FORBEARANCE AGREEMENT

 

THIS FORBEARANCE AGREEMENT (the “Agreement”) is dated as of November19, 2012, by
and among CHATAND, INC.,a Nevada corporation (the “Company”),each of the buyers
listed on the Schedule of Buyers attached hereto and named on the signature page
hereto(collectively, the “Buyers”; and, each, a “Buyer”), and Michael Lebor and
David Rosenberg (collectively, the “Existing Shareholders”; and, each, an
“Existing Shareholder”).

 

The Company and each Buyer entered into that certain Securities Purchase
Agreement dated as of June 17, 2011 (the “Purchase Agreement”), pursuant to
which the Company sold and issued to the Buyers senior secured convertible
promissory notes in the aggregate principal amount of $850,000 (as further
amended, restated, and modified from time to time, the “Notes”).

 

Defaults have occurred and are continuing under the Notes based on the Company’s
failure to comply with (a) Section 2.01(f) of the Notes regarding late payment
of principal and interest, and (b) Section 2.01(p) of the Notes, regarding the
failure of the Company to pay to the Buyers the amounts due under the Notes in a
timely manner, amongst other Events of Default not enumerated
herein(collectively with any other related defaults, potential defaults, or
events of default under any other Transaction Documents, the “Subject
Defaults”). As a result, the Company has requested that the Buyers agree to
forbear from exercising their rights and remedies under the Notes and the
Purchase Agreement in connection with the Subject Defaults. The Buyers have
agreed, subject to the terms and conditions of this Agreement, to forbear from
exercising certain rights and remedies in connection with the Subject Defaults
as provided below.

 

In consideration of the Buyers agreeing to forbear from exercising their rights
and remedies under the Notes and the Purchase Agreement in connection with the
Subject Defaults, the Existing Shareholders and the Company have agreed, subject
to the terms and conditions of this Agreement, for the Company to cancel the
Warrants held by the Existing Shareholders (the “Existing Shareholder Warrants”)
and concurrently with the execution of this Agreement the Existing Shareholder
Warrants shall be immediately cancelled.

 

ACCORDINGLY, for adequate and sufficient consideration, the receipt of which is
hereby acknowledged, the Company, the Existing Shareholders and the Buyers agree
as follows:

 

1.            TERMS AND REFERENCES. Unless otherwise stated in this document,
terms defined in the Transaction Documents have the same meanings when used in
this Agreement.

 

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2.            NO WAIVER. The execution, delivery, and performance of this
Agreement by the parties hereto and the acceptance by the Buyers of the
performance of the Company herewith (a) shall not constitute a waiver or release
by the Buyers of any Event of Default, including, without limitation, the
Subject Defaults, that may now or hereafter exist under the Notes or the
Purchase Agreement, and (b) shall be without prejudice to, and is not a waiver
or release of, the Buyers’ rights at any time in the future to exercise any and
all rights conferred upon the Buyers by the Notes, the Purchase Agreement or
otherwise at law or in equity, including, without limitation, the right to
accelerate the obligations under the Notes, and to institute foreclosure
proceedings, to exercise their rights under the Uniform Commercial Code as in
effect in the State of New York or other applicable laws, and/or to institute
collection proceedings against any Person. The Company agrees and acknowledges
that the Subject Defaults currently exist. Furthermore, the Company acknowledges
that as of November19, 2012, the outstanding balances, as listed below, of the
following promissory notes are correct:

 

(i)chatAND, Inc. Senior Secured Convertible Promissory Note No. 1, in favor of
Stacy Capital Group LLC, in the principal amount of $204,545.45, plus all
accrued interest;

(ii)chatAND, Inc. Senior Secured Convertible Promissory Note No. 2, in favor of
David Stefansky, in the principal amount of $204,545.45, plus all accrued
interest;

(iii)chatAND, Inc. Senior Secured Convertible Promissory Note No. 3, in favor of
Harborview Value Master Fund, L.P., in the principal amount of $181,818.18, plus
all accrued interest;

(iv)chatAND, Inc. Senior Secured Convertible Promissory Note No. 4, in favor of
Endicott Management Partners, LLC, in the principal amount of $181,818.18, plus
all accrued interest; and

(v)chatAND, Inc. Senior Secured Convertible Promissory Note No. 5, in favor of
The Corbran LLC, in the principal amount of $77,272.73, plus all accrued
interest.

 

3.            FORBEARANCE. So long as this Agreement is not terminated as
provided in Section 7 hereof,the Buyers agree that they will not exercise any
rights under the Notes arising from the occurrence of the Subject Defaults from
the date hereof until December20, 2012 (“Effective Period”). The Company agrees
that upon the expiration of the Effective Period or the termination of the
Effective Period under the provisions ofSection7 hereof, or if all amounts due
and owing under the Notes are not paid in full on the expiration of the
Effective Period, then the Buyers may exercise any and all rights available
under the Notes, pursuant to applicable law, under equity, or otherwise. Nothing
in this Agreement constitutes a waiver of present Events of Default or future
Events of Default or a waiver of any Buyer’s right to insist upon compliance by
all other relevant parties with the Transaction Documents.

 

4.            COVENANTS AND ACKNOWLEDGMENTS.

 

(a)      Except as specifically set forth herein, the Company agrees to comply
with all provisions of the Transaction Documents applicable to the Company,
including, without limitation, all of the payment terms under the Transaction
Documents.

 

(b)      Within 5 days of the date hereof, the Company shall take any and all
actions as may be required under the laws of its state of incorporation, its
Organic Documents and any all other applicable laws set forth by any
Governmental Authority in order to (i) causeMichael Lebor, David Rosenberg and
Philip Friedman to resign as a member of the Company’s Board of Directors, and
(ii)cause the election or reelection of all directors designated by the Buyers,
which designees shall initially be David Berger, Richard Rosenblum and Kenneth
Londoner, to serve as all of the sole members of the Company’s Board of
Directors from the date hereof until such director designee’s resignation,
death, removal or disqualification; provided, however, that each director
designee may subsequently only be removed by the Company’s Board of Directors,
absent a vote for such removal by the holders of the Company’s capital stock
entitled to vote on such matters in accordance with any applicable laws set
forth by any Governmental Authority, for gross negligence or a material breach
of such director designee’s fiduciary or similar duties owed to the Company. In
the event of the resignation, death, removal or disqualification of any director
designee at any time after the date hereof, the Buyers shall be entitled to
nominate a replacement director and, after the Company’s Board of Directors has
approved such designee, the Company’s Board of Directors shall, subject to any
requisite approvals of any holders of the Company’s capital stock entitled to
vote on such matters, take such actions as may be necessary under the laws of
its state of incorporation, its Organic Documents and any all other applicable
laws set forth by any Governmental Authority to elect such nominee to the
Company’s Board of Directors to serve until his or her resignation, death,
removal or disqualification or until his or her successor is duly elected. The
Company shall not take any action to increase or decrease the size of the
Company’s Board of Directors without the express written consent of each Buyer.

 

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(c)      Within 5 days of the date hereof, the Company shall take, and shall
cause Chatand Tech, LLC, a Nevada limited liability company and a wholly-owned
subsidiary of the Company (“Subsidiary”), to take, any and all actions as may be
required under the laws of Subsidiary’s state of formation, Subsidiary’s Organic
Documents and any all other applicable laws set forth by any Governmental
Authority in order to (i) cause the election of the followingmanagers designated
by the Buyers, which designees shall initially be Richard Rosenblumand Kenneth
Londoner, to serve as members of Subsidiary’s board of managers from the date
hereof until such manager designee’s resignation, death, removal or
disqualification; provided, however, that each manager designee may subsequently
only be removed by Subsidiary’s board of managers, absent a vote for such
removal by the holders of Subsidiary’s membership interests entitled to vote on
such matters in accordance with any applicable laws set forth by any
Governmental Authority or the Subsidiary’s Organic Documents, for gross
negligence or a material breach of such manager designee’s fiduciary or similar
duties owed to Subsidiary. In the event of the resignation, death, removal or
disqualification of any manager designee at any time after the date hereof, the
Buyers shall be entitled to nominate a replacement manager and, after
Subsidiary’s board of managers has approved such designee, Subsidiary’s board of
managers shall, subject to any requisite approvals of any holders Subsidiary’s
membership interests entitled to vote on such matters, take such actions as may
be necessary under the laws of Subsidiary’s state of formation, its Organic
Documents and any all other applicable laws set forth by any Governmental
Authority to elect such nominee to Subsidiary’s board of managers to serve until
his or her resignation, death, removal or disqualification or until his or her
successor is duly elected. The Company shall not, and shall cause Subsidiary not
to, take any action to increase or decrease the size of Subsidiary’s Board of
Directors, which shall be fixed at four persons, without the express written
consent of each Buyer.The Company shall not, and shall cause Subsidiary not to,
take any action toamend or restate the Organic Documents of the Subsidiary
without the express written consent of each Existing Shareholder.

 

(d)      As of the date of this Agreement, the Company shall cancel the Existing
Shareholder Warrants. By execution of the signature page hereto, the Existing
Shareholders affirm the cancelation of theExisting Shareholder Warrants

 

5.            AMENDMENTS TO TRANSACTION DOCUMENTS. As a condition precedent to
the effectiveness of this Agreement, the Buyers and the Company agree that:

 

(a)      Section 1 of each Warrant is hereby deleted in its entirety and
replaced as follows:

 

“1.      Term. The term of this Warrant shall commence on June 17, 2011 and
shall expire at 6:00 p.m., Eastern Standard Time, on June 17, 2018 (such period
being the “Term”).”; and

 

(b)      Section 3.07 of the Notes is hereby deleted in its entirety.

 

6.            CONDITIONS PRECEDENT. Notwithstanding any contrary provision
herein, this Agreement is not effective unless and until (unless expressly
waived in writing by the Buyers):

 

(a)      the representations and warranties in this Agreement are true and
correct;

 

(b)      the Buyers receive counterparts of this Agreement executed by each
party on the signature pages of this Agreement;

 

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(c)      the Buyers receive certified resolutions of the Company (which are in
the form and substance satisfactory to the Buyers), authorizing the execution,
delivery, and performance of its obligations under this Agreement;

 

(d)      the Buyers receive certified resolutions of Subsidiary (which are in
the form and substance satisfactory to the Buyers), authorizing the execution,
delivery, and performance of the obligations under Section 4(c) hereof; and

 

(e)      the Buyers receive from the Company payment of counsel’s estimated
legal fees and expenses pursuant to Section 10 hereof.

 

7.            TERMINATION OF FORBEARANCE. The forbearance will terminate upon
the expiration of the Effective Period and shall be terminated upon the
occurrence of any of the following events described below:

 

(a)      Any Event of Default (other than Subject Defaults) occurs;

 

(b)      Any representation or warranty of the Company set forth herein is not
true and correct; and

 

(c)      The Company fails to comply with any covenant as set forth herein.

 

8.            RATIFICATIONS. The Company (a) ratifies and confirms all
provisions of the Transaction Documents, (b) ratifies and confirms that all
guaranties, assurances, and Liens granted, conveyed, or assigned to the Buyers
under the Transaction Documents are not released, reduced, or otherwise
adversely affected by this agreement and continue to guarantee, assure, and
secure full payment and performance of the present and future obligation, and
(c) agrees to perform such acts and duly authorize, execute, acknowledge,
deliver, file, and record such additional documents and certificates as any
Buyer may request in order to create, perfect, preserve, and protect those
guaranties, assurances, and Liens.

 

9.            REPRESENTATIONS. The Company represents and warrants to the Buyers
that as of the date of this Agreement (a) the Company has all requisite
authority and power to execute, deliver, and perform its obligations under this
Agreement, which execution, delivery, and performance have been duly authorized
by all necessary corporate action, require no action by or filing with any
governmental authority,do not violate its Organic Documents or violate any laws,
rules, or regulations applicable to it or any material agreement to which it or
its assets are bound, (b) upon execution and delivery by all parties to it, this
Agreement will constitute the legal and binding obligation of the Company,
enforceable against it in accordance with this Agreement’s terms, (c) all
representations and warranties made by the Company in the Transaction Documents
are true and correct in all material respects. In addition, the Company
represents and warrants to the Buyers that as of the date of this Agreement,
except for the Subject Defaults, no Events of Default exist.

 

10.            EXPENSES. The Company shall pay all costs, fees, and expenses
paid or incurred by the Company incident to this Agreement, including, without
limitation, the reasonable fees and expenses of the Buyers’ counsel in
connection with the negotiation, preparation, delivery, and execution of this
document and any related documents.

 

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11.            MISCELLANEOUS. This Agreement is a “Transaction Document”
referred to in the Purchase Agreement. Unless stated otherwise (a) the singular
number includes the plural and vice versa and words of any gender include each
other gender, in each case, as appropriate, (b) headings and captions may not be
construed in interpreting provisions, (c) if any part of this document is for
any reason found to be unenforceable, all other portions of it nevertheless
remain enforceable, and (e) this document may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document, and all of those counterparts must be construed together to constitute
the same document.

 

12.            GOVERNING LAW. The provisions of Section 7.8 of the Purchase
Agreement regarding governing law, submission to jurisdiction, waiver of venue,
service of process and waiver of jury trial are incorporated herein by reference
as though specifically set forth herein, mutatis mutandi.

 

13.            ENTIRETIES. THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES ABOUT THE SUBJECT MATTER OF THIS DOCUMENT AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

14.            PARTIES. This document binds and inures to the Company and the
Buyers, and their respective successors and assigns.

 

Remainder of page intentionally blank.

Signature page follows.

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

 

COMPANY:  

BUYERS: 

           

chatAND, Inc., as the Company

 

HARBORVIEW VALUE MASTER FUND, L.P. 

                      By: /s/   By: /s/     Name: Michael Lebor     Name:
Richard Rosenblum     Title: Chief Executive Officer     Title:                
                           

THE CORBRAN LLC

                                By: /s/           Name: Richard Rosenblum      
    Title:                                      

EXISTING SHAREHOLDERS:

 

STACY CAPITAL GROUP LLC

                            /s/   By: /s/     MICHAEL LEBOR     Name: Solomon
Eisenberg           Title:                

 

   

ENDICOTT MANAGEMENT PARTNERS, LLC

    /s/           DAVID ROSENBERG             By: /s/         Name: Kenneth
Londoner           Title:                      

 

                      /s/           DAVID STEFANSKY  

  

 

Signature Page

Forbearance Agreement

 

 

 

 

SCHEDULE OF BUYERS

 

Buyer’s Name  Original Principal Amount of Notes         Stacy Capital Group LLC
  $204,545.45         David Stefansky  $204,545.45         Harborview Value
Master Fund, L.P.
  $181,818.18         Endicott Management Partners, LLC  $181,818.18         The
Corbran LLC  $77,272.73