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COLLATERAL AGENT AGREEMENT

 

COLLATERAL AGENT AGREEMENT (this "Agreement") dated as of _________________,
2017, among ___________________ (the "Collateral Agent"), and the undersigned
Lenders (each individually, a "Lender" and collectively, the "Lenders"), who
hold or will acquire Notes issued or to be issued by MAGELLAN GOLD CORPORATION,
a Nevada corporation (“Debtor” or the “Company”), at or about the date of this
Agreement (collectively herein the “Notes").

 

WHEREAS, the Lenders have made, are making and will be making loans to Debtor
under a series of promissory notes of even date to be secured by certain
collateral; and

 

WHEREAS, it is desirable to provide for the orderly administration of such
collateral by requiring each Lender to appoint the Collateral Agent, and the
Collateral Agent has agreed to accept such appointment and to receive, hold and
deliver such collateral, all upon the terms and subject to the conditions
hereinafter set forth; and 

 

WHEREAS, it is desirable to allocate the enforcement of certain rights of the
Lenders under the Loan Documents, as defined below, for the orderly
administration thereof.

 

NOW, THEREFORE, in consideration of the premises set forth herein and for other
good and valuable consideration, the parties hereto agree as follows:

 

1.Collateral. 

 

(a)Contemporaneously with the execution and delivery of this Agreement by the
Collateral Agent and the Lenders, the Company shall cause to be executed:  a
Stock Pledge Agreement covering 100% of the issued and outstanding shares of
common stock of Magellan Acquisition Corporation, (ii) a Stock Pledge Agreement
covering one (1) share of common stock of  Minerales Vane 2 S.A. de C.V. and
(ii) a Security Agreement covering all of the tangible and intangible assets of
Magellan Acquisition Corporation (the "Collateral" or “Collateral Documents”) to
the Collateral Agent, for the benefit of the Lenders.  Debtor is issuing the
Notes to the Lenders pursuant to a Subscription Agreement dated at or about the
date of this Agreement. Collectively, the Collateral Documents, Subscription
Agreements and the Notes and other agreements referred to therein are referred
to herein as "Borrower Documents". 

 

(b)The Collateral Agent hereby acknowledges that any Collateral held by the
Collateral Agent is held for the benefit of the Lenders in accordance with this
Agreement and the Borrower Documents.  No reference to the Borrower Documents or
any other instrument or document shall be deemed to incorporate any term or
provision thereof into this Agreement unless expressly so provided. 

 

(c)The Collateral Agent is to distribute in accordance with the Borrower
Documents any proceeds received from the Collateral which are distributable to
the Lenders in proportion to their respective interests.  

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2.Appointment of the Collateral Agent. 

 

The Lenders hereby appoint the Collateral Agent (and the Collateral Agent hereby
accepts such appointment) to take any action including, without limitation, the
registration of any Collateral in the name of the Collateral Agent or its
nominees prior to or during the continuance of an Event of Default (as defined
in the Borrower Documents), the exercise of voting rights upon the occurrence
and during the continuance of an Event of Default, the application of any cash
collateral received by the Collateral Agent to the payment of the Obligations,
the making of any demand under the Borrower Documents, the exercise of any
remedies given to the Collateral Agent pursuant to the Borrower Documents and
the exercise of any authority pursuant to the appointment of the Collateral
Agent as an attorney-in-fact pursuant to the Security Agreement that the
Collateral Agent deems necessary or proper for the administration of the
Collateral pursuant to the Security Agreements.  Upon disposition of the
Collateral in accordance with the Borrower Documents, the Collateral Agent shall
promptly distribute any cash or Collateral in accordance with the Security
Agreement.  Lenders must notify Collateral Agent in writing of the issuance of
Notes to Lenders by Debtor.  The Collateral Agent will not be required to act
hereunder in connection with Notes the issuance of which was not disclosed in
writing to the Collateral Agent nor will the Collateral Agent be required to act
on behalf of any assignee of Notes without the written consent of Collateral
Agent.

 

3.Action by the Majority in Interest. 

 

(a)Certain Actions.  Each of the Lenders covenants and agrees that only a
Majority in Interest shall have the right, but not the obligation, to undertake
the following actions (it being expressly understood that less than a Majority
in Interest hereby expressly waive the following rights that they may otherwise
have under the Borrower Documents): 

 

(i)Acceleration.  If an Event of Default occurs, after the applicable cure
period, if any, a Majority in Interest may, on behalf of all the Lenders,
instruct the Collateral Agent to provide to Debtor notice to cure such default
and/or declare the unpaid principal amount of the Notes to be due and payable,
together with any and all accrued interest thereon and all costs payable
pursuant to such Notes; 

 

(ii)Enforcement.  Upon the occurrence of any Event of Default after the
applicable cure period, if any, a Majority in Interest may instruct the
Collateral Agent to proceed to protect, exercise and enforce, on behalf of all
the Lenders, their rights and remedies under the Borrower Documents against
Debtor, and such other rights and remedies as are provided by law or equity; 

 

(iii)Waiver of Past Defaults.  A Majority in Interest may instruct the
Collateral Agent to waive any Event of Default by written notice to Debtor, and
the other Lenders; and 

 

(iv)Amendment.  A Majority in Interest may instruct the Collateral Agent to
waive, amend, supplement or modify any term, condition or other provision in the
Notes or Borrower Documents so long as such waiver, amendment, supplement or
modification is made with respect to all of the Notes and with the same force
and effect with respect to each of the Lenders. 

 

(b)Permitted Subordination.  A Majority in Interest may instruct the Collateral
Agent to agree to subordinate any Collateral to any claim and may enter into any
agreement with Debtor to evidence such subordination; provided, however, that
subsequent to any such subordination, each Note shall remain pari passu with the
other Notes held by the Lenders. 

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(c)Further Actions.  A Majority in Interest may instruct the Collateral Agent to
take any action that it may take under this Agreement by instructing the
Collateral Agent in writing to take such action on behalf of all the Lenders. 

 

(d)Majority in Interest.  For so long as any obligations remain outstanding on
the Notes, Majority in Interest for the purposes of this Agreement and the
Security Agreement shall mean Lenders who hold more than fifty percent (50%) of
the outstanding principal amount of the Notes.  

 

4.Power of Attorney. 

 

(a)To effectuate the terms and provisions hereof, the Lenders hereby appoint the
Collateral Agent as their attorneyinfact (and the Collateral Agent hereby
accepts such appointment) for the purpose of carrying out the provisions of this
Agreement including, without limitation, taking any action on behalf of, or at
the instruction of, the Majority in Interest at the written direction of the
Majority in Interest and executing any consent authorized pursuant to this
Agreement and taking any action and executing any instrument that the Collateral
Agent may deem necessary or advisable (and lawful) to accomplish the purposes
hereof. 

 

(b)All acts done under the foregoing authorization are hereby ratified and
approved and neither the Collateral Agent nor any designee nor agent thereof
shall be liable for any acts of commission or omission, for any error of
judgment, for any mistake of fact or law except for acts of gross negligence or
willful misconduct. 

 

(c)This power of attorney, being coupled with an interest, is irrevocable while
this Agreement remains in effect. 

 

5.Expenses of the Collateral Agent.  The Lenders shall pay any and all
reasonable costs and expenses incurred by the Collateral Agent, including,
without limitation, reasonable costs and expenses relating to all waivers,
releases, discharges, satisfactions, modifications and amendments of this
Agreement, the administration and holding of the Collateral, insurance expenses,
and the enforcement, protection and adjudication of the parties' rights
hereunder by the Collateral Agent, including, without limitation, the reasonable
disbursements, expenses and fees of the attorneys the Collateral Agent may
retain, if any, each of the foregoing in proportion to their holdings of the
Notes. 

 

6.Reliance on Documents and Experts.  The Collateral Agent shall be entitled to
rely upon any notice, consent, certificate, affidavit, statement, paper,
document, writing or communication (which may be by telegram, cable, telex,
telecopier, or telephone) reasonably believed by it to be genuine and to have
been signed, sent or made by the proper person or persons, and upon opinions and
advice of its own legal counsel, independent public accountants and other
experts selected by the Collateral Agent. 

 

7.Duties of the Collateral Agent; Standard of Care. 

 

(a)The Collateral Agent's only duties are those expressly set forth in this
Agreement, and the Collateral Agent hereby is authorized to perform those duties
in accordance with commercially reasonable practices.  The Collateral Agent may
exercise or otherwise enforce any of its rights, powers, privileges, remedies
and interests under this Agreement and applicable law or perform any of its
duties under this Agreement by or through its officers, employees, attorneys, or
agents. 

 

(b)The Collateral Agent shall act in good faith and with that degree of care
that an ordinarily prudent person in a like position would use under similar
circumstances. 

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(c)Any funds held by the Collateral Agent hereunder need not be segregated from
other funds except to the extent required by law.  The Collateral Agent shall be
under no liability for interest on any funds received by it hereunder. 

 

8.Resignation.  The Collateral Agent may resign and be discharged of its duties
hereunder at any time by giving written notice of such resignation to the other
parties hereto, stating the date such resignation is to take effect.  Within
five (5) days of the giving of such notice, a successor collateral agent shall
be appointed by the Majority in Interest; provided, however, that if the Lenders
are unable so to agree upon a successor within such time period, and notify the
Collateral Agent during such period of the identity of the successor collateral
agent, the successor collateral agent may be a person designated by the
Collateral Agent, and any and all fees of such successor collateral agent shall
be the joint and several obligation of the Lenders.  The Collateral Agent shall
continue to serve until the effective date of the resignation or until its
successor accepts the appointment and receives the Collateral held by the
Collateral Agent but shall not be obligated to take any action hereunder.  The
Collateral Agent may deposit any Collateral with the District Court of the State
of Colorado for the City and County of Denver or any such other court in the
State of Colorado that accepts such Collateral.  

 

9.Exculpation.  The Collateral Agent and its officers, employees, attorneys and
agents, shall not incur any liability whatsoever for the holding or delivery of
documents or the taking of any other action in accordance with the terms and
provisions of this Agreement, for any mistake or error in judgment, for
compliance with any applicable law or any attachment, order or other directive
of any court or other authority (irrespective of any conflicting term or
provision of this Agreement), or for any act or omission of any other person
engaged by the Collateral Agent in connection with this Agreement, unless
occasioned by the exculpated person's own gross negligence or willful
misconduct; and each party hereto hereby waives any and all claims and actions
whatsoever against the Collateral Agent and its officers, employees, attorneys
and agents, arising out of or related directly or indirectly to any or all of
the foregoing acts, omissions and circumstances. The Collateral Agent shall not
be responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectability, priority or
sufficiency of the Pledge or Guaranty or the financial condition of the Issuer
or any of its subsidiaries or affiliates or required to make any inquiry
concerning either the performance or observation of any of the terms, provisions
or conditions of the Notes or the Pledge, the Guaranty, or the existence or
possible existence of any Event of Default.   

 

10.Indemnification.  The Lenders hereby agree to indemnify, reimburse and hold
harmless the Collateral Agent and its directors, officers, employees, attorneys
and agents, jointly and severally, from and against any and all claims,
liabilities, losses and expenses that may be imposed upon, incurred by, or
asserted against any of them, arising out of or related directly or indirectly
to this Agreement or the Collateral, except such as are occasioned by the
indemnified person's own gross negligence or willful misconduct. 

 

11.Miscellaneous. 

 

(a)Rights and Remedies Not Waived.  No act, omission or delay by the Collateral
Agent shall constitute a waiver of the Collateral Agent's rights and remedies
hereunder or otherwise.  No single or partial waiver by the Collateral Agent of
any default hereunder or right or remedy that it may have shall operate as a
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion. 

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(b)Governing Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Colorado without regard to conflicts
of laws that would result in the application of the substantive laws of another
jurisdiction. 

 

(c)Waiver of Jury Trial and Setoff; Consent to Jurisdiction; Etc. 

 

(i)In any litigation in any court with respect to, in connection with, or
arising out of this Agreement or any instrument or document delivered pursuant
to this Agreement, or the validity, protection, interpretation, collection or
enforcement hereof or thereof, or any other claim or dispute howsoever arising,
between the Collateral Agent and the Lenders or any Lender, then each Lender, to
the fullest extent it may legally do so, (A) waives the right to interpose any
setoff, recoupment, counterclaim or crossclaim in connection with any such
litigation, irrespective of the nature of such setoff, recoupment, counterclaim
or crossclaim, unless such setoff, recoupment, counterclaim or crossclaim could
not, by reason of any applicable federal or state procedural laws, be
interposed, pleaded or alleged in any other action; and (B) WAIVES TRIAL BY JURY
IN CONNECTION WITH ANY SUCH LITIGATION AND ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH
LENDER AGREES THAT THIS SECTION 11(c) IS A SPECIFIC AND MATERIAL ASPECT OF THIS
AGREEMENT AND ACKNOWLEDGE THAT THE COLLATERAL AGENT WOULD NOT ENTER THIS
AGREEMENT IF THIS SECTION 11(c) WERE NOT PART OF THIS AGREEMENT. 

 

(ii)Each Lender irrevocably consents to the exclusive jurisdiction of any State
or Federal Court located within the County of Denver, State of Colorado, in
connection with any action or proceeding arising out of or relating to this
Agreement or any document or instrument delivered pursuant to this Agreement or
otherwise.  In any such litigation, each Lender waives, to the fullest extent it
may effectively do so, personal service of any summons, complaint or other
process and agree that the service thereof may be made by certified or
registered mail directed to such Lender at its address for notice determined in
accordance with Section 11(e) hereof.  Each Lender hereby waives, to the fullest
extent it may effectively do so, the defenses of forum non conveniens and
improper venue. 

 

(d)Admissibility of this Agreement.  Each of the Lenders agrees that any copy of
this Agreement signed by it and transmitted by telecopier for delivery to the
Collateral Agent shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence. 

 

(e)Address for Notices. Any notice or other communication under the provisions
of this Agreement shall be given in writing and delivered in person, by
reputable overnight courier or delivery service, by facsimile machine (receipt
confirmed) with a copy sent by first class mail on the date of transmissions, or
by registered or certified mail, return receipt requested, directed to such
party’s addresses set forth below (or to any new address of which any party
hereto shall have informed the others by the giving of notice in the manner
provided herein): 

 

In the case of the Collateral Agent:

 

 

 

 

In the case of the Lenders, to:

 

 

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In the case of Borrower, to:

 

 

 

 

(f)Amendments and Modification; Additional Lender.  Subject to the provisions of
Section 3(ii) hereof, no provision hereof shall be modified, altered, waived or
limited except by written instrument expressly referring to this Agreement and
to such provision, and executed by the parties hereto.  Any transferee of a Note
who acquires a Note after the date hereof will become a party hereto by signing
the signature page and sending an executed copy of this Agreement to the
Collateral Agent and receiving a signed acknowledgement from the Collateral
Agent. 

 

(g)Fee.  All payments hereafter due to the Collateral Agent under this Agreement
for services, expenses and reimbursements must be paid when billed.  The
Collateral Agent may refuse to act on behalf of or make a distribution to any
Lender who is not current in payments to the Collateral Agent.  Payments
required pursuant to this Agreement shall be pari passu to the Lenders'
interests in the Notes.  The Collateral Agent is hereby authorized to deduct any
sums due the Collateral Agent from Collateral in the Collateral Agent's
possession. 

 

(h)Counterparts/Execution.  This Agreement may be executed in any number of
counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.  This Agreement
may be executed by facsimile signature and delivered by facsimile transmission. 

 

(i)Successors and Assigns.  Whenever in this Agreement reference is made to any
party, such reference shall be deemed to include the successors, assigns, heirs
and legal representatives of such party.  No party hereto may transfer any
rights under this Agreement, unless the transferee agrees to be bound by, and
comply with all of the terms and provisions of this Agreement, as if an original
signatory hereto on the date hereof. 

 

(j)Captions: Certain Definitions.  The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.  As used in this Agreement the term "person" shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof. 

 

(k)Severability.  In the event that any term or provision of this Agreement
shall be finally determined to be superseded, invalid, illegal or otherwise
unenforceable pursuant to applicable law by an authority having jurisdiction and
venue, that determination shall not impair or otherwise affect the validity,
legality or enforceability (i) by or before that authority of the remaining
terms and provisions of this Agreement, which shall be enforced as if the
unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement. 

 

(l)Entire Agreement.  This Agreement contains the entire agreement of the
parties and supersedes all other agreements and understandings, oral or written,
with respect to the matters contained herein. 

 

(m)Schedules.  The Collateral Agent is authorized to annex hereto any schedules
referred to herein. 

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IN WITNESS WHEREOF, the parties hereto have caused this Collateral Agent
Agreement to be signed, by their respective duly authorized officers or
directly, as of the date first written above.

 

“LENDERS”

 

(by execution of Subscription Agreement)

 

 

“COLLATERAL AGENT”

 

____________________________

 

By:

 

 

Acknowledged:

 

MAGELLAN GOLD CORPORATION

 

By:

 

 

This Collateral Agent Agreement may be signed by facsimile signature and
delivered by confirmed facsimile transmission.

 

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