PROMISSORY NOTE  

$125,000.00 June 30, 2017  

 

FOR VALUE RECEIVED, the undersigned, MAGELLAN GOLD CORPORATION, a Nevada corporation (the “Company” or “Maker”) promises to pay to the order of John Power , individually ("Holder") at 2010A Harbison Dr., #312,Vacaville, CA  95687 or at such other place as Holder may from time to time designate in writing, the principal sum of One Hundred Twenty Five Thousand and no/100 Dollars ( $125,000.00 ) in lawful money of the United States of America, together with interest on so much thereof as is from time to time outstanding at the rate hereinafter provided, and payable as hereinafter provided.

 

1. Interest Rate .  The unpaid principal balance of this Note shall bear interest commencing on the date of this Note until such unpaid principal amount is paid in full, at a rate of six percent (6%).  To the extent not previously paid, interest on the unpaid principal amount hereunder shall be payable at maturity (by acceleration or otherwise). 

 

2. Maturity Date .  The total outstanding principal balance hereof, together with accrued and unpaid interest is due and payable in full on December 31, 2017. 

 

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 twelve percent (12%) 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. Interest Calculation .  Interest shall be computed using the actual number of days in the period for which such computation is made and a per diem rate equal to 1/365 of the rate per annum. 

 

5. Prepayment .  Maker may prepay all or any portion of the principal balance of this Note with the written consent of Holder.  

 

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. 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: 

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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 securing, 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. 

 

8. 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. 

 

9. Assignment of Note .  This Note may not be assigned by Maker without the written consent of Holder.  

 

10. 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 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. 

 

11. 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. 

 

12. Security .  This Note is secured by a Stock Pledge Agreement of even date herewith. 

 

 

13. 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  

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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.

 

14. Governing Law .  As an additional consideration for the extension of credit, Maker and each endorser, surety, guarantor, and any other person who may become liable for all or any part of this obligation understand and agree that the loan evidenced by this Note is made in the State of Holder's residence or domicile 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. 

 

15. 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. 

 

16. 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. 

 

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

 

18. 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. 

 

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

 

20. 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 as of the 30 ^th day of June, 2017.

 

 

MAKER:

 

MAGELLAN GOLD CORPORATION

 

 

 

By: /s/ W. Pierce Carson  

W. Pierce Carson, President and CEO

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STOCK PLEDGE AGREEMENT

 

This STOCK PLEDGE AGREEMENT (this “Agreement”) is made effective this 30 ^th day of June, 2017 (the “Effective Date”) between MAGELLAN GOLD CORPORATION (“Pledgor”) and JOHN C. POWER (“Secured Party”).  

A. 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 2,750,000 shares of the issued and outstanding common stock of Rio Silver, Inc., a Canadian company (the “Company”), as represented by Certificate No(s). _______________, along with Warrants to purchase 1,500,000 shares of common stock of Rio Silver, Inc. at a price of $0.05 per share and Warrants to purchase 1,250,000 shares common stock of Rio Silver, Inc. at price of $0.06 per share, together with all proceeds, products and increases thereof and substitutions and replacements therefor (collectively, the “Collateral”).  

B. As used in this Agreement, the term “Secured Obligations” shall mean (i) any and all obligations, liabilities and indebtedness under that certain Secured Promissory Note dated of even date herewith in the original principal amount of $125,000, executed by Pledgor in favor of Secured Party, referenced to which is here made (as hereafter amended from time to time, the “Promissory Note”), 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 Note.  

NOW THEREFORE

1. Pledgor represents and warrants that (i) Pledgor holds record and beneficial ownership of the Collateral, free and clear of all liens and encumbrances; and (ii) there are no restrictions upon the transfer of any of the Collateral, other than arising under applicable state or federal securities laws and restrictions on transfer contained in the Shareholder Agreement, as amended, between the Company and the parties hereto.    

2. 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 certificate(s) identified hereinabove, together with stock powers duly executed in blank by Pledgor, to hold as collateral security pursuant to the terms of this Agreement.  

3. 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.  

4. Provided there has not occurred any Event of Default under the Note or this Agreement, the Pledgor shall exercise all voting rights with respect to the Collateral. Upon the occurrence of any Event of Default and during the continuance thereof, Secured Party shall have the right to vote the Collateral.  Pledgor shall, if necessary, execute timely proxies in favor of  

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Pledgor for this purpose but Secured Party shall be under no obligation to exercise any of such rights or privileges.

5. 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.  

6. Provided there has not occurred any Event of Default under the Note or this Agreement, Pledgor shall be entitled to receive all dividends and other amounts payable with respect to the Collateral.  Upon the occurrence of an Event of Default, 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.  

7. 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.  

8. 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.)  

9. 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  

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and 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.  

10. 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.  

11. To the extent permitted by applicable law and in the Promissory Note, 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.  

12. 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 Note;  

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

13. 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.  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.   In lieu of selling or otherwise disposing of the pledged Shares in accordance with the foregoing provisions, Secured Party may, after default, propose to retain all of the Shares then remaining covered by this Pledge Agreement  

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in complete satisfaction of all of the remaining obligations and indebtednesses under the Promissory Note. Written notice of such proposal shall be sent to the Pledgor and, if Pledgor objects in writing within thirty (30) days after the Secured Party provides such written notice, the Pledgee must dispose of the pledged Shares in accordance with the Colorado Uniform Commercial Code.  In the absence of such written objection, the Pledgee may retain the pledged Shares in satisfaction of the obligations remaining under the Promissory Note. 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.

14. 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 15 ^th day of July, 2017, to be effective as of the Effective Date set forth in the first paragraph of this Agreement.  

PLEDGOR:

 

MAGELLAN GOLD CORPORATION

 

 

 

By: /s/ W. Pierce Carson  

Name: W. Pierce Carson  

Title: President and CEO  

Address: 2010A Harbison Dr., #312  

Vacaville, CA  95687  

 

SECURED PARTY:

 

 

/s/ John C. Power

John C. Power  

Address: 2010A Harbison Dr., #312  

Vacaville, CA  95687  

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