Form SC 13D AMMO, INC. Filed by: Urvan Steven F.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
AMMO, INC.
(Name
of Issuer)
Common Stock, par value $0.001 per share
(Title
of Class of Securities)
00175J107
(CUSIP
Number)
Steven
F. Urvan
c/o
Ammo, Inc.
7681 E.
Gray Rd.
Scottsdale, AZ
85260
(480)
947-0001
Copies
to:
Brian
A. Teras, Esq
Arnall
Golden Gregory LLP
171
17th
Street, Suite 2100
Atlanta, GA
30363
(Name,
Address and Telephone Number of Person Authorized to
Receive
Notices and Communications)
April 30, 2021
(Date
of Event which Requires Filing of this Statement)
If the
filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D,
and is filing this schedule because of §§240.13d-1(e),
240.13d-1(f) or 240.13d-1(g), check the following box
[ ]
The
information required on the remainder of this cover page shall not
be deemed to be “filed” for the purpose of Section 18
of the Securities Exchange Act of 1934 (“Act”) or
otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act
(however, see the
Notes).
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1
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NAME OF
REPORTING PERSON
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Steven
F. Urvan
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2
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CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See
Instructions)
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(a)
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(b)
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3
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SEC USE
ONLY
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4
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SOURCE
OF FUNDS*
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OO
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5
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CHECK
IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
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[ ]
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6
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CITIZENSHIP
OR PLACE OF ORGANIZATION
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United
States
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7
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SOLE
VOTING POWER
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NUMBER
OF
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SHARES
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8
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SHARED
VOTING POWER
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BENEFICIALLY
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OWNED
BY
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0
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EACH
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9
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SOLE
DISPOSITIVE POWER
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REPORTING
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PERSON
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14,500,000
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WITH
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10
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SHARED
DISPOSITIVE POWER
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0
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11
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AGGREGATE
AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
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18,500,000
(1)
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12
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CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
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[ ]
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13
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PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
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19.84(2)
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14
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TYPE OF
REPORTING PERSON (See Instructions)
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IN
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1.
Consists
of 18,500,000 shares of common stock of the Issuer held directly by
Mr. Urvan.
2.
Percentage
of class based on 93,260,607 total outstanding shares of common
stock of the Issuer as of April 30, 2021.
Item 1 Security and Issuer.
The
statement (“Statement”) relates to shares of common
stock, par value $0.001 per share (the “Common Stock”),
of Ammo, Inc., a Delaware corporation (the “Issuer”).
The principal executive office of the Issuer is located at 7681 E.
Gray Rd., Scottsdale, AZ 85260.
Item 2 Identity and Background.
The
Statement is being filed by Mr. Steven F. Urvan (“Mr.
Urvan”). Mr. Urvan’s present principal occupation or
employment is serving as Chief Strategy Officer of the Issuer. Mr.
Urvan is a United States citizen. The business address of Mr. Urvan
is c/o Ammo, Inc., 7681 E. Gray Rd., Scottsdale, AZ
85260.
During
the last five years Mr. Urvan has not (i) been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors); or (ii) been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a
result of which proceeding he was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such
laws.
Item 3 Source and Amount of Funds or Other
Consideration.
Mr.
Urvan acquired the reported 18,500,000 shares of Common Stock
pursuant to an Agreement and Plan of Merger, dated as of April 30,
2021 (the “Merger Agreement”), by and among Mr. Urvan,
Gemini Direct Investments, LLC (“Gemini”), the Issuer
and SpeedLight Group I, LLC (“Merger Sub”), whereby
Merger Sub merged (the “Merger”) with and into Gemini,
with Merger Sub surviving the merger as a wholly owned subsidiary
of the Issuer. Pursuant to the Merger Agreement, the Issuer
acquired from Mr. Urvan 100% of the equity of Gemini which owns
100% of the Gunrboker.com business (the
“Acquisition”).
As
consideration for the Acquisition, on April 30, 2021, (i) the
Issuer assumed an aggregate amount of indebtedness of Gemini and
its subsidiaries equal to $50,000,000; and, (ii) the issued and
outstanding membership interests in Gemini, held by Mr. Urvan,
automatically converted into the right to receive (A) $50,000,000,
and (B) 20,000,000 shares of Common Stock (the “Stock
Consideration”) of the Issuer, $0.001 par value per
share. The Stock Consideration consisted of: (a) 14,500,000 shares
issued without being held in escrow or requiring prior stockholder
approval (the “Initial Shares”); (b) 4,000,000 shares
issued subject to a Pledge and Escrow Agreement as described below
(the “Pledged Securities”); and (c) 1,500,000 shares
that will not be issued unless and until the Issuer obtains
stockholder approval for the issuance (the “Additional
Securities”).
Item 4 Purpose of Transaction.
Mr.
Urvan does not have any current plans or proposals which relate to
or would result in: (a) the acquisition of additional securities of
the Issuer, or the disposition of securities of the Issuer; (b) an
extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries; (c) a sale or transfer of a material amount of assets
of the Issuer or any of its subsidiaries; (d) any change in the
present board of directors or management of the Issuer, including
any plans or proposals to change the number or term of directors or
to fill any existing vacancies on the board; (e) any material
change in the present capitalization or dividend policy of the
Issuer; (f) any other material change in the Issuer’s
business or corporate structure; (g) any change in the
Issuer’s charter, bylaws or instruments corresponding thereto
or other actions which may impede the acquisition of control of the
Issuer by any person; (h) causing a class of securities of the
Issuer to be delisted from a national securities exchange or to
cease to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association; (i) a class
of equity securities of the Issuer becoming eligible for
termination of registration pursuant to section 12(g)(4) of the
Exchange Act; or (j) any action similar to any of those enumerated
above.
Item 5 Interest in Securities of the Issuer.
(a) As
of the date hereof, Mr. Urvan beneficially owns 18,500,000 shares
of the issued and outstanding Common Stock of the Issuer. Such
amount represents approximately 19.84% of the total of the issued
and outstanding shares of the Issuer’s Common Stock as of the
date hereof.
(b) Mr.
Urvan holds sole voting and dispositive power over the Initial
Shares. Pursuant to the Pledge and Escrow Agreement and the Company
Lock-Up Agreement (as described below), Mr. Urvan has sole voting
rights with respect to the Pledged Securities but may not sell or
transfer the Pledged Securities without the consent of the Issuer,
until such restrictions are removed pursuant to the terms of the
Pledge and Escrow Agreement and the Lock-Up Agreement.
(c)
Other than disclosed above, there were no transactions by Mr. Urvan
in the Issuer’s Common Stock during the last 60
days.
(d) No
other person is known to have the right to receive, or the power to
direct the receipt of, dividends from, or the proceeds from the
sale of, the securities of the Issuer owned by Mr.
Urvan.
(e) Not
applicable.
Item 6 Contracts, Agreements, Understandings or Relationships With
Respect to Securities of the Issuer.
Pledge
and Escrow Agreement
On
April 30, 2021, in connection with the Merger Agreement, the Issuer
and Mr. Urvan entered into a Pledge and Escrow Agreement (the
“Pledge and Escrow Agreement”). In order to secure the
fulfilment of Mr. Urvan’s indemnification obligations set
forth in the Merger Agreement, Mr. Urvan agreed to irrevocably
pledge and grant to the Issuer a continuing lien and security
interest in and to the Pledged Securities. Mr. Urvan retained his
voting rights with regard to the Pledged Securities.
Company
Lock-Up Agreement
On
April 30, 2021, in connection with the Merger Agreement, the Issuer
and Mr. Urvan entered into a Lock-Up Agreement (the “Company
Lock-Up Agreement”), pursuant to which, until the Pledged
Securities are released in accordance with the terms of the Company
Lock-Up, the Pledged Securities shall not be sold or transferred by
Mr. Urvan without the prior written consent of the
Issuer.
Voting
Agreement
On
April 30, 2021, in connection with the Merger Agreement, the Issuer
and Mr. Urvan entered into a Voting Agreement (the “Voting
Agreement”), whereby for a period of six months following
April 30, 2021, Mr. Urvan: (i) agreed to vote in favor of approving
the implementation of a staggered board of directors at the next
annual meeting of the Issuer; (ii) will not vote any securities in
favor of, or consent to, and will vote the Stock Consideration to
which he has voting rights, to vote against and not consent to, the
approval of a proxy fight either individually or as part of a group
for Schedule 13D or 13G purposes that would result in one-third of
the current officers and one-third of the current directors being
replaced; and (iii) appointed the Issuer as his attorney-in-fact
and proxy with full power of substitution, for and in his name, to
vote in the manner contemplated by the Voting
Agreement.
Standstill
Agreement
On
April 30, 2021, in connection with the Merger Agreement, the Issuer
and Mr. Urvan entered into a Standstill Agreement (the
“Standstill Agreement”), whereby for a one-year period
(the “Standstill Period”), Mr. Urvan agreed not to,
among other things, make, effect, initiate, cause or participate in
(i) any acquisition of any securities of the Issuer or any
securities of any subsidiary or other affiliate or associate of the
Issuer if such acquisition would result in Mr. Uvan and his
affiliates and associates collectively beneficially owning
twenty-five percent (25%) or more of the then issued and
outstanding shares of common stock of the Issuer, (ii) any Company
Acquisition Transaction (as this term is defined in the Standstill
Agreement), or (iii) any “solicitation” of
“proxies” (as those terms are defined in Rule 14a-1 of
the General Rules and Regulations under the Exchange Act) or
consents with respect to any securities of the Issuer.
Investor
Rights Agreement
On
April 30, 2021, in connection with the Merger Agreement, the Issuer
and Mr. Urvan entered into an Investor Rights Agreement (the
“Investor Rights Agreement”). The Investor Rights
Agreement requires the Issuer to use its commercially reasonable
efforts to register 10 million shares of the Stock Consideration
for resale on a registration statement to be filed with the
Securities and Exchange Commission (the “SEC”), under
the Securities Act of 1933, as amended (the “Securities
Act”), within ninety (90) days following April 30, 2021. The
Issuer also agreed in the Investor Rights Agreement to provide Mr.
Urvan with demand registration rights in connection with the other
shares received by Mr. Urvan as part of the Stock Consideration,
including the Pledged Securities (to the extent released and
delivered to Mr. Urvan in accordance with the terms of the Merger
Agreement) and the Additional Securities (if issued in accordance
with the terms of the Merger Agreement).
Underwriter
Lock Up Agreement
As
previously announced, on March 12, 2021, the Issuer entered into an
underwriting agreement (the “Underwriting Agreement”)
with Roth Capital Partners, LLC and Alexander Capital, L.P., as
representatives of the several underwriters identified therein
(collectively, the “Underwriters”), relating to a firm
commitment public offering of 20,000,000 newly issued shares of our
common stock at a public offering price of $5.00 per share.
Pursuant to the Underwriting Agreement, subject to certain
exceptions, the Issuer agreed not to issue any shares of Common
Stock without the consent of the Underwriters for ninety (90) days
following March 12, 2021. Prior to issuing the Stock Consideration,
the Issuer sought and obtained the Underwriters’ consent to
the issuance. As a condition to the consent, the Underwriters
required and Mr. Urvan agreed to execute a lock up agreement
preventing Mr. Urvan from, subject to certain exceptions, selling
any of the shares constituting the Stock Consideration until June
10, 2021.
Item 7 Material to be Filed as Exhibits.
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Exhibit Number
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Description
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10.1
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10.2
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10.3
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10.4
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10.5
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10.6
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10.7
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SIGNATURES
After
reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
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Date:
May 10, 2021
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/s/ Steven F.
Urvan
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Steven F. Urvan
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Exhibit
10.6
PLEDGE AND ESCROW AGREEMENT
THIS
PLEDGE AND ESCROW AGREEMENT (“Agreement”)
is made and effective as of April 30, 2021 by and between
STEVEN F. URVAN, an
individual (the “Pledgor”),
and AMMO, INC., a Delaware
corporation (the “Secured
Party”, the
“Company”).
RECITALS
WHEREAS, the Secured Party, the Pledgor,
Speedlight Group I, LLC, a Delaware limited liability company and
wholly-owned subsidiary of the Secured Party (the
“Sub”),
and Gemini Direct Investments LLC, a Nevada limited company
(“Gemini”),
are parties to that certain Agreement and Plan of Merger, of even
date herewith (the “Merger
Agreement”), pursuant to which the Sub was merged with
Gemini, with the Sub surviving the merger (the
“Merger”);
and
WHEREAS, in consideration for the
Merger, the Company issued 18,500,000 shares of its common stock,
par value $0.001 per share (the “Common
Stock”) to the Pledgor, of which 4,000,000 shares of
Common Stock, evidenced by share certificates number
and (the
“Certificates”),
having an aggregate value of $28,000,000 as of the date hereof,
have not been released to the Pledgor and are being held as
Collateral to secure the Obligations (the “Pledged
Securities”); and
WHEREAS, in order to secure the
fulfilment of the obligations of Pledgor set forth in the Merger
Agreement relating to certain indemnification obligations provided
by Pledgor to the Secured Party and the Sub (i) under Section 7 of
the Merger Agreement, in respect of certain tax liabilities (the
“Tax Liability
Obligations”), and (ii) under Section 9 of the Merger
Agreement, in respect of potential liabilities in connection with
the Triton Matter (as defined in the Merger Agreement) (the
“Triton Liability
Obligations” and together with the Tax Liability
Obligations, the “Obligations”),
Pledgor has agreed to irrevocably pledge to the Secured Party the
Pledged Securities;
NOW, THEREFORE, in consideration of the mutual
covenants, agreements, warranties, and representations herein
contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Recitals,
Construction and Defined Terms. The recitations set forth in
the preamble of this Agreement are true and correct and
incorporated herein by this reference. In this Agreement, unless
the express context otherwise requires: (i) the words
“herein,” “hereof” and
“hereunder” and words of similar import refer to this
Agreement as a whole and not to any particular provision of this
Agreement; (ii) references to the words “Section” or
“Subsection” refer to the respective Sections and
Subsections of this Agreement, and references to
“Exhibit” or “Schedule” refer to the
respective Exhibits and Schedules attached hereto; and (iii)
wherever the word “include,” “includes,”
“including” or words of similar import are used in this
Agreement, such words will be deemed to be followed by the words
“without limitation.” All capitalized terms used in
this Agreement that are defined in the Merger Agreement shall have
the meanings assigned to them in the Merger Agreement, unless the
context of this Agreement requires otherwise (provided that if a
capitalized term used herein is defined in the Merger Agreement and
separately defined in this Agreement, the meaning of such term as
defined in this Agreement shall control for purposes of this
Agreement).
2. Pledge.
In order to secure the full and timely payment and performance of
all of the Pledgor’s Obligations to the Secured Party (which,
for the avoidance of doubt, do not include other obligations which
may be contained in the Merger Agreement other than the
Obligations), the Pledgor hereby transfers, pledges, assigns, sets
over, delivers and grants to the Secured Party a continuing lien
and security interest in and to all of the following property of
Pledgor, both now owned and existing and hereafter created,
acquired and arising (all being collectively hereinafter referred
to as the “Collateral”)
and all right, title and interest of Pledgor in and to the
Collateral, to-wit:
(a) the
Pledged Securities owned by Pledgor;
(b) any
certificates representing or evidencing the Pledged Securities,
including, but not limited to, the Certificates and any substitute
or replacement certificates which may come into existence hereafter
from time to time;
(c) any
and all distributions thereon, and cash and non-cash proceeds and
products thereof, including all dividends, cash, distributions,
income, profits, instruments, securities, stock dividends,
distributions of capital stock or other securities of the Company
and all other property from time to time received, receivable or
otherwise distributed in respect of, in exchange for or upon
conversion of the Pledged Securities, whether in connection with
stock splits, recapitalizations, merger, conversions, combinations,
reclassifications, exchanges of securities or otherwise;
and
(d) any
and all voting, management, and other rights, powers and privileges
accruing or incidental to an owner of the Pledged Securities and
the other property referred to in subsections 2(a) through 2(c)
above.
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3. Transfer
of Pledged Securities. Simultaneously with the execution of
this Agreement, Pledgor shall deliver to the Secured Party: (i) the
Certificates representing or evidencing the Pledged Securities,
together with undated, irrevocable and duly executed assignments or
stock powers thereof in form and substance acceptable to Secured
Party (together with medallion guaranteed signatures, if required
by Secured Party), executed in blank by Pledgor; (ii) if the
Pledged Securities are not represented by physical certificates,
then undated, irrevocable and duly executed assignment instruments
in form and substance acceptable to Secured Party, executed in
blank by Pledgor; (iii) all other property, instruments, documents
and papers comprising, representing or evidencing the Collateral,
or any part thereof, together with proper instruments of assignment
or endorsement, as Secured Party may request or require, duly
executed by Pledgor (collectively, the “Transfer
Documents”); (iv) an irrevocable proxy permitting the
Secured Party to vote the Pledged Securities following a Trigger
Event, in form and substance acceptable to Secured Party, executed
by Pledgor; and (v) an undated letter of cancellation pursuant to
which the Pledgor shall agree to cancel the Pledged Securities in
the event that, following a foreclosure proceeding, the Pledged
Securities shall become the property of the Secured Party, in form
and substance acceptable to Secured Party, executed in blank by
Pledgor. The Pledged Securities, the other Transfer Documents, the
irrevocable proxy and the letter of cancellation (collectively, the
“Pledged
Materials”) shall be held by the Secured Party
pursuant to this Agreement until released under Section 7 hereof,
the termination or expiration of this Agreement, or delivery of the
Pledged Materials in accordance with this Agreement. In addition,
all non-cash dividends, dividends paid or payable in cash or
otherwise in connection with a partial or total liquidation or
dissolution of the Company, instruments, securities and any other
distributions, whether paid or payable in cash or otherwise, made
on or in respect of the Pledged Securities, whether resulting from
a subdivision, combination, or reclassification of the outstanding
capital stock or other securities of the Company, or received in
exchange for the Pledged Securities or any part thereof, or in
redemption thereof, as a result of any merger, consolidation,
acquisition, or other exchange of assets to which the Company may
be a party or otherwise, or any other property that constitutes
part of the Collateral from time to time, including any additional
certificates representing any portion of the Collateral hereafter
acquired by the Pledgor, shall be immediately delivered or cause to
be delivered by Pledgor to the Secured Party in the same form as so
received, together with proper instruments of assignment or
endorsement duly executed by Pledgor.
4. Security
Interest Only. The security interests in the Collateral
granted to Secured Party hereunder are granted as security only and
shall not subject the Secured Party to, or transfer or in any way
affect or modify, any obligation or liability of the Pledgor with
respect to any of the Collateral or any transaction in connection
therewith.
5. Record
Owner of Collateral. Until a “Trigger Event” (as
hereinafter defined) under this Agreement shall occur, the Pledged
Securities shall remain registered in the name of the Pledgor.
Pledgor will promptly give to the Secured Party copies of any
notices or other communications received by it and with respect to
Collateral registered in the name of Pledgor.
6. Rights
Related to Pledged Securities. Subject to the terms of this
Agreement, unless and until a Trigger Event under this Agreement
shall occur:
(a) Pledgor
shall be entitled to exercise any and all voting, management, and
other rights, powers and privileges accruing to an owner of the
Pledged Securities, or any part thereof, for any purpose consistent
with the terms of this Agreement; provided, however, such action
would not materially and adversely affect the rights inuring to
Secured Party under the Merger Agreement, or adversely affect the
remedies of the Secured Party under the Merger Agreement, or the
ability of the Secured Party to exercise same.
3
(b) Upon
the occurrence of a Trigger Event, all rights of the Pledgor in and
to the Pledged Securities and all other Collateral shall cease and
all such rights shall immediately vest in Secured Party in respect
of those Pledged Securities which are necessary to satisfy the
Obligations from time to time, as may be determined by Secured
Party, although Secured Party shall not have any duty to exercise
such rights or be required to sell or to otherwise realize upon the
Collateral, as hereinafter authorized, or to preserve the same, and
Secured Party shall not be responsible for any failure to do so or
delay in doing so. To effectuate the foregoing, Pledgor hereby
grants to Secured Party a proxy to vote that portion of the Pledged
Securities which are necessary to satisfy the Obligations from time
to time for and on behalf of Pledgor, which proxy is irrevocable
and coupled with an interest and which proxy shall be effective
upon the occurrence of any Trigger Event. Such proxy shall remain
in effect so long as the Obligations remain outstanding. The
Pledgor hereby acknowledges that any vote by Pledgor in violation
of this Section 6 shall be null, void and of no force or effect.
Furthermore, all dividends or other distributions received by the
Pledgor shall be subject to retention by the Secured Party in
accordance with Section 3 above, and until such delivery, any of
such dividends and other distributions shall be received in trust
for the benefit of the Secured Party, shall be segregated from
other property or funds of the Pledgor and shall be forthwith
retained by the Secured Party in accordance with Section 3
above.
7. Release
of Pledged Securities.
(a)
Release of Pledged
Securities Relating to Tax Liability Obligations. Pledgor
acknowledges that 1,142,857 shares (having a current value as of
the date hereof of approximately $8,000,000.00) are being held
pursuant to this Agreement to secure Pledgor’s Obligations in
respect of the Tax Liability Obligations (the “Tax Liability
Pledged Securities”). Ten (10) calendar days
immediately following the second (2nd) anniversary of the date
hereof, any Tax Liability Pledged Securities that have not
otherwise been acquired by the Secured Party pursuant to Section
6(b) or Section 10(a) shall be released to the
Pledgor.
(b)
Release of Pledged
Securities Relating to Triton Liability Obligations. Pledgor
acknowledges that 2,857,143 shares (having a current value as of
the date hereof of approximately $20,000,000.00) are being held
pursuant to this Agreement to secure Pledgor’s Obligations in
respect of the Triton Liability Obligations “Triton Liability
Pledged Securities”). Those Triton Liability Pledged
Securities not otherwise previously acquired by the Secured Party
pursuant to Section 6(b) or Section 10(a), shall be released, in
whole or in part, upon the Secured Party’s receipt of written
evidence that all matters in respect of the
Triton Liability Obligations have reached a final non-appealable
judgment in favor of the Company approved by one or more
appropriate courts in a final, non-appealable order or a settlement
of all of them is reached by the parties. Any amounts which are
owed by the Company pursuant to the Triton Liability Obligations
shall be satisfied by the Pledged Securities and the Pledgor hereby
agrees to forfeit that amount of Pledged Securities which, at the
time of the receipt of written evidence of the final non-appealable
judgment or final settlement, has a market value which equals the
amount which is owed by the Company in respect of the Triton
Liability Obligations, as evidenced by the final non-appealable
judgment or final settlement.
(c)
Lock-Up Agreement.
Simultaneously with the execution of this Agreement, the Pledgor
shall execute and deliver a Lock-Up Agreement to the Company, which
shall be acknowledged and agreed to by the Company’s transfer
agent, in form and substance acceptable to Secured Party, pursuant
to which the Pledged Securities shall not be sold or transferred
from the ownership of the Pledgor without the prior written consent
of the Secured Party.
4
8. Representations,
Warranties, and Covenants of the Pledgor. The Pledgor hereby
covenants, warrants and represents, for the benefit of the Secured
Party, as follows (the following representations and warranties
shall be made as of the date of this Agreement and as of each date
when Pledged Securities are delivered to Secured Party hereunder,
as applicable):
(a) The
Pledged Securities are free and clear of any and all Liens, other
than as created by this Agreement.
(b) The
Pledged Securities have been duly authorized and are validly
issued, fully paid and non-assessable, and are subject to no
options to purchase, or any similar rights or to any restrictions
on transferability.
(c) By
virtue of the execution and delivery of this Agreement and upon
delivery to the Secured Party of the Pledged Securities in
accordance with this Agreement, Secured Party will have a valid and
perfected, first priority security interest in the Collateral,
subject to no prior or other Liens of any nature
whatsoever.
(d) Pledgor
covenants, that for so long as this Agreement is in effect, Pledgor
will defend the Collateral and the priority of Secured
Party’s security interests therein, at its sole cost and
expense, against the claims and demands of all Persons at any time
claiming the same or any interest therein.
(e) At
its option, Secured Party may pay, for Pledgor’s account, any
taxes (including documentary stamp taxes), liens, security
interests, or other encumbrances at any time levied or placed on
the Collateral. Pledgor agrees to reimburse Secured Party on demand
for any payment made or expense incurred by Secured Party pursuant
to the foregoing authorization. Any such amount, if not promptly
paid upon demand therefor, shall accrue interest at the highest
non-usurious rate permitted by applicable law from the date of
outlay, until paid, and shall constitute an Obligation secured
hereby.
(f) [reserved]
(g) The
Pledgor hereby authorizes Secured Party to prepare and file such
financing statements, amendments and other documents and do such
acts as Secured Party deems necessary in order to establish and
maintain valid, attached and perfected, first priority security
interests in the Collateral in favor of Secured Party, for its own benefit and as agent for its
Affiliates, free and clear of all Liens and claims and
rights of third parties whatsoever. The Pledgor hereby irrevocably
authorize Secured Party at any time, and from time to time, to file
in any jurisdiction any initial financing statements, amendments,
continuations and other documents in furtherance of the
foregoing.
9. Trigger
Events. The occurrence of any one or more of the following
events shall constitute an “Trigger
Event” hereunder:
(a) Tax
Liability Obligation/Triton Liability Obligation. As
determined by the Company in its sole discretion, the incurring of
any liability by the Company which would result (i) in a Tax
Liability Obligation of the Pledgor under Section 7.3(a) of the
Merger Agreement or (ii) in a Triton Liability Obligation of the
Pledgor under Section 9.2(d) of the Merger Agreement.
5
(b) Covenants
and Agreements. The failure of Pledgor to perform, observe
or comply with any and all of the covenants, promises and
agreements of the Pledgor in this Agreement or in respect of the
Obligations, which such failure is not cured by the Pledgor within
ten (10) days after receipt of written notice thereof from Secured
Party, except that there shall be no notice or cure period with
respect to any failure to pay any sums due under or as part of the
Obligations (provided that if the failure to perform or default in
performance is not capable of being cured, in Secured Party’s
sole discretion, then the cure period set forth herein shall not be
applicable and the failure or default shall be an immediate Trigger
Event hereunder).
10. Rights
and Remedies. Subject at all times to the Uniform Commercial
Code as then in effect in the State governing this Agreement, the
Secured Party shall have the following rights and remedies upon the
occurrence and continuation of a Trigger Event:
(a) Upon
and any time after the occurrence and continuation of a Trigger
Event, the Secured Party shall have the right to acquire an amount
of Pledged Securities and other Collateral, as determined by the
Secured Party in its reasonable discretion, sufficient to satisfy
the Obligation giving rise to the Trigger Event, by providing
written notice of such Trigger Event (the “Trigger Event
Notice”) to the Pledgor. Upon receipt of a Trigger
Event Notice relating to a Tax Liability Obligation, Pledgor shall
have the option, upon written notice to the Secured Party, to pay
the Secured Party the entire Tax Liability Obligation giving rise
to the related Trigger Event in cash. In the event the Secured
Party receives payment in full for such Tax Liability Obligation on
or before the 19th day following the delivery of the related
Trigger Event Notice, the Pledgor shall release that number of Tax
Liability Pledged Securities, determined by dividing the amount of
cash received by Secured Party, by the per-share value of a Tax
Liability Pledged Security, to Pledgor. For purposes of this
Section 10(a) the value of each Tax Liability Pledged Security
shall equal $7.00 per share.
(b) Subject
to the right of the Pledgor to pay cash to the Secured Party under
Section 10(a), upon delivery of the Trigger Event Notice, the
Secured Party shall have the right to, without notice or demand to
Pledgor: (i) sell or transfer the Collateral in respect of those
Pledged Securities which are necessary to satisfy the Obligations
and to apply the proceeds of such transfer or sales, net of any
selling commissions, to the Obligations owed to the Secured Party
by the Pledgor; and (ii) exercise in any jurisdiction in which
enforcement hereof is sought the rights and remedies provided in
this Agreement and those rights and remedies of a secured party
under the Uniform Commercial Code as then in effect in the State
governing this Agreement, and all other rights and remedies
available to the Secured Party, under equity or applicable law, all
such rights and remedies being cumulative and enforceable
alternatively, successively or concurrently. In furtherance of the
foregoing rights and remedies:
6
(i) Secured
Party may sell those Pledged Securities which are necessary to
satisfy the Obligations, or any part thereof, or any other portion
of the Collateral in respect of those Pledged Securities which are
necessary to satisfy the Obligations, in one or more sales, at
public or private sale, conducted by any agent of, or auctioneer or
attorney for Secured Party, at Secured Party’s place of
business or elsewhere, or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery,
and at such price or prices, all as Secured Party may deem
appropriate. Secured Party may be a purchaser at any such sale of
any or all of the Collateral so sold. In the event Secured Party is
a purchaser at any such sale, Secured Party may apply to such
purchase all or any portion of the sums then due and owing by the
Pledgor to Secured Party in respect of the Obligations, and the
Secured Party may, upon compliance with the terms of the sale,
hold, retain and dispose of such property without further
accountability to the Pledgor therefore. In the event Secured Party
is a purchaser at any such sale of any or all of the Collateral,
the Secured Party is authorized to cancel the Pledged Securities
and return same to the Company’s treasury. Secured Party is
authorized, in its absolute discretion, to restrict the prospective
bidders or purchasers of any of the Collateral at any public or
private sale as to their number, nature of business and investment
intention, including the restricting of bidders or purchasers to
one or more persons who represent and agree, to the satisfaction of
Secured Party, that they are purchasing the Collateral, or any part
thereof, for their own account, for investment, and not with a view
to the distribution or resale of any of such Collateral. Upon any
sale of the Collateral, the Secured Party is permitted to instruct
the Company’s transfer agent to release such Pledged
Securities to the Company or any third party and record the
transfer of title on the Company’s books and
records.
(ii) Upon
any such sale, Secured Party shall have the right to deliver,
assign and transfer to each purchaser thereof the Collateral so
sold to such purchaser. Each purchaser (including Secured Party) at
any such sale shall, to the full extent permitted by law, hold the
Collateral so purchased absolutely free from any claim or right
whatsoever, including, without limitation, any equity or right of
redemption of the Pledgor, who, to the full extent that it may
lawfully do so, hereby specifically waives all rights of
redemption, stay, valuation or appraisal which she now has or may
have under any rule of law or statute now existing or hereafter
adopted.
(iii)
At any such sale, the Collateral may be sold in one lot as an
entirety, in separate blocks or individually as Secured Party may
determine, in its sole and absolute discretion. Secured Party shall
not be obligated to make any sale of any Collateral if it shall
determine in its sole and absolute discretion, not to do so,
regardless of the fact that notice of sale of such Collateral shall
have been given. Secured Party may, without notice or publication,
adjourn any public or private sale from time to time by
announcement at the time and place fixed for such sale, or any
adjournment thereof, and any such sale may be made at any time or
place to which the same may be so adjourned without further notice
or publication.
7
(iv)
The Pledgor acknowledges that compliance with applicable federal
and state securities laws (including, without limitation, the
Securities Act of 1933, as amended, blue sky or other state
securities laws or similar laws now or hereafter existing analogous
in purpose or effect) might very strictly limit or restrict the
course of conduct of Secured Party if Secured Party were to attempt
to sell or otherwise dispose of all or any part of the Collateral,
and might also limit or restrict the extent to which or the manner
in which any subsequent transferee of any such securities could
sell or dispose of the same. The Pledgor further acknowledges that
under applicable laws, Secured Party may be held to have certain
general duties and obligations to the Pledgor, as pledgor of the
Collateral, to make some effort toward obtaining a fair price for
the Collateral even though the obligations of the Pledgor may be
discharged or reduced by the proceeds of sale at a lesser price.
The Pledgor understands and agrees that, to the extent allowable
under applicable law, Secured Party is not to have any such general
duty or obligation to the Pledgor, and the Pledgor will not attempt
to hold Secured Party responsible for selling all or any part of
the Collateral at an inadequate price even if Secured Party shall
accept the first offer received or does not approach more than one
possible purchaser. Without limiting their generality, the
foregoing provisions would apply if, for example, Secured Party
were to place all or any part of such securities for private
placement by an investment banking firm, or if such investment
banking firm purchased all or any part of such securities for its
own account, or if Secured Party placed all or any part of such
securities privately with a purchaser or purchasers.
(c) To
the extent that the net proceeds received by the Secured Party are
insufficient to satisfy the Obligations in full, the Secured Party
shall be entitled to a deficiency judgment against the Pledgor and
any other Person obligated for the Obligations for such deficiency
amount. The Secured Party shall have the absolute right to sell or
dispose of the Collateral, or any part thereof, in any manner it
sees fit and shall have no liability to the Pledgor, or any other
party for selling or disposing of such Collateral even if other
methods of sales or dispositions would or allegedly would result in
greater proceeds than the method actually used. The Pledgor and any
other Person obligated for the Obligations shall remain liable for
all deficiencies and shortfalls, if any, that may exist after the
Secured Party has exhausted all remedies hereunder.
(d) Each
right, power and remedy of the Secured Party provided for in this
Agreement or the Merger Agreement shall be cumulative and
concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the
Secured Party of any one or more of the rights, powers or remedies
provided for in this Agreement or the Merger Agreement, or now or
hereafter existing at law or in equity or by statute or otherwise,
shall not preclude the simultaneous or later exercise by the
Secured Party of all such other rights, powers or remedies, and no
failure or delay on the part of the Secured Party to exercise any
such right, power or remedy shall operate as a waiver thereof. No
notice to or demand on the Pledgor in any case shall entitle it to
any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the
Secured Party to any other further action in any circumstances
without demand or notice. The Secured Party shall have the full
power to enforce or to assign or contract its rights under this
Agreement to a third party.
(e) In
addition to all other remedies available to the Secured Party, upon
the issuance of the Pledged Securities to the Secured Party after a
Trigger Event, Pledgor agrees to: (i) take such action and prepare,
distribute and/or file such documents and papers, as are required
or advisable in the opinion of Secured Party and/or its counsel, to
permit the sale of the Pledged Securities, whether at public sale,
private sale or otherwise, including, without limitation, issuing,
or causing its counsel to issue, any opinion of counsel for Pledgor
required to allow the Secured Party to sell the Pledged Securities
or any other Collateral under Rule 144; (ii) to bear all costs and
expenses of carrying out its obligations under this Section 10,
which shall be a part of the Obligations secured hereby; and (iii)
that there is no adequate remedy at law for the failure by the
Pledgor to comply with the provisions of this Section 10 and that
such failure would not be adequately compensable in damages, and
therefore agrees that its agreements contained in this subsection
may be specifically enforced.
8
11. [Reserved].
12. Irrevocable
Authorization and Instruction. If applicable, Pledgor hereby
authorize and instruct the transfer agent for the Company (or
transfer agents if there is more than one) to comply with any
instruction received by it from Secured Party in writing that:
(i) states that a Trigger Event hereunder exists or has
occurred; and (b) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from
Pledgor, and Pledgor agrees that such transfer agents shall be
fully protected in so complying with any such instruction from
Secured Party.
13. Appointment
as Attorney-in-Fact. Pledgor hereby irrevocably constitutes
and appoints Secured Party and any officer or agent of Secured
Party, with full power of substitution, as its true and lawful
attorney-in-fact, with full irrevocable power and authority in the
place and stead of Pledgor, and in the name of Pledgor, or in the
name of Secured Party, as applicable, from time to time in the
discretion of Secured Party, so long as a Trigger Event hereunder
exists, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, including
any financing statements, endorsements, assignments or other
instruments of transfer. Pledgor hereby ratifies all that said
attorneys shall lawfully do or cause to be done pursuant to the
power of attorney granted in this Section 13. All powers,
authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until the Obligations are paid
and performed in full.
14. Continuing
Obligation of Pledgor. The obligations, covenants,
agreements and duties of the Pledgor under this Agreement shall in
no way be affected or impaired by: (i) the modification or
amendment (whether material or otherwise) of any of the obligations
of the Pledgor or any other Person, as applicable; (ii) the
voluntary or involuntary bankruptcy, assignment for the benefit of
creditors, reorganization, or other similar proceedings affecting
the Pledgor or any other Person, as applicable; or (iii) the
release of the Pledgor or any other Person from the performance or
observance of any of the agreements, covenants, terms or conditions
contained in the Merger Agreement, by the operation of law or
otherwise, including the release of the Pledgor’s obligation
to pay interest or attorney’s fees.
9
Pledgor
further agrees that Secured Party may take other guaranties or
collateral or security to further secure the Obligations, and
consent that any of the terms, covenants and conditions contained
in the Merger Agreement may be renewed, altered, extended, changed
or modified by Secured Party or may be released by Secured Party,
without in any manner affecting this Agreement or releasing Pledgor
herefrom, and Pledgor shall continue to be liable hereunder to pay
and perform pursuant hereto, notwithstanding any such release or
the taking of such other guaranties, collateral or security. This
Agreement is additional and supplemental to any and all other
guarantees, security agreements or collateral heretofore and
hereafter executed by Pledgor for the benefit of Secured Party,
whether relating to the liability evidenced by the Merger Agreement
or not, and shall not supersede or be superseded by any other
document or guaranty executed by Pledgor, or any other Person for
any purpose. Pledgor hereby agrees that Pledgor and any additional
parties who may become liable for repayment of the sums due in
respect of the Obligations, may hereafter be released from their
liability hereunder and thereunder; and Secured Party may take, or
delay in taking or refuse to take, any and all action with
reference to the Merger Agreement (regardless of whether same might
vary the risk or alter the rights, remedies or recourses of
Pledgor), including specifically the settlement or compromise of
any amount allegedly due thereunder, all without notice to,
consideration to or the consent of the Pledgor, and without in any
way releasing, diminishing or affecting in any way the absolute
nature of Pledgor’s obligations and liabilities
hereunder.
No
delay on the part of the Secured Party in exercising any rights
hereunder or failure to exercise the same shall operate as a waiver
of such rights. Pledgor hereby waives any and all legal
requirements, statutory or otherwise, that Secured Party shall
institute any action or proceeding at law or in equity or exhaust
its rights, remedies and recourses against or anyone else with
respect to the Obligations, as a condition precedent to bringing an
action against Pledgor upon this Agreement or as a condition
precedent to Secured Party’s rights to sell the Pledged
Securities or any other Collateral. Pledgor agrees that Secured
Party may simultaneously maintain an action upon this Agreement and
an action or proceeding in respective of the Obligations under the
Merger Agreement. All remedies afforded by reason of this Agreement
are separate and cumulative remedies and may be exercised serially,
simultaneously and in any order, and the exercise of any of such
remedies shall not be deemed an exclusion of the other remedies and
shall in no way limit or prejudice any other contractual, legal,
equitable or statutory remedies which Secured Party may have in the
Pledged Securities, any other Collateral, or in respect of the
Obligations under the Merger Agreement. Until the Obligations, and
all extensions, renewals and modifications thereof, are paid in
full, and until each and all of the terms, covenants and conditions
of this Agreement are fully performed, Pledgor shall not be
released by any act or thing which might, but for this provision of
this Agreement, be deemed a legal or equitable discharge of a
surety, or by reason of any waiver, extension, modification,
forbearance or delay of Secured Party or its successors or assigns,
relating to the payment of any sums owing in respect of the
Obligations or to any of the other terms, covenants and conditions
relating thereto, and Pledgor hereby expressly waives and
surrenders any defense to liability hereunder based upon any of the
foregoing acts, things, agreements or waivers, or any of them.
Pledgor also waives any defense arising by virtue of any
disability, insolvency, bankruptcy, lack of authority or power or
dissolution of Pledgor, even though rendering the Merger Agreement
void, unenforceable or otherwise uncollectible, it being agreed
that Pledgor shall remain liable hereunder, regardless of any claim
which Pledgor might otherwise have against Secured Party by virtue
of Secured Party’s invocation of any right, remedy or
recourse given to it hereunder or under the Merger
Agreement.
15. Miscellaneous.
(a) Performance
for Pledgor. The Pledgor agrees and hereby acknowledges that
Secured Party may, in Secured Party’s sole discretion, but
Secured Party shall not be obligated to, whether or not a Trigger
Event shall have occurred, advance funds on behalf of the Pledgor,
without prior notice to the Pledgor, in order to preserve or
protect any right or interest of Secured Party in the Collateral or
under or pursuant to this Agreement or the Merger Agreement;
provided, however, that the making of any such advance by Secured
Party shall not constitute a waiver by Secured Party of any Trigger
Event with respect to which such advance is made, nor relieve the
Pledgor of any such Trigger Event.
10
(b) Applications
of Payments and Collateral. Except as may be otherwise
specifically provided in this Agreement or the Merger Agreement,
all Collateral and proceeds of Collateral coming into Secured
Party’s possession may be applied by Secured Party (after
payment of any costs, fees and other amounts incurred by Secured
Party in connection therewith) to any of the Obligations, whether
matured or unmatured, as Secured Party shall determine in its sole
discretion. Any surplus held by the Secured Party and remaining
after the indefeasible payment in full in cash of all of the
Obligations shall be paid over to whomsoever shall be lawfully
entitled to receive the same or as a court of competent
jurisdiction shall direct. In the event that the proceeds of any
such sale, collection or realization are insufficient to pay all
amounts to which the Secured Party is legally entitled, the Pledgor
shall be liable for the deficiency.
(c) Waivers
by Pledgor. The Pledgor hereby waives, to the extent the
same may be waived under applicable law: (i) notice of acceptance
of this Agreement; (ii) all claims and rights of the Pledgor
against Secured Party on account of actions taken or not taken by
Secured Party in the exercise of Secured Party’s rights or
remedies hereunder, under the Merger Agreement in respect of the
Obligations or under applicable law; (iii) all claims of the
Pledgor for failure of Secured Party to comply with any requirement
of applicable law relating to enforcement of Secured Party’s
rights or remedies hereunder, under the Merger Agreement in respect
of the Obligations or under applicable law; (iv) all rights of
redemption of the Pledgor with respect to the Collateral; (v) in
the event Secured Party seeks to repossess any or all of the
Collateral by judicial proceedings, any bond(s) or demand(s) for
possession which otherwise may be necessary or required;
(vi) presentment, demand for payment, protest and notice of
non-payment and all exemptions applicable to any of the Collateral
or the Pledgor; (vii) any and all other notices or demands which by
applicable law must be given to or made upon the Pledgor by Secured
Party; (viii) settlement, compromise or release of the obligations
of any person or entity primarily or secondarily liable upon any of
the Obligations; (ix) all rights of the to demand that Secured
Party release account debtors or other persons or entities liable
on any of the Collateral from further obligation to Secured Party;
and (x) substitution, impairment, exchange or release of any
Collateral for any of the Obligations. The Pledgor agrees that
Secured Party may exercise any or all of its rights and/or remedies
hereunder and under the Merger Agreement in respect of the
Obligations and under applicable law without resorting to and
without regard to any Collateral or sources of liability with
respect to any of the Obligations.
(d) Waivers
by Secured Party. No failure or any delay on the part of
Secured Party in exercising any right, power or remedy hereunder or
under the Merger Agreement in respect of the Obligations or under
applicable law, shall operate as a waiver thereof.
(e) [Reserved].
(f) Modifications,
Waivers and Consents. No modifications or waiver of any
provision of this Agreement or the Merger Agreement, and no consent
by Secured Party to any departure by the Pledgor therefrom, shall
in any event be effective unless the same shall be in writing, and
then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given, and any single or
partial written waiver by Secured Party of any term, provision or
right of Secured Party hereunder shall only be applicable to the
specific instance to which it relates and shall not be deemed to be
a continuing or future waiver of any other right, power or remedy.
No notice to or demand upon the Pledgor in any case shall entitle
Pledgor to any other or further notice or demand in the same,
similar or other circumstances.
11
(g) Notices.
All notices of request, demand and other communications hereunder
shall be addressed, sent and deemed delivered in accordance with
the Merger Agreement.
(h) Applicable
Law and Consent to Jurisdiction. Subject to Section 15(u),
the Pledgor and the Secured Party each irrevocably agrees that any
dispute arising under, relating to, or in connection with, directly
or indirectly, this Agreement or related to any matter which is the
subject of or incidental to this Agreement (whether or not such
claim is based upon breach of contract or tort) shall be subject to
the exclusive jurisdiction and venue of the state and/or federal
courts located in New York; provided, however, Secured Party may,
at Secured Party’s sole option, elect to bring any action in
any other jurisdiction, including by arbitration pursuant to
Section 15(u) hereof. This provision is intended to be a
“mandatory” forum selection clause and governed by and
interpreted consistent with New York law. The Pledgor and Secured
Party each hereby consents to the exclusive jurisdiction and venue
of any state or federal court having its situs in said county (or
to any other jurisdiction or venue, if Secured Party so elects),
and each waives any objection based on forum non conveniens. The
Pledgor hereby waives personal service of any and all process and
consent that all such service of process may be made by certified
mail, return receipt requested, directed to the Pledgor, as set
forth herein and in the manner provided by applicable statute, law,
rule of court or otherwise. This Agreement shall be construed in
accordance with the laws of the State of New York, without regard
to the principles of conflicts of laws.
(i) Survival:
Successors and Assigns. All covenants, agreements,
representations and warranties made herein shall survive the
execution and delivery hereof, and shall continue in full force and
effect until all Obligations have been paid in full, there exists
no commitment by Secured Party which could give rise to any
Obligations. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the
successors and assigns of such party. In the event that Secured
Party assigns this Agreement and/or its security interest in the
Collateral, such assignment shall be binding upon and recognized by
the Pledgor. All covenants, agreements, representations and
warranties by or on behalf of the Pledgor which are contained in
this Agreement shall inure to the benefit of Secured Party, its
successors and assigns. The Pledgor may not assign this Agreement
or delegate any of their respective rights or obligations
hereunder, without the prior written consent of Secured Party,
which consent may be withheld in Secured Party’s sole and
absolute discretion.
(j) Severability.
If any term, provision or condition, or any part thereof, of this
Agreement shall for any reason be found or held invalid or
unenforceable by any court or governmental authority of competent
jurisdiction, such invalidity or unenforceability shall not affect
the remainder of such term, provision or condition nor any other
term, provision or condition, and this Agreement shall survive and
be construed as if such invalid or unenforceable term, provision or
condition had not been contained therein.
12
(k) Merger
and Integration. This Agreement, the Merger Agreement and
the documents executed in connection herewith or therewith contain
the entire agreement of the parties hereto with respect to the
matters covered and the transactions contemplated hereby, and no
other agreement, statement or promise made by any party hereto, or
by any employee, officer, agent or attorney of any party hereto,
which is not contained herein shall be valid or
binding.
(l) WAIVER
OF JURY TRIAL. THE PLEDGOR HEREBY: (i) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT
BY A JURY; AND (ii) WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH THE PLEDGOR AND SECURED PARTY MAY BE PARTIES,
ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO THIS
AGREEMENT, AND/OR ANY TRANSACTIONS, OCCURRENCES, COMMUNICATIONS, OR
UNDERSTANDINGS (OR THE LACK OF ANY OF THE FOREGOING) RELATING IN
ANY WAY TO DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE PARTIES. IT IS
UNDERSTOOD AND AGREED THAT THIS WAIVER CONSTITUTES A WAIVER OF
TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR
PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES
TO THIS AGREEMENT. THIS WAIVER OF JURY TRIAL IS SEPARATELY GIVEN,
KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE PLEDGOR AND THE
PLEDGOR HEREBY AGREES THAT NO REPRESENTATIONS OF FACT OR OPINION
HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY
JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. SECURED PARTY
IS HEREBY AUTHORIZED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PLEDGOR AND SECURED
PARTY, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF SUCH WAIVER OF
RIGHT TO TRIAL BY JURY. THE PLEDGOR REPRESENTS AND WARRANTS THAT HE
HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF HIS
OWN FREE WILL, AND/OR THAT IHET HAS HAD THE OPPORTUNITY TO DISCUSS
THIS WAIVER WITH COUNSEL.
(m) Execution.
This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed and considered one and the
same Agreement. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a
“.pdf” format file or other similar format file, such
signature shall be deemed an original for all purposes and shall
create a valid and binding obligation of the party executing same
with the same force and effect as if such facsimile or
“.pdf” signature page was an original
thereof.
(n) Headings.
The headings and sub-headings contained in the titling of this
Agreement are intended to be used for convenience only and shall
not be used or deemed to limit or diminish any of the provisions
hereof.
(o) Gender
and Use of Singular and Plural. All pronouns shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as
the identity of the party or parties or their personal
representatives, successors and assigns may require.
13
(p) Further
Assurances. The parties hereto will execute and deliver such
further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this
Agreement, including the execution and filing of UCC-1 Financing
Statements in any jurisdiction as Secured Party may
require.
(q) Time
is of the Essence. The parties hereby agree that time is of
the essence with respect to performance of each of the
parties’ obligations under this Agreement. The parties agree
that in the event that any date on which performance is to occur
falls on a Saturday, Sunday or state or national holiday, then the
time for such performance shall be extended until the next business
day thereafter occurring.
(r) Joint
Preparation. The preparation of this Agreement has been a
joint effort of the parties and the resulting documents shall not,
solely as a matter of judicial construction, be construed more
severely against one of the parties than the other.
(s) Prevailing
Party. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with
any provisions of this Agreement, the successful or prevailing
party or parties shall be entitled to recover from the
non-prevailing party, reasonable attorneys’ fees, court costs
and all expenses, even if not taxable as court costs (including,
without limitation, all such fees, costs and expenses incident to
appeals), incurred in that action or proceeding, in addition to any
other relief to which such party or parties may be
entitled.
(t) Costs
and Expenses. The Pledgor agrees to pay to the Secured
Party, upon demand, the amount of any and all costs and expenses,
including the reasonable fees, costs, expenses and disbursements of
counsel for the Secured Party and of any experts and agents, which
the Secured Party may incur in connection with: (i) the
preparation, negotiation, execution, delivery, recordation,
administration, amendment, waiver or other modification or
termination of this Agreement; (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other
realization upon, any Collateral; (iii) the exercise or
enforcement of any of the rights of the Secured Party hereunder; or
(iv) the failure by the Pledgor to perform or observe any of
the provisions hereof. Included in the foregoing shall be the
amount of all expenses paid or incurred by Secured Party in
consulting with counsel concerning any of its rights hereunder,
under the Merger Agreement or under applicable law, as well as such
portion of Secured Party’s overhead as Secured Party shall
allocate to collection and enforcement of the Obligations in
Secured Party’s sole but reasonable discretion. All such
costs and expenses shall bear interest from the date of outlay
until paid, at the highest rate allowed by law. The provisions of
this Subsection shall survive the termination of this Agreement and
Secured Party’s security interest hereunder and the payment
of all Obligations.
(u)
Arbitration. At the
option of the Secured Party, any dispute, claim or controversy
arising out of or relating to the Collateral or to this Agreement
among the Pledgor and the Secured Party or the breach, termination,
enforcement, interpretation or validity thereof, including the
determination of the scope or applicability of this Agreement to
arbitrate, shall be determined by arbitration in New York City
before one arbitrator. The arbitration shall be administered by
JAMS pursuant to its Comprehensive Arbitration Rules and Procedures
pursuant to JAMS' Streamlined Arbitration Rules and Procedures.
Judgment on the award may be entered in any court having
jurisdiction. This clause shall not preclude parties from seeking
provisional remedies in aid of arbitration from a court of
appropriate jurisdiction.
(v)
Merger Agreement
Controls. Notwithstanding anything to the contrary herein,
in the event of any conflict or inconsistency with or between this
Agreement and the Merger Agreement, the Merger Agreement shall
control, provided however, that the security interest granted
pursuant to Section 2 hereto shall not be affected and shall be in
full force and effect notwithstanding any such conflict or
inconsistency, other than rights to the payment of dividends which
shall remain subject to the Merger Agreement.
[Signatures on the following page]
14
IN
WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PLEDGOR:
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/s/ Steven F.
Urvan
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STEVEN F. URVAN
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[Signature
page to Pledge and Escrow Agreement (Ammo –
Urvan)
15
SECURED PARTY:
AMMO, INC.
By:
/s/ Robert Wiley
Name:
Robert Wiley
Title:
CFO
[Signature
page to Pledge and Escrow Agreement (Ammo –
Urvan)]
16
Exhibit 10.7
April
30, 2021
Roth
Capital Partners, LLC
888 San
Clemente Drive
Newport
Beach, CA 92660
Alexander Capital,
L.P.
17
State Street, 5th Floor
New
York, NY 10004
As
Representatives of the several Underwriters named in the within
mentioned Underwriting Agreement
Re:
Ammo, Inc. – GunBroker Selling Stockholder
Lock-Up
Ladies
and Gentlemen:
Reference is hereby
made to that certain Underwriting Agreement dated March 12, 2021
(the “Underwriting
Agreement”), by and among Ammo, Inc. (the
“Company”) and
Roth Capital Partners, LLC and Alexander Capital, L.P., as
representatives of the several underwriters named in Schedule 1
thereto (the “Representatives”), relating to the
Company’s issuance and sale of 23,000,000 shares of its
common stock, par value $0.001 per share (the “Common Stock”). Capitalized terms
used and not defined herein shall have the meanings assigned to
them in the Underwriting Agreement.
As a
condition to the consent by the Representatives of the Company
lock-up provisions provided under Section 4(a)(x) of the
Underwriting Agreement, the undersigned hereby agrees that for a
period (the “Lock-Up
Period”) commencing on the date hereof and continuing
through the close of trading on June 10, 2021, the undersigned will
not, without the prior written consent of the Representatives,
directly or indirectly, (i) sell, assign, transfer, pledge, offer
to sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option for sale
(including any short sale), right or warrant to purchase, lend,
establish an open “put equivalent position” (within the
meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”)), or otherwise dispose of, or enter into any
transaction which is designed to or could be expected to result in
the disposition of, any shares of Common Stock or securities
convertible into or exercisable or exchangeable for any equity
securities of the Company (including, without limitation, shares of
Common Stock or any such securities which may be deemed to be
beneficially owned by the undersigned in accordance with the rules
and regulations promulgated by the Securities and Exchange
Commission from time to time (such shares or securities, the
“Beneficially Owned
Shares”)), or publicly announce any intention to do
any of the foregoing, other than the exercise of options or
warrants so long as there is no sale or disposition of the Common
Stock underlying such options or warrants during the Lock-Up
Period, (ii) enter into any swap, hedge or other agreement or
arrangement that transfers in whole or in part, the economic risk
of ownership of any Beneficially Owned Shares, Common Stock or
securities convertible into or exercisable or exchangeable for any
equity securities of the Company, or (iii) engage in any short
selling of any Beneficially Owned Shares, Common Stock or
securities convertible into or exercisable or exchangeable for any
equity securities of the Company, whether any such transaction
described in clause (i), (ii) or (iii) above is to be settled by
delivery of shares of Common Stock or such other securities, in
cash or otherwise.
A-1
Anything contained
herein to the contrary notwithstanding, any person to whom shares
of Common Stock, securities convertible into or exercisable or
exchangeable for any equity securities of the Company or
Beneficially Owned Shares are transferred from the undersigned
shall be bound by the terms of this Lock-Up Agreement. This Lock-Up
Agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and
assigns of the undersigned.
In
addition, the undersigned hereby waives, from the date hereof until
the expiration of the Lock-Up Period, any and all rights, if any,
to request or demand registration pursuant to the Securities Act of
1933, as the same may be amended or supplemented from time to time,
of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for any equity securities of the
Company that are registered in the name of the undersigned or that
are Beneficially Owned Shares. In order to enable the aforesaid
covenants to be enforced, the undersigned hereby consents to the
placing of legends and/or stop transfer orders with the transfer
agent of the Common Stock with respect to any shares of Common
Stock, securities convertible into or exercisable or exchangeable
for any equity securities of the Company or Beneficially Owned
Shares.
Notwithstanding the
foregoing, and subject to the conditions below, the undersigned may
transfer the Beneficially Owned Shares in the transactions listed
as clauses (i) - (vi) below without the prior written consent of
the Representatives, provided that (1) prior to each such transfer,
the Representatives shall have received a duplicate form of this
Lock-Up Agreement executed and delivered by each donee, trustee,
distributee or transferee, as the case may be, (2) no such transfer
shall involve a disposition for value, (3) each such transfer
(other than transfers under clauses (ii) and (v) below) shall not
be required to be reported as a reduction in beneficial ownership
in any public report, announcement or filing made or to be made
with the Securities and Exchange Commission or otherwise during the
Lock-Up Period and (4) the undersigned does not otherwise
voluntarily effect any public filing, announcement or report
regarding any such transfer during the Lock-Up Period: (i) as a
bona fide gift or gifts; (ii) by operation of law, including
pursuant to a qualified domestic order or in connection with a
divorce settlement; (iii) to the immediate family of the
undersigned; (iv) to any trust for the direct or indirect benefit
of the undersigned or the immediate family of the undersigned; (v)
to any beneficiary of the undersigned pursuant to a will or other
testamentary document or applicable laws of descent; or (vi) to any
corporation, partnership, limited liability company or other entity
all of the beneficial ownership interests of which are held by the
undersigned or the immediate family of the
undersigned.
A-2
This
Lock-Up Agreement shall not apply to: (i) the transfer of
Beneficially Owned Shares pursuant to a bona fide third party
tender offer, merger, consolidation or other similar transaction
made to all holders of the Common Stock involving a change of
control (as defined below) of the Company, provided that in the
event that the tender offer, merger, consolidation or other such
transaction is not completed, the Beneficially Owned Securities
owned by the undersigned shall remain subject to the restrictions
contained herein; (ii) transactions relating to shares of Common
Stock or other securities acquired in open market transactions
after the date hereof, provided that no filing under Section 16(a)
of the Exchange Act shall be required or shall be voluntarily made
in connection with subsequent sales of Common Stock or other
securities acquired in such open market transactions; or (iii)
transfers to the Company in connection with the exercise of options
or warrants on a “cashless” or “net
exercise” basis or to cover tax withholding obligations upon
the exercise of options or warrants or the vesting of restricted
stock units, provided that any related filing under Section 16(a)
of the Exchange Act reporting a disposition of shares of Common
Stock made in connection with such exercise shall contain a
description of the transaction and indicate that the disposition
was made as part of such exercise or to cover tax withholding
obligations in connection therewith.
This
Lock-Up Agreement shall automatically terminate upon the
consummation of a change of control of the Company, meaning (a) the
consummation of a reorganization, merger or consolidation, or sale
or other disposition of all or substantially all of the assets of
the Company, or (b) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under such Act) of more than fifty percent (50%)
of either (i) the then outstanding shares of Common Stock of the
Company; or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors.
This
Lock-Up Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware.
(Remainder of page intentionally left blank. Signature page to
follow.)
A-3
This
Lock-Up Agreement has been executed as of the date first written
above.
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Steven
F. Urvan
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Printed
Name of Holder
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By:
/s/ Steven F. Urvan
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Signature
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Printed
Name of Person Signing
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(and
indicate capacity of person signing if
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signing as custodian, trustee, or on behalf
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of an entity)
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A-4
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