Document:

EXHIBIT
10.3

 

STANDSTILL
AGREEMENT

 

This
Standstill Agreement (this “Agreement”) is made and entered into as of April 30, 2021 (the “Effective
Date”), between Ammo, Inc., a Delaware corporation (the “Company”), and Steven F. Urvan (the “Stockholder”).
The Company and the Stockholder are referred to herein as the “Parties.”

 

WITNESSETH

 

WHEREAS,
concurrently with execution of this Agreement, on the date hereof, the Company, SpeedLight Group I, LLC (“Merger Sub”),
Gemini Direct Investments, LLC (“Gemini”) and the Stockholder, are entering into that certain Agreement and
Plan of Merger (the “Merger Agreement”), pursuant to which, on the terms and subject to the conditions thereof,
Gemini will be merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a wholly
owned subsidiary of Parent;

 

WHEREAS,
subsequent to the Merger, the Stockholder will be the Beneficial Owner (as defined below) of 18,500,000 shares of common stock
of the Company, par value $0.001 per share (the “Common Stock”), representing approximately 19.86% of the total
outstanding Common Shares (as defined below) as of the date hereof;

 

WHEREAS,
this Agreement shall become effective as of the Effective Date; provided that the consummation of the Merger shall be a condition
precedent to the effectiveness of this Agreement, and, in the event the Merger Agreement is terminated prior to the consummation
of the Merger, this Agreement shall be null and void, ab initio, and of no force or effect; and

 

NOW,
THEREFORE, in consideration of the mutual agreements and understandings set forth herein, the Parties hereto hereby agree as follows:

 

ARTICLE
1

DEFINITIONS

 

1.1
Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

 

(a)
“Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”);
provided, however, that the limited partners of a limited partnership shall not be deemed to be Associates of such limited
partnership solely by virtue of their limited partnership interests.

 

(b)
“Agreement” shall mean this Agreement as in effect on the date hereof and as hereafter from time to time amended,
modified or supplemented in writing in accordance with the terms hereof.

 

(c)
A Person shall be deemed the “Beneficial Owner” or to have “Beneficial Ownership” of and
shall be deemed to “beneficially own” any securities:

 

(i)
which such Person or any of such Person’s Affiliates or Associates is deemed to beneficially own, within the meaning of
Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement;

 

(ii)
which such Person or any of such Person’s Affiliates or Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to a bona fide public offering of securities) other than
agreements between the Company and any Person pursuant to which the right to purchase securities is conditioned upon the achievement
of milestones which have not yet been achieved or upon the exercise of conversion rights, exchange rights, rights (other than
the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (B)
the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act, and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or

 

    	 

    	 

    

 

(iii)
which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting
(except to the extent contemplated by the proviso to Section 1.1(c)(ii)(B) hereof) or disposing of any securities of the Company;
provided, however, that an agreement, arrangement or understanding for purposes of this Section 1.1(c)(iii) shall not be
deemed to include actions, including any agreement, arrangement or understanding, or statements by (i) any member of the Board
of Directors, as comprised on the Effective Date (the “Existing Directors”), (ii) any subsequent directors
of the Company who have been nominated by a majority of the Existing Directors (the “Successor Directors”),
or (iii) any subsequent member of the Board of Directors who is elected by a majority of the Existing Directors and/or Successor
Directors, nominating as a group.

 

Notwithstanding
anything in this definition of Beneficial Ownership to the contrary, the phrase, “then outstanding,” when used with
reference to a Person’s Beneficial Ownership of securities of the Company, shall mean the number of such securities then
issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person
would be deemed the Beneficial Owner hereunder.

 

(d)
“Common Shares” shall mean the shares of the Common Stock; provided, however, that, “Common Shares,”
when used in this Agreement in connection with a specific reference to any Person other than the Company, shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person or, if such other Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such first-mentioned Person.

 

(e)
“Company Acquisition Transaction” shall mean (i) the commencement (within the meaning of Rule 14d-2 of the
General Rules and Regulations under the Exchange Act) of a tender or exchange offer by a third party for at least fifteen percent
(15%) of the then outstanding capital stock of the Company or any direct or indirect Subsidiary of the Company, (ii) the commencement
by a third party of a proxy contest with respect to the election of any directors of the Company, (iii) any sale, license, lease,
exchange, transfer, disposition or acquisition of any portion of the business or assets of the Company or any direct or indirect
Subsidiary of the Company (other than in the ordinary course of business), or (iv) any merger, consolidation, business combination,
share exchange, reorganization, recapitalization, restructuring, liquidation, dissolution or similar transaction or series of
related transactions involving the Company or any direct or indirect Subsidiary of the Company.

 

(f)
“Governmental Authority” shall mean any United States (federal, state, local) or foreign court or tribunal,
or administrative, governmental or regulatory body, agency or authority.

 

(g)
“Group” shall have the meaning set forth in Section 13(d)(3) of the Exchange Act and Rule 13d-5 of the General
Rules and Regulations under the Exchange Act.

 

(h)
“Person” shall mean any individual, firm, corporation, partnership, limited liability company, joint venture,
trust, association, unincorporated organization, group or other entity, and shall include any successor (by merger or otherwise)
of such entity.

 

(i)
“Subsidiary” of any Person shall mean any corporation or other entity of which a majority of the voting power
of the voting equity securities or equity interest is owned, directly or indirectly, by such Person.

 

1.2
Capitalized Terms. All other capitalized terms used herein but not defined shall have the meanings ascribed to such terms
in the Merger Agreement.

 

    	 

    	 

    

 

ARTICLE
2

STANDSTILL

 

2.1
Standstill Provisions. During the period beginning on the Effective Date and ending on the one (1) year anniversary of
the Effective Date (the “Standstill Period”), except pursuant to a negotiated transaction with the Stockholder
approved by the board of directors of the Company (the “Board”) or as otherwise permitted by or contemplated
in the Investor Rights Agreement dated as of the date hereof between the Company and Stockholder (the “Investor Rights
Agreement”), none of the Persons comprising the Stockholder will, in any manner, directly or indirectly:

 

(a)
make, effect, initiate, cause or participate in (i) any acquisition of Beneficial Ownership of any securities of the Company or
any securities of any Subsidiary or other Affiliate or Associate of the Company if such acquisition would result in the Stockholder
and its Affiliates and Associates collectively Beneficially Owning twenty-five percent (25%) or more of the then outstanding Common
Shares, (ii) any Company Acquisition Transaction, 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 Company;

 

(b)
nominate or seek to nominate any person to the Board or otherwise act, alone or in concert with others, to seek to control or
influence the management, Board or policies of the Company;

 

(c)
take any action which might force the Company to make a public announcement regarding any of the types of matters set forth in
subsection (a) of this Section 2.1;

 

(d)
request or propose that the Company (or its directors, officers, employees or agents), directly or indirectly, amend or waive
any provision of this Section 2.1, including this subsection (d);

 

(e)
agree or offer to take, or encourage or propose (publicly or otherwise) the taking of, any action referred to in subsections (a),
(b), (c) or (d) of this Section 2.1;

 

(f)
assist, induce or encourage any other Person to take any action referred to in subsections (a), (b), (c) or (d) of this Section
2.1; or

 

(g)
enter into any discussions or arrangements with any third party with respect to the taking of any action referred to in subsections
(a), (b), (c) or (d) of this Section 2.1.

 

2.2
Termination of Standstill Provisions. The provisions of Section 2.1 shall terminate and be of no further force and effect
in the event (i) any Person or Group shall have commenced a Company Acquisition Transaction independent of any action of the Stockholder
and none of the Persons comprising the Stockholder nor the Stockholder is at such time in breach of this Agreement, or (ii) the
Board shall have endorsed, approved, recommended, or resolved to endorse, approve or recommend a Company Acquisition Transaction.
All of the provisions of Section 2.1 shall be reinstated and shall apply in full force according to their terms in the event that:
(A) if the provisions of Section 2.1 shall have terminated as the result of a tender offer, such tender offer (as originally made
or as amended or modified) shall have terminated (without closing) prior to the commencement of a tender offer by the Stockholder
or any of its Affiliates or Associates that would have been permitted to be made pursuant to the first sentence of this Section
2.2 as a result of such third-party tender offer, (B) any tender offer by the Stockholder or any of its Affiliates or Associates
(as originally made or as extended or modified) that was permitted to be made pursuant to this Section 2.2 shall have terminated
(without closing); or (C) if the provisions of Section 2.1 shall have terminated as a result of any action by the Board referred
to in clause (ii) of the first sentence of this Section 2.2, the Board shall have determined not to take any of such actions (and
no such transaction considered by the Board shall have closed) prior to the commencement of a tender offer by the Stockholder
that would have been permitted to be made pursuant to this Section 2.2 as a result of the initial determination of the Board referred
to in clause (ii) of the first sentence of this Section 2.2, unless prior to such determination by the Board not to take any such
actions, any event referred to in clause (i) of the first sentence of this Section 2.2 shall have occurred. Upon reinstatement
of the provisions of Section 2.2, the provisions of this Section 2.2 shall continue to govern in the event that any of the events
described in clauses (i) and (ii) of the first sentence of this Section 2.2 shall occur. Upon the closing of any tender offer
for or acquisition of any securities of the Company or rights or options to acquire any such securities by the Stockholder or
any of its Affiliates or Associates that would have been prohibited by the provisions of Section 2.1 but for the provisions of
this Section 2.2, all provisions of Section 2.1 and 2.2 shall terminate.

 

2.3
[Reserved].

 

2.4
Sales of Shares of Common Stock. During the Standstill Period, other than any sales of Common Shares effected pursuant
to the registration rights provisions of the Investor Rights Agreement, each person comprising the Stockholder will only sell
shares of Common Stock in open market transactions on the NASDAQ Stock Market or on such principal stock exchange as the Common
Stock is then listed for trading or in private transactions so long as any sale in a private transaction is not to any Person
or Group who the Stockholder reasonably believes after due inquiry Beneficially Owns or as a result of such transaction would
Beneficially Own more than five percent (5%) of the then outstanding Common Shares.

 

    	 

    	 

    

 

ARTICLE
3

REPRESENTATIONS
AND WARRANTIES

 

3.1
Each Party hereto represents and warrants to the other as follows:

 

(a)
Authorization. Such Party has the requisite power, authority and legal capacity to execute, deliver and perform and to
consummate the transactions contemplated by this Agreement. This Agreement constitutes a legal, valid and binding obligation of
such Party, enforceable against such Party in accordance with its terms, except as such enforcement may be limited by any applicable
bankruptcy, insolvency, moratorium or similar law affecting creditors’ rights generally.

 

(b)
No Consents. No consent of any Governmental Authority or other person is required to be obtained by such Party in connection
with the execution and delivery by such Party of this Agreement.

 

3.2
The Stockholder represents and warrants to the Company as follows: As of the date hereof, and pursuant to the consummation
of the Merger, the Stockholder and its Affiliates and Associates will collectively Beneficially Own 18,500,000 shares of Common
Stock and have no other interest in the capital stock of the Company.

 

ARTICLE
4

MISCELLANEOUS

 

4.1
Severability. If any term, provision, covenant or restriction of this Agreement is determined by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect.

 

4.2
Specific Enforcement. The Parties hereto acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions of this Agreement (without the necessity of posting any
bond), this being in addition to any other remedy to which they may be entitled by law or equity.

 

4.3
Further Assurances. The Stockholder shall use its reasonable best efforts to cause its Affiliates and Associates to comply
in all respects with the provisions of this Agreement applicable to the Stockholder to the same extent as if such Affiliates and
Associates were original parties hereto.

 

4.4
Entire Agreement; Amendments. This Agreement contains the entire understanding of the Parties with respect to the matters
covered hereby and thereby. This Agreement may be amended only by an agreement in writing executed by the Parties hereto. The
Parties hereto may amend this Agreement without notice to or the consent of any third party, including any Affiliate or Associate
of the Stockholder.

 

4.5
Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be
effective (a) when personally delivered or transmitted by electronic means, such as electronic mail, on a business day during
normal business hours where such notice is to be received at the address or number designated below, (b) on the business day when
verification of delivery is obtained when sent by fully paid overnight courier, or (c) on the business day that is three (3) days
following the date of mailing by courier, fully prepaid, addressed to such address, whichever shall first occur. The addresses
for such communications shall be:

 

	 	If
    to the Company:	 	Ammo,
    Inc.
	 	 	 	7681
    East Gray Road
	 	 	 	Scottsdale,
    Arizona 85260
	 	 	 	Email:
    
	 	 	 	Attention:
    
	 	 	 
	 	With
    a copy to:	 	Lucosky
    Brookman LLP
	 	 	 	101
    Wood Avenue South, Floor 5
	 	 	 	Woodbridge,
    NJ 08830
	 	 	 	Email:
    
	 	 	 	Attention:
    Joseph Lucosky

 

    	 

    	 

    

 

	 	If
    to the Stockholder:	 	Steven
F. Urvan

	 	 	 	 
	 	 	 	Email:

	 	 	 
	 	With
    a copy to:	 	Arnall
    Golden Gregory LLP
	 	 	 	171
    17th Street, NW, Suite 2100
	 	 	 	Atlanta,
    Georgia 30363
	 	 	 	Email:
    
	 	 	 	Attention:
    Michael D. Golden, Esq.

 

Any
Party hereto may from time to time change its address for notices under this Section 4.5 by giving at least five (5) days’
notice of such changed address to the other Party hereto.

 

4.6
Waivers. No waiver by either Party of any default with respect to any provision, condition or requirement of this Agreement
shall be deemed to be a continuing waiver in the future thereof or a waiver of any other provision, condition or requirement of
this Agreement; nor shall any delay or omission of either Party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.

 

4.7
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed
to limit or affect any of the provisions of this Agreement.

 

4.8
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors
and legal representatives. No Party shall assign this Agreement or any rights hereunder without the prior written consent of the
other Party (which consent may be withheld for any reason in the sole discretion of the Party from whom consent is sought) except
to a successor of all or substantially all of the business or assets of such Party and in the case of the Stockholder to such
Person as part of such transaction to whom all of the shares of Common Stock are transferred so long as such Person agrees in
advance in writing to be subject to this Agreement.

 

4.9
No Third Party Beneficiaries. This Agreement is intended for the benefit of the Parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision of this Agreement be enforced by, any other person.

 

4.10
Governing Law; Venue. This Agreement shall be governed by and construed and enforced in accordance with the laws of the
State of Delaware without regard to the principles of conflicts of laws. The parties hereby irrevocably submit to the jurisdiction
of the courts of the State of Delaware and the federal courts located in the State of Delaware in respect of the interpretation
and enforcement of the provisions of this Agreement.

 

4.11
Counterparts. This Agreement may be executed in separate counterparts (including by facsimile), each of which when so executed
and delivered shall be deemed an original, but both such counterparts shall together constitute one and the same instrument.

 

[Remainder
of this page is intentionally blank]

 

    	 	 	 

    	 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as
of the date first written above.

 

	 	AMMO,
    INC.
	 	 	 
	 	By	
	 	Name:	Fred
    Wagenhals
	 	Title:	Chief
    Executive Officer

 

	 	 
	 	Steven
    F. UrvanEXHIBIT
10.4

 

INVESTOR
RIGHTS AGREEMENT 

 

This
Investor Rights Agreement (this “Agreement”) is made and entered into as of April 30, 2021 (the “Effective
Date”) by and among Ammo, Inc. a Delaware corporation (the “Company”), Gemini Direct Investments,
LLC, a Nevada limited liability company (“Gemini”), SpeedLight Group I, LLC, a Delaware limited liability company
and a wholly owned subsidiary of the Company (“Sub”), and Steven F. Urvan, an individual (the “Investor”).

 

RECITALS

 

WHEREAS,
the Company, Gemini, Sub, and Investor, have entered into that certain Agreement and Plan of Merger dated as of April 30, 2021
(the “Merger Agreement”), pursuant to which Sub will be merged with and into Gemini, and Sub shall continue
as the surviving entity and wholly owned subsidiary of the Company (the “Merger”);

 

WHEREAS,
in connection with the Merger and pursuant to the Merger Agreement, the Company will issue to the Investor up to an aggregate
of 20,000,000 shares of the Company’s common stock, par value $0.001 per share, (the “Shares”), including
14,500,000 Shares issued at the Closing (as defined below);

 

WHEREAS,
the Company has agreed to file a resale registration statement within ninety (90) days of the closing of the Merger (the “Closing”)
with respect to 10,000,000 of the Shares issued at the Closing (the “First Tranche Resale Securities”); and

 

WHEREAS,
the Company has agreed to provide the Investor with demand registration rights in connection with the additional shares received
by the Investor in connection with the Merger which will include 4,000,000 Shares issued at the Closing, the Additional Parent
Stock Consideration (when and if issued in accordance with the terms of the Merger Agreement) and the Escrowed Parent Stock Consideration
(to the extent released and delivered to the Investor in accordance with the terms of the Merger Agreement) (collectively, the
“Second Tranche Resale Securities”).

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

 

ARTICLE
I

DEFINITIONS

 

Section
1.1 Definitions. For purposes of this Agreement, the following terms and variations thereof have the meanings set forth below:

 

“Affiliate”
means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such specified Person, through one or more intermediaries or otherwise. The term “control” means
the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise, and the terms “controlled” and “controlling”
have meanings correlative thereto.

 

    	 

    	 

    

 

“Agreement”
has the meaning set forth in the preamble.

 

“Board”
means the board of directors of the Company.

 

“Business
Day” means any day, other than a Saturday, Sunday or one on which banks are authorized by law to be closed in New York,
New York.

 

“Common
Stock” means the Company’s common stock, par value $0.001 per share.

 

“Effective
Date” has the meaning set forth in the preamble.

 

“Effectiveness
Period” has the meaning set forth in Section 3.4(a)(iii).

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“First
Tranche Registrable Securities” means the First Tranche Resale Securities and any securities issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar event with respect to such securities; provided,
however, that First Tranche Registrable Securities shall cease to be First Tranche Registrable Securities when (i) such
securities have been disposed of in accordance with a Registration Statement or pursuant to Rule 144; (ii) such securities may
be sold pursuant to Rule 144 without any limitation as to manner-of-sale restrictions or volume limitations; or (iii) such securities
cease to be outstanding.

 

“Form
S-1” means a Registration Statement on Form S-1 or any similar long-form registration statement that may be available
at such time.

 

“Form
S-3” means a Registration Statement on Form S-3 or any similar short-form registration statement that may be available
at such time.

 

“Grace
Period” has the meaning set forth in Section 3.4(f).”

 

“Indemnified
Party” has the meaning set forth in Section 4.3.

 

“Indemnifying
Party” has the meaning set forth in Section 4.3.

 

“Merger
Agreement” has the meaning set forth in the recitals.

 

“Person”
shall mean any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated
organization, entity or division, or any government, governmental department or agency or political subdivision thereof.

 

    	2

    	 

    

 

“Registrable
Securities” means the First Tranche Registrable Securities and the Second Tranche Registrable Securities.

 

“Registration”
means a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements
of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming
effective.

 

“Registration
Statement” means a registration statement filed by the Company or its successor with the SEC in compliance with the
Securities Act and the rules and regulations promulgated thereunder for a public offering and sale of equity securities, or securities
or other obligations exercisable or exchangeable for, or convertible into, equity securities (other than a registration statement
on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in
exchange for securities or assets of another entity).

 

“Second
Tranche Registrable Securities” means the Second Tranche Resale Securities and any securities issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar event with respect to such securities; provided,
however, that Second Tranche Registrable Securities shall cease to be Second Tranche Registrable Securities when (i) such
securities have been disposed of in accordance with a Registration Statement or pursuant to Rule 144; (ii) such securities may
be sold pursuant to Rule 144 without any limitation as to manner-of-sale restrictions or volume limitations; or (iii) such securities
cease to be outstanding.

 

“Rule
144” means Rule 144 under the Securities Act or any successor or other similar rule, regulation or interpretation of
the SEC that may at any time permit the sale of Registrable Securities to the public without registration.

 

“Rule
415” means Rule 415 under the Securities Act or any successor or other similar rule providing for offering securities
on a continuous or delayed basis.

 

“SEC”
means the Securities and Exchange Commission.

 

“Shares”
has the meaning set forth in the recitals.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Transfer”
means, directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of (by merger, testamentary
disposition, operation of law or otherwise), either voluntarily or involuntarily, or to enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition
of (by merger, testamentary disposition, operation of law or otherwise) any Shares.

 

    	3

    	 

    

 

“Underwriter”
means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of
such dealer’s market-making activities.

 

“Underwritten
Demand Registration” shall mean an underwritten public offering of Registrable Securities pursuant to a Demand Registration,
as amended or supplemented, that is a fully marketed underwritten offering that requires Company management to participate in
“road show” presentations to potential investors requiring substantial marketing effort from management over multiple
days, the issuance of a “comfort letter” by the Company’s auditors, and the issuance of legal opinions by the
Company’s legal counsel.

 

“Underwritten
Takedown” shall mean an underwritten public offering of Registrable Securities pursuant to the Resale Shelf Registration
Statement, as amended or supplemented, that requires the issuance of a “comfort letter” by the Company’s auditors
and the issuance of legal opinions by the Company’s legal counsel.

 

ARTICLE
II

TRANSFER
RESTRICTIONS

 

Section
2.1 General Transfer Restrictions. The right of the Investor to Transfer any Shares held by him is subject to the restrictions
set forth below.

 

(a)
The Investor acknowledges that the Shares have not been registered under the Securities Act and may not be Transferred except
pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from registration under the
Securities Act. The Investor covenants that the Shares will only be disposed of pursuant to an effective registration statement
under, and in compliance with the requirements of, the Securities Act or pursuant to an available exemption from the registration
requirements of the Securities Act, and in compliance with any applicable state and foreign securities laws. In connection with
any Transfer of the Shares other than a Transfer (i) pursuant to an effective registration statement, (ii) to the Company, (iii)
pursuant to Rule 144, or (iv) to an Affiliate of Investor, the Company may require the Investor to provide to the Company an opinion
of legal counsel selected by the Investor and the legal opinion of counsel shall be satisfactory to the Company, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such Transfer does not require
registration under the Securities Act; provided, however, that prior to any transfer pursuant to clause (iv), each transferee
shall agree with the Company in writing to be bound by this Agreement (it being understood that the rights of the transferor under
this Agreement shall likewise be deemed assigned to such transferee upon such transfer).

 

    	4

    	 

    

 

(b)
Each Shareholder agrees to the affixing of the following legend on any certificate or book-entry position evidencing any of the
Shares substantially in the following form:

 

THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES
LAWS AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND THE RULES AND
REGULATIONS THEREUNDER AND APPLICABLE STATE SECURITIES LAWS.

 

Certificates
or book-entry positions evidencing the Shares shall not be required to contain such legend or any other legend (i) following any
sale of such Shares pursuant to an effective registration statement (including a Registration Statement filed pursuant to this
Agreement) covering the resale of the Shares, (ii) following any sale of such Shares pursuant to Rule 144 or if the Shares are
transferrable by a person who is not an Affiliate of the Company or the applicable Shareholder pursuant to Rule 144 without any
volume or manner of sale restrictions thereunder, (iii) if Investor is not an Affiliate of the Company, one (1) year following
the Closing, provided, however, that in the case of (ii) and (iii), above, the Investor provides the Company with
customary legal representation letters reasonably satisfactory to the Company and the transfer agent of the Company or (iv) if
the Investor provides the Company with a legal opinion reasonably satisfactory to the Company to the effect that the legend is
not required under applicable requirements of the Securities Act. Whenever such restrictions shall cease and terminate as to any
Shares, the Investor shall be entitled to receive from the Company upon a written request in writing, without expense, new securities
of like tenor not bearing the legend set forth herein, and such new securities shall be issued promptly, but in no event less
than five (5) Business Days after a written request to remove such legends.

 

Section
2.2 Rule 144. The Company covenants that it shall file any reports required to be filed by it under the Securities Act
and the Exchange Act to satisfy continued Exchange Act reporting obligations, to enable Investor to sell Registrable Securities
without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities
Act, as such rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. Investor
acknowledges that, as of the Effective Date, he is an “affiliate” of the Company as defined in Rule 144.

 

ARTICLE
III

REGISTRATION
AND PROCEDURES

 

Section
3.1 Resale Shelf Registration Rights.

 

(a)
Subject to compliance by Investor with Section 3.4(d), the Company shall prepare and file or cause to be prepared and filed
with the SEC, no later than ninety (90) days following the Effective Date, with respect to the First Tranche Registrable
Securities, a Registration Statement on Form S-3 or its successor form, or, if the Company is ineligible to use Form S-3, a
Registration Statement on Form S-1, for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities
Act registering the resale from time to time by Investor of all of the First Tranche Registrable Securities (the
“Resale Shelf Registration Statement”). The Company shall use commercially reasonable efforts to cause the
Resale Shelf Registration Statement to be declared effective as soon as possible after filing, and once effective, to keep
the Resale Shelf Registration Statement continuously effective under the Securities Act at all times until the expiration of
the Effectiveness Period. In the event that the Company files a Form S-1 pursuant to this Section 3.1(a), the Company shall
use its commercially reasonable efforts to convert the Form S-1 to a Form S-3 as soon as practicable after the Company is
eligible to use Form S-3. No filing of such Registration Statement shall be required during any period in which the
Company’s insider trading policy would prohibit executive officers of the Company from trading in the Company’s
securities.

 

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(b)
The Company shall notify the Investor in writing of the effectiveness of the Resale Shelf Registration Statement and shall furnish
to him, without charge, such number of copies of the Resale Shelf Registration Statement (including any amendments, supplements
and exhibits), the prospectus contained therein (including each preliminary prospectus and all related amendments and supplements)
and any documents incorporated by reference in the Resale Shelf Registration Statement or such other documents as the Investor
may reasonably request in order to facilitate the sale of the First Tranche Registrable Securities in the manner described in
the Resale Shelf Registration Statement.

 

(c)
Subject to the provisions of Section 3.1(a), the Company shall promptly prepare and file with the SEC from time to time such amendments
and supplements to the Resale Shelf Registration Statement and prospectus used in connection therewith as may be necessary to
keep the Resale Shelf Registration Statement effective and to comply with the provisions of the Securities Act with respect to
the disposition of all the First Tranche Registrable Securities during the Effectiveness Period.

 

(d)
Notwithstanding the registration obligations set forth in this Section 3.1, in the event the SEC informs the Company that all
of the First Tranche Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a
secondary offering on a single registration statement, the Company agrees to promptly (i) inform the Investor and use its commercially
reasonable efforts to file amendments to the Resale Shelf Registration Statement as required by the SEC and/or (ii) withdraw the
Resale Shelf Registration Statement and file a new registration statement (a “New Registration Statement”),
in either case covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-1, Form
S-3 or such other form available to register for resale the First Tranche Registrable Securities as a secondary offering; provided,
however, that prior to filing such amendment or New Registration Statement, the Company shall be obligated to use its commercially
reasonable efforts to advocate with the SEC for the registration of all of the First Tranche Registrable Securities in accordance
with any publicly-available written or oral guidance, comments, requirements or requests of the SEC staff (the “SEC Guidance”).
In the event the Company amends the Resale Shelf Registration Statement or files a New Registration Statement, as the case may
be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the SEC, as promptly
as allowed by SEC or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration
statements on Form S-1, Form S-3 or such other form available to register for resale those First Tranche Registrable Securities
that were not registered for resale on the Resale Shelf Registration Statement, as amended, or the New Registration Statement.

 

    	6

    	 

    

 

(g)
If, at any time and from time to time beginning on such date that is ninety (90) days following the Effective Date, the Company
shall receive a request from the Investor for an Underwritten Takedown of all or any portion of the Investor’s First Tranche
Registrable Securities, then the Company shall use its commercially reasonable efforts to effect, as expeditiously as possible,
the offering in such Underwritten Takedown of (i) all Registrable Securities for which the Investor has requested such offering
under this Section 3.1(g), all to the extent necessary to permit the disposition (in accordance with the intended methods thereof
as aforesaid) of the Registrable Securities so to be offered.

 

(i)
The Company shall be required to effectuate only one Underwritten Takedown by the Investor within any six-month
period.

 

(ii)
If the managing underwriter in an Underwritten Takedown advises the Company and the Investor that, in its view, the number of
shares of Registrable Securities requested to be included in such underwritten offering exceeds the largest number of shares
that can be sold without having an adverse effect on such offering, including the price at which such shares can be sold, the
shares included in such Underwritten Takedown will be reduced in accordance with such determination by the managing
underwriter.

 

(h)
The Company shall have the right to select an Underwriter or Underwriters in connection with an Underwritten Takedown, which Underwriter
or Underwriters shall be reasonably acceptable to the Investor. In connection with an Underwritten Takedown, the Company shall
enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Registrable Securities in such Underwritten Takedown, including,
if necessary, the engagement of a “qualified independent underwriter” in connection with the qualification of the
underwriting arrangements with the Financial Industry Regulatory Authority, Inc.

 

Section
3.2 Demand Registration.

 

(a)
At any time and from time to time beginning on the date that is six (6) months following the Effective Date, and subject to compliance
by such Investor with Section 3.4(d) (other than as to any portion of the Registrable Securities for which there is an effective
Resale Registration Statement available for the resale of such Registrable Securities pursuant to Section 3.1), the Investor may
make a written demand for Registration under the Securities Act of all or any portion of their Registrable Securities on Form
S-1 or any similar long-form Registration or, if then available, on Form S-3. Each registration requested pursuant to this Section
3.2 is referred to herein as a “Demand Registration”. Any demand for a Demand Registration shall specify the
number of shares of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. The Company
shall not be obligated to effect more than one Demand Registration during any three-month period. The Company shall be obligated
to offer an unlimited number of Demand Registrations in respect of the Registrable Securities.

 

    	7

    	 

    

 

(b)
A Registration will not count as a Demand Registration until the Registration Statement filed with the SEC with respect to such
Demand Registration has been declared effective and the Company has complied with all of its obligations under this Agreement
with respect thereto; provided, however, that if, after such Registration Statement has been declared effective, the offering
of Registrable Securities pursuant to a Demand Registration is interfered with by any stop order or injunction of the SEC or any
other governmental agency or court, the Registration Statement with respect to such Demand Registration will be deemed not to
have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated,
and (ii) the Investor elects to continue the offering; provided, further, that the Company shall not be obligated to file a second
Registration Statement until a Registration Statement that has been filed is counted as a Demand Registration or is terminated.

 

(c)
If the Investor so elects and the Investor so advises the Company as part of their written demand for a Demand Registration, the
offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an Underwritten Demand Registration.
The Investor shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such
underwriting by the Investor, and subject to the approval of the Company. The parties agree that, in order to be effected, any
Underwritten Demand Registration must result in (i) aggregate proceeds to the selling holders of $4,000,000 or (ii) the Investor
no longer holding any Registrable Securities.

 

(d)
If the managing Underwriter or Underwriters for an Underwritten Demand Registration that is to be an underwritten offering advises
the Company and the Demanding Holders in writing that, in such Underwriter’s or Underwriters’ opinion, the dollar
amount or number of Registrable Securities which the Investor desires to sell, taken together with all Common Stock or other securities
which the Company desires to sell and the Common Stock, if any, exceeds the maximum dollar amount or maximum number of shares
that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method,
or the probability of success of such offering (such maximum dollar amount or maximum number of shares, as applicable, the “Maximum
Number of Shares”), then the Company shall include in such registration: (i) first, the Registrable Securities as to
which Demand Registration has been requested by the Investor that can be sold without exceeding the Maximum Number of Shares;
(ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the Common Stock
or other securities that the Company desires to sell and (iii) to the extent that the Maximum Number of Shares have not been reached
under the foregoing clauses (i) and (ii), any Common Stock or other securities for the account of other persons that the Company
is obligated to register pursuant to written contractual arrangements with such persons.

 

(e)
If the Investor disapproves of the terms of any underwritten offering or is not entitled to include all of his Registrable Securities
requested for inclusion in any underwritten offering, the Investor may elect to withdraw from any Demand Registration by giving
written notice to the Company and the Underwriter or Underwriters of their request to withdraw prior to the effectiveness of the
Registration Statement filed with the SEC with respect to such Demand Registration. If the Investor withdraws from a proposed
Demand Registration, then either the Investor shall reimburse the Company for the costs associated with the withdrawn registration
(in which case such registration shall not count as a Demand Registration provided for in Section 3.2(a)) or the withdrawn registration
shall count as a Demand Registration provided for in Section 3.2(a).

 

    	8

    	 

    

 

Section
3.3 Reserved.

 

Section
3.4 Registration Procedures. 

 

(a)
Whenever the Company is required to effect the registration of any Registrable Securities pursuant to Section 3.1 or 3.2, the
Company shall use its commercially reasonable efforts to effect the registration and sale of such Registrable Securities in
accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection with any
such request:

 

(i)
The Company shall use its commercially reasonable efforts to, as expeditiously as possible after receipt of a request for a
Demand Registration pursuant to Section 3.2, prepare and file with the SEC a Registration Statement on any form for which the
Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale
of all Registrable Securities to be registered thereunder in accordance with the intended method(s) of distribution thereof,
and shall use its commercially reasonable efforts to cause such Registration Statement to become effective and use its
commercially reasonable efforts to keep it effective for the Effectiveness Period; provided, however, that the Company shall
have the right to defer any Demand Registration for up to 180 days, if the Company shall furnish to the holders a certificate
signed by the Chief Executive Officer or Chairman of the Company stating that, in the good faith judgment of the Board, it
would be materially detrimental to the Company and its shareholders for such Registration Statement to be effected at such
time; provided, further, that the Company shall not invoke such right on more than three occasions or for more than sixty
(60) consecutive calendar days, or more than one hundred and twenty (120) total calendar days, in each case during any
twelve-month period.

 

(ii)
The Company shall, prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish
without charge to the Investor, and Investor’s legal counsel, copies of such Registration Statement as proposed to be
filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and
documents incorporated by reference therein), the prospectus included in such Registration Statement (including each
preliminary prospectus), and such other documents as the Investor or its legal counsel may request in order to facilitate the
disposition of the Registrable Securities owned by such holders.

 

    	9

    	 

    

 

(iii)
The Company shall prepare and file with the SEC such amendments, including post-effective amendments, and supplements to such
Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration
Statement effective and in compliance with the provisions of the Securities Act until the earliest of the following: (i) the
date on which all Registrable Securities and other securities covered by such Registration Statement have been disposed of in
accordance with the intended method(s) of distribution set forth in such Registration Statement or such securities have been
withdrawn and (ii) the date on which all Registrable Securities and other securities covered by such Registration Statement
have ceased to be Registrable Securities (the “Effectiveness Period”).

 

(iv)
The Company shall permit the Investor, the Underwriters, if any, and any attorney and accountant selected by the Investor or
Underwriter to participate, at each such person’s own expense, in the preparation of the Registration Statement, and
shall cause the Company’s officers, directors and employees to supply all information reasonably requested by the
Investor, Underwriter, attorney or accountant in connection with the Registration; provided, however, that such
representatives or Underwriters agree to confidentiality arrangements reasonably satisfactory to the Company, prior to the
release or disclosure of any such information.

 

(v)
After the filing of a Registration Statement, the Company shall promptly, and in no event more than one Business Days after
such filing, notify the Investor of such filing, and shall further notify the Investor promptly and confirm such advice in
writing in all events within two Business Days of the occurrence of any of the following: (A) when such Registration
Statement becomes effective; (B) when any post-effective amendment to such Registration Statement becomes effective; (C) the
issuance or threatened issuance by the SEC of any stop order (and the Company shall take all actions required to prevent the
entry of such stop order or to remove it if entered); and (D) any request by the SEC for any amendment or supplement to such
Registration Statement or any prospectus relating thereto or for additional information or of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers
of the securities covered by such Registration Statement, such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not
misleading, and promptly make available to the Investor any such supplement or amendment; except that before filing with the
SEC a Registration Statement or prospectus or any amendment or supplement thereto, including documents incorporated by
reference, the Company shall furnish to the Investor and to the legal counsel for the Investor, copies of all such documents
proposed to be filed sufficiently in advance of filing to provide such holders and legal counsel with a reasonable
opportunity to review such documents and comment thereon.

 

(vi)
The Company shall use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by
the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as
the Investor (in light of the intended plan of distribution) may reasonably request and (ii) take such action necessary to
cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other
governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other
acts and things that may be necessary or advisable to enable the Investor to consummate the disposition of such Registrable
Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph or subject itself to
taxation in any such jurisdiction.

 

    	10

    	 

    

 

(vii)
The Company shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and
take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable
Securities. The representations, warranties and covenants of the Company in any underwriting agreement which are made to or
for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the Investor, and
the representations, warranties and covenants of the Investor in any underwriting agreement which are made to or for the
benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the Company.

 

(viii)
In the event of an Underwritten Takedown or an Underwritten Demand Registration, the Company shall obtain a “cold
comfort” letter from the Company’s independent registered public accountants in the event of an underwritten
offering, and a customary “bring-down” thereof, in customary form and covering such matters of the type
customarily covered by “cold comfort” letters as the managing Underwriter may reasonably request, and reasonably
satisfactory to the Investor.

 

(ix)
In the event of an Underwritten Takedown or an Underwritten Demand Registration, on the date the Registrable Securities are
delivered for sale pursuant to any Registration, the Company shall obtain an opinion and negative assurances letter, each
dated as of such date, of one counsel representing the Company for the purposes of such Registration, including an opinion of
local counsel if applicable, addressed to the holders, the placement agent or sales agent, if any, and the Underwriters, if
any, covering such legal matters with respect to such Registration in respect of which such opinion is being given as the
holders, placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such
opinions, and reasonably satisfactory to the Investor.

 

(x)
The principal executive officer of the Company, the principal financial officer of the Company, the principal accounting
officer of the Company and all other officers and members of the management of the Company shall cooperate fully in any
offering of Registrable Securities hereunder, which cooperation shall include, without limitation, the preparation of the
Registration Statement with respect to such offering and all other offering materials and related documents, and
participation in meetings with Underwriters, attorneys, accountants and potential investors.

 

(xi)
The Company shall provide and maintain a transfer agent and registrar for the Registrable Securities.

 

(xii)
Upon execution of confidentiality agreements, the Company shall make available for inspection by the Investor, any
Underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other
professional retained by the Investor or any Underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, as shall be necessary to enable them to exercise their due diligence responsibility, and cause the
Company’s officers, directors and employees to supply all information reasonably requested by any of them in connection
with such Registration Statement.

 

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(xiii)
The Company shall comply with all applicable rules and regulations of the SEC and the Securities Act, and make available to
its shareholders, as soon as practicable, an earnings statement covering a period of twelve months, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

 

(xiv)
If an offering pursuant to this Agreement is conducted as an Underwritten Takedown or an Underwritten Demand Registration and
involves Registrable Securities with an aggregate offering price (before deduction of underwriting discounts) that exceeds
$25,000,000, the Company shall use commercially reasonable efforts to make available senior executives of the Company to
participate in customary “road show” presentations that may be reasonably requested by the Underwriter in such
offering.

 

(xv) The Company shall use its commercially reasonable efforts to cause all Registrable Securities included in any
Registration Statement to be listed on such exchanges or otherwise designated for trading in the same manner as similar
securities issued by the Company are then listed or designated.

 

(b)
Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.4(a)(v)(D), or,
upon any suspension by the Company, pursuant to a written insider trading compliance program adopted by the Board, of the
ability of all “insiders” covered by such program to transact in the Company’s securities because of the
existence of material non-public information, the Investor shall immediately discontinue disposition of such Registrable
Securities pursuant to the Registration Statement covering such Registrable Securities until the Investor receives the
supplemented or amended prospectus contemplated by 3.4(a)(v)(D) or the restriction on the ability of “insiders”
to transact in the Company’s securities is removed, as applicable, and, if so directed by the Company, the Investor
will deliver to the Company all copies, other than permanent file copies then in Investor’s possession, of the most
recent prospectus covering such Registrable Securities at the time of receipt of such notice. The foregoing right to delay or
suspend may be exercised by the Company for no longer than 180 days in any 12-month period.

 

(c)
The Company shall bear all costs and expenses incurred in connection with the Resale Shelf Registration Statement pursuant to
Section 3.1, any Demand Registration pursuant to Section 3.2(a), any underwritten Takedown pursuant to Section 3.1(f), and
all expenses incurred in performing or complying with its other obligations under this Agreement, whether or not the
Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees; (ii) fees and
expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) the Company’s
internal expenses (including, without limitation, all salaries and expenses of its officers and employees); (v) the fees and
expenses incurred in connection with the listing of the Registrable Securities as required by Section 3.4(a)(xv); (vi)
Financial Industry Regulatory Authority fees; (vii) fees and disbursements of counsel for the Company and fees and expenses
for independent certified public accountants retained by the Company; (viii) the fees and expenses of any special experts
retained by the Company in connection with such registration and (ix) the reasonable fees and expenses of one legal counsel
selected by the Investor not to exceed $75,000. The Company shall have no obligation to pay any underwriting discounts or
selling commissions attributable to the Registrable Securities being sold by the Investor, which underwriting discounts or
selling commissions shall be borne by the Investor, but the Company shall pay any underwriting discounts or selling
commissions attributable to the securities it sells for its own account.

 

    	12

    	 

    

 

(d)
The Investor shall promptly provide such information as may reasonably be requested by the Company, or the managing Underwriter,
if any, in connection with the preparation of any Registration Statement, including amendments and supplements thereto, in order
to effect the registration of any Registrable Securities under the Securities Act and in connection with the Company’s obligation
to comply with Federal and applicable state securities laws.

 

(e)
At any time and from time to time, in connection with a sale or transfer of Registrable Securities exempt from registration
under the Securities Act or through any broker-dealer transactions described in the plan of distribution set forth within any
prospectus and pursuant to the Registration Statement of which such prospectus forms a part, the Company shall, subject to
the receipt of customary documentation required from the applicable holders in connection therewith, (i) promptly instruct
its transfer agent to remove any restrictive legends applicable to the Registrable Securities being sold or transferred and
(ii) cause its legal counsel to deliver the necessary legal opinions, if any, to the transfer agent in connection with the
instruction under subclause (i). In addition, the Company shall cooperate reasonably with, and take such customary actions as
may reasonably be requested by Investor in connection with the aforementioned sales or transfers; provided, however, that the
Company shall have no obligation to participate in any “road shows” or assist with the preparation of any
offering memoranda or related documentation with respect to any sale or transfer of Registrable Securities in any transaction
that does not constitute an Underwritten Takedown or an Underwritten Demand Registration.

 

(f)
Notwithstanding anything in this Agreement to the contrary, at any time after the Registration Statement becomes effective the
Company may delay the disclosure of material, non-public information concerning the Company or any of its subsidiaries if the
Board has a valid business reason for determining that disclosure of such information is not in the best interests of the Company
and such disclosure is not otherwise required (a “Grace Period”); provided, however, that the Company shall
promptly (i) provide written notice to the Investor of the Grace Period (provided that in no event shall such notice contain any
material, non-public information) and the date on which the Grace Period will begin, and (ii) provide written notice to the Investor
of the date on which the Grace Period ends; provided, further, that no Grace Period shall exceed thirty (30) consecutive days
and during the Effectiveness Period such Grace Periods shall not exceed an aggregate of sixty (60) days provided, further, the
Company shall not register any securities for its own account or that of any other stockholder during such Grace Period. The provisions
of Section 3.4(e) shall not be applicable during any Grace Period. Upon expiration of a Grace Period, the Company shall again
be bound by the provisions of Section 3.4(e) with respect to the information giving rights thereto unless such material, non-public
information is no longer applicable.

 

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ARTICLE
IV

INDEMNIFICATION AND CONTRIBUTION

 

Section
4.1 Company Indemnification. The Company agrees to indemnify and hold harmless Investor, and each of its respective
officers, employees, affiliates, directors, partners, members, attorneys and agents, and each person, if any, who controls
the Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, an
“Investor Indemnified Party”), from and against any expenses, losses, judgments, claims, damages or
liabilities, whether joint or several, arising out of or based upon any untrue statement (or allegedly untrue statement) of a
material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered
under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or arising out of or based upon any omission (or
alleged omission) to state a material fact required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated thereunder applicable
to the Company and relating to action or inaction required of the Company in connection with any such registration; and the
Company shall promptly reimburse the Investor Indemnified Party for any legal and any other expenses reasonably incurred by
such Investor Indemnified Party in connection with investigating and defending any such expense, loss, judgment, claim,
damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any
such expense, loss, claim, damage or liability arises out of or is based upon any untrue statement or allegedly untrue
statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus, or
summary prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the
Company, in writing, by the Investor expressly for use therein, or is based on the Investor’s violation of the federal
securities laws (including Regulation M) or failure to sell the Registrable Securities in accordance with the plan of
distribution contained in the prospectus.

 

4.2
Indemnification by Investor. The Investor will indemnify and hold harmless the Company, each of its directors and officers,
attorneys and each other selling holder and each other person, if any, who controls another selling holder within the meaning
of the Securities Act, against any losses, claims, judgments, damages or liabilities, whether joint or several, insofar as such
losses, claims, judgments, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement
or allegedly untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable
Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained
in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon
any omission or the alleged omission to state a material fact required to be stated therein or necessary to make the statement
therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in
writing to the Company by the Investor expressly for use therein, or is based on Investor’s violation of the federal securities
laws (including Regulation M) or failure to sell the Registrable Securities in accordance with the plan of distribution contained
in the prospectus, and shall reimburse the Company, its directors and officers, and each other selling holder or controlling person
for any legal or other expenses reasonably incurred by any of them in connection with investigation or defending any such loss,
claim, damage, liability or action. The indemnification obligations hereunder shall be limited to the amount of any net proceeds
actually received by the Investor.

 

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4.3
Conduct of Indemnification Proceedings. Promptly after receipt by a person of notice of any loss, claim, damage or liability
or any action in respect of which indemnity may be sought pursuant to Sections 4.1 or 4.2, such person (the “Indemnified
Party”) shall, if a claim in respect thereof is to be made against any other person for indemnification hereunder, notify
such other person (the “Indemnifying Party”) in writing of the loss, claim, judgment, damage, liability or
action; provided, however, that the failure by the Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying
Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent
the Indemnifying Party is actually prejudiced by such failure. If the Indemnified Party is seeking indemnification with respect
to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in
such claim or action, and, to the extent that it wishes, jointly with all other Indemnifying Parties, to assume control of the
defense thereof with counsel satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume control of the defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that in any action in which both the Indemnified Party
and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but
no more than one such separate counsel, which counsel is reasonably acceptable to the Indemnifying Party) to represent the Indemnified
Party and its controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be
sought by the Indemnified Party against the Indemnifying Party, with the fees and expenses of such counsel to be paid by such
Indemnifying Party if, based upon the written opinion of counsel of such Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential differing interests between them. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, consent to entry of judgment or effect any settlement of any claim
or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such claim or proceeding.

 

4.4
Contribution.

 

(a)
If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect
of any loss, claim, damage, liability or action referred to herein, then each such Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim,
damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and
the Indemnifying Parties in connection with the actions or omissions which resulted in such loss, claim, damage, liability or
action, as well as any other relevant equitable considerations. The relative fault of any Indemnified Party and any Indemnifying
Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to information supplied by such Indemnified Party or such
Indemnifying Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

 

(b)
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined
by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred
to in Section 4.4(a).

 

(c)
The amount paid or payable by an Indemnified Party as a result of any loss, claim, damage, liability or action referred to in
the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 4.4, the Investor shall not be required to contribute any amount in excess of the dollar amount
of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by the Investor
from the sale of Registrable Securities which gave rise to such contribution obligation. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.

 

    	15

    	 

    

 

ARTICLE
V

BOARD
NOMINATION RIGHTS

 

5.1
Nomination. Following the Effective Date, the Company and the Board shall use commercially reasonable efforts to nominate
Investor to serve on the Board for a minimum of three (3) years from the Closing (the “Board Service Period”).
Promptly following Closing, the Company shall take such steps, if any, as are reasonably necessary to increase the size of the
Board to accommodate the Investor, and the directors then in office will elect Investor to fill the resulting vacancy, subject
to Investor’s acceptance of such nomination and election. Investor shall not be obligated to accept the nomination or election
to the Board as contemplated by this Section 5.1 but the failure to do so shall not constitute a waiver of Investor’s rights
hereunder.

 

5.2
Election at Shareholder Meeting. Regardless of whether Investor is then serving on the Board, the Nominations and Corporate
Governance Committee of the Board shall recommend to the Board that Investor be nominated and recommended by the Board to shareholders
for election as a director at each meeting of shareholders at which directors are elected during the Board Service Period and
the Board shall recommend the Investor to the shareholders for election as a director at each meeting of shareholders at which
directors are to elected during the Board Service Period. The Company shall use its commercially reasonable efforts to cause the
election of the Investor, including by including the Investor in the proxy statement prepared by management of the Company in
connection with soliciting proxies for every meeting of shareholders called for the election of directors, and at every postponement
or adjournment thereof, and on every action or approval by written consent of the shareholders of the Company or the Board with
respect to the election of Investor. Investor shall not be obligated to accept any nomination for election to the Board as contemplated
by this Section 5.2, but the failure to accept any such nomination shall not constitute a waiver of the Investor’s rights
with respect to any subsequent meetings of shareholders at which directors are to be elected during the Board Service Period.

 

ARTICLE
VI

GENERAL PROVISIONS

 

Section
6.1 No Conflict. The Company is not currently party to, nor shall the Company hereafter enter into, any agreement with
respect to its equity securities that is inconsistent with or violates the rights granted to the Investor set forth in this Agreement
and in the event of any conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall
prevail.

 

Section
6.2 Transfer of Registration Rights. The registration rights contained in this Agreement to cause the Company to register
the Registrable Securities, and the other rights set forth in this Article VI, may be assigned or otherwise conveyed by the
Investor to any transferee of the Registrable Securities if the Transfer was permitted under Article II and the transferee
agrees with the Company in writing to be bound by this Agreement.

 

Section
6.3 Entire Agreement. This Agreement constitutes the entire understanding and agreement between the parties as to the
matters covered herein and supersedes and replaces any prior understanding, agreement or statement of intent, in each case,
written or oral, of any and every nature with respect thereto.

 

Section
6.4 Notices. Any notice or other communication required or permitted to be delivered to any party under this Agreement
shall be in writing and shall be deemed properly delivered, given and received (a) upon receipt when delivered by hand, (b) upon
transmission, if sent by electronic transmission (in each case with receipt verified by electronic confirmation), or (c) one (1)
Business Day after being sent by courier or express delivery service. The addresses, and email addresses for such notices and
communications are those set forth on the signature pages hereof, or such other address, email address or facsimile number as
may be designated in writing hereafter, in the same manner, by any such person.

 

    	16

    	 

    

 

Section
6.5 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the same counterpart and such counterparts may be delivered
by the parties hereto via facsimile or electronic transmission.

 

Section
6.6 Amendment; Waiver. This Agreement may be amended or modified, and any provision hereof may be waived, in whole or in
part, at any time pursuant to an agreement in writing executed by the Company and the Investor. Any failure by any party at any
time to enforce any of the provisions of this Agreement shall not be construed a waiver of such provision or any other provisions
hereof.

 

Section
6.7 Severability. In the event that any provision of this Agreement or the application thereof becomes or is declared by
a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full
force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto.

 

Section
6.8 Governing Law; Venue. This Agreement and all claims or causes of action (whether sounding in contract or tort)
arising under or related to this Agreement, shall be governed by and construed in accordance with, the laws of the State of
Delaware, without regard to any rule or principle that might refer the governance or construction of this Agreement to the
Laws of another jurisdiction. In any action or proceeding between any of the parties arising under or related to this
Agreement, each of the parties (a) knowingly, voluntarily, irrevocably and unconditionally consents and submits to the
exclusive jurisdiction and venue of any court of competent civil jurisdiction sitting in the State of Delaware, (b) agrees
that all claims in respect of any such action or proceeding shall be heard and determined exclusively in accordance with
clause (a) of this Section 6.8, (c) waives any objection to the laying of venue of any such action or proceeding in such
courts, including any objection that any such action or proceeding has been brought in an inconvenient forum or that the
court does not have jurisdiction over any party, and (d) agrees that service of process upon such party in any such action or
proceeding shall be effective if such process is given as a notice in accordance with Section 5.2. The parties agree that any
party may commence a proceeding in a court other than the above-named courts solely for the purpose of enforcing an order or
judgment issued by one of the above-named courts.

 

Section
6.9 Specific Performance. Each party acknowledges and agrees that the other parties hereto would be irreparably
harmed and would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed
by such first party in accordance with their specific terms or were otherwise breached by such first party. Accordingly, each
party agrees that the other parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such
parties are entitled at law or in equity.

 

(Next
Page is Signature Page)

 

    	17

    	 

    

 

IN
WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first written above.

 

	 	COMPANY:
	 	 	 
	 	AMMO, INC.
	 	 	 
	 	By:	 
	 	Name: 	Fred
    W. Wagenhals
	 	Title:	Chief
    Executive Officer

 

	 	Address
    for Notice:
	 	 
	 	7681
    E. Gray Rd.
	 	Scottsdale,
    Arizona 85260
	 	Attn:
    Fred W. Wagenhals
	 	Email:

 

	 	INVESTOR:
	 	 
	 	 
	 	Steven
    F. Urvan
	 	 
	 	Address
    for Notice:
	 	 
	 	Email:

 

[Signature
Page Investor Rights Agreement]

 

    	18

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