Gatling Exploration : Arrangement Agreement

ARRANGEMENT AGREEMENT

between

MAG SILVER CORP.

- and -

GATLING EXPLORATION INC.

Dated March 10, 2022

	TABLE OF CONTENTS
	DEFINITIONS, INTERPRETATION AND SCHEDULES	....................................................... 2
1.1	Definitions..................................................................................................................................................	2
1.2	Interpretation Not Affected by Headings .................................................................................................	11
1.3	Number and Gender .................................................................................................................................	11
1.4	Date for any Action..................................................................................................................................	11
1.5	Statutory References ................................................................................................................................	12
1.6	Currency...................................................................................................................................................	12
1.7	Invalidity of Provisions ............................................................................................................................	12
1.8	Accounting Matters..................................................................................................................................	12
1.9	Knowledge ...............................................................................................................................................	12
1.10	Meaning of Certain Phrase.......................................................................................................................	12
1.11	Schedules .................................................................................................................................................	12
	THE ARRANGEMENT...............................................................................................................	13
2.1	Arrangement.............................................................................................................................................	13
2.2	Interim Order............................................................................................................................................	13
2.3	Gatling Meeting .......................................................................................................................................	14
2.4	Gatling Circular........................................................................................................................................	15
2.5	Preparation of Filings...............................................................................................................................	16
2.6	Final Order ...............................................................................................................................................	17
2.7	Court Proceedings ....................................................................................................................................	17
2.8	Delivery of Consideration Shares ............................................................................................................	17
2.9	Closing .....................................................................................................................................................	18
2.10	Announcement and Shareholder Communications ..................................................................................	18
2.11	Withholding Taxes ...................................................................................................................................	18
2.12	U.S. Tax Matters. .....................................................................................................................................	18
2.13	U.S Securities Laws. ................................................................................................................................	19
	REPRESENTATIONS AND WARRANTIES ...........................................................................	20
3.1	Representations and Warranties of MAG ................................................................................................	20
3.2	Representations and Warranties of Gatling..............................................................................................	20
	COVENANTS ...............................................................................................................................	21
4.1	Covenants of Gatling Regarding the Conduct of Business ......................................................................	21
4.2	Covenants of MAG Regarding the Conduct of Business.........................................................................	25
4.3	Mutual Covenants of the Parties Relating to the Arrangement................................................................	26
4.4	Indemnification and Insurance.................................................................................................................	27
	CONDITIONS...............................................................................................................................	28
5.1	Notice and Cure Provisions......................................................................................................................	28
5.2	Mutual Conditions....................................................................................................................................	28
5.3	Conditions to Obligations of MAG..........................................................................................................	29
5.4	Conditions to Obligations of Gatling .......................................................................................................	30
5.5	Merger of Conditions ...............................................................................................................................	31
	NON-SOLICITATION AND TERMINATION ........................................................................	31
6.1	Covenant Regarding Non-Solicitation. ....................................................................................................	31
6.2	Term .........................................................................................................................................................	35
6.3	Termination..............................................................................................................................................	35
6.4	Termination Payments .............................................................................................................................	38
	AMENDMENT .............................................................................................................................	39
7.1	Amendment..............................................................................................................................................	39
	GENERAL.....................................................................................................................................	40
8.1	Notices .....................................................................................................................................................	40

8.2	Remedies..................................................................................................................................................	41
8.3	Expenses...................................................................................................................................................	41
8.4	Time of the Essence .................................................................................................................................	41
8.5	Entire Agreement .....................................................................................................................................	41
8.6	Further Assurances...................................................................................................................................	42
8.7	Governing Law ........................................................................................................................................	42
8.8	Execution in Counterparts........................................................................................................................	42
8.9	Waiver......................................................................................................................................................	42
8.10	No Personal Liability ...............................................................................................................................	42
8.11	Enurement and Assignment .....................................................................................................................	42
SCHEDULE A - PLAN OF ARRANGEMENT.................................................................................................	A-1
SCHEDULE B - REPRESENTATIONS AND WARRANTIES OF MAG.......................................................	B-1
SCHEDULE C - REPRESENTATIONS AND WARRANTIES OF GATLING ..............................................	C-1
SCHEDULE D - FORM OF GATLING RESOLUTIONS................................................................................	D-1

ARRANGEMENT AGREEMENT

THIS AGREEMENT made the 10th day of March, 2022

B E T W E E N:

MAG SILVER CORP.,

a corporation existing under the

Business Corporations Act (British Columbia),

(hereinafter referred to as "MAG")

- and -

GATLING EXPLORATION INC.

a corporation existing under the

Business Corporations Act (British Columbia),

(hereinafter referred to as "Gatling")

WHEREAS MAG wishes to acquire all of the issued and outstanding Gatling Shares (as defined

below);

AND WHEREAS MAG and Gatling propose to carry out the transactions contemplated by this Agreement by way of Plan of Arrangement under the provisions of the Business Corporations Act (British Columbia);

AND WHEREAS the Gatling Board has unanimously determined, after receiving financial and legal advice and the unanimous recommendation of the Gatling Special Committee, that the Arrangement is fair to the Gatling Securityholders and that the Arrangement is in the best interests of Gatling, and the Gatling Board has decided to recommend that the Gatling Securityholders vote in favour of the Arrangement, all subject to the terms and conditions contained in this Agreement;

AND WHEREAS concurrent with the signing of this Agreement MAG has agreed to provide a bridge loan of up to $3,000,000 (the "Bridge Loan") to Gatling, such Bridge Loan being evidenced by a loan agreement and promissory note and secured by a debenture and general security agreement (collectively, the "Bridge Loan Documents");

AND WHEREAS MAG has entered into the MAG Voting Agreements with certain Gatling Securityholders, pursuant to which, among other things, such Gatling Securityholders agree, subject to the terms and conditions thereof, to vote their Gatling Securities in favour of the Gatling Arrangement Resolutions;

NOW THEREFORE in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the Parties hereto, the Parties hereto hereby covenant and agree as follows:

- 2 -

DEFINITIONS, INTERPRETATION AND SCHEDULES

1.1 Definitions

In this Agreement, unless the context otherwise requires, the following words and terms used herein or in an exhibit with the initial letter or letters thereof capitalized shall have the meanings ascribed to them below:

1. "1933 Act" means the United States Securities Act of 1933, as amended;
2. "Aboriginal" means any aboriginal peoples of Canada, including First Nations, Inuit and Métis peoples of Canada and includes any group of Aboriginals, including tribal or Métis councils;
3. "Aboriginal Claim" means any claim, written assertion or demand, whether proven or unproven, made by any Aboriginals or Aboriginal groups with respect to Aboriginal title, Aboriginal rights, treaty rights or any other Aboriginal interest;
4. "Acquisition Proposal" means, other than the transactions contemplated by this Agreement, and other than any transaction involving only the Gatling, any offer, proposal or inquiry from any person or group of persons (other than MAG or any affiliate of MAG), whether or not in writing and whether or not delivered to the Gatling Shareholders, relating to: (a) any direct or indirect acquisition, purchase, disposition (or any lease, royalty, joint venture, long-term supply agreement or other arrangement having the same economic effect as a sale), through one or more transactions, of (i) the assets of Gatling that, individually or in the aggregate, constitute 20% or more of the consolidated assets of Gatling, or which contribute 20% or more of the consolidated revenue of Gatling, or (ii) 20% or more of any voting or equity securities of Gatling (determined based upon the most recently publicly available consolidated financial statements of Gatling); (b) any direct or indirect take-over bid, tender offer, exchange offer, sale or issuance of securities or other transaction that, if consummated, would result in such person or group of persons beneficially owning 20% or more of any class of voting, equity or other securities; or (c) a plan of arrangement, merger, amalgamation, consolidation, share exchange, share reclassification, business combination, reorganization, recapitalization, liquidation, dissolution, winding up or other similar transaction or series of transactions involving Gatling that, if consummated, would result in such person or group of persons beneficially owning 20% or more of any class of voting, equity or other securities (including securities convertible into or exercisable or exchangeable for securities or equity interests) of Gatling.
5. "affiliate" has the meaning ascribed thereto in the National Instrument 45-106 - Prospectus and Registration Exemptions;
6. "Agreement" means this Arrangement Agreement, together with the schedules attached hereto, as amended, amended and restated or supplemented from time to time;
7. "Arrangement" means the arrangement of Gatling under Section 288 of the BCBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with Section 7.1 hereof or the Plan of Arrangement or made at the direction of the Court in the Final Order (provided, however, that any such amendment or variation is acceptable to both Gatling and MAG, each acting reasonably);
8. "BCBCA" means the Business Corporations Act (British Columbia);