The simulated scouts don't show any surprise when their pistols abruptly stop working, but they do fall back to cover, perhaps to see if they can restart their weapons. The answer is: no.
(Much later, when browsing the simulation logs, Nerves finds a massive log of error messages: generated as the program struggled to understand why the pistols it simulated now had the firmware of an Ahmteller Good Morning Toasterâ„¢.)
The axe-wielding Mercs move forward and fling rocks and debris at Nerves' position. They're reasonable shots, although it doesn't seem in-keeping with Mercenary doctrine.


As a maneuver Lockout uses an attack roll but deals an effect other than harm with the hits scored. So: 1d20+STR+Tech+speciality skill, 1d6+MND+Tech ability. You're also spending Lockout, so that encounter power adds 2*MND to both skill and ability, phew. 1d20+4+2+2+8, 1d6+4+2+8 = 1d20+16, 1d6+14.
Whoops, that's a 1. A 1 in this system isn't an automatic failure, but Nerves now has an Exploit. However, mobs can't actually spend the Exploit, they just get a +2 speciality bonus when attacking: as opposed to elites and bosses who can really punish those rolls. Still, with those modifiers Nerves lands 3 hits, easily disabling the 2 slot pistol resource, significantly downgrading their attack capability.
The (former) pistol Mercs flee to cover, the axe Mercs move forward and try their crap ranged attack, albeit a crap ranged attack with the Exploit's +2 bonus to skill. Nerves takes 1 hit, 7/8 HP. But it was close! They only just made his Df 7 (+2 from light cover). Fortunately his armour (from Reinforced and the cover) stopped additional hits.
EDIT: Ringo pointed out that his Opportunist passive should grant a defensive +2 speciality versus attackers with an Exploit, and the Axemen saddled themselves with an Exploit by triggering his Underestimated aspect. In other words: made a mistake, they missed him!
Rolls
Nerves' Lockout encounter power - (1d20+16, 1d6+14)
1d20+16 : (1) + 16 = 17
1d6+14 : (4) + 14 = 18
Axe Mercs ranged attack - (1d20+3, 1d4+1)
1d20+3 : (6) + 3 = 9
1d4+1 : (2) + 1 = 3