Exhibit 10.3





Exhibit
10.3



MEXORO MINERALS LTD.

CANCELLATION OF DEBT AND RELEASE AGREEMENT




This CANCELLATION OF DEBT AND RELEASE AGREEMENT (this “Agreement”) is made as of the
23rd day of December 2009, by and between Mexoro Minerals Ltd., an entity organized under the laws
of Mexico (the “Company”), Minera Rio Tinto, S.A. de C.V. (“MRT”) and Mario Ayub
(“Mr. Ayub” and along with MRT, the “Releasing Parties”).



RECITALS




A. As of the date of this Agreement, the Releasing Parties claim that the Company owes the
debt outstanding set forth on Schedule A attached hereto (the “Outstanding Debt”).



B. The Company and Releasing Parties have agreed that Releasing Parties shall accept certain
payments and shares of the Company’s Common Stock and warrants to purchase shares of the Company’s
Common Stock in full satisfaction of the Outstanding Debt as set forth herein.



C. Mr. Ayub is acquiring 386,666 shares of the Company’s common stock (the “Shares”)
and 193,333 warrants to purchase shares of the Company’s common stock (the “Warrants”)
pursuant to a Securities Purchase Agreement, dated as of the date hereof, by and among the Company
and Mr. Ayub (“Purchase Agreement”).



NOW, THEREFORE, in consideration of the recitals and the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:




1. Full Satisfaction and Forbearance.




(a) The Company agrees that as soon as reasonably practicable following the closing of
the Company’s sale of the Guazapares property (the “Guazapares Closing”), it will
pay the sum of $9,637.50 to MRT and the sum of $74,629.74 to Mr. Ayub (the “Initial
Payments”).




(b) The Company agrees that it will pay an aggregate of $120,000 to Mr. Ayub in equal
monthly installments, with payments beginning January 15, 2010 and continuing on the 15th
day of each month thereafter for a period of one year (the “Deferred Payments”),
provided however if the Guazapares Closing has not occurred prior to January 15, 2010, then
the Deferred Payments shall begin on the 15th day of the first month following the
Guazapares Closing.




(c) The Company agrees to issue the Shares and Warrants to Mr. Ayub pursuant to the
terms of the Purchase Agreement (the “Securities Issuance”).




(d) The Releasing Parties agree that the Initial Payment, the Deferred Payments and the
Securities Issuance will be made by the Company to the Releasing


 


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Parties in full satisfaction of the Outstanding Debt, including any and all accrued
interest with respect to the Outstanding Debt.



2. Release by Releasing Parties. Except with respect to the Initial Payments, the
Deferred Payments and the Securities Issuance, execution of this Agreement will automatically, by
operation of this Agreement and without any further action on the part of the Company or Releasing
Parties, effect a release and discharge by the Releasing Parties of the Company and their
affiliates and past, present and future officers, directors, shareholders, employees, agents,
successors and assigns from all manner of action, cause and causes of action, suits, debts, sums of
money, accounts, covenants, controversies, agreements, promises, damages, judgments, executions,
costs, expenses, rights, claims or demands whatsoever, at law or in equity, existing at the date
thereof, at any time before the date thereof, or thereafter arising, both anticipated and
unanticipated, known and unknown, contingent and non-contingent, liquidated and non-liquidated,
that Releasing Parties have had, now has, then has or may have against the Company or its
affiliates or past, present or future officers, directors, shareholders, employees, agents,
successors or assigns by reason of any cause or thing, arising or to arise, out of the Outstanding
Debt and any and all agreements, purchase orders, invoices or other arrangements, written or oral,
with respect to the relationship between the Company and the Releasing Parties. For purposes
herein, “Releasing Parties” shall be deemed to include any affiliate of the Releasing Parties.



3. Waiver. The Releasing Parties hereby irrevocably waive their rights under any
applicable statute, rule, regulation, legal principle or legal doctrine that provides that a
general release does not extend to claims which a releasing party does not know or suspect to exist
in its favor at the time of executing such release, which if known by the releasing party would
have materially affected its settlement with the released party, including, without limiting the
generality of the foregoing, the provisions of Section 1542 of the California Civil Code, to the
extent deemed applicable, which provides as follows:



A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor.



4. Other Agreements. Notwithstanding anything contained in this Agreement, all terms
of (a) the Definitive Agreement for the Development of the Cieneguita Project, dated February 6,
2009, entered into between the Company and MRT, as amended, (b) the Consulting Agreement, dated
September 21, 2009, by and between the Company and MRT Investments Ltd., and (c) the
Acknowledgement and Agreement, dated December 23, 2009, by and among the Company, Mario Ayub, MRT
and the other parties names therein, shall remain in full force and effect.



5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF
CALIFORNIA (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE CALIFORNIA
PRINCIPLES OF CONFLICTS OF LAW) AS TO ALL MATTERS, INCLUDING, WITHOUT LIMITATION, MATTERS OF
VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.


 


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6. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and assigns.



7. Counterparts. This Agreement may be executed in counterparts, each of which shall
be an original and all of which shall constitute but one and the same instrument.



8. Captions. The captions contained in this Agreement are for the convenience of the
parties hereto and shall not be deemed or construed as in any way limiting or extending the
language of the provisions to which such captions refer.


 


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



	 	 	 	 	 
	THE COMPANY: 	MEXORO MINERALS LTD.

 	 
	 	By:  	/s/ George Young
 	 
	 	 	Name:  	George Young 	 
	 	 	Title:  	President 	 
	 
	 	 	 
	RELEASING PARTIES: 	      /s/ Mario Ayub
 	 
	 	Mario Ayub 	 
	 	 	 
	 
	 	MINERA RIO TINTO, S.A. DE C.V.

 	 
	 	By:  	/s/ Mario Ayub
 	 
	 	 	Name:  	Mario Ayub 	 
	 	 	Title:  	President 	 



 


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Schedule A




OUTSTANDING DEBT SCHEDULE




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Amount	 	 	 	 	 	 	Amount	 	 	 	 	 	 	 
	Account	 	Description	 	 	Debtor	 	 	Owed (MXN)	 	 	Fx	 	 	Owed (USD)	 	 	Total Due	 	 	Name	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2100
	 	Accounts Payable	 	Mexoro	 	 	 	 	 	 	 	 	 	 	16,000.00	 	 	 	116,000.00	 	 	Mario Ayub
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2104-002-00
	 	Loan	 	Sunburst *	 	 	2,522,770	 	 	 	0.08	 	 	 	194,629.66	 	 	 	194,629.74	 	 	Mario Ayub
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2109-001-00
	 	Loan	 	Sunburst *	 	 	124,919	 	 	 	0.08	 	 	 	9,637.43	 	 	 	9,637.50	 	 	Minera Rio Tinto
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total due under promissory notes and accounts payable	 	 	 	 	 	 	 	 	 	 	320,267.24	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







 


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