MEXORO MINERALS, INC. ACKNOWLEDGEMENT AND AGREEMENT
Exhibit
10.1
MEXORO MINERALS, INC.
ACKNOWLEDGEMENT AND AGREEMENT
ACKNOWLEDGEMENT AND AGREEMENT
This Acknowledgement and Agreement, dated December 23, 2009 (this “Agreement”), is
entered into by and among Mexoro Minerals, Ltd., a Colorado corporation (the “Company”),
Xxxxx Minerals SA, an entity organized under the laws of the United Mexican States (“Xxxxx
Minerals”) and the undersigned investors listed on the signature page hereto (each an
“Investor,” and collectively, the “Investors”).
RECITALS
WHEREAS, the Company has entered into a Definitive Agreement for the Development of the
Cieneguita Project with Minera Rio Tinto, S.A. de C.V. (“MRT”), dated February 6, 2009 (the
“Development Agreement”), pursuant to which the Company 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 pursuant to the terms and
conditions of Amendment No. 1 to the Development Agreement, dated as of the date hereof
(“Amendment No. 1”), pursuant to which the Company will acquire from MRT 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 (“Purchase
Agreement”) and a security agreement (“Security Agreement”) with each of the Investors
in the forms attached hereto as Exhibit A and Exhibit B, respectively, pursuant to which the
Investors purchased an aggregate of $1,500,000 of secured convertible debentures from the Company
(the “Offering”), each in the form attached hereto as Exhibit C (collectively, the
“Debentures”).
WHEREAS, in addition to the Offering, the Company issued a debenture to OHAG in the principal
amount of $250,000 (the “OHAG Debenture”) which was secured by 2,250,000 shares of common
stock of the Company (the “Stock”).
WHEREAS, MRT acquired the OHAG Debenture from OHAG in a private transaction, the Company
subsequently defaulted on its payment obligations under the OHAG Debenture, MRT exercised its
rights under the OHAG Debenture to foreclose on the Stock in lieu of repayment of the OHAG
Debenture by the Company, the Company issued MRT the Stock in satisfaction of the OHAG Debenture
and, upon the issuance of the Stock to MRT, the OHAG Debenture was cancelled.
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, Xxxxx Xxxx and MRT, two of the Investors in the Debentures, desire to sell 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 the
Company in exchange for $550,000 in cash.
WHEREAS, subsequent to the sale by Xxxxx Xxxx and MRT, the Investors wish to contribute as
capital their remaining ownership interests in the Cieneguita Property (and the net cash flows from
the First Phase Production) to Xxxxx Minerals.
WHEREAS, the Company and each of the other parties hereto wish to acknowledge and confirm
their respective ownership interests in the Cieneguita Property (and the net cash flows from the
First Phase Production) resulting from the above transactions.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises and agreements of the parties herein,
and for other valuable consideration, the sufficiency of which is hereby acknowledged and
confirmed, it is agreed as follows:
| 1. | Acknowledgement by the Investors. Each Investor hereby acknowledges
and agrees as follows: |
| (a) | It has executed a Purchase Agreement, a Security Agreement and
a Debenture with respect to each of the principal amounts issued in the name of
the Investor below. |
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| (b) | It has executed a Notice of Election to Convert in the form
attached as Schedule A to the Debenture with respect to each of the Debentures. |
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| (c) | In the aggregate, the Debentures have been converted into a 10%
ownership interest in the Cieneguita Property (which includes a 10% interest in
the net cash flows from the First Phase Production), of which each Investor has
a pro rata ownership of such interest based on the principal amount of its
respective Debenture(s) divided by $1,500,000. |
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| (d) | There are no other outstanding Debentures issued by the Company
in the name of the respective Investors or any of their respective affiliates
or subsidiaries, and as a result of the conversion of the Debentures, the
Company has no further outstanding obligations under the Debentures, including
no obligation to repay any interest under the Debentures. |
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| (e) | The following table represents a true and correct summary of
the ownership interest of the Debentures by the Investors: |
| Principal | Ownership Interest | |||||||||||
| Amount of | in Cieneguita | |||||||||||
| Investor | Debenture | Property | Date of Issuance | |||||||||
391566 BC Ltd. |
$ | 100,000 | 0.667 | % | March 19, 2009 | |||||||
391566 BC Ltd. |
$ | 220,000 | 1.467 | % | March 19, 2009 | |||||||
391566 BC Ltd. |
$ | 50,000 | 0.333 | % | March 19, 2009 | |||||||
Xxxxx Xxxx |
$ | 135,000 | 0.900 | % | March 19, 2009 | |||||||
Xxxxx Xxxx |
$ | 145,000 | 0.967 | % | March 19, 2009 | |||||||
MRT |
$ | 250,000 | 1.667 | % | March 19, 2009 | |||||||
North Mining
Investments |
$ | 250,000 | 1.667 | % | March 19, 2009 | |||||||
MRT |
$ | 100,000 | 0.667 | % | October 12, 2009 | |||||||
North Mining
Investments |
$ | 250,000 | 1.667 | % | October 16, 2009 | |||||||
Total |
$ | 1,500,000 | 10.0 | % | ||||||||
| 2. | Acknowledgement by MRT. MRT hereby acknowledges and agrees that (i)
the OHAG Debenture was purchased in a private transaction by MRT, (ii) OHAG did not
deliver notice to MRT that it did not intend to sell the OHAG Debenture to MRT in
accordance with the terms of the OHAG Debenture, nor has OHAG disputed the sale of the
OHAG Debenture to MRT, and (iii) MRT called the OHAG Debenture and irrevocably agreed
to accept the issuance of Stock by the Company as full and complete satisfaction of the
OHAG Debenture, and any outstanding interest thereon, and that upon issuance of the
Stock to MRT, the Company has no further outstanding obligations under the OHAG
Debenture. |
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| 3. | Sale of Ownership Interests by MRT to the Company. |
| (a) | MRT hereby agrees to sell and convey to the Company, and the
Company hereby agrees to purchase from MRT, subject to the terms and conditions
set forth herein, 2.333% ownership interest in the Cieneguita Property
(including 2.333% of the net cash flows from the First Phase Production) (the
“MRT Ownership Interest”) in consideration for the Company’s payment of
the sum of $320,833.29 to MRT at the closing. The closing of the purchase and
sale of the MRT Ownership Interest shall take place at the offices of DLA Piper
LLP (US), 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, XX 00000, on the date
hereof. |
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| (b) | MRT hereby represents, warrants and covenants to the Company
that as of the date hereof: |
| (i) | This Agreement constitutes legal, valid and
binding obligations of MRT, and MRT has full right, power and authority
to execute, |
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deliver and perform this Agreement, including, without limitation, to
sell the MRT Ownership Interest as specified herein. |
|||
| (ii) | Upon the consummation of the transactions
provided for herein, the Company will have good and marketable title to
the MRT Ownership Interest, free and clear of all claims, liens and
encumbrances of any nature whatsoever. |
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| (iii) | MRT’s performance of this Agreement, and the
sale of the MRT Ownership Interest to the Company, is being made in
compliance with all applicable laws, regulations and rules of Mexico,
the United States of America and all states, foreign countries or other
governmental bodies and agencies that have jurisdiction over the MRT. |
| 4. | Sale of Ownership Interests by Xxxxx Xxxx to the Company. |
| (a) | Xx. Xxxx hereby agrees to sell and convey to the Company, and
the Company hereby agrees to purchase from Xx. Xxxx, subject to the terms and
conditions set forth herein, 1.667% ownership interest in the Cieneguita
Property (including 1.667% of the net cash flows from the First Phase
Production) (the “Xxxx Ownership Interest”) in consideration for the
Company’s payment of the sum of $229,166.71 to Xx. Xxxx at the closing. The
closing of the purchase and sale of the Xxxx Ownership Interest shall take
place at the offices of DLA Piper LLP (US), 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000,
Xxx Xxxxx, XX 00000, on the date hereof. |
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| (b) | Xx. Xxxx hereby represents, warrants and covenants to the
Company that as of the date hereof: |
| (i) | This Agreement constitutes legal, valid and
binding obligations of Xx. Xxxx, and Xx. Xxxx has full right, power and
authority to execute, deliver and perform this Agreement, including,
without limitation, to sell the Xxxx Ownership Interest as specified
herein. |
||
| (ii) | Upon the consummation of the transactions
provided for herein, the Company will have good and marketable title to
the Xxxx Ownership Interest, free and clear of all claims, liens and
encumbrances of any nature whatsoever. |
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| (iii) | Xx. Xxxx’x performance of this Agreement, and
the sale of the Xxxx Ownership Interest to the Company, is being made
in compliance with all applicable laws, regulations and rules of
Mexico, the United States of America and all states, foreign countries
or other governmental bodies and agencies that have jurisdiction over
the Xx. Xxxx. |
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| 5. | Transfer of Ownership Interest by Investors to Xxxxx Minerals. |
| (a) | Immediately following the sale of the MRT Ownership Interest
and the Xxxx Ownership Interest, and subject to the terms and conditions of
this Agreement, each Investor agrees to transfer and assign (as a contribution
to capital) their respective portion of the ownership interest in the
Cieneguita Property (including the net cash flows from the First Phase
Production) (each, a “Cieneguita Interest”) to Xxxxx Minerals on the
date hereof and Xxxxx Minerals hereby accepts such transfer and assignment.
The transfer of the Cieneguita Interests pursuant to this Agreement shall occur
on the date hereof, as a contribution of capital to Xxxxx Minerals. The
Investors (other than North Mining) making the contribution to Xxxxx Minerals
are the owners of Xxxxx Minerals. |
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| (b) | The Investors represent that the following table is a true and
correct summary of the Cieneguita Interests being transferred to Xxxxx
Minerals: |
| Ownership Interest | ||||||||||||
| in Cieneguita | Interest in Net | |||||||||||
| Principal | Property Issued | Cash Flows from | ||||||||||
| Amount of | Upon Debenture | First Phase | ||||||||||
| Investor | Debenture | Conversion | Production | |||||||||
391566 BC Ltd. |
$ | 100,000 | 0.667 | % | 0.667 | % | ||||||
391566 BC Ltd. |
$ | 220,000 | 1.467 | % | 1.467 | % | ||||||
391566 BC Ltd. |
$ | 50,000 | 0.333 | % | 0.333 | % | ||||||
Xxxxx Xxxx* |
$ | 135,000 | 0.096 | % | 0.096 | % | ||||||
Xxxxx Xxxx* |
$ | 145,000 | 0.104 | % | 0.104 | % | ||||||
MRT* |
$ | 250,000 | 0.0 | % | 0.0 | % | ||||||
North Mining
Investments |
$ | 250,000 | 1.667 | % | 1.667 | % | ||||||
MRT* |
$ | 100,000 | 0.0 | % | 0.0 | % | ||||||
North Mining
Investments |
$ | 250,000 | 1.667 | % | 1.667 | % | ||||||
Total |
$ | 1,250,000 | 6.0 | % | 6.0 | % | ||||||
| * | Ownership interests repurchased as set forth in Sections 3 and
4 above. |
| (c) | Each Investor represents, warrants and covenants to Xxxxx
Minerals and the Company that as of the date hereof: |
| (i) | This Agreement constitutes legal, valid and
binding obligations of the Investor, and the Investor has full right,
power and authority to execute, deliver and perform this Agreement,
including, without limitation, to transfer the Cieneguita Interests as
specified herein. |
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| (ii) | Following the closing as contemplated by this
Agreement and, upon the consummation of the transactions provided for
herein, Xxxxx Minerals will have good and marketable title to the
Cieneguita Interests, free and clear of all claims, liens and
encumbrances of any nature whatsoever. |
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| (iii) | The Investor’s performance of this Agreement,
and the transfer of the Cieneguita Interests to Xxxxx Minerals, is
being made in compliance with all applicable laws, regulations and
rules of Mexico, the United States of America, and all states, foreign
countries or other governmental bodies and agencies have jurisdiction
over the Investor. |
| 6. | As of the closing of the transactions contemplated by this Agreement and
pursuant to the terms of the Development Agreement (as amended by Amendment No. 1) the
parties acknowledge and confirm that the ownership interest in the Cieneguita Property
and the interest in the net cash flows from the First Phase Production are held by the
Company, MRT and Xxxxx Minerals as follows: |
| Net Cash Flow | ||||||||||||
| Net Cash Flow | Interest Following | |||||||||||
| Ownership | Interest From First | First Phase | ||||||||||
| Holder | Percentage | Phase Production | Production | |||||||||
MRT |
54 | % | 74 | % | 54 | % | ||||||
Xxxxx Minerals |
6 | % | 6 | % | 6 | % | ||||||
Mexoro |
40 | % | 20 | % | 40 | % | ||||||
| 7. | The provisions of this Agreement shall be binding upon and inure to the benefit
of parties and their respective successors and assigns. |
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| 8. | Each of the parties hereto shall execute and deliver all additional documents,
agreements and instruments and shall do any and all acts and things reasonably
requested by the Company or any other parties hereto in connection with the performance
of its obligations undertaken in this Agreement, including without limitation, taking
all actions required by applicable law to transfer the ownership interests in
accordance with the terms of this Agreement. |
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| 9. | This Agreement may be executed in any number of counterparts (including by
facsimile or other electronic transmission), each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. It shall be
governed by and construed in accordance with the laws of the State of California,
without giving effect to provisions regarding conflicts of law. Any action or
proceeding seeking to enforce any provision of, or based on any right arising out of,
this Agreement may be brought against any of the parties in the United States District
Court for the Southern District of California or the state |
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courts located in San Diego, California, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any such
action or proceeding and waives any objection to venue laid therein. Process in any
action or proceeding referred to in the preceding sentence may be served on any
party anywhere in the world. Each of the parties hereto irrevocably waives any
objection which it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding brought in
such a court has been brought in an inconvenient forum. |
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| 10. | In any action or proceeding brought to enforce any provision of this Agreement
or where any provision hereof is validly asserted as a defense, the successful party
shall, to the extent permitted by applicable law, be entitled to recover reasonable
attorneys’ fees in addition to any other available remedy. |
[Signature Page to Follow]
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IN WITNESS WHEREOF, each of the parties has caused this Acknowledgment of Agreement to be
executed on its behalf, as of the date set forth above.
| COMPANY: Mexoro Minerals Ltd. |
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| By: | /s/ Xxxxxx Xxxxx | |||
| Name: | Xxxxxx Xxxxx | |||
| Title: | President | |||
| XXXXX MINERALS: Xxxxx Minerals SA |
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| By: | /s/ Xxxxx Xxxx | |||
| Name: | Xxxxx Xxxx | |||
| Title: | Authorized Signatory | |||
| INVESTORS: 391566 BC Ltd. |
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| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: | Xxxxxx Xxxxxx | |||
| Title: | President | |||
| Minera Rio Tinto, S.A. de C.V. |
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| By: | /s/ Xxxxx Xxxx | |||
| Name: | Xxxxx Xxxx | |||
| Title: | President | |||
| North Mining Investments |
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| By: | ||||
| Name: | ||||
| Title: | Authorized Signatory | |||
| /s/ Xxxxx Xxxx | ||||
| Xxxxx Xxxx | ||||
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Exhibit A
Form of Securities Purchase Agreement
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Exhibit B
Form of Security Agreement
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Exhibit C
Form of Debenture
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