Document:

Exhibit 10.5

Exhibit
10.5

MEXORO MINERALS LTD.

WARRANT

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE “SEC”) UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). THERE HAS BEEN NO
REGISTRATION UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT
BE RESOLD ABSENT REGISTRATION UNDER THE APPLICABLE SECURITIES LAWS OR AN EXEMPTION THEREFROM, THE
SECURITIES WILL HAVE A LEGEND ON THEM TO THIS EFFECT. THE SECURITIES REPRESENTED HEREBY HAVE BEEN
OFFERED UPON AN EXEMPTION FROM SECURITIES REGISTRATION PURSUANT TO SECTION 4(2) AND/OR RULE 506 OF
THE REGULATION D (“REGULATION D”) AS PROMULGATED BY THE SEC UNDER THE 1933 ACT.

THESE WARRANTS WILL EXPIRE AND BECOME NULL AND VOID

AT 5 P.M. (PACIFIC STANDARD TIME) ON DECEMBER
 _____, 2011.

SHARE PURCHASE WARRANTS TO PURCHASE COMMON SHARES

OF

MEXORO MINERALS, LTD.

THIS IS TO CERTIFY THAT Mario Ayub (the “Holder”), has the right to purchase, upon and subject
to the terms and conditions hereinafter referred to, up to 193,333 fully paid and non-assessable
common shares (the “Shares”) of Mexoro Minerals, Ltd. (hereinafter called the “Company”) on or
before 5 p.m. (Pacific Standard Time) on December
 _____, 2011 (the “Expiry Date”) at a price per share
of U.S. $0.50 (the “Exercise Price”) on the terms and conditions attached hereto as Appendix
A (the “Terms and Conditions”).

	 	1.	 	ONE (1) WARRANT AND THE EXERCISE PRICE ARE REQUIRED TO PURCHASE ONE SHARE.
THIS CERTIFICATE REPRESENTS 193,333 WARRANTS.
	 
	 	2.	 	These Warrants are issued subject to the Terms and Conditions, and the
Warrant Holder may exercise the right to purchase Shares only in accordance with those
Terms and Conditions. The Warrant shall expire twenty-four months (24) months after
the date hereof and shall be exercisable at $0.50 per share of Common Stock for a
period of one year, commencing one year after the date hereof. In other
words, the term of the Warrant is two years and they are not exercisable for the first
twelve months after the date hereof.

 

 

 

	 	3.	 	Nothing contained herein or in the Terms and Conditions will confer any right
upon the Holder hereof or any other person to subscribe for or purchase any Shares at
any time subsequent to the Expiry Date, and from and after such time, this Warrant and
all rights hereunder will be void and of no value.
	 
	 	 	 	IN WITNESS WHEREOF, the Company has executed this Warrant Certificate this
 _____ 
day
of December, 2009.

	 	 	 	 	 
	MEXORO MINERALS, LTD.

 	 
	Per:  	 	 
	 	Authorized Signatory 	 
	 	 	 	 

 

 

 

	 	 	 	 	 

APPENDIX A

TERMS AND CONDITIONS dated December
 _____, 2009, attached to the non-transferable Warrants issued
by Mexoro Minerals, Ltd.

SECTION 1 INTERPRETATION

1.1 Definitions

In these Terms and Conditions, unless there is something in the subject matter or context
inconsistent therewith:

	 	(a)	 	“Company” means Mexoro Minerals, Ltd. until a successor corporation will have
become such as a result of consolidation, amalgamation or merger with or into any
other corporation or corporations, or as a result of the conveyance or transfer of all
or substantially all of the properties and estates of the Company as an entirety to
any other corporation and thereafter “Company” will mean such successor corporation.
	 
	 	(b)	 	“Company’s Auditors” means an independent firm of accountants duly appointed
as auditors of the Company.
	 
	 	(c)	 	“Director” means a director of the Company for the time being, and reference,
without more, to action by the directors means action by the directors of the Company
as a Board, or whenever duly empowered, action by an executive committee of the Board.
	 
	 	(d)	 	“herein,” “hereby” and similar expressions refer to these Terms and
Conditions as the same may be amended or modified from time to time; and the
expression “Article” and “Section,” followed by a number refer to the specified
Article or Section of these Terms and Conditions.
	 
	 	(e)	 	“person” means an individual, corporation, partnership, trustee or any
unincorporated organization and words importing persons have a similar meaning.
	 
	 	(f)	 	“Shares” means the common shares of the Company as constituted at the date
hereof and any shares resulting from any subdivision or consolidation of the shares.
	 
	 	(g)	 	“Warrant Holders” or “Holders” means the holders of the Warrants.
	 
	 	(h)	 	“Warrants” means the warrants of the Company issued and presently authorized
and for the time being outstanding.

 

 

 

1.2 Gender

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

1.3 Interpretation not affected by Headings

The division of these Terms and Conditions into Articles and Sections, and the insertion of
headings are for convenience of reference only and will not affect the construction or
interpretation thereof.

1.4 Applicable Law

The rights and restrictions attached to the Warrant shall be construed in accordance with the
laws of the State of New York, U.S.A. The Holder, in its personal or corporate capacity and, if
applicable, on behalf of each beneficial purchaser for whom it is acting, irrevocably agrees to the
jurisdiction of the courts of the State of New York, U.S.A.

1.5 Additional Issuances of Securities

The Company may at any time and from time to time do further equity or debt financing and may
issue additional Shares, Warrants, convertible securities, stock options or other similar rights to
purchase its capital stock.

SECTION 2 ISSUE OF WARRANTS

2.1 Issue in Substitution for Lost Warrants

	 	(a)	 	In case a Warrant becomes mutilated, lost, destroyed or stolen, the Company,
at its discretion, may issue and deliver a new Warrant of like date and tenor as the
one mutilated, lost, destroyed or stolen, in exchange for and in place of and upon
cancellation of such mutilated Warrant, or in lieu of, and in substitution for such
lost, destroyed or stolen Warrant and the substituted Warrant will be entitled to the
benefit hereof and rank equally in accordance with its terms with all other Warrants
issued or to be issued by the Company.
	 
	 	(b)	 	The applicant for the issue of a new Warrant pursuant hereto will bear the
cost of the issue thereof and in case of loss, destruction or theft furnish to the
Company such evidence of ownership and of loss, destruction, or theft of the Warrant
so lost, destroyed or stolen as will be satisfactory to the Company in its discretion
and such applicant may also be required to furnish indemnity in amount and form
satisfactory to the Company in its discretion, and will pay the reasonable charges of
the Company in connection therewith.

 

 

 

2.2 Warrant Holder Not a Shareholder

The holding of a Warrant will not constitute the Holder thereof as a shareholder of the
Company, nor entitle him to any right or interest in respect thereof except as the Warrant
expressly provided.

SECTION 3 NOTICE

3.1 Notice to Warrant Holders

Any notice required or permitted to be given to the Holders will be in writing and may be
given by prepaid registered post, electronic facsimile transmission or other means of electronic
communication capable of producing a printed copy to the address of the Holder appearing on the
Holder’s Warrant or to such other address as any Holder may specify by notice in writing to the
Company, and any such notice will be deemed to have been given and received by the Holder to whom
it was addressed if mailed, on the third day following the mailing thereof, if by facsimile or
other electronic communication, on successful transmission, or, if delivered, on delivery; but if
at the time of mailing or between the time of mailing and the third business day thereafter there
is a strike, lockout, or other labour disturbance affecting postal service, then the notice will
not be effectively given until actually delivered.

3.2 Notice to the Company

Any notice required or permitted to be given to the Company will be in writing and may be
given by prepaid registered post, electronic facsimile transmission or other means of electronic
communication capable of producing a printed copy to the address of the Company set forth below or
such other address as the Company may specify by notice in writing to the Holder, and any such
notice will be deemed to have been given and received by the Company to whom it was addressed if
mailed, on the third day following the mailing thereof, if by facsimile or other electronic
communication, on successful transmission, or, if delivered, on delivery; but if at the time of
mailing or between the time of mailing and the third business day thereafter there is a strike,
lockout, or other labour disturbance affecting postal service, then the notice will not be
effectively given until actually delivered:

Mexoro Minerals, Ltd.

Mountain View Center

12303 Airport Way

Suite 200

Broomfield, CO 80021

Attention: George Young, President

Fax:

with a copy, which shall not constitute notice, to:

 

 

 

DLA Piper US LLP

4365 Executive Drive, Suite 1100

San Diego, CA 92121-2133

Attention: Jeffrey C. Thacker

Fax: +1 (858) 638-5128

SECTION 4 EXERCISE OF WARRANTS

4.1 Method of Exercise of Warrants

The right to purchase Shares conferred by the Warrants may be exercised by the Holder
surrendering the Warrant Certificate representing same, with a duly completed and executed
subscription in the form attached hereto and a bank draft or certified cheque payable to the
Company for the aggregate purchase price applicable at the time of surrender in respect of the
shares subscribed for in lawful money of the United States of America, to the Company at the
address set forth herein.

4.2 Effect of Exercise of Warrants

	 	(a)	 	Upon surrender and payment as aforesaid, the Shares so subscribed for will be
deemed to have been issued and such person or persons will be deemed to have become
the Holder or Holders of record of such shares on the date of such surrender and
payment, and such shares will be issued at the subscription price in effect on the
date of such surrender and payment.
	 
	 	(b)	 	Within three business days after surrender and payment as aforesaid, the
Company will forthwith cause to be delivered to the person or persons in whose name or
names the Shares so subscribed for are to be issued as specified in such subscription
or mailed to him or them at his or their respective addresses specified in such
subscription, a certificate or certificates for the appropriate number of Shares not
exceeding those which the Warrant Holder is entitled to purchase pursuant to the
Warrant surrendered.

4.3 Limitation on Exercise of Warrants

The Warrant shall expire twenty-four months (24) months after the date hereof and shall be
exercisable at $0.50 per Share for a period of one year, commencing one year after
the date hereof. In other words, the term of the Warrants is two years and they are not
exercisable for the first twelve months after the date hereof.

4.4 Subscription for Less Than Entitlement

The Holder of any Warrant may subscribe for and purchase a number of shares less than the
number which he is entitled to purchase pursuant to the surrendered Warrant. In the event of any
purchase of a number of shares less than the number which can be purchased pursuant to a Warrant,
the Holder thereof upon exercise thereof will in

 

 

 

addition be entitled to receive a new Warrant in respect of the balance of the shares which he
was entitled to purchase pursuant to the surrendered Warrant and which were not then purchased.

4.5 Warrants for Fractions of Shares

To the extent that the Holder of any Warrant is entitled to receive on the exercise or partial
exercise thereof a fraction of a share, such right may be exercised in respect of such fraction
only in combination with another Warrant or other Warrants which in the aggregate entitle the
Holder to receive a whole number of such shares.

4.6 Expiration of Warrants

After the expiration of the period within which a Warrant is exercisable, all rights
thereunder will wholly cease and terminate and such Warrant will be void and of no effect.

4.7 Time of Essence

Time will be of the essence hereof.

4.8 Subscription Price

Each Warrant is exercisable at a price per share (the “Exercise Price”) of U.S. $0.50. One
(1) Warrant and the Exercise Price are required to subscribe for each share during the term of the
Warrants.

4.9 Adjustment of Exercise Price

	 	 	The Exercise Price and the number of shares deliverable upon the exercise of the Warrants
will be subject to adjustment in the event and in the manner following:

	 	(a)	 	If and whenever the shares at any time outstanding are subdivided into a
greater or consolidated into a lesser number of shares the Exercise Price will be
decreased or increased proportionately as the case may be; upon any such subdivision
or consolidation, the number of shares deliverable upon the exercise of the Warrants
will be increased or decreased proportionately as the case may be.
	 
	 	(b)	 	In case of any capital reorganization or of any reclassification of the
capital of the Company or in the case of the consolidation, merger or amalgamation of
the Company with or into any other Company (hereinafter collectively referred to as a
“Reorganization”), each Warrant will, after such Reorganization, confer the right to
purchase the number of shares or other securities of the Company (or of the Company’s
resulting from such Reorganization) which the Warrant Holder would have been entitled
to upon Reorganization if the Warrant Holder had been a shareholder at the time of
such Reorganization.

 

 

 

	 	(c)	 	In any such case, if necessary, appropriate adjustments will be made in the
application of the provisions of this Article Four relating to the rights and interest
thereafter of the Holders of the Warrants so that the provisions of this Article Four
will be made applicable as nearly as reasonably possible to any shares or other
securities deliverable after the Reorganization on the exercise of the Warrants.
	 
	 	(d)	 	The subdivision or consolidation of shares at any time outstanding into a
greater or lesser number of shares (whether with or without par value) will not be
deemed to be a Reorganization for the purposes of this clause.
	 
	 	(e)	 	The adjustments provided for in this Section are cumulative and will become
effective immediately after the record date or, if no record date is fixed, the
effective date of the event which results in such adjustments.

4.10 Determination of Adjustments

If any questions will at any time arise with respect to the Exercise Price or any adjustment
provided for in the “Adjustment of Exercise Price” section above, such questions will be
conclusively determined by the Company’s Auditors, or, if they decline to so act, any other firm of
certified public accountants in the U.S. that the Company may designate and who will have access to
all appropriate records, and such determination will be binding upon the Company and the Holders of
the Warrants.

SECTION 5 WAIVER OF CERTAIN RIGHTS

5.1 Immunity of Shareholders, etc.

The Warrant Holder, as part of the consideration for the issue of the Warrants, waives and
will not have any right, cause of action or remedy now or hereafter existing in any jurisdiction
against any past, present or future incorporator, shareholder, Director or officer (as such) of the
Company for the issue of shares pursuant to any Warrant or on any covenant, agreement,
representation or warranty by the Company herein contained or in the Warrant.

5.2 Legends

The Subscriber hereby acknowledges that upon the issuance thereof, and until such time as the
same is no longer required under the applicable securities laws and regulations, the certificates
representing any of the Shares issued upon exercise hereof will bear appropriate legends required
by law, including:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THERE HAS BEEN NO REGISTRATION UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD TRANSFERRED OR
ASSIGNED IN THE

 

 

 

ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

SECTION 6 MODIFICATION OF TERMS, ETC.

6.1 Modification of Terms and Conditions for Certain Purposes

From time to time the Company may, subject to the provisions of these presents, and it shall,
when so directed by these presents, modify the terms and conditions hereof, for any one or more of
any of the following purposes:

	 	(a)	 	making such provisions not inconsistent herewith as may be necessary or
desirable with respect to matters or questions arising hereunder or for the purpose of
obtaining a listing or quotation of the Warrants on any stock exchange or quotation
system;
	 
	 	(b)	 	adding to or altering the provisions hereof in respect of the registration
and transfer of Warrants; making provisions for the exchange of Warrants of different
denominations; and making any modification in the form of the Warrants which does not
affect the substance thereof;
	 
	 	(c)	 	for any other purpose not inconsistent with the terms hereof, including the
correction or recertification of any ambiguities, defective provisions, errors or
omissions herein; and
	 
	 	(d)	 	to evidence any successions of any corporation and the assumption of any
successor of the covenants of the Company herein and in the Warrants contained as
provided herein.

6.2 Warrants Not Transferable

The Warrant and all rights attached to it are not transferable.

6.3 Covenants of the Company

The Company will reserve and there will remain unissued out of its authorized capital stock a
sufficient number of Shares to satisfy the rights of purchase provided for in the Warrants should
the holders of all the Warrants from time to time outstanding determine to exercise such rights in
respect of all Shares why they are or may be entitled to purchase pursuant thereto.

 

 

 

DATED as of the date first above written in these Terms and Conditions.

	 	 	 	 	 
	 	MEXORO Minerals, Ltd.

 	 
	 	Per:  	 	 
	 	 	Authorized Signatoryexv4w4

Exhibit 4.4

MEXORO MINERALS LTD.

2009 NONQUALIFIED STOCK OPTION PLAN

     Purpose. This Stock Option plan (this “Plan”) is established by Mexoro Minerals Ltd. (the
“Company”). The purposes of this Plan are (a) to ensure the retention of the services of existing
executive personnel, key employees, and directors of the Company or its affiliates; (b) to attract
and retain competent new executive personnel, key employees, consultants and directors; (c) to
provide incentive to all such personnel, employees, consultants and directors to devote their
utmost effort and skill to the advancement and betterment of the Company, by permitting them to
participate in the ownership of the Company and thereby in the success and increased value of the
Company; and (d) to allow vendors, service providers, consultants, business associates, strategic
partners, and others, with or that the Board of Directors anticipates will have an important
business relationship with the Company or its affiliates, the opportunity to participate in the
ownership of the Company and thereby to have an interest in the success and increased value of the
Company.

     Applicability of General Provisions. Unless any Plan specifically indicates to the contrary,
all Plans shall be subject to the General Provisions of the Stock Option plan set forth below, and
references to the Plan could also mean reference to the Plans.

GENERAL PROVISIONS OF THE STOCK OPTION PLAN

     Article 1. Administration. The Plan shall be administered by a committee
(“Committee”) consisting of not less than one director of the Company as designated by the Board of
Directors of the Company (“Board”). The Board may from time to time remove members from the
Committee, fill all vacancies in the Committee, however caused, and may select one of the members
of the Committee as its Chairman. Any action of the Committee shall be taken by a majority vote or
the unanimous written consent of the Committee members. The Committee shall hold meetings at such
times and places as it may determine, shall keep minutes of its meetings, and shall adopt, amend,
and revoke such rules and procedures as it may deem appropriate with respect to the Plan.

     Notwithstanding any other provision of the Plan (and without limiting the Committee’s
authority), in connection with any action concerning grants of Awards to or transactions by
“Insiders,” the Committee may adopt such procedures as its deems necessary or desirable to assure
the availability of exemptions from Section 16 of the Securities Exchange Act of 1934 afforded by
Rule 16b-3 thereunder or any successor rule. Without limiting the foregoing, in connection with
approval of any transaction by an “Insider” involving a grant, award or other acquisition from the
Company, or involving the disposition to the Company of the Company’s equity securities, the
Committee may delegate its approval authority to a subcommittee thereof comprised of two or more
“Non-Employee Directors” (as defined in Rule 16b-3), or take action by the affirmative vote of two
or more Non-Employee Directors (with all other members of the Committee abstaining or recusing
themselves from participating in the

 

 

matter), or refer the matter to the full Board of Directors for action. For this purpose, and
“Insider” shall mean an individual who is, on the relevant date, a specifically identified officer,
director, or 10% beneficial owner of the Company, as defined under Section 16 of the Securities
Exchange Act of 1934.

     Article 2. Authority of Committee. Subject to the other provisions of this
Plan, and with a view to effecting its purpose, the Committee shall have the sole authority, in its
absolute discretion: (a) to construe and interpret the Plan; (b) to define the terms used herein;
(c) to determine, to the extent not provided by the Plan or the relevant Plan, the terms and
conditions of Options and Restricted Shares granted pursuant to the terms of the Plan; and (d) to
make all other determinations necessary or advisable for the administration of the Plan and to do
all things necessary or desirable for the administration of the Plan. All decisions,
determinations, and interpretations made by the Committee shall be binding and conclusive on all
affected individuals having an interest in the Plan and on their legal representatives, heirs and
beneficiaries.

     Article 3. Maximum Number of Shares Subject to the Plan. The shares of common
stock which may be issued under the Plan shall be the authorized and unissued, $0.001 par value
common stock of the Company (the “Common Stock”). The maximum aggregate number of shares of Common
Stock which may be issued under the Plan shall be 5,000,000 shares.

          The shares of Common Stock to be issued upon exercise of an Option may be authorized but
unissued shares or shares reacquired by the Company. If any of the Options granted under the Plan
expire or terminate for any reason before they have been exercised in full, the unpurchased shares
subject to those expired or terminated Options shall cease to reduce the number of shares available
for purposes of the Plan.

          The proceeds received by the Company from the sale of its Common Stock pursuant to the
exercise of Options under the Plan, if in the form of cash, shall be added to the Company’s general
funds and used for general corporate purposes.

     Article 4. Eligibility and Participation. Officers, employees, directors
(whether employee directors or non-employee directors), and independent contractors or agents of
the Company or its subsidiaries (“Subsidiaries”) who are responsible for or contribute to the
management, growth, or profitability of the business of the Company or its Subsidiaries shall be
eligible to participate in the Plan to the extent designated by the Committee in its sole and
complete discretion (“Participants”). The grant of NQSOs to a Participant shall be the grant of
separate options and each NQSO shall be specifically designated as such in accordance with
applicable provisions of the Treasury regulations. A person may be granted multiple Awards under
the Plan.

          For purposes of this Plan, the term “Subsidiary” shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one

 

 

of the other corporations in such chain. A corporation that attains the status of a Subsidiary on
a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

     Article 5. Effective Date and Term of Plan. The Plan shall become effective
upon its adoption by the Board of Directors of the Company subject to approval of the Plan by a
majority of the stockholders of the Company voting in person or by proxy at a meeting of the
stockholders or by unanimous written consent, which approval must be obtained within 12 months
following adoption of the Plan by the Board of Directors. However, Options may be granted under
this Plan prior to obtaining stockholder approval of the Plan, but any such Options shall be
contingent upon such stockholder approval being obtained and may not be exercised prior to such
approval. The Plan shall continue in effect for a term of 10 years unless sooner terminated under
Article 7 of these General Provisions.

     Article 6. Adjustments. If the then outstanding shares of Common Stock are
increased, decreased, changed or exchanged for a different number or kind or shares or securities
through merger, consolidation, combination, exchange of shares, other reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock split, then an
appropriate and proportionate adjustment shall be made in the maximum number and kind of shares or
securities as to which Options may be granted under this Plan. A corresponding adjustment changing
the number and kind of shares or securities allocated to unexercised Options which shall have been
granted prior to any such change, shall likewise be made. Any such adjustment in outstanding
Options shall be made without change in the aggregate purchase price applicable to the unexercised
portion of the Option, but with a corresponding adjustment in the price for each share or other
unit of any security covered by the Option.

     Article 7. Termination and Amendment of the Plan. The Plan shall terminate at
the end of the term of the Plan as described in Article 5. No Options shall be granted under the
Plan after the effective date of such termination.

          Further, subject to the limitation contained in Article 8 of these General Provisions, the
Board of Directors may, at any time and without further approval of the Company’s stockholders,
terminate or suspend the Plan or amend or revise its terms, including the form and substance of the
Option agreements used for the administration of the Plan. However, unless the approval by the
stockholders of the Company representing a majority of the voting power (as contained in Article 5
of these General Provisions) is obtained, no amendment or revision shall (a) increase the maximum
aggregate number of shares that may be sold or distributed pursuant to Options granted under this
Plan, except as permitted under Article 6 of these General Provisions; (b) change the minimum
purchase price for shares under Section 4 of the NQSO Plan; (c) increase the maximum term
established under a Plan for any Option; (d) permit the granting of an Option to anyone other than
as provided in Article 4 of these General Provisions; or (e) change the term of the Plan as
described in Article 5 of these General Provisions.

     Article 8. Prior Rights and Obligations. No termination, suspension, or
amendment of the Plan shall, without the consent of the Participant who has received an Option,
alter or

 

 

impair any of that person’s rights or obligations under the Option granted under the Plan prior to
that termination, suspension, or amendment without the written consent of the Participant.

          The Committee may modify, extend, or renew outstanding Options and authorize the grant of new
Options in substitution therefore, provided that any action may not, without the written consent of
a Participant, impair any of such Participant’s rights under any Option.

     Article 9. Privileges of Stock Ownership. Notwithstanding the exercise of any
Option granted pursuant to the terms of this Plan no Participant shall have any of the rights or
privileges of a stockholder of the company with respect to any shares of Common Stock issuable upon
the exercise of his or her Option until certificates representing the shares have been issued and
delivered. No shares shall be required to be issued and delivered upon exercise of any Option
unless and until all of the requirements of law and of all regulatory agencies having jurisdiction
over the issuance and delivery of the securities shall have been fully complied with.

     Article 10. Reservation of Shares of Common Stock. The Company, during the
term of this Plan, shall at all times reserve and keep available such number of shares of its
Common Stock as shall be sufficient to satisfy the requirements of the Plan. In addition, the
Company shall from time to time, as is necessary to accomplish the purposes of this Plan, seek or
obtain from any regulatory agency having jurisdiction any requisite authority in order to issue and
sell shares of Common Stock hereunder. The inability of the Company to obtain from any regulatory
agency the authority deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of any Common Stock hereunder shall relieve the Company of any liability in respect of the
failure to issue or sell the stock for which the requisite authority was not obtained.

     Article 11. Tax Withholding. The exercise of any Option granted under this
Plan is subject to the condition that if at any time the Company shall determine, in its
discretion, that the satisfaction of withholding tax or other withholding liabilities under any
state or federal law is necessary or desirable as a condition to, or in connection with, such
exercise or the delivery or purchase of shares, then in such event, the exercise of the Option
shall not be effective unless such withholding shall have been effected or obtained in a manner
acceptable to the Company.

     Article 12. Compliance with Securities Laws. Shares of Common Stock shall not
be issued with respected to any Option under the Plan unless the issuance and delivery of those
shares shall comply will all relevant provisions of state and federal law including, without
limitation, the Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares may then be listed,
and shall be further subject to the approval of counsel for the Company with respect to such
compliance. The Committee may also require an individual to furnish evidence satisfactory to the
Company, including a written and signed representation letter and consent to be bound by any
transfer restriction imposed by law, legend, condition, or otherwise, that the shares are being
purchased only for investment and without any present intention to sell or distribute the shares in
violation of any state or federal law, rule or regulation. Further, an individual shall consent to
the imposition of a legend on the shares of Common Stock relating to his or her Option restricting
their transferability as required by law or by this Article 12.

 

 

          Notwithstanding any other provision set forth in the Plan, if required by the then current
Section 16 of the Securities Exchange Act of 1934, any “derivative security” or “equity security”
offered pursuant to the Plan to any Insider may not be sold or transferred for at least six months
after the date of grant of such Award. The terms “equity security” and “derivative security” shall
have the meaning s ascribed to them in the then current Rule 16(a) under the Securities Exchange
Act of 1934.

     Article 13. Corporate Transactions. In the event of (a) a dissolution or
liquidation of the Company, (b) merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation
of the Company in a different jurisdiction, or other transaction in which there is no substantial
change in the stockholders of the company or their relative stock holdings and the Awards granted
under this Plan are assumed, converted, or replaced by the successor corporation, which assumption
is binding on all Participants), (c) merger in which the Company is the surviving corporation but
after which the stockholders of the Company immediately prior to such merger (other than any
stockholder that merges, or which owns or controls another corporation that merges with the Company
in such merger) cease to own their shares or other equity interest in the Company, (d) the sale of
substantially all of the assets of the Company, or (e) the acquisition, sale, or transfer of more
than 50% of the outstanding shares of the Company by tender offer or similar transaction, then any
or all outstanding Awards may be assumed, converted or replaced by the successor corporation (if
any), which assumption, conversion, or replacement shall be binding on all Participants. In the
alternative, the successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after taking into account
the existing provisions of the Awards). The successor corporation may also issue, in place of
outstanding shares of the Company held by the Participant, substantially similar shares or other
property subject to repurchase restrictions no less favorable to the Participant.

          In the event such successor corporation (if any) refuses to assume or substitute Awards as
provided above pursuant to a transaction described in this Article 13, such Awards shall expire on
such transaction at such time and on such conditions as the Committee may determine at its sole and
complete discretion. In any case, notwithstanding anything in this Plan to the contrary, the
Committee may, in its sole and complete discretion, provide that the vesting (that is, full
exercisability in the case of Options) shall accelerate into full vesting upon a transaction
described in this Article 13.

               Article 14. Governing Law. The provisions of this Plan hereunder shall be
governed by and interpreted in accordance with the laws of the State of Colorado, United States of
America, without regard to any applicable conflicts of law and without regard to the fact that any
party is or may become a resident of a different state or county.

 

 

MEXORO MINERALS LTD.

NONQUALIFIED STOCK OPTION PLAN

     Section 1. Purpose. The purpose of this Mexoro Minerals Ltd. Non-qualified
Stock Option Plan (“Plan”) is to provide for the grant of options which shall not constitute
qualified “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (“Code”). This Plan is Part II of the Company’s Stock Option plan (“Plan”).
Unless any provision herein indicates to the contrary, this Plan shall be subject to the General
Provisions of the Plan.

     Section 2. Option Terms and Conditions. Each NQSO shall be evidenced by a
NQSO agreement between the grantee (“Optionee”) and the Company. The terms and conditions of NQSOs
granted under the Plan shall be determined by the Committee in its sole and complete discretion.
Each NQSO shall be subject to all applicable terms and conditions of the Plan and may be subject to
other terms and conditions which are not inconsistent with the Plan. The terms and conditions may
differ as between NQSOs.

     Section 3. Duration of Options. Each NQSO shall expire on the date as
determined by the Committee. In addition, each NQSO shall be subject to earlier termination as
otherwise provided under the Plan. The date of grant of a NQSO shall be the date on which the
Committee makes the determination to grant such NQSO, unless otherwise specified by the Committee.

     Section 4. Exercise Price. The exercise price (“Exercise Price”) for shares
of Common Stock subject to any NQSO shall be determined by the Committee in its sole and complete
discretion. To the extent that the Exercise Price is designated with respect to fair market value
(“Fair Market Value”) of the shares at the time of the grant of the NQSO, then Fair Market Value
shall be determined by the Committee on the basis of such factors as they deem appropriate,
including a determination of Fair Market Value based on an independent appraisal by a person who
customarily makes such appraisals. However, the Fair Market Value on any day shall be deemed to
be, if the Common Stock is traded on a national securities exchange, the closing price (or, if no
reported sale takes place on such day, the mean of the reported bid and asked prices) of the Common
Stock on such day on the principal such exchange. In each case, the Committee’s determination of
Fair Market Value shall be conclusive.

     Section 5. Exercise of Options. A NQSO shall be exercisable at the times or
upon the events determined by the Committee as set forth in the NQSO agreement governing the NQSO.
Each NQSO shall be exercisable in one or more installments during its term, and the right to
exercise may be cumulative as determined by the Committee. No NQSO may be exercised for a fraction
of a share of Common Stock. The person exercising a NQSO may do so only by written notice of
exercise delivered to the Committee, in such form as the Committee

 

 

prescribes or approves from time to time, specifying the number of shares to be purchased and
accompanied by a tender of the Exercise Price for those shares. The Exercise Price of any shares
purchased shall be paid in full in cash or by certified or cashier’s check payable to the order of
the Company, or by shares of Common Stock, if permitted by the Committee, or by a full recourse
promissory note if permitted by the Committee, or by a combination these means, at the time of
exercise of the NQSO.

          If any portion of the Exercise Price is paid in shares of Common Stock, those shares shall be
tendered at their then Fair Market Value as determined by the Committee in accordance with Section
4 of this Plan. As permitted by the Committee, payment in shares of Common Stock shall include the
automatic application of shares of Common Stock received upon exercise of an NQSO to satisfy the
Exercise Price for the NQSO or additional NQSOs.

     Section 6. Continued Employment or Service. Each Optionee, if requested by
the Committee, must agree in writing as a condition of the granting of his or her NQSO, to remain
in the employment of, or service to, the Company or any Subsidiary following the date of the
granting of that option for a period specified by the Committee. Nothing in this Plan nor in any
NQSO granted hereunder shall confer upon any Optionee any right to continued employment by, or
service to, the Company or any Subsidiary, or limit in any way the right of the Company or any
subsidiary at any time to terminate or alter the terms of that employment or service arrangement.

     Section 7. Option Rights Upon Termination of Employment or Service. If an
Optionee under this Plan ceases to be employed by, or provide services to, the Company or any
Subsidiary for any reason other than death or disability, his or her option shall immediately
terminate, provided, however, that the Committee may, in its discretion, allow the NQSO to be
exercised, to the extent exercisable on the date of termination of employment or service, at any
time within three months after the date of termination of employment or service, unless either the
NQSO or this Plan otherwise provides for earlier termination.

     Section 8. Option Rights Upon Disability. If an Optionee becomes disabled
within the meaning of Code Section 22(e)(3) while employed by, or providing services to, the
Company or any Subsidiary, his or her NQSO shall immediately terminate, provided, however, that the
Committee may, in its discretion, allow the NQSO to be exercised, to the extent exercisable on the
date of termination of employment or service due to disability, at any time within one year after
the date of termination of employment or service due to disability, unless either the NQSO or the
Plan otherwise provides for earlier termination.

     Section 9. Option Rights Upon Death of Optionee. Except as otherwise limited
by the Committee at the time of the grant of a NQSO, if an Optionee dies while employed by, or
providing services to, the Company or any Subsidiary, his or her NQSO shall expire one year after
the date of death unless by its terms it expires sooner. During this one year or shorter period,
the NQSO may be exercised, to the extent exercisable on the date of death, by the person or persons
to whom the Optionee’s rights under the NQSO shall pass by will or by the laws of descent and
distribution.

 

 

     Section 10. Options Not Transferable. NQSOs granted pursuant to the terms of
this Plan may not be sold, pledged, assigned, or transferred in any manner otherwise than by will
or the laws of descent or distribution and shall not be subject to execution, attachment, or
similar process. However, at the Optionee’s election, the NQSO may be transferred to and held by a
grantor trust of which the Optionee is both a trustee and beneficiary, in which case such NQSO
shall continue to be subject to all restrictions set forth in the Plan and this Plan. NQSOs may be
exercised during the lifetime of an Optionee only by (a) the Optionee, (b) at the Optionee’s
election, by a grantor trust of which the Optionee is both a trustee and beneficiary, (c) on behalf
of the Optionee, by a person holding the Optionee’s power of attorney for that purpose, or (d) the
duly appointed guardian of the person and property of an Optionee who is disabled within the
meaning of Code Section 22(e)(3).

     Section 11. Option Shares May Be Restricted. As the Committee may determine,
the shares of Common Stock purchased upon exercise of an NQSO granted hereunder may be deemed to
be “Restricted Shares” granted under the Restricted Shares Plan for purposes of applying all
provisions and terms and conditions of the Restricted Share Plan. As such, during the “Restriction
Period” (as described in the Restricted Share Plan), such shares of Common Stock may be subject to
redemption and nontransferability, and all restrictions shall lapse upon the occurrence of events
as may be determined by the Committee. Further, the procedures of the Restricted Share Plan
relating to the issuance, surrender, and assignment of shares and the provisions relating to
stockholder rights may apply to the shares of Common Stock issued upon exercise of any NQSO granted
hereunder.

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