section 406 of ERISA or Section 4975 of the
Code unless the undersigned purchase and holding of the Class B Units would not violate such substantially similar laws, or (II) is not
subject to ERISA and, with respect to the undersigned’s purchase and holding of the Class B Units, is eligible for coverage under
one or more statutory or administrative exemptions from the prohibited transaction rules of ERISA and the Internal Revenue Code.
(vi) Either
(I) the undersigned is not and, for so long as the undersigned holds any Class B Units, will not be, an employee benefit plan or other
plan subject to Section 406 of ERISA or Section 4975 of the Code, another employee benefit plan subject to U.S. federal, state or local
laws, or non-U.S. laws, which are substantially similar to Section 406 of ERISA or Section 4975 of the Code, or any entity or other person
whose assets constitute (or are deemed for purposes of ERISA or the Code to constitute) the assets of any such plan or (II) the undersigned’s
purchase and holding of the Class B Units will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA
or Section 4975 of the Code, or a non-exempt violation of any such substantially similar laws.
(f) Status
of Pubco Stock, if Tendered as All or Part of the Aggregate Purchase Price. If any portion of the Aggregate Purchase Price is being
paid in the form of securities of Pubco (the “Tendered Pubco Stock”), the undersigned owns beneficially (within the
meaning of “beneficial owner” as defined in SEC Rule 13d-3) and of record of, and has the sole power to vote and dispose of
all of the Tendered Pubco Stock, free and clear of any and all security interests, liens, charges, encumbrances, equities, claims, options
or limitations of whatever nature and free of any other limitation or restriction (including any restriction on the right to vote, sell,
or otherwise dispose of such Tendered Pubco Stock), except as may exist by reason of this Agreement or pursuant to applicable law; and
there are no outstanding options or other rights to acquire from the undersigned, or obligations of the undersigned to sell or to dispose
of, any of the Tendered Pubco Stock.
7. Conditions
to Obligations of the Undersigned and the Company. The obligations of the undersigned to purchase the Subject Units and pay
the Aggregate Purchase Price and of the Company to sell and issue the Subject Units are subject to the satisfaction at or prior to the
Closing of the following conditions precedent:
(a) the representations
and warranties of the Company contained in Section 5 hereof and of the undersigned contained in Section 6 hereof shall be true and correct
as of the Closing in all respects with the same effect as though such representations and warranties had been made as of the Closing;
(b) no suspension
of the qualification of the Class B Units for offering or sale in any jurisdiction, or initiation or threatening of any proceedings for
any of such purposes, shall have occurred;
(c) all conditions
precedent to the closing of the Merger Transaction set forth in the Merger Agreement, including all necessary approval of Pubco’s
stockholders and regulatory approvals, if any, shall have been satisfied or waived by the appropriate party thereto, and the closing of
the Merger Transaction shall be scheduled to occur concurrently with or immediately following the Closing;
(d) no governmental
authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal
or otherwise restraining or prohibiting consummation of the Merger Transaction or the transaction contemplated by this Agreement; and
no such governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition;
and
(e) Prior to
or at the Closing, the undersigned shall deliver to the Company a duly completed and executed Internal Revenue Service Form W-9 or appropriate
Form W-8.
8. Obligations
Irrevocable. The obligations of the undersigned hereunder shall be irrevocable.
9. Waiver,
Amendment. Neither this Agreement nor any provisions hereof shall be modified, changed, discharged, or terminated except
by an instrument in writing, signed by the party against whom any waiver, change, discharge, or termination is sought.
10. Assignability.
Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either
the Company or the undersigned without the prior written consent of the other party.
11. Waiver
of Jury Trial. THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING
ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE
EVENT OF A LEGAL ACTION; (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY;
AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
12. Submission
to Jurisdiction. With respect to any suit, action or proceeding relating to any offers, purchases, or sales of the
Subject Units by the undersigned (“Proceedings”), the undersigned irrevocably submits to the jurisdiction of the federal
or state courts located in Suffolk County of New York, which submission shall be exclusive unless none of such courts has lawful jurisdiction
over such Proceedings.
13. Applicable
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
14. Section
and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
15. Notices.
All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered
personally, against written receipt therefor, or sent by registered or certified mail, return receipt requested, postage prepaid:
| If to the Company, to: |
Timothy R. Damadian, Manager |
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FONAR, LLC |
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265 Spagnoli Road |
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Melville, New York 11747 |
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| With a copy (which shall not |
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| constitute notice) to: |
Dennis C. O’Rourke, Esq. |
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Moritt Hock & Hamroff LLP |
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400 Garden City Plaza |
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Garden City, New York 11530 |
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| If to the undersigned, to: |
At the address of the undersigned set forth in the |
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Signature Page to this Agreement |
If to the undersigned, to: At the address
of the undersigned set forth in the Signature Page to this Agreement
In either case, to such other address as a party shall
have specified by notice to the other party given in accordance with this Section 15.
All notices shall be deemed given on the day of delivery,
if personally delivered, or three Business Days after deposit with the U.S. Postal Service, if sent via registered or certified mail.
16. Binding
Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and
their respective heirs, legal representatives, successors and assigns.
17. Survival.
All representations, warranties and covenants contained in this Agreement shall survive (a) the acceptance (in whole or part) of the
Subscription by the Company, (b) the Closing, (c) changes in the transactions, documents, and instruments relating to the Merger Transaction
that are not material or that are to the benefit of the undersigned, and (d) the death or disability of the undersigned, if a natural
person.
18. Notification
of Changes. The undersigned shall notify the Company upon the occurrence of any event prior to the closing of the purchase
of the Subject Units pursuant to this Agreement which would cause any representation, warranty, or covenant of the undersigned contained
in this Agreement to be false or incorrect.
19. Severability.
If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision
in any other jurisdiction.
20. Counterparts.
This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood
that all parties need not sign the same counterpart. Delivery of an executed counterpart of a signature page to this Agreement by facsimile
or other electronic transmission, including by e-mail attachment, shall be effective as delivery of a manually executed counterpart of
this Agreement.
21. Parties
in Interest; Third Party Beneficiaries. Notwithstanding anything to the contrary in this Subscription Agreement (or any of the Exhibits
hereto) or the Merger Agreement, each of the undersigned and the Company acknowledges and agrees that each of the Merger Sub and Pubco
are hereby made a third party beneficiary of this Subscription Agreement solely for the purposes of enforcing the Company’s specific
performance rights hereunder to enforce the undersigned’s compliance with its obligations under this Subscription Agreement, including
the undersigned’s obligation to fund its Subscription. Except as set forth in the immediately preceding sentence, this Subscription
Agreement shall inure to the benefit of and be binding solely upon the Company and the undersigned and nothing in this Subscription Agreement,
express or implied, is intended to confer upon any Person, other than the Company, Merger Sub, Pubco, and the undersigned, any rights
or remedies under, or by reason of, this Subscription Letter to confer upon any Person any rights or remedies against any Person other
than the undersigned under or by reason of this Subscription Agreement.
[signature page follows]
IN WITNESS WHEREOF, the undersigned hereby subscribes to purchase that
number of Class B Membership Interests of FONAR, LLC at a purchase price of $19.00 per Class B Unit, for the Aggregate Purchase Price
as set forth below and has duly executed this Subscription Agreement as of the date set forth below the undersigned’s signature.
| Name of Subscriber: |
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| Executing this Subscription on Behalf of |
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| the Subscriber are as follows - |
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| Name: |
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| Number of Class B Units Subscribed For: |
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| Aggregate Purchase Price Subscribed For: |
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| Form of Consideration: |
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Cash |
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Shares of FONAR Corporation Common |
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Stock (Number of Shares: |
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Shares of FONAR Corporation Class B |
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Common Stock |
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(Number of Shares: |
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Shares of FONAR Corporation Class C |
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Common Stock |
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(Number of Shares: |
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| Subscriber’s Postal Address: |
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ACCEPTANCE PAGE
(To be completed by the Company)
SUBSCRIPTION AND SUBSCRIPTION AGREEMENT ACCEPTED AND
AGREED TO:
| Aggregate
number of Class B Units for which the Subscription is accepted: |
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$ |
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| Aggregate
Purchase Price for which the Subscription is accepted: |
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$ |
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| FONAR, LLC |
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| By: |
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Name: |
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Title: |
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Dated: |
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, 2025 |
ATTACHMENT A
Form of Merger Agreement
ATTACHMENT B
Form of LLC Agreement
ATTACHMENT C
Form of Voting Agreement
ATTACHMENT D
Draft Preliminary Proxy Statement
ATTACHMENT E
Company’s Balance Sheet and Statement of Operations
ATTACHMENT F
Pro Forma Financial Information
ATTACHMENT G
Risk Factors
Investors have no right to withdraw or redeem their investment from
the Company. Investors have no right to demand a return of their investment for any reason, although the Manager may entertain requests
for redemption of Class B Units on a case-by-case basis, but any approvals of such requests will be in the complete discretion of the
Manager, including the Manager’s determination of establishing appropriate reserves.
The Company is newly formed, has no operations and will be dependent
upon the operations of Pubco. The Company was only recently formed to serve as a vehicle to acquire the outstanding securities of
Pubco. The Company does not intend to have any operations or generate any revenue from any sources other than the operations of Pubco.
Therefore, investors in Class B Units will be completely dependent upon the operations and financial performance of Pubco to obtain any
return on their investment.
Investors will have no control over the operations of the Company.
The holders of Class B Units are not entitled to take part in the management or control of the Company’s business or the business
of Pubco, including the operations of Pubco following consummation of the Merger Transaction, which will be the sole responsibility of
the Manager. The Manager would have virtually unlimited latitude in making decisions for the Company and Pubco. Holders of Class B Units
will have very limited authority or power with respect to any matter involving the Company and no authority over the operations of Pubco.
The holders of Class B Units will have very limited voting rights, except where the LLC Agreement or applicable law specifically requires
voting power be given to holders of Class B Units. Even where holders of Class B Units are given voting rights, in most cases, holders
of Class B Units will collectively hold 38% of the voting power on such matters and the holders of Class A Units, affiliates of Timothy
R. Damadian, the Manager, will collectively hold 62% of the voting power.
The ability of the Company to make distributions to the Class B Members
could vary and would depend upon the results of operations of Pubco. The Company will assume substantial debt in connection with the
consummation of the Merger Transaction, including debt to OceanFirst Bank, N.A. (“OFB”) totaling approximately $35
million and private debt to individual holders of Subordinated Secured 7% Promissory Notes in the aggregate principal amount of approximately
$10 million (collectively with any additional debt or substitutions and refinancings, the “Merger Debt”). The Company’s
obligations under the Merger Debt gives priority in payment to the Merger Debt over the holders of equity in the Company, including distributions
to the holders of Class B Units. Further, unless the Company establishes and maintains required reserves, and is otherwise in compliance
with the debt service requirements and other covenants under the terms of the loan agreements with OFB, the Company will not be able to
distribute funds to its members, including the holders of Class B Units. Accordingly, given the fact that the Company’s sole source
of income shall be from Pubco, the ability of the Company to make distributions to the holders of Class B Units depends on Pubco’s
positive cash flow from operations sufficient to, first, make timely payment of all of the Company’s obligations required by the
terms of the Merger Debt, and, second, establish appropriate reserves, and, thereafter, make such distributions. In the event the Manager
determines the Company does not have sufficient funds to distribute to the Class B Members, no distributions will be made to the holders
of Class B Units. The Company cannot assure Investors that it would have adequate cash flow from Pubco’s operations to cover expenses,
including obligations under the Merger Debt, and also be in a position to make distributions to the Class B Unitholders.
Following the consummation of the Merger Transaction, the Company sole
business shall be that of owning and managing Pubco and the lack of diversification makes the Company totally dependent on a single investment.
The Company’s business plan is to manage and grow the business of Pubco following the consummation of the Merger Transaction, and
has no plans to diversify into other businesses. The lack of diversity increases the risks to the Company relating to any downturn in
Pubco’s business or the industries in which Pubco operates. The failure of Pubco to generate sufficient profits will likely have
an adverse effect on the Company.
The Company is responsible for the indemnification of the Manager.
The LLC Agreement provides for the indemnification of the Manager under certain circumstances against costs and expenses incurred by the
Manager, or individuals affiliated with the Manager, in litigation to which they become a party arising from their association with or
activities on behalf of the Company. This indemnification policy could result in substantial expenditures, which the Company may be unable
to recoup. No assurance can be given that such insurance can be obtained at rates favorable to the Company, if at all, or that, if insurance
is obtained, the insurance coverage will be adequate to satisfy any and all claims for indemnification that are made.
The Company’s debt level may have a negative impact on its ability
to make distributions to Investors and to adequately implement a growth strategy. The Company will incur indebtedness, including the
Merger Debt, in connection with the consummation of the Merger Transaction. In addition, subject to the terms of the Merger Debt, especially
the bank loan being made by OFB, Pubco may incur indebtedness in the future in connection with future acquisitions, development, and operating
activities. The Company’s and Pubco’s use of debt financing create risks, including but not limited to:
| ● | that Pubco’s cash flow would be insufficient to make required payments of principal and interest on the Merger Debt, or other
debt of the Company or Pubco; |
| ● | that the Company would be unable to refinance some, or all, of its indebtedness, including the Merger Debt, or that any refinancing
would not be on terms that are favorable to the Company; |
| ● | that required debt payments are not reduced if the economic performance of any property declines; |
| ● | that debt service obligations would reduce funds available to distributions to the holders of Class B Units and funds available for
future acquisitions by Pubco; and |
| ● | that any default of the Company’s indebtedness could result in acceleration of those obligations and possible loss of the Company’s
ownership of Pubco. |
Economic and regulatory changes that impact the industries in which
Pubco operates may cause the Company’s operating results to suffer. The Company’s operating results would be subject to
risks generally incident to the businesses operating in the medical imaging manufacture, support, and office management fields, including
but not limited to:
| ● | Changes in general or local economic conditions where Pubco operates; |
| ● | Changes in the supply of, or the demand for, similar or competing machines and medical office support businesses; |
| ● | Changes in applicable interest rates; |
| ● | Changes in tax, real estate, environmental, and/or zoning laws; |
| ● | Changes in laws and regulations involving the manufacture of medical imaging devices and/or administration and support of medical
offices; and |
| ● | Periods of high interest rates and limited supply of capital. |
These and other reasons may prevent the Company from being profitable or
from realizing growth, factors that could adversely affect the Company’s ability to satisfy its obligations and thereafter make
distributions to the Class B Unitholders.
The Subscription Price of the Class B Units, terms of the Class B Units,
and terms of the Offering were arbitrarily determined and may not reflect the actual value of the Company. The Subscription Price
for the Class B Units and other terms of the Offering (including the value of the merger consideration payable in connection with the
consummation of the Merger Transaction which formed the basis of the values of Pubco’s Common Stock, Class B Common Stock, Class
C Common Stock, and Class A Preferred Stock being tendered to purchase Class B Units in the Offering) were determined by the Manager,
in the Manager’s sole discretion. In determining the Subscription Price of the Class B Units and terms of the Offering, the Manager
considered such matters as the trading prices of Pubco’s Common Stock for certain historical periods, and estimates of the Company’s
business potential, the development of Pubco’s business, and the general condition of the industries in which Pubco operates. The
terms of the Offering, along with the Subscription Price of the Class B Units, do not necessarily bear any relationship to the objective
criteria of value applicable to the Company. Accordingly, the terms of the Offering, along with the Subscription Price for the Class B
Units, should not be viewed as an indication of the future value of the Company, nor the Class B Units or any other securities of the
Company.
Investors will have limited ability to transfer their equity interests
in the Company. The Offering is being made pursuant to Section 4(2) of the Securities Act and Regulation D promulgated under the Act.
The Class B Units have not been registered under the Securities Act or the securities laws of the various states. Subject to the limited
right of transferability as described in the LLC Agreement, Class B Units may not be resold unless the sale is made under an effective
registration statement under the Securities Act and such state laws or exemptions from such registration requirements as are available.
The Company has no plans to become a public reporting company or to establish a trading market for its securities. As a result, each investor
in the Class B Units must bear the economic risk of an investment in the Company for an indefinite period of time.
The Company is dependent upon the Manager for his services and any interruption
in his ability to provide his services could cause an adverse effect upon the Company us to cease operations; the Company is also dependent
on others. The loss of the services of the Manager, Timothy R. Damadian, who also serves as President and Chief Executive Officer
of Pubco, could have a material adverse effect on us. Neither the Company nor Pubco currently maintains any key man life insurance on
Mr. Damadian. The loss of Mr. Damadian’s services could adversely affect the Company’s results of operations as he is a key
member of Pubco’s management. The Company’s future success will also depend on Pubco’s ability to attract, retain, and
motivate other highly skilled employees. Competition for personnel in the industries in which Pubco operates is intense. The Company may
not be able to retain key employees or attract, assimilate, or retain other highly qualified employees in the future. If Pubco does not
succeed in attracting new personnel or retaining and motivating current personnel, the Company’s business will be adversely affected.
There is currently no market for the Class B Units, and the Company
does not expect that a market will develop making an investment in the Class B Units illiquid. The lack of a market may impair the
ability to sell any Cass B Units at the time a holder may wish to sell them or at a price considered to be reasonable. In addition, the
LLC Agreement limits the ability of any holder of Class B Units to dispose of them at any time.
The Manager and his affiliates may significantly influence matters to
be voted on and their interests may differ from, or be adverse to, the interests of holders of Class B Units. The Manager and certain
of his affiliates will own all of the Class A Units of the Company. Under the LLC Agreement, the holders of Class A Units collectively
control 62% of the voting power of all voting securities of the Company and the holders of Class B Units collectively control 38% of the
voting power of all voting securities of the Company. In addition, the Class B Units only vote on certain matters relating to the Company
as set forth in the LLC Agreement. Accordingly, the Manager and certain of his affiliates possess significant influence over the Company
on matters submitted to the Company’s members for approval. This amount of control gives them substantial ability to determine the
future of our Company, and as such, they may elect to close the business, change the business plan or make any number of other major business
decisions without the approval of the other members of the Company. The interest of the Manager and his affiliates may differ from the
interests of the Company’s other members and could, subject to certain fiduciary duties, result in corporate decisions that are
adverse to other members.
The U.S. Securities and Exchange Commission does not pass upon the merits
of any securities offered or the terms of the Offering, nor does the SEC pass upon the accuracy or completeness of any offering document
or literature. Neither the Offering nor the Class B Units have been registered under federal or state securities laws, leading to
an absence of certain regulation applicable to the Company. No governmental agency has reviewed or passed upon the Offering, the Company,
or any securities of the Company, including the Class B Units. The Company also has relied on exemptions from securities registration
requirements under applicable state securities laws. Investors in the Company, therefore, will not receive any of the benefits that such
registration would otherwise provide. Prospective investors must therefore assess the adequacy of disclosure and the fairness of the terms
of the Offering on their own or in conjunction with their personal advisors.
FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH IN THIS MEMORANDUM,
THE PURCHASE OF CLASS B UNITS BEING OFFERED PURSUANT TO THE OFFERING INVOLVES A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING AN INVESTMENT
IN THE COMPANY SHOULD BE AWARE OF THESE FACTORS. THE INTERESTS SHOULD BE PURCHASED ONLY BY THOSE PERSONS AND ENTITIES WHO CAN AFFORD TO
ABSORB A TOTAL LOSS OF THEIR INVESTMENT IN THE COMPANY AND HAVE NO NEED FOR A RETURN ON THEIR INVESTMENT.
ATTACHMENT H
FONAR, LLC
A Delaware limited liability company
Private Placement of Class B Membership Interest
Units
Confidential Purchaser Questionnaire
FONAR, LLC
265 Spagnoli Road
Melville, New York
11747
Ladies and Gentlemen:
The information contained herein is furnished to FONAR, LLC, a Delaware
limited liability company (the “Company”), in order to assist the Company in determining whether the undersigned’s
Subscription to purchase Class B Membership Interest Units (the “Class B Units”) of the Company can be accepted by
the Company in light of the requirements of Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”),
and Rule 506 of Regulation D under the Securities Act (“Reg. D.”), and an exemption contained in the securities laws
of certain states. The undersigned prospective subscriber (“Subscriber”) understands that the information is needed
in order for the Company to evaluate the satisfaction of various suitability requirements, including the requirement that the Company
must have reasonable grounds to believe that Subscriber is an “Accredited Investor,” as defined in Rule 501 of Reg. D. (which
in the case of a partnership Subscriber formed for the purpose of investing in the Class B Units requires each partner to be an Accredited
Subscriber), and that Subscriber has knowledge and experience in financial and business affairs such that Subscriber is capable of evaluating
the merits and risks of the proposed investment. Subscriber understands that (a) the Company will rely on the information contained herein
for purposes of such determination, (b) the Class B Units distributed in connection therewith will not be registered under the Securities
Act in reliance upon the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated
thereunder, (c) the Class B Units will not be registered under the securities laws of any state in reliance upon a similar exemption,
and (d) this Questionnaire is not an offer of the Class B Units or any other securities.
Subscriber understands that, although this Questionnaire and the responses
provided herein will be kept confidential, the Company may need to present it to such parties as the Company deems advisable or required
in order to establish the applicability under any federal or state securities laws of an exemption from registration.
In accordance with the foregoing, the following representations and information
are hereby made and furnished:
(Please answer all questions. If the answer to any question is “None”
or “Not Applicable,” please so state. Each partner of an investing partnership formed for the purpose of investing in the
Class B Units must submit a completed Questionnaire.)
1. General Information.
Name of Prospective Subscriber: _________________________________
State of Domicile: __________________________________
Maximum Amount of Potential Investment: $ ___________________________
Type of Prospective Subscriber. Subscriber is:
☐ An individual
☐ A corporation
☐ A partnership or limited liability company
☐ A trust
☐ Other
Address. The address of Subscriber is: ___________________________
_______________________________________________
_______________________________________________
Contact Information. The contact information of Subscriber is:
Address:________________________________________
_______________________________________________
_______________________________________________
Telephone:___________________________________
Email:______________________________________
Facsimile:___________________________________
Contact Person (if Subscriber is an entity):________________
Tax I.D. Number. The social security number or federal tax identification
number (Employer Identification Number) of Subscriber is:____________________________
Individuals. If Subscriber is an individual:
Name of Employer: ____________________________________
Position: ___________________________________________
Entities. If Subscriber is an entity:
Nature of business: _________________________________
Date of inception of business: _________________________
Was Subscriber formed for the specific purpose of acquiring the Class B
Units?
☐ Yes ☐ No
2. Representations as to Accredited Subscriber Status. Subscriber
has read the definition of “Accredited Investor” from Rule 501 of Regulation D as set forth in Exhibit A, and certifies that
either (check one):
A. ☐ Subscriber is an “Accredited Subscriber” for one
or more of the following reasons:
☐ (a) Subscriber is an individual (not a partnership, corporation,
etc.) whose individual net worth (excess of total assets at fair market value, including homes (but excluding the value of the primary
residence of such individual), automobiles and personal property, over total liabilities (but excluding the amount of indebtedness secured
by the individual’s primary residence up to its fair market value, and including the amount of any such indebtedness in excess of
such fair market value)), or joint net worth with his or her spouse, presently exceeds $1,000,000;
☐ (b) Subscriber is an individual (not a partnership, corporation,
etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of
$300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses
but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching
the same income level in the current year;
☐ (c) Subscriber is a director or executive officer (e.g.,
President or any vice president in charge of a principal business unit, division or function such as sales, administration or finance)
of the Company;
☐ (d) Subscriber is a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the
specific purpose of acquiring the Class B Units and with total assets in excess of $5,000,000;
______________________________________________
______________________________________________
(describe entity)
☐ (e) Subscriber is a trust with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Class B Units, whose purchase would be directed by a “sophisticated person”
as described in Rule 506(b)(2)(ii);
☐ (f) Subscriber is a revocable trust which may be amended or revoked
by the grantors, and all of the grantors satisfy the conditions of clauses (a), (b) or (c) above and have completed copies of this Questionnaire,
which copies are delivered to the Company herewith;
☐ (g) Subscriber is an entity all the equity owners of which are
“Accredited Investors” within one or more of the above categories. If relying upon this category alone, each equity owner
must complete a separate copy of this Questionnaire;
______________________________________________
______________________________________________
(describe entity)
☐ (h) A “family office,” as defined in rule 202(a)(11)(G)-1
under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1):
(i) With
assets under management in excess of $5,000,000,
(ii) That
is not formed for the specific purpose of acquiring the securities offered, and
(iii) Whose
prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family
office is capable of evaluating the merits and risks of the prospective investment.
☐ (i) A “family client,” as defined in rule 202(a)(11)(G)-1
under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), of a family office meeting the requirements in paragraph (a)(12)
of the definition of “accredited investor” set forth in Rule 501(a) promulgated under the Securities Act of 1933, as amended,
and whose prospective investment in the Company is directed by such family office pursuant to paragraph (a)(12)(iii) of said definition.
B. ☐ Subscriber is not an “Accredited Subscriber.”
3. Individual Representations as to Sophistication. The information
requested in this Section 3 must be provided by each prospective subscriber that is an individual, each individual shareholder of a prospective
Subscriber that is a corporation, each individual partner or member of a prospective subscriber that is a partnership or limited liability
company, each individual grantor of a prospective Subscriber that is a revocable trust and each sophisticated person as described in Rule
506(b)(2)(ii) under the Securities Act that will direct the investment by a prospective subscriber that is an irrevocable trust (attach
additional sheets if necessary):
A. General Information.
State where registered to vote: __________________________
Date of Birth: ________________________________________
Country of citizenship, if
other than the United States: ____________________________
B. Business Experience.
Current occupation (if retired, please described your last occupation):
Employer: ___________________________________________
Nature of Business: ____________________________________
Position and/or duties: __________________________________
Length of Employment: _________________________________
If current employment is less than five years, please complete the following
chart on Subscriber’s employment history for the past five years:
| Employer and Title |
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Please list all professional qualifications that Subscriber has held or
currently hold, including bar admissions, accounting certificates, brokerage licenses and other professional licenses or certificates:
| Professional Qualifications |
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Year Received |
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Yes ☐ |
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No ☐ |
C. Education.
Please state Subscriber’s education and degrees earned:
D. Financial Advisors.
Please provide the name of your financial advisor(s), if any, who assists
Subscriber with Subscriber’s investment decisions (e.g., accountant, investment advisor, etc.) and the period of time for which
you have used the advisor(s):
| Name and Title |
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Company or Firm Name |
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E. Affiliation.
If Subscriber has any pre-existing personal or business relationship with
the Company or any of its officers or directors or any other prospective investor, please identify and describe the nature and duration
of such relationship:
______________________________________________________________
______________________________________________________________
______________________________________________________________
F. Net Worth and Income.
Please indicate Subscriber’s net worth (excess of total assets at
fair market value, including homes (but excluding the value of Subscriber’s primary residence), automobiles and personal property,
over total liabilities (but excluding the amount of indebtedness secured by Subscriber’s primary residence up to its fair market
value, and including the amount of any such indebtedness in excess of such fair market value)), together with Subscriber’s spouse,
if applicable:
$________________________
Please indicate Subscriber’s income (including foreign income, tax
exempt income and full amount of capital gains and losses but excluding any income of your spouse and any unrealized capital appreciation)
or reasonably expected income for the years ended or ending December 31:
2023: $________ 2024: $________ 2025: $________
Please indicate Subscriber’s income together with Subscriber’s
spouse (including foreign income, tax exempt income and full amount of capital gains and losses but excluding any unrealized capital appreciation)
or reasonably expected income for the years ended or ending December 31:
2023: $________ 2024: $________ 2025: $________
G. Investment Experience.
Indicate how often Subscriber invests in :
Restricted Securities (securities for which no market exists)
Often ☐ Occasionally ☐ Seldom ☐ Never ☐
Marketable Securities
Often ☐ Occasionally ☐ Seldom ☐ Never ☐
Government Securities
Often ☐ Occasionally ☐ Seldom ☐ Never ☐
Commodities
Often ☐ Occasionally ☐ Seldom ☐ Never ☐
Venture Capital Funds (limited partnerships or limited liability companies)
Often ☐ Occasionally ☐ Seldom ☐ Never ☐
Please list Subscriber’s most recent investments in restricted securities
(securities for which no market exists):
| Type
of Investment |
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When
Purchased |
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Amount
of Investment |
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Does Subscriber have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an investment in the Class B Units?
☐ Yes ☐ No
Does Subscriber, either alone by reason of Subscriber’s business
or financial experience or together with Subscriber’s professional advisor(s), have the capacity to protect Subscriber’s own
interests in connection with a purchase of the Class B Units?
☐ Yes ☐ No
Is Subscriber (or the beneficiary of the trust for which you are the fiduciary)
able to bear the economic risk of the investment, including a complete loss of the investment?
☐ Yes ☐ No
Would Subscriber’s purchase of the Class B Units be for investment?
☐ Yes ☐ No
If not, please state the reason for which Subscriber would purchase the
Class B Units:
______________________________________________________________
______________________________________________________________
______________________________________________________________
4. Entity Representations as to Sophistication. The information
requested in this Section 4 must be provided by each prospective Subscriber that is a corporation, partnership, limited liability company
or trust (attach additional sheets if necessary):
A. Total Assets.
Please indicate the current value of the total assets of the entity:
$____________________________
B. Business.
Please describe the nature of the business conducted by the entity:
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
Please indicate the date that such business was commenced:
____________________________
C. Investment Experience.
Please provide information detailing the business, financial and investment
experience of the entity and the investment managers (persons who make investment decisions) of such entity:
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
By signing below, Subscriber hereby acknowledges that the answers, representations,
and information, set forth in this Questionnaire are accurate and complete in all respects, and undertakes to immediately notify the Company
in writing regarding any material change in the information set forth herein prior to the date and time that Subscriber purchases any
Class B Units. Subscriber understands that the Company and its legal counsel will rely on the accuracy and completeness of these representations
for the purpose of determining Subscriber’s suitability as an investor under applicable securities laws, and that a false representation
may constitute a violation of law and that any person who suffers damage as a result of a false representation may have a claim against
me for damages.
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Print Title (if applicable) |
Exhibit A
Rule
501 Definition Of Accredited Investor
Accredited investor. Accredited investor shall mean any person who
comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the
time of the sale of the securities to that person:
(1) Any bank
as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities
Exchange Act of 1934; any investment adviser registered pursuant to section 203 of the Investment Advisers Act of 1940 or registered pursuant
to the laws of a state; any investment adviser relying on the exemption from registering with the Commission under section 203(l) or (m)
of the Investment Advisers Act of 1940; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered
under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that act; any Small Business
Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act
of 1958; any Rural Business Investment Company as defined in section 384A of the Consolidated Farm and Rural Development Act; any plan
established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions,
for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning
of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21)
of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that
are accredited investors;
(2) Any private
business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization
described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, partnership, or limited
liability company, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
(4) Any director,
executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general
partner of a general partner of that issuer;
(5) Any natural
person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds $1,000,000;
(i) Except
as provided in paragraph (a)(5)(ii) of this section, for purposes of calculating net worth under this paragraph (a)(5):
(A) The
person’s primary residence shall not be included as an asset;
(B) Indebtedness
that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of
the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of
sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence,
the amount of such excess shall be included as a liability); and
(C) Indebtedness
that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time
of the sale of securities shall be included as a liability;
(ii) Paragraph
(a)(5)(i) of this section will not apply to any calculation of a person’s net worth made in connection with a purchase of securities
in accordance with a right to purchase such securities, provided that:
(A) Such
right was held by the person on July 20, 2010;
(B) The
person qualified as an accredited investor on the basis of net worth at the time the person acquired such right; and
(C) The
person held securities of the same issuer, other than such right, on July 20, 2010.
Note 1 to paragraph (a)(5): For the purposes of calculating joint net worth
in this paragraph (a)(5): Joint net worth can be the aggregate net worth of the investor and spouse or spousal equivalent; assets need
not be held jointly to be included in the calculation. Reliance on the joint net worth standard of this paragraph (a)(5) does not require
that the securities be purchased jointly.
(6) Any natural
person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s
spouse or spousal equivalent in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income
level in the current year;
(7) Any trust,
with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in §230.506(b)(2)(ii);
(8) Any entity
in which all of the equity owners are accredited investors;
Note 1 to paragraph (a)(8): It is permissible to look through various forms
of equity ownership to natural persons in determining the accredited investor status of entities under this paragraph (a)(8). If those
natural persons are themselves accredited investors, and if all other equity owners of the entity seeking accredited investor status are
accredited investors, then this paragraph (a)(8) may be available.
(9) Any entity,
of a type not listed in paragraph (a)(1), (2), (3), (7), or (8), not formed for the specific purpose of acquiring the securities offered,
owning investments in excess of $5,000,000;
Note 1 to paragraph (a)(9): For the purposes this paragraph (a)(9), “investments”
is defined in rule 2a51-1(b) under the Investment Company Act of 1940 (17 CFR 270.2a51-1(b)).
(10) Any natural
person holding in good standing one or more professional certifications or designations or credentials from an accredited educational
institution that the Commission has designated as qualifying an individual for accredited investor status. In determining whether to designate
a professional certification or designation or credential from an accredited educational institution for purposes of this paragraph (a)(10),
the Commission will consider, among others, the following attributes:
(i) The
certification, designation, or credential arises out of an examination or series of examinations administered by a self-regulatory organization
or other industry body or is issued by an accredited educational institution;
(ii) The
examination or series of examinations is designed to reliably and validly demonstrate an individual’s comprehension and sophistication
in the areas of securities and investing;
(iii) Persons
obtaining such certification, designation, or credential can reasonably be expected to have sufficient knowledge and experience in financial
and business matters to evaluate the merits and risks of a prospective investment; and
(iv) An
indication that an individual holds the certification or designation is either made publicly available by the relevant self-regulatory
organization or other industry body or is otherwise independently verifiable;
Note 1 to paragraph (a)(10): The Commission will designate professional
certifications or designations or credentials for purposes of this paragraph (a)(10), by order, after notice and an opportunity for public
comment. The professional certifications or designations or credentials currently recognized by the Commission as satisfying the above
criteria will be posted on the Commission’s website.
(11) Any natural
person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)),
of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of such
act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act;
(12) Any “family
office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1):
(i) With
assets under management in excess of $5,000,000,
(ii) That
is not formed for the specific purpose of acquiring the securities offered, and
(iii) Whose
prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family
office is capable of evaluating the merits and risks of the prospective investment; and
(13) Any “family
client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), of a family
office meeting the requirements in paragraph (a)(12) of this section and whose prospective investment in the issuer is directed by such
family office pursuant to paragraph (a)(12)(iii).
COVER SHEET WITH SUBSCRIPTION
INSTRUCTIONS
Enclosed herewith are the documents necessary to subscribe for Class B
Membership Interest Units (the “Class B Units”) of FONAR LLC, a limited liability company organized under the laws
of Delaware (the “Company”). Set forth herein are instructions for the execution of the enclosed documents.
A. Instructions.
Each person considering subscribing for Class B Units should review the
following instructions:
| ● | Agreement: One copy of each of the Class B Membership Interest Units Subscription Agreement (the “Subscription Agreement”),
Voting Agreement (Attachment C), and Purchaser Questionnaire (Attachment G), must be completed, executed, and delivered to the Company
at the address set forth below. |
| ● | Payment: Payment of the Aggregate Purchase Price for the Class B Units must be made by tender of either: |
| ● | Delivery at or prior to the Closing of one or more stock certificates representing shares of the capital stock of FONAR Corporation
equal in value to the Aggregate Purchase Price ($19.00 per share of Common Stock, $19.00 per share of Class B Common Stock, or $6.34 per
share of Class C Common Stock), together with a duly executed stock power with respect to such shares; or |
| ● | Delivery at or prior to the Closing (as defined in Section 3 of the Agreement) of immediately available funds to the bank account
of Escrow Agent in accordance with the Wire Instructions below. |
| ● | Acceptance or Rejection of Subscription: The Company shall have the right to accept or reject a Subscription, in whole or in
part. If the Subscriber’s subscription is accepted, in whole or in part, the Company will complete and execute the Acceptance Page
to both copies of the Subscription Agreement and return one copy to Subscriber for Subscriber’s records. |
B. Company Address:
265 Spagnoli Road
Melville, New York 11747
