MEXORO MINERALS LTD. AMENDMENT NO. 1 TO THE DEVELOPMENT AGREEMENT
Exhibit 10.2
AMENDMENT NO. 1 TO THE
DEVELOPMENT AGREEMENT
DEVELOPMENT AGREEMENT
This Amendment No. 1 to the Development Agreement (this “Amendment”) is made and
entered into as of December 23, 2009, by and among Mexoro Minerals Ltd., a Colorado corporation
(“Mexoro”), Sunburst Mining de Mexico S.A. de C.V., an entity organized under the laws of
the United Mexican States (“Sunburst”), Minera Rio Tinto, S.A. de C.V., an entity organized
under the laws of the United Mexican States (“MRT”) and Xxxxx Minerals S.A., an entity
organized under the laws of the United Mexican States (“Xxxxx Minerals”). Capitalized
terms used herein which are not defined herein shall have the definition ascribed to them in the
Development Agreement, dated February 6, 2009, by and among the Company, Sunburst and MRT (the
“Development Agreement”).
RECITALS
WHEREAS, subject to the terms and conditions of the Development Agreement, Sunburst has
assigned to MRT a 60% ownership interest in the Cieneguita property (the “Cieneguita
Property”), subject to a 75% interest in the net cash flows from the mining production of the
Cieneguita Property that is available from the surface of the Cieneguita Property to a depth of
fifteen meters (the “First Phase Production”).
WHEREAS, the Company and MRT seek to amend the Development Agreement to reflect Sunburst’s
acquisition from MRT of a 6% ownership interest in the Cieneguita Property and a 1% interest in the
net cash flows from the First Phase Production in exchange for $100,000 in cash and a reduction of
the funds MRT is required to invest in the Bankable Feasibility Stage of the Cieneguita Property
from $5,000,000 to $4,000,000.
WHEREAS, the Company previously entered into a securities purchase agreement and a security
agreement with certain investors, pursuant to which the investors purchased an aggregate of
$1,500,000 of secured convertible debentures from the Company (the “Debentures”).
WHEREAS, pursuant to the terms of the Debentures, the investors irrevocably agreed to convert
an aggregate of $1,500,000 of the Debentures into a 10% ownership interest in the Cieneguita
Property (which includes a 10% interest in the net cash flows from the First Phase Production).
WHEREAS, pursuant to an Acknowledgement and Agreement, Xxxxx Xxxx and MRT, two of the
investors, have sold a portion of their ownership interests in the Cieneguita Property (an
aggregate of 4% ownership interest in the Cieneguita Property, and 4% of the net cash flows from
the First Phase Production) to Sunburst in exchange for $550,000 in cash, and the parties seek to
amend the Development Agreement to account for these transactions.
WHEREAS, subsequent to the sale by Xxxxx Xxxx and MRT, the investors contributed as capital
their remaining 6% ownership interest in the Cieneguita Property (and the net cash flows from the
First Phase Production) to Xxxxx Minerals.
WHERAS, the Company, Sunburst and MRT seek to add Xxxxx Minerals as a party to the Development
Agreement to account for their ownership interest.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and
in the Subscription Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
| 1. | The Development Agreement is hereby deemed to be amended to add Xxxxx Minerals
as a party to the Development Agreement. |
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| 2. | Section 4.3(a)(10) of the Development Agreement shall be amended and restated
in its entirety as follows: |
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“From the remaining amount, MRT shall retain 74% as consideration for the
development of the contract, and the remaining 26% shall be paid (i) 6% to XXXXX
MINERALS and (ii) 20% to SUNBURST, by issuing corresponding invoices.” |
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| 3. | Section 5.6 of the Development Agreement shall be amended and restated in its
entirety as follows: |
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“To take the CIENEGUITA PROJECT to Bankable Feasibility stage, MRT shall invest in
the Project the amount of US$4,000,000 (FOUR MILLION DOLLARS, legal currency of the
United States of America) (the “Threshold Amount”).” |
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| 4. | Section 5.7 of the Development Agreement shall be amended and restated in its
entirety as follows: |
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“In the event the costs required for the Project to be in Financial Feasibility are
less than the Threshold Amount, MRT shall invest the remainder of any funds
comprising the Threshold Amount in any work necessary for site development, such
that MRT will have invested an aggregate of US$4,000,000 (FOUR MILLION DOLLARS,
legal currency of the United States of America).” |
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| 5. | The first paragraph and second paragraph of Section 5.8 of the Development
Agreement shall be amended and restated in its entirety as follows: |
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“Once MRT makes an investment equal to the Threshold Amount and takes the CIENEGUITA
PROJECT to Bankable Feasibility stage, the ownership structure |
of the CORPORATION shall be modified to be 54% owned by MRT, 6% owned by XXXXX
MINERALS and 40% owned by SUNBURST and the By-Laws of the CORPORATION shall be
modified to restructure the BOARD OF DIRECTORS, which shall be 5 members (CHAIRMAN,
SECRETARY, TREASURER, FIRST MEMBER AND SECOND MEMBER) to be heard and vote, 2 of
whom shall be designated by MRT, 2 of whom shall be designated by SUNBURST and
MEXORO, and 1 of whom shall be an industry expert mutually designated by MRT and
SUNBURST and MEXORO. |
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If for any reason, MRT invests a total amount less than the Threshold Amount, MRT
shall have its ownership interest in the CORPORATION reduced such that MRT’s
ownership interest will be equal to (a) the product of (i) the amount invested by
MRT, multiplied by (ii) 0.6, divided by (b) 5. The amount of any
reduction in MRT’s ownership interest in the CORPORATION below 60% pursuant to this
section will be referred to herein as the “MRT Reduction”. In the event of an MRT
Reduction, SUNBURST’s ownership interest in the CORPORATION will be increased by an
amount equal to the MRT Reduction.” |
| 6. | Section 5.9 of the Development Agreement shall be amended and restated in its
entirety as follows: |
| “(a) | In the event that the Threshold Amount has been invested by
MRT, and the Bankable Feasibility Survey has not been prepared, and MRT and
SUNBURST mutually determine that an additional investment is required (an
“Additional Investment”), MRT, SUNBURST and XXXXX MINERALS each agree
to fund the Additional Investment on a pro rata basis in accordance with their
respective ownership interests in the CORPORATION. For avoidance of doubt, as
of the date hereof, SUNBURST would be required to fund 40% of the Additional
Investment, MRT would be required to fund 54% of the Additional Investment and
XXXXX MINERALS would be required to fund 6% of the Additional Investment. |
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| (b) | In the event that MRT, SUNBURST or XXXXX MINERALS decide not to
fund its pro rata portion of the Additional Investment within ten business days
after a determination is made that the Additional Investment is necessary (the
“Expiration Date”), then subject to Section 5.9(c), the
non-contributing partner will have its ownership interest in the CORPORATION
decreased by one percent (1%) for every $100,000 invested by a contributing
partner. Notwithstanding the foregoing, the parties agree that in no event
shall SUNBURST’s ownership interest in the CORPORATION be decreased below 25%. |
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| (c) | In the event XXXXX MINERALS does not fund its pro rata portion
of the Additional Investment by the Expiration Date, then notwithstanding
Section 5.9(b), SUNBURST shall have the right to fund all or a portion of |
the Additional Investment on behalf of XXXXX MINERALS (the “Cover
Amount”). In the event SUNBURST funds the Cover Amount, SUNBURST will
be deemed to have acquired from XXXXX MINERALS a one percent (1%) ownership
interest in the CORPORATION for every $100,000 funded by SUNBURST (the
“Acquired Ownership Interest”). Upon the payment of the Cover
Amount by SUNBURST, XXXXX MINERALS shall be deemed to have automatically
transferred the Acquired Owernship Interest to SUNBURST. In the event that
SUNBURST elects not to fund the Cover Amount within ten business days
following the Expiration Date, then XXXXX MINERALS will have its ownership
percentage in the Cieneguita Property reduced as set forth in Section
5.9(b).” |
| 7. | Section 8 of the Development Agreement shall be amended and restated in its
entirety as follows: |
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“The contract herein my be terminated: |
(a) By the mutual written consent of MRT and Mexoro;
(b) By MRT, if Mexoro or SUNBURST fail to comply with their respective
obligations provided herein, in which case MRT shall provide Mexoro and
SUNBURST written notice of the grounds for their non-compliance, and MRT
shall have the right to terminate this contract if Mexoro and SUNBURST fail
to correct such non-compliance within 30 days of their receipt of written
notice from MRT.
(c) By Mexoro, if MRT fails to comply with its obligations provided herein,
in which case Mexoro shall provide MRT written notice of the grounds for its
non-compliance, and Mexoro shall have the right to terminate this contract
if MRT fails to correct such non-compliance within 30 days of its receipt of
written notice from Mexoro.”
| 8. | The Company, SUNBURST, MRT and XXXXX MINERALS represent that they have the
necessary authority to enter into this Amendment. |
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| 9. | This Amendment shall be binding upon, and inure to the benefit of, the parties
hereto, their respective successors and legal representatives and their permitted
assigns. |
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| 10. | Except to the extent expressly modified by this Amendment, all of the
provisions of the Development Agreement shall remain in full force and effect, without
modification or amendment and are ratified in all respects. This Amendment is limited
by its terms and does not and shall not serve to amend or waive any provision of the
Development Agreement except as expressly provided for in this Amendment. |
| 11. | This Amendment, including the validity hereof and the rights and obligations of
the parties hereunder, shall be construed, interpreted, enforced and governed by and
under the laws of the State of California applicable to contracts made and to be
performed entirely in such state, without regard to its rules regarding conflicts of
law provisions. |
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| 12. | This Amendment may be executed in any number of counterparts, each of which
shall constitute an original but all of which shall constitute one and the same
instrument. The Parties need not sign the same counterpart. |
[Signature Page to Follow]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 to the Development
Agreement as of date first written above.
| MEXORO MINERALS LTD. |
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| By: | /s/ Xxxxxx Xxxxx | |||
| Name: | Xxxxxx Xxxxx | |||
| Title: | President | |||
| SUNBURST MINING DE MEXICO S.A. DE C.V. |
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| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: | Xxxxxx Xxxxxx | |||
| Title: | Authorized Signatory | |||
| MINERA RIO TINTO S.A. DE C.V. |
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| By: | /s/ Xxxxx Xxxx | |||
| Name: | Xxxxx Xxxx | |||
| Title: | President | |||
| XXXXX MINERALS S.A. |
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| By: | /s/ Xxxxx Xxxx | |||
| Name: | Xxxxx Xxxx | |||
| Title: | Authorized Signatory | |||
