Document:

exh10-1.htm

    
      

      

    

    EXHIBIT 10.1

     

    

      MEXORO
MINERALS LTD.

       

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

       

      SECURED
CONVERTIBLE DEBENTURE

       

      Date
of
Issue:                                May
7, 2008

       

      Interest
Rate:                                8.0%
per annum

       

      $500,000
(the “Principal
Amount”)

       

      Mexoro Minerals Ltd. (the
“Corporation”) for value
received hereby promises to Paramount Gold and Silver
Corp. (the “Holder”) of 346 Waverley Street, Suite
110, Ottawa, Ontario K2P 0W5 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 eight per cent (8%)
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 interest 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 Ottawa,
Ontario;

       

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

       

      “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 the Convertible Debenture is convertible,
being $0.50 per Conversion Unit;

       

      “Conversion Privilege” means
the right to convert the 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 the 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 $0.75 per
Warrant Share expiring four years after the date this Convertible Debenture is
converted into Conversion Units;

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      “Convertible Debenture” means
this 8% secured convertible debenture of the Corporation and any debenture
issued in replacement, substitution or exchange, in whole or in part, of this 8%
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;

       

      “Event of Default” has the
meaning attributed thereto in Section 5.3;

       

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

       

      “Interest Rate” means 8% per
annum;

       

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

       

       “Maturity Date” means one (1)
year from the Issue Date or such earlier date on which the conversion of the
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 May 9, 2008 of the
Corporation granting the Holder a security interest in all the present and after
acquired property of Mexoro;

       

      “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;

       

      “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 May 9, 2008 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

       

      “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 Province of Ontario and the laws of the Canada applicable therein.
The parties hereto submit to the exclusive jurisdiction of the courts in the
Province of Ontario. 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 Province of
Ontario 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 monthly in arrears on the tenth (10th) day of each month, 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

              

      

       

      As
interest becomes due on this Convertible Debenture, the Corporation shall pay in
certified funds for such interest payable, less any applicable withholding tax,
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 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.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      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.

       

      
        	
                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
surrender 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.

       

      

       

      
        	
                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
determined by the accounting firm of HLB Cinnamon Jang Willoughby in Vancouver,
BC.

       

      or 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 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 two (2) 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 held by certain Swiss investors due on March
      31, 2008 to 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 the 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 the next registration
      statement to be filed by the Corporation within sixty (60) days following
      the Issue Date (the “Registration
      Statement”); (ii) make its best efforts to obtain effectiveness
      with the Securities and Exchange Commission of the Registration Statement
      within one hundred twenty (120) days following the Issue Date; 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 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 OTC-Bulletin Board 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 to 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.

       

      ARTICLE
5

       

      REGISTRATION
RIGHTS

       

      
        	
                5.1  

              	
                Registration
      Rights

              

      

       

      When the
Corporation elects to file a Registration Statement, with respect to its Common
Shares pursuant to the Securities Act of 1933 (the “Act”), the Conversion Shares,
Warrant Shares and any other securities due to the Holder under this Convertible
Debenture shall be included and registered pursuant to any such Registration
Statement, at the expense of the Corporation; provided, however, that such
Registration Statement must be filed no later than the sixtieth (60th) day
following the Issue Date and the Corporation shall make its best efforts to have
such Registration Statement be declared effective no later than the one hundred
twentieth (120th) day following the Issue Date. The Corporation must notify the
Holder in writing of its intention to file the Registration Statement at least
twenty (20) days prior to the filing of the Registration Statement, and provide
the Holder with drafts of such Registration Statement for review and comment by
the Holder upon Holder’s request.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ARTICLE
6

       

      MISCELLANEOUS

       

      
        	
                6.1  

              	
                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:                                Mario
Ayub

       

      Facsimile:

       

      
        	
                (b)  

              	
                if
      to the Holder:

              

      

       

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

       

      
        	
                6.2  

              	
                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.

       

      
        	
                6.3  

              	
                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]

       

      
        
           

        

        
           

          
            

          

        

        
           

          
            -  -

             

          

        

      

      IN WITNESS WHEREOF MEXORO MINERALS
LTD. has caused this Convertible Debenture to be signed by its authorized
signatory as of the 9th day of May, 2008.

       

      
        	 
      	
                MEXORO
      MINERALS LTD.

              
	 
      	 
      
	 
      	 
      
	 
      	
                Name:

                Title:

              

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            -  -

             

          

        

      

      SCHEDULE
A

       

      NOTICE
OF ELECTION TO CONVERT

       

      
        	
                TO:

              	
                MEXORO
      MINERALS LTD.

              
	
                Principal
      Amount to be converted

              	
                $

              	 
      
	 
      	 
      	 
      

      

      The
undersigned registered Holder of the within Convertible Debenture hereby
irrevocably elects to convert the above noted Principal Amount of such
Convertible Debenture into Conversion Units of Mexoro Minerals Ltd. in
accordance with the provisions of the within mentioned Convertible Debenture and
hereby delivers this Convertible Debenture to the Corporation for such purpose
and directs 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.

       

      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)

              

      

      

       

      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.$0.75 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:

              	 
      
	 
      

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            -  -

             

          

        

      

      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

              
	 
      	 
      	 
      

      

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
            -  -

             

          

        

      

      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)ex10-2.htm

    
      

      

    

    EXHIBIT 10.2

     

    NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY WAS SOLD IN ACCORDANCE WITH REGULATION S AND
IT AND ANY SECURITIES INTO WHICH IT MAY BE EXERCISED MAY ONLY BE RESOLD TO
ANOTHER PARTY IN ACCORDANCE WITH REGULATION S.

    

    SERIES
A COMMON STOCK PURCHASE WARRANT

    

    To
Purchase [-----------] Shares of Common Stock of

     

    MEXORO
MINERALS LTD.

     

    THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, [Name of Subscriber] (the “Holder”), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the
“Initial Exercise
Date”) and on or prior to the close of business on the second anniversary
of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Mexoro Minerals Ltd, a
Colorado corporation (the “Company”), up to
[----------] shares (the “Warrant Shares”) of
Common Stock, without par value, of the Company (the “Common
Stock”).  The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in Section
1(b).

     

    Section
1.                                Exercise.

     

    a) Exercise of
Warrant.  Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company of a duly executed facsimile copy of the Notice of Exercise Form annexed
hereto (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of such Holder
appearing on the books of the Company); provided, however, within 5
business days of the date said Notice of Exercise is delivered to the Company,
if this Warrant is exercised in full, the Holder shall have surrendered this
Warrant to the Company and the Company shall have received payment of the
aggregate Exercise Price of the shares thereby purchased by wire
transfer.  Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender this Warrant to the Company until
the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full.  Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the outstanding number of
Warrant Shares purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased.  The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and the date of
such purchases.  The Company shall deliver any objection to any Notice
of Exercise Form within 3 business days of receipt of such
notice.  The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less
than the amount stated on the face hereof.

     

    b) Exercise.

     

    The
Warrant may be exercised in the manner set out in (i) and (ii)
below:

     

    (i)           by
the payment of the Exercise Price for each Warrant Share being
purchased.  The exercise price of the Common Stock under this Warrant
shall be $0.75, subject to adjustment hereunder (the “Exercise
Price”).

     

    or

     

    (ii)           in
lieu of paying cash for the Warrant Shares, exercise by an exchange, in whole or
in part (a "Warrant Exchange") as noted in a duly executed Notice of Exercise
electing a Warrant Exchange. In connection with any Warrant Exchange, the Holder
shall be deemed to have paid for the Warrant Shares an amount equal to the Fair
Market Value of each Warrant delivered, and the Warrants shall be deemed
exercised for the amount so paid. For this purpose, the Fair Market Value of
each Warrant is the difference between the Market Value of a share of Common
Stock and the Exercise Price on the Exercise Date. Market Value shall mean (i)
if the Common Stock is listed on a national exchange or quoted on an
over-the-counter market on which the Common Shares are then quoted for trading,
the average closing bid price of a share of Common Stock during the ten (10)
trading days ending on the Exercise Date and (ii) if the Common Stock is neither
listed on a national exchange nor quoted on an over-the-counter market, the
amount reasonably determined (the “Board Determination”) in good faith by the
board of directors of the Company (the “Board”) subject to the remainder of this
subsection. After a Board Determination, the Board shall send to the Holder a
written statement setting forth in reasonable detail how it came to the Board
Determination, and the Holder shall have ten (10) business days after the
transmittal of such statement to make known in writing any objection to such
valuation and the determination of Market Value as determined by the Holder (the
“Holder Determination”). Within five (5) business days of receipt of such a
written objection, the Board shall either submit a new determination in place of
the disapproved valuation or request a meeting with the Holder to discuss a
mutually satisfactory valuation. If within an additional period of five (5)
business days, a substitute valuation has not been agreed to by the Board and
the Holder, the Board shall submit the dispute between the Board and the Holder
to an investment banking firm or appraiser mutually acceptable to the Board and
the Holder for resolution as soon as practicable. The determination of value by
such investment banking firm or appraiser (the “Appraiser Determination”) shall
be final and conclusive and binding on the Company and the Holder. If the
Appraiser Determination is greater than or equal to the average of the Holder
Determination and the Board Determination, the cost and expense of the
investment banking firm or appraiser shall be bourn by the Company and otherwise
it shall be bourn by the Holder.

    

    

    c) Mechanics of
Exercise.

     

    i. Authorization of Warrant
Shares.  The Company covenants that all Warrant Shares which
may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such
issue).

     

    ii. Delivery of New Warrants
Upon Exercise.  If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

     

    iii. Rescission
Rights.  If the Company fails to cause its transfer agent to
transmit to the Holder a certificate or certificates representing the Warrant
Shares pursuant to this Section 1(c)(iii) within 5 business days of the date the
Notice of Exercise is delivered and, in the case of a cashless exercise pursuant
to Section 1(b)(ii), the determination of the Exercise Price, then the Holder
will have the right to rescind such exercise.

     

    iv. Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Company fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Shares pursuant to an exercise within 5 business days
of the date the Notice of Exercise is delivered and in the case of a cashless
exercise pursuant to Section 1(b)(ii), the determination of the Exercise Price,
and if after such date the Holder is required by its broker to purchase (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Company, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery
obligations hereunder.  For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In, together with applicable
confirmations and other evidence reasonably requested by the
Company.  Nothing herein shall limit a Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the
terms hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    v. No Fractional Shares or
Scrip.  No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise
Price.

     

    vi. Charges, Taxes and
Expenses.  Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.

     

    vii. Closing of
Books.  The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

     

    Section
2.                                Certain Adjustments.

     

    a) Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding:
(A) pays a stock dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company pursuant to this
Warrant), (B) subdivides outstanding shares of Common Stock into a larger number
of shares, (C) combines (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (D) issues by
reclassification of shares of the Common Stock any shares of capital stock of
the Company, then in each case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted.  Any
adjustment made pursuant to this Section 2(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.

     

    b) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (A) the
Company effects any merger or consolidation of the Company with or into another
Person, (B) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (C) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (D) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Company, (a) upon exercise of this
Warrant, the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any
additional consideration (the “Alternate
Consideration”) receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is acquired in an all cash
transaction, cash equal to the value of this Warrant as determined in accordance
with the Black-Scholes option pricing formula.  For purposes of any
such exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Exercise Price
among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration.  If
holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction.  To
the extent necessary to effectuate the foregoing provisions, any successor to
the Company or surviving entity in such Fundamental Transaction shall issue to
the Holder a new warrant consistent with the foregoing provisions and evidencing
the Holder’s right to exercise such warrant into Alternate Consideration. The
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this Section 2(d) and insuring that this Warrant (or any
such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.

     

    c) Calculations. All
calculations under this Section 2 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 2,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.

     

    Section
3.                                Transfer of
Warrant.

     

    a) Transferability.  Subject
to compliance with any applicable securities laws and the conditions set forth
in Sections 4(a) and 3(d) hereof, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer.  Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled.  A Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.

     

    b) New Warrants. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney.  Subject to compliance
with Section 3(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    c) Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.

     

    d) Transfer
Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall
not be registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or
blue sky laws, the Company may require, as a condition of allowing such transfer
(i) that the Holder or transferee of this Warrant, as the case may be, furnish
to the Company a written opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable
state securities or blue sky laws, (ii) that the holder or transferee execute
and deliver to the Company an investment letter in form and substance acceptable
to the Company, (iii) that the transferee be an
“accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified
institutional buyer as defined in Rule 144A(a) under the Securities
Act and (iv) that the
transferee not be in the United States or a U.S. Person for the purpose of
resales under Regulation S under the Securities Act.

     

    Section
4.                                Miscellaneous.

     

    a) Title to
Warrant.  Prior to the Termination Date and subject to
compliance with applicable laws and Section 3 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part, at the office or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed.  The transferee shall sign an investment letter in
form and substance reasonably satisfactory to the Company.

     

    b) No Rights as Shareholder
Until Exercise.  This Warrant does not entitle the Holder to
any voting rights or other rights as a shareholder of the Company prior to the
exercise hereof.  Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price (or by means of a cashless exercise), the
Warrant Shares so purchased shall be and be deemed to be issued to such Holder
as the record owner of such shares as of the close of business on the later of
the date of such surrender or payment.

     

    c) Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant, shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

     

    d) Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a
Saturday, Sunday or a legal holiday, then such action may be taken or such right
may be exercised on the next succeeding day not a Saturday, Sunday or legal
holiday.

     

    e) Authorized
Shares.

     

    The
Company covenants that during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant.  The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed.

     

    Except
and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment.  Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this
Warrant.

     

    Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    f) Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.

     

    g) Restrictions.  The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.

     

    h) Nonwaiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date.  If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

     

    i) Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.

     

    j) Limitation of
Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

     

    k) Remedies.  Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant.  The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be
adequate.

     

    l) Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder.  The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant
Shares.

     

    m) Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.

     

    n) Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.

     

    o) Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

     

    

    ********************

    

    

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

     

    

    Dated:  _____________________,
2008

    
 

    
      	
              MEXORO
      MINERALS LTD.

               

               

            
	
              By:__________________________________________

                   Name:

                   Title:

               

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    NOTICE
OF EXERCISE

    

    TO:           MEXORO
MINERALS LTD.

    

    (1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

     

    (2) The
undersigned shall

    

    |_|
purchase ______ Warrant shares of the Company for a total of $______ and tenders
herewith payment of the aggregate Exercise Price of such Warrant Shares in full,
together with all applicable transfer taxes, if any; or

    

    |_|
purchase _______ Warrant Shares of the Company pursuant to the cashless exercise
provision under Section 1.b(ii) of the Warrant, and tenders herewith the number
of Warrant Shares to purchase such Warrant Shares based upon the formula set
forth in Section 1.b(ii).

    

    (3) Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

     

    _______________________________

    

    

    The
Warrant Shares shall be delivered to the following:

    

    _______________________________

    

    _______________________________

    

    _______________________________

    

    (4)  Accredited
Investor.  The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended, and, if exercise is being made in reliance of Regulation S promulgated
under the Securities Act of 1933, the undersigned is not in the United States
and is not a U.S. Person as applies to Regulation S.

    

    [SIGNATURE
OF HOLDER]

    

    Name of
Investing Entity:
________________________________________________________________________

    Signature of Authorized Signatory of
Investing Entity:
_________________________________________________

    Name of
Authorized Signatory:
___________________________________________________________________

    Title of
Authorized Signatory:
____________________________________________________________________

    Date:
________________________________________________________________________________________

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    ASSIGNMENT
FORM

    

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

    

    

    

    FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

     

    

    _______________________________________________
whose address is

    

    _______________________________________________________________.

    

    

    

    _______________________________________________________________

    

    Dated:  ______________,
_______

    

    

    Holder’s
Signature:                                           _____________________________

    

    Holder’s
Address:                                           _____________________________

    

    _____________________________

    

    

    

    Signature
Guaranteed:  ___________________________________________

    

    

    NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

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