6% Convertible Redeemable Notes with GEL Properties LLC

 

 

 

TITAN IRON ORE CORP.

6% CONVERTIBLE REDEEMABLE NOTE

DUE NOVEMBER 4, 2015

 

NOW THEREFORE FOR VALUE RECEIVED, Titan Iron Ore Corp. the "Company") promis­es to pay to the order of GEL Properties, LLC and its authorized successors and permitted as­signs ("Holder"), the aggregate principal face amount of Fifteen Thousand dollars exactly (U.S. $15,000.00) on November 4, 2015 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 6% per annum commencing on November 4, 2013 (the "Funding Date"). The Company acknowledges it has received the sum of $15,000 less legal fees of $1,000 and investment banking fees of $1,500 incurred by the Holder in connection with this transaction for a total net payment of $12,500.00. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at 16192 Coastal Highway, Lewes, DE, 19958, initially, and if changed, last appearing on the records of the Com­pany as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of out­standing principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be paya­ble in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

 

This Note is subject to the following additional provisions:

 

 

2.            The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

 

3.            This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due present­ment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

 

4.           (a)The Holder of this Note is entitled, at its option, at any time after the requisite rule 144 holding period, and after full cash payment for the shares convertible here­under, to convert all or any amount of the principal face amount of this Note then outstanding in­to shares of the Company's common stock (the "Common Stock") without restrictive legend of any nature, at a conversion price ("Conversion Price") for each share of Common Stock equal to 60% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company's shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for any of the five trading days in­cluding the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to in­cluded the same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Compa­ny delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. In the event the Company experiences a DTC "Chill" on its shares while this note is eligible for conversion into free trad­ing shares, the conversion price shall be decreased to 55% instead of 60% while that "Chill" is in effect. The Holder will not short or maintain a short position in the stack of the Company while this Note is in effect.

 

 

(c)           The Company shall have the option to redeem this Note and pay to the Holder (i) 130% of the unpaid principal and accrued interest amount due under this Note, in full, is such redemption occurs prior to the 90th date after the issuance day of this Note; (ii) If this note is prepaid after the 91st day after issuance but before the 180th day after issuance than the Company shall pay to the Holder 140% of the unpaid principal and accrued interest amount due under this Note, in full. After the 180th day, if the Company desires to redeem this Note, it shall pay to the Holder 150% of the unpaid principal and accrued interest amount due under this Note, in full. If the redemption request occurs following the 180th day after the issuance of this Note, then the Company shall give the Holder 5 days written notice and the Holder during such 5 days shall have the option to convert this Note or any part thereof into shares of Common Stock at the Conversion Price set forth in paragraph 4(a) of this Note.

 

(d)           Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or ex­change of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus ac­crued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of ac­crued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

 

(e)           In case of any Sale Event in connection with which this Note is not re-deemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number• of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same. Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

 

 

6.           The Company hereby expressly waives demand and presentment for pay-ment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

 

7.           The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

 

8.            If one or more of the following described "Events of Default" shall occur:

 

(a)          The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

 

(b)          Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note shall be false or misleading in any respect; or

 

(c)          The Company shall fail to perform or observe, in any respect, any cove-nant, term, provision, condition, agreement or obligation of the Company under this Note; or

 

(d)          The Company shall (1) admit in writing its inability to pay its debts gen-erally as they mature; (2) make an assignment for the benefit of creditors or commence proceed­ings for its dissolution; (3) apply for or consent to the appointment of a trustee, liquidator or re­ceiver for its or for a substantial part of its property or business; (4) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

 

(e)          A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged with­in thirty (30) days after such appointment; or

 

(f)           Any governmental agency or any court of competent jurisdiction at the in-stance of any governmental agency shall assume custody or control of the whole or any substan­tial portion of the properties or assets of the Company; or

 

(g)          One or more money judgments, writs or warrants of attachment, or similar process, in excess of twenty five thousand dollars ($25,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or

 

(h)          Bankruptcy, reorganization, insolvency or liquidation proceedings, or oth-er proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be

 

(i)           The Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;

 

(j)           defaulted on or breached any term of any other note of similar debt in-strument into which the Company has entered and failed to cure such default within the appro­priate grace period; or

 

(k)           The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of its receipt of a proper Notice of Conversion along with a proper and conforming legal opinion.

 

Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discre­tion, the Holder may consider this Note immediately due and payable, without presentment, de­mand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall be accrue at a de­fault interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th day after the conversion no­tice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day.

 

If the Holder shall commence an action or proceeding to enforce any provisions of this Note, in­cluding without limitation engaging an attorney, then the Holder shall be reimbursed by the Company for its attorneys' fees and other costs and expenses incurred in the investigation, prepa­ration and prosecution of such action or proceeding.

 

9.            In case any provision of this Note is held by a court of competent jurisdic-tion to be excessive in scope or otherwise invalid or unenforceable, such provision shall be ad­justed rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

 

10.           Neither this Note nor any term hereof may be amended, waived, dis-charged or terminated other than by a written instrument signed by the Company and the Holder.

 

11.           The Company represents that it is not a "shell" issuer and has never been a "shell" issuer or that if it previously has been a "shell" issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a "shell issu-er. Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to al­low for salability of the conversion shares or (ii) accept such opinion from Holder's counsel.

 

12.           The Company will issue irrevocable transfer agent instructions reserving 10,714,285 shares of Common Stock for conversion under this Note and any other notes being issued on even day herewith. The reserve shall be replenished as needed to allow for conver­sions of this Note. Upon full conversion of this Note, the reserve representing this Note shall be cancelled. From this reserve, the Holder may send a Conversion Notice to the Company, and the Company will duly pass to its transfer agent, a conversion for a tranche of shares to be converted (Tranche Conversion") This/these Tranche Conversion(s) may be actually transferred by the transfer agent to the Holder, or via DWAC to the Holder's designated Broker-Dealer(s) to be held in street name FBO the Holder, yet unconverted on the books and records of the Company in a Creditor in Possession Escrow. ("CPE") When the CPE is active, by having shares therein, the Holder must submit daily transaction journals, on days that there were a sale, in the Compa­ny's securities ("Runs") to the Company to calculate the price of conversion ("Basis") of any conversion and the amount and date thereunder.

 

13.           The Company will give the Holder direct notice of any corporate actions including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law. The Company will email such notices to ***@***.

 

14.           This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

IN WITNESS WHEREOF, the Company has caused this Note to be duly execut­ed by an officer thereunto duly authorized.

 

Dated:11-5-2013