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STOCK PLEDGE AGREEMENT

 

This STOCK PLEDGE AGREEMENT (this “Agreement”) is made effective this ___ day of
November, 2017 (the “Effective Date,”) between MAGELLAN GOLD CORPORATION, a
Nevada corporation (“Pledgor”) and ______________, as Collateral Agent under the
terms of a Collateral Agent Agreement of even date with the holders of Pledgor’s
Series 2017 10% Secured Promissory Notes (“Secured Party”). 

1.For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and as collateral security for and to secure the prompt
payment and performance in full of the Secured Obligations (hereinafter
defined), Pledgor hereby assigns to Secured Party and grants to Secured Party a
continuing security interest in all issued and outstanding shares of capital
stock of Magellan Acquisition Corporation (the “Company”) and all issued and
outstanding shares of capital stock of Minerales Vane 2. S.A. de C.V (“Vane 2”),
as identified on Schedule “I” attached hereto, together with all proceeds,
products and increases thereof and substitutions and replacements therefor
(collectively, the “Collateral”). 

As used in this Agreement, the term “Secured Obligations” shall mean (i) any and
all obligations, liabilities and indebtedness under the Pledgor’s Series 2017
10% Secured Promissory Notes executed by Pledgor in favor of Secured Party,
referenced to which is here made (as hereafter amended from time to time, the
“Promissory Notes”), and (ii) any and all extensions, renewals and replacements
of the foregoing.  The term “Secured Obligations” shall include, without
limitation, all unpaid accrued interest thereon and all costs and expenses
payable under the Promissory Notes 

2.Pledgor represents and warrants that (i) Pledgor holds record and beneficial
ownership of the Collateral, free and clear of all liens and encumbrances; (ii)
Schedule I identifies all issued and outstanding stock of the Company, and there
is no outstanding preferred stock in the Company, (iii) there are no
restrictions upon the transfer of any of the Collateral, other than arising
under applicable state or federal securities laws; and (iv) there are no
existing obligations, warrants, options or otherwise, to issue capital stock or
securities convertible into capital stock of the Company, and in no event will
Pledgor permit any additional stock or securities to be issued prior to payment
in full of the Secured Obligations. 

3.In furtherance of Secured Party’s security interest in the Collateral, Pledgor
agrees to deliver to Secured Party, on the date of this Agreement, the stock
certificates identified on Schedule I attached hereto, together with stock
powers duly executed in blank by Pledgor, to hold as collateral security
pursuant to the terms of this Agreement. 

4.With respect to the Collateral and all proceeds, products and increases
thereof and substitutions therefore, Pledgor hereby appoints Secured Party its
attorney-in-fact, to arrange for the transfer of the Collateral on the books of
the Company to the name of Secured Party subsequent to the occurrence and during
the continuance of any Event of Default (as hereinafter defined) hereunder.
 However, Secured Party shall be under no obligation to do so. 

5.Upon the occurrence of any Event of Default and during the continuance
thereof, Secured Party shall have the right to vote the Collateral, but subject
to a Voting Agreement  

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between Pledgor and the Company of even date herewith to which Secured Party
agrees to be bound if it exercises the right to so vote the Collateral.  Pledgor
shall, if necessary, execute timely proxies in favor of Pledgor for this
purpose.  But Secured Party shall be under no obligation to exercise any of such
rights or privileges. 

6.Upon the occurrence of any Event of Default and during the continuance
thereof, Secured Party may exercise all of the rights and privileges in
connection with the Collateral to which a transferee may be entitled as the
record holder thereof, together with the right and privileges otherwise granted
hereunder.  But Secured Party shall be under no obligation to exercise any of
such rights or privileges. 

7.All dividends, and other amounts (including amounts received or receivable
upon redemption or repurchase) that may be, or become, due on any of the
Collateral shall be applied to the Secured Obligations.  If Pledgor receives any
such dividends, payments or amounts, it shall immediately endorse and deliver
the same to Secured Party in the form received.   All such amounts which Secured
Party receives and retains in accordance with the terms of this paragraph 7
shall be applied to reduce the principal amount outstanding on the Secured
Obligations in inverse order of seniority.  Secured Party is, furthermore,
authorized to give receipts in the name of Pledgor for any amounts so received.
 Secured Party shall be under no obligation to collect any such amounts. 

8.In the event that for any reason during the term of this Agreement,
subscription warrants or any other rights or options shall be issued in
connection with the Collateral, such warrants, rights or options shall be
immediately assigned, if necessary, by Pledgor to Secured party.  (This
paragraph does not serve to authorize the issue of such warrants in
contravention of this Agreement or any other agreement.)  If any such warrants,
rights or options are exercised by Pledgor, all new securities so acquired by
Pledgor shall be immediately assigned to Secured Party, shall become part of the
Collateral and shall be endorsed to, delivered to and held by Secured Party
under the terms of this Agreement in the same manner as the securities
originally pledged. 

9.In the event that, during the term of this Agreement, any share, dividend,
reclassification, readjustment or other change is declared or made in the
capital structure of the Company, all new, substituted and additional shares, or
other securities, issued by reason of any such change shall become part of the
Collateral and shall be endorsed to, delivered to and held by Secured Party
under the terms of this Agreement in the same manner as the securities
originally pledged.  (This paragraph does not serve to authorize any change in
the capital structure of the Company in contravention of this Agreement or any
other agreement.) 

10.Pledgor authorizes Secured Party, without notice or demand, and without
affecting the liability of Pledgor hereunder, from time to time to: 

(A)hold security in addition to and other than the Collateral for the payment of
the Secured Obligations or any part thereof, and exchange, enforce, waive and
release any Collateral or any part hereof, or any other such security, or part
thereof; 

(B)on the transfer of all or any part of the Secured Obligations secured
hereunder, Secured Party may assign all or any part of Secured Party’s security
interest in the Collateral and shall be fully discharged thereafter from all
liability and  

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responsibility with respect to the Collateral so transferred, provided that in
no event shall Secured Party be liable for any act or omission or negligent act
or negligent omission with respect to the Collateral, other than acts or
omissions constituting gross negligence.  The transferee of the Collateral shall
be vested with the rights, powers and remedies of Secured Party hereunder, and
with respect to any Collateral not so transferred, Secured Party shall retain
all rights, powers and remedies hereby given; and 

(C)Pledgor waives any defense arising by reason of any liability or other
defense of Pledgor or of any other person.  Pledgor shall have no right to
require Secured Party to marshal collateral. 

11.It shall not be necessary for Secured Party to inquire into the powers of
Pledgor or the officers, directors or agents acting or purporting to act on
behalf of Pledgor, and any obligations made or created in reliance on the
professed exercise of such powers shall be secured hereunder. 

12.To the extent permitted by applicable law and in the Promissory Notes,
Secured Party shall be under no duty or obligation whatsoever to make or give
any presentments, demands for performance, notices of non-performance, protests,
notices of protest, or notices of dishonor in connection with the Secured
Obligations. 

13.The occurrence of any of the following events shall, at the option of Secured
Party, constitute an “Event of Default” under this Agreement: 

(A)the occurrence of an Event of Default, as such term is defined in the
Promissory Notes; 

(B)the default or nonperformance by Pledgor of any term or condition of this
Agreement;  

(C)the default or nonperformance by Pledgor or the Company of any term or
condition of the Assumption Agreement;  

(D)the default or nonperformance by Pledgor or the Company of any term or
condition of the Voting Agreement made between Pledgor and the Company effective
as of the Effective Date, reference to which is here made; or 

(E)the default or nonperformance by Pledgor or the Company of any term or
condition of the Agreement made among Pledgor, the Company and the Secured Party
effective as of the Effective Date, reference to which is here made. 

14.Upon the occurrence and during the continuance of any Event of Default, the
Secured Obligations shall, at the option of Secured Party, become immediately
due and payable, and Secured Party shall have all the rights and remedies
provided in the applicable state Uniform Commercial Code at the date of this
Agreement and, in this connection, the Secured Party may, upon ten (10) days’
notice to the Pledgor (at the address set forth below Pledgor’s signature to
this Agreement), without liability for any diminution in value or price which
may have occurred, sell all or any part of the Collateral in such manner and for
such price as Secured Party may determine.   

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At any public sale Secured Party shall be free to purchase all or any part of
the Collateral.  Secured Party shall receive the proceeds of any such sale or
sales, and, after deducting therefrom any and all reasonable costs and expenses
incurred in connection with the sale thereof, apply the net proceeds toward the
payment of the Secured Obligations secured hereunder, including interest,
reasonable attorneys’ fees, and all other reasonable costs and expenses incurred
by Secured Party hereunder and under any other agreement between Pledgor and
Secured Party.  If such proceeds be more than sufficient to pay the same, then
in case of a surplus, such surplus shall be accounted for and paid over to
Pledgor, provided Pledgor be not then indebted to Secured Party otherwise under
this Agreement or any other agreement or for any cause whatsoever.
 Notwithstanding the foregoing, Pledgor shall have no liability to Secured Party
for any deficiency remaining or other sums due and owing under the Secured
Obligations following Secured Party's exercise of its rights with respect to the
Collateral in accordance with this Agreement. 

15.Upon indefeasible repayment in full in cash of the Secured Obligations,
Secured Party will promptly, at Pledgor’s reasonable expense, deliver all of the
Collateral to Pledgor along with all instruments of assignment executed in
connection therewith, and execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence Assignor’s release of Secured Party
‘s security interest hereunder. 

EXECUTED on this __ day of November, 2017, to be effective as of the Effective
Date set forth in the first paragraph of this Agreement. 

 

PLEDGOR:

 

MAGELLAN GOLD CORPORATION

 

 

By:

Name:

Title:

Address: 

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SECURED PARTY:

 

______________________, Collateral Agent

 

By:

Name:

Title:

Address: 

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SCHEDULE I

to

Stock Pledge Agreement

Dated November __, 2017

between

Magellan Gold Corporation

and

_____________________, Collateral Agent and Secured Party

 

a.100 shares of the common stock of Magellan Acquisition Corporation, which
represents 100% of the issued and outstanding capital stock of Magellan
Acquisition Corporation. 

 

 

b.One (1) share of the common stock of Minerales Vane 2 S.A. de C.V., a Mexican
corporation. 

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STOCK PLEDGE AGREEMENT

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