Exhibit 10.3
Confidential
U.S. Accredited Investors Only
THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE “AGREEMENT”) RELATES TO AN
OFFERING OF SECURITIES UPON AN EXEMPTION FROM SECURITIES REGISTRATION PURSUANT
TO SECTION 4(2) AND/OR RULE 506 OF REGULATION D (“REGULATION D”) AS PROMULGATED
BY THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “1933 ACT”). NONE OF THE SECURITIES TO WHICH THIS
SUBSCRIPTION AGREEMENT RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY
U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED NONE MAY BE OFFERED OR
SOLD, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT,
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING
TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE 1933 ACT.
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(U.S. Accredited Investors Only)
Mexoro Minerals, Ltd.
C. General Retana #706
Col San Felipe
Chihuahua, Chih. 31203
Mexico
Attention: Francisco Quiroz, President
Dear Sirs:
Mexoro Minerals, Ltd., (the “Company”) is offering, on an exempt private
placement basis, up to an aggregate of 8,000,000 units of its own issue (each a
“Unit”) to eligible investors (a “Subscriber”) at a subscription price of U.S.
$0.20 per Unit. Each Unit will consist of one share of the Company’s common
stock (each a “Share” or the “Common Stock”) and one share purchase warrant
(each a “Warrant”) exercisable at $0.30 per Warrant, a copy of which is attached
as Exhibit A). Each Warrant to acquire additional Shares shall have a term of
twenty-four (24) months after the date of this Agreement. Each Warrant entitles
the holder thereof to purchase one Share of the Company (each a “Warrant Share”)
for a period of one year, commencing one year after the date of this Agreement.
The Units are being offered solely to U.S. Subscribers via this subscription
agreement (the “Agreement”) at U.S. $0.20 per Unit for an aggregate purchase
price of U.S. $1,600,000 (the “Offering”). The Units, the Shares, the Warrants
and the Warrant Shares are sometimes hereinafter referred to as the
“Securities.” Subscriptions will be accepted only for an even number of Units
and no fractional Units will be issued.

 

 

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U.S. Accredited Investors Only
The Company reserves the right to increase the size of the Offering without
notice to investors or prospective investors.
1. Subscription.
1.1 Based upon the terms of this Agreement, the Subscriber hereby irrevocably
subscribes for and agrees to purchase _____ Units from the Company at a
subscription price of U.S. $0.20 per Unit, for aggregate consideration of U.S.
$_____ (the “Subscription Proceeds”).
1.2 Each Unit consists of:
(a) 1 Share; and
(b) 1 Warrant to purchase 1 Warrant Share. The Warrant shall expire twenty-four
months (24) months after the date of this Agreement and shall be exercisable at
$0.30 per share of Common Stock for a period of one year, commencing one year
after the date of this Agreement. In other words, the term of the Warrants is
two years and they are not exercisable for the first twelve months after the
date of this Agreement.
1.3 Payment:
(a) The Subscription Proceeds must accompany this Agreement and shall be paid by
wire transfer of immediately available funds in U.S. dollars in accordance with
the wire instructions attached hereto as Exhibit B. The Company has provided
certain financial projections regarding the estimated use of the Subscription
Proceeds in the “Use of Proceeds” section, attached hereto as Exhibit C.
(b) The Subscriber acknowledges and agrees that this Agreement, the Subscription
Proceeds and any other documents delivered in connection herewith will be held
by the Company or the Escrow Agent (as defined herein). In the event that this
Agreement is not accepted by the Company for whatever reason within 30 days of
the delivery of an executed Agreement by the Subscriber, this Agreement, the
Subscription Proceeds and any other documents delivered in connection herewith
will be returned to the Subscriber at the address of the Subscriber as set forth
in this Agreement.
1.4 Documents Required from Subscriber:
(a) The Subscriber must complete, sign and return to the Company two
(2) executed copies of this Agreement; and
(b) The Subscriber shall complete, sign and return to the Company as soon as
possible, on request by the Company, any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, the OTC Bulletin
Board, stock exchanges and applicable law.

 

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U.S. Accredited Investors Only
1.5 Escrow:
The Subscription Proceeds shall be deposited by the Company in a bank account
pursuant to the instructions in Exhibit B. The Subscriber acknowledges that the
Subscription Proceeds will be deposited in a client escrow account (the “Escrow
Account”) at a bank selected by the Company (the “Escrow Agent”). The Subscriber
agrees that the Escrow Agent shall have no accountability to the Subscriber
whatsoever, and acknowledges that the Escrow Agent is merely the recipient for
the Company and have no obligations to the Subscriber. The Subscriber agrees
that submission of the Subscription Proceeds to the Escrow Agent in trust is to
be deposited in an escrow fund and shall be the property of the Company at that
point. The only duty the Escrow Agent shall have to the Subscriber is to deliver
the Subscription Proceeds to the Company, all solely according to the Company’s
instructions, and the Escrow Agent shall require no further instructions from
the Subscriber in delivering the same to the Company.
The proceeds of the Escrow Account shall be distributed in accordance with
Section 1.6.
1.6 Closing:
Closing of the offering of the Units shall occur in the following manner:
(a) The Escrow Agent shall release U.S. $500,000.00 (Five Hundred Thousand
Dollars) from the Escrow Account to the Company once the following conditions
are met (the “First Closing”): (x) the sum of the Subscription Proceeds
deposited in the Escrow Account is equal to or greater than U.S. $800,000.00
(Eight Hundred Thousand Dollars), (y) two current members of the board of
directors of the Company (the “Board of Directors”) resign and John Patrick
Clair, Mario Ayub and George Young (collectively, the “New Board Members”) are
each appointed and qualified as new members of the Board of Directors, and
(z) the Company shall have taken all appropriate action so that the New Board
Members comprise a majority of the Board of Directors.
(b) Within two business days after the Filing Date (as defined herein), the
Escrow Agent shall (x) release funds to DLA Piper LLP (US) from the Escrow
Account (not to exceed U.S. $100,000.00) (One Hundred Thousand Dollars),
(y) release the amounts payable by the Company to Andean Invest Limited
(“Andean”) pursuant to the subscription agreement for Canadian and Non U.S.
Subscribers and, (z) upon delivery of a certificate from the Company confirming
the accuracy of the representation, warranties and covenants of the Company made
pursuant to this Agreement as of the Filing Date and in a form reasonably
satisfactory to the Subscriber, the remainder of the Escrow Account shall be
disbursed to the Company (the “Final Closing”).
(c) If the Final Closing does not occur by November 30, 2009, the Escrow Agent
shall return all remaining funds in the Escrow Account to the Subscribers. The
amount refunded to each Subscriber pursuant to this Section shall be done in a
pro-rata manner and in the same proportion as the initial contribution of a
Subscriber as compared to the total Subscription Proceeds collected by the
Escrow Agent pursuant to the Offering.

 

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U.S. Accredited Investors Only
(d) Unless otherwise agreed to by the Company and the Subscriber, on the Closing
Date (as defined herein), (x) the Company shall irrevocably instruct its
transfer agent to deliver to the Subscriber one or more stock certificates, free
and clear of all restrictive and other legends (except as expressly provided in
Section 3 hereof), evidencing the number of Shares the Subscriber is purchasing
as is set forth on Subscriber’s signature page to this Agreement next to the
heading “Shares Issued” within two (2) business days after the Closing Date (the
“Subscribed Shares”) and (b) the Company shall issue to the Subscriber a Warrant
pursuant to which the Subscriber shall have the right to acquire such number of
Warrant Shares as is set forth on the Subscriber’s signature page to this
Agreement next to the heading “Warrants Issued,” duly executed on behalf of the
Company and registered in the name of the Subscriber. As used herein, the term
“Closing Date” means the business day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all of the
conditions set forth in Section 6 hereof are satisfied, or such other date as
the parties may agree.
2. Conditions to Offer.
This Offering is being conducted on a “best efforts” basis. Closing of the
Offering shall occur as described in and subject to the provisions of
Section 1.6 hereof.
3. Representations, Warranties and Covenants.
3.1 Representation, Warranties and Covenants of the Subscriber. The Subscriber
hereby represents and warrants to, and covenants with, the Company (which
representation, warranties and covenants shall survive the closing of this
Agreement) and acknowledges that the Company is relying thereon that:
(a) The undersigned is resident, or if not an individual, has a head office, in
the jurisdiction set out under the heading “Address of subscriber” above the
signature set forth on the execution page of this Agreement, which address is
the undersigned’s principal residence or place of business, and such address was
not obtained or used solely for the purpose of acquiring the Securities.
(b) The Company has not undertaken, and will have no obligation, to register any
of the Securities under the 1933 Act or any other securities legislation, except
as set forth under Section 10 of this Subscription Agreement.
(c) The Subscriber has received and carefully read this Subscription Agreement.
(d) By completing the Questionnaire, the Subscriber is representing and
warranting that the Subscriber is an “Accredited Investor”, as the term is
defined in Rule 501(a) of the 1933 Act.
(e) The Subscriber has the legal capacity and competence to enter into and
execute this Subscription Agreement and to take all actions required pursuant
hereto and, if the Subscriber is a corporation, it is duly incorporated and
validly subsisting under the laws of its jurisdiction of incorporation and all
necessary approvals by its directors, shareholders and others have been obtained
to authorize execution and performance of this Subscription Agreement on behalf
of the Subscriber.

 

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U.S. Accredited Investors Only
(f) The Subscriber is an “accredited investor” as the term is defined in
Rule 501(a) of Regulation D and shall submit to the Company such further
assurances of such status as may reasonably be requested by the Company.
(g) The Company has not made any other representations or warranties to the
undersigned with respect to the Company or rendered any investment advice except
as contained herein.
(h) The undersigned has such knowledge and experience in financial, investment
and business matters to be capable of evaluating the merits and risks of the
prospective investment in the securities of the Company. The undersigned has
consulted with such independent legal counsel or other advisers as the
undersigned has deemed appropriate to assist the undersigned in evaluating the
proposed investment in the Company. By accepting these documents, the
undersigned agrees that the information contained herein, and in all related and
ancillary documents, shall be kept confidential and will not be used for any
other purpose other than in connection with considering the purchase of the
Securities.
(i) The Subscriber (i) has adequate means of providing for its current financial
needs and possible personal contingencies and does not have a need for liquidity
of this investment in the Securities; (ii) can afford (a) to hold the Securities
for an indefinite period of time; and (b) to sustain a complete loss of the
entire amount of the Subscription Proceeds for the Securities; and (iii) has not
made an overall commitment to investments which are not readily marketable,
which is disproportionate so as to cause such overall commitment to become
excessive.
(j) The Subscriber has been afforded the opportunity to ask questions of, and
receive answers from, the officers and/or directors of the Company acting on its
behalf concerning the terms and conditions of this transaction and to obtain any
additional information, to the extent that the Company possesses such
information or can acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information furnished; and the undersigned has
received satisfactory answers to all such questions to the extent deemed
appropriate in order to evaluate the merits and risks of an investment in the
Company.
(k) The Subscriber acknowledges that the none of the Securities are currently
registered under the 1933 Act and, except as provided in Section 10 hereof, the
Company has not undertaken to register any of such securities under U.S. Federal
or State law, and, unless so registered, may only be offered or sold pursuant to
an effective registration statement under the 1933 Act, or pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the 1933 Act and in each case in accordance with applicable
state and provincial securities laws.

 

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Confidential
U.S. Accredited Investors Only
(l) The undersigned further understands that it is purchasing all such
securities without being furnished any prospectus setting forth all of the
information that may be required to be furnished under applicable securities
laws and as a consequence, certain protections, rights and remedies provided in
applicable securities legislation, including statutory rights of rescission or
damages, may not be available to it.
(m) The undersigned further acknowledges that no agency, governmental authority,
securities commission or similar regulatory body, stock exchange or other entity
has reviewed, passed on or made any finding or determination as to the merit for
investment of the Securities nor have any such agencies or governmental
authorities made any recommendation or endorsement with respect to the
Securities.
(n) The Subscriber understands that the Securities are being offered and sold to
it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and the Subscriber’s compliance with,
the representations and warranties set forth herein in order to determine the
availability of such exemptions and the eligibility of the Subscriber to acquire
the Securities.
(o) This Agreement has been duly executed and delivered and, when accepted by
the Company, will constitute a legal, valid and binding obligation of the
undersigned enforceable against it in accordance with the terms hereof.
(p) No prospectus or offering memorandum within the meaning of the securities
laws has been delivered to, summarized for or seen by the Subscriber in
connection with the sale of the Units and the Subscriber is not aware of any
prospectus or offering memorandum having been prepared by the Company.
(q) It has not received, nor has it requested, nor does it have any need to
receive, any offering memorandum (as defined in or contemplated by applicable
securities legislation) or any other document (other than financial statements
or any other continuous disclosure documents, the contents of which are
prescribed by statute or regulation) describing the business and affairs of the
Company which has been prepared for delivery to, and review by, prospective
subscribers in order to assist them in making an investment decision in respect
of the Securities (or any of them), and it has not become aware of any
advertisement including, by way of example and not in limitation, advertisement
in any printed media of general and regular circulation or on radio or
television with respect to the distribution of the Units.
(r) The decision to execute this Subscription Agreement and acquire the Units
hereunder has not been based upon any oral or written representation as to fact
or otherwise made by or on behalf of the Company, and such decision is based
entirely upon a review of information, including the risk factors described in
the Company’s filings with the U.S. Securities and Exchange Commission (the
“SEC”), (the adequacy of which is hereby acknowledged) about the Company that is
available to any member of the public on the EDGAR database maintained by the
SEC at www.sec.gov.

 

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U.S. Accredited Investors Only
(s) There are risks associated with an investment in the Company, including, by
way of example and not in limitation, the specific risks identified in the
Company’s most recent periodic reports filed with the SEC and available for
viewing at the SEC’s website at www.SEC.gov.
(t) The Subscriber understands and agrees that there may be material tax
consequences to it of an acquisition, holding or disposition of the Securities.
The Company gives no opinion and makes no representation with respect to the tax
consequences under U.S., Canadian, state, provincial, local or foreign tax law
of the acquisition, holding or disposition of the Securities and the Subscriber
acknowledges that it is solely responsible for determining the tax consequences
of its investment.
(u) If required by applicable securities legislation, regulations, rules,
policies or orders or by any securities commission, stock exchange or other
regulatory authority, the undersigned will execute, deliver, file and otherwise
assist the Company in filing such reports, undertakings and other documents with
respect to the issue of the Securities.
(v) The undersigned hereby agrees that the Company will insert the following
legends on the face of the Securities in compliance with applicable securities
laws:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.”
(w) The undersigned has not purchased the Securities as a result of any form of
general solicitation or general advertising, including advertisements, articles,
notices or other communications published in any newspaper, magazine or similar
media or broadcast over radio, television or other form of telecommunications,
or any seminar or meeting whose attendees have been invited by general
solicitation or general advertising.

 

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U.S. Accredited Investors Only
(x) The undersigned certifies that each of the foregoing representations and
warranties set forth in this Section 3.1 are true as of the date hereof and
shall survive such date.
3.2 Representations, Warranties and Covenants of the Company. The Company hereby
represents and warrants and covenants to the Subscriber that:
(a) Organization and Good Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable). The Company has all necessary
corporate power and authority to own, lease, use and operate its properties and
to carry on its business as now being conducted and presently proposed to be
conducted. The Company and each of its subsidiaries is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which its ownership or leasing of assets, or the conduct of its business,
makes such qualification necessary.
(b) Requisite Power and Authorization. The Company has all necessary corporate
power and authority to execute and deliver this Agreement, to issue the Shares
and the Warrants and to carry out the provisions of this Agreement. All
corporate action on the part of the Company required for the lawful execution
and delivery of this Agreement, issuance and delivery of the Shares and the
Warrants and the performance by the Company of its obligations hereunder has
been taken. Upon execution and delivery, this Agreement constitutes valid and
binding obligations of the Company enforceable in accordance with their
respective terms, except as enforcement may be limited by insolvency and similar
laws affecting the enforcement of creditors’ rights generally and equitable
remedies. The Shares, when issued in compliance with the provisions of this
Agreement, and the Warrant Shares, if issued, when issued in compliance with the
provisions of the Warrants, will be duly authorized and validly issued, fully
paid, non-assessable, subject to no lien, claim or encumbrance and issued in
compliance with federal securities laws and applicable state securities laws. No
stockholder of the Company or other person has any preemptive, anti-dilution,
“poison-pill” or similar right with respect to the Shares and the Warrants and,
if issued, the Warrant Shares. The Company has reserved such number of shares of
its Common Stock necessary for issuance of the Shares and the Warrant Shares.
(c) SEC Documents. The Company has filed all of its SEC Filings (as defined
herein) for the two year period preceding the date hereof. As of their
respective filing dates, or such later date on which such reports were amended,
the SEC Filings complied in all material respects with the requirements of the
Exchange Act. The SEC Filings as of their respective dates, or such later date
on which such reports were amended, when issued did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The financial
statements included in the SEC Filings comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. Except as may be indicated in
the notes to the financial statements included

 

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U.S. Accredited Investors Only
in the SEC Filings or, in the case of unaudited statements, as permitted by Form
10-Q of the SEC, such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied and fairly present
the consolidated financial position of the Company and any subsidiaries at the
dates thereof and the consolidated results of their operations and consolidated
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal, recurring adjustments). As used herein, the term “SEC
Documents” means the Company annual reports on Form 10-K for fiscal year ended
February 29, 2009 and 2008 (including any amendments thereto) and (ii) the
Company’s quarterly report on Form 10-Q for the 2009 and 2008 fiscal years and
the term “SEC Filings” means the SEC Documents, along with all other reports,
schedules, forms, statements and other documents that the Company is required to
file with the SEC pursuant to the reporting requirements of the Securities and
Exchange Act of 1934, as amended, for the two year period preceding the date
hereof.
(d) Capital Stock. The authorized capital stock of the Company consists of
200,000,000 shares of Common Stock, with no par value, and 20,000,000 shares of
Preferred Stock, with no par value. As of August 27, 2009, there were 38,420,493
shares of Common Stock issued and outstanding and there was no issued and
outstanding Preferred Stock. All outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid and non-assessable. As of
August 15, 2009, none of the authorized Common Stock is reserved for issuance,
other than (i) 4,700,000 shares of Common Stock reserved for future issuance
pursuant to 6,000,000 options approved under the Company’s stock option plans,
(ii) 1,370,000 shares of Common Stock reserved for future issuance pursuant to
options and awards which may be granted under the Company’s 2008 stock option
plan, and (iii) 7,327,233 shares of Common Stock reserved for future issuance
pursuant to outstanding warrants. Attached hereto as Exhibit 3.2(d) is the
Company capitalization table as of the date of the Agreement. Except as set
forth in this paragraph 3.2(d) and Exhibit 3.2(d), the Company has no
outstanding securities convertible into or exchangeable for Common Stock and no
contracts, rights, options or warrants to purchase or otherwise acquire Common
Stock or securities convertible into or exchangeable for Common Stock.
(e) No Conflicts. The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby (including, without limitation, the issuance and reservation for issuance
of the Warrant Shares) will not: (i) conflict with or result in a violation of
any provision of the Company’s certificate of incorporation or bylaws or
(ii) violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its subsidiaries is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and regulations of any self- regulatory organizations to which the Company or
its securities are subject) applicable to the Company or any of its subsidiaries
or by which any property or asset of the Company or any of its subsidiaries is
bound or affected. Neither the Company nor any of its subsidiaries is in default
(and no event has occurred which with notice or lapse of time or both could put
the Company or

 

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any of its subsidiaries in default) under, and, to the knowledge of the Company,
neither the Company nor any of its subsidiaries has taken any action or failed
to take any action that would give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party or by
which any property or assets of the Company or any of its subsidiaries is bound
or affected. Neither the Company nor its subsidiaries is in violation of any
material law, rule ordinance or regulation of any governmental entity. Except as
required under federal securities laws and any applicable state securities laws,
rules or regulations, by the terms of this Agreement, or by any applicable
trading market, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court, governmental
agency, regulatory agency, self regulatory organization or stock market or any
third party in order for it to execute, deliver or perform any of its
obligations under this Agreement or the Warrants in accordance with the terms
hereof or thereof or to issue and sell the Shares and Warrants in accordance
with the terms hereof and to issue the Warrant Shares upon exercise of the
Warrants in accordance with the terms thereof.
(f) No Material Adverse Change. Since the date of the latest audited financial
statements included in the SEC Documents, except as set forth in the SEC
Documents, there has not been:

  (i)  
any changes in the assets, liabilities, financial condition, prospects or
operations of the Company from that reflected in the financial statements except
changes in the ordinary course of business which have not been, either in any
individual case or in the aggregate, materially adverse to the Company and its
subsidiaries taken as a whole;

  (ii)  
any material change, except in the ordinary course of business, in the
contingent obligations of the Company whether by way of guarantee, endorsement,
indemnity, warranty or otherwise; or

  (iii)  
any damage, destruction or loss, whether or not covered by insurance, materially
and adversely affecting the properties or business of the Company.

(g) Litigation. Except as described in the SEC Documents, there is no material
action, suit, claim, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending, or, to the Company’s knowledge, threatened or contemplated, against the
Company or any of its subsidiaries, or against any officer, director or employee
of the Company or any such subsidiary in connection with such person’s
employment therewith. Neither the Company nor any of its subsidiaries is a party
to or subject to the provisions of, any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality which could
reasonably be expected to have a material adverse effect on the Company, its
assets, liabilities, financial condition or business prospects.

 

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(h) Contracts. The material contracts to which the Company is a party that have
been filed as exhibits to the SEC Filings, have been duly and validly
authorized, executed and delivered by the Company and constitute the legal,
valid and binding agreements of the Company, enforceable by and against it in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws and judicial decisions of general application relating to
enforcement of creditors’ rights generally, and the application of general
equitable principles relating to or affecting the availability of remedies, and
except as rights to indemnity or contribution may be limited by federal or state
securities laws or the public policy underlying such laws.
(i) Real Property. The Company has good and valid title to all items of tangible
personal property (“Real Property”) used in its operations free and clear of all
Liens (as defined herein). Any Real Property described in the SEC Filings as
being leased by the Company or any subsidiary is held by the Company under
valid, existing and enforceable leases. As used herein, the term “Liens” shall
mean any security interests, liens, pledges, mortgages or other encumbrances,
whether arising voluntarily, involuntarily or by operation of law. Attached
hereto as Exhibit 3.2(i) is a list of all Real Property and leases used in the
Company’s operations. Except as disclosed on Exhibit 3.2(i), there are no
unrecorded covenants, deed restrictions, easements, leases, subleases or rights
of occupancy or liens which encumber the Real Property, or any part thereof.
There are no easements, rights of way or licenses which are not in full force
and effect necessary for the operation of any of the parcels constituting the
Real Property. The Company has the right of ingress and egress, through a public
road or street, to and from each of the parcels comprising the Real Property. No
utility easement or right of way which services any portion of the Real Property
may be terminated by the owner or mortgagee of any property through which any
such easement or right of way runs.
(j) Permits; Compliance. The Company and each of its subsidiaries is in
possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and
orders issued by the appropriate federal, state local or foreign regulatory
authorities necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted (collectively, the “Company Permits”),
and there is no action pending or, to the knowledge of the Company, threatened
regarding suspension or cancellation of any of the Company Permits. Neither the
Company nor any of its subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits.
(k) Certain Transactions. Except as set forth in the SEC Filings, to the
knowledge of the Company there are no loans, leases, royalty agreements or other
transactions between: (i) the Company or any of its subsidiaries or any of their
respective customers or suppliers, and (ii) any officer, employee, consultant or
director of the Company or any person owning five percent (5%) or more of the
capital stock of the Company or five percent (5%) or more of the ownership
interests of the Company or any of its subsidiaries or any member of the
immediate family of such officer, employee, consultant, director, stockholder or
owner or any corporation or other entity controlled by such officer, employee,
consultant, director, stockholder or owner, or a member of the immediate family
of such officer, employee, consultant, director, stockholder or owner.

 

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(l) No Brokers. Except as disclosed herein, no brokerage or finder’s fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
person with respect to the Offering. To the knowledge of the Company, the
Subscriber shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other persons for fees of a type contemplated
herein that may be due in connection with the transactions contemplated by the
Offering.
(m) Internal Controls. The Company is in compliance with the provision of the
Sarbanes-Oxley Act of 2002 currently applicable to the Company.
(n) FCPA Matters. Neither the Company, nor any of its subsidiaries, nor, to the
knowledge of the Company, any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his or
her actions for, or on behalf of, the Company: (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity, (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds, (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic governmental or private official or person.
(o) Non-Public Information. The Company has not disclosed to the Subscriber any
information that would constitute material non-public information other than the
existence of the transactions contemplated hereby.
(p) Disclosure. All disclosure provided to the Subscriber or Andean regarding
the Company, its business and the transactions contemplated hereby, furnished by
or on behalf of the Company, were, as of the date made, true and correct and did
not contain any untrue statement of 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.
(q) Survival. The representations, warranties and covenants of the Company shall
survive the Final Closing and shall continue in full force and effect for the
benefit of the Subscriber for a period of two (2) years following the Final
Closing, all in accordance with this Agreement.
(r) No Undisclosed Events, Liabilities, Developments or Circumstances. Except
for the transactions contemplated hereby, no event, liability, development or
circumstance has occurred or exists, or is contemplated to occur, with respect
to the Company, its business, properties, prospects, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.

 

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(s) Use of Proceeds. The Company hereby covenants to use the monies raised from
the Offering only as described in the “Use of Proceeds” section, attached hereto
as Exhibit C.
(t) Delay in Filing or Effectiveness of Registration Statement; Public
Information.

  (i)  
If (A) a Registration Statement covering all of the Registrable Securities (as
defined herein) required to be covered thereby and required to be filed by the
Company pursuant to this Agreement is (x) not filed by the Company with the SEC
on or before November 30, 2009 (a “Filing Failure”) or (y) not declared
effective by the SEC on or before the ten-month anniversary of the Final Closing
(an “Effectiveness Failure”) or (B) on any day after the Registration Statement
is declared effective by the SEC (the “Effective Date”) sales of any of the
Registrable Securities required to be included on such Registration Statement
cannot be made pursuant to such Registration Statement or otherwise (including,
without limitation, because of a failure to keep such Registration Statement
effective, to disclose such information as is necessary for sales to be made
pursuant to such Registration Statement or to register a sufficient number of
shares of Common Stock or any other similar failure) (a “Maintenance Failure”)
then, as partial relief for the damages to the Subscriber by reason of any such
delay in or reduction of its ability to sell the underlying shares of Common
Stock (which remedy shall not be exclusive of any other remedies available at
law or in equity), the Company shall issue to the Subscriber additional shares
of Common Stock equal to ten percent (10.0%) of the aggregate Subscribed Shares
included in such Registration Statement on each of the following dates: (I) the
day of a Filing Failure and on every thirtieth day (pro rated for periods
totaling less than thirty (30) days) thereafter until the date such Filing
Failure is cured; (II) the day of an Effectiveness Failure and on every
thirtieth day (pro rated for periods totaling less than thirty (30) days)
thereafter until the date such Effectiveness Failure is cured; and (III) the
initial day of a Maintenance Failure and on every thirtieth day (pro rated for
periods totaling less than thirty (30) days) thereafter until the date such
Maintenance Failure is cured. The payments to which a Subscriber shall be
entitled to pursuant to this paragraph (i) are referred to herein “Registration
Delay Payments.” The calculation of the Registration Delay Payments pursuant to
this paragraph shall be cumulative so that the number of shares to be issued to
the Subscriber as a result of a Filing Failure, Effectiveness Failure or a
Maintenance Failure in the first month shall be added to the Subscribed Shares
in order to determine the number of shares to be issued to the Subscriber in the
second month. As an example, if the initial number of Subscribed Shares was Two
Million shares, the damages on the day of the

 

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U.S. Accredited Investors Only
failure would be 200,000 shares and the damages after thirty days would be
220,000 shares and so on. Shares of Common Stock issued to the Subscriber as
Registration Delay Payments shall be issued on the earlier of (x) the last day
of the calendar month during which such Registration Delay Payments are incurred
and (y) the third business day after the event or failure giving rise to the
Registration Delay Payments is cured. In the event the Company fails to issue
the shares of Common Stock representing the Registration Delay Payments in a
timely manner, such Registration Delay Payments shall bear interest at the rate
of one percent (1.5%) per month (prorated for partial months) until paid in
full. The parties agree that there is no maximum aggregate Registration Delay
Payments payable to the Subscriber under this Agreement. In addition, and
notwithstanding anything to the contrary contained herein, if the Company has
received a comment by the SEC requiring the Subscriber to be named as an
underwriter in the Registration Statement (which notwithstanding the reasonable
best efforts of the Company is not withdrawn by the SEC) and such Subscriber
elects in writing not to be named as a selling stockholder in the Registration
Statement, the Subscriber shall not be entitled to any Registration Delay
Payments with respect to such Registration Statement.

  (ii)  
At any time during the period commencing on the six (6) month anniversary of the
Final Closing Date and ending at such time that all of the Registrable
Securities can be sold without the requirement to be in compliance with
Rule 144(c)(1) and otherwise without restriction or limitation pursuant to
Rule 144(c), including, if applicable, Rule 144(i), if a registration statement
is not available for the resale of all of the Registrable Securities and the
Company shall fail for any reason to satisfy the current public information
requirement under Rule 144 (a “Public Information Failure”) then, as partial
relief for the damages to the Subscriber by reason of any such delay in or
reduction of its ability to sell the Registrable Securities of the Subscriber
(which remedy shall not be exclusive of any other remedies available at law or
in equity), the Company shall pay to the Subscriber damages calculated as
described in paragraph (i) hereof. The payments to which a holder shall be
entitled pursuant to this paragraph (ii) are referred to herein as “Public
Information Failure Payments.” Public Information Failure Payments shall be paid
on the earlier of (x) the last day of the calendar month during which such
Public Information Failure Payments are incurred and (y) the third business day
after the event or failure giving rise to the Public Information Failure
Payments is cured. In the event the Company fails to make Public Information
Failure Payments in a timely manner, such Public Information Failure Payments
shall bear interest at the rate of 1.5% per month (prorated for partial months)
until paid in full.

 

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(u) The Company certifies that each of the foregoing representations and
warranties set forth in this Section 3.2 are true as of the date hereof and
shall survive such date.
4. Indemnification. The parties hereto understand that the Securities are being
offered in reliance upon representation, warranties and covenants of each of the
parties hereto, the exemptions under applicable securities laws; that the
availability of such exemptions are, in part, dependent upon the truthfulness
and accuracy of the representations made by the undersigned herein; that the
Company will rely on such representations in accepting any subscriptions for the
Securities, and that the Company may take such steps as it considers reasonable
to verify the accuracy and truthfulness of such representations in advance of
accepting or rejecting the undersigned’s subscription. The undersigned agrees to
indemnify and hold harmless the Company against any reasonable damage, loss,
expense or cost, including reasonable attorneys’ fees, sustained as a result of
any misstatement or omission on the undersigned’s part in this Agreement.
5. No Waiver. Notwithstanding any of the representations, warranties,
acknowledgments or agreements made herein by the undersigned, the undersigned
does not thereby, or in any manner, waive any rights granted to him under
applicable securities laws.
6. Revocation. The undersigned agrees that he or she shall not cancel, terminate
or revoke this Agreement or any agreement of the undersigned made hereunder, and
this Agreement shall survive the death or disability of the undersigned.
7. Termination of Agreement. If the Company elects to cancel this Agreement,
provided that it returns to the undersigned, without interest and without
deduction, all sums paid by the undersigned, this Offering shall be null and
void and of no further force and effect, and no party shall have any rights
against any other party hereunder.
8. Risks of New Business. The undersigned has been advised that the Company is
preparing to engage in mineral exploration operations and has not yet commenced
business operations or generated revenues. The Company will be subject to all of
the risks inherent in a new business and there is no assurance that the Company
will succeed, become profitable or that investors in the Company will receive a
return on all or any part of their investment. Moreover, mineral exploration
operations are significantly volatile and uncertain, and there is no assurance
that the market for metals explored for will be sustained.
THIS IS A HIGHLY SPECULATIVE INVESTMENT THAT SHOULD NOT BE MADE BY ANYONE WHO
CANNOT AFFORD TO SUSTAIN A LOSS OF HIS ENTIRE INVESTMENT.
9. Miscellaneous.
9.1 All notices or other communications given or made hereunder shall be in
writing and shall be mailed by registered or certified mail, return receipt
requested, postage prepaid, to the undersigned at their address set forth below
and to the Company.

 

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9.2 This Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by all parties.
9.3 The provisions of this Agreement shall survive the execution thereof.
9.4 This Agreement shall be governed by and construed in accordance with the
domestic laws of the State of New York without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York. The parties further: (a) agree that any legal
suit, action or proceeding arising out of or relating to this Agreement shall be
instituted exclusively in any Federal or State court of competent jurisdiction
within the State of New York, (b) waive any objection that they may have now or
hereafter to the venue of any such suit, action or proceeding, and
(c) irrevocably consent to the in personam jurisdiction of any Federal or State
court of competent jurisdiction within the State of New York in any such suit,
action or proceeding. The parties each further agree to accept and acknowledge
service of any and all process which may be served in any such suit, action or
proceeding in a Federal or State court of competent jurisdiction within the
State of New York, and that service of process upon the parties mailed by
certified mail to their respective addresses shall be deemed in every respect
effective service of process upon the parties, in any action or proceeding.
10. Registration Rights.
10.1 Promptly after the date of this Agreement, the Company shall prepare and
file with the SEC (the “Filing Date”) a registration statement on Form S-1 (or,
if the Company is then eligible, on Form S-3) (the “Registration Statement”)
covering the resale of all of the Shares purchased hereunder and the resale of
all the Warrant Shares (collectively, the “Registrable Securities”). The Company
shall use its best efforts to have the Registration Statement declared effective
by the SEC in a timely manner.
10.2 The Company will promptly prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective until
the earlier of (a) the date as of which the Subscriber may sell all of the
Shares covered by such Registration Statement without restriction pursuant to
Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or
any successor thereto) promulgated under the Securities Act or (b) the date on
which the Subscriber shall have sold all of the Shares covered by the
Registration Statement. For the purpose of this Section 10, the term
“Subscriber” means the Subscriber or any transferee or assignee thereof to whom
the Subscriber assigns its rights as a holder of Shares under this Agreement and
who agrees to become bound by the provisions of this Agreement and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights as a holder of Shares under this Agreement and who agrees to become bound
by the provisions of this Agreement.

 

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10.3 Notwithstanding the foregoing, if the SEC prevents the Company from
including any or all of the Registrable Securities on the Registration Statement
due to limitations on the use of Rule 415 under the 1933 Act for the resale of
the Registrable Securities by the Subscribers, the Company shall seek to
register on the Registration Statement the maximum number of Registrable
Securities as is permitted by the SEC, and, subject to this Section, the Company
shall continue to use commercially reasonable efforts to register all remaining
Registrable Securities as soon as the SEC permits such registration. In such
event, the number of shares of Common Stock to be registered for each Subscriber
in the Registration Statement shall be reduced pro rata among all Subscribers
and the Company shall register as many shares of Common Stock as it is permitted
to register, prior to including any shares of Common Stock issuable upon
exercise of the Warrants. If the SEC, by written or oral comment or otherwise,
limits the Company’s ability to file, or prohibits the filing of a Registration
Statement with respect to any or all the Registrable Securities which were not
included in the Registration Statement, it shall not be a breach or default by
the Company under this Agreement and shall not be deemed a failure by the
Company to use “best efforts” as set forth above or elsewhere in this Agreement.
10.4 In order to enable the Subscriber to sell the Shares under Rule 144, for a
period of two years from the Final Closing Date, use its best efforts to comply
with the requirements of Rule 144, including without limitation, use its best
efforts to comply with the requirements of Rule 144(c) with respect to public
information about the Company and to timely file all reports required to be
filed by the Company under the Exchange Act.
10.5 Each Subscriber agrees that, upon receipt of any notice from the Company of
the happening of any event as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, such Subscriber will immediately
discontinue disposition of Registrable Securities pursuant to any Registration
Statement covering such Registrable Securities until such Subscriber’s receipt
of the copies of the supplemented or amended prospectus or receipt of notice
that no supplement or amendment is required. Each Subscriber covenants and
agrees that it will comply with the prospectus delivery requirements of the 1933
Act as applicable to it or an exemption therefrom in connection with sales of
Registrable Securities pursuant to the Registration Statement.

 

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11. Collection of Personal Information. The undersigned (on its own behalf and,
if applicable, on behalf of any person for whose benefit the undersigned is
subscribing) acknowledges and consents to the fact the Company is collecting the
undersigned’s (and any beneficial purchaser’s) personal information for the
purpose of completing the undersigned’s subscription. The undersigned (on its
own behalf and, if applicable, on behalf of any person for whose benefit the
undersigned is subscribing) acknowledges and consents to the Company retaining
the personal information for as long as permitted or required by applicable law
or business practices. The undersigned (on its own behalf and, if applicable, on
behalf of any person for whose benefit the undersigned is subscribing) further
acknowledges and consents to the fact the Company may be required by applicable
securities laws and stock exchange rules to provide regulatory authorities any
personal information provided by the undersigned respecting itself (and any
beneficial purchaser). By executing this Agreement, the undersigned is deemed to
be consenting to the foregoing collection, use and disclosure of the
undersigned’s (and any beneficial purchaser’s) personal information. The
undersigned also consents to the filing of copies or originals of any of the
undersigned’s documents described herein as may be required to be filed with any
stock exchange or securities regulatory authority in connection with the
transactions contemplated hereby. The undersigned represents and warrants that
it has the authority to provide the consents and acknowledgments set out in this
paragraph on behalf of all beneficial purchasers.
12. Certification. The undersigned has read this entire Agreement and certifies
that every statement on the part of the undersigned is true and complete.
[remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the undersigned has executed this Agreement on the date
their signature has been subscribed and sworn to below.
DATED as of this                      day of                     , 2009.

             
Number of Units to be purchased at U.S. $0.20 each:
           
 
         
Aggregate Subscription Proceeds:
    $      
 
         
Name (full legal name of subscriber):
           
 
         
 
        (print name of subscriber)
Address of subscriber
           
 
         
 
           
 
         
 
           
 
         
 
        (address, including postal code)
 
           
 
         
 
        (telephone number)
 
           
 
         
 
        (facsimile number)
 
           
 
         
 
        (e-mail address)
 
           
 
        By:   
 
           
 
        (signature)
 
         
 
        (if corporation, print name of authorized signatory)
 
           
 
         
 
        (official capacity)
 
           
 
         
 
        (social security number or federal
corporate/business account number)

 

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ACCEPTED as of the                                          day of
                    , 2009.
MEXORO MINERALS, LTD.

                     
 
          Shares Issued:        
 
             
 
   
By:
                   
 
                    Name:   Francisco Quiroz   Warrants Issued:            
Title:   President            

 

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EXHIBIT A

 

 

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EXHIBIT B

 

 

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EXHIBIT C

 

 

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EXHIBIT 3.2(d)

 

 

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EXHIBIT 3.2(i)

 

 

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SCHEDULE A

 

 

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SCHEDULE B

 

 

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(MEXORO MINERALS LTD. LOGO) [c90529c9052901.gif]
SUBSCRIPTION DOCUMENTS
for
U.S. ACCREDITED INVESTORS ONLY
SUBSCRIPTION DOCUMENTS AND PROCEDURE
The Company has increased the size of the Offering so that it is offering up to
an aggregate of 9,000,000 Units at a subscription price of U.S. $0.20 per Unit.
The price per Unit has not changed. Attached hereto is a revised Use of Proceeds
section. The Units are being offered solely to U.S. Accredited Investors via
this Agreement for an aggregate purchase price of U.S. $1,800,000.
This document supplements the Company’s previously circulated subscription
document. Capitalized terms herein shall have the same meaning as ascribed to
them in the Agreement.

Except as described herein, this supplement does not reflect events or
transactions occurring after the date of the Agreement or modify or update the
Agreement.
Date: September 4, 2009