Document:

Promissory
Note 

 

Scottsdale,
Arizona 85260

 

$10,400,000.00
as of March 14, 2019

 

FOR
VALUE RECEIVED, Enlight Group II, LLC, a Delaware limited liability company (“Borrower”), hereby promises
to pay to the order of Jagemann Stamping Company, a Wisconsin corporation (collectively with any and all of its permitted successors
and assigns and/or any other holder of this Note, “Lender”), without offset, in immediately available
funds in lawful money of the United States of America, without counterclaim or setoff and free and clear of, and without any deduction
or withholding for, any taxes or other payments), at 5757 West Custer Street, Manitowoc, WI 54220, the principal sum of Ten Million
Four Hundred Thousand & 00/100 Dollars ($10,400,000.00) (this “Note”), if that amount is less (the
aggregate unpaid principal balance of this Note is referred to herein, from time to time, as the “Principal Debt”),
together with interest on the Principal Debt, from day to day outstanding as hereinafter. The loan evidenced by this Note is referred
to herein as the “Loan”. Unless otherwise defined herein, capitalized terms used in this Note shall
have the meanings given such terms in the Loan Agreement.

 

Section
1. Payment Schedule and Maturity Date. Prior to the Maturity Date (as hereinafter defined), accrued and unpaid interest on
the outstanding amount due and owing as evidenced by this Note shall be paid monthly in arrears on the fifteenth (15th) day of
each month commencing on April 15, 2019. The entire principal balance of this Note then unpaid, together with all accrued and
unpaid interest and all other amounts payable hereunder and under the other loan documents related to this Note (including the
Security Agreement, herein the “Loan Documents”), shall be due and payable in full on July 15, 2019 (the “Initial
Maturity Date”), or, if the Initial Maturity Date is extended pursuant to the terms of this Note, excluding the
first Two Million & 00/100 Dollars ($2,000,000.00) (“Interim Payment”) for which no extension is provided pursuant
to Section 2 below, the Maturity Date (as hereinafter defined. The maturity date for the Interim Payment shall be April 30, 2019
(“Initial Payment Maturity Date”).

 

	 	(a)	Security.
    Borrower hereby grants Lender a continuing security interest in the Equipment as defined in Section 2.01(a) of the Amended
    APA in order to secure the timely payment of all of the debts, liabilities and obligations arising under the Note and such
    Security Agreement. Borrower agrees to execute all documents reasonably necessary for Lender to perfect this security interest.
    Lender agrees to release such security interest promptly upon satisfaction of the debt arising under the Note.
	 	 	 
	 	(b)	Refinance
    – Prompt Payment. Borrower agrees that it is required to be pay this Loan in full (including the Principal Debt
    and all accrued interest) promptly upon successfully refinancing the Equipment. Lender agrees to provide all necessary supporting
    information and execute all documents reasonably necessary for Borrower to successfully refinance the Equipment under terms
    acceptable to Borrower. 
	 	 	 
	 	(c)	Guaranty.
    AMMO, Inc., the sole member/manager of Borrower (“Guarantor”), hereby independently, jointly and severally guarantees
    Borrower’s payment of the financial and other obligations arising hereunder in this Note. The Guarantor acknowledges
    that this is a guaranty of payment and not a guaranty of collection. 

 

Section
2. Extension Option. Excluding the first Two Million & 00/100 Dollars ($2,000,000.00) for which no extension is provided
as set forth above in Section 1, Borrower shall have a single option to extend the Initial Maturity Date for payment of the balance
thereafter due under the Loan Documents to the date that is sixty (60) days after the Initial Maturity Date (the “Extended
Maturity Date”; the Initial Maturity Date, as so extended is referred to herein as the “Maturity Date”),
upon and subject to the following terms and conditions, unless otherwise agreed to or waived by Lender in writing: Borrower shall
have the option to extend the Initial Maturity Date of this Note to September 15, 2019 (the “ Extended Maturity Date”),
upon and subject to the following terms and conditions, unless otherwise agreed to or waived by Lender in writing:

 

    	 

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(a)
Borrower shall request that Lender extend the Maturity Date to the Extended Maturity Date by written notice (“Extension
Notice”) to Lender to be received by Lender not more than sixty (60) days, and not less than fifteen (15) days,
prior to the Initial Maturity Date.

 

(b)
As of the date Lender receives the Extension Notice and at the Initial Maturity Date, there shall not exist any Event of Default
(as hereinafter defined), nor shall there exist any default which after notice and/or lapse of time would constitute an Event
of Default.

 

(c)
Whether the Maturity Date is extended pursuant to the Extension Notice, Borrower shall pay all out-of-pocket costs and expenses
incurred by Lender in connection with the proposed extension, including, without limitation, appraisal fees, environmental audit
and attorneys’ fees and expenses actually incurred by Lender upon demand by Lender, it being agreed that any failure to
pay such amounts shall constitute a default under this Note.

 

(d)
All applicable regulatory requirements (if any), including appraisal requirements, shall have been satisfied with respect to such
extension.

 

(e)
Not later than the Initial Maturity Date, Borrower, Guarantor (if any), Lender, and all other parties reasonably deemed necessary
by Lender (such as any permitted subordinate lienholders, tenants of the Property and permanent lenders (if any)) shall enter
into such documentation as may be reasonably required by Lender to evidence such extension.

 

If
the foregoing conditions are satisfied, and the term of the Loan is extended to the Extended Maturity Date, all terms and conditions
of this Note shall continue to apply to such extended term except to the extent agreed upon in writing by Borrower and Lender.

 

Section
3. Interest.

 

Section
3.1 Interest Rates. The Principal Debt from day to day outstanding that is not past due shall bear interest at a rate per
annum equal to the following, as applicable:

 

(a)
For the applicable Interest Period (as hereinafter defined), the applicable LIBOR Rate (as hereinafter defined); and

 

(b)
If the LIBOR Rate is unavailable or not applicable, then the Base Rate (as hereinafter defined).

 

Section
3.2 Computations and Determinations. All interest shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day). Lender shall determine each interest rate applicable
to the Principal Debt in accordance with this Note and its determination thereof shall be conclusive in the absence of manifest
error. The books and records of Lender shall be conclusive evidence, in the absence of manifest error, of all sums owing to Lender
from time to time under this Note, but the failure to record any such information shall not limit or affect the obligations of
Borrower under the Loan Documents.

 

Section
3.3 Unavailability of Rate. If, with respect to any LIBOR Rate Principal (as hereinafter defined) for an Interest Period (as
hereinafter defined), Lender determines that no adequate basis exists for determining LIBOR or that LIBOR will not adequately
and fairly reflect the cost to Lender of funding or maintaining the LIBOR Rate Principal for such Interest Period, or that any
applicable Law, or compliance therewith by Lender, prohibits or restricts or makes impossible the making or maintenance of such
LIBOR Rate Principal or the charging of interest on such LIBOR Rate Principal, and Lender so notifies Borrower, then until Lender
notifies Borrower that the circumstances giving rise to such suspension no longer exist, such LIBOR Rate Principal shall automatically
be deemed to be Base Rate Principal (as hereinafter defined), and the interest payable under the Loan shall be the Base Rate,
either (a) on the last day of the corresponding Interest Period (if Lender determines that it may lawfully continue to utilize
the LIBOR Rate to such day), or (b) immediately (if Lender determines that it may not lawfully continue to utilize the LIBOR Rate).

 

    	 

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Section
3.4 Past Due Rate. If any amount payable by Borrower under any Loan Document is not paid when due (without regard to any applicable
grace periods), such amount shall thereafter bear interest at the Past Due Rate (as hereinafter defined) to the fullest extent
permitted by applicable Law. In addition, following any Event of Default, all Indebtedness shall bear interest at the Past Due
Rate. In either case, accrued and unpaid interest or past due amounts (including interest on past due interest) shall be due and
payable on demand, at a fluctuating rate per annum (the “Past Due Rate”) equal to the higher of (a)
the Prime Rate (as hereinafter defined) plus five percent (5%), or (b) the LIBOR Rate (as hereinafter defined) plus five percent
(5%).

 

Section
3.5 Additional Defined Terms. For purposes of this Note, the following terms shall have the meanings indicated, unless the
context otherwise requires:

 

“Applicable
Margin” means two percent (2%).

 

“Base
Rate” means, on any day, a simple rate per annum equal to the sum of the Prime Rate for that day plus the Applicable
Margin. Without notice to Borrower or anyone else, the Base Rate shall automatically fluctuate upward and downward as and in the
amount by which the Prime Rate fluctuates.

 

“Base
Rate Principal” means, at any time, the Principal Debt minus the portion, if any, of such Principal Debt that is
LIBOR Rate Principal.

 

“Interest
Period” means, with respect to any LIBOR Rate Principal, the period commencing on the date such LIBOR Rate Principal
is disbursed or on the date on which the Principal Debt or any portion thereof is converted into or continued as such LIBOR Rate
Principal, and ending on the date three (3) months thereafter; provided that:

 

	 	(i)	each
    Interest Period must commence on a LIBOR Business Day;
	 	 	 
	 	(ii)	in
    the case of the continuation of LIBOR Rate Principal, the Interest Period applicable after the continuation of such LIBOR
    Rate Principal shall commence on the last day of the preceding Interest Period;
	 	 	 
	 	(iii)	the
    last day of each Interest Period and the actual number of days during the Interest Period shall be determined by Lender using
    the practices of the London interbank market; and
	 	 	 
	 	(iv)	no
    Interest Period shall extend beyond the Maturity Date, and any Interest Period that begins before the Maturity Date and would
    otherwise end after the Maturity Date shall instead end on the Maturity Date; and Borrower shall not incur any Consequential
    Loss (as hereinafter defined) if the Maturity Date shall end on a day that is not on the last day of an Interest Period.

 

“LIBOR
Business Day” means a Business Day that is also a London Banking Day.

 

“LIBOR
Margin” means two percent (2%)

 

“LIBOR
Rate” means for any applicable Interest Period for any LIBOR Rate Principal, a simple rate per annum equal to the
sum of the LIBOR Margin plus the applicable London Interbank Offered Rate.

 

“LIBOR
Rate Principal” means any portion of the Principal Debt which bears interest at an applicable LIBOR Rate at the
time in question.

 

“LIBOR
Reserve Percentage” means, with respect to any applicable Interest Period, for any day that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including basic, supplemental, emergency, special and marginal reserves) generally
applicable to financial institutions regulated by the Federal Reserve Board comparable in size and type to Lender, in respect
of “Eurocurrency liabilities” (or in respect of any other category of liabilities which includes deposits by reference
to which the interest rate on LIBOR Rate Principal is determined), whether or not Lender has any Eurocurrency liabilities or such
requirement otherwise in fact applies to Lender. The LIBOR Rate shall be adjusted automatically as of the effective date of each
change in the LIBOR Reserve Percentage.

 

    	 

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“London
Banking Day” means a day on which banks in London are open for business and dealing in offshore dollars.

 

“London
Interbank Offered Rate” means, with respect to any applicable Interest Period, the rate per annum equal to the British
Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters or the Wall Street Journal (or
other commercially available source providing quotations of BBA LIBOR as selected by Lender from time to time) at approximately
11:00 a.m. (London time) two (2) London Banking Days before the commencement of the Interest Period, for deposits in U.S. Dollars
(for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available
at such time for any reason, then the rate for that Interest Period will be determined by such alternate method as reasonably
selected by Lender.

 

“Prime
Rate” means, on any day, the rate of interest per annum reported in The Wall Street Journal as the “prime
rate” (or the average prime rate if a high and a low prime rate are therein reported) (or, if The Wall Street Journal is
no longer in publication, such replacement publication as may be selected by Lender), and the Prime Rate shall change without
notice with each change in such prime rate as of the date such change is reported.

 

Section
4. Prepayment.

 

(a)
Borrower may prepay the Principal Debt, in full at any time or in part from time to time, provided that:

 

(i)
Lender shall have actually received from Borrower prior irrevocable written notice (the “Prepayment Notice”)
setting forth (A) Borrower’s intent to prepay, (B) the amount of principal that will be prepaid (the “Prepaid
Principal”), and (C) the date on which the prepayment will be made, such Prepayment Notice to be received by Lender,
in each case, on or prior to the date that is at least five (5) Business Days prior to the date of such proposed prepayment;

 

(ii)the
Prepaid Principal shall be in the amount of $1,000 or a larger integral multiple of $1,000 (unless the prepayment retires the
outstanding balance of this Note in full); and

 

(iii)
each prepayment shall be in the amount of one hundred percent (100%) of the Prepaid Principal, plus accrued unpaid interest thereon
to the date of prepayment (or the end of the month in which the prepayment is made), plus any other sums that have become due
to Lender under the Loan Documents on or before the date of prepayment but have not been paid.

 

Section
5. Late Charges. If Borrower shall fail to make any payment under the terms of this Note within ten (10) business days after
the date such payment is due (other than with respect to the payment due at maturity for which there is no grace period), Borrower
shall pay to Lender on demand a late charge calculated at the Past Due Rate pursuant to Section 3.5. Such grace period shall not
be construed as in any way extending the due date of any payment. The late charge is imposed for the purpose of defraying the
expenses of Lender incident to handling such delinquent payment. This charge shall be in addition to, and not in lieu of, any
other amount that Lender may be entitled to receive or action that Lender may be authorized to take as a result of such late payment.

 

Section
6. Certain Provisions Regarding Payments. All payments made under this Note shall be applied, to the extent thereof, to late
charges, to accrued but unpaid interest and then to unpaid Amortized Principal Payments Whenever any payment under this Note or
any other Loan Document falls due on a day which is not a Business Day, such payment may be made on the next succeeding Business
Day.

 

    	 

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Section
7. Events of Default. The occurrence of any one or more of the following shall constitute an “Event of Default”
under this Note:

 

(a)
Borrower fails to pay when and as due and payable any amounts payable by Borrower to Lender under the terms of this Note and such
failure continues for ten days.

 

(b)
Any covenant, agreement or condition in this Note is not fully and timely performed, observed or kept, subject to any applicable
grace or cure periods set forth in this Note.

 

(c)
Borrower or Guarantor becomes subject to any bankruptcy of insolvency.

 

(d)
Borrower or Guarantor sells or transfers all or substantially all its assets or there is a change in control of either the Borrower
or the Guarantor.

 

Section
8. Remedies. Upon the occurrence of an Event of Default, Lender may at any time thereafter exercise any one or more of the
following rights, powers and remedies:

 

(a)
Lender may accelerate the Maturity Date and declare the unpaid principal balance and accrued but unpaid interest on this Note,
and all other amounts payable hereunder and under the other Loan Documents, at once due and payable, and upon such declaration
the same shall at once be due and payable.

 

(b)
Lender may set off the amount owed by Borrower to Lender, whether or not matured and regardless of the adequacy of any other collateral
securing this Note, against any and all accounts, credits, money, securities or other property now or hereafter on deposit with,
held by or in the possession of Lender to the credit or for the account of Borrower, without notice to or the consent of Borrower.

 

(c)
Lender may exercise any of its other rights, powers and remedies under this Note or at law or in equity including, but not limited
to foreclosing upon the security provided for herein and availing itself of all other rights to possession and collection afforded
pursuant to Lender’s security interest in such security, or enforcing the guaranty provided herein by the Guarantor.

 

Section
9. Remedies Cumulative .All of the rights and remedies of Lender under this Note and the other Loan Documents are cumulative
of each other and of any and all other rights at law or in equity, and the exercise by Lender of any one or more of such rights
and remedies shall not preclude the simultaneous or later exercise by Lender of any or all such other rights and remedies. No
single or partial exercise of any right or remedy shall exhaust it or preclude any other or further exercise thereof, and every
right and remedy may be exercised at any time and from time to time. No failure by Lender to exercise, nor delay in exercising,
any right or remedy shall operate as a waiver of such right or remedy or as a waiver of any Event of Default.

 

Section
10. Costs and Expenses of Enforcement. Borrower agrees to pay to Lender on demand all costs and expenses incurred by Lender
in seeking to collect this Note or to enforce any of Lender’s rights and remedies under the Loan Documents, including court
costs and reasonable attorneys’ fees and expenses, whether or not suit is filed hereon, or whether in connection with bankruptcy,
insolvency or appeal.

 

Section
11. Service of Process.

 

(a)
Borrower hereby irrevocably designates and appoints Fred Wagenhals (CEO), AMMO, Inc., 7681 E. Gray Rd. Scottsdale, AZ 85260, as
Borrower’s authorized agent to accept and acknowledge on Borrower’s behalf service of any and all process that may
be served in any suit, action, or proceeding instituted in connection with this Note in any state or federal court sitting in
the state which may exercise lawful jurisdiction over the Parties. If such agent shall cease so to act, Borrower shall irrevocably
designate and appoint without delay another such agent in the State of Arizona satisfactory to Lender and shall promptly deliver
to Lender evidence in writing of such agent’s acceptance of such appointment and its agreement that such appointment shall
be irrevocable.

 

(b)
Borrower hereby consents to process being served in any suit, action, or proceeding instituted in connection with this Note by
(i) the mailing of a copy thereof by certified mail, postage prepaid, return receipt requested, to Borrower and (ii) serving a
copy thereof upon the agent, if any, hereinabove designated and appointed by Borrower as Borrower’s agent for service of
process. Borrower irrevocably agrees that such service shall be deemed to be service of process upon Borrower in any such suit,
action, or proceeding. Nothing in this Note shall affect the right of Lender to serve process in any manner otherwise permitted
by law and nothing in this Note will limit the right of Lender otherwise to bring proceedings against Borrower in the courts of
any jurisdiction or jurisdictions, subject to any provision or agreement for arbitration or dispute resolution set forth in the
Loan Agreement.

 

    	 

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Section
12. Heirs, Successors and Assigns. The terms of this Note and of the other Loan Documents shall bind and inure to the benefit
of the heirs, devisees, representatives, successors and assigns of the parties. The foregoing sentence shall not be construed
to permit Borrower to, and Borrower shall not, assign the Loan, or its rights and obligations under this Note or any of the Loan
Documents, except as otherwise expressly permitted under the other Loan Documents.

 

Section
13. General Provisions. Time is of the essence with respect to Borrower’s obligations under this Note, subject to applicable
notice and/or cure periods. If more than one person or entity executes this Note as Borrower, all of said parties shall be jointly
and severally liable for payment of the Indebtedness. Borrower and each party executing this Note as Borrower hereby severally
(a) waive demand, presentment for payment, notice of dishonor and of nonpayment, protest, notice of protest, notice of intent
to accelerate, notice of acceleration and all other notices (except any notices which are specifically required by this Note or
any other Loan Document), filing of suit and diligence in collecting this Note or enforcing any of the security herefore; (b)
agree to any substitution, subordination, exchange or release of any such security or the release of any party primarily or secondarily
liable hereon; (c) agree that Lender shall not be required first to institute suit or exhaust its remedies hereon against Borrower
or others liable or to become liable hereon or to perfect or enforce its rights against them or any security herefore; (d) consent
to any extensions or postponements of time of payment on this Note for any period or periods of time and to any partial payments,
before or after maturity, and to any other indulgences with respect hereto, without notice thereof to any of them; (e) submit
(and waive all rights to object) to non-exclusive personal jurisdiction of any state or federal court sitting in the State of
Arizona or the state and county in which payment on this Note is to be made for the enforcement of any and all obligations under
this Note and the other Loan Documents; (f) waive the benefit of all homestead and similar exemptions as to this Note; (g) agree
that their liability under this Note shall not be affected or impaired by any determination that any title, security interest
or lien taken by Lender to secure this Note is invalid or unperfected; and (h) subordinate to the Loan and the Loan Documents
any and all rights against Borrower and any security for the payment on this Note, whether by subrogation, agreement or otherwise,
until this Note is paid in full. A determination that any provision of this Note is unenforceable or invalid shall not affect
the enforceability or validity of any other provision and the determination that the application of any provision of this Note
to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as
it may apply to other persons or circumstances. This Note may not be amended except in a writing specifically intended for such
purpose and executed by the party against whom enforcement of the amendment is sought. Title and headings in this Note are for
convenience only and shall be disregarded in construing it. Whenever a time of day is referred to herein, unless otherwise specified
such time shall be the local time of the place where payment on this Note is to be made.

 

Section
14. Notices. Any notice, request, or demand to or upon Borrower or Lender shall be deemed to have been properly given or made
when delivered in accordance with the terms of this Note and the Amended APA regarding notices.

 

Section
15. No Usury. It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply with applicable
state law or applicable United States federal law (to the extent that it permits Lender to contract for, charge, take, reserve,
or receive a greater amount of interest than under state law) and that this Section shall control every other covenant and agreement
in this Note and the other Loan Documents. If applicable state or federal law should at any time be judicially interpreted so
as to render usurious any amount called for under this Note, or contracted for, charged, taken, reserved, or received with respect
to the Loan, or if Lender’s exercise of the option to accelerate the Maturity Date, or if any prepayment by Borrower results
in Borrower having paid any interest in excess of that permitted by applicable law, then it is Lender’s express intent that
all excess amounts theretofore collected by Lender shall be credited on the principal balance of this Note, and the provisions
of this Note shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without
the necessity of the execution of any new documents, so as to comply with the applicable law, but so as to permit the recovery
of the fullest amount otherwise called for hereunder or thereunder. All sums paid or agreed to be paid to Lender for the use or
forbearance of the Loan shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout
the full stated term of the Loan.

 

    	 

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Section
16. Lost Note. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of this
Note or any other security document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation,
upon cancellation of this Note or other security document, Borrower will issue, in lieu thereof, a replacement note or other security
document in the same principal amount thereof and otherwise of like tenor.

 

Section
17. Choice of Law. This Note and its validity, enforcement and interpretation shall be governed by the laws of the State of
Delaware (without regard to any principles of conflicts of laws) and applicable United States federal law.

 

Section
18. Waiver of Jury Trial. BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY
IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED
TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF LENDER
RELATING TO THE ADMINISTRATION OF THE LOAN EVIDENCED BY THIS NOTE OR ENFORCEMENT OF THE LOAN DOCUMENTS EVIDENCING AND/OR SECURING
THE LOAN, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER
TO ACCEPT THIS NOTE AND MAKE THE LOAN.

 

Section
19. Venue; Jurisdiction. BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS
MAY BE BROUGHT IN THE COURTS OF THE STATE OF ARIZONA OR WISCONSIN OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT
OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT FORUM.

 

Section
20. Obligations Joint and Several. If Borrower is comprised of more than one Person, the obligations of such Persons under
this Note shall be joint and several.

 

Section
21. Counterparts. If this Note is to be executed by more than one Person, then this Note may be executed in one or more counterparts,
each of which shall constitute an original and all of which, taken together, shall constitute one and the same instrument.

 

    	 

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IN
WITNESS WHEREOF, Borrower has duly executed this Note under seal as of the date first above written.

 

Borrower:

 

	Enlight
    Group II, LLC	 
	 	 	 
	By:	/s/
    Fred Wagenhals	 
	Name:	Fred
    Wagenhals	 
	Title:	Managing
    Member – AMMO, Inc. (CEO)	 
	 	 	 
	Guarantor:
    AMMO, Inc.	 
	 	 	 
	By:	/s/
    Fred Wagenhals	 
	Name:	Fred
    Wagenhals	 
	Title:	CEOSecurity
Agreement

 

 

This
Security Agreement, dated as of March 14, 2019 (this “Agreement”), by the undersigned (the “Debtor”) in
favor of Jagemann Stamping Company (the “Secured Party”).

 

Reference
is made to that certain Note, dated as of March 14, 2019 (as the same may be amended, restated, amended and restated, supplemented
or otherwise modified from time to time, the “Note”), by and among Enlight Group II, LLC, AMMO, Inc. (“Guarantor”),
and the lender from time to time party thereto. Unless otherwise defined herein, terms defined in the Note and used herein shall
have the meanings given to them in the Note. Unless otherwise defined in this Agreement or in the Note, terms defined in Article
8 or 9 of the UCC are used in this Agreement as such terms are therein defined.

 

1.
For valuable consideration, and to secure the payment and performance of the obligations hereinafter described, Debtor hereby
grants to Secured Party, a continuing security interest in the items described in Exhibit A, wherever located, and any
and all products and proceeds of such collateral (including, but not limited to, any claims to any items referred to in this definition,
and any claims of Debtor against third parties for loss of, damage to, or destruction of, any or all of the collateral or for
proceeds payable under or unearned premiums with respect to policies of insurance) in whatever form, including cash (collectively
referred to as the “Collateral”).

 

2.
This Agreement and the security interest created hereby are given for the purpose of securing: (a) payment of the indebtedness
evidenced by the Note; (b) performance of each agreement of Debtor herein contained and contained in the Note (including costs
of collection); (c) payment and performance of all existing and future obligations of Debtor to Secured Party; and (d) any and
all amendments, modifications, renewals and/or extensions of any of the foregoing, including, but not limited to, amendments,
modifications, renewals or extensions which are evidenced by new or additional instruments, documents or agreements or which change
the rate of interest on any obligations secured hereby. It is the express purpose of Debtor and Secured Party that all obligations
of Debtor to Secured Party shall be subject to Secured Party’s security interest in the Collateral, regardless of whether
such obligations shall be of the same class as the obligations initially contemplated at the time this transaction was entered
into.

 

3.
Debtor represents, warrants and agrees that: (a) Debtor has full title to the Collateral, free from any liens, leases, encumbrances,
defenses or other claims; the security interest in the Collateral constitutes a first, prior and indefeasible security interest;
and no financing statement covering the Collateral, or any part thereof, is on file in any public office; (b) Debtor will execute
all documents (including financing statements) and take such other action as Secured Party deems necessary to create and perfect
a security interest in the Collateral; (c) Debtor will, at its sole cost and expense, defend any claims that may be made against
the Collateral; (d) except as otherwise provided herein, the Collateral shall be kept at Debtor’s address set forth herein
and Debtor will not, without Secured Party’s prior written consent, part with possession of, transfer, sell, lease, encumber,
conceal or otherwise dispose of the Collateral or any interest therein; (e) the Collateral will be maintained in good condition
and repair, and will not be used in violation of any applicable laws, rules or regulations; (f) Debtor will pay and discharge
all taxes and liens on the Collateral prior to delinquency; (g) Debtor will maintain insurance on the Collateral covering such
risks and in such form and amount as may be required by Secured Party from time to time, with insurers satisfactory to Secured
Party and with loss payable to Secured Party as its interest may appear, and upon request Debtor will deliver the original of
such policy or policies to Secured Party; (h) Debtor will permit Secured Party to inspect the Collateral and Debtor’s books
and records (including computer files) pertaining thereto at any time; and (i) the Collateral will at all times remain personal
property.

 

4.
In the event Debtor shall fail to perform any obligation hereunder, Secured Party may, but shall not be obligated to, perform
the same, and the cost thereof shall be payable by Debtor to Secured Party [immediately and without demand].

 

    	 

    	 	Page 2

    

 

5.
If this Agreement is given to secure obligations of any person or entity other than Debtor (such person or entity being hereinafter
referred to as “Principal”), Debtor waives notice of default, presentment, demand for payment, protest, notice of
protest, notice of nonpayment or dishonor, and all other notices and demands of any kind whatsoever; and Debtor consents and agrees
that Secured Party may, from time to time, without notice or demand and without affecting the enforceability or security hereof:
(a) take, alter, enforce or release any additional security for the obligations secured hereby; (b) renew, extend, modify, amend,
accelerate, accept partial payments on, release, settle, compromise, compound, collect or otherwise liquidate the obligations
secured hereby or any security therefor, and bid and purchase at any sale; or (c) release or substitute Principal or any guarantors
of the obligations secured hereby. If any default should be made in the payment or performance of any obligations secured hereby
or in the terms and conditions of any security held therefor, Secured Party may enforce this Agreement independently of any other
remedy or security Secured Party may at any time hold in connection with the obligations secured hereby, and it shall not be necessary
for Secured Party to proceed upon or against, and/or exhaust, any other security or remedy before proceeding to enforce this Agreement.
Until all obligations secured hereby are paid in full, Debtor waives all right of subrogation.

 

6.
There shall be a “default” or an “event of default” hereunder upon the occurrence of any of the following
events: (a) default in the payment or performance of any obligations secured hereby or contained herein; or (b) occurrence of
any “default” or “event of default” under the Note secured hereby or any security therefor.

 

7.
Upon the occurrence of any event of default, all obligations secured hereby shall, at Secured Party’s option, immediately
become due and payable without notice or demand, and Secured Party shall have in any jurisdiction where enforcement hereof is
sought, in addition to all other rights and remedies which Secured Party may have under law, all rights and remedies of a secured
party under the Uniform Commercial Code and in addition the following rights and remedies: (a) to settle, compromise or release
on terms acceptable to Secured Party, in whole or in part, any amounts owing on the Collateral; (b) to enforce payment and prosecute
any action or proceeding with respect to any and all of the Collateral; (c) to extend the time of payment, make allowances and
adjustments and issue credits in Secured Party’s name or in the name of Debtor; (d) to foreclose the liens and security
interests created under this Agreement or under any other agreement relating to the Collateral by any available judicial procedure
or without judicial process; (e) to enter any premises where any Collateral may be located for the purpose of taking possession
of or removing the same; (f) to remove from any premises where the same may be located the collateral and any and all documents
instruments, files and records, and any receptacles and cabinets containing the same, relating to the Collateral, and Secured
Party may, at Debtor’s cost and expense, use the supplies and space of Debtor at any or all of its places of business as
may be necessary or appropriate to properly administer and control the Collateral or the handling of collections and realizations
thereon; (g) to receive, open and dispose of all mail addressed to Debtor and notify postal authorities to change the address
for delivery thereof to such address as Secured Party may designate; (h) to sell, assign, lease, or otherwise dispose of the Collateral
or any part thereof, either at public or private sale, in lots or in bulk, for cash, on credit or otherwise, with or without representations
or warranties, and upon such terms as shall be acceptable to Secured Party, all at Secured Party’s sole option and as Secured
Party in its sole discretion may deem advisable. The net cash proceeds resulting from the collection, liquidation, sale, lease
or other disposition of the Collateral shall be applied, first, to the expenses (including all attorneys’ fees) of retaking,
holding, storing, processing and preparing for sale, selling, collecting, liquidating and the like, and then to the satisfaction
of all obligations and indebtedness or against principal or interest to be in Secured Party’s absolute discretion. Debtor
will, at Secured Party’s request, assemble all Collateral and make it available to Secured Party at such place or places
as Secured Party may designate which are reasonably convenient to both parties, whether at the premises of Debtor or elsewhere,
and will make available to Secured Party all premises and facilities of Debtor for the purpose of Secured Party’s taking
possession of the Collateral or removing or putting the Collateral in saleable form. Debtor agrees to pay all costs and expenses
incurred by Secured Party in the enforcement of this Agreement, including without limitation reasonable attorneys’ fees,
whether or not suit is filed hereon.

 

    	 

    	 	Page 3

    

 

8.
This Agreement expresses the entire understanding of the parties hereto and may not be altered or amended except with the written
consent of each of the parties. This Agreement shall be binding upon and inure to the benefit of the respective heirs, executors,
administrators, assigns and successors of the parties hereto. All of Secured Party’s rights and remedies hereunder are cumulative
and not exclusive, and are in addition to all rights and remedies provided by law or under any other agreement between Debtor
and Secured Party, or otherwise. Where the context permits, the plural term shall include the singular, and vice versa. Where
more than one person signs this Agreement, their obligations hereunder shall be joint and several.

 

9.
This Agreement and your rights and obligations hereunder will be governed by and construed in accordance with the laws of the
State of Delaware. We agree that any legal action or proceeding with respect to this Agreement may be brought in either the courts
of the State of Wisconsin, Arizona or any other courts of the United States of America, having jurisdiction over the parties or
security provided herein. For the purpose of any such legal action or proceeding, we hereby submit to the exclusive jurisdiction
of such courts and agree not to raise and waive any objection we may have based upon the venue of any such court. We further agree:
(1) not to bring any legal action or proceeding referred in connection with this Agreement in any other court, unless the courts
of the State of Delaware, Arizona or Wisconsin or of the United States determine that they do not have jurisdiction in the matter;
and (2) to waive any limitation on the time within which an action or proceeding may be brought under or with respect to this
Agreement.

 

10.
WE HEREBY WAIVE, AND COVENANT THAT WE WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY
IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, SUIT, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT,
THE SUBJECT MATTER HEREOF, ANY LOAN DOCUMENT, OR ANY OF OUR OBLIGATIONS, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING
OR WHETHER IN CONTRACT, IN TORT OR OTHERWISE.

 

	ENLIGHT
    GROUP II, LLC – Debtor	 
	 	 	 
	By:	/s/
    Fred Wagenhals	 
	 	Fred
    Wagenhals	 
	Title:	AMMO,
    Inc. CEO	 
	 	AMMO,
    Inc. – Sole manager/member of Debtor	 

 

	AGREED
    AND ACCEPTED:	 
	 	 
	Jagemann
    Stamping Company	 
	 	 	 
	By:	/s/
    Tom Jagemann	 
	 	Tom
    Jagemann	 
	Title:	CEO	 

 

    	 

    	 	Page 4

    

 

Supplemental
Information for

 

Security
Agreement

 

Dated
March 14, 2019

 

The
following is a list of Exhibits to the above referenced Agreement, not attached herewith. Any omitted information will be furnished
to the Securities and Exchange Commission upon request.

 

1.
Exhibit “A” Description of Collateral

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