Colt CZ : Agreement on pledge of book-entry form shares in Česká zbrojovka

AGREEMENT ON PLEDGE

OF BOOK-ENTRY FORM SHARES IN ČESKÁ ZBROJOVKA

A.S.

[⚫] 2024

between

COLT CZ GROUP SE

as Security Provider

and

KOMERČNÍ BANKA, A.S.

as Security Agent

Allen Overy Shearman Sterling (Czech Republic) LLP, organizační složka

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	CONTENTS
Clause		Page
1.	Interpretation	2
2.	Secured Debts	4
3.	Creation of pledge	5
4.	Restrictions on dealings	5
5.	Perfection, notification and further assurances	6
6.	Security representations	7
7.	Security Assets	8
8.	When Security becomes enforceable	10
9.	Enforcement of Security	10
10.	Application of proceeds	13
11.	Subordination of claims of the Security Provider	14
12.	Changes to the Parties	14
13.	Miscellaneous	15
14.	Release and termination	15
15.	Disapplication of certain provisions of the Civil Code	15
16.	Governing law	16
17.	Jurisdiction	16
Schedule
1.	Form of Confirmation from the Corporation	17
2.	Form of Transfer Certificate	22

Signatories

24

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THIS AGREEMENT (the Agreement) is made on [⚫] 2024

BETWEEN:

1. Colt CZ Group SE, a company with its registered office at náměstí Republiky 2090/3a, Nové Město, 110 00 Prague 1, identification number 291 51 961, registered in the Commercial Register under file number H 962 kept by the Municipal Court in Prague, as pledgor (the Security Provider); and
2. Komerční banka, a.s., a company with its registered office at Na Příkopě 33 building number 969, 114 07 Prague 1, identification number 453 17 054, registered in the Commercial Register under file number B 1360 kept by the Municipal Court in Prague, as pledgee (the Security Agent)

(the Security Provider and the Security Agent collectively the Parties and each of them a Party).

IT IS AGREED as follows:

1. INTERPRETATION

1.1 Definitions

In this Agreement:

Capital Markets Act means Act No. 256/2004 Coll., on Conducting Business in the Capital Markets, as amended.

Central Depository means the legal entity specified in Section 100 et seq. of the Capital Markets Act which maintains the central records of book-entry securities in the Czech Republic as described in Section 92 of the Capital Markets Act.

Confirmed Copy of Entry means a document issued by the Central Depository, in form and substance satisfactory to the Security Agent, stating that:

1. the Security Assets are pledged under Section 1309 et seq. of the Civil Code; and
2. the Security Provider's right to dispose of any Security Assets is suspended under Section 97 of the Capital Markets Act.

Corporation means Česká zbrojovka a.s., a company with its registered office at Svat. Čecha 1283, 688 01 Uherský Brod, identification number 463 45 965, registered in the Commercial Register under file number B 712 kept by the Regional Court in Brno.

Credit Agreement means the EUR 484,814,084.45 credit facilities agreement dated 7 May 2024 between, among others, the Security Provider as parent, original borrower and original guarantor and the Security Agent as original lender, mandated lead arranger, facility agent and security agent.

Enforceability Notice means a notice from the Security Agent to the Corporation, substantially in the form of Schedule 1 (Form of Confirmation from the Corporation) under the heading Schedule to the Form of Confirmation from the Corporation.

Existing Security means any encumbrance and restrictions in respect of the Security Assets (in particular any negative pledge created as a right in rem), created under the agreement on

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negative pledge of shares in the Corporation dated 7 May 2024 and entered into between the Security Provider as pledgor and the Security Agent as pledgee.

Expert means an independent expert selected by the Security Agent from the following entities or their successors: (i) PricewaterhouseCoopers Česká republika, s.r.o. (identification number: 610 63 029); (ii) KPMG Česká republika, s.r.o. (identification number: 005 53 115); (iii) Deloitte Advisory s.r.o. (identification number: 275 82 167); and (iv) E & Y Valuations s.r.o. (identification number: 161 90 581).

Secured Debts means each debt specified in Clause 2 (Secured Debts) below.

Security Assets means each of the following book-entry shares issued by the Corporation:

Number	Form	Class /	Account	ISIN	Nominal	Percentage of
of		ordinary,	number at		value of	registered capital
shares		preference,	Central		each share
		other	Depository
612,324	registered	class A	086D311	CZ0005130013	700	89.07
	shares
75,170	registered	class B	086D311	CZ0005130021	700	10.93
	shares

Security Period means the period beginning on the date of this Agreement and ending on the earliest of:

1. the date on which all the Secured Debts have been unconditionally and irrevocably paid and discharged in full and the Finance Parties are under no further obligation (whether existing or contingent) to provide any Loan or any other utilisation (including bank guarantee, letter of credit or overdraft loan) to the Borrowers or payment to a beneficiary under any bank guarantee or letter of credit issued under the Finance Documents;
2. the date on which the Security Agent has unilaterally waived in writing its right to the Security; or
3. the date on which the Security otherwise terminated with the Security Agent's written consent.

Share Rights means any right to any dividend, or other income or other proceeds in relation to the Security Assets.

1.2 Construction

1. Capitalised terms defined in the Credit Agreement have the same meaning in this Agreement, unless expressly defined in this Agreement.
2. The principles of construction set out in the Credit Agreement will have effect as if set out in this Agreement.
3. The term the Security or this Security means any security created under this Agreement.

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1. The term suspension of the right to dispose means the suspension of the owner's right to dispose of an investment instrument registered in investment instrument records under Section 97(1)(e) of the Capital Markets Act.
2. This Security does not constitute a financial collateral arrangement under Section 8(2) of Act No. 408/2010 Coll., on financial collateral arrangements, as amended.
3. When a provision of this Agreement applies to:
4. 1. the Security Assets, the provision applies to each share forming the Security Assets; or
   2. the pledge created under this Agreement, the provision applies to each pledge created under this Agreement.
5. Any obligation of the Security Provider under this Agreement remains in force during the Security Period.

2. SECURED DEBTS

1. The pledge created under this Agreement secures all monetary debts of each Obligor to the Security Agent that have arisen under, or in connection with, the Finance Documents and that exist on the date of this Agreement.
2. The pledge created under this Agreement further secures, up to an aggregate amount not exceeding EUR1,262,500,000 at any time, all monetary debts of each Obligor to the Security Agent that will arise under, or in connection with, the Finance Documents in the future at any time up to and including 7 May 2039, and that are of the following type:
3. 1. the principal of any loan (in Czech úvěr) or simple loan (in Czech zápůjčka);
   2. debts arising in connection with an issued financial or bank guarantee or letter of credit, including debts arising due to a payment being made under that guarantee or letter of credit;
   3. interest or default interest;
   4. debts resulting from derivative transactions, including debts from closing out those transactions;
   5. debts under a guarantee or financial guarantee;
   6. debts resulting from an indemnity or another arrangement with a similar effect;
   7. commitment fee, arrangement fee, agent fee or other fee;
   8. costs or expenses incurred in connection with the protection, preservation or enforcement of rights or security;
   9. damages including loss of profit and other than proprietary harm;
   10. debts resulting from unjust enrichment;
   11. contractual penalty;

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1. debts arising due to a party rescinding an agreement (in Czech odstoupení) or the invalidity, non-existence (in Czech zdánlivost), ineffectiveness, illegality or unenforceability of an agreement or other legal act; or
2. credit card debts.

3. CREATION OF PLEDGE

1. Pledge

1. Under Section 1309 et seq. of the Civil Code, for the purposes of securing the Secured Debts, the Security Provider pledges the Security Assets to the Security Agent.
2. The Security Agent accepts the pledge created under this Agreement.

1. General
   This Security is:
2. 1. continuing security for the payment, discharge and performance of the Secured Debts and will extend to the ultimate balance of all sums due as the Secured Debts regardless of any intermediate payment or discharge in whole or in part; and
   2. in addition to, and is not in any way prejudiced by, any other security now or subsequently held by any Finance Party.
3. Changes in respect of the Security Assets

1. The Security Provider must promptly inform the Security Agent of any changes in respect of the Security Assets.
2. This is without prejudice to the Security Provider's obligation to obtain prior consent in accordance with Clause 7.2 (Changes to rights) below.

3.4 Shares acquired in future

1. The Security Provider must notify the Security Agent immediately if it has newly acquired any share (or any interim certificate) in the Corporation.
2. At the Security Agent's request, the Security Provider must, no later than ten days after receipt of the request, pledge all the new shares for the purposes of securing the Secured Debts, by entering into either:
3. 1. a new pledge agreement substantially in the form of this Agreement, subject to any amendments which the Security Agent may require; or
   2. an amendment to this Agreement, in form and substance satisfactory to the Security Agent,

as required by the Security Agent.

4. RESTRICTIONS ON DEALINGS

4.1 Restrictions on dealings with the Security Assets

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1. Except as expressly allowed, in each case, under the Credit Agreement or this Agreement, the Security Provider may not, without the prior written consent of the Security Agent:
2. 1. create or permit to subsist any other pledge of the Security Assets;
   2. create or permit to subsist any other encumbrance (including any pre-emptive right) on the Security Assets, the Share Rights or any other right attached to the Security Assets;
   3. sell, transfer or otherwise dispose of the Security Assets or any of their parts, the Share Rights or any other right attached to the Security Assets;
   4. attach (in Czech připojit) the Security Assets to any collective business asset (in Czech věc hromadná) that is encumbered by a security interest created earlier than the Security Agent's pledge of the Security Assets;
   5. waive, amend or terminate, in whole or in part, any accessory or ancillary right or other right in respect of the Security Assets or waive, amend or terminate, in whole or in part, any accessory or ancillary debt or other debt in respect of the Security Assets; or
   6. perform any act which:
   7. 1. may result in a reduction in the value of the Security Assets; or
      2. may adversely affect any right of the Security Agent under this Agreement.
3. The restrictions under paragraph (a) are agreed for the benefit of the Security Agent and restrictions under paragraphs (a)(i) to (a)(iii) above are, in addition, agreed with effects on third parties as a suspension of the right to dispose.

4.2 Term and purpose of restrictions on dealings

The restrictions under Clause 4.1 (Restrictions on dealings with the Security Assets) above are agreed for the Security Period in order to strengthen the position of the Security Agent as a secured creditor.

5. PERFECTION, NOTIFICATION AND FURTHER ASSURANCES

1. Perfection of the pledge and restrictions on dealings
   The Security Provider must no later than two Business Days after the date of this Agreement at its own cost ensure that the pledge and the suspension of the right to dispose be registered on the Security Provider's account in the respective investment instruments records under Section 1331 of the Civil Code by completing and submitting a registration form complying with all the requirements of Section 95 of the Capital Markets Act and all other applicable regulations, including the relevant rules of the Central Depository.
2. Evidencing the perfection of the pledge and restrictions on dealings
   The Security Provider must deliver a Confirmed Copy of Entry to the Security Agent no later than two Business Days after the date of this Agreement.
3. Notification of the pledge to the Corporation The Security Provider must:

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1. promptly notify the creation of the pledge to the Corporation after the Security Provider receives a Confirmed Copy of Entry confirming that the pledge and the suspension of the right to dispose have been duly registered in the respective investment instrument records; and
2. ensure that the Corporation will, within two Business Days after receipt of a Confirmed Copy of Entry pursuant to paragraph (a) above, deliver to the Security Agent a confirmation signed by an authorised person or authorised persons that will be substantially in the form attached in Schedule 1 (Form of Confirmation from the Corporation).

5.4 Further assurances

1. The Security Provider must, at its own cost and without undue delay (and in any event within any applicable time limit) perform whatever act the Security Agent may require for:
2. 1. perfecting and protecting any security intended to be created under this Agreement;
   2. facilitating the enforcement of this Security or the exercise of any right, power or discretion exercisable by the Security Agent in respect of any Security Asset; and
   3. facilitating the assignment or transfer of any rights or obligations of the Security Agent under this Agreement.

This includes the execution of any transfer or assignment, whether to the Security Agent or its nominee, or any amendment to this Agreement which the Security Agent may think expedient.

1. The Security Provider must promptly notify the Security Agent in writing of any circumstance that may endanger the existence or enforceability of the Security or of any rights under this Agreement.

6. SECURITY REPRESENTATIONS

1. Representations
   The representations set out in this Agreement are made by the Security Provider to the Security Agent on the date of this Agreement, on each Utilisation Date and on the first day of each Interest Period.
2. Nature of security
   This Agreement creates a pledge over the Security Assets on the terms of this Agreement and this Agreement is not liable to be avoided, declared non-existent (in Czech zdánlivá), ineffective or otherwise set aside, in particular on the Security Provider's insolvency, bankruptcy, dissolution, winding-up, administration or reorganisation.
3. Title

1. (i) The Security Provider has full and exclusive title to the Security Assets, the Share Rights and all other rights attached to the Security Assets, free of any defect in the sense of Section 1107 of the Civil Code and free of any right from an obligation or right in rem or other right or interest for the benefit of any other person, and no steps have been taken to create any such defect or any such right or interest for the benefit of any other person over the Security Assets, the Share Rights or any other rights attached to the

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Security Assets, except for this Security, the Existing Security (until its termination) and other restrictions created or permitted under this Agreement; and

1. 1. it has not created a pledge over its enterprise, any of its parts or a collective business asset that is (in whole or in part) formed by any Security Asset.
2. (i) It is not aware of any adverse claim by any person in respect of its exclusive title to the Security Assets, the Share Rights or any other rights attached to the Security Assets;
3. 1. none of the Security Assets, the Share Rights or any other rights attached to the Security Assets is the subject of a dispute or claim; and

1. 1. there are no overdue debts in relation to the Security Assets.
2. Ranking
   The pledge created under this Agreement is a first ranking pledge over the Security Assets.
3. Non-conflict

1. No breach of any law or regulation is outstanding which may adversely affect the value of any Security Asset.
2. Neither the articles of association of the Security Provider nor any agreement, arrangement or licence applicable to the Security Provider contains any provision (except for the Existing Security) which could adversely affect or restrict the creation or enforcement of the Security, including by way of pre-emption rights.

7. SECURITY ASSETS

1. Representations
   The Security Provider represents to the Security Agent that:
2. 1. each capital contribution relating to the shares forming the Security Assets has been fully paid;
   2. the shares forming the Security Assets were properly issued in compliance with Czech law;
   3. the shares forming the Security Assets represent 100% of the Corporation's registered capital and voting rights in the Corporation;
   4. it does not own any shares in the Corporation other than the shares forming the Security Assets;
   5. it has not transferred any of the Share Rights or any other rights attached to the Security Assets to a third party;
   6. the Security Assets are freely transferable for the purpose of creating or enforcing this Security; and
   7. no payments to it by the Corporation are subject to any right of set-off or similar rights.
3. Changes to rights

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The Security Provider must not perform or allow the performance of any act on its behalf which prejudices or which may prejudice the Security Agent's rights arising in connection with this Agreement, including any act which may result in:

1. the Security Assets, the Share Rights or any other right attaching to the Security Assets being altered (including a division of the Security Assets);
2. the Corporation's articles of association being amended so as to restrict or adversely affect the transfer of the whole or any part of the Security Assets in connection with any enforcement of this Security, including by permitting pre-emption rights; or
3. further shares in the Corporation, interim certificates or convertible or priority debentures under Section 286 of the Corporations Act being issued (including any increase in the Corporation's registered capital) or the Corporation's registered capital being decreased, a global share being issued or any similar fact occurring;

without the prior written consent of the Security Agent.

1. Other obligations in respect of the Security Assets
   The Security Provider must not submit an instruction to the person keeping the respective investment instrument records to register the termination of the suspension of the right to dispose of the Security Assets.
2. Share Rights and voting rights

1. Before the Security becomes enforceable pursuant to Clause 8 (When Security becomes enforceable) below and the Security Agent delivers an Enforceability Notice to the Corporation:
2. 1. the Security Provider may exercise the Share Rights, voting rights and any other powers or rights in respect of the Security Assets to the extent permitted by Clause 7.2 (Changes to rights) above and, unless it is expressly allowed by the Finance Documents, the Security Provider may vote for or enable the payment of any dividend only with the prior consent of the Security Agent; and
   2. the Security Agent consents to all Share Rights being paid directly to the Security Provider.
3. After the Security becomes enforceable pursuant to Clause 8 (When Security becomes enforceable) below and the Security Agent delivers the Enforceability Notice to the Corporation:
4. 1. the Security Agent may exercise:
   2. 1. 1. any voting rights, including the right to vote in the Corporation's supreme body, if the Security Agent has given notice of this to the Security Provider;
         2. any Share Rights; and
         3. any other power or right that may be exercised by the owner of the Security Assets.
      2. all Share Rights must be performed directly to the Security Agent or as it may direct, up to the amount of the unpaid Secured Debts; and

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