Document:

mexoroconvdebenture.htm

    EXHIBIT
10.2

     

    THIS
SECURITY, AND ANY SECURITIES TO BE ISSUED BY THE CORPORATION IN CONVERSION OF
THIS SECURITY, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED.

     

    

     

    MEXORO
MINERALS LTD.

     

    (a
corporation incorporated under the laws of the State of Colorado)

     

    SECURED
CONVERTIBLE DEBENTURE

     

    Date
of
Issue:                                March
25,  2009

     

    Interest
Rate:                                15.0%
per annum

     

    $250,000___
(the “Principal
Amount”)

     

    Mexoro Minerals Ltd. (the
“Corporation”) for value
received hereby promises to each holder identified on
the signature pages hereto (the “Holder”)  the
outstanding Principal Amount on the Maturity Date as hereinafter defined. The
Holder is entitled, subject to such earlier conversion as may be required
hereunder, to convert the Principal Amount into Conversion Units upon surrender
of this Convertible Debenture at an office of the Corporation. The Corporation
shall pay interest on the Principal Amount outstanding from time to time from
the date of this Convertible Debenture or from the last interest payment date to
which interest has been paid on the Convertible Debenture, whichever is later,
at the rate of fifteen per cent (15%) per annum. Such interest shall be
calculated and payable in accordance with Article 2 hereof and interest on
overdue interest shall be calculated, and shall be due and payable, in lawful
money of the United States of America, in the same manner and at the same time
and place as aforesaid.

     

    Payment
and performance of the Principal Amount, together with interest thereon and any
other indebtedness, liabilities, covenants and obligations of the Corporation to
the Holder arising in respect of this Convertible Debenture shall constitute
Obligations for the
purpose of and as defined in the Mexoro General Security Agreement and Sunburst
General Security Agreement (collectively, the “Security Agreements”) and are
secured by the Security Agreements and the security interests granted by the
Corporation and Sunburst to the Holder pursuant to the Security
Agreements.

     

    ARTICLE
1

     

    INTERPRETATION

     

    
      	
              1.1  

            	
              Definitions

            

    

     

    In this
Convertible Debenture, unless there is something in the subject matter or
context inconsistent therewith:

     

     “business day” means a day
which is not a Saturday, Sunday or civic or statutory holiday in New
York;

     

    “Capital Reorganization” has
the meaning attributed thereto in Section 3.3;

     

    “Cieneguita
Dividend”
means a 15% per annum dividend to be distributed quarterly in cash by the
Corporation on the Common Shares.  The Corporation and MRT shall
guarantee that this dividend shall be no less than USD250,000.00 per
year.

     

    “Common Shares” means shares of
common stock in the capital of the Corporation as such shares exist at the close
of business on the date of execution and delivery of this Convertible
Debenture;

     

    “Corporation’s Auditors” or
“Auditors of the
Corporation” means an independent firm of chartered accountants duly
appointed as auditors of the Corporation;

     

    “Conversion Date” has the
meaning attributed thereto in subsection 3.2(3);

     

    “Conversion Price” means the
price per Conversion Unit at which this Convertible Debenture is convertible,
being $0.20 per Conversion Unit;

     

    “Conversion Privilege” means
the right to convert this Convertible Debenture into a Conversion Unit as
provided in Article 3;

     

    “Conversion Share” means Common
Shares to be issued as part of the Conversion Units in connection with the
conversion of all or part of this Convertible Debenture;

     

    “Conversion Unit” means one
Conversion Share and one half of a Conversion Warrant, to be issued at the
Conversion Price in connection with the conversion of all or part of this
Convertible Debenture;

     

    “Conversion Warrant” means
share purchase warrants of the Corporation to be issued as
part of the Conversion Units in connection with the conversion of this
Convertible Debenture, and exercisable to purchase a Warrant Share at $0.30 per
Warrant Share, expiring on February 28, 2012;

     

    “Convertible Debenture” means
this 15% secured convertible debenture of the Corporation and any debenture
issued in replacement, substitution or exchange, in whole or in part, of this
15% secured convertible debenture;

     

    “Dividend Paid in the Ordinary
Course” means any dividend paid by the Corporation on the Common Shares
(whether in cash, securities, property or other assets), provided that the
directors of the Corporation do not by resolution determine that such dividend
is extraordinary or otherwise out of the ordinary course having regard to the
Corporation’s dividend policy at such time, the value of such dividend, the
financial position of the Corporation, economic conditions, business practices
and such other factors as the directors of the Corporation may in their
discretion consider relevant;

     

     “Equity Securities” means any
Common Stock or Common Stock Equivalents;

     

    “Event of Default” has the
meaning attributed thereto in Section 4.3;

     

    “Financing” means MRT’s
investment in the Corporation for the acquisition of real property known as
Cieneguiata.

     

    “Holder” means the original
Holder or other permitted Holder of this Convertible Debenture;

     

    “Interest Rate” means 15% per
annum;

     

    “Issue Date” means the date of
issue of this Convertible Debenture;

     

     “Maturity Date” means one (1)
year from the Issue Date or such earlier date on which the conversion of this
Convertible Debenture shall become due and payable pursuant to the terms
provided herein in accordance with the terms of this Convertible
Debenture;

     

    “Mexoro General Security
Agreement” means the general security agreement dated as of the date here
of the Corporation granting the Holder a security interest in all the present
and after acquired property of the Corporation;

     

    “MRT” means a company that
intends to invest in the Corporation for the purposes of the Corporation’s
acquisition of real property known as Cieneguita.

     

    “Person” means any individual,
corporation or company, partnership, joint venture, syndicate, sole
proprietorship, trust, trustee, executor, administrator or other legal
representative or an unincorporated organization, government or governmental
authority or entity and pronouns have a similarly extended meaning;

     

     “Registration” means a
registration effected by preparing and filing a Registration Statement and the
declaration or ordering of the effectiveness of that Registration Statement; and
the terms “Register” and “Registered” have meanings concomitant with the
foregoing; “Registrable
Securities”
means (i) the Conversion Shares and (ii) the Warrant Shares;

     

    “Registration Statement” means
a registration statement prepared on Forms S-1, S-2 or S-3 under the Securities
Act, or on any comparable form in connection with registration in a jurisdiction
other than the United States;

     

    “Reserved Property” means 10%
of the real property known as Cieneguita located in Chihuahua, Mexico, which may
be acquired by the Corporation and which shall provide the Corporation with
funds to satisfy the Cieneguita Dividend.

     

    “Securities Act” means the
United States Securities Act of 1933, as amended;

     

    “Securities Purchase
Agreement” means the
securities purchase agreement entered into between the Corporation and the
Holder on the date hereof that governs the sale of this
Convertible Debenture.

     

    “Sunburst” means Sunburst de
Mexico S.A. de C.V., the wholly-owned subsidiary of the
Corporation;

     

    “Sunburst General Security
Agreement” means the general security agreement dated as of the date here
of Sunburst, granting the Holder a security interest in all the present and
after acquired property of Sunburst;

     

    “Warrant Certificate” means the
form of certificate representing the Conversion Warrants in the form attached as
Schedule B hereto; and

     

    “Variable Rate Transaction”
shall mean a transaction in which the Company issues or sells any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock at a conversion,
exercise or exchange rate or other price that is based upon and/or varies with
the trading prices of or quotations for the shares of Common Stock at any time
after the initial issuance of such debt or equity securities.

     

    “Warrant Share” means a Common
Share issued upon the exercise of a Conversion Warrant.

     

    Words
importing the singular number include the plural and vice versa and words
importing gender include the neuter, feminine and masculine
genders.

     

    
      	
              1.2  

            	
              Headings

            

    

     

    The
division of this Convertible Debenture into Articles, Sections, subsections and
clauses, and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation hereof.

     

    
      	
              1.3  

            	
              Applicable
      Law

            

    

     

    This
Convertible Debenture shall be governed by and construed in accordance with the
laws of the State of New York and the laws of the United States applicable
therein. The parties hereto submit to the exclusive jurisdiction of the courts
in the State of New York. The parties agree that any litigation between the
parties which arises pursuant to or in connection with this Convertible
Debenture, or any of its provisions, shall be referred to the courts in the
State of New York and shall not be referred to the courts in any other
jurisdiction.

     

    
      	
              1.4  

            	
              Business
      Day

            

    

     

    In the
event that any day on or before which any action is required to be taken
hereunder is not a business day, then such action shall be required to be taken
on or before the requisite time on the next succeeding day that is a business
day.

     

    
      	
              1.5  

            	
              Monetary
      Reference

            

    

     

    Any
reference in this Convertible Debenture to “Dollars”, “dollars” or “$” shall be
deemed to be a reference to lawful money of the United States of
America.

     

    
      	
              1.6  

            	
              Invalidity
      of Provisions

            

    

     

    Each of
the provisions contained in this Convertible Debenture is distinct and severable
and a declaration of invalidity or unenforceability of any such provision by a
court of competent jurisdiction shall not affect the validity or enforceability
of any other provision hereof or thereof.

     

    
      	
              1.7  

            	
              Schedules

            

    

     

    The
following schedules are attached to and form part of this Convertible
Debenture:

     

    Schedule

     

    Schedule
A                                -           Notice
of Election to Convert

     

    Schedule
B                                -           Form
of Conversion Warrant

     

    ARTICLE
2

     

    INTEREST

     

    
      	
              2.1  

            	
              Interest

            

    

     

    Interest
shall accrue from the date hereof or from the last interest payment date to
which interest on the Convertible Debenture shall have been paid, on the
outstanding Principal Amount of this Convertible Debenture at the Interest Rate
payable quarterly in arrears on the last day of each three month period
commencing May 30, 2009, both before and after demand, default, maturity and
judgment and interest on overdue interest at the rate and in the manner
aforesaid. Interest shall continue to accrue and become payable on the Principal
Amount unless the Principal Amount is fully converted prior to the Maturity Date
in accordance with Articles 3 or 4 herein.

     

    
      	
              2.2  

            	
              Payment
      of Interest

            

    

     

    Subject
to the terms of the Securities Purchase Agreement dated same, as interest
becomes due on this Convertible Debenture, the Corporation shall pay, at its
election, either in certified funds for such interest payable, less any
applicable withholding tax, or in Common Shares calculated at a twenty percent
(20%) discount to the twenty (20) day moving average of the Common Shares as
quoted on the Over the Counter Bulletin Board Market (“OTCBB”) or other such
stock exchange as the case may be to the then registered Holder of this
Convertible Debenture and addressed to such Holder at his last address appearing
on the register. The forwarding of such payment cash or Common Shares shall
satisfy and discharge the liability for interest on this Convertible Debenture
to the extent of the sum represented thereby unless such cheque be not paid at
par on presentation at any of the places of payment above
mentioned.

     

    
      	
              2.3  

            	
              Cancellation
      of Matured Convertible Debenture

            

    

     

    Upon
conversion of the outstanding Principal Amount of, and payment of any accrued
but unpaid interest on the Convertible Debenture, this Convertible Debenture
shall be cancelled and destroyed by the Corporation and no Convertible Debenture
shall be issued in substitution therefor

    .

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    ARTICLE
3

     

    CONVERSION

     

    
      	
              3.1  

            	
              Conversion
      Privilege and Conversion Price

            

    

     

    Subject
to and upon compliance with the provisions of this Article 3, the Holder shall
have the right, at such Holder’s option, at any time up to the Maturity Date or
until anytime thereafter that the Principal Amount or a portion thereof remains
outstanding, to the extent applicable, to convert the whole or from time to time
part of the Principal Amount outstanding under this Convertible Debenture into
Conversion Units at the Conversion Price. The number of Conversion Units shall
be determined by dividing the Principal Amount of the Convertible Debenture by
the Conversion Price.

     

    When the
holder has the right to convert this Convertible Debenture into Conversion Units
at the Conversion Price, the Holder may instead choose to accept either of the
following:

     

    (1) Cash & Warrants:
Full payment, including accrued interest plus sufficient warrants equal to 20%
of the value of this Convertible Debenture with a strike price at 20% discount
to the 20 day moving average of the Common Shares as quoted on the Over the
Counter Bulletin Board or other such exchange as the case may be
(“OTCBB”).  This offer may only be accepted by the Holder when a
Financing occurs and when the Company
provides a written offer to the Holder; or

     

    (2) Real Property
Interest: A percentage ownership interest in the Reserved Property equal
to the Principal Amount divided by the sum of all Principal Amounts raised in
connection with the Securities Purchase Agreement.

     

    
      	
              3.2  

            	
              Manner
      of Exercise of Right to Convert

            

    

     

    (1) In order
to exercise the Conversion Privilege, the Holder shall at any anytime, surrender
such Convertible Debenture to the Corporation at an office of the Corporation
accompanied by a notice in the form substantially similar to the “Notice of
Election to Convert” attached to this Convertible Debenture, duly signed by the
Holder or the Holder’s executors, administrators or other legal representatives
or the Holder’s attorney duly appointed by an instrument in writing in form and
execution satisfactory to the Corporation stating:

     

    
      	
              (a)  

            	
              that
      the Holder elects to convert the then outstanding Principal Amount under
      the Convertible Debenture or a specified portion
  thereof;

            

    

     

    
      	
              (b)  

            	
              the
      names (with addresses) in which the Conversion Shares and Conversion
      Warrants issuable upon such conversion are to be registered;
      and

            

    

     

    
      	
              (c)  

            	
              the
      address or addresses to which the certificates representing the Conversion
      Shares and Conversion Warrants issuable upon conversion and the cheque for
      any amount payable under Section 3.6 are to be
  delivered.

            

    

     

    (2) Upon
receipt by the Corporation of the “Notice of Election to Convert” in accordance
with Section 3.2(1) above, the Holder or his permitted nominee shall be entitled
to be entered in the books of the Corporation as at the Conversion Date, as
defined below (or such later date as is specified in subsection 3.2(3)) as the
Holder of the number of Conversion Shares and Conversion Warrants into which
this Convertible Debenture is convertible, in accordance with the provisions of
this Article 3 upon receipt of such notice, the Corporation shall deliver to the
Holder electing to convert or, subject as aforesaid, its nominee or assignee a
certificate or certificates representing the number of Conversion Shares and
Conversion Warrants into which all or any portion of the Principal Amount hereof
has been converted and, if applicable, a cheque for any amount payable under
Section 3.6 to the address indicated in the “Notice of Election to Convert”, and
if applicable, a new Convertible Debenture representing such Principal Amount
that has not been converted.

     

    (3) For the
purposes of this Article 3, this Convertible Debenture shall be deemed to be
surrendered for conversion on the date (the “Conversion Date”) on which it
is so surrendered in accordance with the provisions of this Article 3 and, if
surrendered by mail or other means of delivery, on the date on which it is
received by the Corporation, provided that if this Convertible Debenture is
surrendered for conversion on a day on which the register of Common Shares is
closed, the Person entitled to receive Conversion Shares shall become the Holder
of record of such Conversion Shares as at the date on which such register is
next reopened and provided that if a Convertible Debenture is surrendered for
conversion on any interest payment date such Convertible Debenture shall be
deemed to be surrendered for conversion on such interest payment
date.

     

    (4) If this
Convertible Debenture is surrendered for conversion in accordance with this
Section 3.2, the Holder shall be entitled to receive accrued and unpaid interest
in respect of the Principal Amount converted only for the period up to the
Conversion Date, such interest to be paid at the time of delivery of the
Conversion Shares and Conversion Warrants issuable upon such conversion in
accordance with Section 2.2.

     

    (5) The
Conversion Shares and Conversion Warrants shall be issued without any type of
restrictive legend except as required by US securities laws and any laws
pertaining to the country of residence of the Convertible Debenture
holder.

     

    (6) Payments
due under this Convertible Debenture shall be made at the time of exercise and
shall be in cash or in shares of Common Stock.  In the event payment
is made in shares of Common Stock, such shares shall be valued at their fair
market value on the date of exercise.

     

    (7) Notwithstanding
anything to the contrary set forth in this Convertible Debenture, at no time may
a Holder of this Convertible Debenture convert this Convertible Debenture to
acquire the Conversion Shares or exercise Conversion Warrants to the extent that
after giving effect to such conversion or exercise, the Holder (together with
the Holder’s affiliates) would beneficially own (as determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the
rules thereunder) in excess of 9.99% of the number of shares of Common Stock
outstanding immediately after giving effect to such exercise; provided, however,
that upon a Holder of this Convertible Debenture providing the Corporation with
a Waiver Notice with 65 days notice that such Holder would like to waive this
Section with regard to any or all Conversion Shares or Conversion Warrants
issuable upon conversion of this Convertible Debenture or through the exercise
of the Conversion Warrants, this Section shall be of no force or effect with
regard to all or a portion of the Warrant referenced in the Waiver
Notice.

     

    
      	
              3.3  

            	
              Capital
      Reorganization

            

    

     

    If and
whenever at any time after the date hereof, and prior to the Conversion Date,
there is a subdivision or consolidation of the Common Shares, or an issuance of
Common Shares or securities convertible into Common Shares to all or
substantially all of the holders of Common Shares by way of a stock dividend or
other distribution (other than the issue of securities to the Holder or the
issue of Common Shares or other securities to holders of Common Shares as a
Dividend Paid in the Ordinary Course), or a reclassification of the Common
Shares at any time outstanding or other change of the Common Shares into other
shares or into other securities, whether of the Corporation or of another body
corporate, or other capital reorganization, or a consolidation, amalgamation or
merger of the Corporation with or into any other corporate or other entity
(other than a consolidation, amalgamation or merger which does not result in any
reclassification of the outstanding Common Shares or a change of the Common
Shares into other shares), or a transfer of the undertaking or assets of the
Corporation as an entirety or substantially as an entirety to another
corporation or other entity in which the Holders of Common Shares are entitled
to receive shares, other securities or other property (any of such events being
called a “Capital
Reorganization”), the Holder who exercises the right to convert this
Convertible Debenture pursuant to this Convertible Debenture after the effective
date of such Capital Reorganization will be entitled to receive, and will accept
for the same aggregate consideration in lieu of the number of Conversion Shares
and Conversion Warrants to which the Holder was previously entitled upon such
conversion into a Conversion Unit, the aggregate number of Conversion Shares and
Conversion Warrants, other securities or other property which the Holder would
have been entitled to receive as a result of such Capital Reorganization if, on
the effective date thereof, the Holder had been the Holder of the number of
Conversion Shares and Conversion Warrants into which such a Conversion Unit were
convertible immediately prior to such Capital Reorganization. The Corporation
will take all steps necessary to ensure that, on a Capital Reorganization, the
Holder will, if it exercises its conversion rights hereto, receive the aggregate
number of shares, other securities or other property to which it is entitled as
a result of the Capital Reorganization. Appropriate adjustments will be made as
a result of any such Capital Reorganization in the application of the provisions
set forth in this Article 3 with respect to the rights and interests thereafter
of the Holder under this Convertible Debenture to the end that the provisions
set forth in this Article 3 will thereafter correspondingly be made applicable
as nearly as may reasonably be in relation to any shares, other securities or
other property thereafter deliverable upon the conversion of this Convertible
Debenture.

     

    
      	
              3.4  

            	
              Notice
      as to Adjustment

            

    

     

    The
Corporation shall from time to time, immediately after the occurrence of any
event which requires an adjustment or readjustment as provided in Section 3.3,
deliver a notice in writing (an “Adjustment Notice”) to the
Holder specifying the nature of the event requiring the same and the amount of
the adjustment or readjustment necessitated thereby and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Such notice and the amount of the adjustment specified
therein shall, subject to the provisions of subsection 3.5, be conclusive and
binding on all parties in interest.

     

    
      	
              3.5  

            	
              Rules
      Regarding Calculation of Adjustment of Conversion
  Terms

            

    

     

    If within
five days of receipt of an Adjustment Notice a Holder notifies the Corporation
in writing that it disputes the content of the Adjustment Notice, or if at any
time a dispute is made by a shareholder or other creditor of the Corporation
with respect to adjustments provided for in Section 3.3, such dispute will be
resolved by a written determination by the accounting firm of Davidson &
Partners in Vancouver B.C.

     

    However,
if they are unable or unwilling to act, by such other firm of independent
chartered accountants as may be selected by the directors of the Corporation,
and any such determination will be binding upon the Corporation, the Holder and
(to the extent permitted by the articles and by-laws of the Corporation and
applicable law) the shareholders of the Corporation; such auditors or
accountants will be given access to all necessary records of the Corporation. If
any such determination is made, the Corporation will deliver a certificate of
the Corporation to the Holder describing such determination.

     

    

     

    
      	
              3.6  

            	
              No
      Requirement to Issue Fractional Conversion
Units

            

    

     

    The
Corporation shall not be required to issue fractional Conversion Units upon the
conversion of all or any part of this Convertible Debenture pursuant to this
Article 3. The number of whole Conversion Units issuable upon conversion of this
Convertible Debenture shall be computed on the basis of the aggregate Principal
Amount of the Convertible Debenture so converted. If any fractional interest in
a Conversion Unit would, except for the provisions of this Section, be
deliverable upon the conversion of any Principal Amount of the Convertible
Debenture, the Corporation may, at its sole option, in lieu of delivering any
certificate representing such fractional interest, satisfy such fractional
interest by paying to the Holder an amount in lawful money of the United States
of America equal (to the nearest amount) to the corresponding fraction of the
value of a Conversion Unit on the Conversion Date, determined by the directors
of the Corporation acting in good faith which determination shall be conclusive,
provided that the Corporation shall not be required to make any payment,
calculated as aforesaid, that is less than $10.00.

     

    
      	
              3.7  

            	
              Corporation
      to Reserve Shares

            

    

     

    The
Corporation shall at all times while any Principal Amount of the Convertible
Debenture remains outstanding reserve and keep available out of its authorized
but unissued Common Shares solely for the purpose of issue upon conversion of
this Convertible Debenture, as provided in this Article 3, and issue upon
exercise of the Conversion Warrants, and conditionally allot to the Holder who
may exercise its conversion rights hereunder and its exercise rights in
connection with the Conversion Warrants, such number of Conversion Shares as
shall then be issuable upon the conversion of this Convertible Debenture and
such number of Warrant Shares as shall be issuable upon exercise of the
Conversion Warrants. All Conversion Shares which shall be so issuable shall be
duly and validly issued as fully paid and non-assessable Common Shares. All
Warrant Shares issued upon the exercise of the Conversion Warrants in accordance
with the terms and conditions of the Warrant Certificate, including payment of
the exercise price thereof, shall be duly and validly issued as fully paid and
non-assessable Common Shares.

     

    

     

    
      	
              3.8  

            	
              Hold
      Period Legends

            

    

     

    The legend set forth below shall be
included on (i) all certificates for Conversion Shares issued to U.S. Persons as
such term is defined in Rule 902 of Regulation S (“U.S. Persons”) under the
United States Securities Act of 1933, as amended, (ii) any Conversion Warrants
issued upon conversion of this Convertible Debenture, and (iii) any securities
issued upon exercise of Conversion Warrants if held by a U.S. Person at the time
of exercise:

     

    THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER
HEREOF, BY PURCHASING THESE SECURITIES, AGREES FOR THE BENEFIT OF THE
CORPORATION THAT THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 904 OF REGULATION S (“REGULATION S”) UNDER THE U.S.
SECURITIES ACT, (C) WITHIN THE UNITED STATES IN ACCORDANCE WITH (1) RULE 144A
UNDER THE U.S. SECURITIES ACT OR (2) RULE 144 UNDER THE U.S. SECURITIES ACT, (D)
UNDER AN EFFECTIVE REGISTRATION STATEMENT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT,
PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C)(2), OR (E) ABOVE, A LEGAL
OPINION ISSUED BY THE ATTORNEY FOR THE HOLDER BE PROVIDED TO THE
CORPORATION.

     

    

     

    ARTICLE
4

     

    DEFAULT
AND ENFORCEMENT

     

    
      	
              4.1  

            	
              Covenants

            

    

     

    Except as
otherwise provided in this Convertible Debenture, the Corporation hereby
covenants and agrees that so long as any amounts remain unpaid pursuant to this
Convertible Debenture it will strictly observe and perform the following
covenants:

     

    
      	
              (a)  

            	
              The
      Corporation shall take all necessary action to adjust the Conversion Price
      as provided under Section 3.3 hereof, if applicable;
  and

            

    

     

    
      	
              (b)  

            	
              The
      Corporation and Sunburst will not dispose of any assets out of the
      ordinary course of business without the prior written consent of the
      Holder, such consent not to be unreasonably
  withheld.

            

    

     

    
      	
              4.2  

            	
              Acceleration
      on Event of Default

            

    

     

    If an
Event of Default shall occur and be continuing, the unpaid balance of the
Principal Amount, and all accrued interest and all other amounts payable under
this Convertible Debenture may be declared by the Holder on written notice to
the Corporation to be, and upon such notice shall become, immediately due and
payable. Upon the payment in full of the aftorementioned amounts, the Holder
shall promptly surrender this Convertible Debenture to or as directed by the
Corporation.

     

    
      	
              4.3  

            	
              Events
      of Default

            

    

     

    Any of
the following conditions or events which shall occur shall constitute events of
default (“Events of
Default”) under this Convertible Debenture:

     

    
      	
              (a)  

            	
              if
      the Corporation shall default in the payment of any of the Principal
      Amount at the Maturity Date;

            

    

     

    
      	
              (b)  

            	
              if
      the Corporation shall default in the payment of any interest on this
      Convertible Debenture, or other amounts payable hereunder, when the same
      becomes due and payable, whether at the Maturity Date or otherwise and
      such default shall continue for a period of ten (10) business days after a
      notice in writing of such default has been given by the Holder to the
      Corporation;

            

    

     

    
      	
              (c)  

            	
              if
      the Corporation or Sunburst shall default in the performance of or
      compliance with any term or condition or covenant contained in this
      Convertible Debenture or the General Security Agreements, provided that
      such default is of a nature that may be cured, and such default shall not
      have been remedied within a period of ten (10) business days after such
      default;

            

    

     

    
      	
              (d)  

            	
              notwithstanding
      the $476,000 promissory note issued by the Corporation heretofore and held
      by certain Swiss investors due on March 31, 2008 under which the
      Corporation is currently in default, if the Corporation or Sunburst
      commits any of the events of default under any operating and/or senior
      debt credit facilities or arrangements with any other lender and such
      default shall not have been remedied within a period of ten (10) business
      days after such default;

            

    

     

    
      	
              (e)  

            	
              if
      the Corporation or Sunburst shall (i) file, or consent by answer or
      otherwise to the filing against it of, a petition for relief or
      reorganization or arrangement or any other petition in bankruptcy, for
      liquidation or otherwise take advantage of any bankruptcy or insolvency
      law of any jurisdiction, (ii) make an assignment, an arrangement or a
      compromise for the benefit of its creditors, (iii) consent to the
      appointment of a custodian, receiver, trustee or other officer with
      similar powers of itself or of any substantial part of its property, (iv)
      cease to carry on business, or (v) take corporate action for the purpose
      of any of the foregoing;

            

    

     

    
      	
              (f)  

            	
              if
      any representation, warranty or certification made in connection with the
      execution and delivery of this Convertible Debenture or the General
      Security Agreements shall prove to be at any time materially incorrect at
      the time it was made and such default shall not have been remedied within
      a period of ten (10) business days after Holder has noticed the
      Corporation of such default;

            

    

     

    
      	
              (g)  

            	
              if
      a court or governmental authority of competent jurisdiction shall enter a
      final order appointing, with or without the consent of the Corporation or
      Sunburst, as the case may be, a custodian, receiver, trustee or other
      officer with similar powers with respect to it or with respect to any
      substantial part of either of their property, or if a final order for
      relief shall be entered in any case or proceeding for liquidation or
      reorganization or otherwise to take advantage of any bankruptcy or
      insolvency law of any jurisdiction, or ordering the dissolution,
      winding-up or liquidation of the Corporation or Sunburst, or if any
      petition for any such relief shall be filed against the Corporation or
      Sunburst and such petition shall not be dismissed within thirty (30) days;
      and

            

    

     

    
      	
              (h)  

            	
              the
      Corporation fails to: (i) include the Conversion Shares issuable upon
      conversion of this Convertible Debenture, Warrant Shares issuable upon
      exercise of the Conversion Warrants and any other securities due to the
      Holder pursuant to this Convertible Debenture in any Registration
      Statement for which Holder is entitled to piggy back registration rights
      pursuant to Section 5.1 herein; (ii) make its best efforts to obtain
      effectiveness with the Securities and Exchange Commission of the
      Registration Statement for which Holder is entitled to piggy back
      registration rights pursuant to Section 5.1 herein; or (iii) maintain the
      effectiveness of such Registration Statement (or sales cannot otherwise be
      made thereunder effective, whether by reason of the Corporation’s failure
      to amend or supplement the prospectus included therein) for more than
      twenty (20) consecutive days or thirty (30) days in any twelve month
      period after the Registration Statement becomes effective or after
      becoming effective the Registration Statement is not kept effective for
      the term of the Conversion
Warrants.

            

    

     

    

     

    
      	
              4.4  

            	
              Representations
      and Warranties

            

    

     

    The
Corporation hereby represents and warrants to the Holder that:

     

    
      	
              (a)  

            	
              no
      authorization, approval or other action by, and no notice to or filing
      with, any governmental authority or regulatory body is required for the
      execution, delivery and performance of this Convertible Debenture or the
      General Security Agreements by the Corporation and Sunburst or for the
      grant by the Corporation and Sunburst of the security interests granted
      pursuant to the General Security Agreements except for authorization,
      approval or such filings as have been obtained, made and are in full force
      and effect; and in particular, but without limiting the foregoing, the
      Corporation has obtained all approvals and authorizations from the OTCBB
      and the shareholders and directors of the Corporation as are necessary to
      complete all the transactions contemplated in and provided for in this
      Convertible Debenture;

            

    

     

    
      	
              (b)  

            	
              the
      Corporation and Sunburst are in compliance with the requirements of all
      applicable laws, rules, regulations and orders of every governmental
      authority, the non-compliance with which would materially adversely affect
      the value or worth of the Corporation’s and Sunburst’s property as
      collateral security for this Convertible Debenture and the General
      Security Agreements and upon completion of all the transactions
      contemplated in and provided for in this Convertible Debenture the
      Corporation and Sunburst will remain in compliance with the requirements
      of all applicable laws, rules, regulations and orders of every
      governmental authority; and

            

    

     

    
      	
              (c)  

            	
              this
      Convertible Debenture and the General Security Agreements have been
      properly authorized, duly executed and delivered by the Corporation and
      Sunburst and constitute legal, valid and binding obligations of the
      Corporation and Sunburst enforceable in accordance with their respective
      terms, except as may be limited by applicable bankruptcy, insolvency,
      moratorium, and other laws affecting creditors’ rights generally and
      except that orders for specific performance, injunctions and other
      equitable remedies are discretionary remedies which may be granted only in
      the discretion of the court.

            

    

     

    
      	
              4.5  

            	
              Indemnity

            

    

     

    The
Corporation covenants and agrees to indemnify and hold harmless the Holder from
and against any and all damages or deficiencies resulting from any
misrepresentation, breach of warranty or non-fulfillment of any covenant on the
part of the Corporation or Sunburst under this Convertible Debenture or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by the Corporation or Sunburst to the Holder under
this Convertible Debenture or the General Security Agreements and any and all
actions, suits, proceedings, demands, assessments, judgments, costs and legal
and other expenses incident to any of the foregoing.

     

    
      	
              4.6  

            	
              Survival
      of Representations, Warranties, Indemnity and
  Covenants

            

    

     

    Notwithstanding
the completion of the transactions herein contemplated, the representations and
warranties, covenants and indemnities contained in this Convertible Debenture
shall not merge in, be prejudiced by or be superseded in any way by the
execution and completion of this Convertible Debenture and shall survive the
same for a period of two years from the date of execution of this Convertible
Debenture.

     

    
      	
              4.7  

            	
              Remedies

            

    

     

    In case
of a default hereunder by the Corporation or Sunburst, the Holder may enforce
the rights of the Holder by any remedy or proceeding authorized or permitted by
applicable law (subject in all cases to any mandatory provision of applicable
law). No remedy herein contained conferred upon the Holder shall be intended to
be exclusive and such Holder shall be entitled to seek other remedies available
under applicable laws.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    ARTICLE
5

     

    REGISTRATION
RIGHTS

     

    
      	
              5.1  

            	
              Piggy
      Back Registration Rights

            

    

     

    If the
Corporation proposes to Register any Equity Securities for its own account or
for the account of any Person that is not a Holder, then in connection with the
public offering of such securities, the Corporation shall promptly give each
Holder written notice of such Registration and, upon the written request of any
Holder given within twenty (20) days after delivery of such notice, the
Corporation shall use its best efforts to include in such Registration any
Registrable Securities thereby requested by such Holder.  If a Holder
decides not to include all or any of its Registrable Securities in such
Registration by the Corporation, such Holder shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent Registration
Statement or Registration Statements as may be filed by the Corporation with
respect to offerings of its securities, all upon the terms and conditions set
forth herein.

     

    
      	
              5.2  

            	
              No
      Variable Rate Transaction

            

    

     

    For a
period of 12 months following the Effective Date, the Corporation shall be
prohibited from effecting or entering into an agreement to effect any subsequent
financing involving a Variable Rate Transaction.

     

    

    ARTICLE
6

    REDEMPTION

    6.1 Redemption

    

    On the
terms and subject to the conditions set forth in this Agreement, the Corporation
shall redeem this Convertible Debenture from the Holder (the “ Redemption ”) for the
aggregate Redemption Consideration (as such term is defined in Section 6.2
below) on the Redemption Date (as such term is defined in Section 6.3). The
Corporation shall give the Holder written notice of the Redemption Date not less
than three days prior to such date.

    

    6.2            Deliveries

    

    On the
Redemption Date, (a) the Holder shall deliver to the Corporation or its
designee its original executed Convertible Debenture, each of which shall be
duly executed in blank for transfer, and (b) the Corporation shall pay to
the Holder an aggregate amount in cash equal to $0.01 per Conversion Warrant,
plus all accrued but unpaid interest on the Convertible Debenture through the
date immediately preceding the Redemption Date (the “ Redemption
Consideration ”), by wire transfer of immediately available funds to
the account designated by the Holder prior to the Redemption Date.

    

    6.3           Redemption Date

    

    The Corporation shall have the right to
redeem this Convertible Debenture in the event that the Corporation’s Common
Shares close with a bid price, on average, over $1.00 per share for a
consecutive 20 day trading period.

     

     6.4            Effect of
Redemption

    

    Upon
consummation of the Redemption, this Convertible Debenture shall be cancelled by
the Corporation on its books and the Holder shall have no further rights,
powers, entitlements or claims of any kind under this Convertible Debenture or
the Security Agreements, all of which shall be fully and effectively terminated,
cancelled, released, acquitted, and forever discharged without any further
action on the part of the Holder. For the avoidance of doubt, the payment of the
Redemption Consideration shall discharge in full the Corporation’s obligation to
repay any principal outstanding under this Convertible Debenture immediately
prior to the Redemption.

    

    

    

    ARTICLE
7

     

    MISCELLANEOUS

     

    
      	
              7.1  

            	
              Notice

            

    

     

    Any
notice or other communication required or permitted to be given hereunder shall
be in writing and shall be given by facsimile or other means of electronic
communication or by delivery as hereafter provided. Any such notice other
communication, if sent by facsimile or other means of electronic communication,
shall be deemed to have been received on the business day following the sending,
or, if delivered by hand, shall be deemed to have been received at the time it
is delivered to the applicable address noted below either to the individual
designated below or to an individual at such address having apparent authority
to accept deliveries on behalf of the addressee. Notice of change of address
shall also be governed by this Section. Notices and other communications shall
be addressed as follows:

     

    
      	
              (a)  

            	
              if
      to the Corporation:

            

    

     

    Mexoro
Minerals Ltd.

     

    C.
General Retana, #706

     

    Col. San
Felipe

     

    Chihuahua,
Mexico

     

    Attention:                                Francisco Quiroz

     

    Facsimile:                                +52
(614) 426 5505 ext 104

     

    With a
copy to:

     

    William
S. Rosenstadt, Esq.

    Sanders
Ortoli Vaughn-Flam Rosenstadt LLP

    501
Madison Avenue, 14th
Floor

    New York,
NY 10022

    

    
      	
              (b)  

            	
              if
      to the Holder:

            

    

     

    To the
Holder whose name and address appears on the front page of this Convertible
Debenture.

     

    
      	
              7.2  

            	
              Replacement
      of Certificates

            

    

     

    (1) In case
this Convertible Debenture shall become mutilated or be lost, destroyed or
stolen, the Corporation shall issue, and thereupon deliver, a new Convertible
Debenture of like tenor as the one mutilated, lost, destroyed or stolen in
exchange for and upon surrender and cancellation of such mutilated Certificate
or in lieu of and in substitution for such lost, destroyed or stolen Convertible
Debenture.

     

    
      	
              7.3  

            	
              Amendment,
      Waiver

            

    

     

    No
amendment or waiver of this Convertible Debenture will be binding unless such
amendment or waiver is agreed to in writing by the Corporation and the Holder.
No waiver of any provision of this Convertible Debenture will constitute a
waiver of any other provision nor will any waiver of any provision of this
Convertible Debenture constitute a continuing waiver unless otherwise expressly
provided.

     

    

     

    [SIGNATURE
PAGE FOLLOWS]

     

    
      
        
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    IN WITNESS WHEREOF MEXORO MINERALS
LTD. has caused this Convertible Debenture to be signed by its authorized
signatory as of the 25th day of March, 2009.

     

    
      	 
      	
              MEXORO
      MINERALS LTD.

            
	 
      	 
      
	 
      	
              By:__/s/ Francisco
      Quiroz________________

                   Name:
      Fransisco Quiroz

                   Title:
      President

               

               

            
	 
      	 
      

    

    
      
        
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    SCHEDULE
A

     

    NOTICE
OF ELECTION TO CONVERT

     

    
      	
              TO:

            	
              MEXORO
      MINERALS LTD.

            
	
              Principal
      Amount to be converted

            	
              $

            	 
      
	 
      	 
      	 
      

    

    The
undersigned, the registered Holder of that certain 15% Convertible Debenture,
dated _________, 2009, in the original principal amount of $_________, hereby
irrevocably elects to convert the above noted Principal Amount of such
Convertible Debenture into (Check one):

     

    
      	
              □  

            	
              Cash &
      Warrants: Pursuant to an offer from the Corporation and Financing,
      to receive full payment, including accrued interest plus sufficient
      warrants equal to 20% of the value of the debenture with a strike price at
      20% discount to the 20 day moving average of the Common Shares as quoted
      on the Over the Counter Bulletin Board or other such exchange as the case
      may be (“OTCBB”); or

            

    

     

    
      	
              □  

            	
              Conversion Shares
      & Warrants: Conversion Units at the Conversion Price. The
      number of Conversion Units shall be determined by dividing the Principal
      Amount of the Convertible Debenture by the Conversion Price;
      or

            

    

     

    
      	
              □  

            	
              Real Property
      Interest: A percentage ownership interest in the Reserved Property
      equal to the Principal Amount divided by the sum of all Principal Amounts
      raised in connection with the Securities Purchase
    Agreement.

            

    

     

    In
accordance with the provisions of the within mentioned Convertible Debenture, I
hereby deliver this Convertible Debenture to the Corporation for such
purpose.

     

    For
conversions into Cash & Warrants or Conversion Shares &
Warrants:

     

    I hereby
direct that the certificates for the Conversion Shares and Conversion Warrants
be registered and delivered as follows:

     

    
      	
              Name
      in Full

            	
              Address

            	
              Address
      for Delivery

            	
              Number
      of Conversion Shares and Conversion Warrants

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      

    

    (Please
print full name in which share and warrant certificates are to be
issued.)

     

    The
registered Holder hereof may exercise the Holder’s right to subscribe for
Conversion Units of MEXORO
MINERALS LTD. by completing this Notice of Election to Convert it to the
Corporation at its office.

     

    For
conversions into real property:

     

    I hereby
direct that my Principal Amount be converted into a percent interest of the
Cieneguita property.  Please register this interest as
follows:

     

    
      	
              Name
      in Full

            	
              Address

            	
              Address
      for Delivery

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

    

    

     

    If
applicable, please deliver a new Convertible Debenture in respect of the balance
of the principal amount of the attached Convertible Debenture Certificate that
has not been converted, redeemed or repaid, to the undersigned.

     

    
      	
              Dated:

            	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
              (Signature
      of Holder)

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
              (Print
      Name of Holder)

            

    

    

     

    
      
        
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    SCHEDULE
B

     

    FORM OF
TRANSFER

     

    SCHEDULE
A

     

    TO:           MEXORO MINERALS
LTD.

     

    SUBSCRIPTION
FORM

     

    The
undersigned hereby subscribes for _______________ shares of common stock
(“Common Shares”) in the capital of Mexoro Minerals Ltd. (the “Corporation”) (or
such other number of common shares or other securities to which such
subscription entitles the undersigned in lieu thereof or in addition thereto
pursuant to the provisions of the warrant certificate (the “Warrant
Certificate”) dated the   day of , 20
issued by the Corporation) at the purchase price of U.S. $0.30 per Common Share
(or at such other purchase price as may be in effect under the provisions of the
Warrant Certificate) and on and subject to the other terms and conditions
specified in the Warrant Certificate and hereunder and encloses herewith a
certified cheque, bank draft or money order in lawful money of the United States
of America payable to the Corporation or has transmitted same day funds in
lawful money of United States of America by wire to such account as the
Corporation directed the undersigned in payment of the subscription
price.

     

    The
undersigned is an “accredited investor” Is defined in Regulation D promulgated
under the United States Securities Act of 1933, as amended (the “Securities
Act”) or is a not U.S. Person or a person within the United States and that the
Common Shares are not being subscribed for on behalf of a U.S. Person (as such
term is defined for the purposes of the Securities Act.

     

    The
undersigned hereby directs that the Common Shares subscribed for be registered
and delivered as follows:

     

    
      	
              Name in Full

            	
              Address

            	
              Number of Common Shares

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

    

    DATED
this ________ day
of                                                                                     ,
20_____.

     

    
      	 
      
	 
      
	 
      	 
      
	
              By:

            	 
      
	 
      

    

    
      
        
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    SCHEDULE
B

     

    FORM OF
TRANSFER

     

    FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
______________________________________________________________________________(include
name and address of the transferee) Warrants exercisable for shares in the
common stock (“Common Shares”) in the capital stock of Mexoro Minerals Ltd. (the
“Corporation”) registered in the name of the undersigned on the register of the
Corporation maintained therefor, and hereby irrevocably appoints
_____________________________________________ the attorney of the undersigned to
transfer the said securities on the books maintained by the Corporation with
full power of substitution.

     

    DATED
this _________ day of _______________, 20________ .

     

    

     

    
      	 
      	 
      	
              Signature
      of Transferor

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
              Address
      of Transferor

            
	 
      	 
      	 
      

    

    

     

    
      
        
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    SCHEDULE
C

     

    

     

    NOTICE
OF EXERCISE

     

    (If
Registration Statement Not Effective)

     

    TO:
MEXORO MINERALS LTD.

     

    The
undersigned holder of the within Warrant Certificate, hereby exercises certain
Warrants (the “Exercised Warrants”) evidenced thereby and hereby subscribes for
a number of Common Shares of Mexoro Minerals Ltd. (the “Corporation”) equal to
such number of Common Shares or number or amount of other securities or
property, or combination thereof, to which such exercise entitles him under the
provisions of the Warrant at an aggregate price equal to the product of the
Exercise Price and the number of Exercised Warrants, and on the terms specified
in such Warrant Certificate, and in payment therefor, delivers herewith a bank
draft, certified cheque or money order payable to Mexoro Minerals Ltd.
Capitalized terms not defined herein shall have the definitions set forth in the
Warrant Certificate.

     

    The
undersigned represents that it (A) has had access to such current public
information concerning the Corporation as it considered necessary in connection
with its investment decision and (B) understands that the securities issuable
upon exercise hereof have not been registered under the United States Securities Act of
1933, as amended (the “1933 Act”).

     

    The
undersigned represents and warrants that it: [CHECK ONE ONLY]

     

    ____ A.
is not a U.S. Purchaser and it (1) is not in the United States; (2) is not a
U.S. Person and is not exercising the Warrants for, or on behalf or benefit of,
a U.S. Person or person in the United States; (3) did not execute or deliver the
Subscription Form in the United States; (4) agrees not to engage in hedging
transactions with regard to the Common Shares prior to the expiration of the
one-year distribution compliance period set forth in Rule 903(b)(3) of
Regulation S; (5) acknowledges that the Common Shares issuable upon exercise of
the Warrants are “restricted securities” as defined in Rule 144 of the 1933 Act
and upon the issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the 1933 Act or applicable U.S.
state laws and regulations, the certificates representing the Common Shares will
bear a restrictive legend; and (6) acknowledges that the Corporation shall
refuse to register any transfer of the Common Shares not made in accordance with
the provisions of Regulation S, pursuant to registration under the 1933 Act, or
pursuant to an available exemption from registration under the 1933 Act; and (B)
it holder has not engaged in any “directed selling efforts” (as defined in
Regulation S) in the United States.

     

    ____B.
the undersigned is delivering a written opinion of United States counsel or a
written confirmation from the Corporation to the effect that the Common Shares
to be delivered upon exercise hereof have been registered under the 1933 Act or
are exempt from registration thereunder.

     

    The
undersigned holder understands that the certificate representing the
Corporation’s Common Shares is issued upon exercise of this Warrant will bear a
legend restricting the transfer without registration under the 1933 Act and
applicable state securities laws substantially the form set forth in Section
1(3) of the Warrant Certificate.

     

    Name:

     

    Please
print or type name and address (including postal code)

     

    Address:

     

    Number of
Warrants being Exercised:

     

    DATED
this______ day of_______ ,_________

     

    Signature
guaranteed by:

     

    Name of
registered holder (please print)

     

    
      	
              Signature
      of or on behalf of registered

            
	
              holder

            
	 
      
	 
      
	 
      
	
              Office,
      Title or other Authorization (if holder not an
  individual)mexorosecurityagreement.htm

    EXHIBIT
10.3

    

    MEXORO
GENERAL SECURITY AGREEMENT

    

    SECURITY AGREEMENT (this “Agreement”), dated as
of March 25, 2009, between MEXORO MINERALS LTD. (“Borrower”), a
Colorado corporation, and each lender identified on the signature pages hereto
(each, including its successors and assigns, a “Lender” and collectively the
“Lenders”).  The Lender and Borrower are concurrently entering into a
financing transaction pursuant to which Borrower will issue to Lender its
Secured Convertible Debenture, dated as of even date herewith, (as amended,
modified or supplemented from time to time in accordance with its terms, the
(“Debenture”)
pursuant to which the Lender will make a loan to the Borrower in the Principal
Amount (as such term is defined in the Debenture) pursuant to, and subject to
the terms and conditions thereof.

     

    

    Execution and delivery of this
Agreement is a condition precedent to the making of the Loan.

    

    The obligation of the Lender to make
the Loan is conditioned, among other things, on the execution and delivery by
the Borrower of the Debenture and this Agreement to secure the Obligations (as
such term is defined below), such Obligations to include, without limitation,
the due and punctual payment and performance of (a) the principal of and
interest and fees due under the Debenture, when and as due, whether at maturity,
by acceleration, or otherwise, (b) all obligations of the Borrower at any time
and from time to time under this Agreement and (c) all other obligations at any
time and from time to time under the Debenture or this Agreement (the
“Obligations”).

    

    Accordingly, the Borrower and the
Lender hereby agree as follows:

    

    1.           Definitions of
Terms.  All capitalized terms used herein, but not defined
herein, shall have the meanings set forth in the Debenture.  As used
herein, the following terms shall have the following meanings:

    

    (a) “Account” shall mean
all present and future rights of the Borrower to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (i) for services rendered or to be rendered, or
(ii) for a secondary obligation incurred or to be incurred.

    

    (b) “Chattel Paper”,
“Documents” and
“Instruments”
shall have the meanings set forth in the Colorado Uniform Commercial
Code.

    

    (c) “Equipment” shall mean
all of the equipment of the Borrower, including, without limitation, all
machinery, data processing and computer equipment (whether owned or licensed and
including embedded software), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.  Without limitation to the generality of the foregoing, such
term shall also include all “Equipment” as defined in the Uniform Commercial
code.

    

    (d) 
General Intangibles”
shall mean all of any Borrower’s present and future general intangibles of every
kind and description, including, without limitation, mineral
concessions,  option properties, contract rights, payment intangibles,
trade names and trademarks and the goodwill of the business symbolized thereby,
deposit accounts, letters of credit, and federal, state and local tax refund
claims of all kinds.

    

    (e)  “UCC” shall mean the
Uniform Commercial Code of the State of Colorado and or any other applicable law
of any state or states which have jurisdiction with respect to all, or any
portion of, the Collateral subject to this Agreement, or this Agreement, from
time to time.  It is the intent of the parties that defined terms in
the UCC should be construed in their broadest sense so that the term
“Collateral” (as defined herein below) will be construed in its broadest
sense.  Accordingly if there are, from time to time, changes to
defined terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the amended
definitions, the existing ones shall be controlling.

    

    (f) “Proceeds” shall mean
any consideration received from the sale, lease, exchange or other disposition
of any asset or property which constitutes Collateral, any other value received
as a consequence of the possession of any Collateral and any payment received
from any insurer or other person or entity as a result of the loss,
nonconformity, or interference with the use of, defects or infringements of
rights, or damage to any asset or property that constitutes
Collateral.

    

    (g) “Receivable” shall
mean all of the following property of the Borrower: (a) all Accounts; (b) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (c) all
payment intangibles; (d) letters of credit, indemnities, guarantees, security or
other deposits and proceeds thereof issued and payable to the Borrower or
otherwise in favor of or delivered to the Borrower in connection with any
Account; or (e) all other accounts, contract rights, chattel paper, instruments,
notes, general intangibles and other forms of obligations owing to the Borrower,
whether from the rendition of services or otherwise associated with any
Accounts, or general intangibles of the Borrower (including, without limitation,
choses in action, causes of action, tax refunds, tax refund claims, any funds
which may become payable to the Borrower in connection with the termination of
any employee benefit plan and any other amounts payable to the Borrower from any
employee benefit plan, rights and claims against insurance carriers, rights to
indemnification, business interruption insurance and proceeds thereof, casualty
or any similar types of insurance and any proceeds thereof and proceeds of
insurance covering the lives of employees on which the Borrower is a
beneficiary).

    

    (h) “Records”  shall
mean all of the Borrower’s files, present and future books of account of every
kind or nature, invoices, ledger cards, statements, correspondence, memoranda,
and other data relating to the Collateral or any account debtor, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of the Borrower with respect to the foregoing maintained
with or by any other person).

    

    (i) “Securities”  shall
mean all common or preferred equities owned by the Borrower in any subsidiary
company, affiliated company or any other entity wherever situated, whether in
the United States of America or any other country including Mexico.

    

    2.           Grant and Perfection of
Security Interest. (a) As security for the payment or performance, as the
case may be, of the Obligations, the Borrower hereby creates and grants to the
Lender, its successors and its assigns, a continuing security interest in, lien
upon, and right of setoff against, and hereby assigns to the Lender, all
personal property and fixtures and interests of the Borrower, whether now owned
or hereafter acquired or existing and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by the Lender), collectively the “Collateral”,
including, without limitation, all of the Borrower’s right, title and interest
in the following:

    

    (i)           all
Receivables;

    

    (ii)          all
General Intangibles;

    

    (iii)         all
goods, including, without limitation, Equipment;

    

    (iv)         Chattel
Paper, including, without limitation, all tangible and electronic chattel
paper;

    

    (v)          all
Instruments, including, without limitation, all promissory notes;

    

    (vi)         all
Documents;

    

    (vii)        all
deposit accounts;

    

    (viii)       all
letters of credit, banker’s acceptances and similar instruments and including
all letter-of-credit rights;

    

    (ix)          all
supporting obligations and all present and future liens, security interests,
rights, remedies, title and interest in, to and in respect of any Collateral,
including (A) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to the
Collateral, and (B) deposits by and property of account debtors or other persons
securing the obligations of account debtors;

    

    (x)           all
(A) investment property (including but not limited to the securities of any
subsidiary now organized or hereinafter organized of the
Borrower,  whether certificated or uncertificated, securities
accounts, security entitlements, commodity contracts or commodity accounts) and
(B) monies, credit balances, deposits and other property of the Borrower now or
hereafter held or received from or for the account of the Borrower, whether for
safekeeping, pledge, custody, transmission, collection or
otherwise;

    

    (xi)          all
commercial tort claims;

    

    (xii)         all
Records; and

    

    (xiii)        all
products and Proceeds of the foregoing, in any form, including insurance
proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.

    

    Attached
hereto and marked Schedule 1 is a list of the Collateral in existence as of the
date hereof.

    

    (b) The
Borrower irrevocably and unconditionally authorizes the Lender (or its agent) to
file at any time and from time to time such financing statements with respect to
the Collateral naming the Lender as the secured party and the Borrower as
debtor, as the Lender may require, and including any other information with
respect to the Borrower or otherwise required by Article 9 of the Uniform
Commercial Code of such jurisdiction as the Lender may determine in good faith,
together with any amendment and continuations with respect thereto, which
authorization shall apply to all financing statements filed on, prior to or
after the date hereof.  The Lender hereby ratifies and approves all
financing statements naming the Lender as secured party and the Borrower as
debtor with respect to the Collateral (and any amendments with respect to such
financing statements) filed by or on behalf of the Lender prior to the date
hereof and ratifies and confirms the authorization of the Lender to file such
financing statements (and amendments, if any).  The Borrower hereby
authorizes the Lender to adopt on behalf of the Borrower any symbol required for
authenticating any electronic filing.  In the event that the
description of the collateral in any financing statement naming the Lender as
the secured party and the Borrower as debtor includes assets and properties of
the Borrower that do not at any time constitute Collateral, whether hereunder,
under any of the other Financing Agreements or otherwise, the filing of such
financing statement shall nonetheless be deemed authorized by the Borrower to
the extent of the Collateral included in such description and it shall not
render the financing statement ineffective as to any of the Collateral or
otherwise affect the financing statement as it applies to any of the Collateral,
provided, that,
in such event, upon the Borrower’s written request and at the Borrower’s
expense, the Lender shall file such amendments to its financing statements to
change the assets described therein so as to constitute the
Collateral.  In no event shall the Borrower at any time file, or
permit or cause to be filed, any correction statement or termination statement
with respect to any financing statement (or amendment or continuation with
respect thereto) naming the Lender as secured party and the Borrower as debtor
so long as this Agreement has not been terminated or all of the Obligations have
not been paid and satisfied in full in immediately available funds.

    

    (c) In the
event that any goods, documents of title are at any time after the date hereof
in the custody, control or possession of another person, the Borrower shall
promptly notify the Lender thereof in writing.  Promptly upon the
Lender’s request, the Borrower shall promptly obtain an acknowledgment from such
other person, in form and substance satisfactory to the Lender, that such other
person, inter alia,
acknowledges the security interest of the Lender in such collateral, agrees to
waive any and all claims such other person may, at any time, have against such
collateral, and agrees to permit the Lender access to, and the right to remain
on, the premises of such other person so as to exercise the Lender’s rights and
remedies and otherwise deal with such collateral and in the case of any person
who at any time has custody, control or possession of any Collateral, holds such
collateral for the benefit of the Lender and shall agrees to act upon the
instructions of the Lender, without the further consent of the
Borrower.

    

    (d) The
Borrower agrees at all times to keep in all material respects accurate and
complete accounting records with respect to the Collateral, including, but not
limited to, a record of all payments and Proceeds received.

    

    3.           
Further
Assurances.  The Borrower agrees to take any other actions
reasonably requested by the Lender to insure the attachment, perfection of, and
the ability of the Lender to enforce, the security interest of the Lender in any
and all of the Collateral, including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC or other applicable law, including Mexico to the
extent, if any, that the Borrower’s signature thereon is required therefor, (ii)
causing the Lender’s name to be noted as secured party on any certificate of
title for a titled good if such notation is a condition to attachment,
perfection or priority of, or ability of the Lender to enforce, the security
interest of the Lender in such Collateral, (iii) complying with any provision of
any statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of the Lender to enforce, the security interest of the
Lender in such Collateral, (iv) obtaining the consents and approvals of any
governmental and other third party consents and approvals, including, without
limitation, any consent of any other person obligated on Collateral, (v) paying
any fees and taxes required in connection with the execution and delivery of
this Agreement or the granting of the security interest of the Borrower, and
(vi) taking all actions required by any earlier versions of the UCC or by other
law, as applicable in any relevant jurisdiction.

    

    4.           
Inspection and
Verification.  The Lender and such persons as the Lender may
designate shall have the right, at any reasonable time or times, and upon
reasonable notice (which may be telephonic), to inspect the Collateral owned by
the Borrower, all records related thereto (and to make extracts and copies from
such records), and the premises upon which any such Collateral is located, to
discuss the Borrower’s affairs with the officers of the Borrower and its
independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, and condition of or any other matter relating
to, such Collateral, including, in the case of Receivables or Collateral in the
possession of a third person, contacting account debtors or a third person
possessing such Collateral for the purpose of making such a
verification.  The provisions of this Section 4 shall not be deemed to
limit the Lender’s rights under the Debenture.

    

    5.           Taxes;
Encumbrances.  At its option, the Lender may discharge past due
taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral, and may pay for the maintenance and preservation of
the Collateral to the extent the Borrower fails to do so and the Borrower agrees
to reimburse the Lender on demand for any payment made or any expense incurred
by it pursuant to the foregoing authorization; provided, however, that nothing
in this Section 5 shall be interpreted as excusing the Borrower from the
performance by it of any covenants or other promises as set forth herein or in
the Debenture.

    

    6.           Assignment of Security
Interest.  If at any time the Borrower shall take and perfect a
security interest in any property of an account debtor or any other person to
secure payment and performance of a Receivable, any contract right, or payment
intangible the Borrower shall promptly assign such security interest to the
Lender.  Such assignment need not be filed of public record unless
necessary to continue the perfected status of the security interest against
creditors of and transferees from the account debtor or other person granting
the security interest.

    

    7.           Records.  The
Borrower shall keep or cause to be kept records with respect to the Collateral,
which are complete and accurate in all material respects.  In
addition, the Borrower will provide the Lender with such further schedules
and/or information with respect thereto as the Lender may reasonably
require.

    

    8.           
Priority.  The
Lender’s security interest in the Collateral is and shall remain sa first
priority security interest with respect to the concessions collectively known as
“Cieneguita” and described in detail in the Company’s current report on Form 8-K
dated March 24, 2009. However, such security interest shall remain subordinated
on all remaining Collateral only to the extent of a $127,500 security interest
held by Paramount Gold and Silver Corp. which is required be released upon that
payment of that amount on or before April 30, 2009.

    

    9.           
Protection of
Security.  The Borrower shall, at its own cost and expense,
take any and all actions reasonably necessary to defend title to the Collateral
owned by it against all persons and to defend the security interest of the
Lender in such Collateral, and the priority thereof, against any Lien of any
nature whatsoever except for Liens which may be permitted by the
Debenture.

    

    10.          Continuing Obligations of
the Borrower.  The Borrower shall remain liable to observe and
perform all the conditions and obligations to be observed and performed by it
under each contract, agreement, interest or obligation relating to the
Collateral, all in accordance with the terms and conditions thereof, and shall
indemnify and hold harmless the Lender from any and all such
liabilities.

    

    11.          Remedies Upon
Default.  Upon the occurrence and during the continuance of an
Event of Default, it is agreed that the Lender shall have the right to take any
or all of the following actions at the same or different times:  with
or without legal process and with or without previous notice or demand for
performance, to take possession of the Collateral and without liability for
trespass (except for actual damage caused by the Lender’s gross negligence or
willful misconduct) to enter any premises where such Collateral may be located
for the purpose of taking possession of or removing such Collateral and,
generally, to exercise any and all rights afforded to a secured party under, and
subject to its obligations contained in, the Uniform Commercial Code as in
effect in any state or other applicable law. Without limiting the generality of
the foregoing, the Borrower agrees that the Lender shall have the right to sell
or otherwise dispose of all or any part of the Collateral, at public or private
sale.  Each such purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of the Borrower, and
the Borrower hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which the Borrower now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.

    

    Without limiting the foregoing, upon
the occurrence and during the continuance of an Event of Default, the Lender
may, in its discretion, enforce the rights of the Borrower against any account
debtor or other obligor in respect of any of the Receivables.  Without
limiting the generality of the foregoing, at any time or times that an Event of
Default exists or has occurred and is continuing, the Lender may, in its
discretion, at such time (i) notify any or all account debtors or other obligors
in respect thereof that the Receivables have been assigned to the Lender and
that the Lender has a security interest therein and the Lender may direct any or
all account debtors and other obligors to make payment of the Receivables
directly to the Lender, (ii) extend the time of payment of, compromise or
settle, and upon any terms or conditions, any and all Receivables and thereby
discharge or release the account debtor or any secondary obligors or other
obligors in respect thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivable or such other obligations,
but without any duty to do so, and the Lender shall not be liable to Borrower
(or any Affiliate of Borrower) for any failure to collect or enforce the payment
thereof nor for the negligence of its agents or attorneys with respect thereto
and (iv) take whatever other action the Lender may deem necessary or desirable
for the protection of its interests.  At any time that an Event of
Default exists or has occurred and is continuing, at the Lender’s request, any
notice or demand for payment sent to any account debtor shall state that the
Receivables and such other obligations have been assigned to the Lender and are
payable directly and only to the Lender and the Borrower shall deliver to the
Lender such originals of documents evidencing the sale and delivery of goods or
the performance of services giving rise to any Receivables as the Lender may
require.

    

    The Lender shall give the Borrower five
(5) days’ written notice (which the Borrower agrees is reasonable notice) of the
Lender’s intention to make any sale of Collateral. Such notice, in the case of a
public sale, shall state the time and place for such sale and, in the case of a
sale at a broker’s board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Lender may fix and state in
the notice (if any) of such sale.  At any such sale, the Collateral,
or portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Lender may (in its sole and absolute discretion,
exercised in a commercially reasonable manner) determine.  The Lender
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given.  The Lender may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned.  In case any sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be retained by
the Lender until the sale price is paid by the purchaser or purchasers thereof,
but the Lender shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like
notice.  At any public sale made pursuant to this Section 11, the
Lender may bid for or purchase, free (to the extent permitted by law) from any
right of redemption, stay or appraisal on the part of the Borrower (all said
rights being also hereby waived and released to the extent permitted by law),
with respect to the Collateral or any part thereof offered for sale and the
Lender or any such Lender may make payment on account thereof by using any claim
then due and payable to the Lender from the Borrower as a credit against the
purchase price, and the Lender may, upon compliance with the terms of sale,
hold, retain and dispose of such property without further accountability to the
Borrower therefor.  For purposes hereof, a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Lender shall be free to carry out such sale and purchase pursuant
to such agreement, and the Borrower shall not be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact that
after the Lender shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Lender may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

        12.           Application of
Proceeds.  The proceeds of any collection or sale of
Collateral, as well as any Collateral consisting of cash, shall be applied by
the Lender as follows:

    

    FIRST, to the payment of all reasonable
costs and expenses incurred by the Lender in connection with such collection or
sale or otherwise in connection with this Agreement or any of the Obligations,
including, but not limited to, all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances made by
the Lender hereunder on behalf of the Borrower and any other reasonable costs or
expenses incurred in connection with the exercise of any right or remedy
hereunder;

    

    SECOND, to principal and then interest
on the Loan and all other fees, costs, charges and other Obligations arising
under the Debenture; and

    

    THIRD, to the Borrower, its successors
and assigns, or as a court of competent jurisdiction may otherwise
direct.

    

    Upon any
sale of the Collateral by the Lender (including, without limitation, pursuant to
a power of sale granted by statute or under a judicial proceeding), the receipt
of the Lender or of the officer making the sale shall be a sufficient discharge
to the purchaser or purchasers of the Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Lender or such officer or be answerable in any
way for the misapplication thereof.

    

    13.           Additional Covenants as to
the Collateral.

    

    (a)           The
Borrower shall keep the Collateral at their current locations and the Borrower
will not remove the Collateral from such locations without providing at least
thirty (30) days’ prior written notice to the Lender, whose consent may be
withheld.

    

    (b)           Without
providing at least thirty (30) days’ prior written notice to the Lender, the
Borrower will not change (i) its type of organization, jurisdiction of
organization or other legal structure.

    

    (c)           The
Borrower shall cause its Equipment to be maintained in the same condition,
repair and working order as when new, ordinary wear and tear excepted, and shall
forthwith, or in the case of any loss or damage to any such Equipment as quickly
as practicable after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith which are
necessary or desirable to such end.  The Borrower shall promptly
furnish to the Lender a statement respecting any loss or damage to any of its
Equipment.

    

    14.           Security Interest
Absolute.  All rights of the Lender hereunder, the security
interest created hereby, and all obligations of the Borrower hereunder, shall be
absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Debenture, any other agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or consent to any departure from the Debenture, or any other agreement or
instrument, (iii) any exchange, release or nonperfection of any other
Collateral, or any release or amendment or waiver of or consent to or departure
from any guarantee, for all or any of the Obligations, or (iv) any other
circumstance which might otherwise constitute a defense available to, or
discharge of, the Borrower or any other obligor in respect of the Obligations or
in respect of this Agreement.

    

    15.           No
Waiver.  No failure on the part of the Lender to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Lender preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.  All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law. The Lender shall not be deemed to have waived any rights hereunder or under
any other agreement or instrument unless such waiver shall be in writing and
signed by such parties.

    

    16.           Financing
Waiver.  Notwithstanding and provisions herein to the contrary,
Lender agrees to waive its security interest in as to an
undivided 60% interest of Borrower in the property commonly known as
Cieneguita.  Cieneguita is real property that might be acquired by the
Borrower at a future date, and shall serve as additional
Collateral.

    

    17.           Lender Appointed
Attorney-in-Fact.  The Borrower hereby appoints the Lender the
attorney-in-fact of the Borrower solely for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument
which the Lender may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an
interest.

    

    18.           Fees and
Expenses.  The Borrower shall be obligated to, within ten (10)
days after demand, pay to the Lender the amount of any and all expenses,
including the reasonable fees and expenses of its counsel and of any experts or
agents which the Lender may incur in connection with (i) the administration of
this Agreement, including the cost and expenses of the Lender’s Collateral
examination as provided herein, (ii) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Lender hereunder, or (iv)
the failure by the Borrower to perform or observe any of the provisions hereof.
In addition, the Borrower indemnifies and holds the Lender harmless from and
against any and all liability incurred by the Lender hereunder or in connection
herewith, unless such liability shall be due to the gross negligence or willful
misconduct of the Lender, as the case may be.  Any such amounts
payable as provided hereunder or thereunder shall be additional Obligations
secured hereby.

    

    19.           Submission to
Jurisdiction.  (a) Any legal action or proceeding with respect
to this Agreement may be brought in the State of New York at the sole discretion
of the Lender.  By execution and delivery of this Agreement, the
Borrower hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.

    

    (b)           The
Borrower hereby irrevocably waives, in connection with any such action or
proceeding, any objection, including, without limitation, any objection to the
laying of venue or based on the grounds of forum non conveniens, which it may
now or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.

    

    (c)           The
Borrower hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it, as the case may
be, at its address set forth in the Debenture.

    

    (d)           Nothing
herein shall affect the right of the Lender to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Borrower in any other jurisdiction which the Lender deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against the Borrower or its property.

    

    20.           Entire Agreement; Waiver of
Jury Trial, etc. (a) This Agreement and the Debenture constitute the
entire contract between the parties hereto relative to the subject matter
hereof.  Except as expressly provided herein,  nothing in
this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, any rights, remedies, obligations or liabilities
under or by reason of this Agreement the other Financing
Agreements.

    

    (b)           EXCEPT
AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND THE OTHER FINANCING
AGREEMENTS.

    

    (c)           Except
as prohibited by law, each party hereto hereby waives any right it may have to
claim or recover in any litigation arising hereunder, any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages.

    

    (d)           Each
party hereto (i) certifies that no representative, Lender or attorney of the
Lender has represented, expressly or otherwise, that the Lender would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that it has been induced to enter into this Agreement, by, among
other things, the mutual waivers and certifications herein.

    

    21.           Binding Agreement;
Assignments.  This Agreement, and the terms, covenants and
conditions hereof, shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower
shall not be permitted to assign this Agreement or any interest herein or in the
Collateral, or any part thereof, or any cash or property held by the Lender as
Collateral under this Agreement, except as contemplated by this Agreement or the
Debenture.

    

    22.           Applicable
Law.  This Agreement shall be construed in accordance with and
governed by the law of the State of New York (other than the conflicts of laws
principles thereof) except to the extent that the validity or perfection of the
security interest hereunder, or remedies hereunder, in respect of any particular
collateral are governed by the laws of the State of New York with respect to any
mining concessions.

    

    23.           Notices.  All
communications and notices hereunder shall be in writing and given as provided
in the Debenture.

    

    24.           Severability.  In
the event any one or more of the provisions contained in this Agreement should
be held invalid, ille­gal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

    

    25.           Section
Headings.  Section headings used herein are for convenience
only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

    

    26.           Counterparts; Facsimile
Signatures.  This Agreement may be executed in counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute but one contract, and shall become effective when copies hereof
which, when taken together, bear the signatures of each of the parties hereto
shall be delivered to the Lender.  Delivery of an executed counterpart
of a signature page to this Agreement by telecopier shall be effective as
delivery of a manually executed signature page hereto.

    

    27.           Termination.  This
Agreement shall terminate when (a) all the Obligations have been fully and
indefeasibly paid in immediately available funds and (b) the Debenture has been
terminated.

    

    28.           Debenture.  The
Borrower acknowledges that this Agreement does not and shall not be construed as
requiring the Lender to accept the Debenture or make the Loan.

    

    .

    (Signature
Pages Follow)

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties
hereto have caused this Securities Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated
above.

     

    

    
      	
              MEXORO
      MINERALS INC.

               

               

            	
              Address for Notice:

            
	
              By:__/s/ Francisco
      Quiroz________________

                   Name:
      Fransisco Quiroz

                   Title:
      President

               

               

            	
              General
      Retana 706

              Col.
      San Felipe, Chihuahua, Chih.

              Mexico,
      C.P. 32103

            
	 
      	 
      
	 
      	 
      

    

    

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    [PURCHASER
SIGNATURE PAGES TO MEXORO MINERALS LTD. SECURITIES PURCHASE
AGREEMENT]

    

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    Name of
Purchaser: ________________________________________________________

    Signature of Authorized Signatory of
Purchaser: __________________________________

    Name of
Authorized Signatory:
____________________________________________________

    Title of
Authorized Signatory:
_____________________________________________________

    Email
Address of
Purchaser:________________________________________________

    

    Address
for Notice of Purchaser:

    

    

    

    

    Address
for Delivery of Securities for Purchaser (if not same as above):

    

    

    

    

    

    Subscription
Amount:

    

    

    EIN
Number:  [PROVIDE
THIS UNDER SEPARATE COVER]

    

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    Schedule I

    

    

    The
Collateral

    

    All the
present and hereafter acquired property of Mexoro.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]