Document:

PROMISSORY NOTE

And

AMENDMENT NO. 2 TO STOCK PURCHASE AGREEEMENT

 

WITNESSETH:

 

WHEREAS,  Magellan Gold Corporation, a Nevada corporation (“Magellan”) and its wholly-owned subsidiary Magellan Acquisition Corporation (“MAC”), a Colorado corporation (collectively “Buyer” and “Makers”) and Rose Petroleum plc (“Rose”) and its wholly-owned subsidiary Vane Minerales (UK) Limited (“Seller” or “Holder”) have executed and delivered a Stock SPA dated September 9, 2017 as amended by Amendment No. 1 thereto dated October 17, 2017 (the “SPA”); and

 

WHEREAS, the SPA contemplates and provides for Buyer and Seller to deposit in escrow at closing of the SPA the sum of $50,000 as a holdback from the Purchase Price under the SPA (the “Holdback”) against which potential indemnity claims by Buyer could be paid post-closing; and

 

WHEREAS,  the Buyer and Seller wish to eliminate the holdback escrow and in lieu thereof execute this promissory note in the principal amount of $50,000, which shall be deemed Amendment No. 2 to the SPA; and

 

WHEREAS, unless otherwise defined herein, all capitalized terms shall have the meaning set forth in the SPA.

 

FOR VALUE RECEIVED, Magellan Gold Corporation, a Nevada corporation ("Magellan"), and Magellan Acquisition Corporation, a Colorado corporation (“MAC”), and their successors and assigns (the "Maker"), joint and severally promise to pay to the order of Rose Petroleum plc ("Holder"), the principal sum of Fifty Thousand and no/100 Dollars ($50,000) in lawful money of the United States of America, without interest payable as hereinafter provided.

 

1.Interest Rate.  The unpaid principal balance of this Note shall not bear interest. 

 

2.Payment/Maturity Date.  The total outstanding principal balance hereof shall be due and payable in full on March 10, 2018 (the “Maturity Date”). 

 

3.Default Interest and Attorney Fees.  Upon declaration of a default hereunder, the balance of the principal remaining unpaid, interest accrued thereon, and all other costs, and fees shall bear interest at the rate of six percent (6%) per annum from the date or default, or the date of advance, as applicable.  In the event of default, the Maker and all other parties liable hereon agree to pay all costs of collection, including reasonable attorneys' fees. 

 

4.Default Interest Calculation.  Default interest shall be calculated on a 365-day year and the actual number of days in each month commencing on the date of any default. 

 

5.Prepayment.  Maker may prepay the unpaid principal balance of this Note in whole or in part at any time or from time to time without penalty.  

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6.Costs of Collection.  Maker agrees that if, and as often as, this Note is placed in the hands of an attorney for collection or to defend or enforce any of Holder's rights hereunder or under any instrument securing payment of this Note, Maker shall pay to Holder its reasonable attorneys' fees and all court costs and other expenses incurred in connection therewith, regardless of whether a lawsuit is ever commenced or whether, if commenced, the same proceeds to judgment or not.  Such costs and expenses shall include, without limitation, all costs, reasonable attorneys' fees, and expenses incurred by Holder in connection with any insolvency, bankruptcy, reorganization, foreclosure, deed in lieu of foreclosure or similar proceedings involving Maker or any endorser, surety, guarantor, or other person liable for this Note which in any way affect the exercise by Holder of its rights and remedies under this Note, or any other document or instrument securing, evidencing, or relating to the indebtedness evidenced by this Note. 

 

7.Restrictive Covenant.  For so long as this Note is outstanding and any amount due hereunder unpaid, Makers will not, without the written consent of Holder, transfer or assign any of their equity interest in Minerales Vane 2 S.A. de C.V, a Mexican corporation acquired by Maker from Holder pursuant to the SPA. 

 

8.Indemnity Claims under the SPA. 

 

(a)Officer’s Certificate. If Buyer makes any claim for indemnification under the SPA on or prior to the Maturity Date, Buyer will deliver a certificate signed by an authorized  representative of Buyer (an “Officer’s Certificate”) to the Seller, which Officer’s Certificate will state that Buyer has claims against the Sellers for which Buyer may be entitled to indemnification under the SPA, and the Officer’s Certificate will specify in reasonable detail the nature and basis of the claims and, to the extent known at such time, the amount of such claims. 

(b)Seller’s Response. Within thirty (30) days after receipt by Seller of the Officer’s Certificate, Seller will deliver a written response to Buyer, accepting Buyer’s claims in whole or in part or rejecting Buyer’s claims. Unless Seller accepts Buyer’s claims in whole, Seller’s response will include a reasonably detailed statement of the reasons for that portion of Buyer’s claims not being accepted by Seller. If Seller accepts any portion of Buyer’s claims upon receipt of a joint written instruction from Seller and Buyer, the Holder may off-set the principal amount due under this Note by an amount equal to the amount of the accepted claims. If the Buyer does not receive from Seller a written response within such thirty (30) day period, the claims will be deemed to be accepted by Seller, and the principal amount due under this Note shall be reduced by an amount equal to the full amount claimed in the Officer’s Certificate.  

(c)Negotiation Period. If the Buyer receives from Seller a written response within the thirty (30) day period referred to in Section 8(b) pursuant to which Seller rejects all or any portion of Buyer’s claims in accordance with Section 8(b), upon Buyer’s receipt of such rejection, Seller and Buyer will attempt in good faith to resolve such claims. If Buyer and Seller agree to a settlement (whether before or after litigation is commenced), they will prepare and execute joint written agreement evidencing such settlement. Upon execution of such joint written instructions, the principal amount due to Holder under this Note shall be reduced by the amount set forth in the settlement agreement. 

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(d)Dispute Resolution.  If Buyer and Seller fail to settle all of Buyer’s claims within thirty (30) days after Buyer’s receipt of Seller’s rejection of all or any portion of Buyer’s claim stated in the Officer’s Certificate, then such claims will be resolved in accordance with the following provisions: 

Arbitration shall determine any question, dispute, or controversy arising under this agreement, at the option of the Buyer or the Seller. The parties hereto understand that this Agreement contains an agreement to arbitrate. After executing this document, each party understands that it will not be able to bring a lawsuit concerning any dispute that may arise that is covered by these arbitration provisions.  Instead, each party agrees to submit any such dispute to an impartial arbitrator as provided below.

(i)The Seller and Buyer agree to mediate within thirty (30) days any dispute or claim between them arising out of this Escrow Agreement or any resulting transaction before resorting to arbitration or court action.  Mediation is a process in which parties attempt to resolve a dispute by submitting it to an impartial, neutral mediator who is authorized to facilitate the resolution of the dispute but who is not empowered to impose a settlement on the parties.  Mediation fees, if any, shall be divided equally among the parties involved.  Before the mediation begins, the parties agree to sign a document limiting the admissibility in arbitration or any civil action of anything said, any admission made, and any documents prepared, in the course of mediation, consistent with the Federal Rules of Evidence.  If any party commences an arbitration or court action based on a dispute or claim to which this paragraph applies without first attempting to resolve the matter through mediation, then in the discretion of the arbitrator(s) or judge, that party shall not be entitled to recover attorney’s fees even if they would otherwise be available to that party in any such arbitration or court action.  However, the filing of a judicial action to enable the recording of a notice of pending action, for order of attachment, receivership, injunction, or other provisional remedies, shall not in itself constitute a loss of the right to recover attorney’s fees under this provision. 

(ii)Any dispute or claim in law or equity between the Seller and Buyer arising out of this Agreement or any resulting transaction which is not settled though mediation within thirty (30) days shall be decided by neutral, binding arbitration in Denver, Colorado and not by court action, except as provided by Colorado law for judicial review of arbitration proceeding.  The arbitration shall be conducted in accordance with the rules of either the American Arbitration Association (AAA) or Judicial Arbitration and Mediation Services, Inc. (JAMS).  The claimant first filing for the arbitration shall make the selection between AAA and JAMS rules.  The parties to arbitration may agree in writing to use different rules and/or arbitrator(s).  In all other respects, the arbitration shall be conducted in accordance with the Federal Rules of Civil Procedure.  In any arbitration, the prevailing party shall be entitled to recover its costs and attorney’s fees incurred in both the mediation and arbitration. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The parties shall have the right to discovery in accordance with the Federal Rules of Civil Procedure.  The filing of a judicial action to enable the recording of a notice of pending action, for order of attachment, receivership, injunction, or other provisional remedies, shall not constitute a waiver of the right to arbitrate under this provision. 

(e)The Final Decision (as defined below) of the arbitration shall be binding on the Buyer and Seller and shall have the same force and effect as an uncontested Officer’s Certificate, and the principal amount due to Holder under this Note shall be adjusted in accordance with such  

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Final Decision. For purposes of this Escrow Agreement, “Final Decision” shall mean a written final non-appealable order of a court of competent jurisdiction delivered to Buyer or Seller.

(f) Payment of Note.   

(i)Release. Within two Business Days following the Maturity Date,  the Buyer shall pay to Seller an amount equal to (A) $50,000, less (B) the amount of any outstanding claims under an Officer’s Certificate on or prior to the Maturity Date. If there are outstanding claims under an Officer’s Certificate received by the Seller on or prior to the Maturity Date, then the Buyer will retain an amount due under the Note equal to all such unsatisfied claims until such time as all outstanding claims have been resolved. Upon the resolution of all outstanding claims, Buyer shall pay to Seller any amounts due and owing under this Note after giving effect to all off-sets resulting from such resolved claims. 

 

9.Default.  At the option of Holder, the unpaid principal balance of this Note and all accrued interest thereon shall become immediately due, payable, and collectible, without notice or demand, upon the occurrence at any time of any of the following events, each of which shall be deemed to be an event of default hereunder: 

 

a.Maker's failure to make any payment of principal, interest, or other charges on or before the date on which such payment becomes due and payable under this Note. 

 

b.Maker's breach or violation of any agreement or covenant contained in this Note, or in any other document or instrument evidencing, or relating to the indebtedness evidenced by this Note. 

 

c.The failure of Maker to generally pay its debts as they become due or if Maker shall file in any court pursuant to any statute, either of the United States or of any state, a petition in bankruptcy or insolvency, or for reorganization, or for the appointment of a receiver or trustee of all or a substantial portion of Maker' property, or if Maker make any assignment for or petitions for or enters into an arrangement for the benefit of creditors, or if a petition in bankruptcy is filed against Maker which is not discharged within sixty (60) days thereafter. 

 

d.Dissolution, liquidation or termination of Maker. 

 

10.Application of Payments.  Any payment made against the indebtedness evidenced by this Note shall be applied against the following items in the following order:  (1) costs of collection, including reasonable attorney's fees incurred or paid and all costs, expenses, default interest, late charges and other expenses incurred by Holder and reimbursable to Holder pursuant to this Note (as described herein); (2) default interest accrued to the date of said payment; (3) ordinary interest accrued to the date of said payment; and (4) finally, outstanding principal. 

 

11.Assignment of Note.  This Note may not be assigned by Maker or Holder. 

 

12.Non-Waiver.  No delay or omission on the part of Holder in exercising any rights or remedy hereunder shall operate as a waiver of such right or remedy or of any other right or remedy  

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under this Note.  A waiver on any one or more occasion shall not be construed as a bar to or waiver of any such right and/or remedy on any future occasion.

 

13.Maximum Interest.  In no event whatsoever shall the amount paid, or agreed to be paid, to Holder for the use, forbearance, or retention of the money to be loaned hereunder ("Interest") exceed the maximum amount permissible under applicable law.  If the performance or fulfillment of any provision hereof, or any agreement between Maker and Holder shall result in Interest exceeding the limit for Interest prescribed by law, then the amount of such Interest shall be reduced to such limit.  If, from any circumstance whatsoever, Holder should receive as Interest an amount which would exceed the highest lawful rate, the amount which would be excessive Interest shall be applied to the reduction of the principal balance owing hereunder (or, at the option of Holder, be paid over to Maker) and not to the payment of Interest. 

 

 

14.Purpose of Loan.  Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes and that the proceeds thereof will not be used primarily for personal, family, household, or agricultural purposes. 

 

15.Waiver of Presentment.  Maker and the endorsers, sureties, guarantors and all persons who may become liable for all or any part of this obligation shall be jointly and severally liable for such obligation and hereby jointly and severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest, and any and all lack of diligence or delays in collection or enforcement hereof.  Said parties consent to any modification or extension of time (whether one or more) of payment hereof, the release of all or any part of the security for the payment hereof, and the release of any party liable for payment of this obligation.  Any modification, extension, or release may be without notice to any such party and shall not discharge said party's liability hereunder. 

 

16.Governing Law.  As an additional consideration for the extension of credit, Holder and Maker understand and agree that the loan evidenced by this Note is made in the State of Colorado and the provisions hereof will be construed in accordance with the laws of such state, and such parties further agree that in the event of default this Note may be enforced in any court of competent jurisdiction in said state, and they do hereby submit to the jurisdiction of such court regardless of their residence or where this Note or any endorsement hereof may be executed. 

 

17.Binding Effect.  The term "Maker" as used herein shall include the original Maker of this Note and any party who may subsequently become liable for the payment hereof as an assumer with the consent of the Holder, provided that Holder may, at its option, consider the original Maker of this Note alone as Maker unless Holder has consented in writing to the substitution of another party as Maker.  The term "Holder" as used herein shall mean Holder or, if this Note is transferred, the then Holder of this Note. 

 

18.Relationship of Parties.  Nothing herein contained shall create or be deemed or construed to create a joint venture or partnership between Maker and Holder, Holder is acting hereunder as a lender only. 

 

19.Liability of Maker.  Maker's liability under this Note shall be joint and several; and Holder shall have no duty or obligation to exhaust any remedies at law or in equity against one  

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Maker as a condition to asserting Holder's remedies against the other Maker, or both Maker concurrently.

 

20.Severability.  Invalidation of any of the provisions of this Note or of any paragraph, sentence, clause, phrase, or word herein, or the application thereof in any given circumstance, shall not affect the validity of the remainder of this Note. 

 

21.Amendment.  This Note may not be amended, modified, or changed, except only by an instrument in writing signed by both of the parties. 

 

22.Time of the Essence.  Time is of the essence for the performance of each and every obligation of Maker hereunder. 

 

 

 

IN WITNESS WHEREOF, the undersigned has executed this Note this 30th day of November, 2017.

 

Magellan Gold Corporation, a Nevada corporation

 

 

By:  /s/ W. Pierce Carson

Its:   President

 

Magellan Acquisition Corporation, a Colorado corporation

 

 

By:  /s/ W. Pierce Carson

Its:   President

 

Rose Petroleum plc

 

 

By:  /s/ M.C. Idiens

Its:   CEO

 

Vane Minerales (UK) Limited

 

 

By:  /s/ M.C. Idiens

Its:   Director

              

-6-ESCROW AGREEMENT

 

 

THIS ESCROW AGREEMENT, dated as of the 1st day of November, 2017 (“Escrow Agreement” or “Agreement”), is by and among MAGELLAN GOLD CORPORATION, a Nevada corporation (“Buyer”), and VANE MINERALS (UK) LIMITED (“Vane”) and ROSE PETROLEUM, plc (“Rose”) (Vane and Rose are together, the “Seller”) and Corporate Stock Transfer, Inc. (“Escrow Agent”). Each of Buyer, Seller and Escrow Agent are hereinafter sometimes individually referred to herein as a “party” and collectively as the “parties.”

 

W I T N E S S E T H:

 

WHEREAS, Buyer and Seller are parties to that certain Stock Purchase Agreement dated September 9, 2017, as amended by Amendment No. 1 thereto dated October 17, 2017 (the “SPA”) pursuant to which Seller has agreed to sell to Buyer 26,573,999 shares of Minerales Vane 2 S.A. de C.V. comprising 100% of the issued and outstanding shares of capital stock of Minerales Vane 2 S.A. de C.V. (all definitions used herein shall have the meaning assigned to them in the SPA unless otherwise defined herein); and,

 

WHEREAS, in performance of its payment obligations under the SPA Buyer has agreed to place in escrow by wire transfer of immediately available funds to a single account designated in writing by Escrow Agent, nine hundred thousand dollars and 00/100 ($900,000.00) (the “Escrow Amount”); and

 

WHEREAS, Buyer and Seller have agreed that the balance of the Purchase Price to be paid to Seller under the SPA at Closing consisting of a number of shares of Buyer’s Common Stock having a value, as determined under the SPA, of five hundred thousand dollars and 00/100 ($500,000.00) (the “Purchase Price Shares”) shall also be deposited with and held by the Escrow Agent subject to the terms hereof; and

 

WHEREAS, the Escrow Agent has agreed to act as escrow agent pursuant to the terms hereof.

 

NOW, THEREFORE, in consideration of the mutual obligations and covenants hereafter set forth, Buyer, Seller and the Escrow Agent hereby covenant and agree as follows:

 

1.Designation of Escrow Agent. Buyer and Seller hereby designate and appoint the Escrow Agent as escrow agent to serve in accordance with the terms of this Escrow Agreement. The Escrow Agent hereby accepts such appointment and agrees to perform the duties set forth herein. 

 

2.Delivery of Escrow Amount to Escrow. The parties hereby acknowledge and agree that concurrently with the execution and delivery of this Agreement, Buyer shall deliver to the Escrow Agent the Escrow Amount. The Escrow Amount shall be held in escrow and distributed in accordance with the terms and provisions of this Escrow Agreement. 

 

3.Effect of Escrow. Notwithstanding the delivery of the Escrow Amount to the Escrow Agent in accordance with Section 2 of this Escrow Agreement, the parties agree that the Escrow Amount shall be deemed the property of Buyer, until paid to Seller pursuant to the terms and conditions of this Escrow Agreement. 

4.Escrow Amount. The Escrow Agent shall have no discretion whatsoever with respect to the management, disposition or investment of the Escrow Amount and is not a trustee or fiduciary to any party hereto. The Escrow Agent shall hold the Escrow Amount in accordance with this Agreement.  

 

5.Release of Escrow Amount and Termination of Escrow. 

 

(a)The Escrow Agent shall disburse the Escrow Amount in accordance with the joint written instructions of Buyer and Seller given at any time. Without limiting the generality of the foregoing, Buyer and Seller may deliver a joint written instruction (reasonably satisfactory to the Escrow Agent) directing the Escrow Agent to make one or more deliveries of the Escrow Amount. 

 

(b)Concurrently with the Closing of the SPA, the Escrow Agent shall, upon receipt of written confirmation of the Closing signed by the Buyer and Seller and joint written instructions,   pay the Escrow Amount to the Seller. 

 

(c)If the SPA has not been consummated on or before the Termination Date (as defined in Section 12), then the Seller and the Buyer shall each provide the Escrow Agent with a certificate in writing setting forth their position that such failure was due to either (i) the failure of a condition precedent in favor of the Seller (“Seller Failure”), (ii) the failure of a condition precedent in favor of the Buyer (“Buyer Failure”), or (iii) the Parties mutually acknowledged that they were unable to consummate the SPA without a breach by either Party due to a cause other than a Seller or Buyer Failure (“Transaction Failure”) and allowed the transaction to lapse as of the Termination Date of this Agreement. If either Party fails to provide the Escrow Agent with the certification provided for in this Section 5(c), it shall be presumed that the failure to close was due to the failure of the Party defaulting in its undertaking to provide such certification.  

 

(d)If the written certifications agree that the failure to close on or before the Termination Date of this Agreement was due to either a Seller Failure or Buyer Failure, the Escrow Agent shall deliver the Escrow Amount to the Buyer. The Escrow Amount will be delivered within thirty (30) days following the later of (1) the date of the written certifications (the latest date in the event of two separate correspondences), or (2) the Termination Date hereof.  

 

(e)If the written certifications disagree as to the cause of the failure to close prior to the Termination Date of this Agreement, the Escrow Agent shall retain the Escrow Amount until directed by an order issued by a court of competent jurisdiction or otherwise directed by a joint written instruction (reasonably satisfactory to the Escrow Agent) signed by both the Buyer and the Seller, or until the Termination Date. 

 

(f)If the written certifications agree that the failure to close on or before the Termination Date of this Agreement was without a breach by either Party due to a Transaction Failure, then the Escrow Agent shall disburse any and all Escrow Amounts remaining in escrow by delivering such Escrow Amount to the Buyer. The Escrow Amount will be delivered within thirty (30) days following the later of (1) the date of the written certifications (the latest date in the event of two separate correspondences), or (2) the Termination Date hereof. 

 

(g)Notwithstanding the foregoing, upon termination of this Escrow Agreement in accordance with the provisions of Section 12 below, the Escrow Agent shall disburse any and all Escrow Amount remaining in escrow on the termination date by delivering such Escrow Amount to the Buyer. 

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6.Purchase Price Shares. 

 

(a)At the Closing of the SPA, Buyer and Seller shall cause to be delivered to the Escrow Agent a certificate representing the Purchase Price Shares registered in the name of Vane. 

 

(b) During the period of time that the Purchase Price Shares are held by the Escrow Agent, such Shares shall be deemed the sole property of Seller, and Seller shall exercise all rights of beneficial ownership with respect to such Shares, including, without limitation, the right to vote such Shares and receive dividends, if any, declared and paid with respect to such Shares. 

 

             (c)During the Share Escrow Period, the Seller will not offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase or otherwise dispose of (the “Resale Restrictions”) any or all of the Purchase Price Shares for the period commencing on the Closing Date and ending on the Option Expiration Date as defined in Section 6(d) below (“Share Escrow Period”). As a reasonable means of ensuring compliance with the terms of this Agreement, the undersigned further agrees that the Buyer may instruct the transfer agent for the Purchase Price Shares to place a transfer restriction on such transfer agent's records. 

 

(d)Seller hereby grants to Buyer the sole and exclusive right and option to purchase all, but not less than all, of the Purchase Price Shares in consideration of payment in the amount set forth in this Section 6(b) (the “Option” and “Option Exercise Price”, respectively). If this Option is exercised after the Option Exercise Date (as defined below) and on or before the six month anniversary of the Option Exercise Date, the Option Exercise Price shall be $500,000.  If this Option is exercised after the six month anniversary of the Option Exercise Date and on or before the Option Expiration Date (as defined below), the Option Exercise Price shall be $550,000. The Option granted herein is freely assignable by Buyer. The Option may be exercised by Buyer (or Buyer’s assignee) commencing the day following the Closing Date (“Option Exercise Date”) and ending five (5) business days following the first anniversary of the Option Exercise Date (“Option Expiration Date”). Buyer (or Buyer’s assignee) shall exercise the Option by serving written notice (“Notice”) of such exercise concurrently to the Seller and the Escrow Agent. Such Notice shall designate the name, address and Tax ID of the purchaser of the Purchase Price Shares (if different from Buyer) and shall be accompanied by payment of the Option Exercise Price payable to the order of Seller. Upon receipt of the Notice and payment of the Option Exercise Price, the Escrow Agent shall deliver the Option Exercise Price to Seller, shall cancel the certificate representing the Purchase Price Shares and shall issue a new certificate representing the Purchase Price Shares registered in the name designated by Buyer (or Buyer’s assignee) in the Notice. 

 

(e)If Buyer has failed to exercise the Option on or before the Option Expiration Date, Escrow Agent shall deliver the certificate representing the Purchase Price Shares to the Seller, whereupon this Escrow Agreement shall terminate and the Escrow Agent shall be fully discharged hereunder. 

 

7.Escrow Agent. 

 

(a)The duties and responsibilities of the Escrow Agent shall be limited to those expressly set forth in this Agreement. No implied duties of the Escrow Agent shall be read into this Agreement and the Escrow Agent shall not be subject to, or obliged to recognize any other agreement between, or  

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direction or instruction of, any or all the parties hereto even though reference thereto may be made herein.

 

(b)In the event all or any part of the Escrow Amount shall be attached, garnished or levied upon pursuant to any court order, or the delivery thereof shall be stayed or enjoined by a court order, or any other order, judgment or decree shall be made or entered by any court affecting the Escrow Amount, or any part thereof, or any act of the Escrow Agent, the Escrow Agent is hereby expressly authorized to obey and comply with all final writs, orders, judgments or decrees so entered or issued by any court; and, if the Escrow Agent obeys or complies with such writ, order, judgment or decree, it shall not be liable to Buyer, Seller, or to any other person by reason of such compliance. 

 

(c)Except for willful misconduct or gross negligence, the Escrow Agent shall not be liable to anyone for any damages, losses or expenses incurred as a result of any act or omission of the Escrow Agent. The Escrow Agent shall not incur any such liability with respect to (i) any action taken or omitted in good faith upon the advice of counsel for the Escrow Agent given with respect to any question relating to the duties and responsibilities of the Escrow Agent under this Agreement or (ii) any action taken or omitted in reliance upon any instrument, including any written notice or instruction provided for herein, not only as to its due execution by an authorized person as to the validity and effectiveness of such instrument, but also as to the truth and accuracy of any information contained therein that the Escrow Agent shall in good faith believe to be genuine, to have been signed by a proper person or persons and to conform to the provisions of this Agreement. 

 

(d)The Escrow Agent shall not be responsible for the sufficiency or accuracy, or the form, execution, validity or genuineness, of documents received hereunder, or for any description therein, nor shall it be responsible or liable in any respect on account of the identity, authority or rights of any person executing or delivering or purporting to execute or deliver any such document or this Agreement, or on account of or by reason of forgeries, false representations, or the exercise of its discretion in any particular manner, nor shall the Escrow Agent be liable for any mistake of fact or of law or any error of judgment, or for any act or omission, except as a result of its gross negligence or willful malfeasance. The Escrow Agent is not authorized and shall not disclose the name, address, or security positions of the parties or the securities held hereunder in response to requests concerning shareholder communications under Section 14 of the Exchange Act, the rules and regulations thereunder, and any similar statute, regulation, or rule in effect from time to time. Under no circumstances shall the Escrow Agent be liable for any general or consequential damages or damages caused, in whole or in part, by the action or inaction of Buyer, Seller, or any of their respective agents or employees. The Escrow Agent shall not be liable for any damage, loss, liability, or delay caused by accidents, strikes, fire, flood, war, riot, equipment breakdown, electrical or mechanical failure, acts of God or any cause which is reasonably unavoidable or beyond its reasonable control. 

 

(e)The Escrow Agent may consult with legal counsel of its own choosing and shall be fully protected in acting or refraining from acting in good faith and in accordance with the opinion of such counsel.  

 

(f)In the event of a dispute between the parties hereto sufficient in the discretion of the Escrow Agent to justify its doing so, the Escrow Agent shall be entitled to tender the Escrow Amount into the registry or custody of any court of competent jurisdiction, to initiate such legal proceedings as it deems appropriate, and thereupon to be discharged from all further duties and liabilities under this Agreement. Any such legal action may be brought in any such court as the Escrow Agent shall  

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determine to have jurisdiction over the Escrow Amount. The filing of any such legal proceedings shall not deprive the Escrow Agent of its compensation hereunder earned prior to such filing.

 

(g)The Escrow Agent shall be under no duty to take any legal action in connection with this Agreement or towards its enforcement, or to appear in, prosecute or defend any action or legal proceeding that would result in or might cause it to incur any costs, expenses, losses or liability, unless and until it shall be indemnified with respect thereto in accordance with paragraph 8 of this Agreement. 

 

(h)Any other controversy or claim arising out of or relating to this Agreement, or the breach of the same, shall be settled through consultation and negotiation in good faith and a spirit of mutual cooperation. However, if those attempts fail, each of the parties agrees that any dispute or controversy arising out of or in connection with this Agreement or any alleged breach hereof shall be settled by arbitration in the City and County of Denver, Colorado, pursuant to the Commercial Arbitration Rules of the AAA. If Buyer and Seller cannot jointly select a single arbitrator to determine the matter, one arbitrator shall be chosen by each of Buyer and Seller (or, if a party fails to make a choice, by the AAA on behalf of such party) and the two arbitrators so chosen will select a third (or, if they fail to make a choice, by the AAA). The decision of the single arbitrator jointly selected by Buyer and Seller, or, if three arbitrators are selected, the decision of any two of them will be final and binding upon the parties and the judgment of a court of competent jurisdiction may be entered thereon. The arbitrator or arbitrators shall award the costs and expenses of the arbitration, including reasonable attorneys' fees, disbursements, arbitration expenses, arbitrators' fees and the administrative fee of the AAA, to the prevailing party as shall be determined by the arbitrator or arbitrators. 

 

8.The Escrow Agent's Fees. In consideration of its services as Escrow Agent, Buyer and Seller shall pay the Escrow Agent a fee of $1,000, to be shared equally by Buyer and Seller.  

 

9.Indemnification of the Escrow Agent. Buyer and Seller each agree, jointly and severally, to indemnify the Escrow Agent and hold it harmless against any losses, claims, damages, liabilities and/or expenses, including reasonable costs of investigation and fees and expenses of independent counsel and disbursements (collectively, the “Escrow Agent Losses”) which may be imposed upon the Escrow Agent or incurred by it in connection with the performance of its duties hereunder, including any litigation arising from this Escrow Agreement or involving its subject matter, except for Escrow Agent Losses incurred by the Escrow Agent resulting from its own gross negligence or willful misconduct. In so agreeing to indemnify and hold harmless the Escrow Agent, as among themselves, Buyer and Seller intend hereby to share equally all amounts required to be paid pursuant to this Section 9. This indemnification shall survive the termination or the resignation or removal of the Escrow Agent. 

 

10.Resignation of the Escrow Agent. It is understood that the Escrow Agent reserves the right to resign as Escrow Agent at any time by giving written notice of its resignation, specifying the effective date thereof, to Buyer and Seller. Within thirty (30) days after receiving the aforesaid notice, Buyer and Seller shall appoint a successor Escrow Agent to which the Escrow Agent may distribute the property then held hereunder, less its fees, costs and expenses (including counsel fees and expenses) which may remain unpaid at that time. If a successor Escrow Agent has not been appointed and has not accepted such appointment by the end of such thirty (30) day period, the Escrow Agent may apply to a court of competent jurisdiction for the appointment of a successor Escrow Agent and the fees, costs and expenses (including reasonable counsel fees and expenses) which it incurs in connection with such a proceeding shall be paid by the parties equally. 

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11.Amendment. This Escrow Agreement may be amended, modified, superseded or canceled, and any of the terms or conditions hereof may be waived, only by and upon written notice to the Escrow Agent at any time given jointly by Buyer and Seller, but the duties or powers or responsibilities of the Escrow Agent may not be increased without its consent. However, any successor to the business of Escrow Agent whether by reorganization or otherwise, will act with like effect as though originally named. No party may assign any rights, duties or obligations hereunder unless all other parties have given their prior written consent. 

 

12. Termination. This Agreement shall terminate as to the Escrow Amount (i) upon the delivery of the Escrow Amount in accordance with this Agreement or (ii) December 31, 2017, whichever occurs first. This Agreement shall terminate as to the Purchase Price Shares on the earlier of (i) the exercise of the Option by Buyer or (ii) the Option Expiration Date. 

 

13. Certain Corporate Matters. Buyer hereby appoints the following persons to serve as authorized signatories of Buyer hereunder and to give any instruction contemplated hereby. The signature set forth opposite each person's name is his genuine signature. 

 

NameSignature 

 

W. Pierce Carson/s/ W. Pierce Carson  

 

Seller hereby appoints the following persons to serve as authorized signatories of Seller hereunder and to give any instruction contemplated hereby. The signature set forth opposite each person's name is his genuine signature.

 

NameSignature 

 

Matthew C. Idiens/s/ Matthew C. Idiens 

 

Buyer and Seller may add additional authorized signatories, by notice to the other and to the Escrow Agent

 

14. Miscellaneous. 

 

(a)This Escrow Agreement is binding upon, and shall inure to the benefit of, and be enforceable by the respective beneficiaries, representatives, successors and assigns of the parties hereto. 

 

(b)Other than the SPA, this Escrow Agreement contains the entire understanding of the parties with respect to the subject matter hereof. Nothing herein shall limit or affect the rights of the parties under the SPA. 

 

(c)This Escrow Agreement shall be governed by and construed in accordance with the laws of the State of Colorado. 

.

(d)This Escrow Agreement, and any of the notices issued pursuant hereto, may be executed simultaneously in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 

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(e)Article headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Escrow Agreement. 

 

15. Notices. All notices provided for hereunder shall be in writing and shall be deemed to be given:  (a) when delivered to the individual, or to an officer of the company to which the notice is directed; or (b) three days after the same has been deposited in the United States mail sent Certified or Registered mail with Return Receipt Requested, postage prepaid and addressed as provided in this paragraph; or (c) when delivered by an overnight delivery service (including Federal Express or United States Express Mail) with receipt acknowledged and with all charges prepaid by the sender addressed as provided in this paragraph or (d) by electronic communication, including email. Notices shall be directed as follows: 

 

If to Seller, to:

 

Rose Petroleum PLC

Attn:  Chris Eadie

First Floor

Newmarket House

Market Street

Newbury

Bershire

RG 14 5 DP

UK

 

Telephone:  0044 207 225 4590

Email:  chris.eadie@rosepetroleum.com

With a copy to:

 

Brad Hamilton

Jones & Keller P.C.

1999 Broadway, Ste. 3150

Denver, CO  80202

 

Telephone:  303 573 1600

Email:  bhamilton@joneskeller.com

If to Buyer, to:

 

________________________
________________________
________________________
________________________

Telephone:______________ 

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If to Escrow Agent, to:

 

Corporate Stock Transfer, Inc. 

Attention:  Carylyn Bell, President 

3200 Cherry Creek South Drive, Suite 430 

Denver, CO 80209

Telephone: (303) 282-4800

Fax: (303) 282-5800

 

 

If the date on which any action, calculation or notice required or permitted to be taken, made or given hereunder is other than a business day, then such action, calculation or notice, as the case may be, may be taken, made or given on the next succeeding business day.

 

IN WITNESS WHEREOF, this Escrow Agreement has been duly executed and delivered by the duly authorized officers of Buyer, Seller and the Escrow Agent, on the date first above written.

 

 

MAGELLAN GOLD CORPORATION,ESCROW AGENT: 

a Nevada corporation

CORPORATE STOCK TRANSFER, INC., Escrow Agent

 

 

By:/s/ W. Pierce CarsonBy: /s/ Carylyn Bell 

Name:W. Pierce CarsonName:Carylyn Bell 

Title:PresidentTitle:President 

 

 

ROSE PETROLEUM, plc VANE MINERALS (UK) LIMITED 

 

 

 

By:/s/ M.C. IdiensBy:/s/ M.C. Idiens 

Name:M.C. IdiensName:M.C. Idiens 

Title:CEOTitle:Director 

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